|
Sapiens Reports Second Quarter 2020 Financial Results
HOLON, Israel, Aug. 4, 2020 /PRNewswire/ -- Sapiens International Corporation, (NASDAQ: SPNS) and (TASE: SPNS), a leading global provider of software solutions for the insurance industry, and a member of the Formula Group (NASDAQ: FORTY) and (TASE: FORT), today announced its financial results for the second quarter ended June 30, 2020.
Summary Results for Second Quarter 2020 (USD in millions, except per share data)
| GAAP
|
| Non-GAAP
|
|
| June 30, 2020
| June 30, 2019
| % Change
| June 30, 2020
| June 30, 2019
| % Change
| Revenue
| $93.1
| $79.5
| 17.0%
| $93.1
| $79.5
| 17.0%
| Gross Profit
| $38.3
| $31.5
| 21.6%
| $41.9
| $34.8
| 20.4%
| Gross Margin
| 41.1%
| 39.6%
| 150 bps
| 45.0%
| 43.8%
| 120 bps
| Operating Income
| $12.4
| $9.5
| 31.2%
| $16.8
| $12.6
| 33.4%
| Operating Margin
| 13.3%
| 11.9%
| 140 bps
| 18.0%
| 15.8%
| 220 bps
| Net Income (*)
| $9.3
| $6.8
| 35.9%
| $13.3
| $9.5
| 39.8%
| Diluted EPS
| $0.18
| $0.14
| 28.6%
| $0.26
| $0.19
| 36.8%
|
(*) Attributable to Sapiens' shareholders.
"Our second quarter growth was driven by North America and Europe and reached a growth rate of 17.0%. Non-Gaap Operating income grew 33.4%, lifting operating margin by 220 basis points to a record 18.0%, primarily due to cost saving steps we implemented as COVID-19 appeared," said Roni Al-Dor, Sapiens president and CEO.
"Our outlook for 2020 has improved despite COVID-19. We continue to sign new business and increase our revenue from existing customers with upselling opportunities. "In addition the recent Delphi acquisition enhances our position as a leading solutions provider in the MPL market in North America As such, we are raising our 2020 revenue guidance range," concluded Roni Al-Dor. "Our revised 2020 revenue range is now $376 million to $381 million, as compared to our prior range of $368 million to $377 million. The Delphi business acquisition which we completed at the end of July is currently in loss position, partially offsetting our operational improvement in 2020. That being said we are increasing our guidance to 16.5% to 16.9% from prior range of 16.0% to 16.5%."
Quarterly Results Conference Call
Management will host a conference call and webcast on August 4, 2020 at 9:30 a.m. Eastern Time (4:30 p.m. in Israel) to review and discuss Sapiens' results.
Please call the following numbers (at least 10 minutes before the scheduled time) to participate:
North America (toll-free): + 1-888-668-9141; International: +972-3-918-0609; UK: 0-800-917-9141
The live webcast of the call can be viewed on Sapiens' website at: https://www.sapiens.com/investor-relations/ir-events-presentations/
If you are unable to join live, a replay of the call will be accessible until August 13, 2020, as follows:
North America: +1-877-456-0009; International: +972-3-9255901
A recorded version of the webcast will also be available via the Sapiens website, for three months at the same location.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: non-GAAP revenue, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributed to Sapiens shareholders, non-GAAP basic and diluted earnings per share, Adjusted EBITDA and Adjusted Free Cash-Flow.
Sapiens believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Sapiens' financial condition and results of operations. The Company's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: Valuation adjustment on acquired deferred revenue, amortization of capitalized software development and other intangible assets, capitalization of software development, stock-based compensation, compensation related to acquisition and acquisition-related costs, restructuring and cost reduction costs, and tax adjustments related to non-GAAP adjustments.
Management of the Company does not consider these non-GAAP measures in isolation, or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations, as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures.
To compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Sapiens urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables of this release.
The Company defines Adjusted EBITDA as net profit, adjusted for valuation adjustment on acquired deferred revenue, stock-based compensation expense, depreciation and amortization, capitalized of software development costs, compensation expenses related to acquisition and acquisition-related costs, restructuring and cost reduction costs, financial expense (income), provision for income taxes and other income (expenses). These amounts are often excluded by other companies to help investors understand the operational performance of their business.
The Company uses Adjusted EBITDA as a measurement of its operating performance, because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflects an additional way of viewing aspects of the operations that the Company believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete The Company uses Adjusted Free Cash-Flow as a measurement of its operating performance, and reconciles cash-flow from operating activities to Adjusted Free Cash-Flow, while reducing the amounts for capitalization of software development costs and capital expenditures. The Company adds back payments related to investment in the new campus in India, cash payments made for former acquisitions in respect of future performance targets and retention criteria as determined upon acquisition date of the respective acquired company, which were included in the cash-flow from operating activities. We believe that Adjusted Free Cash-Flow is useful in evaluating our business, because Adjusted Free Cash-Flow reflects the cash surplus available to fund the expansion of our business.
About Sapiens
Sapiens International Corporation empowers insurers to succeed in an evolving industry. The company offers digital software platforms, solutions and services for the property and casualty, life, pension and annuity, reinsurance, financial and compliance, workers' compensation and financial markets. With more than 35 years of experience delivering to over 500 organizations globally, Sapiens has a proven ability to satisfy customers' core, data and digital requirements. For more information: www.sapiens.com
Forward Looking Statements
Some of the statements in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. Words such as "will," "expects," "believes" and similar expressions are used to identify these forward-looking statements (although not all forward-looking statements include such words). These forward-looking statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement.
These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties, as well as certain additional risks that we face, please refer to the Risk Factors detailed in Item 3 of Part III of our Annual Report on Form 20-F for the year ended December 31, 2019, and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.
Investors and Media Contact
Brett Mass
Managing Partner
Hayden IR
Phone: +1-646-536-7331
Email: [email protected]
| SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
| U.S. dollars in thousands (except per share amounts)
|
|
|
|
|
|
|
| Three months ended
|
| Six months ended
|
|
|
| June 30
|
| June 30
|
|
|
| 2020
|
| 2019
|
| 2020
|
| 2019
|
|
|
| (unaudited)
|
| (unaudited)
|
| (unaudited)
|
| (unaudited)
|
|
|
|
|
|
|
|
|
|
| Revenue
|
| 93,063
|
| 79,529
|
| 183,597
|
| 156,316
| Cost of revenue
|
| 54,804
|
| 48,075
|
| 109,074
|
| 95,055
|
|
|
|
|
|
|
|
|
|
| Gross profit
|
| 38,259
|
| 31,454
|
| 74,523
|
| 61,261
|
|
|
|
|
|
|
|
|
|
| Operating expenses:
|
|
|
|
|
|
|
|
|
| Research and development, net
|
| 9,328
|
| 8,923
|
| 19,854
|
| 17,700
|
| Selling, marketing, general and administrative
|
| 16,528
|
| 13,077
|
| 31,988
|
| 26,030
| Total operating expenses
|
| 25,856
|
| 22,000
|
| 51,842
|
| 43,730
|
|
|
|
|
|
|
|
|
|
| Operating income
|
| 12,403
|
| 9,454
|
| 22,681
|
| 17,531
|
|
|
|
|
|
|
|
|
|
| Financial and other expenses, net
|
| 63
|
| 434
|
| 1,550
|
| 1,488
| Taxes on income
|
| 3,010
|
| 2,154
|
| 4,911
|
| 4,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income
|
| 9,330
|
| 6,866
|
| 16,220
|
| 12,042
|
|
|
|
|
|
|
|
|
|
| Attributable to non-controlling interest
|
| 33
|
| 26
|
| 103
|
| 47
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Sapiens' shareholders
|
| 9,297
|
| 6,840
|
| 16,117
|
| 11,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share
|
| 0.19
|
| 0.14
|
| 0.32
|
| 0.24
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per share
|
| 0.18
|
| 0.14
|
| 0.32
|
| 0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding used to compute basic earnings per share (in thousands)
|
| 50,297
|
| 50,002
|
| 50,236
|
| 49,994
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding used to compute diluted earnings per share (in thousands)
|
| 51,173
|
| 50,530
|
| 51,128
|
| 50,430
|
| SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
|
|
|
|
|
| CONDENSED CONSOLIDATED NON-GAAP STATEMENTS OF INCOME
|
|
|
|
|
| U.S. dollars in thousands (except per share amounts)
|
|
|
|
|
|
|
| Three months ended
|
| Six months ended
|
|
|
| June 30
|
| June 30
|
|
|
| 2020
|
| 2019
|
| 2020
|
| 2019
|
|
|
| (unaudited)
|
| (unaudited)
|
| (unaudited)
|
| (unaudited)
|
|
|
|
|
|
|
|
|
|
| Revenue
|
| 93,063
|
| 79,529
|
| 183,597
|
| 156,316
| Cost of revenue
|
| 51,163
|
| 44,735
|
| 101,906
|
| 88,418
|
|
|
|
|
|
|
|
|
|
| Gross profit
|
| 41,900
|
| 34,794
|
| 81,691
|
| 67,898
|
|
|
|
|
|
|
|
|
|
| Operating expenses:
|
|
|
|
|
|
|
|
|
| Research and development, net
|
| 10,579
|
| 10,493
|
| 22,542
|
| 20,662
|
| Selling, marketing, general and administrative
|
| 14,538
|
| 11,720
|
| 27,752
|
| 22,905
| Total operating expenses
|
| 25,117
|
| 22,213
|
| 50,294
|
| 43,567
|
|
|
|
|
|
|
|
|
|
| Operating income
|
| 16,783
|
| 12,581
|
| 31,397
|
| 24,331
|
|
|
|
|
|
|
|
|
|
| Financial and other expenses, net
|
| 63
|
| 434
|
| 1,550
|
| 1,488
| Taxes on income
|
| 3,347
|
| 2,580
|
| 5,992
|
| 4,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income
|
| 13,373
|
| 9,567
|
| 23,855
|
| 17,978
|
|
|
|
|
|
|
|
|
|
| Attributable to non-controlling interest
|
| 33
|
| 26
|
| 103
|
| 47
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Sapiens' shareholders
|
| 13,340
|
| 9,541
|
| 23,752
|
| 17,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share
|
| 0.27
|
| 0.19
|
| 0.47
|
| 0.36
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per share
|
| 0.26
|
| 0.19
|
| 0.46
|
| 0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding used to compute basic earnings per share (in thousands)
|
| 50,297
|
| 50,002
|
| 50,236
|
| 49,994
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding used to compute diluted earnings per share (in thousands)
|
| 51,173
|
| 50,530
|
| 51,128
|
| 50,430
|
SAPIENS INTERNATIONAL CORPORATION N.V. AND SUBSIDIARIES
|
|
|
|
| RECONCILIATION OF GAAP TO NON-GAAP RESULTS
|
|
|
|
| U.S. dollars in thousands (except per share amounts)
|
|
|
|
|
|
| Three months ended
|
| Six months ended
|
|
| June 30,
|
| June 30,
|
|
| 2020
|
| 2019
|
| 2020
|
| 2019
|
|
| (unaudited)
|
| (unaudited)
|
| (unaudited)
|
| (unaudited)
|
|
|
|
|
|
|
|
|
| GAAP gross profit
|
| 38,259
|
| 31,454
|
| 74,523
|
| 61,261
|
|
|
|
|
|
|
|
|
| Amortization of capitalized software
|
| 1,531
|
| 1,390
|
| 3,027
|
| 2,731
| Amortization of other intangible assets
|
| 2,110
|
| 1,950
|
| 4,141
|
| 3,906
| Non-GAAP gross profit
|
| 41,900
|
| 34,794
|
| 81,691
|
| 67,898
|
|
|
|
|
|
|
|
|
| GAAP operating income
|
| 12,403
|
| 9,454
|
| 22,681
|
| 17,531
| Gross profit adjustments
|
| 3,641
|
| 3,340
|
| 7,168
|
| 6,637
| Capitalization of software development
|
| (1,251)
|
| (1,570)
|
| (2,688)
|
| (2,962)
| Amortization of other intangible assets
|
| 698
|
| 540
|
| 1,287
|
| 1,075
| Stock-based compensation
|
| 764
|
| 288
|
| 1,386
|
| 741
| Acquisition-related costs *)
|
| 528
|
| 529
|
| 1,563
|
| 1,309
| Non-GAAP operating income
|
| 16,783
|
| 12,581
|
| 31,397
|
| 24,331
|
|
|
|
|
|
|
|
|
| GAAP net income attributable to Sapiens' shareholders
|
| 9,297
|
| 6,840
|
| 16,117
|
| 11,995
| Operating income adjustments
|
| 4,380
|
| 3,127
|
| 8,716
|
| 6,800
| Taxes on income
|
| (337)
|
| (426)
|
| (1,081)
|
| (864)
| Non-GAAP net income attributable to Sapiens' shareholders
|
| 13,340
|
| 9,541
|
| 23,752
|
| 17,931
|
|
|
|
|
|
|
|
|
|
|
(*) Acquisition-related costs pertain to charges on behalf of M&A agreements related to future performance targets and retention criteria, as well as third-party services, such as, tax, accounting and legal rendered until the acquisition date.
Summary of NON-GAAP Financial Information
U.S. dollars in thousands (except per share amounts)
|
|
|
|
|
|
|
|
|
|
| Q2 2020
|
| Q1 2020
|
| Q4 2019
|
| Q3 2019
|
| Q2 2019
|
|
|
|
|
|
|
|
|
|
| Revenues
| 93,063
|
| 90,534
|
| 86,715
|
| 82,643
|
| 79,529
| Gross profit
| 41,900
|
| 39,791
|
| 38,402
|
| 36,712
|
| 34,794
| Operating income
| 16,783
|
| 14,614
|
| 14,345
|
| 13,530
|
| 12,581
| Net income to Sapiens' shareholders
| 13,340
|
| 10,412
|
| 10,553
|
| 10,412
|
| 9,541
| Adjusted EBITDA
| 17,854
|
| 15,724
|
| 15,271
|
| 14,523
|
| 13,358
|
|
|
|
|
|
|
|
|
|
| Basic earnings per share
| 0.27
|
| 0.21
|
| 0.21
|
| 0.21
|
| 0.19
| Diluted earnings per share
| 0.26
|
| 0.20
|
| 0.21
|
| 0.21
|
| 0.19
|
Non-GAAP Revenues by Geographic Breakdown
U.S. dollars in thousands
|
|
|
|
|
|
|
|
|
|
| Q2 2020
|
| Q1 2020
|
| Q4 2019
|
| Q3 2019
|
| Q2 2019
|
|
|
|
|
|
|
|
|
|
| North America
| 46,610
|
| 44,567
|
| 41,787
|
| 44,413
|
| 39,216
| Europe
| 41,030
|
| 40,232
|
| 37,504
|
| 30,273
|
| 33,881
| Rest of the world
| 5,423
|
| 5,735
|
| 7,424
|
| 7,957
|
| 6,432
|
|
|
|
|
|
|
|
|
|
| Total
| 93,063
|
| 90,534
|
| 86,715
|
| 82,643
|
| 79,529
|
Adjusted Free Cash-Flow
U.S. dollars in thousands
|
|
|
|
|
|
|
|
|
|
| Q2 2020
|
| Q1 2020
|
| Q4 2019
|
| Q3 2019
|
| Q2 2019
|
|
|
|
|
|
|
|
|
|
| Cash-flow from operating activities
| 14,761
|
| 5,759
|
| 21,429
|
| 18,671
|
| 15,507
| Increase in capitalized software development costs
| (1,251)
|
| (1,437)
|
| (1,162)
|
| (1,541)
|
| (1,570)
| Capital expenditures
| (393)
|
| (552)
|
| (2,456)
|
| (973)
|
| (1,079)
| Capital expenditures related to new campus in India
| -
|
| -
|
| -
|
| (6,325)
|
| -
| Free cash-flow
| 13,117
|
| 3,770
|
| 17,811
|
| 9,832
|
| 12,858
|
|
|
|
|
|
|
|
|
|
| Capital expenditures related to new campus in India
| -
|
| -
|
| -
|
| 6,325
|
| -
| Cash payments attributed to acquisition-related costs(*) (**)
| 1,562
|
| 737
|
| 200
|
| 100
|
| 1,692
|
|
|
|
|
|
|
|
|
|
| Adjusted free cash-flow
| 14,679
|
| 4,507
|
| 18,011
|
| 16,257
|
| 14,550
|
|
|
|
|
|
|
|
|
|
| (*) Included in cash-flow from operating activities
|
|
|
|
|
|
|
|
|
| (**) Acquisition-related payments pertain to payments on behalf of M&A agreements related to future performance targets and retention criteria, as well as third-party services, such as, tax, accounting and legal rendered until the acquisition date.
|
Adjusted EBITDA Calculation
U.S. dollars in thousands
|
|
|
|
|
|
| Three months ended
|
| Six months ended
|
|
| June 30
|
| June 30
|
|
| 2020
|
| 2019
|
| 2020
|
| 2019
|
|
|
|
|
|
|
|
|
| GAAP operating profit
|
| 12,403
|
| 9,454
|
| 22,681
|
| 17,531
|
|
|
|
|
|
|
|
|
| Non-GAAP adjustments:
|
|
|
|
|
|
|
|
| Amortization of capitalized software
|
| 1,531
|
| 1,390
|
| 3,027
|
| 2,731
| Amortization of other intangible assets
|
| 2,808
|
| 2,490
|
| 5,428
|
| 4,981
| Capitalization of software development
|
| (1,251)
|
| (1,570)
|
| (2,688)
|
| (2,962)
| Stock-based compensation
|
| 764
|
| 288
|
| 1,386
|
| 741
| Compensation related to acquisition and acquisition-related costs
|
| 528
|
| 529
|
| 1,563
|
| 1,310
|
|
|
|
|
|
|
|
|
| Non-GAAP operating profit
|
| 16,783
|
| 12,581
|
| 31,397
|
| 24,332
|
|
|
|
|
|
|
|
|
| Depreciation
|
| 1,071
|
| 777
|
| 2,182
|
| 1,550
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA
|
| 17,854
|
| 13,358
|
| 33,579
|
| 25,882
|
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
| CONDENSED CONSOLIDATED BALANCE SHEETS
| U.S. dollars in thousands
|
|
|
|
|
|
|
|
|
| June 30,
|
| December 31,
|
|
|
| 2020
|
| 2019
|
|
|
| (unaudited)
|
| (unaudited)
|
|
|
|
|
|
| ASSETS
|
|
|
|
|
| CURRENT ASSETS
|
|
|
|
|
| Cash and cash equivalents
|
| 127,978
|
| 66,295
|
| Trade receivables, net and unbilled receivables
|
| 62,969
|
| 50,221
|
| Investment in restricted deposit
|
| -
|
| 22,890
|
| Other receivables and prepaid expenses
|
| 9,041
|
| 7,817
|
|
|
|
|
|
|
| Total current assets
|
| 199,988
|
| 147,223
| LONG-TERM ASSETS
|
|
|
|
|
| Property and equipment, net
|
| 16,486
|
| 16,601
|
| Severance pay fund
|
| 5,839
|
| 5,106
|
| Goodwill and intangible assets, net
|
| 248,733
|
| 228,691
|
| Operating lease right-of-use assets
|
| 50,231
|
| 49,539
|
| Other long-term assets
|
| 6,017
|
| 5,261
|
|
|
|
|
|
|
| Total long-term assets
|
| 327,306
|
| 305,198
| TOTAL ASSETS
|
| 527,294
|
| 452,421
|
|
|
|
|
|
| LIABILITIES AND EQUITY
|
|
|
|
| CURRENT LIABILITIES
|
|
|
|
|
| Trade payables
|
| 5,738
|
| 5,107
|
| Current maturities of Series B Debentures
|
| 19,796
|
| 9,898
|
| Accrued expenses and other liabilities
|
| 64,443
|
| 60,574
|
| Current maturities of operating lease liabilities
|
| 9,073
|
| 8,312
|
| Deferred revenue
|
| 25,061
|
| 21,021
|
|
|
|
|
|
|
| Total current liabilities
|
| 124,111
|
| 104,912
| LONG-TERM LIABILITIES
|
|
|
|
|
| Series B Debentures, net of current maturities
|
| 98,434
|
| 58,850
|
| Deferred tax liabilities
|
| 7,235
|
| 5,082
|
| Other long-term liabilities
|
| 8,312
|
| 8,321
|
| Long-term operating lease liabilities
|
| 44,319
|
| 43,394
|
| Accrued severance pay
|
| 7,367
|
| 6,364
|
| Total long-term liabilities
|
| 165,667
|
| 122,011
|
|
|
|
|
|
| REDEEMABLE NON-CONTROLLING INTEREST
|
| 458
|
| -
| EQUITY
|
|
| 237,058
|
| 225,498
| TOTAL LIABILITIES AND EQUITY
|
| 527,294
|
| 452,421
|
SAPIENS INTERNATIONAL CORPORATION N.V. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW
U.S. dollars in thousands
|
|
| For the six months ended June 30,
|
| 2020
| 2019
|
| (unaudited)
| (unaudited)
|
Cash flows from operating activities:
|
|
| Net income
| 16,220
| 12,042
| Reconciliation of net income to net cash provided by operating
activities:
|
|
| Depreciation and amortization
| 10,637
| 9,262
| Accretion of discount on Series B Debentures
| 77
| 84
| Capital gain from sale of property and equipment
| -
| (129)
| Stock-based compensation related to options issued to employees
| 1,386
| 741
|
|
|
| Net changes in operating assets and liabilities, net of amount acquired:
|
|
| Trade receivables, net and unbilled receivables
| (11,554)
| 712
| Deferred tax assets, net
| (1,146)
| (1,435)
| Other operating assets
| 3,286
| (356)
| Trade payables
| (275)
| 190
| Other operating liabilities
| (2,187)
| 152
| Deferred revenues
| 4,008
| 4,760
| Accrued severance pay, net
| 68
| 34
|
|
|
| Net cash provided by operating activities
| 20,520
| 26,057
|
|
|
| Cash flows from investing activities:
|
|
| Purchase of property and equipment
| (945)
| (1,720)
| Investment in deposit
| (379)
| (1,119)
| Proceeds from restricted deposit used for completed acquisition
| 22,890
| -
| Payments for business acquisitions, net of cash acquired
| (22,483)
| 821
| Capitalized software development costs
| (2,688)
| (2,962)
|
|
|
| Net cash used in investing activities
| (3,605)
| (4,980)
|
|
|
| Cash flows from financing activities:
|
|
| Proceeds from employee stock options exercised
| 2,334
| 78
| Distribution of dividend
| (6,632)
| -
| Repayment of Series B Debenture
| (9,898)
| (9,898)
| Issuance of Series B Debentures, net of issuance expenses of $863
| 60,155
| -
| Receipt of short-term loan
| 20,000
| -
| Repayment of loan
| (20,000)
| (4)
| Payment of contingent considerations
| (538)
| (120)
| Dividend to non-controlling interest
| -
| (66)
|
|
|
| Net cash provided by (used in) financing activities
| 45,421
| (10,010)
|
|
|
| Effect of exchange rate changes on cash and cash equivalents
| (652)
| 1,587
|
|
|
| Increase in cash and cash equivalents
| 61,684
| 12,654
| Cash and cash equivalents at the beginning of period
| 66,295
| 64,628
|
|
|
| Cash and cash equivalents at the end of period
| 127,979
| 77,282
|
Debentures Covenants
As of June 30, 2020, Sapiens was in compliance with all of its financial covenants under the indenture for the Series B Debentures, based on having achieved the following in its consolidated financial results:
Covenant 1
- Target shareholders' equity (excluding minority interest): above $120 million.
- Actual shareholders' equity equal to $237 million.
Covenant 2
- Target ratio of net financial indebtedness to net capitalization (in each case, as defined under the indenture for the Company's Series B Debentures) below 65%.
- Actual ratio of net financial indebtedness to net capitalization equal to (3.4)%.
Covenant 3
- Target ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is below 5.5.
- Actual ratio of net financial indebtedness to EBITDA (accumulated calculation for the four last quarters) is equal to (0.1).
 View original content:http://www.prnewswire.com/news-releases/sapiens-reports-second-quarter-2020-financial-results-301105459.html
SOURCE Sapiens International Corporation
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