Fortune lists IGATE in the 100 Fastest-Growing
Companies in the U.S.
IGATE Corporation (“IGATE” or the “Company”) (NASDAQ: IGTE), the
New Jersey-headquartered integrated technology and operations
solutions provider, today announced its financial results for the
third quarter and nine months ended September 30, 2014.
Third Quarter Financial Highlights
- Revenues were $ 322.8 million
- Increased 10.0% compared to $ 293.4
million in the third quarter of 2013
- Increased 3.5% sequentially compared to
$311.7 million in the second quarter of 2014
- Gross margin was 35.3%
- Compared to 41.4% in the third quarter
of 2013
- Compared to 36.6% in the second quarter
of 2014
- Adjusted EBITDA was $68.8
million
- Compared to $78.4 million in the third
quarter of 2013
- Compared to $70.0 million in the second
quarter of 2014
- Net Income was $37.3 million
- Compared to $31.9 million in the third
quarter of 2013
- Compared to $3.1 million in the second
quarter of 2014 (after a one-time charge of $51.8 million arising
from extinguishment of debt)
- Non GAAP diluted earnings per share
were $0.52
- Compared with $0.46 per share in the
third quarter of 2013
- Compared with $0.48 per share in the
second quarter of 2014
- GAAP diluted earnings per share were
$0.34
- Compared to GAAP diluted earnings per
share of $0.30 in the third quarter of 2013
- Compared to GAAP diluted earnings per
share of $(0.07) in the second quarter of 2014 (after a one-time
charge of $51.8 million arising from extinguishment of debt)
- As of September 30, 2014, the
Company had 34,455 employees with a net addition of 1,713 during
the third quarter ended September 30, 2014
Ashok Vemuri, President and CEO, said, “I am pleased that
we are able to sustain our broad-based growth both sequentially as
well as year over year. Our clients are responding positively to
the changes we have implemented in the Company. Our industry
utility solutions, Reference Data Management Solution for the
financial sector (IDMS) and our Long Term Care Solution for
healthcare sector (IBAS), continue to find significant market
traction and drive a differentiated industry value proposition.
Through our IGATE Corporate University we are building market-ready
talent capital and emerging technology solutions, further
strengthening our competitive position.”
“We are pleased to be the only IT services company to be listed
in Fortune 100 Fastest-Growing Companies in the U.S., further
validating our go-to-market strategy,” he added.
Sujit Sircar, CFO, said, “Although we experienced some
margin headwinds due to the continuing investment we had to make in
some of our transformational client engagements, expanded client
coverage and hiring for growth, I am happy with the increase in net
income, while we continue to maintain healthy earnings growth. We
lowered our debt by another $126 million during the quarter which
has improved our leverage further.”
Third Quarter Operating Results
Results for the three and nine months ended September 30, 2014
and 2013, respectively, on a GAAP and non-GAAP basis are provided
in the table below.
Q3 FY'14 Q3 FY'13
Y/Y
Nine monthsended FY'14
Nine monthsended FY'13
Y/Y Net revenue ($Millions) 322.8 293.4
10.0 % 936.7 851.6 10.0 %
Operating margin ($Millions) 54.7
66.0 (17.2 )% 173.6 168.2 3.2 %
GAAP net income ($Millions)
37.3 31.9 17.0 % 72.0 96.6 (25.4 )%
GAAP diluted EPS ($)
0.34 0.30 13.3 % 0.56 0.91 (38.5 )%
Adjusted EBITDA
($Millions) 68.8 78.4 (12.2 )% 214.0 210.1 1.9 %
Non-GAAP
net income ($Millions) 42.5 36.3 17.2 % 118.4 110.7 7.0 %
Non-GAAP diluted EPS ($) 0.52 0.46 13.0 % 1.44 1.39 3.6 %
New customer and project wins in the quarter
- A U.K.-based global retail company in
the business of providing optician services and visual instruments
selected IGATE to assist the client’s IT Operations program. As
part of the multi-year engagement, IGATE will provide integrated
support to over 40 applications covering the functional areas of
the client’s Retail and Supply Chain as well as their core business
applications such as legacy point of sale and enterprise systems.
The engagement is expected to bring improved efficiency in the
client’s store operations, order management, product data, pricing
and promotion, contact center and warehouse management.
- IGATE has been selected by a large
North American-based financial institution to streamline its Life,
Health and Disability administration program. As part of the
multi-year engagement, IGATE will consolidate the client’s current
administration platforms and migrate the bulk of the client’s
policies to its proprietary ITOPS-based administration platform.
IGATE will introduce a modern administration system to service
these blocks and deliver operational efficiency and superior policy
holder experience. In addition to the administration platform,
IGATE will bring to bear a modern ecosystem, which includes
workflow and self-serve portals for policy holders driving contact
center volumes down and driving up policy holder satisfaction. This
engagement is also expected to make the client’s fixed IT assets
and costs variable and also positively impact its reserves.
- A North American-based energy company
selected IGATE to provide independent verification and validation
services for its internal operations division. As part of the
engagement, IGATE’s testing center of excellence team will work
with the client’s business and IT divisions to create a coherent
end-to-end business process flow to align diverse departments and
teams at different stages of the client’s value chain to provide a
unified business experience to the end customer. IGATE will also
provide Diversity Business Enterprise (DBE) spend by leveraging its
technology ecosystem to help the client align with its
organization-wide focus.
- One of the world’s largest chains of
fast food restaurants selected IGATE to transform its point of
sale, back office and digital landscape for its Switzerland
operations. As a strategic technology partner, IGATE will provide a
future-proof digital and technology ecosystem through its
proprietary Store-in-a-Box solution. Through this solution, IGATE
will offer a 24x7 multi-lingual service to remotely manage store
applications and infrastructure, onsite field service, inventory
management, data management and deployment. The engagement is
expected to lower the operational costs to the client and enhance
customer experience in the region.
- IGATE was selected by a leading North
America-based domestic sugar producer to assist the company in
increasing operational efficiencies across multiple warehouses
around the globe for the distribution and storage of its products.
As a strategic partner, IGATE will facilitate a lean distribution
network with its warehouse management solutions. IGATE will
leverage its consumer packaged goods industry best practices and
global delivery model to implement and rollout its solutions to all
of the client’s warehouses providing processes standardization. The
engagement is expected to bring down operational costs and shore up
process efficiencies by managing the inventory across the client’s
value chain.
Significant Events and Recognitions in the Quarter
- IGATE was ranked 51 in Fortune’s list
of 100 Fastest-Growing Companies in the U.S. – the only IT services
company to be featured on the list.
- Srikanth Iyengar joined IGATE as Senior
Vice President and Head of Europe and Australia and member of the
Executive Council
- IGATE launched IGATE Corporate
University in the Company’s training and development facility in
Pune, India. The University will focus on building custom training
programs and methodologies in association with leading global
educational institutions.
- IGATE announced a new facility in
Noida, India. The facility is spread across 60,000 sq. ft. and can
accommodate about 550 people. The new facility adds to its existing
offices in Noida that are housed in the Special Economic Zone.
- IGATE was ranked 29th on IDC’s
Financial Insights FinTech Top 100 List
- IGATE was featured in the top quadrant
in Zinnov’s Global Service Providers Ratings, 2014 for Product and
Engineering Solutions (P&ES). Recognized as an expansive and
established player, IGATE was ranked high for its specialization,
R&D practice maturity, innovation and IP. IGATE was also ranked
in the leadership zone in three sub verticals under P&ES:
Automotive, Computer Peripherals and Storage and Industrial
Automation.
- IGATE was included in the HFS Blueprint
Report for Digital Transformation Services as a “Rising Star.”
IGATE was amongst the top 11 players selected in the report from
multiple digital solutions providers who participated in this
research. IGATE was quoted to be strong in technology and a company
that can bring a holistic view across Digital Transformation
Services that makes it a true contender–especially in certain
industries such as insurance and healthcare and life sciences.
- IGATE was included in Everest PEAK
Matrix reports for Life Science IT Outsourcing and Independent
Testing Services as a “Major Contender.” The Company was ranked for
the scale, scope, domain investments and delivery footprint.
- IGATE continues to be in ‘Established
and Expansive’ (Leader) quadrant for the 4th consecutive year in
the Zinnov GSPR ratings in the Automotive, Industrial Automation
and Storage Devices segments.
- The Asia Pacific HRM Congress awarded
the HR Leadership Award for 2014 to Dr. Srinivas Kandula, EVP and
Chief People Officer, IGATE, recognizing him for his contributions
to the field of HR.
- IGATE won the coveted award on
“Innovation in Retention Strategy” at the 5th Asia Best Employer
Brand Awards 2014 recognizing the Employee Retention Management
initiative of IGATE.
- IGATE was successfully appraised at
CMMI Level 5 Version 1.3 under both Development and Services Model.
The scope of this appraisal was for the entire organization which
included IT, business process outsourcing (BPO) and infrastructure
managed services (IMS) across all of IGATE’s locations in North
America, Europe and India. With this rating, IGATE joins a very
select group of companies who have demonstrated their commitment to
better quality and customer service by applying the most rigorous
process analysis and improvements.
Conference Call and Webcast
IGATE, the integrated technology and operations company, has
scheduled its Earnings Conference Call on Wednesday, October 15,
2014 to discuss the results of its third quarter ended September
30, 2014. Senior management of the company will discuss the
financial performance for the quarter and answer participants'
questions during the call.
Time: 08:00 – 9:00 am Eastern Time Toll
Free (U.S.): 877-407-8037 Toll (U.S.): 201-689-8037 Toll Free
(India): 000-800-852-1477
The call will be webcast live on IGATE’s website (www.igate.com)
on the Investor Relations page under the ‘Events’ section.
Participants are requested to log in 10 minutes prior to the start
of the webcast. The on-demand version of the webcast will be
available on the IGATE website shortly after the call.
Investors, potential investors, shareholders and bond holders
can access the telephonic replay by dialing 877-660-6853 (toll
free) or 201-612-7415 (toll) and entering conference number
13591633. The telephonic replay will be available until October 29,
2014.
About IGATE
IGATE is a global leader in providing integrated technology and
operations-based solutions, headquartered in Bridgewater, New
Jersey. As a trusted partner to corporations in North America,
Europe and Asia Pacific, IGATE provides solutions to clients’
business challenges by leveraging its technology and process
capabilities, underwritten by an understanding of domain and
industry imperatives. With revenues over US$ 1.2 billion, and a
global employee talent capital of over 34,000, IGATE offers
productized applications and platforms that provide the necessary
competitive and innovation edge to clients across industries,
through a combination of speed, agility and imagination. IGATE is
listed on NASDAQ under the symbol IGTE.
Follow IGATE on Twitter: @IGATE_CorpIGATE on Facebook:
https://www.facebook.com/igatecorp
Use of non-GAAP Financial Measures
This press release contains non-GAAP financial measures as
defined by the Securities and Exchange Commission. These non-GAAP
measures are not in accordance with, or an alternative for,
measures prepared in accordance with, generally accepted accounting
principles in the United States (“GAAP”) and may be different from
non-GAAP measures used by other companies. In addition, these
non-GAAP measures are not based on any comprehensive set of
accounting rules or principles. Reconciliations of these non-GAAP
measures to their comparable GAAP measures are included in the
attached financial tables.
IGATE believes that non-GAAP measures have limitations in that
they do not reflect all of the amounts associated with IGATE's
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate IGATE's results
of operations in conjunction with the corresponding GAAP measures.
These non-GAAP measures should be considered supplemental in nature
and should not be considered in isolation or be construed as being
more important than comparable GAAP measures.
IGATE believes that providing Adjusted EBITDA and non-GAAP net
income and non-GAAP diluted earnings per share in addition to the
related GAAP measures provides investors with greater transparency
to the information used by IGATE's management in its financial and
operational decision-making. These non-GAAP measures are also used
by the Management in connection with IGATE’s performance
compensation programs.
More specifically, the non-GAAP financial measures contained
herein exclude the following items:
- Amortization of intangible assets:
Intangible assets primarily comprise of customer relationships. We
incur charges relating to the amortization of these intangibles.
These charges are included in our GAAP presentation of earnings
from operations, operating margin, net income and diluted earnings
per share. We exclude these charges for purposes of calculating
these non-GAAP measures.
- Stock-based compensation: Although
stock-based compensation is an important component of the
compensation of IGATE’s employees and executives, determining the
fair value of the stock-based instruments involves a high degree of
judgment and estimation and the expense recorded may not reflect
the actual value realized upon the future exercise or termination
of the related stock-based awards. Furthermore, unlike cash
compensation, the value of stock-based compensation is determined
using a complex formula that incorporates factors, such as market
volatility, that are beyond the Company's control. Management
believes it is useful to exclude stock-based compensation in order
to better understand the long-term performance of IGATE's core
business.
- Foreign exchange (gain)/loss: From time
to time, the Company recognizes foreign currency losses on
re-measurement of escrow account balance and foreign exchange gains
on re-measurement of redeemable non-controlling interest liability.
IGATE believes that eliminating these non-capitalized items for
purposes of calculating non-GAAP measures facilitates a more
meaningful evaluation of IGATE’s current performance and
comparisons to its past performance.
- Delisting expenses: We voluntarily
delisted the equity shares of our majority owned subsidiary, IGATE
Computer Systems Limited from the National Stock Exchange of India
Limited and the Bombay Stock Exchange Limited and the American
Depository Shares from the New York Stock Exchange. Delisting is an
infrequent activity and expenses incurred in connection therein are
inconsistent in amount and are significantly impacted by the timing
and nature of the delisting. IGATE believes that eliminating these
expenses for purposes of calculating these non-GAAP measures
facilitates a more meaningful evaluation of its current operating
performance and comparisons to its past operating performance.
- Merger and reorganization expenses:
IGATE is merging and reorganizing its overseas subsidiaries and
branches with a view to simplifying the corporate structure and has
incurred legal and professional expenses in this connection. Merger
and reorganization is an infrequent activity and expenses incurred
in connection therein are inconsistent in amount and significantly
impacted by the timing and nature of the reorganization. IGATE
believes that eliminating these expenses for purposes of
calculating non-GAAP measures facilitates a more meaningful
evaluation of IGATE's current operating performance and comparisons
to its past operating performance.
- Preferred dividend and accretion to
preferred stock: IGATE has issued 8.00% Series B Preferred Stock.
IGATE also incurred issuance costs, which have been netted against
the proceeds received from the issuance of Series B Preferred
Stock. The Series B Preferred Stock is being accreted over a period
of six years. Although the effect of inclusion of equivalent units
of common stock towards convertible participating preferred stock
is anti-dilutive for GAAP purposes, the non-GAAP diluted earnings
per share has been calculated assuming the conversion of all
outstanding shares of preferred stock into equivalent units of
common stock. IGATE believes that eliminating these expenses as
well as inclusion of equivalent units of common stock towards the
preference shares to compute diluted earnings per share for
purposes of calculating these non-GAAP measures facilitates a more
meaningful evaluation of IGATE's current operating performance and
comparisons to its past operating performance.
- Loss on extinguishment of Debt: IGATE
has extinguished Debt prior to its scheduled maturity which has
resulted in non-operating expenses which otherwise would not have
been incurred. Debt extinguishment related charges that are
excluded from GAAP earnings to determine non-GAAP earnings consist
of the extinguishment premium paid as well as the write-off of
unamortized debt issuance costs. These expenses are inconsistent
and of a non-recurring nature and IGATE believes that eliminating
them for purposes of calculating non-GAAP measures facilitates a
more meaningful evaluation of IGATE's current operating performance
and comparisons to its past operating performance.
From time to time in the future, there may be other items that
IGATE may exclude in presenting its financial results.
Forward-Looking Statements
This news release contains forward-looking statements that
involve risks, uncertainties and assumptions. If the risks or
uncertainties ever materialize or the assumptions prove incorrect,
the results of the Company may differ materially from those
expressed or implied by such forward-looking statements and
assumptions. All statements regarding the business outlook, the
expected performance of the Company’s products and services for its
clients, and all other statements in this release other than
statements of historical fact are statements that could be deemed
forward-looking statements. Words such as “expect,” “potential,”
“believes,” “anticipates,” “plans,” “intends” and other similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements in the press release
include, without limitation, statements regarding the business
outlook, and the expected performance of the Company’s products and
services for its clients, and other matters that involve known and
unknown risks, uncertainties and other factors that may cause
results, levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release.
Such risk factors include, among others: uncertain global economic
conditions, concentrated revenues, new organizational and
operational strategies, continued pricing pressures and the
significant indebtedness which will use a significant portion of
its cash flows to service such indebtedness, as a result of which
the Company might not have sufficient funds to operate its
businesses in the manner it intends or has operated in the past.
Additional risks relating to the Company are set forth in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2013, the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2014 as well as the Company’s
other reports filed with the Securities and Exchange Commission. As
in prior periods, the financial information set forth in this
release, including tax-related items, reflects estimates based on
information available at this time. While the Company believes
these estimates to be accurate, actual results may differ
materially from those contained in the forward-looking statements
in this press release. These amounts could also differ materially
from actual reported amounts in the Company’s quarterly Report on
Form 10-Q for the quarter ended September 30, 2014. The Company
assumes no obligation and does not intend to update these
forward-looking statements as circumstances change. This document
does not constitute an offer to purchase or to sell securities in
any jurisdiction.
IGATE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
September 30, December 31,
2014 2013 (unaudited) (audited)
ASSETS Current assets: Cash and cash
equivalents $ 130,204 $ 204,836 Restricted cash - 360,000
Short-term investments 32,754 181,401 Accounts receivable, net of
allowances of $3,115 and $4,103, respectively 165,837 157,905
Unbilled revenues 79,457 61,424 Prepaid expenses and other current
assets 43,624 44,492 Prepaid income taxes 13,248 838 Deferred tax
assets 3,875 10,235 Foreign exchange derivative contracts 4,912 836
Receivable from related parties 5,954 4,046
Total current assets 479,865 1,026,013 Deposits and
other assets 20,293 24,930 Prepaid income taxes 32,138 32,160
Property and equipment, net of accumulated depreciation of $124,890
and $108,084, respectively 220,964 165,581 Leasehold land 75,603
76,732 Deferred tax assets 15,281 15,153 Goodwill 439,175 438,891
Intangible assets, net 111,398 119,262
Total assets $ 1,394,717 $ 1,898,722
LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $ 10,208 $ 9,268 Line
of credit 52,000 52,000 Senior Notes - 360,000 Term loans - 90,000
Accrued payroll and related costs 45,798 57,093 Other accrued
liabilities 66,098 79,785 Accrued income taxes 3,861 5,802 Foreign
exchange derivative contracts 1,159 909 Deferred revenue
18,406 17,776 Total current liabilities
197,530 672,633 Other long-term liabilities 6,185 3,532
Senior notes 325,000 410,000 Term Loans 234,000 270,000 Accrued
income taxes 18,261 13,936 Deferred tax liabilities 35,261
41,717 Total liabilities 816,237
1,411,818 Series B Preferred stock , without
par value 435,989 410,371
Shareholders' equity: Common Stock, par value $0.01 per
share 600 594 Common stock in treasury, at cost (14,714 ) (14,714 )
Additional paid-in capital 225,147 204,143 Retained earnings
315,172 268,750 Accumulated other comprehensive loss
(387,444 ) (387,115 ) Total IGATE Corporation shareholders’
equity 138,761 71,658 Non- controlling interest 3,730
4,875 Total equity 142,491
76,533 Total liabilities, preferred stock and shareholders'
equity $ 1,394,717 $ 1,898,722
IGATE
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands) (unaudited)
Three
Months ended Nine Months ended
September 30, September 30, 2014
2013 2014
2013 Revenues $ 322,774 $ 293,406
$ 936,725 $ 851,592 Cost of revenues (exclusive of depreciation and
amortization) 208,801 172,063
595,314 518,073 Gross margin 113,973 121,343
341,411 333,519 Selling, general and administrative expense 49,934
46,862 140,103 139,004 Depreciation and amortization 9,384
8,439 27,660 26,305
Income from operations 54,655
66,042 173,648 168,210 Loss on extinguishment of debt - - (51,760 )
- Other income (loss), net (170 ) (19,415 )
(22,080 ) (27,023 ) Income before income taxes 54,485 46,627
99,808 141,187 Income tax expense 17,088
14,634 27,486 44,461
Net income before non-controlling
interest
37,397 31,993 72,322 96,726 Non-controlling interest 89
97 282 97 Net
income attributable to IGATE Corporation 37,308 31,896 72,040
96,629 Accretion to Preferred Stock 152 126 436 361 Preferred
dividend 8,653 7,994 25,182
23,246 Net income attributable to IGATE common
shareholders $ 28,503 $ 23,776 $ 46,422 $
73,022
IGATE CORPORATION Earnings Per
Share (Amounts in thousands, except per share data) (unaudited)
Three Months Ended
Nine Months Ended September 30, September
30,
PARTICULARS
2014 2013 2014
2013 Net income attributable to IGATE common shareholders $
28,503 $ 23,776 $ 46,422 $ 73,022 Add: Dividends on Series B
Preferred Stock 8,653 7,994 25,182
23,246 37,156 31,770 71,604 96,268
Less: Dividends on Series
B Preferred Stock [A] 8,653 7,994 25,182
23,246
Undistributed Income $ 28,503 $ 23,776 $
46,422 $ 73,022
Allocation of Undistributed Income
Common stock [B] 20,876 17,716 34,001 54,411 Unvested restricted
stock [C] - 7 - 21 Series B Preferred Stock [D] 7,627
6,053 12,421 18,590 $ 28,503 $ 23,776 $ 46,422 $
73,022
Shares outstanding for allocation of undistributed
income: Common stock 59,029 58,311 59,029 58,311 Unvested
restricted stock - 23 - 23 Series B Preferred Stock 21,565
19,923 21,565 19,923 80,594
78,257 80,594 78,257
Weighted average
shares outstanding: Common stock [E] 58,962 58,148 58,829
57,895 Unvested restricted stock [F] - 23 - 23 Series B Preferred
Stock [G] 21,565 19,923 21,565 19,923
80,527 78,094 80,394 77,841
Weighted average common stock outstanding 58,962 58,148
58,829 57,895
Dilutive effect of stock options and restricted
shares outstanding 1,905 1,688 1,880
1,669
Dilutive weighted average shares outstanding
[H] 60,867 59,836 60,709 59,564
Distributed earnings per share: Series B Preferred Stock
[I=A/G] $ 0.40 $ 0.40 $ 1.17 $ 1.17
Undistributed
earnings per share: Common stock [J=B/E] $ 0.35 $ 0.30 $ 0.58 $
0.94 Unvested restricted stock [K=C/F] - $ 0.30 - $ 0.93 Series B
Preferred Stock [L=D/G] $ 0.35 $ 0.30 $ 0.58 $ 0.93
Earnings per share - Basic Common stock [J] $ 0.35 $ 0.30 $
0.58 $ 0.94 Unvested restricted stock [K] - $ 0.30 $ - $ 0.93
Series B Preferred Stock [I+L] $ 0.75 $ 0.70 $ 1.75 $ 2.10
Earnings per share - Diluted [[B+C]/H] $ 0.34 $ 0.30 $ 0.56
$ 0.91
The number of outstanding participative convertible preferred
stock for which the earnings per share exceeded the earnings per
share of common stock aggregated to 21.6 million and 19.9 million
for the three and nine months ended September 30, 2014 and 2013,
respectively. These shares were excluded from the computation of
diluted earnings per share because they were anti-dilutive.
IGATE CORPORATION Reconciliation of Net Income, Net of Tax,
to Adjusted EBITDA (Amounts in thousands) (unaudited)
Three Months ended
Nine Months ended September 30, September 30,
2014 2013 2014
2013 Net income $ 37,397 $ 31,993 $ 72,322 $ 96,726
Adjustments: Depreciation and amortization 9,384 8,439
27,660 26,305 Interest expense 7,492 20,256 43,317 67,025 Income
tax expense 17,088 14,634 27,486 44,461 Other income, net (4,153 )
(5,213 ) (15,147 ) (39,910 ) Foreign exchange (gain)/loss (3,169 )
4,372 (6,090 ) (92 ) Stock-based Compensation 4,607 3,878 12,423
10,243 Loss on Extinguishment of debt - - 51,760 - Delisting
expenses - - - 93 Merger and reorganization expenses 156
- 286 5,264
Adjusted EBITDA (a non-GAAP measure) $ 68,802 $ 78,359
$ 214,017 $ 210,115
The Company presents the non-GAAP financial measures EBITDA and
adjusted EBITDA because management uses these measures to monitor
and evaluate the performance of the business and believes that the
presentation of these measures will enhance investors' ability to
analyze trends in the business and evaluate the Company's
underlying performance relative to other companies in the
industry.
IGATE CORPORATION Reconciliation of Selected GAAP
Measures to Non-GAAP Measures (Amounts in thousands, except
per share data) (unaudited)
Three Months ended Nine Months
ended September 30, September 30, 2014
2013 2014 2013
GAAP Net income attributable to IGATE common shareholders $ 28,503
$ 23,776 $ 46,422 $ 73,022
Adjustments: Preferred dividend
and accretion to preferred stock 8,805 8,120 25,618 23,607
Amortization of Intangible assets 2,715 2,540 7,996 7,980
Stock-based Compensation 4,607 3,878 12,423 10,243 Delisting
expenses - - - 93 Merger and reorganization expenses 156 - 286
5,264 Foreign exchange loss on acquisition hedging and
remeasurement - - - 489 Forfeiture of vested stock options - - -
(3,005 ) Loss on Extinguishment of debt - - 51,760 - Income tax
adjustments (2,253 ) (2,020 ) (26,070 )
(7,028 ) Non-GAAP Net income attributable to IGATE common
shareholders $ 42,533 $ 36,294 $ 118,435 $
110,665 Weighted average shares outstanding, Basic
58,962 58,171 58,829 57,918 Add: assumed preferred stock conversion
21,565 19,923 21,565
19,923 Non-GAAP weighted average shares outstanding ,
Basic 80,527 78,094 80,394
77,841 Weighted average dilutive common
shares outstanding 60,867 59,836 60,709 59,564 Add: assumed
preferred stock conversion 21,565 19,923
21,565 19,923 Weighted average
dilutive common equivalent shares outstanding 82,432
79,759 82,274 79,487
Basic EPS (GAAP) to Basic EPS (Non-GAAP): Basic
EPS (GAAP) $ 0.35 $ 0.30 $ 0.58 $ 0.94 Preferred dividend and
accretion to preferred stock 0.11 0.11 0.32 0.31 Amortization of
Intangible assets 0.04 0.03 0.10 0.10 Stock-based Compensation 0.06
0.05 0.15 0.13 Delisting expenses - - - 0.00 Merger and
reorganization expenses 0.00 - 0.00 0.07 Foreign exchange loss on
acquisition hedging and remeasurement - - - 0.01 Forfeiture of
vested stock options - - - (0.04 ) Loss on Extinguishment of debt -
- 0.64
- Income tax adjustments (0.03 ) (0.03 ) (0.32
) (0.09 )
Basic EPS (Non-GAAP) $ 0.53 $ 0.46
$ 1.47 $ 1.43
Diluted EPS (GAAP) to
Diluted EPS (Non-GAAP): Diluted EPS (GAAP) $ 0.34 $ 0.30
$ 0.56 $ 0.91 Preferred dividend and accretion to preferred stock
0.11 0.11 0.31 0.30 Amortization of Intangible assets 0.04 0.03
0.10 0.10 Stock-based Compensation 0.06 0.05 0.16 0.13 Delisting
expenses - - - - Merger and reorganization expenses 0.00 - 0.00
0.07 Foreign exchange loss on acquisition hedging and remeasurement
- - - 0.01 Forfeiture of vested stock options - - - (0.04 ) Loss on
Extinguishment of debt - - 0.63 - Income tax adjustments
(0.03 ) (0.03 ) (0.32 ) (0.09 )
Diluted EPS
(Non-GAAP) $ 0.52 $ 0.46 $ 1.44 $ 1.39
Non-GAAP Disclosure of Adjusted EBITDA
We present Adjusted EBITDA as a supplemental measure of our
performance. We define Adjusted EBITDA as net income plus (i)
depreciation and amortization, (ii) interest expense, (iii) income
tax expense, minus (iv) other income, net plus (v) foreign exchange
(gain)/loss, (vi) stock based compensation, (vii) Delisting
expenses, (viii) Merger and reorganization expenses and (ix) loss
on extinguishment of debt. We eliminated the impact of the above as
we do not consider them as indicative of our ongoing operating
performance. You are encouraged to evaluate these adjustments and
the reasons we consider them appropriate for supplemental analysis.
In evaluating Adjusted EBITDA, you should be aware that in the
future we may incur expenses that are the same as or similar to
some of the adjustments in this presentation. Our presentation of
Adjusted EBITDA should not be construed as an inference that our
future results will be unaffected by unusual or non-recurring
items.
We present Adjusted EBITDA because we believe it assists
investors and analysts in comparing our performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our core operating performance. In
addition, we use Adjusted EBITDA: (i) as a factor in evaluating
management’s performance when determining incentive compensation,
(ii) to evaluate the effectiveness of our business strategies and
(iii) because our credit agreement and our indenture uses measures
similar to Adjusted EBITDA to measure our compliance with certain
covenants.
Adjusted EBITDA has limitations as an analytical tool. Some of
these limitations are:
- Adjusted EBITDA does not reflect our
cash expenditures, or future requirements, for capital expenditures
or contractual commitments;
- Adjusted EBITDA does not reflect
changes in, or cash requirements for, our working capital
needs;
- Adjusted EBITDA does not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on our debts; although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in
the future, and adjusted EBITDA does not reflect any cash
requirements for such replacements; non-cash compensation is and
will remain a key element of our overall long-term incentive
compensation package, although we exclude it as an expense when
evaluating our ongoing operating performance for a particular
period; Adjusted EBITDA does not reflect the impact of certain cash
charges resulting from matters we consider not to be indicative of
our ongoing operations; and other companies in our industry may
calculate adjusted EBITDA differently than we do, limiting its
usefulness as a comparative measure.
Because of these limitations, adjusted EBITDA should not be
considered in isolation or as a substitute for performance measures
calculated in accordance with GAAP. We compensate for these
limitations by relying primarily on our GAAP results and using
Adjusted EBITDA only supplementally.
IGATE CorporationInvestor ContactSalil Ravindran, +1 510
298 8400Salil.Ravindran@IGATE.comorMedia ContactPallavi
Choudhury, +919538501740Pallavi.Choudhury@IGATE.com
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