iGATE (Nasdaq:IGTE), the first Business Outcomes driven integrated
Technology and Operations (iTOPS) solutions provider, today
announced its financial results for the first quarter ended March
31, 2011.
First Quarter Highlights:
- Net Income for first quarter 2011 increased
54% to $ 17.9 million from $ 11.6 million in the
first quarter 2010.
- Revenues for first quarter 2011 increased 31%
to $ 75.8 million from $ 57.9 million in the first quarter
2010.
- Gross margin was 40.9% for the first quarter 2011 compared to
40.1% in the corresponding quarter last year. Net margin was 23.7%
as against 20.1% in the corresponding quarter last year.
- Diluted earnings per share of $ 0.22 GAAP (increase of 10% from
the corresponding quarter last year); $0.23 non-GAAP.
- Adjusted EBITDA was $ 20.6 million for the first quarter 2011
compared with $14.4 million in the same period last year.
- iGATE added four new customers during the quarter.
- The company ended the first quarter 2011 with an employee base
of 8,244.
Commenting on the Q1 performance, Phaneesh Murthy, CEO, iGATE
said, "Delays in clients' budgets created softness in the
market which was further exacerbated by our focus on the Patni
acquisition creating a sequentially weak quarter for
iGATE."
Sujit Sircar, CFO, iGATE said, "The process of acquiring
Patni Computer Systems is on track and we expect the transaction to
be completed shortly. We have raised $770 million through a bond
issue to fund the acquisition. From calendar Q2, we will be
reporting consolidated financials for iGATE."
On the integration process between iGATE and Patni, Srinivas
Kandula, Global Head – HR, iGATE and Sunil Chitale, Chief Marketing
and Strategy Officer, Patni said, "A sales training program
has already been conducted for the combined sales force on the
joint go-to market strategy. In addition, various back office
integration processes are well underway to ensure a smooth Day 1
for the 25,000 employees."
Key Highlights of the quarter
- Announced acquisition of Patni Computer Systems - acquisition
process on track
- A Mentor-Protégé agreement awarded to iGATE, together with
Aitheras LLC by the US Federal Government.
- Hosted Scrabble tournaments at International, Intercorporate
and Intercollegiate levels in Bangalore attracting participants
from 12 countries, 45 corporations and colleges from Southern
India.
First Quarter Operating Results:
Results for the first quarter on a GAAP and non-GAAP basis are
provided in the table below.
|
|
|
|
|
Q1 FY'11 |
Q1 FY'10 |
Y/Y |
Net revenue ($Millions) |
75.8 |
57.9 |
31% |
Operating margin($Millions) |
6.9 |
11.0 |
-37% |
GAAP net income ($Millions) |
17.9 |
11.6 |
54% |
GAAP diluted EPS ($) |
0.22 |
0.20 |
10% |
Non-GAAP net income ($Millions) |
15.7 |
12.8 |
23% |
Non-GAAP diluted EPS ($) |
0.23 |
0.23 |
-- |
New customers and project wins in the
quarter:
- iGATE was selected by a leading Fortune brand in electronics to
provide product engineering services. iGATE team will develop the
next generation wireless and mobile stores and roll out in multiple
countries.
- A leading music and recording company has selected iGATE for
their Master Data Management Initiative, as they plan to implement
their Business Intelligence Strategy.
- iGATE won a multiyear ERP transformation deal from a world
leader in construction material manufacturing. The ERP
transformation will help the client significantly improve its
response time to business needs at a competitive cost, while
delivering maximum value to customers and shareholders.
- iGATE secured a five year Federal GSA Schedule IT Contract,
providing it the capability to bid for contracts with the
Government of United States.
- iGATE was engaged by a leading US Loan Servicing company to
significantly reduce the effort required for pre-processing. The
project will be executed on an iTOPS framework to create a
state-of-the-art customized work-flow system for the client.
- A leader in the design, marketing and distribution of premium
lifestyle products selected iGATE to digitize its Media Assets.
iGATE team will evaluate the current systems and DAM products and
strategize the implementation of a fully integrated enterprise
digital media platform.
- A leading North American Media and Entertainment company
selected iGATE as its IT partner for a multi-year media asset
management implementation. iGATE will implement an enterprise asset
management platform which will provide ordering, fulfilment,
archiving and master data management solutions.
Conference Call and Webcast:
iGATE will host a telephone conference call on Thursday, May 5,
2011 at 8:00 am Eastern time to discuss the results of its first
quarter ended March 31, 2011. The live discussion can be accessed
by dialing 877-407-8037 (domestic) or 201-689-8037 (international).
A live webcast of this conference call will be available on our web
site at http://ir.igate.com/investors/. The teleconference replay
will be available until May 15, 2011 and can be accessed by dialing
877-660-6853 (domestic) and 201-612-7415 (international), passcode
371055 and account number 293. A replay will also be available
shortly after the live call via webcast on the iGATE Investor
Relations website at http://ir.igate.com/investors/.
About iGATE:
iGATE (Nasdaq:IGTE) is the first Business Outcomes driven
integrated Technology and Operations (iTOPS) solutions provider
with a global delivery model. iGATE's unique business model aligns
with the client's strategic objectives to achieve operational
efficiencies, increase cost variability and rationalize their
current operating environment. With industry expertise spanning
decades, iGATE has developed the right solutions with its Business
Outcomes driven approach for industry verticals – Banking,
Insurance, Manufacturing, Retail, Health Care, Media &
Entertainment and Telecom & Hi-Tech.
The iGATE Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5150
Use of non-GAAP Financial Measures:
This press release contains non-GAAP financial measures as
defined by 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 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 EBITDA, 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.
More specifically, the non-GAAP financial measures contained
herein exclude the following items:
- Acquisition expenses: iGATE incurs costs related to its
acquisitions, which are inconsistent in amount and frequency and
are significantly impacted by the timing and nature of iGATE's
acquisitions. iGATE believes that eliminating these expenses for
purposes of calculating these non-GAAP measures facilitates a more
meaningful evaluation of iGATE's current operating performance and
comparisons to the past operating performance.
- Forex gain: The Company entered into forward foreign exchange
contracts to mitigate the risk of changes in foreign exchange rates
on payments related to the Patni Acquisition. We also recognized
favorable foreign currency gain on remeasurement of escrow account
balance maintained for facilitating payments related to Patni
Acquisition. iGATE believes that eliminating the non-capitalized
items for purposes of calculating these non-GAAP measures
facilitates a more meaningful evaluation of iGATE's current
performance and comparisons to the past performance.
- Amortization of intangible assets: Intangible assets consist
primarily of customer contracts purchased in connection with the
delisting of iGATE's Indian subsidiary. iGATE incurs charges
relating to the amortization of these intangibles. These charges
are included in iGATE's GAAP presentation of earnings from
operations, operating margin, net income and diluted earnings per
share. Hence, iGATE excludes these charges for purposes of
calculating these non-GAAP measures.
- Stock-based compensation: Although stock-based compensation is
an important aspect 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
our control. Management believes it is useful to exclude
stock-based compensation in order to better understand the
long-term performance of our core business.
From time to time in the future, there may be other items that
iGATE may exclude in presenting its financial results.
Forward-Looking Statements:
Statements contained in this press release regarding the
benefits of the acquisition, the business outlook, the demand for
the products and services, and all other statements in this release
other than recitation of historical facts are forward-looking
statements. Words such as "expect", "potential", "believes",
"anticipates", "plans", "intends" and similar expressions are
intended to identify such forward-looking statements.
Forward-looking statements in the press release include, without
limitation, forecasts of market growth, future revenues, benefits
of the proposed acquisition, expectations that the acquisition will
be accretive to the results, future expectations concerning growth
of business, cost competitiveness and expansion of global reach
following the acquisition, 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: difficulties encountered
in integrating business; uncertainties as to the timing of the
acquisition, including the consummation of the public offer under
the Indian Takeover Regulations and the tender offer under US
securities laws; the satisfaction of the closing conditions to
the transaction, including the receipt of regulatory approvals;
whether certain market segments grow as anticipated; the
competitive environment in the information technology services
industry and competitive responses to the proposed acquisition; and
whether the companies can successfully provide services/products
and the degree to which these gain market
acceptance. Furthermore, in connection with the proposed
acquisition, the Company has borrowed significant amounts,
including by issuing high yield notes, and will have to 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, 2010, as well as the Company's other reports filed
with the Securities and Exchange Commission. Actual results
may differ materially from those contained in the forward-looking
statements in this press release. Any forward-looking
statements are based on information currently available to the
Company and it assumes no obligation to update these statements as
circumstances change. This document does not constitute an
offer to purchase or to sell securities in any jurisdiction.
Additional U.S.-Related Information
The information contained herein is neither an offer to purchase
nor a solicitation of an offer to sell shares of Patni Computer
Systems Limited or iGATE Corporation or any of their respective
subsidiaries or affiliates. Subject to future developments, iGATE
Corporation has filed tender offer documents with the SEC in
connection with the proposed acquisition. Shareholders of
Patni Computer Systems Limited should read those filings, and any
other filings made by iGATE Corporation with the SEC in connection
with the proposed acquisition, as they will contain important
information. Those documents, as well as iGATE
Corporation's other public filings with the SEC, may be obtained
without charge at the SEC's website at www.sec.gov and at iGATE
Corporation's website at www.igate.com.
|
iGATE
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Amounts in thousands, except
per share data) |
|
|
|
|
March 31, |
December 31, |
|
2011 |
2010 |
|
(unaudited) |
(audited) |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 343,663 |
$ 67,924 |
Short-term investments |
36,592 |
71,915 |
Accounts receivable, net |
40,854 |
37,946 |
Unbilled revenues |
20,712 |
13,893 |
Prepaid expenses and other current
assets |
5,022 |
5,380 |
Foreign exchange derivative contract |
14,855 |
794 |
Deferred tax assets |
2,887 |
5,422 |
Receivable from Mastech Holdings,
Inc. |
143 |
140 |
Total current assets |
464,728 |
203,414 |
|
|
|
Deposits and other assets |
5,475 |
5,443 |
Property and equipment, net |
54,819 |
52,950 |
Deferred tax assets |
14,347 |
10,117 |
Goodwill |
31,819 |
31,741 |
Intangible assets, net |
1,182 |
1,378 |
|
|
|
Total assets |
$ 572,370 |
$ 305,043 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 3,806 |
$ 3,291 |
Accrued payroll and related costs |
18,613 |
19,709 |
Accrued income taxes |
3,636 |
715 |
Line of credit |
30,000 |
-- |
Other current liabilities |
36,232 |
31,354 |
Deferred revenue |
1,005 |
667 |
Total current liabilities |
93,292 |
55,736 |
|
|
|
Other long-term liabilities |
1,239 |
1,251 |
Total liabilities |
94,531 |
56,987 |
|
|
|
Series B Preferred stock, without par
value |
212,044 |
-- |
|
|
|
Shareholders' equity: |
|
|
|
|
|
Common Stock, par value $0.01 per
share |
574 |
572 |
Additional paid-in capital |
190,060 |
188,389 |
Retained earnings |
90,675 |
75,474 |
Common stock in treasury, at
cost |
(14,714) |
(14,714) |
Accumulated other comprehensive
loss |
(800) |
(1,665) |
Total shareholders' equity |
265,795 |
248,056 |
Total liabilities and shareholders'
equity |
$ 572,370 |
$ 305,043 |
|
|
iGATE
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME |
(Amounts in
thousands) |
(unaudited) |
|
|
|
Three Months
ended, |
|
March
31, |
|
2011 |
2010 |
|
|
|
Revenues |
$ 75,798 |
$ 57,890 |
|
|
|
Cost of revenues (exclusive of Depreciation
and amortization) |
44,795 |
34,678 |
|
|
|
Gross margin |
31,003 |
23,212 |
|
|
|
Selling, general and administrative |
21,747 |
10,005 |
|
|
|
Depreciation and amortization |
2,307 |
2,222 |
|
|
|
Income from operations |
6,949 |
10,985 |
|
|
|
Other income, net |
19,853 |
832 |
|
|
|
Income before income taxes |
26,802 |
11,817 |
|
|
|
Income tax expense |
8,863 |
203 |
|
|
|
Net income |
17,939 |
11,614 |
|
|
|
Accretion to Preferred Stock |
15 |
-- |
Preferred dividend |
2,723 |
-- |
|
|
|
Net income attributable to iGATE common
shareholders |
$ 15,201 |
$ 11,614 |
|
|
|
|
iGATE
CORPORATION |
|
Earnings Per
Share |
|
(Amounts in thousands,
except per share data) |
|
(unaudited) |
|
|
|
|
|
|
|
|
Three Months
Ended March 31, |
|
PARTICULARS |
|
2011 |
|
2010 |
|
|
|
|
|
|
|
Net income attributable to iGATE common
shareholders |
|
$ 15,201 |
|
$ 11,614 |
|
Add: Dividends on Series B Preferred
Stock |
|
2,723 |
|
-- |
|
|
|
17,924 |
|
$ 11,614 |
|
Less: Dividends paid on |
|
|
|
|
|
Common Stock |
$ -- |
|
$ 6,076 |
|
|
Unvested restricted stock |
-- |
|
60 |
|
|
Series B Preferred Stock |
2,723 |
2,723 |
-- |
6,136 |
|
Undistributed
Income |
|
$ 15,201 |
|
$ 5,478 |
|
|
|
|
|
|
|
Basic and Diluted allocation of
Undistributed Income |
|
|
|
|
|
Common stock |
|
$ 12,771 |
|
$ 5,426 |
|
Unvested restricted stock |
|
59 |
|
52 |
|
Series B Preferred Stock |
|
2,371 |
|
-- |
|
|
|
$ 15,201 |
|
$ 5,478 |
|
|
|
|
|
|
|
Shares outstanding: |
|
|
|
|
|
Common stock |
|
56,443 |
|
55,279 |
|
Unvested restricted stock |
|
262 |
|
527 |
|
Series B Preferred Stock |
|
10,479 |
|
-- |
|
|
|
67,184 |
|
55,806 |
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
Common stock |
|
56,311 |
|
55,234 |
|
Unvested restricted stock |
|
262 |
|
527 |
|
|
|
56,573 |
|
55,761 |
|
|
|
|
|
|
|
Weighted average common stock
outstanding |
|
56,311 |
|
55,234 |
|
Dilutive effect of stock options and
restricted shares outstanding |
|
1,481 |
|
1,488 |
|
Dilutive weighted average shares
outstanding |
|
57,792 |
|
56,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributed earnings per
share: |
|
|
|
|
|
Common stock |
|
$ -- |
|
$ 0.11 |
|
Unvested restricted stock |
|
-- |
|
0.11 |
|
|
|
|
|
|
|
Basic earnings per share from
operations |
|
|
|
|
|
Common Stock |
|
$ 0.23 |
|
$ 0.21 |
|
Unvested restricted stock |
|
0.23 |
|
0.21 |
|
|
|
|
|
|
|
Diluted earnings per share from
operations |
|
$ 0.22 |
|
$ 0.20 |
|
|
|
|
|
|
|
* The number of
outstanding participative convertible preferred stock for which the
earnings per share exceeded the earnings per share of common stock
aggregated to 10.5 million shares for the three months ended March
31, 2011. These shares were excluded from the computation of
diluted earnings per share as they were anti-dilutive. |
|
|
|
|
|
iGATE
CORPORATION |
|
Reconciliation of
Selected GAAP measures to Non-GAAP measures |
|
(Amounts in thousands, except
per share data) |
|
(unaudited) |
|
|
|
|
Three Months
ended, |
|
|
March
31, |
|
|
2011 |
2010 |
|
|
|
|
|
GAAP Net income |
$ 17,939 |
$ 11,614 |
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
Amortization of Intangible assets |
197 |
193 |
|
Stock Based Compensation, net of income
taxes |
861 |
974 |
|
Acquisition expenses, net of income
taxes |
9,039 |
-- |
|
Forex gain on acquisition hedging and
remeasurement, net of tax |
(12,306) |
-- |
|
|
|
|
|
Non-GAAP Net income |
$ 15,730 |
$ 12,781 |
|
|
|
|
|
Basic earnings per share from
operations |
|
|
|
GAAP |
$ 0.23 |
$ 0.21 |
|
Non-GAAP |
$ 0.23 |
$ 0.23 |
|
|
|
|
|
Diluted earnings per share from
operations |
|
|
|
GAAP |
$ 0.22 |
$ 0.20 |
|
Non-GAAP |
$ 0.23 |
$ 0.23 |
|
|
|
|
|
Weighted average shares outstanding,
Basic |
67,052* |
55,761 |
|
Weighted average dilutive common
equivalent shares outstanding |
68,271* |
56,722 |
|
|
|
|
|
*Includes assumed conversion of
10.5 million shares of Series B Preferred Stock as of January 1,
2011. |
|
|
iGATE
CORPORATION |
Reconciliation of Net
income, net of tax, to Adjusted EBITDA |
(Amounts in thousands) |
(unaudited) |
|
|
Three Months
ended, |
|
March
31, |
|
2011 |
2010 |
|
|
|
Net income |
$ 17,939 |
$ 11,614 |
|
|
|
Adjustments |
|
|
|
|
|
Depreciation and amortization |
2,307 |
2,222 |
Interest expenses |
89 |
19 |
Income tax expense |
8,863 |
203 |
|
|
|
EBITDA |
29,198 |
14,058 |
|
|
|
Other income, net |
(1,097) |
(2,172) |
Foreign exchange (gain)/loss |
(18,845) |
1,321 |
Stock Based Compensation |
1,508 |
1,199 |
Acquisition expenses |
9,792 |
-- |
|
|
|
Adjusted EBITDA (a non-GAAP measure) |
$ 20,556 |
$ 14,406 |
|
|
|
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 believe the presentation of these measures will
enhance the investors' ability to analyze trends in the business
and evaluate the Company underlying performance relative to other
companies in the industry. |
CONTACT: Media Contact:
Prabhanjan Deshpande "PD"
+91 80 4104 5006
pr@igate.com
Investor Contact:
Araceli Roiz
+1 510 896 3007
araceli.roiz@igate.com
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