Patni Reports Third Quarter Results With a 6.8% YoY Increase in Revenue
October 18 2011 - 5:12AM
Patni Computer Systems Limited (
Patni or the
Company) today announced its financial results for the
third quarter ended September 30, 2011.
Third Quarter Highlights
- Revenues for the quarter were at US$ 191.0 million
(` 9,453 million)
- Revenues increased 6.8% from US$ 178.8 million (` 7,967
million) in the corresponding quarter 2010.
- Percentage of revenue derived from top the ten customers
decreased to 46.4% from 48.5% in corresponding quarter 2010.
- Two Fortune 1000 clients added in the quarter.
- Non GAAP EBITDA for the quarter was at U.S. $ 35.7
million
- Decreased by 1.4% from US$36.2 million in the corresponding
quarter 2010.
- Net Income for the quarter was at U.S. $17.0 million
(` 842.4 million)
- Decreased by 40.8% from U.S. $ 28.7million (` 1,280.9 million)
in the corresponding quarter 2010.
- Decreased by 34.1% to U.S. $20.6 million after adjusting for
non-GAAP adjustments.
- Earnings Per Share (or EPS) for the quarter were at $
0.13 per share [$ 0.25 per American Depository Share (or ADS)];
after adjustment for non-GAAP items were at $ 0.15 ($ 0.31 per
ADS).
- During the quarter, the Company generated cash flow of
U.S. $10.5 million from operating activities and ended the quarter
with U.S. $367.1 million in cash and short-term
investments.
- During the quarter, the SGnA cost was reduced by U.S.
$4 million through a mix of headcount rationalization, optimization
of facilities and administration cost, and centralizing some of the
support functions.
- Headcount was 17,853 as of September 30,
2011.
Commenting on the results, Phaneesh Murthy, Chief Executive
Officer and Managing Director, Patni said, "Our integration
efforts [with iGATE (iGATE Corporation
(Nasdaq:IGTE)] are progressing smoothly. Measurable
outcomes like attrition rate and pipeline building are trending in
the right direction."
On the market viewpoint, he said, "While we do not see
any cut back in the existing projects, we still retain a cautious
outlook for the 2012 budgets in some verticals."
Key Client Wins
- A leading U.S.-based Fortune 1000 bank has signed up with Patni
for Application Development and Maintenance Services.
- A Singapore-based healthcare provider has selected Patni for
the automation of the financial reporting data from its clinical
systems.
- A leading Fortune 1000 financial services company has chosen
Patni to build a utility for its reconciliation activities and to
provide it with Business Process Outsourcing (or BPO) services.
- A Middle East-based petroleum services company has selected
Patni to implement business process management software at a group
level.
- A large U.S.-based telecommunications company has signed up
with Patni for a large-scale implementation of Siebel's customer
relationship management (or CRM) software.
Table 1
Unaudited Consolidated Statement of Income – U.S. GAAP
(in U.S. $ thousands) for the quarter ended September 30,
2011.
A1) UNAUDITED
CONSOLIDATED STATEMENT OF INCOME - US GAAP (US$ '000) for
the quarter/ period ended |
|
|
Particulars |
Quarter ended Sep 30 2011
Successor Company |
Quarter ended Sep 30 2010
Predecessor Company |
YoY
change % |
Period May 16,2011 to June
30,2011 Successor Company |
Period Apr 1,2011 to May
15,2011 Predecessor Company |
Quarter ended Jun 30 2011
Total (NON GAAP) |
QoQ change % |
Revenue |
190,965 |
178,787 |
6.8% |
94,268 |
89,568 |
183,836 |
3.9% |
Cost of revenues (exclusive of
depreciation and amortization) |
121,858 |
111,250 |
9.5% |
63,612 |
59,509 |
123,121 |
-1.0% |
Gross Profit |
69,107 |
67,537 |
2.3% |
30,656 |
30,059 |
60,715 |
13.8% |
Selling, general and administrative
expenses |
35,559 |
32,783 |
8.5% |
25,432 |
31,701 |
57,133 |
-37.8% |
Depreciation & Amortization |
11,066 |
7,373 |
50.1% |
6,549 |
3,708 |
10,257 |
7.9% |
Foreign exchange Loss (gain), net |
6,808 |
(4,864) |
-240.0% |
(3,265) |
(3,705) |
(6,970) |
-197.7% |
Operating income
(loss) |
15,674 |
32,245 |
-51.4% |
1,940 |
(1,645) |
295 |
5205.7% |
Other income, net |
3,341 |
2,512 |
33.0% |
2,772 |
1,348 |
4,120 |
-18.9% |
Income (loss) before income
taxes |
19,015 |
34,757 |
-45.3% |
4,712 |
(297) |
4,415 |
330.7% |
Income taxes |
1,996 |
6,012 |
-66.8% |
1,982 |
9 |
1,991 |
0.3% |
Net income/(loss) |
17,019 |
28,745 |
-40.8% |
2,730 |
(306) |
2,424 |
602.1% |
|
|
|
|
|
|
|
|
Earnings per share -
GAAP |
|
|
|
|
|
|
|
- Basic |
$0.13 |
$0.22 |
-42.4% |
$0.02 |
($0.00) |
$0.02 |
599.6% |
- Diluted |
$0.13 |
$0.21 |
-41.5% |
$0.02 |
($0.00) |
$0.02 |
602.9% |
|
|
|
|
|
|
|
|
Weighted average number of common
shares used in computing earnings per share |
|
|
|
|
|
|
|
- Basic |
134,020,900 |
130,424,874 |
|
133,915,882 |
133,544,231 |
133,570,818 |
|
- Diluted |
135,457,278 |
133,862,898 |
|
135,773,325 |
135,420,766 |
135,642,004 |
|
|
NON GAAP
Adjustments |
|
|
|
|
|
|
|
Amortization of Intangible
assets |
2,622 |
1,450 |
|
1,740 |
798 |
2,538 |
|
Stock Based
Compensation |
2,184 |
1,485 |
|
1,225 |
404 |
1,629 |
|
Severance expenses |
|
|
|
6,164 |
11,289 |
17,453 |
|
Total NON GAAP
Adjustments |
4,806 |
2,935 |
|
9,129 |
12,491 |
21,620 |
|
|
|
|
|
|
|
|
|
Tax on above |
1,227 |
421 |
|
2,264 |
2,906 |
5,170 |
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income |
20,598 |
31,259 |
-34.1% |
9,595 |
9,279 |
18,874 |
9.1% |
Earnings per share - NON
GAAP |
|
|
|
|
|
|
|
- Basic |
$0.15 |
$0.24 |
-35.9% |
$0.07 |
$0.07 |
$0.14 |
8.8% |
- Diluted |
$0.15 |
$0.23 |
-34.9% |
$0.07 |
$0.07 |
$0.14 |
9.3% |
|
NON GAAP
Adjustments |
|
|
|
|
|
|
|
Stock Based
Compensation |
2,184 |
1,485 |
|
1,225 |
404 |
1,629 |
|
Severance expenses |
-- |
-- |
|
6,164 |
11,289 |
17,453 |
|
Total NON GAAP
Adjustments |
2,184 |
1,485 |
|
7,389 |
11,693 |
19,082 |
|
|
|
|
|
|
|
|
|
Non-GAAP
EBITDA |
35,732 |
36,239 |
-1.4% |
12,613 |
10,051 |
22,664 |
57.7% |
Table 2
Unaudited Consolidated Statement of
Income (` '000) for the quarter
ended September 30, 2011, based on Convenience
Translation.
D1)
UNAUDITED CONSOLIDATED STATEMENT OF INCOME (RS. '000): BASED ON
CONVENIENCE TRANSLATION |
For
the quarter / period ended |
Particulars |
Quarter ended
Sep 30 2011 Successor Company |
Period May
16,2011 to June 30,2011 Successor
Company |
Period Apr
1,2011 to May 15,2011 Predecessor
Company |
Quarter ended
Jun 30 2011 Total (NON GAAP) |
Quarter ended
Sep 30 2010 Predecessor
Company |
Exchange rate$1 =
INR |
49.50 |
44.59 |
44.86 |
44.72 |
44.56 |
Revenues |
9,452,768 |
4,203,407 |
4,018,019 |
8,221,427 |
7,966,747 |
Cost of revenues (exclusive of
depreciation and amortization) |
6,031,970 |
2,836,475 |
2,669,552 |
5,506,026 |
4,957,290 |
Gross
Profit |
3,420,798 |
1,366,932 |
1,348,467 |
2,715,400 |
3,009,457 |
Selling, general and administrative
expenses |
1,760,182 |
1,134,023 |
1,422,078 |
2,556,101 |
1,460,796 |
Depreciation & Amortization |
547,770 |
291,994 |
166,347 |
458,341 |
328,560 |
Foreign exchange gain / (loss), net |
336,985 |
(145,593) |
(166,201) |
(311,794) |
(216,723) |
Operating income
(loss) |
775,860 |
86,508 |
(73,757) |
12,752 |
1,436,824 |
Other income, net |
165,355 |
123,606 |
60,457 |
184,062 |
111,936 |
Income (loss)
before income taxes |
941,215 |
210,114 |
(13,300) |
196,814 |
1,548,760 |
Income taxes |
98,813 |
88,365 |
424 |
88,790 |
267,882 |
Net income
(loss) |
842,403 |
121,749 |
(13,724) |
108,024 |
1,280,878 |
Earnings per
share |
|
|
|
|
|
-
Basic |
6.29 |
0.91 |
(0.10) |
0.81 |
9.82 |
- Diluted |
6.22 |
0.90 |
(0.10) |
0.80 |
9.51 |
Weighted average
number of common shares used in computing earnings per
share |
|
|
|
|
|
-
Basic |
134,020,900 |
133,915,882 |
133,544,231 |
133,570,818 |
130,424,874 |
- Diluted |
135,457,278 |
135,773,325 |
135,420,766 |
135,642,004 |
133,862,898 |
Important Notes to the release
- Fiscal Year: Patni's fiscal year commences on
January 1 and ends on December 31. The current review covers the
financial and operating performance of the Company for the quarter
ended September 30, 2011. On May 12, 2011, approximately 82.4% of
our shares were acquired by iGATE Corporation. For
convenience, we have used a cut-off date of May 15, 2011 as the
transactions from May 13, 2011 and May 14, 2011 were
insignificant. The post May 15, 2011 consolidated financial
statements reflect the new basis of accounting as required by the
authoritative guidance under ASC 805-50-S99-1, and have applied the
SEC rules and guidance regarding "push down" accounting treatment.
Accordingly, our consolidated financial statements prior to the
acquisition by iGATE Corporation reflect the historical accounting
basis in our assets and liabilities and are labeled Predecessor
Company, while such consolidated financial statements subsequent to
the acquisition by iGATE Corporation are labeled Successor Company
and reflect the push down basis of accounting for the fair values
of assets and liabilities acquired by iGATE Corporation. The
results for the three months ended September 30, 2011 may not be
comparable to the results for the three months ended September 30,
2010 as a result of the push down accounting treatment.
- U.S. GAAP: A Consolidated Statement of Income
in U.S. GAAP is available on Page 3 of the Fact Sheet attached to
this release.
- Percentage analysis: Any percentage amounts,
as set forth in this release, unless otherwise indicated, have been
calculated on the basis of the U.S. Dollar amounts derived from our
consolidated financial statements prepared in accordance with U.S.
GAAP, and not on the basis of any translated Rupee amount.
Calculation of percentage amounts on the basis of Rupee amounts may
lead to results that are different, in a material way, from those
calculated as per U.S. Dollar amounts.
- Convenience translation: A Consolidated
Statement of Income as per Convenience Translation prepared in
accordance with U.S. GAAP is available on page 6 of the Fact Sheet
attached to this release. We have translated the financial data
derived from our consolidated financial statements prepared in
accordance with U.S. GAAP for each period at the noon buying rate
in the City of New York on the last business day of such period for
cable transfers in Rupees as certified for customs purposes by the
Federal Reserve Bank of New York. The translations should not be
considered as a representation that such US Dollar amounts have
been, could have been or could be converted into Rupees at any
particular rate, the rate stated elsewhere in this document, or at
all. Investors are cautioned to not rely on such translated
amounts.
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 (or 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.
Patni believes that non-GAAP measures have limitations in that
they do not reflect all of the amounts associated with Patni's
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate Patni'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.
Patni believes that providing Earnings before Interest, Taxes,
Depreciation and Amortization (or EBITDA), Adjusted EBITDA,
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 Patni's management
in its financial and operational decision-making. These non-GAAP
measures are also used in connection with performance compensation
programs.
More specifically, the non-GAAP financial measures contained
herein exclude the following items:
- Amortization of intangible assets. Intangible assets comprise
value of customer relationships. Patni incurs charges relating to
the amortization of these intangibles. These charges are included
in Patni's GAAP presentation of earnings from operations, operating
margin, net income and diluted earnings per share. Patni excludes
these charges for purposes of calculating these non-GAAP
measures.
- Severance Cost. As a result of its acquisition by iGATE
Corporation, the Company incurred severance costs in connection
with the termination of the services of some of its employees.
- Stock-based compensation. Although stock-based compensation is
an important aspect of the compensation of Patni'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
Patni may exclude in presenting its financial results.
About iGATE Patni
'iGATE Patni' is the common brand identity of two organizations
— iGATE Corporation (or iGATE) and Patni Computer Systems Limited
(or Patni). With iGATE having acquired a majority stake in Patni,
the two companies, under the common brand iGATE Patni, jointly
provide full-spectrum consulting, technology and business process
outsourcing, and product engineering services on a Business
Outcomes-based model. Armed with over three decades of IT Services
experience and powered by the iTOPS (Integrated Technology and
Operations) platform, iGATE Patni's multi-location global
organization with a talent pool of 26,000+ people, consistently
delivers effective solutions to over 360 Fortune 1000 clients
spanning across verticals such as banking and financial services;
insurance and healthcare; life sciences; manufacturing, retail,
distribution and logistics; media, entertainment leisure and
travel; communication, energy and utilities; public sector; and
independent software vendors. Visit: www.igatepatni.com
iGATE Corporation is listed on the NASDAQ Stock Market (IGTE),
and Patni Computer Systems Limited is listed on the Bombay Stock
Exchange (532517), the National Stock Exchange of India (PATNI) and
the New York Stock Exchange (PTI).
Safe Harbor
Certain statements in this release concerning the benefits of
the acquisition by iGATE, the business outlook, the demand for
products and services, our future growth prospects and all other
statements in this release other than recitation of historical
facts are forward-looking statements, which involve a number of
risks and uncertainties that could cause actual results to differ
materially from those in such forward-looking statements.
Words such as "expect", "potential", "believes", "anticipates",
"plans", "intends" and similar expressions are intended to identify
such forward-looking statements. The risks and uncertainties
relating to these statements include, but are not limited to, risks
and uncertainties regarding fluctuations in earnings, our ability
to manage growth and the integration of iGATE and Patni, whether
the companies can successfully provide services/products and the
degree to which these gain market acceptance, our relationship with
iGATE, including the risks related to its business, some of which
are discussed under the caption "Risk Factors" in iGATE's Annual
Report on Form 10-K for the fiscal year ended December 31, 2010,
intense competition in IT services including those factors which
may affect our cost advantage, wage increases in India, our ability
to attract and retain highly skilled professionals, time and cost
overruns on fixed-price, fixed-time frame contracts, client
concentration, restrictions on immigration, our ability to manage
our international operations, reduced demand for technology in our
key focus areas, disruptions in telecommunication networks,
liability for damages on our service contracts, the success of the
companies in which Patni has made strategic investments, withdrawal
of governmental fiscal incentives, political instability, legal
restrictions on raising capital or acquiring companies outside
India, unauthorized use of our intellectual property and general
economic conditions affecting our industry. 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. The
Company does not undertake to update any forward-looking statement
that may be made from time to time by or on behalf of the
Company.
CONTACT: Media Contact
Prabhanjan Deshpande "PD"
+91 80 4104 5006
PD@igatepatni.com
Investor Contact
Araceli Roiz
+1 510 896 3007
araceli.roiz@igatepatni.com
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