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iGATE Reports 2008 First-Quarter ResultsContinued Strong Earnings Growth Drives iGATE Forward
PITTSBURGH, April 18 /PRNewswire-FirstCall/ -- iGATE Corporation, NASDAQ: IGTE, an integrated technology and operations (iTOPS) company, today announced its first-quarter 2008 financial results under US GAAP for the three months ended March 31, 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20010110/IGTELOGO )
Highlights for the quarter
-- Diluted earnings from continuing operations of $0.13 per share, an
increase of 57% from the corresponding quarter last year and an
increase of 46% from the previous quarter
-- Revenue from operations of $54.9 million in iGATE Solutions segment,
an increase of 4% sequentially and 15% year-on-year
-- Consolidated revenue from continuing operations of $79.8 million, an
increase of 7% from the same period last year and an increase of 1%
from the last quarter
-- Net employees added during the quarter is 307 taking the total to
6,566 as of March 31, 2008 in iGATE Solutions segment and taking the
company total to 7,317
-- 7 new customers added during the quarter in iGATE Solutions segment
-- iGATE announced its plan to divest its Professional Services business.
Presently, it looks more likely that this divestiture will take the
form of a spin-off rather than a sale. Consequently, the Professional
Services segment is still being reported as continuing operations as
required by US GAAP.
"iGATE solutions business reported another good growth quarter. Many of our existing customers are scaling business with us and increasing their engagement levels with us. On another positive note, we added seven new customers this quarter, including major wins that can help grow our iTOPS revenue. We believe that these wins will have both revenue and improved margin impact for our business going forward," said Phaneesh Murthy, Chief Executive Officer of iGATE Corporation. "Our gross margins increased due to increase in higher margin revenues, improved bill rates and reduction in attrition rates. We have delivered strong margin growth this quarter and will continue to focus on earnings growth through improving revenue quality and operational efficiencies," said Ramachandran Natesan, Chief Financial Officer of iGATE Corporation. Operating results iGATE Solutions Revenues for the quarter increased to $54.9 million compared to $47.9 million in the same period last year and $52.8 million in the previous quarter. Gross profit margin increased to 37% from 32% in the corresponding quarter last year and from 35% in the previous quarter. The improvement in margin is due to increase in the contribution from higher margin customers, improved average realizations and a reduction in attrition rates. Operating income has increased to $6.7 million from $4.3 million in the same period last year and $6.5 million in the previous quarter. Operating margin has gone up to 12% of revenue from 9% in the corresponding quarter. iGATE Professional Services Revenues for the quarter declined to $24.9 million compared to $27.0 million in the same period last year and $26.0 million in the previous quarter. Gross profit margin was at 20% compared to 23% in the corresponding quarter last year and 20% in the previous quarter. Operating income declined to $1.3 million from $2.2 million in the same period last year and $1.4 million in the previous quarter. Operating margin is at 5% of revenue. Overall Net income increased 71% year-on-year to $7.4 million, or $0.13 per diluted share, compared with net income of $4.3 million or $0.08 per diluted share in the same period last year and $4.9 million or $0.09 per diluted share in the previous quarter. During the quarter, the company generated operating cash flow of $7.3 million and ended the quarter with $56.5 million in cash and short-term investments. Key customer wins and significant projects executed iGATE entered into a multi-year multi-million dollar iTOPS deal with a government agency in Australia to provide bonds processing and administrative service. Besides cost savings the engagement helps the client enhance customer service by improving the time and quality of delivery. A major provider of risk assessment services for the Insurance industry selected iGATE to provide image processing, quality review, quality assurance and data capture services through an integrated technology platform which combines image capture and processing, document management and work flow. iGATE won a multi-year deal from a large Fortune 500 North American building materials manufacturer. As per the contract, iGATE will provide independent offshore ERP testing services for their Oracle Apps, legacy systems and associated third party installation. A leading processor of debit and credit card payments in North America has engaged iGATE to provide data migration, enrichment and analytics for their merchant records. The intention of the engagement is to provide cost effectiveness and scale of operations as per the varying needs of the customer. iGATE was selected as a strategic partner by an European health insurance firm to provide infrastructure services for their multiple data centers. The services include monitoring, administration and change projects in all areas of infrastructure domain. A leading North American financial conglomerate used the expertise of iGATE to develop an enterprise wide regulatory and compliance system that aggregates the proprietary and discretionary positions held to meet the reporting requirements of various regulatory bodies. iGATE is assisting the firm in creating centralized reporting of multi-location and multi- jurisdiction positions to reduce the risk of non-compliance.
Significant events during the quarter
-- iGATE was included in 2008 Global Services 100 list, a survey of the
100 best global services providers.
-- iGATE set up a service delivery center in the city of Ballarat, State
of Victoria, Australia,
-- iGATE announced its plan to sell its Clinical Research business. The
results of the Clinical Research business have been reported as
discontinued operations in the quarter. The figures for previous
periods have been reclassified accordingly.
-- During the quarter, iGATE repurchased 1.6 million shares for $15.8
million of its subsidiary, iGATE Global Solutions ("iGS") as part of
delisting it from Indian stock exchanges. Since the announcement of its
intention to delist iGS in October 07, iGATE has purchased a total of
5.6 million shares for $58.0 million, increasing iGATE's total
shareholding in the company to 98.2%.
Conference Call and Webcast iGATE will host a telephonic conference call to discuss the company's first-quarter financial results at 8:00 a.m. Eastern Time (USA) on Friday, April 18, 2008. A live webcast of this conference call will be available on the website mentioned in the invite. The webcast will remain available for replay through April 21, 2008. About iGATE Corporation Pittsburgh, Pennsylvania-based iGATE Corporation NASDAQ: IGTE is the first fully integrated technology and operations firm with a global service model. iGATE Corporation, through its subsidiary, iGATE Global Solutions Ltd., enables clients to optimize their business through a combination of process investment strategies, technology leverage and business process outsourcing and provisioning. Services include consulting, enterprise data management and data warehousing, business intelligence and analytics, design, development, systems integration, package evaluation, and implementation, re-engineering and maintenance. iGATE Corporation also offers IT Professional Services in the areas of packaged application implementation, custom development, web services and business intelligence. The company services more than 300 clients across the globe. Clients rely on iGATE because of the high quality of service, responsiveness, and cost- effective global reach. More information about iGATE is available at http://www.igate.com/investors.html. Forward-Looking Statements Some of the statements contained in this news release that are not historical facts are forward-looking statements. These forward-looking statements include the company's financial, growth and liquidity projections as well as statements concerning the company's plans, strategies, intentions and beliefs concerning business cash flows, costs and the markets in which it operates and the proposed divestiture of its Professional Services business. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects" and similar expressions are intended to identify certain forward- looking statements. These statements are based on information currently available to the company and it assumes no obligation to update the forward statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from the forward-looking statements. These risks include, but are not limited to, the company's ability to predict its financial performance, the level of market demand for its services, the highly-competitive market for the types of services offered by the company, the impact of competitive factors on profit margins, market conditions that could cause the company's customers to reduce their spending for its services, the company's ability to create, acquire and build new businesses and to grow existing businesses, attract and retain qualified personnel, reduce costs and conserve cash, currency fluctuations and market conditions in India and elsewhere around the world, political and military tensions in India and South Asia, changes in generally accepted accounting principles and/or their interpretation and other risks that are described in more detail in the company's filings with the Securities and Exchange Commission including its Form 10-K for the year ended December 31, 2007.
iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
(unaudited)
March 31, December 31,
2008 2007 *
ASSETS
Current assets:
Cash and cash equivalents $21,726 $49,684
Short term investments 34,753 25,295
Accounts receivable, net 57,804 51,616
Prepaid and other current assets 7,537 10,248
Prepaid income taxes 30 894
Deferred income taxes 813 696
Current assets of discontinued
operations 1,276 1,067
Total current assets 123,939 139,500
Investments in unconsolidated
affiliates 51 1,005
Land, building, equipment and
leasehold improvements, net 35,117 34,663
Deposits 2,467 2,148
Goodwill 42,571 35,989
Intangible assets, net 3,752 1,003
Noncurrent assets of discontinued
operations 1,708 1,627
Total assets $209,605 $215,935
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,668 $6,090
Accrued payroll and related costs 16,653 18,502
Accrued income taxes 35 631
Other accrued liabilities 15,028 18,555
Restructuring reserve 763 1,058
Deferred revenue 1,618 536
Current liabilities of
discontinued operations 703 510
Total current liabilities 39,468 45,882
Other long term liabilities 533 536
Deferred income taxes 6,824 7,114
Total liabilities 46,825 53,532
Minority interest 1,961 6,437
Shareholders' equity:
Common Stock, par value $0.01 per share 547 546
Additional paid-in capital 167,118 165,757
Retained earnings (deficit) 1,382 (6,026)
Common stock in treasury, at cost (14,714) (14,714)
Accumulated other
comprehensive income 6,486 10,403
Total shareholders' equity 160,819 155,966
Total liabilities and
shareholders' equity $209,605 $215,935
* Certain amounts in previously issued financial statements were
reclassified to conform to presentations for quarter ended March 31,
2008
iGATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars and shares in thousands, except per share data)
(unaudited)
Three months ended
Mar 31, 2008 Mar 31, 2007 Dec 31, 2007
Revenues $79,797 $74,917 $78,861
Cost of revenues 54,497 53,474 55,313
Gross margin 25,300 21,443 23,548
Selling, general
and administrative 18,751 16,880 17,903
Restructuring charge - - 769
Income from operations 6,549 4,563 4,876
Other income, net 1,325 1,510 1,193
Minority interest (293) (895) (1,026)
Gain on sale of stock of
subsidiaries - - 136
Equity in (loss) income of
affiliated companies (9) 49 (192)
Income before income taxes 7,572 5,227 4,987
Income tax expense (benefit) 174 618 (44)
Income from continuing operations 7,398 4,609 5,031
Income (loss) from discontinued
operations, net of income taxes 10 (282) (176)
Net income $7,408 $4,327 $4,855
Net earnings (loss) per common share, Basic:
Earnings from continuing operations $0.14 $0.09 $0.09
Earnings (loss) from discontinued
operations - (0.01) -
Net earnings - Basic $0.14 $0.08 $0.09
Net earnings (loss) per common share, Diluted:
Earnings from continuing
operations $0.13 $0.09 $0.09
Earnings (loss) from discontinued
operations - (0.01) -
Net earnings - Diluted $0.13 $0.08 $0.09
Weighted average common shares
outstanding, Basic 53,676 53,072 53,627
Weighted average dilutive common
equivalent shares outstanding 54,927 53,633 54,443
iGATE CORPORATION
OPERATING SEGMENT RESULTS
(dollars in thousands)
(unaudited)
iGate iGate
iGate Professional Shared
Three Months Ended March 31, 2008 Solutions Services Services Total
External revenues $54,875 $24,922 $- $79,797
Cost of revenues 34,511 19,986 - 54,497
Gross margin 20,364 4,936 - 25,300
Selling, general and
administrative expenses 13,669 3,614 1,468 18,751
Income (loss) from operations $6,695 $1,322 (1,468) 6,549
Other income, net 1,325 1,325
Minority interest (293) (293)
Equity in loss of affiliated companies (9) (9)
(Loss) income before income taxes $(445) $7,572
iGate iGate
iGate Professional Shared
Three Months Ended March 31, 2007 Solutions Services Services Total
External revenues $47,869 $27,048 $- $74,917
Cost of revenues 32,534 20,940 - 53,474
Gross margin 15,335 6,108 - 21,443
Selling, general and
administrative expenses 11,017 3,936 1,927 16,880
Income (loss) from operations $4,318 $2,172 (1,927) 4,563
Other income, net 1,510 1,510
Minority interest (895) (895)
Equity in income of affiliated companies 49 49
(Loss) income before income taxes $(1,263) $5,227
iGate iGate
iGate Professional Shared
Three months ended December Solutions Services Services Total
31, 2007
External revenues $52,817 $26,044 $- $78,861
Cost of revenues 34,366 20,947 - 55,313
Gross margin 18,451 5,097 - 23,548
Selling, general and
administrative expenses 11,930 3,709 2,264 17,903
Restructuring charge - - 769 769
Income (loss) from operations $6,521 $1,388 (3,033) 4,876
Other income, net 1,193 1,193
Minority interest (1,026) (1,026)
Gain on sale of stock of subsidiaries 136 136
Equity in loss of affiliated companies (192) (192)
(Loss) income before income taxes $(2,922) $4,987
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Website: http://www.igate.com/Website: http://www.igate.com/investors.html/ |
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