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iGATE Q2 Consolidated Revenues Increase 155% to $ 170.4 Million; Adjusted EBITDA Up 85.4%(GlobeNewswire Via Acquire Media NewsEdge) FREMONT, Calif., Aug. 5, 2011 (GLOBE NEWSWIRE) -- iGATE Corporation (Nasdaq:IGTE), the first integrated Technology and Operations (iTOPS) company providing Business Outcomes based solutions under the brand iGATE Patni, today announced its financial results for the second quarter and six months ended June 30, 2011. Second Quarter Highlights Revenues for second quarter 2011 were $ 170.4 million $ 66.8 million in the second quarter 2010. Organic revenues grew 14.7 %, with acquisition adding 140.4 % to the total revenues. Net Income for second quarter 2011 was $ 4.0 million $ 11.2 million in the second quarter 2010. Interest expense impacted net income by $13 million. Gross margin was 34.7 % for the second quarter 2011. 38.1 % in the second quarter 2010. Diluted earnings per share of $ (0.02) GAAP; $0.16 non-GAAP. Adjusted EBITDA was $ 28.6 million for the second quarter 2011. $15.4 million in the second quarter 2010. 21 new customers were added during the quarter including nine Fortune 1000 and equivalent clients. 26,395 employees at the end of the quarter.Highlights of six months ending June 30, 2011 Revenues for the six months ending June 30, 2011 were $246.2 million; $ 124.7 million in the corresponding period in 2010. Organic revenues grew 22.2 %, with acquisition adding 75.2 % to the total revenues. Net Income for the six months ending June 30, 2011 was $ 21.9 million; $ 22.8 million in the corresponding period in 2010. Interest expense impacted net income by $13.1 million. Gross margin was 36.6 % for the six months ending June 30, 2011. 39.0 % in the corresponding period in 2010. Diluted earnings per share of $0.18 GAAP; $0.37 non-GAAP. Adjusted EBITDA was $ 49.2 million for the six months ending June 30, 2011. $29.9 million in the corresponding period in 2010. Commenting on the Q2 performance, Phaneesh Murthy, CEO, iGATE Patni said, "We have successfully completed the first phase of integration, integrating the go-to market functions of both the organizations and are well underway into the delivery and shared services integration. We believe that the integration program is progressing more smoothly than planned." "We are seeing customers respond positively to our joint value proposition and are starting to sense some larger opportunities," he added. Sujit Sircar, Chief Financial Officer, iGATE said, "The blending of iGATE and Patni results and increase in salaries have created a dip in the margins which we expect to improve over the next few quarters and to get to iGATE's benchmark margins over the next two years. "iGATE continues to generate good operating cash-flow with a cash balance of over $430 million as on June 30, 2011." Operating Results for the second quarter and six months ending June 30, 2011 Results for the second quarter and six months ending June 30, 2011 on a GAAP and non-GAAP basis are provided in the table below. Six months Six months Q2 Q2 endedended FY'11FY'10Y/YFY'11FY'10Y/Y Net revenue ($Millions) 170.4 66.8 155.1% 246.2 124.7 97.4%Operating margin ($Millions) 9.7 11.5 -15.7% 16.7 22.5 -25.8%GAAP net income ($Millions) 4 11.2 -64.3% 21.9 22.8 -3.9%GAAP diluted EPS ($) -0.02 0.20 -110.0% 0.18 0.40 -55.0%Non-GAAP net income ($Millions) 11.9 13.2 -9.8% 27.7 26.2 5.7%Non-GAAP diluted EPS ($) 0.16 0.23 -30.4% 0.37 0.46 -19.6% New customers and projects won in the quarter A German Manufacturing company has engaged with iGATE Patni to provide product engineering services leveraging its offshore delivery model. A US healthcare leader has retained us for a large scale consulting engagement. A leading Forest Products Company has retained iGATE Patni to provide infrastructure management services on an outcomes based model. A leading US Financial Services firm has chosen iGATE Patni for Eagle platform upgrade and implementation of new modules. iGATE Patni has been chosen by a US Manufacturing major for its ERP implementation. iGATE Patni has been selected by a leading US Manufacturing company to provide support for sales force automation. A leading Communications firm in the Middle East has engaged with iGATE Patni to provide offshore support for its ERP applications.Awards and Recognitions in the quarter iGATE Patni ranked No. 1 Healthcare R&D Service Provider in Global R&D Service Providers Rating, by Zinnov Management Consulting. iGATE Patni ranked in the Leadership Zone for Overall Leading R&D Service Providers, in Global R&D Service Providers Rating, by Zinnov Management Consulting. iGATE Patni emerged in the 'Leadership Zone' in verticals like Automotive and Computer Peripherals & Storage in Global R&D Service Providers Rating, by Zinnov Management Consulting. Everest Group named iGATE Patni as a "Major Contender" in Finance and Accounting in its FAO Research Report 2011. iGATE Patni was awarded the Advanced Solutions Partner status with TIA Technology, the Copenhagen based world leader in integrated, leading edge standard software solutions for the global insurance industry.Acquisition On May 12, 2011, we completed our acquisition of a majority stake in Patni Computers and our results for the second quarter include Patni's results of operations since May 16, 2011. Conference Call and Webcast iGATE will host a telephone conference call on Friday, August 5, 2011 at 8:00 am Eastern Time to discuss the results of its second quarter ended June 30, 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 September 1, 2011 and can be accessed by dialing 877-660-6853 (domestic) and 201-612-7415 (international), passcode 375662 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 Patni 'iGATE Patni' is the common brand identity of two organizations iGATE Corporation and Patni Computer Systems Limited (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 like: banking & financial services; insurance & healthcare; life sciences; manufacturing, retail, distribution & logistics; media, entertainment leisure & travel; communication, energy & utilities; public sector; and independent software vendors. Visit: www.igatepatni.com iGATE Corporation is listed on NASDAQ (IGTE), and Patni Computer Systems Limited on the Bombay Stock Exchange (532517), the National Stock Exchange of India (PATNI) and NYSE (PTI). The iGATE Patni brand logo is available at //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. These non-GAAP measures are also used as performance compensation programs 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 comprise value of customer relationships from the recent Patni acquisition and the previous 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. iGATE excludes these charges for purposes of calculating these non-GAAP measures. Severance Cost: As a result of acquisition of Patni, the Company incurred severance costs in connection with the termination of the services of some of Patni's employees. 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 Patni 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, 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; whether certain market segments grow as anticipated; the competitive environment in the information technology services industry and competitive responses to our acquisition of Patni; and whether the companies can successfully provide services/products and the degree to which these gain market acceptance. Furthermore, in connection with the Patni 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. iGATE CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) June 30,December 31, 20112010 (unaudited)(audited)ASSETS Current assets: Cash and cash equivalents $ 95,938 $ 67,924 Short-term investments 338,152 71,915 Accounts receivable, net 154,995 37,946 Unbilled revenues 68,568 13,893 Prepaid expenses and other current assets 24,719 5,380 Foreign exchange derivative contracts 7,256 794 Deferred tax assets 24,557 5,422 Receivable from Mastech Holdings Inc. 208 140 Prepaid income taxes 7,332 -- Total current assets 721,725 203,414 Investment in affiliate 427 -- Deposits and other assets 144,983 5,443 Property and equipment, net 220,898 52,950 Deferred tax assets 24,331 10,117 Goodwill 628,080 31,741 Intangible assets, net 188,135 1,378 Total assets $ 1,928,579 $ 305,043 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,394 $ 3,291 Accrued payroll and related costs 87,650 19,709 Accrued income taxes 1,034 715 Line of credit 45,000 -- Other accrued liabilities 81,067 31,354 Foreign exchange derivative contracts 690 -- Deferred revenue 19,480 667 Total current liabilities 243,315 55,736 Other long-term liabilities 5,444 1,251 Accrued income taxes 17,300 -- Foreign exchange derivative contracts 5,341 -- Deferred income taxes 66,275 -- Senior Notes 770,000 -- Total liabilities 1,107,675 56,987 Series B Preferred stock, without par value 335,067 -- Shareholders' equity: Common Stock, par value $0.01 per share 575 572 Additional paid-in capital 194,897 188,389 Retained earnings 88,920 75,474 Common stock in treasury, at cost (14,714) (14,714) Accumulated other comprehensive loss 3,796 (1,665) Total iGATE Corporation shareholders' equity 273,474 248,056 Non controlling interest 212,363 -- Total shareholders' equity 485,837 248,056 Total liabilities and shareholders' equity $ 1,928,579 $ 305,043 iGATE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands) (unaudited) Three Months endedSix Months ended June 30,June 30, 2011* 2010 2011* 2010 Revenues $ 170,417 $ 66,849 $ 246,215 $124,739 Cost of revenues (exclusive of Depreciation and amortization) 111,203 41,390 155,998 76,068 Gross margin 59,214 25,459 90,217 48,671 Selling, general and administrative 40,423 11,843 62,170 21,848 Depreciation and amortization 9,058 2,126 11,365 4,348 Income from operations 9,733 11,490 16,682 22,475 Other (expenses) income, net (4,003) 976 15,850 1,808 Income before income taxes 5,730 12,466 32,532 24,283 Income tax expense 1,244 1,312 10,107 1,515 Net income before noncontrolling interest 4,486 11,154 22,425 22,768 Noncontrolling interest 487 -- 487 -- Net income attributable to iGATE Corporation 3,999 11,154 21,938 22,768 Accretion to Preferred Stock 115 -- 130 -- Preferred dividend 5,639 -- 8,362 -- Net (loss) income attributable to iGATE Corporation common shareholders $ (1,755) $ 11,154 $ 13,446 $ 22,768 *Includes Patni results since May 16, 2011. iGATE CORPORATION Earnings Per Share (Amounts in thousands, except per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30,PARTICULARS 2011** 2010 2011** 2010 Net income attributable to iGATE common shareholders $ (1,755) $ 11,154 $ 13,446 $ 22,768 Add: Dividends on Series B Preferred Stock 5,639 -- 8,362 -- 3,884 11,154 21,808 22,768 Less: Dividends paid on Common Stock $ -- $ -- $ -- $ 6,076 Unvested restricted stock -- -- -- 60 Series B Preferred Stock 5,639 5,639 -- -- 8,362 8,362 -- 6,136Undistributed Income $ (1,755) $ 11,154 $ 13,446 $ 16,632 Basic and Diluted allocation of Undistributed Income Common stock (1,351) 11,082 10,352 16,497 Unvested restricted stock (6) 72 41 135 Series B Preferred Stock (398) -- 3,053 -- $ (1,755) $ 11,154 $ 13,446 $ 16,632 Shares outstanding: Common stock 56,524 55,557 56,524 55,557 Unvested restricted stock 222 363 222 455 Series B Preferred Stock 16,668 -- 16,668 -- 73,414 55,920 73,414 56,012 Weighted average shares outstanding: Common stock 56,514 55,447 56,399 55,234 Unvested restricted stock 238 363 257 455 56,752 55,810 56,656 55,689 Weighted average common stock outstanding 56,752 55,447 56,399 55,234Dilutive effect of stock options and restricted shares outstanding -- 1,670 1,483 1,707Dilutive weighted average shares outstanding 56,752 57,117 57,882 56,941 Distributed earnings per share: Common stock $ -- $ -- $ -- $ 0.11 Unvested restricted stock $ -- $ -- $ -- $ 0.11 Basic earnings per share from operations Common Stock $ (0.02) $ 0.20 $ 0.18 $ 0.41 Unvested restricted stock $ (0.02) $ 0.20 $ 0.18 $ 0.41 Diluted earnings per share from operations $ (0.02) $ 0.20 $ 0.18 $ 0.40 * The number of outstanding participative convertible preferred stock for which the earnings per share exceeded the earnings per share of common stock aggregated to 16.7 million shares for the six months ended June 30, 2011. These shares were excluded from the computation of diluted earnings per share as they were anti-dilutive. The dilutive effect of stock options outstanding of 1.5 million shares for the three months ended June 30, 2011 was not considered in computing diluted earnings per share as the Company was in a net loss position. Inclusion of such shares would have been anti-dilutive. **Includes Patni results since May 16, 2011 iGATE CORPORATION Reconciliation of Net income, net of tax, to Adjusted EBITDA (Amounts in thousands) (unaudited) Three Months endedSix Months ended June 30thJune 30th 2011201020112010 Net income attributable to iGATE Corporation $ 3,999 $11,154 $ 21,938 $ 22,768 Adjustments Depreciation and amortization 9,058 2,126 11,365 4,348 Interest expenses 13,199 14 13,288 33 Income tax expense 1,244 1,312 10,107 1,515 EBITDA 27,500 14,606 56,698 28,664 Other income, net (3,321) (747) (4,418) (2,886) Foreign exchange (gain)/loss (5,875) (243) (24,720) 1,078 Stock Based Compensation 3,014 1,807 4,522 3,006 Acquisition expenses 1,122 -- 10,914 -- Severance expenses 6,164 -- 6,164 -- Adjusted EBITDA (a non-GAAP measure) $ 28,604 $15,423 $ 49,160 $ 29,862 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. iGATE CORPORATIONReconciliation of Selected GAAP measures to Non-GAAP measures(Amounts in thousands, except per share data)(unaudited) Three Months endedSix Months ended June 30thJune 30th 2011201020112010 GAAP Net income attributable to iGATE Corporation $ 3,999 $ 11,154 $ 21,938 $ 22,768 Adjustments Amortization of Intangible assets, net of taxes 1,324 194 1,520 386 Stock Based Compensation, net of taxes 2,358 1,807 3,219 3,006 Acquisition expenses, net of taxes 1,875 -- 10,914 -- Forex gain on acquisition hedging and remeasurement, net of taxes (2,008) -- (14,314) -- Severance cost, net of taxes 4,388 -- 4,388 -- Non-GAAP Net income $ 11,936 $ 13,155 $ 27,665 $ 26,160 Basic earnings per share from operations GAAP $ (0.02) $ 0.20 $ 0.18 $ 0.41 Non-GAAP $ 0.16 $ 0.24 $ 0.38 $ 0.47 Diluted earnings per share from operations GAAP $ (0.02) $ 0.20 $ 0.18 $ 0.40 Non-GAAP $ 0.16 $ 0.23 $ 0.37 $ 0.46 Weighted average shares outstanding, Basic 73,420* 55,810 73,325* 55,689Weighted average dilutive common equivalent shares outstanding 73,420* 57,117 74,550* 56,941 *Includes assumed conversion of 16.7 million shares of Series B Preferred Stock as of January 1, 2011.CONTACT: Media Contact Prabhanjan Deshpande "PD" +91 80 4104 5006 [email protected] Investor Contact Araceli Roiz +1 510 896 3007 [email protected] Source: iGATE Corporation 2011 GlobeNewswire, Inc. |