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iGATE Reports Q1 Revenues; Profits up 34.6%
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0 KommentareiGATE Corporation
13.04.2012 12:31
Patni Delisting Process Successful; Will Enable a Simplified Corporate Structure
FREMONT, Calif., 2012-04-13 12:31 CEST (GLOBE NEWSWIRE) --
iGATE Corporation (Nasdaq:IGTE), the first Business Outcomes driven integrated
Technology and Operations (iTOPS) solutions provider, operating under the brand
name iGATE Patni, today announced its financial results for the first quarter
ended March 31, 2012.
First Quarter Highlights
-- Accepts delisting offer of Patni Computer Systems Limited (´Patni´)
enabling Patni to proceed with delisting from the Indian stock exchanges at
Rs. 520/- per share and marking the completion of a complex corporate
restructuring within one year of Patni´s acquisition
-- Net Income for first quarter 2012 increased by 34.6% to $ 24.1 million from
$ 17.9 million in the first quarter 2011
-- Revenues for first quarter 2012 increased by 247.4% to $ 263.3 million from
$75.8 million in the first quarter 2011
-- Gross margin was 40.2% for the first quarter 2012 compared to 40.9% in the
corresponding quarter last year
-- Diluted earnings per share of $0.22 GAAP; $0.38 non-GAAP
-- iGATE Patni added seven new customers during the quarter
-- The company ended the first quarter 2012 with 27,100 employees
Phaneesh Murthy, CEO, iGATE Patni said, ´The long tail rationalization of our
customers that we undertook yielded us higher profits but dipped revenues and
the delays in project kick-offs resulted in lesser revenue growth. We expect
our revenue growth to be back on track over the next couple of quarters
creating a back loaded year.´
Sujit Sircar, CFO, iGATE Patni said, ´We are delighted that we managed to do a
very complex capital restructuring within a year of completing the Patni
acquisition. The successful delisting of Patni will be an important step
towards our vision of ´one company´ and will set us up well for a possible
downstream merger while also reducing costs of Compliance and Governance.´
Key Highlights of the quarter
-- Delisting of Patni
On April 10, 2012, iGATE announced the results of the delisting offer of Patni
from the Indian stock exchanges. Announcing the process as a success, iGATE
accepted the discovered price of Rs.520 per equity share, determined through a
reverse book building process using the electronic facility of the Bombay Stock
Exchange, in accordance with the Security Exchange Board of India regulations.
The public shareholders holding equity shares of Patni were invited to submit
bids via an offer that opened on March 28, 2012 and closed on March 30, 2012.
-- Inauguration of iGATE Patni managed Rio Tinto Innovation Center
On March 27, 2012, the iGATE Patni-managed Rio Tinto Innovation Center was
inaugurated in Pune, India as part of the innovation partnership initiative
between the two companies. With a joint investment of approximately $3 million
dollars, this facility can staff 300 people and will focus exclusively on
creating next generation technologies that contribute to global growth and
development of Rio Tinto´s ´Mine of the Future(tm)´ program. As an outcomes-based
engagement, iGATE Patni will provide innovation-led engineering research and
development services that will enable Rio Tinto to deliver greater operational
efficiency, as well as improved health, safety and environmental performance in
the mining industry.
First Quarter Operating Results
Results for the first quarter on a GAAP and non-GAAP basis are provided in the
table below.
-
Three months ended Three months Year over
3/31/12 ended year change
3/31/11
Net revenue ($Millions) 263.3 75.8 247%
Operating margin($Millions) 48.1 6.9 597%
GAAP net income ($Millions) 24.1 17.9 35%
GAAP diluted EPS ($) 0.22 0.22 0%
Adjusted EBITDA ($Millions) 68.3 20.6 232%
Non-GAAP net income 29.0 15.7 85%
($Millions)
Non-GAAP diluted EPS ($) 0.38 0.23 65%
New customers and key project wins in the quarter
-- One of the leading U.S.-based pharmaceutical retailers chose iGATE Patni to
facilitate its prescription and medication process for North American
senior citizens. iGATE Patni´s data warehousing services will enable easy
identification and enrollment of senior citizens into the pharmacies´
systems during the point of sale and help pharmacists reduce the cycle time
for servicing these senior citizens.
-- A leading Middle East-based telecommunications company chose iGATE Patni to
develop business intelligence that will increase efficiency in managing
customer information. The company will use the analytics information
derived from iGATE Patni´s services and customize its offerings in the
Middle East region.
-- A North America-based Fortune 1000 Insurance company chose iGATE Patni to
develop an enterprise-wide ´mobility center of excellence´. As part of the
engagement, iGATE Patni will build mobile applications that provide more
avenues for the insurance company to increase its customer service levels.
Its policy holders will be able to access services via their smart phones
and tablets while the company will have increased access to customer
information and expedite various customer transaction processes.
-- A leading India-based energy and environmental engineering company chose
iGATE Patni for the development of an energy efficient solar collector.
iGATE Patni´s product engineering services will enable this collector to
harness the sun´s energy in an effective manner. The collector, integrated
with a newly designed triple effect chiller, will be used to develop
first-of-its-kind solar air-conditioning systems.
-- A leading U.S.-based aluminum company engaged iGATE Patni to refine the
implementation and usage of its enterprise systems. As part of the
initiative, iGATE Patni will develop training methodologies on SAP and
increase the adaptability of the enterprise systems, including order
processing, shipment and finance.
-- A North America-based banking and financial services firm engaged iGATE
Patni to build a suite of mobile applications for its corporate systems
group. The iGATE Patni-developed applications will enable the Bank´s
customers to transact via smart phones and other hand held devices. The
Bank hopes that these applications facilitate up-selling and cross-selling
of its range of products and increase customer satisfaction levels.
Conference Call and Webcast
iGATE will host a telephone conference call on Friday, April 13, 2012 at 8:00
am Eastern time to discuss the results of its first quarter ended March 31,
2012. The live discussion may be accessed by dialing 877-660-6853 (toll free)
or 201-612-7415 (toll) and entering account number 293 and conference number
390561. The telephonic replay will be available until April 20, 2012. 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 name of two organizations -- iGATE and Patni.
With iGATE Corporation having acquired a majority stake in Patni Computer
Systems Limited, the two companies, under the common brand iGATE Patni, 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 over 27,000 employees, consistently
delivers effective solutions to over 360 Fortune 1000 clients spanning across
verticals like: 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. For further information visit
www.igatepatni.com.
iGATE Corporation is listed on NASDAQ (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).
The iGATE Patni brand 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 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 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 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 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.
-- 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.
-- 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 its past operating performance.
-- Foreign Exchange gain: The Company entered into forward foreign exchange
contracts to mitigate the risk of changes in foreign exchange rates on
payments related to the acquisition of Patni. We also recognized favorable
foreign currency gain on re-measurement of escrow account balance
maintained for facilitating payments related to the 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 its past
performance.
In March 2012, the Company entered into a forward foreign exchange contract
to mitigate the risk of changes in foreign exchange rates on payments
related to the delisting of Patni. 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 its past performance.
-- Severance Cost: As a result of the acquisition of Patni, iGATE incurred
severance costs in connection with the termination of the services of some
of Patni´s employees.
-- Delisting expenses: iGATE is voluntarily delisting the equity shares of its
majority owned subsidiary, Patni 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 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
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 through the issuance of 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, 2011, as well as the Company´s other reports
filed with the Securities and Exchange Commission and risks related to the
business of Patni as set forth in Patni´s Annual Report in Form 20-F for the
fiscal year ended December 31, 2011. 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 CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
March 31, December
31,
2012 2011
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 80,734 $ 75,440
Short-term investments 394,944 354,528
Accounts receivable, net 142,904 172,711
Unbilled revenues 96,065 45,223
Prepaid expenses and other current assets 17,873 18,752
Foreign exchange derivative contracts 3,050 277
Prepaid income taxes 11,172 8,341
Deferred tax assets 23,983 20,574
Receivable from Mastech Holdings, Inc. 75 187
Total current assets 770,800 696,033
Deposits and other assets 36,597 32,102
Prepaid income taxes 20,769 18,481
Property and equipment, net 177,010 175,672
Leasehold land 94,046 90,339
Deferred tax assets 27,062 30,456
Goodwill 533,027 511,060
Intangible assets, net 164,549 160,706
Total assets $ 1,823,860 $ 1,714,849
=========================
LIABILITIES AND SHAREHOLDERS´ EQUITY
Current liabilities:
Accounts payable $ 9,261 $ 7,857
Accrued payroll and related costs 55,663 71,913
Accrued income taxes 1,813 3,993
Line of credit 57,000 57,000
Other accrued liabilities 97,199 77,988
Foreign exchange derivative contracts 11,765 12,471
Deferred revenue 17,221 22,412
Total current liabilities 249,922 253,634
Other long-term liabilities 3,358 4,610
Senior notes 770,000 770,000
Term Loan 5,500 --
Foreign exchange derivative contracts 525 6,739
Accrued income taxes 24,846 17,672
Deferred tax liabilities 61,122 58,992
Total liabilities 1,115,273 1,111,647
Series B Preferred stock, without par value 356,116 349,023
Shareholders´ equity:
Common Stock, par value $0.01 per share 585 577
Additional paid-in capital 207,990 201,281
Retained earnings 121,468 104,493
Common stock in treasury, at cost (14,714) (14,714)
Accumulated other comprehensive loss (154,792) (214,641)
Total iGATE Corporation shareholders´ equity 160,537 76,996
Non controlling interest 191,934 177,183
Total equity 352,471 254,179
Total liabilities, preferred stock and $ 1,823,860 $ 1,714,849
shareholders´ equity
=========================
iGATE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
(unaudited)
Three Months ended,
March 31,
2012 2011
Revenues $ 263,265 $ 75,798
Cost of revenues (exclusive of Depreciation and 157,429 44,795
amortization)
Gross margin 105,836 31,003
Selling, general and administrative 42,421 21,747
Depreciation and amortization 15,285 2,307
Income from operations 48,130 6,949
Other income (loss), net (8,723) 19,853
Income before income taxes 39,407 26,802
Income tax expense 10,863 8,863
Net income before noncontrolling interest 28,544 17,939
Noncontrolling interest 4,476 --
Net income attributable to iGATE Corporation 24,068 17,939
Accretion to Preferred Stock 93 15
Preferred dividend 6,999 2,723
Net income attributable to iGATE common shareholders $ 16,976 $ 15,201
====================
iGATE CORPORATION
Earnings Per Share
(Amounts in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
PARTICULARS 2012 2011
Net income attributable to iGATE common $ 16,976 $ 15,201
shareholders
Add: Dividends on Series B Preferred Stock 6,999 2,723
---------
23,975 $ 17,924
Less: Dividends paid on
Common Stock $ -- $ --
Unvested restricted stock -- --
Series B Preferred Stock 6,999 6,999 2,723 2,723
Undistributed Income $ 16,976 $ 15,201
========== =========
Basic and Diluted allocation of Undistributed
Income
Common stock $ 12,918 $ 12,771
Unvested restricted stock 43 59
Series B Preferred Stock 4,015 2,371
---------
$ 16,976 $ 15,201
========== =========
Shares outstanding:
Common stock 56,924 56,443
Unvested restricted stock 188 262
Series B Preferred Stock 17,692 10,479
---------
74,804 67,184
========== =========
Weighted average shares outstanding:
Common stock 56,813 56,311
Unvested restricted stock 193 262
Participating preferred stock 17,692 10,479
---------
74,698 67,052
========== =========
Weighted average common stock outstanding 56,813 56,311
Dilutive effect of stock options and restricted 1,671 1,481
shares outstanding
---------
Dilutive weighted average shares outstanding 58,484 57,792
========== =========
Distributed earnings per share:
Common stock -- $ --
Unvested restricted stock -- $ --
Participating preferred stock 0.40 $ 0.26
Undistributed earnings per share:
Common stock 0.23 $ 0.23
Unvested restricted stock 0.23 $ 0.23
Participating preferred stock 0.23 $ 0.23
Basic earnings per share from operations
Common Stock 0.23 $ 0.23
Unvested restricted stock 0.23 $ 0.23
Participating preferred stock 0.63 $ 0.49
Diluted earnings per share from operations 0.22 $ 0.22
The number of outstanding participative convertible preferred stock for which
the earnings per share exceeded the earnings per share of common stock
aggregated to 17.7 million,10.5 million shares for the three months ended
March 31,2012 and 2011 respectively.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,
2012 2011
GAAP Net income $ 24,068 $ 17,939
Adjustments
Amortization of Intangible assets, net of taxes 2,174 197
Stock Based Compensation, net of taxes 1,965 861
Acquisition expenses, net of taxes -- 9,039
Delisting expenses, net of taxes 1,478 --
Forex gain on acquisition hedging and remeasurement, net of (685) (12,306)
taxes
Non-GAAP Net income $ 29,000 $ 15,730
===================
Basic earnings per share from operations
GAAP $ 0.23 $ 0.23
Non-GAAP $ 0.39 $ 0.23
Diluted earnings per share from operations
GAAP $ 0.22 $ 0.22
Non-GAAP $ 0.38 $ 0.23
Weighted average shares outstanding, Basic 74,698* 67,052*
===================
Weighted average dilutive common equivalent shares 76,176* 68,271*
outstanding
===================
*Includes assumed conversion of 17.7 million,10.5 million shares of Series B
Preferred Stock as of March 31,2012 and 2011 respectively.
iGATE CORPORATION
Reconciliation of Net income, net of tax, to Adjusted EBITDA
(Amounts in thousands)
(unaudited)
Three Months ended,
March 31,
2012 2011
Net income attributable to iGATE Corporation $ 24,068 17,939
Adjustments
Depreciation and amortization 15,285 2,307
Interest expenses 19,123 89
Income tax expense 10,863 8,863
Noncontrolling interest 4,476 --
Other income, net (7,564) (1,097)
Foreign exchange (gain)/loss (2,836) (18,845)
Stock Based Compensation 2,812 1,508
Acquisition expenses -- 9,792
Delisting expenses 2,115 --
Adjusted EBITDA (a non-GAAP measure) $ 68,342 $ 20,556
=============================
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.
Non-GAAP Disclosure of Adjusted EBITDA
We present Adjusted EBITDA as a supplemental measure of our performance. We
define Adjusted EBITDA as net income attributable to iGATE Corporation plus (i)
depreciation and amortization, (ii) interest expense, (iii) income tax expense,
minus (iv) other income, net plus (v) foreign exchange loss, (v) stock based
compensation (vi) acquisition expenses (vii) severance expenses and (viii)
delisting expenses. We eliminated the impact of the above as we do not
consider them as indicative of our ongoing operating performance. These
adjustments are itemized below. 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 use 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.
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
News Source: NASDAQ OMX
13.04.2012 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
DGAP´s Distribution Services include Regulatory Announcements,
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Media archive at www.dgap-medientreff.de and www.dgap.de
Language: English
Company: iGATE Corporation
United States
Phone:
Fax:
E-mail:
Internet:
ISIN: US9901036403
WKN:
End of Announcement DGAP News-Service
-- Accepts delisting offer of Patni Computer Systems Limited (´Patni´)
enabling Patni to proceed with delisting from the Indian stock exchanges at
Rs. 520/- per share and marking the completion of a complex corporate
restructuring within one year of Patni´s acquisition
-- Net Income for first quarter 2012 increased by 34.6% to $ 24.1 million from
$ 17.9 million in the first quarter 2011
-- Revenues for first quarter 2012 increased by 247.4% to $ 263.3 million from
$75.8 million in the first quarter 2011
-- Gross margin was 40.2% for the first quarter 2012 compared to 40.9% in the
corresponding quarter last year
-- Diluted earnings per share of $0.22 GAAP; $0.38 non-GAAP
-- iGATE Patni added seven new customers during the quarter
-- The company ended the first quarter 2012 with 27,100 employees
Phaneesh Murthy, CEO, iGATE Patni said, ´The long tail rationalization of our
customers that we undertook yielded us higher profits but dipped revenues and
the delays in project kick-offs resulted in lesser revenue growth. We expect
our revenue growth to be back on track over the next couple of quarters
creating a back loaded year.´
Sujit Sircar, CFO, iGATE Patni said, ´We are delighted that we managed to do a
very complex capital restructuring within a year of completing the Patni
acquisition. The successful delisting of Patni will be an important step
towards our vision of ´one company´ and will set us up well for a possible
downstream merger while also reducing costs of Compliance and Governance.´
Key Highlights of the quarter
-- Delisting of Patni
On April 10, 2012, iGATE announced the results of the delisting offer of Patni
from the Indian stock exchanges. Announcing the process as a success, iGATE
accepted the discovered price of Rs.520 per equity share, determined through a
reverse book building process using the electronic facility of the Bombay Stock
Exchange, in accordance with the Security Exchange Board of India regulations.
The public shareholders holding equity shares of Patni were invited to submit
bids via an offer that opened on March 28, 2012 and closed on March 30, 2012.
-- Inauguration of iGATE Patni managed Rio Tinto Innovation Center
On March 27, 2012, the iGATE Patni-managed Rio Tinto Innovation Center was
inaugurated in Pune, India as part of the innovation partnership initiative
between the two companies. With a joint investment of approximately $3 million
dollars, this facility can staff 300 people and will focus exclusively on
creating next generation technologies that contribute to global growth and
development of Rio Tinto´s ´Mine of the Future(tm)´ program. As an outcomes-based
engagement, iGATE Patni will provide innovation-led engineering research and
development services that will enable Rio Tinto to deliver greater operational
efficiency, as well as improved health, safety and environmental performance in
the mining industry.
First Quarter Operating Results
Results for the first quarter on a GAAP and non-GAAP basis are provided in the
table below.
-
Three months ended Three months Year over
3/31/12 ended year change
3/31/11
Net revenue ($Millions) 263.3 75.8 247%
Operating margin($Millions) 48.1 6.9 597%
GAAP net income ($Millions) 24.1 17.9 35%
GAAP diluted EPS ($) 0.22 0.22 0%
Adjusted EBITDA ($Millions) 68.3 20.6 232%
Non-GAAP net income 29.0 15.7 85%
($Millions)
Non-GAAP diluted EPS ($) 0.38 0.23 65%
New customers and key project wins in the quarter
-- One of the leading U.S.-based pharmaceutical retailers chose iGATE Patni to
facilitate its prescription and medication process for North American
senior citizens. iGATE Patni´s data warehousing services will enable easy
identification and enrollment of senior citizens into the pharmacies´
systems during the point of sale and help pharmacists reduce the cycle time
for servicing these senior citizens.
-- A leading Middle East-based telecommunications company chose iGATE Patni to
develop business intelligence that will increase efficiency in managing
customer information. The company will use the analytics information
derived from iGATE Patni´s services and customize its offerings in the
Middle East region.
-- A North America-based Fortune 1000 Insurance company chose iGATE Patni to
develop an enterprise-wide ´mobility center of excellence´. As part of the
engagement, iGATE Patni will build mobile applications that provide more
avenues for the insurance company to increase its customer service levels.
Its policy holders will be able to access services via their smart phones
and tablets while the company will have increased access to customer
information and expedite various customer transaction processes.
-- A leading India-based energy and environmental engineering company chose
iGATE Patni for the development of an energy efficient solar collector.
iGATE Patni´s product engineering services will enable this collector to
harness the sun´s energy in an effective manner. The collector, integrated
with a newly designed triple effect chiller, will be used to develop
first-of-its-kind solar air-conditioning systems.
-- A leading U.S.-based aluminum company engaged iGATE Patni to refine the
implementation and usage of its enterprise systems. As part of the
initiative, iGATE Patni will develop training methodologies on SAP and
increase the adaptability of the enterprise systems, including order
processing, shipment and finance.
-- A North America-based banking and financial services firm engaged iGATE
Patni to build a suite of mobile applications for its corporate systems
group. The iGATE Patni-developed applications will enable the Bank´s
customers to transact via smart phones and other hand held devices. The
Bank hopes that these applications facilitate up-selling and cross-selling
of its range of products and increase customer satisfaction levels.
Conference Call and Webcast
iGATE will host a telephone conference call on Friday, April 13, 2012 at 8:00
am Eastern time to discuss the results of its first quarter ended March 31,
2012. The live discussion may be accessed by dialing 877-660-6853 (toll free)
or 201-612-7415 (toll) and entering account number 293 and conference number
390561. The telephonic replay will be available until April 20, 2012. 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 name of two organizations -- iGATE and Patni.
With iGATE Corporation having acquired a majority stake in Patni Computer
Systems Limited, the two companies, under the common brand iGATE Patni, 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 over 27,000 employees, consistently
delivers effective solutions to over 360 Fortune 1000 clients spanning across
verticals like: 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. For further information visit
www.igatepatni.com.
iGATE Corporation is listed on NASDAQ (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).
The iGATE Patni brand 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 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 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 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 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.
-- 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.
-- 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 its past operating performance.
-- Foreign Exchange gain: The Company entered into forward foreign exchange
contracts to mitigate the risk of changes in foreign exchange rates on
payments related to the acquisition of Patni. We also recognized favorable
foreign currency gain on re-measurement of escrow account balance
maintained for facilitating payments related to the 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 its past
performance.
In March 2012, the Company entered into a forward foreign exchange contract
to mitigate the risk of changes in foreign exchange rates on payments
related to the delisting of Patni. 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 its past performance.
-- Severance Cost: As a result of the acquisition of Patni, iGATE incurred
severance costs in connection with the termination of the services of some
of Patni´s employees.
-- Delisting expenses: iGATE is voluntarily delisting the equity shares of its
majority owned subsidiary, Patni 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 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
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 through the issuance of 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, 2011, as well as the Company´s other reports
filed with the Securities and Exchange Commission and risks related to the
business of Patni as set forth in Patni´s Annual Report in Form 20-F for the
fiscal year ended December 31, 2011. 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 CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
March 31, December
31,
2012 2011
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 80,734 $ 75,440
Short-term investments 394,944 354,528
Accounts receivable, net 142,904 172,711
Unbilled revenues 96,065 45,223
Prepaid expenses and other current assets 17,873 18,752
Foreign exchange derivative contracts 3,050 277
Prepaid income taxes 11,172 8,341
Deferred tax assets 23,983 20,574
Receivable from Mastech Holdings, Inc. 75 187
Total current assets 770,800 696,033
Deposits and other assets 36,597 32,102
Prepaid income taxes 20,769 18,481
Property and equipment, net 177,010 175,672
Leasehold land 94,046 90,339
Deferred tax assets 27,062 30,456
Goodwill 533,027 511,060
Intangible assets, net 164,549 160,706
Total assets $ 1,823,860 $ 1,714,849
=========================
LIABILITIES AND SHAREHOLDERS´ EQUITY
Current liabilities:
Accounts payable $ 9,261 $ 7,857
Accrued payroll and related costs 55,663 71,913
Accrued income taxes 1,813 3,993
Line of credit 57,000 57,000
Other accrued liabilities 97,199 77,988
Foreign exchange derivative contracts 11,765 12,471
Deferred revenue 17,221 22,412
Total current liabilities 249,922 253,634
Other long-term liabilities 3,358 4,610
Senior notes 770,000 770,000
Term Loan 5,500 --
Foreign exchange derivative contracts 525 6,739
Accrued income taxes 24,846 17,672
Deferred tax liabilities 61,122 58,992
Total liabilities 1,115,273 1,111,647
Series B Preferred stock, without par value 356,116 349,023
Shareholders´ equity:
Common Stock, par value $0.01 per share 585 577
Additional paid-in capital 207,990 201,281
Retained earnings 121,468 104,493
Common stock in treasury, at cost (14,714) (14,714)
Accumulated other comprehensive loss (154,792) (214,641)
Total iGATE Corporation shareholders´ equity 160,537 76,996
Non controlling interest 191,934 177,183
Total equity 352,471 254,179
Total liabilities, preferred stock and $ 1,823,860 $ 1,714,849
shareholders´ equity
=========================
iGATE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
(unaudited)
Three Months ended,
March 31,
2012 2011
Revenues $ 263,265 $ 75,798
Cost of revenues (exclusive of Depreciation and 157,429 44,795
amortization)
Gross margin 105,836 31,003
Selling, general and administrative 42,421 21,747
Depreciation and amortization 15,285 2,307
Income from operations 48,130 6,949
Other income (loss), net (8,723) 19,853
Income before income taxes 39,407 26,802
Income tax expense 10,863 8,863
Net income before noncontrolling interest 28,544 17,939
Noncontrolling interest 4,476 --
Net income attributable to iGATE Corporation 24,068 17,939
Accretion to Preferred Stock 93 15
Preferred dividend 6,999 2,723
Net income attributable to iGATE common shareholders $ 16,976 $ 15,201
====================
iGATE CORPORATION
Earnings Per Share
(Amounts in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
PARTICULARS 2012 2011
Net income attributable to iGATE common $ 16,976 $ 15,201
shareholders
Add: Dividends on Series B Preferred Stock 6,999 2,723
---------
23,975 $ 17,924
Less: Dividends paid on
Common Stock $ -- $ --
Unvested restricted stock -- --
Series B Preferred Stock 6,999 6,999 2,723 2,723
Undistributed Income $ 16,976 $ 15,201
========== =========
Basic and Diluted allocation of Undistributed
Income
Common stock $ 12,918 $ 12,771
Unvested restricted stock 43 59
Series B Preferred Stock 4,015 2,371
---------
$ 16,976 $ 15,201
========== =========
Shares outstanding:
Common stock 56,924 56,443
Unvested restricted stock 188 262
Series B Preferred Stock 17,692 10,479
---------
74,804 67,184
========== =========
Weighted average shares outstanding:
Common stock 56,813 56,311
Unvested restricted stock 193 262
Participating preferred stock 17,692 10,479
---------
74,698 67,052
========== =========
Weighted average common stock outstanding 56,813 56,311
Dilutive effect of stock options and restricted 1,671 1,481
shares outstanding
---------
Dilutive weighted average shares outstanding 58,484 57,792
========== =========
Distributed earnings per share:
Common stock -- $ --
Unvested restricted stock -- $ --
Participating preferred stock 0.40 $ 0.26
Undistributed earnings per share:
Common stock 0.23 $ 0.23
Unvested restricted stock 0.23 $ 0.23
Participating preferred stock 0.23 $ 0.23
Basic earnings per share from operations
Common Stock 0.23 $ 0.23
Unvested restricted stock 0.23 $ 0.23
Participating preferred stock 0.63 $ 0.49
Diluted earnings per share from operations 0.22 $ 0.22
The number of outstanding participative convertible preferred stock for which
the earnings per share exceeded the earnings per share of common stock
aggregated to 17.7 million,10.5 million shares for the three months ended
March 31,2012 and 2011 respectively.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,
2012 2011
GAAP Net income $ 24,068 $ 17,939
Adjustments
Amortization of Intangible assets, net of taxes 2,174 197
Stock Based Compensation, net of taxes 1,965 861
Acquisition expenses, net of taxes -- 9,039
Delisting expenses, net of taxes 1,478 --
Forex gain on acquisition hedging and remeasurement, net of (685) (12,306)
taxes
Non-GAAP Net income $ 29,000 $ 15,730
===================
Basic earnings per share from operations
GAAP $ 0.23 $ 0.23
Non-GAAP $ 0.39 $ 0.23
Diluted earnings per share from operations
GAAP $ 0.22 $ 0.22
Non-GAAP $ 0.38 $ 0.23
Weighted average shares outstanding, Basic 74,698* 67,052*
===================
Weighted average dilutive common equivalent shares 76,176* 68,271*
outstanding
===================
*Includes assumed conversion of 17.7 million,10.5 million shares of Series B
Preferred Stock as of March 31,2012 and 2011 respectively.
iGATE CORPORATION
Reconciliation of Net income, net of tax, to Adjusted EBITDA
(Amounts in thousands)
(unaudited)
Three Months ended,
March 31,
2012 2011
Net income attributable to iGATE Corporation $ 24,068 17,939
Adjustments
Depreciation and amortization 15,285 2,307
Interest expenses 19,123 89
Income tax expense 10,863 8,863
Noncontrolling interest 4,476 --
Other income, net (7,564) (1,097)
Foreign exchange (gain)/loss (2,836) (18,845)
Stock Based Compensation 2,812 1,508
Acquisition expenses -- 9,792
Delisting expenses 2,115 --
Adjusted EBITDA (a non-GAAP measure) $ 68,342 $ 20,556
=============================
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.
Non-GAAP Disclosure of Adjusted EBITDA
We present Adjusted EBITDA as a supplemental measure of our performance. We
define Adjusted EBITDA as net income attributable to iGATE Corporation plus (i)
depreciation and amortization, (ii) interest expense, (iii) income tax expense,
minus (iv) other income, net plus (v) foreign exchange loss, (v) stock based
compensation (vi) acquisition expenses (vii) severance expenses and (viii)
delisting expenses. We eliminated the impact of the above as we do not
consider them as indicative of our ongoing operating performance. These
adjustments are itemized below. 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 use 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.
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
News Source: NASDAQ OMX
13.04.2012 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
DGAP´s Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
Language: English
Company: iGATE Corporation
United States
Phone:
Fax:
E-mail:
Internet:
ISIN: US9901036403
WKN:
End of Announcement DGAP News-Service
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