iGATE Reports Q2 Revenues; Revenues Up 57.3%
Corporate Structure and Brand Simplified After Patni Delisting
FREMONT, Calif., July 13, 2012 (GLOBE NEWSWIRE) -- iGATE Corporation (Nasdaq:IGTE), the first integrated Technology and Operations Company providing Business Outcomes-business based solutions, today announced its financial results for the second quarter and six months ended June 30, 2012.
Second Quarter Highlights
Successfully completed delisting of Patni Computer Systems Ltd and launched single go-to-market brand, "iGATE," in line with the vision of 'one company'
Net income for the second quarter of 2012 increased by 217.5% to $12.7 million from $4.0 million in the second quarter of 2011
Revenues for the second quarter of 2012 increased by 57.3% to $268.0 million from $170.4 million in the second quarter of 2011
Gross margin was 37.4% for the second quarter of 2012 compared to 34.7% in the corresponding quarter of 2011
Diluted earnings per share of $0.07 GAAP; $0.28 non-GAAP
iGATE added 17 new customers during the quarter
The company ended the second quarter of 2012 with 27,417 employees
Phaneesh Murthy, CEO, iGATE said, "It has been satisfying to see growth coming back in a very volatile market. I am particularly happy with the pedigree of the new clients we have added in the quarter with seven of them being Fortune 1000 companies. This clearly shows the increased acceptance of our differentiated outcomes-based proposition."
On key events, Mr. Murthy said, "I am happy that we have filled our North American Sales Leadership position. It is my pleasure to welcome Sanjay Tugnait to this role."
Sujit Sircar, CFO, iGATE said, "I am very pleased that we were able to smoothly accomplish the delisting process of Patni with our ownership of Patni shares now rising to 96.9%. While the rupee fluctuation is a concern due to forex headwinds, I am confident that we are well placed for a steady growth in revenues and margins. "
Second Quarter Operating Results
Results for the second quarter on a GAAP and non-GAAP basis are provided in the table below.
Q2
FY'12
Q2
FY'11
Y/Y
Six
months
ended
FY'12
Six
months
ended
FY'11
Y/Y
Net revenue ($Millions)
268.0
170.4
57.3%
531.3
246.2
115.8%
Operating margin($Millions)
48.0
9.7
394.8%
96.1
16.7
475.4%
GAAP net income ($Millions)
12.7
4.0
217.5%
36.7
21.9
67.6%
GAAP diluted EPS ($)
0.07
-0.02
450.0%
0.29
0.18
61.1%
Non-GAAP net income ($Millions)
21.5
11.9
80.7%
50.5
27.7
82.3%
Non-GAAP diluted EPS ($)
0.28
0.16
75.0%
0.66
0.37
78.4%
New customer wins in the quarter
A Fortune 1000 Bank in the U.S. has engaged iGATE to support it on a critical program aimed at the prevention of money laundering. Through proprietary solutions in data management, iGATE is helping make available data in the anti-money laundering reporting system. This will help the bank stay in compliance with requirements of the Bank Secrecy Act and the Patriot Act.
A Europe-based Fortune 1000 company providing engineering and technology solutions for the energy industry has chosen iGATE to build competencies in energy related projects in emerging countries. iGATE is helping the company to reduce execution time by building a competence centre in India and support its global project deliveries. This centre will concentrate in the oil and gas domain and deliver high quality design work.
A Fortune 500 company that distributes maintenance, repair, and operating supplies has chosen iGATE to assist the company in reducing the time to market for its products and services. While iGATE will support this client in building and deploying a new generation of e-commerce Solutions, this strategic partnership will allow the client to take advantage of iGATE's global footprint allowing quicker development and deployment of the e-Commerce Systems.
iGATE has been selected by a Europe-based Fortune 1000 drug manufacturing company to assist in its compliance related programs. iGATE will provide validation support to the Product Development Quality and Validation team of the company (PDQV) and deliver reports that are critical to stay compliant to regulatory guidelines.
iGATE has been selected by a leading U.S. Bank to manage its Liquidity Risk program. iGATE is using its proprietary Reference Data Management solution to establish data lineage and identify all of the critical data elements required for Liquidity Risk management.
A leading global manufacturer that supplies oilfield and power transmission products for use in energy infrastructure and industrial applications has chosen iGATE to scale its internal IT and achieve global transformation. iGATE will manage and roll-out Enterprise Applications globally. iGATE was chosen because of its strong Business Outcomes orientation and the ability to provide services at a global scale.
Awards and Recognitions
iGATE has been ranked No. 18 and also adjudged a 'Leader' in The 2012 Global Outsourcing 100® List by The International Association of Outsourcing Professionals® (IAOP®). Chosen for the third consecutive year, iGATE's rank has risen significantly from No. 53 in 2011. The assessment criterion was based on multiple measurement standards such as- Company Size; Growth; Global Presence; Customer References; Company Recognitions; Company Certifications; Employee Management; Executive Leadership.
iGATE won the 'World Class Award', the highest honour under the 'Large Service Organizations' category, at the Global Performance Excellence Awards (GPEA).
iGATE's Legal Team was selected as the winner of the 'International Company In-House Legal Team of the Year' by the International Financial Law Review (IFLR)/Asia Law in the Mergers & Acquisitions Category for its extensive work and valuable contribution in completion of a complex transaction in the acquisition of Patni Computer Systems Limited.
iGATE was ranked No.3 and rated in the 'Leaders' category for its Product and Engineering Practice by Zinnov Consulting in its Global R&D Service Providers' Rating.
The iGATE Corporation Annual Report 2011 won the Silver Award (Core area- Tech. and IT Services) in the prestigious LACP Annual Report competition in the 'Overall Category' for the fourth time in a row.
New Appointment
iGATE appointed Sanjay Tugnait as the new North America Sales Leader and Global Head of Alliances. Sanjay will be paramount to delivering iGATE's business growth agenda. He will be part of iGATE's Executive Committee. In a career spanning over two decades, Sanjay has been part of global companies such as Accenture and IBM/PWC.
Prior to joining iGATE, Sanjay was the Managing Partner of Accenture's Financial Services practice in India. He is credited for setting up the company's Financial Services business in the subcontinent. He has also served Accenture as a Partner for its North America practice. Sanjay has been part of Accenture's Global CEO Advisory Council and India Leadership team.
Conference Call and Webcast
iGATE will host a telephone conference call on Friday, July 13, 2012 at 8:00 am Eastern time to discuss the results of its second quarter and six months ended June 30, 2012. The live discussion may be accessed by dialing 877-407-8037 (toll free) or 201-689-8037 (toll) and entering account number 293 and conference number 397094. The on-demand version of the webcast will be available on the iGATE website shortly after the call.
Investors, potential investors, shareholders and bond holders can access the telephonic replay by dialing 877-660-6853 (toll free) or 201-612-7415 (toll) and entering account number 293 and conference number 397094. The telephonic replay will be available until July 20, 2012.
About Business Outcomes
iGATE's industry-first Business Outcomes-based approach focuses on the realization of tangible and measurable results, unlike traditional models which are driven by work, effort, time and manpower. By integrating technology and processes in a proprietary way and pricing services on results, iGATE exchanges fixed costs for a variable cost structure in an attempt to get clients to pay-for-results-only while enabling them adjust to the peaks and valleys of their demand.
About iGATE
iGATE Corporation is the first integrated technology and operations (iTOPS) company providing full-spectrum consulting, technology and business process outsourcing, and product and engineering solutions on a Business Outcomes-based model. Armed with over three decades of IT Services experience and powered by the iTOPS platform, iGATE's multi-location global organization has a talent pool of over 27,000 employees and consistently delivers effective solutions to over 360 Fortune 1000 clients spanning 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. Please visit
www.igate.com for more information.
iGATE Corporation is listed on NASDAQ under the symbol "IGTE."
The iGATE Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5150
Use of non-GAAP Financial Measures
This press release contains non-GAAP financial measures as defined by 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. In June 2012, the Company recognized foreign currency loss on re-measurement of escrow account balance and foreign exchange gain on re-measurement of redeemable non-controlling interest liability. 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 voluntarily delisted 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.
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