BANGALORE and BRIDGEWATER, New Jersey, April 10, 2014 /PRNewswire/ --
iGATE Corporation (iGATE or the Company) (NASDAQ: IGTE), the New Jersey-headquartered integrated technology and operations solutions provider, today announced its financial results for the first quarter ended March 31, 2014.
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First Quarter Highlights
Ashok Vemuri, President and Chief Executive Officer, iGATE, said, "We had an encouraging start to the year with a 10% y-o-y growth in revenues. Overall market conditions appear to be favorable across the board. With our healthy pipeline, along with the timely rollout of investments in people and solutions, we believe we are well positioned for sustainable growth."
Sujit Sircar, Chief Financial Officer, iGATE, said, "We successfully secured financing to redeem our $770 million 9% Senior Notes through a combination $325 million of new 4.75% senior notes due in 2019 and bank financing. This refinancing is expected to yield significant cost savings over the coming quarters. I am also pleased with the Company's cash-flow position during the quarter. However, the rupee fluctuation due to forex headwinds will be a concern, as we continue to grow our profits."
First Quarter 2014 Operating Results
Results of the first quarter 2014 and 2013, on GAAP and non-GAAP basis, are provided in the table below.
Q1 FY14 Q1 FY13 Y/Y
Net revenue ($Millions) 302.2 274.9 10%
Operating margin
($Millions) 61.2 52.6 16%
GAAP net income
($Millions) 31.6 34.8 (9)%
GAAP diluted EPS ($) 0.29 0.34 (15)%
Adjusted EBITDA
($Millions) 75.2 65.5 15%
Non-GAAP net income
($Millions) 36.4 39.9 (9)%
Non-GAAP diluted EPS ($) 0.45 0.51 (12)%
Key contracts won during the First Quarter
Key Highlights and Recognitions during the First Quarter
Conference Call and Webcast
iGATE has scheduled its Earnings Conference Call on Thursday, April 10, 2014 to discuss the results of its first quarter ended March 31, 2014. Senior management of the company will discuss the financial performance for the quarter and answer participants' questions during the call.
Time : 07:30 - 8:30 am Eastern Time
Toll Free (U.S.) : 877-407-8037
Toll (U.S.) : 201-689-8037
Toll Free (India) : 000-800-852-1477
The call will be webcast live on iGATE's website (http://www.igate.com) in the Investor Relations page under the 'Events' section. Participants are requested to log in 10 minutes prior to the start of the webcast. The on-demand version of the webcast will be available on the iGATE website shortly after the call.
Investors, potential investors, shareholders and bondholders can access the telephonic replay by dialing 877-660-6853 (toll free) or 201-612-7415 (toll) and entering conference number 13579176. The telephonic replay will be available until April 15, 2014.
About iGATE
iGATE Corporation provides integrated technology and operations (iTOPS) solutions by leveraging its proven capabilities across consulting, technology and business process outsourcing, and product and engineering solutions. Armed with over three decades of IT Services experience and powered by over 30,000 experts, iGATE's multi-location global organization has consistently delivered effective solutions to over 300 companies including many Fortune 1000 clients spanning verticals such as: banking and financial services; insurance; healthcare and life sciences; manufacturing; retail and CPG; media and entertainment; energy and utilities; and independent software vendors. Please visit http://www.igate.com for more information.
Follow iGATE on Twitter: @iGATE_Corp (https://twitter.com/iGATE_Corp)
iGATE on Facebook: http://www.facebook.com\igatecorporation
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 ("GAAP") and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in the attached financial tables.
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 the Management in connection with iGATE's performance compensation programs.
More specifically, the non-GAAP financial measures contained herein exclude the following items:
From time to time in the future, there may be other items that iGATE may exclude in presenting its financial results.
Forward-Looking Statements
This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of the Company may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements regarding the business outlook, the expected performance of the Company's products and services for its clients, and all other statements in this release other than statements of historical fact are statements that could be deemed forward-looking statements. Words such as "expect", "potential", "believes", "anticipates", "plans", "intends" and other similar expressions are intended to identify such forward-looking statements. Forward-looking statements in the press release include, without limitation, statements regarding the business outlook, and the expected performance of the Company's products and services for its clients, 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: uncertain global economic conditions, concentrated revenues, new organizational and operational strategies, continued pricing pressures and the significant indebtedness which will 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, 2013, as well as the Company's other reports filed with the Securities and Exchange Commission As in prior periods, the financial information set forth in this release, including tax-related items, reflects estimates based on information available at this time. While the Company believes these estimates to be accurate, actual results may differ materially from those contained in the forward-looking statements in this press release. These amounts could also differ materially from actual reported amounts in the Company's quarterly Report on Form 10-Q for the quarter ended March 31, 2014. The Company assumes no obligation and does not intend to update these forward-looking 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,
2014 2013
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 237,944 $ 204,836
Restricted cash 360,000 360,000
Short-term investments 162,196 181,401
Accounts receivable, net of allowances of $3,001 and
$4,103, respectively 147,214 157,905
Unbilled revenues 88,223 61,424
Prepaid expenses and other current assets 53,473 44,492
Prepaid income taxes 9,800 838
Deferred tax assets 5,937 10,235
Foreign exchange derivative contracts 6,671 836
Receivable from related parties 6,471 4,046
Total current assets 1,077,929 1,026,013
Deposits and other assets 23,681 24,930
Prepaid income taxes 34,644 32,160
Property and equipment, net of accumulated depreciation
of $116,889 and $108,084, respectively 180,917 165,581
Leasehold land 78,405 76,732
Deferred tax assets 15,154 15,153
Goodwill 452,911 438,891
Intangible assets, net 120,294 119,262
Total assets $ 1,983,935 $ 1,898,722
LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,489 $ 9,268
Line of credit 52,000 52,000
Senior Notes 770,000 360,000
Term loans 90,000 90,000
Accrued payroll and related costs 46,060 57,093
Other accrued liabilities 101,232 79,785
Accrued income taxes 2,794 5,802
Foreign exchange derivative contracts 15 909
Deferred revenue 13,254 17,776
Total current liabilities 1,088,844 672,633
Other long-term liabilities 4,188 3,532
Senior notes - 410,000
Term loans 270,000 270,000
Accrued income taxes 22,117 13,936
Deferred tax liabilities 37,315 41,717
Total liabilities 1,422,464 1,411,818
Series B Preferred stock , without par value 418,649 410,371
Shareholders' equity:
Common shares, par value $0.01 per share 598 594
Common shares held in treasury, at cost (14,714) (14,714)
Additional paid-in capital 213,337 204,143
Retained earnings 292,088 268,750
Accumulated other comprehensive loss (353,630) (387,115)
Total iGATE Corporation shareholders' equity 137,679 71,658
Non-controlling interest 5,143 4,875
Total equity 142,822 76,533
Total liabilities,preferred stock and shareholders'
equity $ 1,983,935 $ 1,898,722
iGATE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
(unaudited)
Three Months ended
March 31,
2014 2013
Revenues $ 302,206 $ 274,918
Cost of revenues (exclusive of depreciation and
amortization) 188,780 170,239
Gross margin 113,426 104,679
Selling, general and administrative expense 42,661 42,792
Depreciation and amortization 9,558 9,271
Income from operations 61,207 52,616
Other income (loss), net (16,071) (2,896)
Income before income taxes 45,136 49,720
Income tax expense 13,425 14,960
Net income before non controlling interest 31,711 34,760
Non controlling interest 95 -
Net income attributable to iGATE Corporation 31,616 34,760
Accretion to preferred Stock 139 115
Preferred dividend 8,139 7,500
Net income attributable to iGATE common shareholders $ 23,338 $ 27,145
iGATE CORPORATION
Earnings Per Share
(Amounts in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
PARTICULARS 2014 2013
Net income attributable to iGATE common shareholders $ 23,338 $ 27,145
Add: Dividends on Series B Preferred Stock 8,139 7,500
31,477 34,645
Less: Dividends on
Series B Preferred Stock [A] 8,139 7,500
Undistributed Income $ 23,338 $ 27,145
Allocation of Undistributed Income
Common stock [B] 17,256 20,338
Unvested restricted stock [C] - 8
Series B Preferred Stock [D] 6,082 6,799
$ 23,338 $ 27,145
Shares outstanding for allocation of undistributed income:
Common stock 58,808 57,270
Unvested restricted stock - 23
Series B Preferred Stock 20,726 19,147
79,534 76,440
Weighted average shares outstanding:
Common stock [E] 58,687 57,262
Unvested restricted stock [F] - 23
Series B Preferred Stock [G] 20,726 19,147
79,413 76,432
Weighted average common stock outstanding 58,687 57,262
Dilutive effect of stock options and restricted
shares outstanding 1,854 1,741
Dilutive weighted average shares outstanding [H] 60,541 59,003
Distributed earnings per share:
Series B Preferred Stock [I=A/G] $0.39 $0.39
Undistributed earnings per share:
Common stock [J=B/E] $0.29 $0.36
Unvested restricted stock [K=C/F] - $0.36
Series B Preferred stock [L=D/G] $0.29 $0.36
Earnings per share - Basic
Common stock [J] $0.29 $0.36
Unvested restricted stock [K] - $0.36
Series B Preferred stock [I+L] $0.68 $0.75
Earnings per share -Diluted [[B+C]/H] $0.29 $0.34
The number of shares of outstanding Series B Preferred Stock for which the earnings per share exceeded the earnings per share of common stock aggregated to 20.7 million and 19.1 million for the three months ended March 31, 2014 and 2013 respectively. These shares were excluded from the computation of diluted earnings per share as they were anti-dilutive.
iGATE CORPORATION
Reconciliation of Net Income, Net of Tax, to Adjusted EBITDA
(Amounts in thousands)
(unaudited)
Three Months ended
March 31,
2014 2013
Net income $ 31,711 $ 34,760
Adjustments
Depreciation and amortization 9,558 9,271
Interest expense 23,629 22,657
Income tax expense 13,425 14,960
Other income, net (7,354) (17,280)
Foreign exchange gain (204) (2,481)
Stock-based compensation 4,297 3,125
Delisting expenses - 93
Merger and reorganization expenses 130 419
Adjusted EBITDA (a non-GAAP measure) $ 75,192 $ 65,524
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 believes that the presentation of these measures will enhance investors' ability to analyze trends in the business and evaluate the Company's underlying performance relative to other companies in the industry.
iGATE CORPORATION
Reconciliation of Selected GAAP Measures to Non-GAAP Measures
(Amounts in thousands, except per share data)
(unaudited)
Three Months ended
March 31,
2014 2013
GAAP Net income attributable to iGATE
common shareholders $ 23,338 $ 27,145
Adjustments
Preferred dividend and accretion to preferred stock 8,278 7,615
Amortization of intangible assets 2,580 2,748
Stock-based compensation 4,297 3,125
Delisting expenses - 93
Merger and reorganization expenses 130 419
Foreign exchange loss on acquisition hedging
and remeasurement - 401
Income tax adjustments (2,243) (1,681)
Non-GAAP Net income attributable to iGATE common
shareholders $ 36,380 $ 39,865
Weighted average shares outstanding, Basic 58,687 57,285
Add:assumed preferred stock conversion 20,726 19,147
Non-GAAP weighted average shares outstanding , Basic 79,413 76,432
Weighted average dilutive common shares outstanding 60,541 59,003
Add:assumed preferred stock conversion 20,726 19,147
Weighted average dilutive common equivalent
shares outstanding 81,267 78,150
Basic EPS (GAAP) to Basic EPS (Non-GAAP):
Basic EPS (GAAP) $ 0.29 $ 0.36
Preferred dividend and accretion to preferred stock 0.11 0.10
Amortization of intangible assets 0.03 0.04
Stock-based compensation 0.06 0.04
Delisting expenses - -
Merger and reorganization expenses 0.00 0.00
Foreign exchange loss on acquisition hedging
and remeasurement - 0.00
Income tax adjustments (0.03) (0.02)
Basic EPS (Non-GAAP) $ 0.46 $ 0.52
Diluted EPS (GAAP) to Diluted EPS (Non-GAAP):
Diluted EPS (GAAP) $ 0.29 $ 0.34
Preferred dividend and accretion to preferred stock 0.10 0.10
Amortization of intangible assets 0.03 0.04
Stock-based compensation 0.06 0.04
Delisting expenses - 0.00
Merger and reorganization expenses 0.00 0.01
Foreign exchange loss on acquisition hedging
and remeasurement - 0.00
Income tax adjustments (0.03) (0.02)
Diluted EPS (Non-GAAP) $ 0.45 $ 0.51
Non-GAAP Disclosure of Adjusted EBITDA
iGATE presents Adjusted EBITDA as a supplemental measure of its performance. We define Adjusted EBITDA as net income plus (i) depreciation and amortization, (ii) interest expense, (iii) income tax expense, minus (iv) other income, net plus (v) foreign exchange (gain)/loss, (vi) stock-based compensation (vii) delisting expenses and (viii) merger and reorganization 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:
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