BANGALORE and FREMONT, California, July 17, 2013 /PRNewswire/ --
Signed Three Large Multi-Year Deals Each Valued at $100 Million or Greater
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, 2013.
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Second Quarter Highlights
Gerhard Watzinger, CEO, iGATE, said, "I am pleased with our performance in the second quarter with revenue growing 3% sequentially. We booked orders worth over $600 million including three significant multi-year contracts each valued at $100 million or greater. I am happy to see that the Business Outcomes proposition is resonating well with our customers and markets."
"We are seeing more positive signs related to offshore IT services spending and stability in the overall business environment, with clients spending to their budgets," he added.
Sujit Sircar, CFO, iGATE, said, "I am happy with the margin growth seen in the quarter as we absorbed our annual wage hikes which were offset largely by operational efficiencies and to an extent the depreciation of the Indian Rupee. Our profits increased and the cash flow position looks good. The diluted earnings per share increased by 57% on a non GAAP basis, which is another positive."
On the currency fluctuation, Sircar said, "The tailwinds provided by the rupee fluctuation against the U.S. dollar appear to be short-lived with the operating costs going up in the medium to long term."
Second Quarter Operating Results
Results for the three and six months ended June 30, 2013 and 2012, respectively on a GAAP and non-GAAP basis are provided in the table below.
Six Six
months months
ended ended
Q2 FY'13 Q2 FY'12 Y/Y FY'13 FY'12 Y/Y
Net revenue ($Millions) 283.3 268.0 6% 558.2 531.3 5%
Operating margin($Millions) 49.6 48.0 3% 102.2 96.1 6%
GAAP net income ($Millions) 30.0 12.7 136% 64.7 36.7 76%
GAAP diluted EPS ($) 0.28 0.07 300% 0.62 0.29 114%
Adjusted EBITDA ($Millions) 66.2 63.2 5% 131.8 131.5 0%
Non-GAAP net income ($Millions) 34.5 21.5 60% 74.4 50.5 47%
Non-GAAP diluted EPS ($) 0.44 0.28 57% 0.95 0.66 44%
New customer and project wins in the quarter
Awards and Recognitions
Conference Call and Webcast
iGATE will host a telephone conference call on Wednesday, July 17, 2013 at 8:00 am Eastern time to discuss the results of its second quarter and six months ended June 30, 2013. The live discussion may be accessed by dialing 877-407-8037 (toll free) or 201-689-8037 (toll). The on-demand version of the webcast will be available on the iGATE website.
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 conference number 417632. The telephonic replay will be available until July 24, 2013.
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 28,300 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 http://www.igate.com for more information.
iGATE Corporation is listed on NASDAQ under the symbol "IGTE."
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:
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 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 other 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 the Company's acquisition of iGATE Computer; and whether iGATE can successfully provide services/products and the degree to which these gain market acceptance. Furthermore, in connection with the iGATE Computer acquisition, the Company has borrowed significant amounts, including through the issuance of high yield notes, and will need 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, 2012, 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
June 30, December 31,
2013 2012
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 114,613 $ 95,155
Restricted cash - 3,072
Short-term investments 275,183 510,816
Accounts receivable, net 150,942 162,335
Unbilled revenues 89,239 72,901
Prepaid expenses and other current assets 36,012 31,710
Prepaid income taxes 8,351 8,541
Deferred tax assets 16,814 14,655
Foreign exchange derivative contracts 5,599 782
Total current assets 696,753 899,967
Deposits and other assets 22,036 25,372
Prepaid income taxes 27,848 28,351
Property and equipment, net 160,043 167,252
Leasehold land 79,944 86,933
Deferred tax assets 14,966 30,635
Goodwill 456,720 493,141
Intangible assets, net 128,770 144,428
Total assets $1,587,080 $1,876,079
LIABILITIES, REDEEMABLE NON CONTROLLING
INTEREST, PREFERRED STOCK AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 7,428 $ 7,799
Line of credit 77,000 77,000
Term loans 70,000 35,000
Accrued payroll and related costs 47,896 54,802
Other accrued liabilities 86,119 79,008
Accrued income taxes 4,091 9,134
Foreign exchange derivative contracts 5,349 7,516
Deferred revenue 13,625 17,890
Total current liabilities 311,508 288,149
Other long-term liabilities 2,385 3,265
Senior notes 770,000 770,000
Term Loans - 263,500
Accrued income taxes 19,039 17,272
Deferred tax liabilities 42,721 55,494
Total liabilities 1,145,653 1,397,680
Redeemable non controlling interest 6,560 32,422
Series B Preferred stock , without par value 393,961 378,474
Shareholders' equity:
Common Stock, par value $0.01 per share 589 585
Common stock in treasury, at cost (14,714) (14,714)
Additional paid-in capital 191,615 185,340
Retained earnings 220,121 170,875
Accumulated other comprehensive loss (356,705) (274,583)
Total equity 40,906 67,503
Total liabilities, redeemable
non controlling interest, preferred
stock and shareholders equity $1,587,080 $1,876,079
iGATE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands)
(unaudited)
Three Months ended Six Months ended
June 30, June 30,
2013 2012 2013 2012
Revenues $ 283,268 $ 267,993 $ 558,186 $ 531,258
Cost of revenues (exclusive of
depreciation and amortization) 175,771 167,682 346,010 325,111
Gross margin 107,497 100,311 212,176 206,147
Selling, general and
administrative expense 49,350 40,863 92,142 83,284
Depreciation and amortization 8,595 11,445 17,866 26,730
Income from operations 49,552 48,003 102,168 96,133
Other income (loss), net (4,712) (30,707) (7,608) (39,430)
Income before income taxes 44,840 17,296 94,560 56,703
Income tax expense 14,867 4,649 29,827 15,512
Net income before non-
controlling interest 29,973 12,647 64,733 41,191
Noncontrolling interest - - - 4,476
Net income attributable
to iGATE Corporation 29,973 12,647 64,733 36,715
Accretion to Preferred Stock 120 98 235 192
Preferred dividend 7,752 7,172 15,252 14,171
Net income attributable
to iGATE common shareholders $ 22,101 $ 5,377 $ 49,246 $ 22,352
iGATE CORPORATION
Earnings Per Share
(Amounts in thousands, except per share data)
(unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
PARTICULARS 2013 2012 2013 2012
Net income attributable
to iGATE common shareholders $ 22,101 $ 5,377 $ 49,246 $ 22,352
Add: Dividends on Series B Preferred Stock 7,752 7,172 15,252 14,171
29,853 12,549 64,498 36,523
Less: Dividends on
Series B Preferred Stock [A] 7,752 7,172 15,252 14,171
Undistributed Income $ 22,101 $ 5,377 $ 49,246 $ 22,352
Allocation of Undistributed Income
Common stock [B] 16,479 4,086 36,718 16,984
Unvested restricted stock [C] 6 3 14 13
Series B Preferred Stock [D] 5,616 1,288 12,514 5,355
$ 22,101 $ 5,377 $ 49,246 $ 22,352
Shares outstanding for allocation
of undistributed income:
Common stock 57,301 57,227 57,301 57,227
Unvested restricted stock 23 45 23 45
Series B Preferred Stock 19,529 18,045 19,529 18,045
76,853 75,317 76,853 75,317
Weighted average shares outstanding:
Common stock [E] 57,288 57,163 57,403 56,978
Unvested restricted stock [F] 23 45 23 45
Series B Preferred Stock [G] 19,529 18,045 19,529 18,045
76,840 75,253 76,955 75,068
Weighted average common stock outstanding 57,288 57,163 57,403 56,978
Dilutive effect of stock options
and restricted shares outstanding 1,611 1,569 1,683 1,636
Dilutive weighted average shares
outstanding [H] 58,899 58,732 59,086 58,614
Distributed earnings per share:
Series B Preferred Stock [I=A/G] $0.40 $0.40 $0.79 $0.79
Undistributed earnings per share:
Common stock [J=B/E] $0.29 $0.07 $0.65 $0.30
Unvested restricted stock [K=C/F] $0.29 $0.07 $0.65 $0.30
Series B Preferred stock [L=D/G] $0.29 $0.07 $0.65 $0.30
Basic earnings per share from operations :
Common Stock [J] $0.29 $0.07 $0.65 $0.30
Unvested restricted stock [K] $0.29 $0.07 $0.65 $0.30
Series B Preferred stock [I+L] $0.69 $0.47 $1.44 $1.09
Diluted earnings per share
from operations [[B+C]/H] $0.28 $0.07 $0.62 $0.29
The number of outstanding participative convertible preferred stock for which the earnings per share exceeded the earnings per share of common stock aggregated to 19.5 million and 18.0 million for the three and six months ended June 30, 2013 and 2012, respectively. These shares were excluded from the computation of diluted earnings per share because 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 Six Months ended
June 30, June 30,
2013 2012 2013 2012
GAAP Net income attributable
to iGATE common shareholders $ 22,101 $ 5,377 $ 49,246 $ 22,352
Adjustments
Preferred dividend and accretion
to preferred stock 7,872 7,270 15,487 14,363
Amortization of Intangible assets 2,692 2,809 5,440 5,920
Stock Based Compensation 3,240 2,663 6,365 5,475
Delisting expenses - 1,089 93 3,204
Merger and reorganization expenses 4,845 - 5,264 -
Foreign exchange (gain) / loss on
acquisition hedging and remeasurement 88 4,133 489 3,154
Forfeiture of vested stock options (3,005) - (3,005) -
Income tax adjustments (3,327) (1,880) (5,008) (4,007)
Non-GAAP Net income attributable
to iGATE common shareholders $ 34,506 $ 21,461 $ 74,371 $ 50,461
Weighted average shares outstanding, Basic 57,311 57,208 57,426 57,023
Add back: assumed preferred
stock conversion 19,529 18,045 19,529 18,045
Non-GAAP weighted average shares
outstanding, Basic 76,840 75,253 76,955 75,068
Weighted average dilutive common
shares outstanding 58,899 58,732 59,086 58,614
Add back: assumed preferred
stock conversion 19,529 18,045 19,529 18,045
Weighted average dilutive common
equivalent shares outstanding 78,428 76,777 78,615 76,659
Basic EPS (GAAP) to Basic EPS (Non-GAAP):
Basic EPS (GAAP) from operations $ 0.29 $ 0.07 $ 0.65 $ 0.30
Preferred dividend and accretion
to preferred stock 0.10 0.10 0.20 0.19
Amortization of Intangible assets 0.04 0.04 0.08 0.08
Stock Based Compensation 0.04 0.04 0.08 0.07
Delisting expenses - 0.01 0.00 0.04
Merger and reorganization expenses 0.06 - 0.06 -
Foreign exchange (gain) / loss on
acquisition hedging and remeasurement (0.00) 0.05 0.00 0.04
Forfeiture of vested stock options (0.04) - (0.04) -
Income tax adjustments (0.04) (0.02) (0.06) (0.05)
Basic EPS (Non-GAAP) from operations $ 0.45 $ 0.29 $ 0.97 $ 0.67
Diluted EPS (GAAP) to Diluted EPS (Non-GAAP):
Diluted EPS (GAAP) from operations $ 0.28 $ 0.07 $ 0.62 $ 0.29
Preferred dividend and accretion
to preferred stock 0.10 0.10 0.20 0.19
Amortization of Intangible assets 0.04 0.04 0.08 0.08
Stock Based Compensation 0.04 0.03 0.08 0.07
Delisting expenses - 0.01 0.00 0.04
Merger and reorganization expenses 0.06 - 0.07 -
Foreign exchange (gain) / loss
on acquisition hedging and remeasurement (0.00) 0.05 0.00 0.04
Forfeiture of vested stock options (0.04) - (0.04) -
Income tax adjustments (0.04) (0.02) (0.06) (0.05)
Diluted EPS (Non-GAAP) from operations $ 0.44 $ 0.28 $ 0.95 $ 0.66
iGATE CORPORATION
Reconciliation of Net Income, Net of Tax, to Adjusted EBITDA
(Amounts in thousands)
(unaudited)
Three Months ended Six Months ended
June 30, June 30,
2013 2012 2013 2012
Net income $ 29,973 $ 12,647 $ 64,733 $ 41,191
Adjustments
Depreciation and amortization 8,595 11,445 17,866 26,730
Interest expenses 24,112 21,032 46,769 40,155
Income tax expense 14,867 4,649 29,827 15,512
Other income, net (17,417) (7,596) (34,697) (15,160)
Foreign exchange (gain) / loss (1,983) 17,271 (4,464) 14,435
Stock Based Compensation 3,240 2,663 6,365 5,475
Delisting expenses 0 1,089 93 3,204
Merger and reorganization expenses 4,845 - 5,264 -
Adjusted EBITDA (a non-GAAP measure) $ 66,232 $ 63,200 $ 131,756 $ 131,542
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.
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 (gain)/loss, (vi) stock based compensation (vi1) Delisting expenses (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. 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:
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.
Media Contact
Prabhanjan Deshpande "PD"
+91-80-4104-5006
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Investor Contact
Salil Ravindran
+1-510-298-8400
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Regional media contacts
India
Shoma Ghosh
Adfactors PR
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Amrita Panja
Adfactors PR
+91-9920081123
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North America
Anu Kher
Gutenberg Communications
+1-646-775-6301
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Meagan Ostrowski
Gutenberg Communications
+1-212-810-4394
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Europe
Radha Ahlstrom-Vij
Gutenberg Communications
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