Exhibit 99.1
Kanbay International, Inc. Reports Strong Second Quarter Results
Rosemont, IL — August 25, 2004 — Kanbay International, Inc. (NASDAQ: KBAY), a global IT services firm focused on the financial services industry, today announced its financial results for the second quarter ended June 30, 2004.
Highlights for the second quarter include:
• Quarterly revenue increased to $44.8 million, up 21% sequentially and 73% year-over-year
• Revenue from third parties increased 37% sequentially and 68% year-over-year
• Operating income in the second quarter was $7.6 million, which was an increase of 31% sequentially and 343% year-over-year
• Second quarter net income of $6.4 million, up 21% sequentially and 189% year-over-year
Total revenue for the second quarter grew 21% sequentially and 73% year-over-year with revenue from third parties increasing by 37% sequentially and 68% year-over-year. Operating income was $7.6 million in the second quarter, which was an increase of 31% sequentially and 343% year-over-year. Net income for the quarter was $6.4 million resulting in diluted earnings per share of $0.21 compared to net income of $5.3 million and diluted earnings per share of $0.18 in the first quarter of 2004.
“We are still leveraging past infrastructure investments that have enabled our revenue growth,” according to Bill Weissman, Chief Financial Officer. “With continued strong gross margins and additional economies of scale of our support infrastructure, we continue to move toward our long term operating margin objective of 20%.”
“Kanbay continues to experience advantages from our focus on the financial services industry and we are seeing strength across all four of the groups with whom we work — banking, credit services, insurance, and capital markets,” said Raymond Spencer, Chairman and Chief Executive Officer. “Our client base is becoming far more sophisticated in regards to global delivery for IT services. Kanbay’s commitment to investing in building deep technical and domain knowledge, combined with over a decade of experience operating a successful global delivery model, continues to give us a competitive advantage.”
Mr. Spencer added, “Our clients look to us to lower their total cost of ownership by providing them with high value solutions utilizing Kanbay’s Microcosm Model. This model ensures that each individual Kanbay location, from a competency perspective, is a microcosm of the whole company and is the foundation of our highly leveraged global delivery capabilities. We are pleased that our clients recognize the unique value of our approach and we anticipate continued strength going forward.”
Conference Call
Kanbay management will host a conference call on August 25th at 10:00 a.m. (ET) to discuss the Company’s results of operations for the second quarter. To participate in the call, domestic callers can dial (800) 291-9234 and international callers can dial (617) 614-3923. The passcode for the conference call is 95392302. The conference call will also be webcast and accessible through Kanbay’s website at www.kanbay.com. Please access the website at least fifteen minutes prior to the call to register and download any required software. A replay of the conference call will be available for one week, until 5:00 p.m. (ET) on September 1, 2004, by dialing (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The passcode for the replay is 37338084. A webcast replay of the conference call will also be available for two weeks following the call, until 5:00 p.m. (ET) on September 8, 2004, through Kanbay’s website at www.kanbay.com.
About Kanbay International, Inc.
Founded in 1989, Kanbay International, Inc. (NASDAQ: KBAY) is a global IT services firm focused on the financial services industry. With over 3,600 employees, Kanbay provides its services primarily to banks, credit service providers, insurance companies, and capital markets firms. The company uses a global delivery model to provide application development, maintenance and support, software package selection and integration, business
process and technology advice, network and system security, and specialized services. Kanbay is a CMM Level 5 assessed company headquartered in greater Chicago with offices in the U.S., Canada, U.K., Australia, Hong Kong, Japan, Singapore and India.
Forward-Looking Statements
This release contains statements relating to projections or future results. These statements are forward-looking statements under the federal securities laws. We can make no assurance that any of projections or future results discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. For a discussion of important factors that could affect our actual results, please refer to our SEC filings, including the “Risk Factors” section of the prospectus we recently filed with the SEC.
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Kanbay International, Inc.
Condensed Consolidated Statement of Income (Unaudited)
(dollars in thousands except per share amounts)
| | Three months ended June 30 | | Six months ended June 30 | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Net revenues—related parties | | $ | 29,331 | | $ | 16,690 | | $ | 55,091 | | $ | 30,904 | |
Net revenues—third parties | | 15,419 | | 9,208 | | 26,664 | | 17,109 | |
Total revenues | | 44,750 | | 25,898 | | 81,755 | | 48,013 | |
Cost of revenues | | 24,149 | | 14,347 | | 42,914 | | 26,493 | |
Gross profit | | 20,601 | | 11,551 | | 38,841 | | 21,520 | |
Sales and marketing expenses | | 4,183 | | 2,796 | | 8,149 | | 4,930 | |
General and administrative expenses | | 7,378 | | 5,922 | | 14,556 | | 10,993 | |
Stock compensation expense | | 307 | | 357 | | 606 | | 668 | |
Total selling, general and administrative expenses | | 11,868 | | 9,075 | | 23,311 | | 16,591 | |
Depreciation and amortization | | 1,185 | | 773 | | 2,222 | | 1,524 | |
Gain on sale of fixed assets | | (10 | ) | — | | (20 | ) | (7 | ) |
Income from operations | | 7,558 | | 1,703 | | 13,328 | | 3,412 | |
Other income (expense) | | | | | | | | | |
Interest expense and other, net | | (82 | ) | (94 | ) | 37 | | (285 | ) |
Equity in earnings of affiliate | | 614 | | 617 | | 1,384 | | 990 | |
Total other income/(expense) | | 532 | | 523 | | 1,421 | | 705 | |
Income before income taxes | | 8,090 | | 2,226 | | 14,749 | | 4,117 | |
Income tax expense | | 1,660 | | 23 | | 2,990 | | 80 | |
Net income | | 6,430 | | 2,203 | | 11,759 | | 4,037 | |
Dividends on preferred stock | | (125 | ) | (152 | ) | (277 | ) | (302 | ) |
Increase in carrying value of stock subject to repurchase | | — | | (610 | ) | — | | (1,804 | ) |
Income available to common stockholders | | $ | 6,305 | | $ | 1,441 | | $ | 11,482 | | $ | 1,931 | |
Income per share of common stock | | | | | | | | | |
Basic | | $ | 0.29 | | $ | 0.07 | | $ | 0.54 | | $ | 0.09 | |
Diluted | | $ | 0.21 | | $ | 0.05 | | $ | 0.40 | | $ | 0.08 | |
Weighted average number of common shares outstanding | | 21,828,474 | | 20,484,721 | | 21,277,125 | | 20,484,721 | |
Weighted average number of common and dilutive shares outstanding | | 29,908,725 | | 29,200,260 | | 29,421,440 | | 29,195,363 | |
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Kanbay International, Inc.
Condensed Consolidated Statement of Financial Position (Unaudited)
(In thousands)
| | June 30, 2004 | | December 31, 2003 | |
Assets | | | | | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 6,621 | | $ | 17,419 | |
Trade accounts receivable | | 29,390 | | 10,469 | |
Other current assets | | 6,528 | | 5,062 | |
Total Current Assets | | 42,539 | | 32,950 | |
Property and equipment - net | | 14,492 | | 11,315 | |
Investment in affiliate | | 23,006 | | 22,185 | |
Other assets | | 3,944 | | 1,909 | |
Total Assets | | $ | 83,981 | | $ | 68,359 | |
Liabilities and Stockholders’ Equity | | | | | |
Current Liabilities | | | | | |
Accounts payable | | $ | 3,435 | | $ | 2,312 | |
Accrued and other current liabilities | | 20,035 | | 18,539 | |
Total Current Liabilities | | 23,470 | | 20,851 | |
Total Liabilities | | 23,470 | | 20,851 | |
Stockholders’ Equity | | 60,511 | | 47,508 | |
Total Liabilities and Stockholders’ Equity | | $ | 83,981 | | $ | 68,359 | |
Contacts:
Debra Johnson, Public Relations
847.384.6151
djohnson@kanbay.com
Atul Phull, Investor Relations
847.384.6145
aphull@kanbay.com
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