Exhibit 99.1
IGATE REPORTS REVENUE GROWTH OF 9% IN THE FIRST QUARTER OF 2005
OVER SAME QUARTER A YEAR AGO
- Offshore subsidiary adds 11 new clients, including 5 Fortune 1000 firms and
improves its offshore-onsite ratio -
PITTSBURGH, May 10 /PRNewswire-FirstCall/ -- iGATE Corporation (Nasdaq:
IGTE), a global provider of IT and BPO services, today announced its financial
results for the first quarter ending March 31, 2005. Consolidated revenues for
this quarter were $69.6 million, an 8.6% increase from $64.1 million reported in
the same quarter a year ago and a 2.2% sequential increase from $68.1 million in
the fourth quarter of 2004. The sequential increase was primarily driven by
revenue growth at iGATE Global Solutions, the Company's Indian offshore
subsidiary.
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This quarter's loss from operations was breakeven compared with a loss
from operations of ($2.2) million in the first quarter of 2004 and a loss from
operations of ($8.1) million in the prior quarter. The improved result this
quarter was driven by lower SG&A expenses which represented 24.8% of revenues in
the quarter, compared with 30.1% in the first quarter of 2004.
Net income for the first quarter of 2005 was $0.03 per share or $1.3
million. This quarter's results included a net tax benefit of $1.9 million
primarily related to the reversal of certain prior year tax accruals. The
reversal was triggered by a recent favorable IRS tax audit of iGATE for the
years 1999, 2000 and 2001. This quarter's net income compares with a net loss of
($1.8) million or ($0.03) per share reported in the first quarter of 2004.
Sunil Wadhwani, Chief Executive Officer and co-founder of iGATE Corporation
said: "Our offshore subsidiary, iGATE Global Solutions (iGS), continues to make
progress. Although lower offshore bill rates negatively impacted gross margin,
this was offset by a decrease in SG&A expenses which led to positive operating
income for the quarter. iGATE's Professional Services business continued to
deliver steady profitability above industry average, with income from operations
representing 8.1% of revenues this quarter compared with 7% in the same quarter
a year ago. Both businesses are expected to contribute to iGATE's profitability
in 2005."
Ashok Trivedi, President and co-founder of iGATE Corporation, commented:
"iGS's revenue ramp-up and acquisition of new Fortune 1000 clients continue to
be our priority. We are confident iGS has the expertise and infrastructure in
place to meet and exceed its clients' needs and believe Phaneesh Murthy, CEO of
iGATE Global Solutions Ltd., and his team are on track to take iGS to the next
level."
Offshore Outsourcing Services
Highlights at iGS for the first quarter of 2005 include:
-- Operating results improved to $0.2 million compared with a loss from
operations of ($1.5) million in the first quarter of 2004. This
improvement was primarily driven by more effective management of SG&A
expenses.
-- Eleven new clients were added in the quarter, including 5 Fortune 1000
customers.
-- Offshore volume grew by 29.7% over the corresponding quarter last year.
-- Onsite volume declined due to the ongoing rationalization of non-
strategic relationships.
-- Offshore / onsite volume ratio improved to 66% / 34% from 52% / 48% in
last year's first quarter, the highest level ever achieved.
-- Offshore contribution to revenues increased to 35.1% of IT services
revenues compared with 29.7% in the first quarter of 2004.
-- GE revenue concentration declined to 38.3% from 44% in the first quarter
of 2004, as the transition towards a more offshore-centric model
continued.
-- Number of billable employees increased by 255 to 3,556 in the quarter.
Commenting on the progress of iGS, Phaneesh Murthy, CEO of iGATE Global
Solutions, said: "2004 was a year of consolidation and we had mixed outcomes. We
did well on building our internal capabilities, brought offshore / onsite ratios
to industry standards and improved margins. Our challenge through 2005 will be
to add customers that can help us scale our business in the new integrated
technology and operations model."
Professional Services
-- Revenues in the first quarter 2005 increased 26.3% to $36.5 million from
$28.9 million in the first quarter of 2004.
-- Income from operations increased to $2.9 million in the first quarter of
2005 from $2.0 million in the first quarter of 2004, despite a
year-over-year decline in gross margin.
"During the first quarter 2005, the Business Intelligence (BI) practice we
launched in 2004 made progress. The practice is now headed by an industry
veteran with over 15 years of BI experience, whose expertise contributes to the
practice's strong growth and helps us expand the scope of high value BI services
we can provide to our clients. While this practice represents a niche market for
iPS, we expect it to grow to a more meaningful size over the next 18 months,"
said Steve Shangold, President of iGATE Mastech Inc.
Looking ahead to Q2 2005, Sunil Wadhwani added, "We expect revenues to be
flat with Q1-05 as iGS gradually builds momentum in its sales pipeline and
converts it into revenues over the next few quarters. As a result of this, as
well as an increase in wages and salaries in India effective April 1, 2005, we
anticipate our second quarter net loss to be breakeven or close to it."
iGATE will host its first quarter earnings conference call at 10:00 am ET,
on Tuesday, May 10, 2005. The call will be webcast at http://www.igatecorp.com
via the Investor Relations section of the site. Investors should log on 10
minutes prior to the start of the program.
A replay of the call will be available beginning at approximately 11:00 a.m.
May 10, 2005 through 12:00 midnight, May 17, 2005. Domestic callers can access
the replay by dialing 877-660-6853 and entering account code 293 and conference
number 147099. International callers can access the replay by dialing
201-612-7415 and entering the same two codes. The webcast will be available for
replay though May 17, 2005 on iGATE's corporate website.
About iGATE Corporation:
iGATE Corporation (Nasdaq: IGTE) is the first fully integrated technology
and operations firm with a global service model. iGATE Corporation, through its
offshore subsidiary iGATE Global Solutions Ltd., enables clients to optimize
their business through a combination of process investment strategies,
technology leverage and business process outsourcing and provisioning. Services
include consulting, enterprise data management and data warehousing, business
intelligence and analytics, design, development, system integration, package
evaluation and implementation, re-engineering and maintenance. iGATE Corporation
also offers IT Professional Services in the areas of packaged application
implementation, custom development, web services and business intelligence.
The company services more than 500 clients across five continents. Clients
rely on iGATE because of our high quality of service, our responsiveness and our
cost-effective global reach. More information on iGATE is available at
http://www.igatecorp.com.
Some of the statements in this news release that are not historical facts
are forward-looking statements. These forward-looking statements include our
financial, growth and liquidity projections as well as statements concerning our
plans, strategies, intentions and beliefs concerning our business, cash flows,
costs and the markets in which we operate. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects" and similar expressions are
intended to identify certain forward-looking statements. These statements are
based on information currently available to us, and we assume no obligation to
update these statements as circumstances change. There are risks and
uncertainties that could cause actual events to differ materially from these
forward-looking statements. These risks include, but are not limited to, our
ability to predict our financial performance, the level of market demand for our
services, the highly-competitive market for the types of services that we offer,
the impact of competitive factors on profit margins, market conditions that
could cause our customers to reduce their spending for our services, our ability
to create, acquire and build new businesses and to grow our existing businesses,
our ability to attract and retain qualified personnel, our ability to reduce
costs and conserve cash, currency fluctuations and market conditions in India
and elsewhere around the world, political and military tensions in India and
South Asia, changes in generally accepted accounting principles and/or their
interpretation and other risks that are described in more detail in our filings
with the Securities and Exchange Commission including our Form 10-K (as amended)
for the year ended December 31, 2004.
iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
March 31, December 31,
2005 2004
------------ ------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 21,688 $ 28,201
Short term investments 32,332 35,863
Accounts receivable, net 63,480 61,363
Prepaid and other current assets 5,878 6,985
Prepaid income taxes 1,153 435
Deferred income taxes 2,858 2,304
Total current assets 127,389 135,151
Investments in unconsolidated affiliates 3,938 3,951
Land, building, equipment and
leasehold improvements, net 29,443 25,814
Goodwill 9,283 9,398
Intangible assets, net 5,319 5,918
Total assets $ 175,372 $ 180,232
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 9,891 $ 8,636
Accrued payroll and related costs 14,071 16,662
Accrued income taxes - 2,019
Other accrued liabilities 7,725 9,555
Restructuring reserve 2,933 3,692
Deferred revenue 510 653
Current liabilities of
discontinued operations 87 88
Total current liabilities 35,217 41,305
Restructuring reserve 3,517 3,777
Other long term liabilities 520 564
Deferred income taxes 9,399 9,520
Total liabilities 48,653 55,166
Minority interest 13,574 13,366
Shareholders' equity:
Common Stock, par value $0.01
per share 535 535
Additional paid-in capital 161,510 161,345
Retained deficit (35,366) (36,710)
Deferred compensation (1,731) (1,934)
Common stock in treasury, at cost (14,714) (14,714)
Accumulated other comprehensive
income 2,911 3,178
Total shareholders' equity 113,145 111,700
Total liabilities and
shareholders' equity $ 175,372 $ 180,232
iGATE Corporation
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended
---------------------------
March 31, March 31,
2005 2004
------------ ------------
Revenues $ 69,601 $ 64,063
Cost of revenues 52,404 47,026
Gross margin 17,197 17,037
Selling, general and administrative 17,229 19,280
Loss from operations (32) (2,243)
Other (expense) income, net (286) 756
Minority interest (84) (23)
Equity in losses of affiliated companies (117) (100)
Loss before income taxes (519) (1,610)
Income tax (benefit) expense (1,863) 312
Income (loss) from continuing operations 1,344 (1,922)
Income from discontinued
operations, net of income taxes - 170
Net income (loss) $ 1,344 $ (1,752)
Net earnings (loss) per common share, Basic:
Earnings (loss) from continuing operations $ 0.03 $ (0.04)
Earnings from discontinued operations - 0.01
Net earnings (loss) - Basic $ 0.03 $ (0.03)
Net earnings (loss) per common share, Diluted:
Earnings (loss) from continuing operations $ 0.03 $ (0.04)
Earnings from discontinued operations - 0.01
Net earnings (loss) - Diluted $ 0.03 $ (0.03)
Weighted average common shares
outstanding, Basic 52,479 52,226
Weighted average dilutive common
equivalent shares outstanding 52,723 52,226
iGATE
Three Months Ended iGATE Professional iGATE
March 31, 2005 Solutions Services Corporate Total
- ----------------------------- ------------ ------------ ------------ ------------
External revenues $ 32,711 $ 36,457 $ 433 $ 69,601
Cost of revenues 23,193 28,957 254 52,404
Gross margin 9,518 7,500 179 17,197
Selling, general
and administrative 9,277 4,551 3,401 17,229
Income (loss) from operations $ 241 $ 2,949 (3,222) (32)
Other expense, net (286) (286)
Minority interest (84) (84)
Equity in losses of
affiliated companies (117) (117)
Loss before income taxes $ (3,709) $ (519)
SOURCE iGATE Corporation
-0- 05/10/2005
/CONTACT: Laureen Laby, Investor Relations, +1-412-787-9230, or
llaby@igate.com/
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