Exhibit 99.1
IGATE CORPORATION REPORTS CONTINUED IMPROVEMENT IN THIRD QUARTER FINANCIAL
RESULTS
NINTH CONSECUTIVE QUARTER OF YEAR-OVER-YEAR REVENUE GROWTH;
INCOME FROM OPERATIONS OF $1.7 MILLION VERSUS A LOSS OF ($1.5) MILLION;
OFFSHORE SUBSIDIARY ADDS EIGHT CLIENTS, SIX ARE GLOBAL 1000
PITTSBURGH, Nov. 8 /PRNewswire-FirstCall/ -- iGATE Corporation (Nasdaq:
IGTE), a global provider of IT and BPO services, today announced its financial
results for the third quarter ended September 30, 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010110/IGTELOGO)
Third Quarter Highlights
* Consolidated revenues increase 5.3% year-over-year, 3.2% sequentially.
* Sequential gross margin increase to 27.0% from 24.7%.
* Consolidated income from operations of $1.7 million compared to ($1.5)
million loss from operations last year and ($0.6) million loss from
operations in 2005 second quarter.
* Diluted earnings per share of $0.02 compared to net loss of ($0.03) last
year.
* Cash flow provided by operations a positive $8.4 million year to date.
Third Quarter Results
Consolidated revenues for the third quarter increased 5.3% to $70.1 million
from $66.6 million in the same quarter last year and rose 3.2% from $67.9
million reported in the second quarter of 2005. The year-over-year revenue
increase was due to revenue growth at the Company's offshore subsidiary, iGATE
Global Solutions ("iGS"), which was driven by momentum from new clients added
during the past 15 months, increases in billable headcount and utilization. The
sequential third quarter revenue improvement was due to higher revenues from iGS
as well as net growth in the Company's core staffing operations, iGATE
Professional Services ("iPS").
Gross margin, as a percentage of sales, increased to 27.0% in the third
quarter from 25.3% in last year's third quarter and the 24.7% reported in the
2005 second quarter. The improvements were due to higher revenue and gross
margin at iGS and higher utilization rates at both iGS and iPS.
Selling, general, and administrative (SG&A) expense for the third quarter
decreased 6.0% to $17.2 million from $18.3 million in the same period last year
and decreased 0.9% from $17.4 million reported in the 2005 second quarter. The
sequential quarter over quarter decrease was due primarily to a reduction in bad
debt expense at iPS. As a percentage of sales, third quarter SG&A declined to
24.6% from 27.5% in the corresponding period last year and from 25.6% in the
2005 second quarter.
Third quarter income from operations improved to $1.7 million compared to a
loss of ($1.5) million in the corresponding period last year. Last year's third
quarter included a $1.6 million pretax charge related to the completion of the
Company's Quintant acquisition. On a sequential basis, the third quarter income
from operations of $1.7 million compared to a second quarter loss from
operations of ($0.6) million.
The Company reported net income of $0.9 million, or $0.02 per diluted share,
for the third quarter compared to a net loss of ($1.8) million, or ($0.03) per
diluted share, in the corresponding period last year.
"We are pleased with the solid progress being made on our top priorities of
growing offshore revenues and expanding our overall profitability," stated Sunil
Wadhwani, Chief Executive Officer and co-founder of iGATE Corporation. "During
the quarter, we had material revenue growth in offshore services and our overall
gross profit margins improved significantly. In conjunction with our shift in
strategic focus to pursue more Global 1000 clients that represent greater growth
opportunities, we continued to add more high quality clients at iGS during the
quarter, and we are gaining more project and service traction with clients added
during the previous 15 months. In addition, our staffing business remains
steady, is profitable and continues to generate solid cash flow."
Ashok Trivedi, President and co-founder of iGATE Corporation commented, "iGS
secured eight additional clients during the third quarter and six are Global
1000 companies. In addition, iGS again increased its billable headcount and
utilization rates. We are very encouraged by the recent client additions and
believe that our business strategy of focusing on larger, multi- year contracts
with Global 1000 companies is beginning to show the positive results we expect."
Year-To-Date Results
Consolidated revenues for the nine months ended September 30, 2005 increased
5.7% to $207.6 million from $196.5 million in the same period last year. The
year-to-date revenue increase was due primarily to higher revenues from iPS as a
result of a large financial services client project that began in the second
quarter of 2004 and reached completion during the 2005 third quarter. Also
contributing to the nine month revenue increase was slightly higher revenues
reported at iGS.
As a percentage of sales, year-to-date gross margin declined slightly to
25.5% from 25.6% in the corresponding period last year. The gross margin decline
was attributable to a higher revenue contribution from the Company's lower
margin iPS business and annual wage increases at iGS.
Year-to-date net income was $1.9 million, or $0.04 per diluted share,
compared to a net loss of ($9.3) million, or ($0.18) per basic share, in the
same period last year.
Operating Segments
iGATE Global Solutions (iGS)
* iGS reported third quarter revenues of $35.2 million, up 3.2% from second
quarter revenues of $34.1 million.
* iGS reported third quarter gross margins of 31.0%, up from 26.9% in the
second quarter.
* iGS reported third quarter operating income of $0.7 million compared to
an operating loss of ($0.5) million in the second quarter.
* iGS added eight new clients during the third quarter, six of which are
Global 1000 companies, bringing to 57 the total number of new clients
added during the past 15 months, 33 of which are Global 1000 companies.
* The improvement in iGS's third quarter results was primarily due to
recent client additions, increases in billable headcount and utilization
rates.
* The third quarter offshore/onsite ratio improved to 68% / 32% compared
with 57% / 43% in the corresponding period last year and 67% / 33% in the
2005 second quarter.
* Offshore revenues contributed 40.6% to total third quarter iGS IT
services revenues compared with 36.8% in the 2005 second quarter.
* iGS added 73 employees during the third quarter, 64 of which are billable
employees. As of the end of September, the iGS total employee headcount
was approximately 4,360.
* Mr. UVG Sekar, formerly with IBM Corporation, joined iGS as the Global
Head of Human Resources. He will be leading the company's recruitment and
human resource initiatives, policies and administration.
* The iGS Board of Directors approved the initial plan regarding Phase III
of the company's Whitefield campus at Bangalore, India. This project is
projected to add 1,000 seats and is expected to be completed in 2007.
iGATE Professional Services
* Third quarter revenues of $34.2 million were comparable to $34.4 million
reported in the same period last year and up 3.4 percent compared with
$33.1 million in the 2005 second quarter.
* Third quarter gross margins increased to 22.3%, up from 21.7% in the
second quarter.
* Third quarter income from operations for iPS of $3.7 million was
comparable with the corresponding period last year and up 31.0% compared
with the $2.8 million reported in the 2005 second quarter.
* Growth in core staffing operations strengthened with a net growth of 50
consultants during the third quarter.
Cash Flow & Balance Sheet
For the nine month year-to-date period ended September 30, 2005, cash flow
provided by operations was a positive $8.4 million compared to cash used by
operations of $14.9 million for the corresponding period in 2004.
The Company continues to maintain a strong balance sheet. As of September
30, 2005, the Company had $62.5 million in cash and short-term investments and
no outstanding borrowings.
Conference Call
iGATE will host a telephone conference call to discuss the company's third
quarter financial results on Tuesday, November 8, 2005 at 10:00 a.m. EST. A live
webcast of this conference call will be available on the company's website,
http://www.igatecorp.com. Simply click on the investor relations section and
follow the links to the live webcast. The webcast will remain available for
replay through November 15, 2005.
About iGATE Corporation
Pittsburgh, Pennsylvania-based 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, systems
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 300 clients across five continents. Clients
rely on iGATE because of the high quality of service, responsiveness, and
cost-effective global reach. More information about iGATE is available at
http://www.igatecorp.com.
Forward-Looking Statements
Some of the statements contained in this news release that are not
historical facts are forward-looking statements. These forward-looking
statements include the company's financial, growth and liquidity projections as
well as statements concerning the company's plans, strategies, intentions and
beliefs concerning business cash flows, costs and the markets in which it
operates. 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 the company and it assumes no obligation to update the forward
statements as circumstances change. There are risks and uncertainties that could
cause actual events to differ materially from the forward-looking statements.
These risks include, but are not limited to, the company's ability to predict
its financial performance, the level of market demand for its services, the
highly-competitive market for the types of services offered by the company, the
impact of competitive factors on profit margins, market conditions that could
cause the company's customers to reduce their spending for its services, the
company's ability to create, acquire and build new businesses and to grow
existing businesses, attract and retain qualified personnel, 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 the
company's filings with the Securities and Exchange Commission including its Form
10-K (as amended) for the year ended December 31, 2004.
iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
September 30, December 31,
2005 2004
------------- -------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 31,510 $ 28,201
Short term investments 31,010 35,863
Accounts receivable, net 54,702 61,363
Prepaid and other current assets 6,094 6,985
Prepaid income taxes 1,896 435
Deferred income taxes 1,817 2,304
Total current assets 127,029 135,151
Investments in unconsolidated
affiliates 4,328 3,951
Land, building, equipment and
leasehold improvements, net 29,880 25,814
Goodwill 9,192 9,398
Intangible assets, net 4,142 5,918
Total assets $ 174,571 $ 180,232
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 8,342 $ 8,636
Accrued payroll and related
costs 16,321 16,662
Accrued income taxes - 2,019
Other accrued liabilities 5,750 9,555
Restructuring reserve 2,413 3,692
Deferred revenue 177 653
Current liabilities of
discontinued operations 81 88
Total current liabilities 33,084 41,305
Restructuring reserve 2,974 3,777
Other long term liabilities 528 564
Deferred income taxes 9,723 9,520
Total liabilities 46,309 55,166
Minority interest 14,271 13,366
Shareholders' equity:
Common Stock, par value $0.01
per share 536 535
Additional paid-in capital 161,587 161,345
Retained deficit (34,777) (36,710)
Deferred compensation (1,323) (1,934)
Common stock in treasury, at
cost (14,714) (14,714)
Accumulated other comprehensive
income 2,682 3,178
Total shareholders' equity 113,991 111,700
Total liabilities and
shareholders' equity $ 174,571 $ 180,232
iGATE Corporation
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues $ 70,102 $ 66,565 $ 207,599 $ 196,496
Cost of revenues 51,172 49,728 154,674 146,236
Gross margin 18,930 16,837 52,925 50,260
Selling, general and
administrative 17,221 18,311 51,824 54,565
Restructuring charges - - - 4,896
Income (loss) from operations 1,709 (1,474) 1,101 (9,201)
Other income, net 411 611 645 867
Minority interest (260) (73) (403) 56
Equity in income (losses) of
affiliated companies 137 (98) 108 (285)
Income (loss) before income taxes 1,997 (1,034) 1,451 (8,563)
Income tax expense (benefit) 1,122 785 (482) 4,525
Income (loss) from continuing
operations 875 (1,819) 1,933 (13,088)
Income from discontinued
operations, net of income taxes - 3 - 3,818
Net income (loss) $ 875 $ (1,816) $ 1,933 $ (9,270)
Net earnings (loss) per common share, Basic:
Earnings (loss) from continuing
operations $ 0.02 $ (0.03) $ 0.04 $ (0.25)
Earnings from discontinued
operations - 0.00 - 0.07
Net earnings (loss) - Basic $ 0.02 $ (0.03) $ 0.04 $ (0.18)
Net earnings (loss) per common share, Diluted:
Earnings (loss) from continuing
operations $ 0.02 $ (0.03) $ 0.04 $ (0.25)
Earnings from discontinued
operations - 0.00 - 0.07
Net earnings (loss) - Diluted $ 0.02 $ (0.03) $ 0.04 $ (0.18)
Weighted average common shares
outstanding, Basic 52,529 52,922 52,507 52,710
Weighted average dilutive common
equivalent shares outstanding 52,706 52,922 52,712 52,710
iGATE
iGATE Professional iGATE
Three Months Ended 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)
iGATE
iGATE Professional iGATE
Three Months Ended June 30, 2005 Solutions Services Corporate Total
- ---------------------------------------------- ------------ ------------ ------------ ------------
External revenues $ 34,071 $ 33,056 $ 769 $ 67,896
Cost of revenues 24,922 25,889 287 51,098
Gross margin 9,149 7,167 482 16,798
Selling, general and
administrative 9,660 4,370 3,344 17,374
(Loss) income from operations $ (511) $ 2,797 (2,862) (576)
Other expense, net 520 520
Minority interest (59) (59)
Equity in income of affiliated
companies 88 88
Loss before income taxes $ (2,313) $ (27)
iGATE
iGATE Professional iGATE
Three Months Ended September 30, 2005 Solutions Services Corporate Total
- ---------------------------------------------- ------------ ------------ ------------ ------------
External revenues $ 35,151 $ 34,188 $ 763 $ 70,102
Cost of revenues 24,246 26,551 375 51,172
Gross margin 10,905 7,637 388 18,930
Selling, general and
administrative 10,162 3,973 3,086 17,221
Income (loss) from operations $ 743 $ 3,664 (2,698) 1,709
Other expense, net 411 411
Minority interest (260) (260)
Equity in income of affiliated
companies 137 137
Loss before income taxes $ (2,410) $ 1,997
iGATE
iGATE Professional iGATE
Nine Months Ended September 30, 2005 Solutions Services Corporate Total
- ---------------------------------------------- ------------ ------------ ------------ ------------
External revenues $ 101,933 $ 103,701 $ 1,965 $ 207,599
Cost of revenues 72,361 81,397 916 154,674
Gross margin 29,572 22,304 1,049 52,925
Selling, general and
administrative 29,099 12,894 9,831 51,824
(Loss) income from operations $ 473 $ 9,410 (8,782) 1,101
Other expense, net 645 645
Minority interest (403) (403)
Equity in income of affiliated
companies 108 108
Loss before income taxes $ (8,432) $ 1,451
SOURCE iGATE Corporation
-0- 11/08/2005
/CONTACT: Michael J. Zugay, Sr. Vice President & CFO of iGATE
Corporation, +1-412-787-9590, or mzugay@igate.com/
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/Web site: http://www.igatecorp.com/
(IGTE)