iGATE Reports Q1 Revenues; Profits up 34.6%

Patni Delisting Process Successful; Will Enable a Simplified Corporate Structure

FREMONT, Calif., April 13, 2012 (GLOBE NEWSWIRE) -- iGATE Corporation (Nasdaq:IGTE), the first Business Outcomes driven integrated Technology and Operations (iTOPS) solutions provider, operating under the brand name iGATE Patni, today announced its financial results for the first quarter ended March 31, 2012.

First Quarter Highlights

• Accepts delisting offer of Patni Computer Systems Limited ("Patni") enabling Patni to proceed with delisting from the Indian stock exchanges at Rs. 520/- per share and marking the completion of a complex corporate restructuring within one year of Patni's acquisition


• Net Income for first quarter 2012 increased by 34.6% to $ 24.1 million from $ 17.9 million in the first quarter 2011


• Revenues for first quarter 2012 increased by 247.4% to $ 263.3 million from $75.8 million in the first quarter 2011


• Gross margin was 40.2% for the first quarter 2012 compared to 40.9% in the corresponding quarter last year


• Diluted earnings per share of $0.22 GAAP; $0.38 non-GAAP


• iGATE Patni added seven new customers during the quarter


• The company ended the first quarter 2012 with 27,100 employees

Phaneesh Murthy, CEO, iGATE Patni said, "The long tail rationalization of our customers that we undertook yielded us higher profits but dipped revenues and the delays in project kick-offs resulted in lesser revenue growth. We expect our revenue growth to be back on track over the next couple of quarters creating a back loaded year."

Sujit Sircar, CFO, iGATE Patni said, "We are delighted that we managed to do a very complex capital restructuring within a year of completing the Patni acquisition. The successful delisting of Patni will be an important step towards our vision of 'one company' and will set us up well for a possible downstream merger while also reducing costs of Compliance and Governance."

Key Highlights of the quarter

• Delisting of Patni

On April 10, 2012, iGATE announced the results of the delisting offer of Patni from the Indian stock exchanges. Announcing the process as a success, iGATE accepted the discovered price of Rs.520 per equity share, determined through a reverse book building process using the electronic facility of the Bombay Stock Exchange, in accordance with the Security Exchange Board of India regulations. The public shareholders holding equity shares of Patni were invited to submit bids via an offer that opened on March 28, 2012 and closed on March 30, 2012.

• Inauguration of iGATE Patni managed Rio Tinto Innovation Center

On March 27, 2012, the iGATE Patni-managed Rio Tinto Innovation Center was inaugurated in Pune, India as part of the innovation partnership initiative between the two companies. With a joint investment of approximately $3 million dollars, this facility can staff 300 people and will focus exclusively on creating next generation technologies that contribute to global growth and development of Rio Tinto's 'Mine of the Future™' program. As an outcomes-based engagement, iGATE Patni will provide innovation-led engineering research and development services that will enable Rio Tinto to deliver greater operational efficiency, as well as improved health, safety and environmental performance in the mining industry.

First Quarter Operating Results

Results for the first quarter on a GAAP and non-GAAP basis are provided in the table below. 

New customers and key project wins in the quarter

• One of the leading U.S.-based pharmaceutical retailers chose iGATE Patni to facilitate its prescription and medication process for North American senior citizens. iGATE Patni's data warehousing services will enable easy identification and enrollment of senior citizens into the pharmacies' systems during the point of sale and help pharmacists reduce the cycle time for servicing these senior citizens.


• A leading Middle East-based telecommunications company chose iGATE Patni to develop business intelligence that will increase efficiency in managing customer information. The company will use the analytics information derived from iGATE Patni's services and customize its offerings in the Middle East region.


• A North America-based Fortune 1000 Insurance company chose iGATE Patni to develop an enterprise-wide 'mobility center of excellence'. As part of the engagement, iGATE Patni will build mobile applications that provide more avenues for the insurance company to increase its customer service levels. Its policy holders will be able to access services via their smart phones and tablets while the company will have increased access to customer information and expedite various customer transaction processes.


• A leading India-based energy and environmental engineering company chose iGATE Patni for the development of an energy efficient solar collector. iGATE Patni's product engineering services will enable this collector to harness the sun's energy in an effective manner. The collector, integrated with a newly designed triple effect chiller, will be used to develop first-of-its-kind solar air-conditioning systems.


• A leading U.S.-based aluminum company engaged iGATE Patni to refine the implementation and usage of its enterprise systems. As part of the initiative, iGATE Patni will develop training methodologies on SAP and increase the adaptability of the enterprise systems, including order processing, shipment and finance.


• A North America-based banking and financial services firm engaged iGATE Patni to build a suite of mobile applications for its corporate systems group. The iGATE Patni-developed applications will enable the Bank's customers to transact via smart phones and other hand held devices. The Bank hopes that these applications facilitate up-selling and cross-selling of its range of products and increase customer satisfaction levels.

Conference Call and Webcast

iGATE will host a telephone conference call on Friday, April 13, 2012 at 8:00 am Eastern time to discuss the results of its first quarter ended March 31, 2012. The live discussion may be accessed by dialing 877-660-6853 (toll free) or 201-612-7415 (toll) and entering account number 293 and conference number 390561. The telephonic replay will be available until April 20, 2012. A replay will also be available shortly after the live call via webcast on the iGATE Investor Relations website at http://ir.igate.com/investors/.

About iGATE Patni

'iGATE Patni' is the common brand name of two organizations — iGATE and Patni. With iGATE Corporation having acquired a majority stake in Patni Computer Systems Limited, the two companies, under the common brand iGATE Patni, provide full-spectrum consulting, technology and business process outsourcing, and product engineering services on a Business Outcomes-based model. Armed with over three decades of IT Services experience and powered by the iTOPS (Integrated Technology and Operations) platform, iGATE Patni's multi-location global organization with a talent pool of over 27,000 employees, consistently delivers effective solutions to over 360 Fortune 1000 clients spanning across verticals like: 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. For further information visit www.igatepatni.com.

iGATE Corporation is listed on NASDAQ (IGTE), and Patni Computer Systems Limited is listed on the Bombay Stock Exchange (532517), the National Stock Exchange of India (PATNI) and the New York Stock Exchange (PTI).

The iGATE Patni brand logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5150

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:

• Amortization of intangible assets: Intangible assets comprise value of customer relationships from the recent Patni acquisition and the previous delisting of iGATE's Indian subsidiary. iGATE incurs charges relating to the amortization of these intangibles. These charges are included in iGATE's GAAP presentation of earnings from operations, operating margin, net income and diluted earnings per share. iGATE excludes these charges for purposes of calculating these non-GAAP measures.
  
   


• Stock-based compensation: Although stock-based compensation is an important aspect of the compensation of iGATE's employees and executives, determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expense recorded may not reflect the actual value realized upon the future exercise or termination of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock-based compensation is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.
  
   


• Acquisition expenses: iGATE incurs costs related to its acquisitions, which are inconsistent in amount and frequency and are significantly impacted by the timing and nature of iGATE's acquisitions. iGATE believes that eliminating these expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of iGATE's current operating performance and comparisons to its past operating performance. 
  
   


• Foreign Exchange gain: The Company entered into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on payments related to the acquisition of Patni. We also recognized favorable foreign currency gain on re-measurement of escrow account balance maintained for facilitating payments related to the Patni acquisition. iGATE believes that eliminating the non-capitalized items for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of iGATE's current performance and comparisons to its past performance. 
  
   
  
  In March 2012, the Company entered into a forward foreign exchange contract to mitigate the risk of changes in foreign exchange rates on payments related to the delisting of Patni. iGATE believes that eliminating the non-capitalized items for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of iGATE's current performance and comparisons to its past performance.
  
   


• Severance Cost: As a result of the acquisition of Patni, iGATE incurred severance costs in connection with the termination of the services of some of Patni's employees.
  
   


• Delisting expenses: iGATE is voluntarily delisting the equity shares of its majority owned subsidiary, Patni from the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited and the American Depository Shares from the New York Stock Exchange. Delisting is an infrequent activity and expenses incurred in connection therein are inconsistent in amount and are significantly impacted by the timing and nature of the delisting. iGATE believes that eliminating these expenses for purposes of calculating these non-GAAP measures facilitates a more meaningful evaluation of iGATE's current operating performance and comparisons to its past operating performance. 

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 benefits of the Patni acquisition, 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 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 our acquisition of Patni; and whether the companies can successfully provide services/products and the degree to which these gain market acceptance. Furthermore, in connection with the Patni acquisition, the Company has borrowed significant amounts, including through the issuance of high yield notes, and will have 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, 2011, as well as the Company's other reports filed with the Securities and Exchange Commission and risks related to the business of Patni as set forth in Patni's Annual Report in Form 20-F for the fiscal year ended December 31, 2011. 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.

You can see all tables 

on the PDF file

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