[October 15, 2014] |
|
IGATE Reports Sequential Revenue Growth of 3.5% and Year-on-Year of 10%
BRIDGEWATER, N.J. --(Business Wire)--
IGATE Corporation ("IGATE" or the "Company") (NASDAQ: IGTE), the New
Jersey-headquartered integrated technology and operations solutions
provider, today announced its financial results for the third quarter
and nine months ended September 30, 2014.
Third Quarter Financial Highlights
-
Revenues were $ 322.8 million
-
Increased 10.0% compared to $ 293.4 million in the third quarter
of 2013
-
Increased 3.5% sequentially compared to $311.7 million in the
second quarter of 2014
-
Gross margin was 35.3%
-
Compared to 41.4% in the third quarter of 2013
-
Compared to 36.6% in the second quarter of 2014
-
Adjusted EBITDA was $68.8 million
-
Compared to $78.4 million in the third quarter of 2013
-
Compared to $70.0 million in the second quarter of 2014
-
Net Income was $37.3 million
-
Compared to $31.9 million in the third quarter of 2013
-
Compared to $3.1 million in the second quarter of 2014 (after a
one-time charge of $51.8 million arising from extinguishment of
debt)
-
Non GAAP diluted earnings per share were $0.52
-
Compared with $0.46 per share in the third quarter of 2013
-
Compared with $0.48 per share in the second quarter of 2014
-
GAAP diluted earnings per share were $0.34
-
Compared to GAAP diluted earnings per share of $0.30 in the third
quarter of 2013
-
Compared to GAAP diluted earnings per share of $(0.07) in the
second quarter of 2014 (after a one-time charge of $51.8 million
arising from extinguishment of debt)
-
As of September 30, 2014, the Company had 34,455 employees with a
net addition of 1,713 during the third quarter ended September 30, 2014
Ashok Vemuri, President and CEO, said, "I am pleased that we are
able to sustain our broad-based growth both sequentially as well as year
over year. Our clients are responding positively to the changes we have
implemented in the Company. Our industry utility solutions, Reference
Data Management Solution for the financial sector (IDMS) and our Long
Term Care Solution for healthcare sector (IBAS), continue to find
significant market traction and drive a differentiated industry value
proposition. Through our IGATE Corporate University we are building
market-ready talent capital and emerging technology solutions, further
strengthening our competitive position."
"We are pleased to be the only IT services company to be listed in
Fortune 100 Fastest-Growing Companies in the U.S., further validating
our go-to-market strategy," he added.
Sujit Sircar, CFO, said, "Although we experienced some margin
headwinds due to the continuing investment we had to make in some of our
transformational client engagements, expanded client coverage and hiring
for growth, I am happy with the increase in net income, while we
continue to maintain healthy earnings growth. We lowered our debt by
another $126 million during the quarter which has improved our leverage
further."
Third Quarter Operating Results
Results for the three and nine months ended September 30, 2014 and 2013,
respectively, on a GAAP and non-GAAP basis are provided in the table
below.
|
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Q3 FY'14
|
|
|
Q3 FY'13
|
|
|
Y/Y
|
|
|
Nine months ended FY'14
|
|
|
Nine months ended FY'13
|
|
|
Y/Y
|
Net revenue ($Millions)
|
|
|
322.8
|
|
|
293.4
|
|
|
10.0
|
%
|
|
|
936.7
|
|
|
851.6
|
|
|
10.0
|
%
|
Operating margin ($Millions)
|
|
|
54.7
|
|
|
66.0
|
|
|
(17.2
|
)%
|
|
|
173.6
|
|
|
168.2
|
|
|
3.2
|
%
|
GAAP net income ($Millions)
|
|
|
37.3
|
|
|
31.9
|
|
|
17.0
|
%
|
|
|
72.0
|
|
|
96.6
|
|
|
(25.4
|
)%
|
GAAP diluted EPS ($)
|
|
|
0.34
|
|
|
0.30
|
|
|
13.3
|
%
|
|
|
0.56
|
|
|
0.91
|
|
|
(38.5
|
)%
|
Adjusted EBITDA ($Millions)
|
|
|
68.8
|
|
|
78.4
|
|
|
(12.2
|
)%
|
|
|
214.0
|
|
|
210.1
|
|
|
1.9
|
%
|
Non-GAAP net income ($Millions)
|
|
|
42.5
|
|
|
36.3
|
|
|
17.2
|
%
|
|
|
118.4
|
|
|
110.7
|
|
|
7.0
|
%
|
Non-GAAP diluted EPS ($)
|
|
|
0.52
|
|
|
0.46
|
|
|
13.0
|
%
|
|
|
1.44
|
|
|
1.39
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New customer and project wins in the quarter
-
A U.K.-based global retail company in the business of providing
optician services and visual instruments selected IGATE to assist the
client's IT Operations program. As part of the multi-year engagement,
IGATE will provide integrated support to over 40 applications covering
the functional areas of the client's Retail and Supply Chain as well
as their core business applications such as legacy point of sale and
enterprise systems. The engagement is expected to bring improved
efficiency in the client's store operations, order management, product
data, pricing and promotion, contact center and warehouse management.
-
IGATE has been selected by a large North American-based financial
institution to streamline its Life, Health and Disability
administration program. As part of the multi-year engagement, IGATE
will consolidate the client's current administration platforms and
migrate the bulk of the client's policies to its proprietary
ITOPS-based administration platform. IGATE will introduce a modern
administration system to service these blocks and deliver operational
efficiency and superior policy holder experience. In addition to the
administration platform, IGATE will bring to bear a modern ecosystem,
which includes workflow and self-serve portals for policy holders
driving contact center volumes down and driving up policy holder
satisfaction. This engagement is also expected to make the client's
fixed IT assets and costs variable and also positively impact its
reserves.
-
A North American-based energy company selected IGATE to provide
independent verification and validation services for its internal
operations division. As part of the engagement, IGATE's testing center
of excellence team will work with the client's business and IT
divisions to create a coherent end-to-end business process flow to
align diverse departments and teams at different stages of the
client's value chain to provide a unified business experience to the
end customer. IGATE will also provide Diversity Business Enterprise
(DBE) spend by leveraging its technology ecosystem to help the client
align with its organization-wide focus.
-
One of the world's largest chains of fast food restaurants selected
IGATE to transform its point of sale, back office and digital
landscape for its Switzerland operations. As a strategic technology
partner, IGATE will provide a future-proof digital and technology
ecosystem through its proprietary Store-in-a-Box solution. Through
this solution, IGATE will offer a 24x7 multi-lingual service to
remotely manage store applications and infrastructure, onsite field
service, inventory management, data management and deployment. The
engagement is expected to lower the operational costs to the client
and enhance customer experience in the region.
-
IGATE was selected by a leading North America-based domestic sugar
producer to assist the company in increasing operational efficiencies
across multiple warehouses around the globe for the distribution and
storage of its products. As a strategic partner, IGATE will facilitate
a lean distribution network with its warehouse management solutions.
IGATE will leverage its consumer packaged goods industry best
practices and global delivery model to implement and rollout its
solutions to all of the client's warehouses providing processes
standardization. The engagement is expected to bring down operational
costs and shore up process efficiencies by managing the inventory
across the client's value chain.
Significant Events and Recognitions in the Quarter
-
IGATE was ranked 51 in Fortune's list of 100 Fastest-Growing Companies
in the U.S. - the only IT services company to be featured on the list.
-
Srikanth Iyengar joined IGATE as Senior Vice President and Head of
Europe and Australia and member of the Executive Council
-
IGATE launched IGATE Corporate University in the Company's training
and development facility in Pune, India. The University will focus on
building custom training programs and methodologies in association
with leading global educational institutions.
-
IGATE announced a new facility in Noida, India. The facility is spread
across 60,000 sq. ft. and can accommodate about 550 people. The new
facility adds to its existing offices in Noida that are housed in the
Special Economic Zone.
-
IGATE was ranked 29th on IDC's Financial Insights FinTech Top 100 List
-
IGATE was featured in the top quadrant in Zinnov's Global Service
Providers Ratings, 2014 for Product and Engineering Solutions (P&ES).
Recognized as an expansive and established player, IGATE was ranked
high for its specialization, R&D practice maturity, innovation and IP.
IGATE was also ranked in the leadership zone in three sub verticals
under P&ES: Automotive, Computer Peripherals and Storage and
Industrial Automation.
-
IGATE was included in the HFS Blueprint Report for Digital
Transformation Services as a "Rising Star." IGATE was amongst the top
11 players selected in the report from multiple digital solutions
providers who participated in this research. IGATE was quoted to be
strong in technology and a company that can bring a holistic view
across Digital Transformation Services that makes it a true
contender-especially in certain industries such as insurance and
healthcare and life sciences.
-
IGATE was included in Everest PEAK Matrix reports for Life Science IT
Outsourcing and Independent Testing Services as a "Major Contender."
The Company was ranked for the scale, scope, domain investments and
delivery footprint.
-
IGATE continues to be in 'Established and Expansive' (Leader) quadrant
for the 4th consecutive year in the Zinnov GSPR ratings in the
Automotive, Industrial Automation and Storage Devices segments.
-
The Asia Pacific HRM Congress awarded the HR Leadership Award for 2014
to Dr. Srinivas Kandula, EVP and Chief People Officer, IGATE,
recognizing him for his contributions to the field of HR.
-
IGATE won the coveted award on "Innovation in Retention Strategy" at
the 5th Asia Best Employer Brand Awards 2014 recognizing the Employee
Retention Management initiative of IGATE.
-
IGATE was successfully appraised at CMMI Level 5 Version 1.3 under
both Development and Services Model. The scope of this appraisal was
for the entire organization which included IT, business process
outsourcing (BPO) and infrastructure managed services (IMS) across all
of IGATE's locations in North America, Europe and India. With this
rating, IGATE joins a very select group of companies who have
demonstrated their commitment to better quality and customer service
by applying the most rigorous process analysis and improvements.
Conference Call and Webcast
IGATE, the integrated technology and operations company, has scheduled
its Earnings Conference Call on Wednesday, October 15, 2014 to discuss
the results of its third quarter ended September 30, 2014. Senior
management of the company will discuss the financial performance for the
quarter and answer participants' questions during the call.
Time:
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08:00 - 9:00 am Eastern Time
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Toll Free (U.S.):
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877-407-8037
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Toll (U.S.):
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201-689-8037
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Toll Free (India):
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000-800-852-1477
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The call will be webcast live on IGATE's website (www.igate.com)
on the Investor Relations page under the 'Events' section. Participants
are requested to log in 10 minutes prior to the start of the webcast.
The on-demand version of the webcast will be available on the IGATE
website shortly after the call.
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 13591633. The
telephonic replay will be available until October 29, 2014.
About IGATE
IGATE is a global leader in providing integrated technology and
operations-based solutions, headquartered in Bridgewater, New Jersey. As
a trusted partner to corporations in North America, Europe and Asia
Pacific, IGATE provides solutions to clients' business challenges by
leveraging its technology and process capabilities, underwritten by an
understanding of domain and industry imperatives. With revenues over US$
1.2 billion, and a global employee talent capital of over 34,000, IGATE
offers productized applications and platforms that provide the necessary
competitive and innovation edge to clients across industries, through a
combination of speed, agility and imagination. IGATE is listed on NASDAQ
under the symbol IGTE.
Follow IGATE on Twitter: @IGATE_Corp IGATE on Facebook: https://www.facebook.com/igatecorp
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 ("GAAP") 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 the 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 primarily
comprise of customer relationships. We incur charges relating to the
amortization of these intangibles. These charges are included in our
GAAP presentation of earnings from operations, operating margin, net
income and diluted earnings per share. We exclude these charges for
purposes of calculating these non-GAAP measures.
-
Stock-based compensation: Although stock-based compensation is an
important component 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 the Company's
control. Management believes it is useful to exclude stock-based
compensation in order to better understand the long-term performance
of IGATE's core business.
-
Foreign exchange (gain)/loss: From time to time, the Company
recognizes foreign currency losses on re-measurement of escrow account
balance and foreign exchange gains on re-measurement of redeemable
non-controlling interest liability. IGATE believes that eliminating
these non-capitalized items for purposes of calculating non-GAAP
measures facilitates a more meaningful evaluation of IGATE's current
performance and comparisons to its past performance.
-
Delisting expenses: We voluntarily delisted the equity shares of our
majority owned subsidiary, IGATE Computer Systems Limited 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 its
current operating performance and comparisons to its past operating
performance.
-
Merger and reorganization expenses: IGATE is merging and reorganizing
its overseas subsidiaries and branches with a view to simplifying the
corporate structure and has incurred legal and professional expenses
in this connection. Merger and reorganization is an infrequent
activity and expenses incurred in connection therein are inconsistent
in amount and significantly impacted by the timing and nature of the
reorganization. IGATE believes that eliminating these expenses for
purposes of calculating non-GAAP measures facilitates a more
meaningful evaluation of IGATE's current operating performance and
comparisons to its past operating performance.
-
Preferred dividend and accretion to preferred stock: IGATE has issued
8.00% Series B Preferred Stock. IGATE also incurred issuance costs,
which have been netted against the proceeds received from the issuance
of Series B Preferred Stock. The Series B Preferred Stock is being
accreted over a period of six years. Although the effect of inclusion
of equivalent units of common stock towards convertible participating
preferred stock is anti-dilutive for GAAP purposes, the non-GAAP
diluted earnings per share has been calculated assuming the conversion
of all outstanding shares of preferred stock into equivalent units of
common stock. IGATE believes that eliminating these expenses as well
as inclusion of equivalent units of common stock towards the
preference shares to compute diluted earnings per share 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.
-
Loss on extinguishment of Debt: IGATE has extinguished Debt prior to
its scheduled maturity which has resulted in non-operating expenses
which otherwise would not have been incurred. Debt extinguishment
related charges that are excluded from GAAP earnings to determine
non-GAAP earnings consist of the extinguishment premium paid as well
as the write-off of unamortized debt issuance costs. These expenses
are inconsistent and of a non-recurring nature and IGATE believes that
eliminating them for purposes of calculating 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
This news release contains forward-looking statements that involve
risks, uncertainties and assumptions. If the risks or uncertainties ever
materialize or the assumptions prove incorrect, the results of the
Company may differ materially from those expressed or implied by such
forward-looking statements and assumptions. All statements regarding the
business outlook, the expected performance of the Company's products and
services for its clients, and all other statements in this release other
than statements of historical fact are statements that could be deemed
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, statements regarding the business outlook, and the expected
performance of the Company's products and services for its clients, 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: uncertain
global economic conditions, concentrated revenues, new organizational
and operational strategies, continued pricing pressures and the
significant indebtedness which will 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, 2013, the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2014 as well
as the Company's other reports filed with the Securities and Exchange
Commission. As in prior periods, the financial information set forth in
this release, including tax-related items, reflects estimates based on
information available at this time. While the Company believes these
estimates to be accurate, actual results may differ materially from
those contained in the forward-looking statements in this press release.
These amounts could also differ materially from actual reported amounts
in the Company's quarterly Report on Form 10-Q for the quarter ended
September 30, 2014. The Company assumes no obligation and does not
intend to update these forward-looking statements as circumstances
change. This document does not constitute an offer to purchase or to
sell securities in any jurisdiction.
IGATE CORPORATION
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Amounts in thousands, except per share data)
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
130,204
|
|
|
|
$
|
204,836
|
|
Restricted cash
|
|
|
|
|
|
-
|
|
|
|
|
360,000
|
|
Short-term investments
|
|
|
|
|
|
32,754
|
|
|
|
|
181,401
|
|
Accounts receivable, net of allowances of $3,115 and $4,103,
respectively
|
|
|
|
|
|
165,837
|
|
|
|
|
157,905
|
|
Unbilled revenues
|
|
|
|
|
|
79,457
|
|
|
|
|
61,424
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
43,624
|
|
|
|
|
44,492
|
|
Prepaid income taxes
|
|
|
|
|
|
13,248
|
|
|
|
|
838
|
|
Deferred tax assets
|
|
|
|
|
|
3,875
|
|
|
|
|
10,235
|
|
Foreign exchange derivative contracts
|
|
|
|
|
|
4,912
|
|
|
|
|
836
|
|
Receivable from related parties
|
|
|
|
|
|
5,954
|
|
|
|
|
4,046
|
|
Total current assets
|
|
|
|
|
|
479,865
|
|
|
|
|
1,026,013
|
|
|
|
|
|
|
|
|
|
|
Deposits and other assets
|
|
|
|
|
|
20,293
|
|
|
|
|
24,930
|
|
Prepaid income taxes
|
|
|
|
|
|
32,138
|
|
|
|
|
32,160
|
|
Property and equipment, net of accumulated depreciation of $124,890
and $108,084, respectively
|
|
|
|
|
|
220,964
|
|
|
|
|
165,581
|
|
Leasehold land
|
|
|
|
|
|
75,603
|
|
|
|
|
76,732
|
|
Deferred tax assets
|
|
|
|
|
|
15,281
|
|
|
|
|
15,153
|
|
Goodwill
|
|
|
|
|
|
439,175
|
|
|
|
|
438,891
|
|
Intangible assets, net
|
|
|
|
|
|
111,398
|
|
|
|
|
119,262
|
|
Total assets
|
|
|
|
|
$
|
1,394,717
|
|
|
|
$
|
1,898,722
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
$
|
10,208
|
|
|
|
$
|
9,268
|
|
Line of credit
|
|
|
|
|
|
52,000
|
|
|
|
|
52,000
|
|
Senior Notes
|
|
|
|
|
|
-
|
|
|
|
|
360,000
|
|
Term loans
|
|
|
|
|
|
-
|
|
|
|
|
90,000
|
|
Accrued payroll and related costs
|
|
|
|
|
|
45,798
|
|
|
|
|
57,093
|
|
Other accrued liabilities
|
|
|
|
|
|
66,098
|
|
|
|
|
79,785
|
|
Accrued income taxes
|
|
|
|
|
|
3,861
|
|
|
|
|
5,802
|
|
Foreign exchange derivative contracts
|
|
|
|
|
|
1,159
|
|
|
|
|
909
|
|
Deferred revenue
|
|
|
|
|
|
18,406
|
|
|
|
|
17,776
|
|
Total current liabilities
|
|
|
|
|
|
197,530
|
|
|
|
|
672,633
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
|
|
|
6,185
|
|
|
|
|
3,532
|
|
Senior notes
|
|
|
|
|
|
325,000
|
|
|
|
|
410,000
|
|
Term Loans
|
|
|
|
|
|
234,000
|
|
|
|
|
270,000
|
|
Accrued income taxes
|
|
|
|
|
|
18,261
|
|
|
|
|
13,936
|
|
Deferred tax liabilities
|
|
|
|
|
|
35,261
|
|
|
|
|
41,717
|
|
Total liabilities
|
|
|
|
|
|
816,237
|
|
|
|
|
1,411,818
|
|
|
|
|
|
|
|
|
|
|
Series B Preferred stock , without par value
|
|
|
|
|
|
435,989
|
|
|
|
|
410,371
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
Common Stock, par value $0.01 per share
|
|
|
|
|
|
600
|
|
|
|
|
594
|
|
Common stock in treasury, at cost
|
|
|
|
|
|
(14,714
|
)
|
|
|
|
(14,714
|
)
|
Additional paid-in capital
|
|
|
|
|
|
225,147
|
|
|
|
|
204,143
|
|
Retained earnings
|
|
|
|
|
|
315,172
|
|
|
|
|
268,750
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
(387,444
|
)
|
|
|
|
(387,115
|
)
|
Total IGATE Corporation shareholders' equity
|
|
|
|
|
|
138,761
|
|
|
|
|
71,658
|
|
Non- controlling interest
|
|
|
|
|
|
3,730
|
|
|
|
|
4,875
|
|
Total equity
|
|
|
|
|
|
142,491
|
|
|
|
|
76,533
|
|
Total liabilities, preferred stock and shareholders' equity
|
|
|
|
|
$
|
1,394,717
|
|
|
|
$
|
1,898,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IGATE CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
(Amounts in thousands)
|
(unaudited)
|
|
|
|
|
Three Months ended
|
|
|
Nine Months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Revenues
|
|
|
$
|
322,774
|
|
|
|
$
|
293,406
|
|
|
|
$
|
936,725
|
|
|
|
$
|
851,592
|
|
Cost of revenues (exclusive of depreciation and amortization)
|
|
|
|
208,801
|
|
|
|
|
172,063
|
|
|
|
|
595,314
|
|
|
|
|
518,073
|
|
Gross margin
|
|
|
|
113,973
|
|
|
|
|
121,343
|
|
|
|
|
341,411
|
|
|
|
|
333,519
|
|
Selling, general and administrative expense
|
|
|
|
49,934
|
|
|
|
|
46,862
|
|
|
|
|
140,103
|
|
|
|
|
139,004
|
|
Depreciation and amortization
|
|
|
|
9,384
|
|
|
|
|
8,439
|
|
|
|
|
27,660
|
|
|
|
|
26,305
|
|
Income from operations
|
|
|
|
54,655
|
|
|
|
|
66,042
|
|
|
|
|
173,648
|
|
|
|
|
168,210
|
|
Loss on extinguishment of debt
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(51,760
|
)
|
|
|
|
-
|
|
Other income (loss), net
|
|
|
|
(170
|
)
|
|
|
|
(19,415
|
)
|
|
|
|
(22,080
|
)
|
|
|
|
(27,023
|
)
|
Income before income taxes
|
|
|
|
54,485
|
|
|
|
|
46,627
|
|
|
|
|
99,808
|
|
|
|
|
141,187
|
|
Income tax expense
|
|
|
|
17,088
|
|
|
|
|
14,634
|
|
|
|
|
27,486
|
|
|
|
|
44,461
|
|
Net income before non-controlling interest
|
|
|
|
37,397
|
|
|
|
|
31,993
|
|
|
|
|
72,322
|
|
|
|
|
96,726
|
|
Non-controlling interest
|
|
|
|
89
|
|
|
|
|
97
|
|
|
|
|
282
|
|
|
|
|
97
|
|
Net income attributable to IGATE Corporation
|
|
|
|
37,308
|
|
|
|
|
31,896
|
|
|
|
|
72,040
|
|
|
|
|
96,629
|
|
Accretion to Preferred Stock
|
|
|
|
152
|
|
|
|
|
126
|
|
|
|
|
436
|
|
|
|
|
361
|
|
Preferred dividend
|
|
|
|
8,653
|
|
|
|
|
7,994
|
|
|
|
|
25,182
|
|
|
|
|
23,246
|
|
Net income attributable to IGATE common shareholders
|
|
|
$
|
28,503
|
|
|
|
$
|
23,776
|
|
|
|
$
|
46,422
|
|
|
|
$
|
73,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IGATE CORPORATION
|
Earnings Per Share
|
(Amounts in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
PARTICULARS
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Net income attributable to IGATE common shareholders
|
|
|
|
|
|
$
|
28,503
|
|
|
$
|
23,776
|
|
|
$
|
46,422
|
|
|
$
|
73,022
|
Add: Dividends on Series B Preferred Stock
|
|
|
|
|
|
|
8,653
|
|
|
|
7,994
|
|
|
|
25,182
|
|
|
|
23,246
|
|
|
|
|
|
|
|
37,156
|
|
|
|
31,770
|
|
|
|
71,604
|
|
|
|
96,268
|
Less: Dividends on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Preferred Stock
|
|
|
[A]
|
|
|
|
8,653
|
|
|
|
7,994
|
|
|
|
25,182
|
|
|
|
23,246
|
Undistributed Income
|
|
|
|
|
|
$
|
28,503
|
|
|
$
|
23,776
|
|
|
$
|
46,422
|
|
|
$
|
73,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of Undistributed Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
[B]
|
|
|
|
20,876
|
|
|
|
17,716
|
|
|
|
34,001
|
|
|
|
54,411
|
Unvested restricted stock
|
|
|
[C]
|
|
|
|
-
|
|
|
|
7
|
|
|
|
-
|
|
|
|
21
|
Series B Preferred Stock
|
|
|
[D]
|
|
|
|
7,627
|
|
|
|
6,053
|
|
|
|
12,421
|
|
|
|
18,590
|
|
|
|
|
|
|
$
|
28,503
|
|
|
$
|
23,776
|
|
|
$
|
46,422
|
|
|
$
|
73,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding for allocation of undistributed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
59,029
|
|
|
|
58,311
|
|
|
|
59,029
|
|
|
|
58,311
|
Unvested restricted stock
|
|
|
|
|
|
|
-
|
|
|
|
23
|
|
|
|
-
|
|
|
|
23
|
Series B Preferred Stock
|
|
|
|
|
|
|
21,565
|
|
|
|
19,923
|
|
|
|
21,565
|
|
|
|
19,923
|
|
|
|
|
|
|
|
80,594
|
|
|
|
78,257
|
|
|
|
80,594
|
|
|
|
78,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
[E]
|
|
|
|
58,962
|
|
|
|
58,148
|
|
|
|
58,829
|
|
|
|
57,895
|
Unvested restricted stock
|
|
|
[F]
|
|
|
|
-
|
|
|
|
23
|
|
|
|
-
|
|
|
|
23
|
Series B Preferred Stock
|
|
|
[G]
|
|
|
|
21,565
|
|
|
|
19,923
|
|
|
|
21,565
|
|
|
|
19,923
|
|
|
|
|
|
|
|
80,527
|
|
|
|
78,094
|
|
|
|
80,394
|
|
|
|
77,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding
|
|
|
|
|
|
|
58,962
|
|
|
|
58,148
|
|
|
|
58,829
|
|
|
|
57,895
|
Dilutive effect of stock options and restricted shares outstanding
|
|
|
|
|
|
|
1,905
|
|
|
|
1,688
|
|
|
|
1,880
|
|
|
|
1,669
|
Dilutive weighted average shares outstanding
|
|
|
[H]
|
|
|
|
60,867
|
|
|
|
59,836
|
|
|
|
60,709
|
|
|
|
59,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributed earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Preferred Stock
|
|
|
[I=A/G]
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
1.17
|
|
|
$
|
1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
[J=B/E]
|
|
|
$
|
0.35
|
|
|
$
|
0.30
|
|
|
$
|
0.58
|
|
|
$
|
0.94
|
Unvested restricted stock
|
|
|
[K=C/F]
|
|
|
|
-
|
|
|
$
|
0.30
|
|
|
|
-
|
|
|
$
|
0.93
|
Series B Preferred Stock
|
|
|
[L=D/G]
|
|
|
$
|
0.35
|
|
|
$
|
0.30
|
|
|
$
|
0.58
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
[J]
|
|
|
$
|
0.35
|
|
|
$
|
0.30
|
|
|
$
|
0.58
|
|
|
$
|
0.94
|
Unvested restricted stock
|
|
|
[K]
|
|
|
|
-
|
|
|
$
|
0.30
|
|
|
$
|
-
|
|
|
$
|
0.93
|
Series B Preferred Stock
|
|
|
[I+L]
|
|
|
$
|
0.75
|
|
|
$
|
0.70
|
|
|
$
|
1.75
|
|
|
$
|
2.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Diluted
|
|
|
[[B+C]/H]
|
|
|
$
|
0.34
|
|
|
$
|
0.30
|
|
|
$
|
0.56
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of outstanding participative convertible preferred stock for
which the earnings per share exceeded the earnings per share of common
stock aggregated to 21.6 million and 19.9 million for the three and nine
months ended September 30, 2014 and 2013, respectively. These shares
were excluded from the computation of diluted earnings per share because
they were anti-dilutive.
IGATE CORPORATION
|
Reconciliation of Net Income, Net of Tax, to Adjusted EBITDA
|
(Amounts in thousands)
|
(unaudited)
|
|
|
|
|
|
|
Three Months ended
|
|
|
Nine Months ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
37,397
|
|
|
|
$
|
31,993
|
|
|
|
$
|
72,322
|
|
|
|
$
|
96,726
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
9,384
|
|
|
|
|
8,439
|
|
|
|
|
27,660
|
|
|
|
|
26,305
|
|
Interest expense
|
|
|
|
|
|
7,492
|
|
|
|
|
20,256
|
|
|
|
|
43,317
|
|
|
|
|
67,025
|
|
Income tax expense
|
|
|
|
|
|
17,088
|
|
|
|
|
14,634
|
|
|
|
|
27,486
|
|
|
|
|
44,461
|
|
Other income, net
|
|
|
|
|
|
(4,153
|
)
|
|
|
|
(5,213
|
)
|
|
|
|
(15,147
|
)
|
|
|
|
(39,910
|
)
|
Foreign exchange (gain)/loss
|
|
|
|
|
|
(3,169
|
)
|
|
|
|
4,372
|
|
|
|
|
(6,090
|
)
|
|
|
|
(92
|
)
|
Stock-based Compensation
|
|
|
|
|
|
4,607
|
|
|
|
|
3,878
|
|
|
|
|
12,423
|
|
|
|
|
10,243
|
|
Loss on Extinguishment of debt
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
51,760
|
|
|
|
|
-
|
|
Delisting expenses
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
93
|
|
Merger and reorganization expenses
|
|
|
|
|
|
156
|
|
|
|
|
-
|
|
|
|
|
286
|
|
|
|
|
5,264
|
|
Adjusted EBITDA (a non-GAAP measure)
|
|
|
|
|
$
|
68,802
|
|
|
|
$
|
78,359
|
|
|
|
$
|
214,017
|
|
|
|
$
|
210,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
IGATE CORPORATION
|
Reconciliation of Selected GAAP Measures to Non-GAAP Measures
|
(Amounts in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
|
Three Months ended
|
|
|
Nine Months ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
GAAP Net income attributable to IGATE common shareholders
|
|
|
|
|
$
|
28,503
|
|
|
|
$
|
23,776
|
|
|
|
$
|
46,422
|
|
|
|
$
|
73,022
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividend and accretion to preferred stock
|
|
|
|
|
|
8,805
|
|
|
|
|
8,120
|
|
|
|
|
25,618
|
|
|
|
|
23,607
|
|
Amortization of Intangible assets
|
|
|
|
|
|
2,715
|
|
|
|
|
2,540
|
|
|
|
|
7,996
|
|
|
|
|
7,980
|
|
Stock-based Compensation
|
|
|
|
|
|
4,607
|
|
|
|
|
3,878
|
|
|
|
|
12,423
|
|
|
|
|
10,243
|
|
Delisting expenses
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
93
|
|
Merger and reorganization expenses
|
|
|
|
|
|
156
|
|
|
|
|
-
|
|
|
|
|
286
|
|
|
|
|
5,264
|
|
Foreign exchange loss on acquisition hedging and remeasurement
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
489
|
|
Forfeiture of vested stock options
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(3,005
|
)
|
Loss on Extinguishment of debt
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
51,760
|
|
|
|
|
-
|
|
Income tax adjustments
|
|
|
|
|
|
(2,253
|
)
|
|
|
|
(2,020
|
)
|
|
|
|
(26,070
|
)
|
|
|
|
(7,028
|
)
|
Non-GAAP Net income attributable to IGATE common shareholders
|
|
|
|
|
$
|
42,533
|
|
|
|
$
|
36,294
|
|
|
|
$
|
118,435
|
|
|
|
$
|
110,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, Basic
|
|
|
|
|
|
58,962
|
|
|
|
|
58,171
|
|
|
|
|
58,829
|
|
|
|
|
57,918
|
|
Add: assumed preferred stock conversion
|
|
|
|
|
|
21,565
|
|
|
|
|
19,923
|
|
|
|
|
21,565
|
|
|
|
|
19,923
|
|
Non-GAAP weighted average shares outstanding , Basic
|
|
|
|
|
|
80,527
|
|
|
|
|
78,094
|
|
|
|
|
80,394
|
|
|
|
|
77,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average dilutive common shares outstanding
|
|
|
|
|
|
60,867
|
|
|
|
|
59,836
|
|
|
|
|
60,709
|
|
|
|
|
59,564
|
|
Add: assumed preferred stock conversion
|
|
|
|
|
|
21,565
|
|
|
|
|
19,923
|
|
|
|
|
21,565
|
|
|
|
|
19,923
|
|
Weighted average dilutive common equivalent shares outstanding
|
|
|
|
|
|
82,432
|
|
|
|
|
79,759
|
|
|
|
|
82,274
|
|
|
|
|
79,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS (GAAP) to Basic EPS (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS (GAAP)
|
|
|
|
|
$
|
0.35
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.58
|
|
|
|
$
|
0.94
|
|
Preferred dividend and accretion to preferred stock
|
|
|
|
|
|
0.11
|
|
|
|
|
0.11
|
|
|
|
|
0.32
|
|
|
|
|
0.31
|
|
Amortization of Intangible assets
|
|
|
|
|
|
0.04
|
|
|
|
|
0.03
|
|
|
|
|
0.10
|
|
|
|
|
0.10
|
|
Stock-based Compensation
|
|
|
|
|
|
0.06
|
|
|
|
|
0.05
|
|
|
|
|
0.15
|
|
|
|
|
0.13
|
|
Delisting expenses
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
0.00
|
|
Merger and reorganization expenses
|
|
|
|
|
|
0.00
|
|
|
|
|
-
|
|
|
|
|
0.00
|
|
|
|
|
0.07
|
|
Foreign exchange loss on acquisition hedging and remeasurement
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
0.01
|
|
Forfeiture of vested stock options
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.04
|
)
|
Loss on Extinguishment of debt
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
0.64
|
|
|
|
|
-
|
|
Income tax adjustments
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.32
|
)
|
|
|
|
(0.09
|
)
|
Basic EPS (Non-GAAP)
|
|
|
|
|
$
|
0.53
|
|
|
|
$
|
0.46
|
|
|
|
$
|
1.47
|
|
|
|
$
|
1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP) to Diluted EPS (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)
|
|
|
|
|
$
|
0.34
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.56
|
|
|
|
$
|
0.91
|
|
Preferred dividend and accretion to preferred stock
|
|
|
|
|
|
0.11
|
|
|
|
|
0.11
|
|
|
|
|
0.31
|
|
|
|
|
0.30
|
|
Amortization of Intangible assets
|
|
|
|
|
|
0.04
|
|
|
|
|
0.03
|
|
|
|
|
0.10
|
|
|
|
|
0.10
|
|
Stock-based Compensation
|
|
|
|
|
|
0.06
|
|
|
|
|
0.05
|
|
|
|
|
0.16
|
|
|
|
|
0.13
|
|
Delisting expenses
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Merger and reorganization expenses
|
|
|
|
|
|
0.00
|
|
|
|
|
-
|
|
|
|
|
0.00
|
|
|
|
|
0.07
|
|
Foreign exchange loss on acquisition hedging and remeasurement
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
0.01
|
|
Forfeiture of vested stock options
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(0.04
|
)
|
Loss on Extinguishment of debt
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
0.63
|
|
|
|
|
-
|
|
Income tax adjustments
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.32
|
)
|
|
|
|
(0.09
|
)
|
Diluted EPS (Non-GAAP)
|
|
|
|
|
$
|
0.52
|
|
|
|
$
|
0.46
|
|
|
|
$
|
1.44
|
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Disclosure of Adjusted EBITDA
We present Adjusted EBITDA as a supplemental measure of our performance.
We define Adjusted EBITDA as net income 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, (vii) Delisting expenses, (viii) Merger and
reorganization expenses and (ix) loss on extinguishment of debt. 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 uses 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:
-
Adjusted EBITDA does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
-
Adjusted EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
-
Adjusted EBITDA does not reflect the significant interest expense, or
the cash requirements necessary to service interest or principal
payments, on our debts; although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized will
often have to be replaced in the future, and adjusted EBITDA does not
reflect any cash requirements for such replacements; non-cash
compensation is and will remain a key element of our overall long-term
incentive compensation package, although we exclude it as an expense
when evaluating our ongoing operating performance for a particular
period; Adjusted EBITDA does not reflect the impact of certain cash
charges resulting from matters we consider not to be indicative of our
ongoing operations; and other companies in our industry may calculate
adjusted EBITDA differently than we do, limiting its usefulness as a
comparative measure.
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.
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