iGATE Corporation's revenues were $55.6mn, 15% increase

iGATE Corporation (Nasdaq: IGTE), an integrated technology and operations (iTOPS) company, has announced its financial results for the three months ended June 30, 2008.

Second quarter highlights

• Diluted earnings from continuing operations were $0.15 per share, a 67% increase from last year’s second quarter adjusted for a $2.5 million one-time non-cash charge.
• In the iGATE Global Solutions segment, revenues were $55.6 million, a 15% increase from last year’s second quarter. The segment’s operating income of $8.1 million was up 620% from a year ago.
• Five new customers were added during the quarter by iGATE Global Solutions.  Three of these are Fortune 1000 companies.
• iGATE and Royal Bank of Canada, Canada’s largest bank, won the “Best Financial Services” partnership award in the Everest Group’s distinguished 2008 Outsourcing Excellence Awards.
• The proposed spin-off to iGATE shareholders of the Professional Services segment, which will be renamed Mastech Holdings, Inc., is proceeding smoothly, and is expected to be completed during the third quarter.  Mastech Holdings, Inc. filed a Form 10 registration statement with the SEC on June 11, 2008, and is currently responding to the SEC’s comments.

“While conditions in the global economic environment were challenging, we maintained our customer acquisition momentum through iTOPS projects,” said Phaneesh Murthy, Chief Executive Officer of iGATE Corporation.  “We believe that particularly in challenging economic times like these, our outcome-price based iTOPS model is increasingly more appealing to customers.”

“We are pleased with our margin performance during the second quarter, as better management of SG&A costs has helped offset annual salary increases,” said Ramachandran Natesan, Chief Financial Officer of iGATE Corporation. 

Operating results

iGATE Global Solutions

The segment’s revenues for the quarter were $55.6 million, compared to $48.6 million in the corresponding period last year and $54.9 million in the previous quarter.  iGATE Global Solutions’ gross profit margin was 36% compared to 31% a year ago.  Operating income for the quarter was $8.1 million, compared with $1.1 million in the same period last year and $6.7 million in the previous quarter.  The operating margin was 15% of revenue, compared with 2% a year ago.  Last year’s second quarter was impacted by a goodwill impairment charge of $1.9 million related to the LoanPro acquisition.

For the first half of 2008, iGATE Global Solutions revenues were $110.5 million, compared with $96.4 million in last year’s first half.  The segment’s operating income was $14.8 million, compared with $5.4 million a year ago.

Key customer wins and significant projects executed

A Fortune 500 entertainment company has engaged iGATE to  manage its news, information and entertainment content from production to distribution. iGATE is implementing a Digital Asset Management system to enable the client  to search and view content across the organization, reduce the operating cost of distribution and maximize its revenue stream with a rich library of digital assets.

A large pension fund company in Europe has engaged iGATE to provide equity research and data analytics for FTSE100 companies. iGATE is responsible for data collection, data analysis, data input and quality checks.

iGATE won a multi-year deal from one of the largest food and beverage companies  in North America to provide  data collection, analysis, management and validation services for new applications that are a part of the client's overall Product Lifecycle Management (PLM) strategy.

iGATE has added another leading Canadian financial services company to its client base and will be implementing a platform that will provide reporting and modeling for global securities holdings across the organization’s various legal entities.

A US-based leading construction material manufacturing company selected iGATE to provide data management to its customer fulfillment division. As part of the deal, iGATE will support the client's Customer Sales Order organization around areas like inventory, database management and process optimization.

A leading consumer electronics retailer in North America selected iGATE to provide support for its procurement functions. iGATE will provide services around transaction processing, data management and reporting, order and vendor management.

Additional quarterly highlights

• iGATE was named to The Black Book of Outsourcing’s prestigious 2008 list of “50 Best Managed Global Outsourcing Vendors,” and ranked  No 6 in The Black Book of Outsourcing 2008 Top 10  Knowledge Process Outsourcers (KPO).
• The company officially began operations in June at its new $2 million Information and Communication Technology facility in Ballarat in the State of Victoria, Australia.
• iGATE announced an expansion of its global delivery facility in Chennai, India.  The expanded facility will include a new Media and Entertainment Centre of Excellence.   

iGATE Professional Services

Revenues for the quarter declined to $24.4 million compared to $27.0 million in the same period last year and $24.9 million in the previous quarter.  The segment’s gross profit margin for the second quarter was 19% compared to 22% in the corresponding quarter last year. Operating income declined to $1.7 million from $2.3 million in the same period last year and $1.3 million in the previous quarter.

For the first half of 2008, iGATE Professional Services reported revenues of $49.3 million, compared with $54.1 million in the six-month period last year.  Operating income for the first half was $3.0 million, compared with $4.5 million a year ago.

Overall

Consolidated revenues increased 6% to $80.0 million compared to $75.6 million in the second quarter of last year. For the first half of 2008, the consolidated revenues stood at $159.8 million, compared with $150.5 million in last year’s first half.

Net income from continuing operations for the second quarter was $8.5 million, or $0.15 per diluted share, compared with $2.3 million, or $0.04 per diluted share a year ago.  For the first six months of 2008, net income from continuing operations was $15.9 million, or $0.29 per diluted share, compared with $6.9 million, or $0.13 per diluted share, in last year’s first half. 

The company’s operating cash flow for the first half of 2008 was $23.1 million.  As of June 30, 2008, the company’s balance sheet remained strong, with $61.3 million in cash and short-term investments, no debt, and $155.9 million in shareholders’ equity. 

Mr. Murthy concluded, “With the impending sale of our Clinical Research business and the expected spin-off of Professional Services in the immediate future, we are well on our way to completing the restructuring of iGATE as a ‘pure play’ in the higher-margin IT services and solutions arena.  In particular, in the years ahead we believe iGATE is increasingly well-positioned to carve out a leadership role at the intersection of business process outsourcing (BPO) and traditional IT services with our unique iTOPS business model. Looking ahead, while we are satisfied that our cost containment measures are working and that we have strong fiscal practices, we will continue to press to enhance top-line growth through active marketing of our iTOPS model.”   

Sourced From: proPR