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Intelligroup Q3 results beats expectations
By siliconindia
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Wednesday, 06 November 2002, 20:30 IST
EDISON: Intelligroup Inc. (Nasdaq: ITIG) Wednesday reported better than expected results for its third quarter and nine-month period ended September 30, 2002.
The Company reported revenues of $28.4 million for third quarter 2002, a 7% increase over second quarter 2002 revenues of $26.5 million, and 11% improvement from revenues of $25.5 million in third quarter 2001.
The Company also reported that it has won more than 60 new engagements since the end of the prior quarter, including 8 new application management projects. New engagements include customers who are leaders in agriculture, oil and gas, food and beverage, life sciences, and hi-tech manufacturing industry segments, as well as public sector accounts in government services and education.
Commenting on Intelligroup's perfoemance, Arjun Valluri, chairman and chief eecutive officer, said, "We have continued to improve our results, and I am extremely pleased with our performance for the third quarter of 2002. Not only did we exceed our revenue and income expectations this quarter, but we have done so despite the challenges of the current economic environment, and in the face of increased competition for new engagements. We grew this quarter's revenue line by 7% over the prior quarter, and improved sequential quarterly operating income by 38%. We believe this quarter's results are a validation of Intelligroup's business strategy and competitive advantage, and a credit to our employees who make it possible."
Gross profit margin for third quarter 2002 was 29.5 percent of revenue, compared with 31.2% for second quarter 2002, and 33.8 percent for third quarter 2001, reflecting continuing pressure on pricing caused by competition for new projects.
The Company incurred an additional $412,000 in charges during the third quarter of 2002, related to the proxy contest initiated earlier this year by a dissident shareholder ("Proxy Charges"). Added to the $464,000 in Proxy Charges reported in the second quarter of 2002, total Proxy Charges this year have totaled $876,000. The Company expects to incur additional charges related to this matter during the fourth quarter of 2002, however the amount is currently undetermined.
Speaking about the proxy contest, Valluri stated, "Unfortunately, the continued efforts by a dissident shareholder to disenfranchise certain other shareholders and to overturn the independently certified proxy vote have created a continuing distraction for employees and management, and a drain on our limited cash resources."
The Company reported third quarter operating expenses (selling, general, administrative and depreciation expenses, excluding Proxy Charges of $7.6 million. In comparison, second quarter operating expenses, excluding all special charges, were $7.7 million, and third quarter 2001 operating expenses were $8.1 million.
Excluding all special charges, the Company reported third quarter 2002 operating income of $752,000, compared with $546,000 of second quarter 2002 operating income, and third quarter 2001 operating income of $524,000. Earnings before interest, taxes, depreciation and amortization ("EBITDA"), and excluding special charges, was $1.6 million for the third quarter of 2002, $1.4 million for the second quarter of 2002, and $1.7 million for the third quarter of 2001. Including special charges, the Company's third quarter 2002 operating income was $340,000, with EBITDA of $1.2 million.
Excluding all Proxy Charges, third quarter 2002 net income was $425,000, or $0.03 diluted earnings per share. In comparison, second quarter 2002 net income, excluding all special charges, was $266,000, or diluted earnings per share of $0.02, and third quarter 2001 net income was $146,000, or diluted earnings per share of $0.01. The Company's third quarter 2002 net income, including the special charges, was $13,000, or $0.00 diluted earnings per share.
For the nine-month period ended September 30, 2002, revenues were $79.4 million, compared to $85.1 million for the same period in 2001. The Company's net income, excluding special charges, was $701,000 or $0.04 diluted earnings per share in the first nine months of 2002, as compared with net income of $513,000 or $0.03 diluted earnings per share in the corresponding period of 2001. Including the mostly non-cash special charges, the Company's nine-month period ended September 30, 2002 net loss was $8.5 million, or a $0.51 loss per share.