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iGate reports $72.1 M Q3 revenues
By siliconindia
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Wednesday, 06 November 2002, 20:30 IST
PITTSBURGH: iGate Corporation (Nasdaq: IGTE) Tuesday announced consolidated revenues of $72.1 million for the third quarter ended September 30, 2002, compared with $99.7 million reported in the same quarter a year ago. For the first nine months of 2002, revenues were $223.1 million compared with $335.2 million for the first nine months of 2001.
On a US-GAAP basis, net income for the third quarter was $1.3 million or $0.03 per diluted share. This compares with last year's third quarter net loss of $46.0 million or $0.90 per diluted share which included pre-tax charges of $44.4 million for goodwill impairment and special items. Year-to- date, net income was $8.1 million or $0.16 per diluted share compared with a net loss of $41.1 million or $0.80 per diluted share for the first nine months of 2001.
Operating profit during the quarter was $2.3 million or 3.1% of revenues, up from last year's third quarter operating profit which after excluding special items and goodwill impairment was $53,000 or 0.1% of revenues.
"Despite persistent weakness in global IT spending, we are pleased to show profitability for the third consecutive quarter this year. This is the direct result of management's continued focus on a lean cost structure and emphasis on more efficient and cost-effective internal processes. However, our primary goal remains revenue growth, and specifically through our offshore outsourcing services. Offshore outsourcing is becoming the solution of choice to address IT needs while our customers respond to tight budget constraints, and our plan is to further shift our resources toward offshore outsourcing," said Sunil Wadhwani, iGate's Chief Executive Officer and Co-Founder.
iGate's balance sheet continued to strengthen this quarter. Late September, the Company decided to prepay the last $10 million of long-term debt relating to an outstanding convertible note which was due to GE Capital.
"The company's strong cash balance enabled iGate to prepay its $10 million outstanding debt to GE without impacting its financial position. This transaction will result in net cash savings of about $1 million over the next two years," said Michael Zugay, Chief Financial Officer.
As of September 30, 2002, iGate had no debt, $108 million in cash and short-term investments and $37 million available on its credit line. During the quarter, iGate generated $4 million in cash flow from operations.
"GE is one of our largest clients and our relationship with GE is as strong as it was five years ago when it committed $30 million to our expansion. We do not expect any changes to our relationship, as a result of our early prepayment," commented Ashok Trivedi, iGate's President and Co- Founder.
Looking ahead at the fourth quarter of 2002, Sunil Wadhwani commented, "Visibility is still poor as our clients' IT budgets remain uncertain. Based on weak IT spending, fewer billable days and anticipated lower utilization in the fourth quarter due to the holiday season, we expect next quarter's revenues to be in the range of $66 million to $70 million. However, we remain confident in the fundamentals of our business and believe that our sustained efforts to manage SG&A expenses to the appropriate level will contribute to breakeven US-GAAP EPS in the fourth quarter.
"In line with our goals to continue to be profitable and consistently generate cash flow from operations, our priorities are two-fold: to concentrate our entire organization toward the expansion of our offshore outsourcing services and to streamline our operations and processes even more in order to further decrease our internal cost structure. We believe this strategy will allow us to better meet our clients' needs, take advantage of additional offshore opportunities and add value to our shareholders through revenue and earnings growth. We intend to implement this plan within the next few weeks and will update you on the details of our plan as they are finalized," added Sunil Wadhwani.