Press release from Business Wire India
Source: Intelligroup, Inc.
Tuesday, May 11, 2010 02:11 PM IST (08:41 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Stock exchanges; Technology
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Intelligroup Q1 Revenue Increased 8.7% to $33.5 Million, Net Income Rose 159% to $2.0 Million and EPS Rose 165% to $0.05
Princeton, New Jersey, United States and Hyderabad, Andhra Pradesh, India, Tuesday, May 11, 2010 -- (Business Wire India) -- Intelligroup, Inc. (ITIG 3.75, 0.00, 0.00%), an information technology and outsourcing services provider principally focused on Enterprise Applications, announced operating results for its first quarter ended March 31, 2010.
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Q1 2010 Highlights:
-- Q1 '10 revenue increased 8.7% to $33.5 million, compared to $30.9 million in Q1 '09 and by 1.8% compared to $33.0 million in Q4 '09
-- Q1 '10 gross margin rose to 31.8%, compared to 31.2% in Q1 '09, but decreased compared to 33.7% in Q4 '09
-- Q1 '10 operating margin increased to 9.2%, compared to 5.9% in Q1 '09, but decreased compared to 11% in Q4 '09
-- Q1 '10 foreign exchange (fx) loss increased to $0.8 million, compared to an fx loss of $0.6 million in Q1 '09, and a $0.2 million fx loss in Q4 '09
-- Q1 '10 net income was $2.0 million, or $0.05 per diluted share, compared to $0.8 million, or $0.02 per diluted share, in Q1 '09 and $3.3 million, $0.08 per diluted share, in Q4 '09
-- Q1 '10 cash from operating activities of $2.5 million
-- Cash and Short-term Investments rose to $26.1 million as of March 31, 2010, compared to $15.9 million as of March 31, 2009, and $23.2 million as of December 31, 2009
-- Intelligroup added 33 new customers globally in Q1 '10
Overview of Key Operating Metrics:
Intelligroup President and CEO, Vikram Gulati, commented, "During the first quarter we were able to leverage a modest rebound in IT spending to achieve sequential and year-over-year top line growth. A particular area of strength in our business continues to be the Life Sciences vertical, where we have begun work on a large application development engagement expected to generate revenue of over $30 million over five years. We also initiated work on a multi-year, multi-million ERP application testing engagement, underscoring the traction we are seeing in testing. The improving demand trend, combined with better visibility from the larger contracts, provides us with a good deal of optimism on our prospects for the balance of the year. In addition, our efforts are progressing well in developing a market presence in the Middle East where we see substantial opportunity for future growth.
"However, gross margins and net income were impacted as the environment has become increasingly competitive on pricing and the Indian Rupee continued to appreciate against the U.S. Dollar.
"Looking ahead, we feel the market is moving from being 'demand constrained' to being 'supply constrained.' And, while that change provides a positive outlook for the business, in the near term it is creating a more competitive pricing environment for both projects as well as employee compensation. We remain confident in our ability to drive growth and maintain operating discipline, and as always, remain focused on delivering value to our clients and shareholders."
Q1 Operating Results:
Revenues for Q1 '10 increased 8.7% to $33.5 million, compared to the prior year, and by 1.8% sequentially, on the back of improving deal flow and continued improvement in the overall market. Intelligroup was able to leverage its operational and cost structure and generate gross margin of 31.8%, a 60bps improvement over the previous year period, however a decline versus 33.7% in Q4 '09. Intelligroup was also able to reduce SG&A by 2.9% to $7.6 million y-o-y, however SG&A increased 1.5% sequentially. Operating margin improved by 330bps to 9.2% versus Q1 '09, but decreased versus 11% in Q4 '09. Operating income rose to $3.1 million, a 70% increase versus the year ago period though a 15.4% decline as compared to Q4 '09.
Intelligroup recorded a foreign exchange loss of $0.8 million in Q1 '10 reflecting the continued impact of the appreciation of the Indian Rupee versus the U.S. Dollar, compared to a net foreign exchange loss of $0.6 million in Q1 '09, and a loss of $0.02 million in Q4 '09. Tax expenses totaled $0.5 million in Q1 '10, in line with Q1 '09 and slightly higher than the $0.4 million in Q4 '09.
Q1 '10 net income rose to $2.0 million, or $0.05 per diluted share, an increase of 159% compared to Q1 '09 net income of $0.8 million, or $0.02 per diluted share, however a decline of 38% versus Q4 '09. Diluted shares outstanding were 42.5 million in Q1 '10, an increase of 1.7% compared to Q1 '09 and Q4 '09, principally reflecting the issuance of stock options pursuant to the Company's incentive compensation program.
Intelligroup generated cash from operating activities of $2.5 million in Q1 '10, ending the quarter with $26.1 million of cash and short-term investments, an increase of approximately $2.9 million from year-end 2009.
Alok Bajpai, CFO, added, "While year-over-year results experienced healthy growth, and we continued to exercise good cost disciplines in the first quarter, our sequential margins showed some decline primarily due to foreign currency fluctuations, as well as ongoing price sensitivity from customers. Nonetheless, we were able to achieve good cash flow from operations, enabling us to conclude the quarter with a sequential increase of $2.9 million in cash and equivalents. It is comforting to see that our efforts to improve operational efficiencies, including utilization, overhead and cash collection continue to serve us well and help us maintain margin and generate strong cash flow."
About Intelligroup, Inc.
Intelligroup is an Enterprise Applications systems integrator providing consulting, implementation, testing, application management, infrastructure management, and other IT services for global corporations. The Company possesses deep expertise and proprietary tools in industry-specific enterprise solutions and has been recognized by clients, partners including SAP and Oracle and IT industry analysts for consistently exceeding expectations. Intelligroup won the 2009 global annual Pinnacle Award from SAP, was a finalist in Oracle 2009 Titan Awards, and was ranked as a 'Leader' on the 2010 Global Outsourcing 100(R) list by the International Association of Outsourcing Professionals (IAOP)(R). Intelligroup's global service delivery model combines onsite teams and offshore development capabilities to deliver solutions that accelerate results, reduce costs and generate meaningful ROI for clients.
Safe Harbor for Forwarding-looking Statements:
Certain statements contained herein, including statements regarding the development of services and markets, future demand for services and the effect of the share repurchases by the Company and other statements regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995), including future financial performance and the effect of share repurchase by the Company. Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to the impact of the general economic conditions and the strength of the global economic recovery, variability of quarterly operating results, continued uncertainty of the IT market and revenues derived from application management business, uncertainty in revenues for traditional professional services offerings, loss of one or more significant customers, reliance on large projects, concentration of revenue, volatility caused by fluctuations in the currency markets, ability to attract and retain professional staff, dependence on key personnel, ability to manage growth effectively, risks associated with strategic partnerships, various project-associated risks, including termination with short notice, substantial competition, risks associated with intellectual property rights, risks associated with international operations and other risk factors detailed under the caption "Risk Factors" in Intelligroup's annual report on Form 10-K for the period ended December 31, 2009. Intelligroup disclaims any intention or obligation to update forward looking statements as a result of developments occurring after the date of this press release.
Intelligroup, the Intelligroup logo and 'Creating the Intelligent Enterprise', are trademarks of the Company. 4Sight, 4Sight Plus, PowerUp Services, HotPac Analyzer and Uptimizer are service marks of Intelligroup.
All other trademarks and company names mentioned are the property of their respective owners.
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CONTACT DETAILS
Norberto Aja, David Collins, Jaffoni & Collins Incorporated, 212-835-8500, itig@jcir.com
Sarah Jacob Tharakan, 20:20 MEDIA, +91 9160101266, sarah.tharakan@2020india.com
KEYWORDS
CONSUMER, ECONOMY, BANKING, BUSINESS SERVICES, Financial Analyst, IT, STOCK EXCHANGES, TECHNOLOGY
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