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| 8-K - CURRENT REPORT - INTELLIGROUP INC | intelligroup_8k.htm |
For Immediate Release
Intelligroup Q3 EPS Rise to $0.09 versus
$0.06
on 330 Basis Point Gross Margin Improvement
- Cash, Cash Equivalents and Short-Term Investments Grow to $22.7 Million -
Princeton, NJ, November 2, 2009 – Intelligroup, Inc. (OTC BB: ITIG), an information technology and outsourcing services provider principally focused on enterprise resource planning (ERP) and extended ERP solutions, today announced its financial results for the third quarter ended September 30, 2009. Intelligroup will host a conference call today at 10:00 a.m. EST to review its financial results.
Conference Call/Replay: 800-734-8507 or 212-231-2926. Phone replay will be available until November 6th via 800-633-8625 or 402-977-9141, passcode: 21441041.
Webcast: Available live at www.intelligroup.com/ig_events_webcasts.html or www.earnings.com and archived for 30 days.
Q3 ’09 Highlights:
- Revenue increased 2.5% to $31.7 million compared to Q2 ‘09
revenue of $31.0 million and decreased 23.0% compared to $41.2 million in Q3
'08
- Gross margin rose to 34.6% compared to 34.5%
in Q2 ’09 and 31.3% in Q3 ’08
- Operating margin rose to 11.4% compared to
9.3% in Q2 ’09 and 9.4% in Q3 ’08
- Foreign exchange (fx) gain of $0.03 million
compared to a fx gain of $0.7 million in Q2 ’09 and a fx loss of $0.7 million
in Q3 ’08
- Net income of $3.6 million, or $0.09 per
diluted share, compared to $3.2 million, or $0.08 per diluted share, in Q2 ’09
and $2.7 million, or $0.06 per diluted share, in Q3
’08
- Cash from operating activities of $3.4
million; $14 million year-to-date
- Cash and cash equivalents including
short-term investments were $22.7 million as of September 30, 2009, compared
to $20.3 million at June 30, 2009 and $11.2 million at December 31,
2008
- Intelligroup added 28 new customers globally in Q3 ’09; 92 year-to-date
| Overview of Key Operating Metrics: | ||||||||
| Q3' 09 | Q2' 09 | Q1' 09 | Q4' 08 | Q3' 08 | |
2008 | 2007 | |
| Utilization Rate | 80% | 78% | 72% | 70% | 72% | 71% | 70% | |
| Billing Rates – Offshore | $23 | $21 | $22 | $24 | $24 | $24 | $21 | |
| Billing Rates – Onsite | $101 | $105 | $106 | $110 | $108 | $107 | $103 | |
| Revenue Mix – Offshore | 33% | 32% | 32% | 32% | 29% | 30% | 28% | |
| Revenue Mix – Onsite | 67% | 68% | 68% | 68% | 71% | 70% | 72% | |
| Top 10 Customer Revenue % | 37% | 39% | 36% | 38% | 36% | 35% | 41% | |
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Intelligroup President and Chief Executive Officer, Vikram Gulati, commented, "Intelligroup made continued progress in the third quarter in managing the margins, and these efforts have yielded improved profitability and allowed the Company to maintain strong cash flow. Revenue for the quarter increased by 2.5% as compared to the previous quarter.
“In our go-to-market strategy, we continue to leverage our core ERP strengths, proprietary software tools and deep experience in a select group of verticals including, Life Sciences, Manufacturing and High-Tech”.
Additional Q3 2009 Financial
Highlights:
Q3 2009 SG&A, including
depreciation and amortization, decreased by 18.3% to $7.4 million compared to
$9.0 million in Q3 ’08, and declined by 5.9% on a sequential basis. The decrease
was primarily due to continuing cost optimization efforts. Q3 ’09 operating
income was $3.6 million, or 11.4% of revenues, a 200 basis point improvement
over $3.9 million, or 9.4% of revenues, in Q3 ’08 and a 210 basis point
improvement compared to operating income of $2.9 million, or 9.3% of revenues,
in Q2 ’09.
Intelligroup recorded a foreign exchange gain of $0.03 million in Q3 ‘09, reflecting the relative stability of the Indian Rupee versus the U.S. Dollar as compared to previous quarters. Tax expenses remained steady at $0.5 million in Q3 ’09 as compared to Q3 ’08 and decreased slightly from $0.6 million in Q2 ’09.
Diluted shares outstanding were 41.6 million in Q3 ’09. During the quarter, Intelligroup repurchased 446,931 shares of common stock at an average price of $1.89, bringing total purchases since the inception of the program to 1.2 million shares.
Intelligroup generated cash from operating activities of $3.4 million in Q3 ’09 and $14 million year to date. As of September 30, 2009, Intelligroup had $22.7 million of cash and cash equivalents and short-term investments, net of line of credit borrowings, an increase of approximately $11.7 million from year-end 2008.
Alok Bajpai, CFO, added, “The recent challenges we have experienced in the IT services market have driven us to substantially improve upon our operational metrics and successfully achieve disciplined cost management. We are working diligently to institutionalize these disciplines for the long term so that we can achieve the greatest possible benefit as demand for IT services begins to recover.”
About Intelligroup,
Inc.
Intelligroup is an ERP-focused 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 recognized by NASSCOM as a Top 100
Innovator. 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. For more
information please visit www.intelligroup.com.
Intelligroup, the Intelligroup logo and ‘Creating the Intelligent Enterprise’, are trade-marks 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.
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.
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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 global economic crisis, 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, 2008. 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 trade-marks 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.
INVESTOR CONTACTS:
Norberto Aja, David Collins
Jaffoni & Collins
Incorporated
(212) 835-8500
itig@jcir.com
(tables to follow)
# # #
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INTELLIGROUP, INC.
CONSOLIDATED
BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND
DECEMBER 31, 2008
(In thousands except par
value)
| September 30 | December 31 | |||||||
| 2009 | 2008 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 21,004 | $ | 10,161 | ||||
| Short-term investments | 1,852 | 1,031 | ||||||
| Accounts receivable, less allowance for doubtful accounts of $2,162 | ||||||||
| and $1,996 at September 30, 2009 and December 31, 2008, | ||||||||
| respectively | 21,795 | 23,805 | ||||||
| Unbilled services, less allowance for doubtful accounts of $46 and $20 | ||||||||
| at September 30, 2009 and December 31, 2008, respectively | 4,923 | 10,456 | ||||||
| Deferred tax asset, current portion | 623 | 545 | ||||||
| Prepaid expenses and prepaid taxes | 642 | 1,115 | ||||||
| Other current assets | 659 | 617 | ||||||
| Total current assets | 51,498 | 47,730 | ||||||
| Property and equipment, net | 3,346 | 5,041 | ||||||
| Goodwill and intangibles | 1,925 | 1,941 | ||||||
| Restricted cash and investments | 2,475 | 882 | ||||||
| Prepaid taxes - Non-adjustable, less allowance for doubtful accounts of | ||||||||
| $101 and $95 at September 30, 2009 and December 31, 2008, respectively | 887 | 393 | ||||||
| Deferred taxes, net of current portion and other assets | 2,704 | 4,243 | ||||||
| Total Assets | $ | 62,835 | $ | 60,230 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Line of credit borrowings | $ | 125 | $ | 125 | ||||
| Accounts payable | 1,502 | 1,820 | ||||||
| Liability on derivative instruments | 1,057 | 2,621 | ||||||
| Accrued payroll and related taxes | 9,664 | 11,609 | ||||||
| Accrued expenses and other current liabilities | 4,035 | 4,930 | ||||||
| Deferred revenue, current portion | 1,583 | 735 | ||||||
| Tax payable | 860 | — | ||||||
| Capital lease and deferred rent, current portion | 608 | 805 | ||||||
| Total current liabilities | 19,434 | 22,645 | ||||||
| Obligations under capital lease, net of current portion | 216 | 533 | ||||||
| Deferred revenue, net of current portion | 360 | 454 | ||||||
| Other long-term liabilities | 984 | 1,556 | ||||||
| Total Liabilities | 20,994 | 25,188 | ||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Preferred stock, $.01 par value, 5,000 shares authorized, none issued or | ||||||||
| outstanding | — | — | ||||||
| Common stock, $.01 par value, 65,000 shares authorized | ||||||||
| at September 30, 2009 and December 31, 2008 and 41,074 and | ||||||||
| 42,114 shares issued and outstanding at September 30, 2009 and | ||||||||
| December 31, 2008, respectively | 411 | 421 | ||||||
| Additional paid-in capital | 70,912 | 72,089 | ||||||
| Accumulated deficit | (26,559 | ) | (34,100 | ) | ||||
| Accumulated other comprehensive loss | (2,923 | ) | (3,368 | ) | ||||
| Total shareholders’ equity | 41,841 | 35,042 | ||||||
| Total liabilities and shareholders’ equity | $ | 62,835 | $ | 60,230 | ||||
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INTELLIGROUP,
INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
(Thousands except per share data)
| NINE MONTHS ENDED | THREE MONTHS ENDED | |||||||||||||||
| SEPTEMBER 30 | SEPTEMBER 30 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Revenue | $ | 93,559 | $ | 119,797 | $ | 31,730 | $ | 41,207 | ||||||||
| Cost of revenue | 62,261 | 82,453 | $ | 20,745 | 28,326 | |||||||||||
| Gross profit | 31,298 | 37,344 | 10,985 | 12,881 | ||||||||||||
| Selling, general and administrative expenses | 21,100 | 27,466 | 6,809 | 8,798 | ||||||||||||
| Depreciation and amortization | 1,906 | 1,685 | 557 | 222 | ||||||||||||
| Total operating expenses | 23,006 | 29,151 | 7,366 | 9,020 | ||||||||||||
| Operating income | 8,292 | 8,193 | 3,619 | 3,861 | ||||||||||||
| Interest income | 100 | 259 | 36 | 83 | ||||||||||||
| Interest expense | (57 | ) | (428 | ) | (19 | ) | (71 | ) | ||||||||
| Foreign currency transaction gain (loss), net | 141 | (1,716 | ) | 27 | (657 | ) | ||||||||||
| Other income (expense), net | 693 | 480 | 403 | (63 | ) | |||||||||||
| Income before income taxes | 9,169 | 6,788 | 4,066 | 3,153 | ||||||||||||
| Provision for income taxes | 1,629 | 1,094 | 506 | 456 | ||||||||||||
| Net income | $ | 7,540 | $ | 5,694 | $ | 3,560 | $ | 2,696 | ||||||||
| Basic net income per share | $ | 0.18 | $ | 0.14 | $ | 0.09 | $ | 0.06 | ||||||||
| Diluted net income per share | $ | 0.18 | $ | 0.13 | $ | 0.09 | $ | 0.06 | ||||||||
| Weighted average no. of common shares | ||||||||||||||||
| outstanding | - Basic | 41,451 | 42,160 | 41,143 | 42,160 | |||||||||||
| - Diluted | 41,591 | 42,439 | 41,641 | 42,580 | ||||||||||||
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INTELLIGROUP,
INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR NINE MONTH ENDED SEPTEMBER 30, 2009 AND 2008
(USD in
thousands)
| NINE MONTHS ENDED SEP 30, | |||||||
| 2009 | 2008 | ||||||
| (Unaudited) | |||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 7,540 | $ | 5,694 | |||
| Adjustments to reconcile net income to net | |||||||
| Cash provided by operating activities: | |||||||
| Depreciation and amortization | 2,331 | 1,917 | |||||
| Provision for doubtful accounts and advances | 803 | 664 | |||||
| Stock compensation expense | 515 | 792 | |||||
| Profit on sale of investment | (85 | ) | — | ||||
| Unrealized interest | (63 | ) | — | ||||
| Unrealized gain on investments | (472 | ) | — | ||||
| Loss on sale of fixed assets | 52 | — | |||||
| Unrealized exchange (gain)/loss | (170 | ) | 913 | ||||
| Deferred taxes | (388 | ) | (1,732 | ) | |||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 1,757 | 900 | |||||
| Unbilled services | 5,451 | (4,931 | ) | ||||
| Prepaid taxes | (622 | ) | — | ||||
| Prepaid expenses and other current assets | 426 | (762 | ) | ||||
| Other assets | 79 | (232 | ) | ||||
| Restricted cash and investments | 722 | 62 | |||||
| Liability on derivative instruments | (1,982 | ) | 457 | ||||
| Accounts payable | (529 | ) | (1,351 | ) | |||
| Accrued payroll and related taxes | (2,001 | ) | 615 | ||||
| Accrued expenses and other current liabilities | (850 | ) | 1,246 | ||||
| Deferred revenue, Current portion | 825 | (1,198 | ) | ||||
| Deferred revenue, net of current portion | (108 | ) | — | ||||
| Income taxes payable | 741 | 2,368 | |||||
| Other long-term liabilities | 11 | (110 | ) | ||||
| Net cash provided by operating activities | $ | 13,983 | $ | 5,312 | |||
| Cash flows from investing activities: | |||||||
| Purchase of property and equipment | $ | (782 | ) | $ | (758 | ) | |
| Proceeds from sale of equipment | — | 74 | |||||
| Purchases of investments | (14,729 | ) | — | ||||
| Proceeds from sale of investments | 14,085 | — | |||||
| Net cash used in investing activities | $ | (1,426 | ) | $ | (684 | ) | |
| Cash flows from financing activities: | |||||||
| Principal payments under capital leases | $ | (188 | ) | $ | (533 | ) | |
| Stock repurchase | (1,848 | ) | — | ||||
| Proceeds from exercise of stock options | 147 | 15 | |||||
| Net change in line of credit borrowings | — | (3,441 | ) | ||||
| Net cash used in financing activities | $ | (1,889 | ) | $ | (3,959 | ) | |
| Effect of foreign currency exchange rate changes on cash | $ | 175 | $ | (351 | ) | ||
| Net increase (decrease) in cash and cash equivalents | 10,843 | 318 | |||||
| Cash and cash equivalents - beginning of year | $ | 10,161 | $ | 8,419 | |||
| Cash and cash equivalents - end of the period | $ | 21,004 | $ | 8,737 | |||
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