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Princeton, NJ, October 29, 2008:
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 operating results for
its third quarter and nine months ended September 30, 2008 as well as
the authorization by the Company’s Board of Directors for the repurchase
of up to $5 million of the Company’s common stock to be funded
using the Company's working capital.
Highlights |
- Q3 ’08 revenue increased 8.4% compared
to Q3 ’07 and 2.7% compared to Q2 '08.
- Q3 ’08 gross margin improved 215
basis points to 31.3% compared to Q3 ’07
but declined 120 basis points compared to
Q2 '08, reflecting the impact of an annual
salary increase implemented in July 2008.
- Q3 ’08 operating margin improved
383 basis points to 9.4% over Q3 ’07
and increased 287 basis points compared to
Q2 '08.
- Q3 ’08 EPS were $0.06 compared to
$0.06 in Q3 ’07 and $0.03 in Q2 ’08.
The earnings are inclusive of a $0.7 million
net foreign exchange loss in Q3 ’08
compared with a $0.8 million net foreign
exchange gain in Q3 ’07 and a $1.4
million net foreign exchange loss in Q2 ’08.
Foreign exchange impacts are reflected in
other income/expense.
- Resource utilization improved 150 basis
points to 71.5% in Q3 ’08 vs. Q3 ’07
and declined 120 basis points compared to
Q2 ’08.
- Intelligroup added 35 new customers globally
in Q3 ’08 and 106 new customers in
the first nine months of 2008.
- Announces authorization of $5 million share
repurchase program.
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Revenues for Q3 '08 increased
8.4% to $41.2 million, compared to $38.0 million in
Q3 '07, and increased 2.7% compared to Q2 ’08
as the Company won additional projects across various
verticals, including High-Tech and Consumer Services.
The Company's average onsite bill rates increased by
6% in Q3 ’08 as compared to Q3 ’07 and
increased by 2% as compared to Q2 ’08 levels.
The Company's average offshore rates increased by 5%
in Q3 ’08 as compared to Q3 ’07 and increased
by 4% as compared to Q2 ’08.
Q3 ’08 gross profit increased
to $12.9 million - a gross margin of 31.3% - compared
to Q3 ’07 gross profit of $11.1 million - a
gross margin of 29.1% - and declined slightly compared
to Q2 ’08 gross profit of $13.0 million - a
gross margin of 32.5%. The slight decline in gross
profit on a quarterly sequential basis was principally
due to annual salary increases implemented in July
2008.
As a result of having largely built out the necessary levels of corporate
overhead to support its business over prior quarters, Intelligroup was
able to reduce selling, general and administrative expenses as a percentage
of revenue in Q3 ’08, driving operating margin increases on a year-over-year
and quarterly sequential basis. Q3 ’08 operating margin increased
to 9.4% compared to 5.5% in Q3 ’07 and 6.5% in Q2 ’08. SG&A
for Q3 ’08 was $8.8 million, or 21.3% of revenue, compared with $8.4
million, or 22.1% of revenue in Q3 ’07 and $9.7 million, or 24.1%
of revenue in Q2 ’08.
Offsetting its operating income
gains, Intelligroup recorded a net foreign exchange
loss of $0.7 million in Q3 ’08 reflecting the
impact from the Company’s hedging strategy
due to the on-going decline of the value of the Rupee
versus the U.S. dollar in Q3 ’08. While hedging
remains an important long-term risk management practice
and an integral component of onshore/offshore businesses,
increasing fluctuations in foreign exchange markets
may result in volatility in quarterly operating results.
Notwithstanding the impact of a foreign exchange loss versus a foreign
exchange gain in the year-ago period, Q3 ’08 net income was $2.7
million, or $0.06 per diluted share, compared with Q3 ’07 net income
of $2.6 million, or $0.06 per diluted share, and increased over Q2 ’08
net income of $1.1 million, or $0.03 per share.
Intelligroup President and Chief
Executive Officer, Vikram Gulati, commented, "Our
third-quarter performance demonstrates the value
of our ERP focus and the ability of our team to execute
even during challenging economic conditions. We enjoy
a significant base of recurring revenue, continue
to succeed in new business engagements and continue
to strengthen our financial foundation through the
generation of free cash flow while prudently investing
in growth opportunities. We have continued confidence
in our business given the role ERP plays in improving
top- and bottom-line operational performance within
the enterprises we target. Reflecting the current
economic environment we remain even more focused
on closely managing our business - through careful
planning, on-going operational discipline and superior
customer service and project execution.”
Share Repurchase
Pursuant to the new $5 million share repurchase authorization, Intelligroup
may purchase shares from time to time in the open market or through privately
negotiated transactions. The program will expire on the earlier of (i)
the 18 month anniversary of the approval of the plan, (ii) a determination
by the Board of Directors to discontinue the program or (iii) the repurchase
of the maximum number of shares under the plan. The Company is not obligated
to repurchase shares under the authorization, and the timing, actual number
and value of shares purchased will depend on many factors, including the
Company’s cash flow and the liquidity and price performance of its
shares. Intelligroup is unable to effect any share repurchases until its
next trading window which commences three trading days after today’s
report of third quarter results.
The Company intends to also adopt
a trading plan pursuant to Rule 10b5-1 under the
Securities Exchange Act of 1934 to facilitate repurchases
under the repurchase program at a time when it would
ordinarily not be in the market due to its internal
trading policy.
Commenting on the share repurchase authorization, Alok Bajpai, CFO of Intelligroup,
said, "The current disruption in the equity capital markets provides
an attractive environment for opportunistic, accretive purchases of our
common stock. Share repurchases represent just one of the ways to utilize
our surplus cash to create value for shareholders. Accordingly we continue
to identify and review other opportunities to invest in the growth of our
business.”
Conference Call
Intelligroup will host a conference call today at 10:00 a.m. EDT today
to discuss its Q3 results. The dial-in numbers are 800-769-0959 or 212-231-2911.
A replay will be available for three days by dialing 800-633-8284 or 402-977-9140,
pass-code: 21396899. A live webcast/replay is available via www.intelligroup.com/ig_events_webcasts.html or www.earnings.com.
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About Intelligroup, Inc.
Intelligroup is an ERP-focused enterprise applications systems integrator
providing consulting, implementation, testing, application 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
2007 global annual Pinnacle Award from SAP, was the finalist in Oracle
2007 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. Intelligroup
clients include Varian Medical, Reckitt Benckiser, Royal Greenland, SAP,
Magellan, Hershey’s, Eastman Chemical and Hitachi. For more information
please visit www.intelligroup.com.
Safe Harbor for Forwarding-looking Statements:
Certain statements contained herein, including statements regarding the
development of services and markets and future demand for services 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, 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, unanticipated costs associated
with continued litigation, 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, general
economic conditions, 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, 2007. 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.
Alll other trademarks and company names mentioned are the property of their
respective owners
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INVESTOR CONTACTS:
Norberto Aja, David Collins, Richard Land
Jaffoni & Collins Incorporated
(212) 835-8500
itig@jcir.com |
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INTELLIGROUP,
INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(in thousands of U.S. dollars, except per share data)
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THREE
MONTHS ENDED SEP 30 |
NINE
MONTHS ENDED SEP 30 |
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2008 |
2007 |
2008 |
2007 |
| Revenue |
$41,207 |
$38,010 |
$119,797 |
$106,745 |
| Cost of revenue |
28,326 |
26,945 |
82,453 |
78,817 |
| Gross profit |
12,881 |
11,064 |
37,344 |
27,928 |
Selling, general
and administrative expenses
|
8,798 |
8,397 |
27,466 |
26,087 |
Depreciation and
amortization
|
222 |
560 |
1,685 |
1,799 |
| Total operating expenses |
9,020 |
8,957 |
29,151 |
27,886 |
| Operating Income/(loss) |
3,861 |
2,107 |
8,193 |
42 |
Interest income (expense),
net
|
12 |
(142) |
(168) |
(516) |
| Other income (expense),
net |
(720) |
817 |
(1,236) |
756 |
| Income / (Loss) before
income taxes |
3,153 |
2,782 |
6,788 |
282 |
Provision for income
taxes
|
456 |
182 |
1,094 |
631 |
| Net Income / (Loss) |
$2,696 |
$2,600 |
$5,694 |
$(349) |
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| Basic net income/
( loss) per share |
$0.06 |
$0.06 |
$0.14 |
$(0.01) |
| Diluted net income
/ ( loss) per share |
$0.06 |
$0.06 |
$0.13 |
$(0.01) |
Weighted average
no. of common shares
|
|
|
| - Basic |
42,160 |
42,078 |
42,160 |
41,988 |
| - Diluted |
42,580 |
42,181 |
42,439 |
41,988 |
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INTELLIGROUP,
INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(in thousands except par value)
|
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30-Sep-2008 |
31-Dec-2007 |
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Unaudited |
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ASSETS |
|
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| CURRENT ASSETS |
|
|
| Cash and cash equivalents |
$ 8,737 |
$ 8,419 |
| Accounts receivable, less allowance
for doubtful accounts of $1,612 and $1,240
at September 30, 2008 and December 31,
2007, respectively |
22,320 |
24,493 |
Unbilled services, less allowance
for doubtful accounts of $911
at September 30, 2008 and December 31, 2007
|
16,126 |
11,393 |
Deferred tax asset, current portion
|
1,841 |
589 |
Prepaid expenses
|
701 |
1,567 |
| Other current assets |
1,043 |
1,965 |
| Total current assets |
50,768 |
48,426 |
| Property and equipment, net |
4,315 |
6,470 |
| Goodwill and Intangibles |
2,512 |
3,034 |
| Restricted Cash |
3,983 |
4,848 |
| Deferred taxes and other assets |
2,779 |
2,684 |
| Total assets |
$64,357 |
$65,462 |
| LIABILITIES
AND SHAREHOLDERS' EQUITY |
| CURRENT LIABILITIES |
|
|
| Line of credit borrowings |
$2,852 |
$6,566 |
| Accounts payable |
4,397 |
3,542 |
| Accrued payroll and related taxes |
11,759 |
11,645 |
Accrued expenses and other current
liabilities
|
5,844 |
4,878 |
Current portion of deferred revenue
|
1,287 |
3,345 |
| Tax Payable |
1,287 |
- |
Current portion of obligations under
capital lease
|
226 |
457 |
| Total current liabilities |
27,652 |
30,433 |
Obligations under capital lease, net
of current portion
|
253 |
375 |
Deferred revenue, net of current portion
|
524 |
691 |
| Other long-term liabilities |
1,200 |
579 |
| Total liabilities |
29,629 |
32,078 |
| Commitments and
contingencies |
| Shareholders' Equity |
|
|
| Preferred stock, $.01 par value, 5,000
shares authorized, none issued or outstanding |
-- |
-- |
Common stock, $.01 par value, 50,000
shares authorized
and 42,172 shares issued and outstanding at September 30, 2008
and 42,160 shares issued and outstanding at December 31, 2007 |
421 |
421 |
| Additional paid-in capital |
71,927 |
71,119 |
| Accumulated deficit |
(35,095) |
(40,789) |
Accumulated other comprehensive Income
|
(2,525) |
2,633 |
| Total shareholders' equity |
34,728 |
33,384 |
| Total liabilities and shareholders'
equity |
$64,357 |
$65,462 |
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INTELLIGROUP,
INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(USD in thousands)
|
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September
30, |
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2008 |
2007 |
| Cash flows from operating activities: |
|
|
| Net Income |
5,694 |
(349) |
Adjustments to reconcile net
loss to net
cash provided by (used in) operating activities: |
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Depreciation and amortization
|
1,917 |
2,045 |
Provision for doubtful accounts and
advances
|
664 |
70 |
Stock compensation expense
|
792 |
859 |
| Exchange (gain) loss |
(3,415) |
1,143 |
| Deferred taxes |
(1,732) |
(116) |
| Changes in operating assets
and liabilities: |
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|
| Accounts receivable |
900 |
(971) |
| Unbilled services |
(4,931) |
(1,638) |
| Prepaid expenses and other current
assets |
480 |
(404) |
| Other assets |
(232) |
386 |
| Restricted Cash |
62 |
(503) |
| Accounts payable |
1,282 |
287 |
| Accrued payroll and related taxes |
615 |
190 |
| Accrued expenses and other current
liabilities |
1,246 |
52 |
| Deferred revenue and advanced payments |
(2,004) |
(354) |
| Income taxes payable |
2,368 |
(243) |
| Other long-term liabilities |
800 |
598 |
| Net cash provided by (used
in) operating activities |
4,507 |
1,050 |
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|
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| Cash flows from investing activities: |
|
|
| Purchase of property and equipment |
(702) |
(2,308) |
| Proceeds from sale of equipment |
824 |
36 |
| Purchases of investments |
- |
(6,290) |
| Proceeds from sale of Investments |
- |
7,136 |
Acquisition of businesses
|
- |
(3,013) |
| Net cash provided by (used
in) investing activities |
121 |
(4,439) |
|
|
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| Cash flows from financing activities: |
|
|
| Principal payments under capital leases |
(533) |
(575) |
| Proceeds from exercise of stock options |
15 |
240 |
| Net change in line of credit borrowings |
(3,441) |
(964) |
| Net cash provided by (used
in )financing activities |
(3,959) |
(1,300) |
|
|
|
| Effect of foreign currency exchange
rate changes on cash |
(351) |
324 |
| Net increase (decrease) in cash and
cash equivalents |
318 |
(4,365) |
| Cash and cash equivalents - beginning
of year |
8,419 |
12,277 |
| Cash and cash equivalents -
end of year |
8,737 |
7,912 |
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Intelligroup to Host Q3 Earnings Conference Call
Wednesday, October 29th at 10.00 EDT
Princeton, New Jersey
October 20, 2008 -- 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
that it will hold a quarterly conference call to discuss
its Q3 2008 results on Wednesday, October 29, 2008
at 10:00 a.m. EDT. Intelligroup will release its Q3
Earnings at 7:30 a.m. EDT that morning.
Conference Call Dial-In Number: 800-769-0959
or 212-231-2911 (international); please call at least
5 minutes in advance of the start time. A replay of
the call will be available by dialing 800-633-8284
or 402-977-9140 (international) pass-code number 21396899,
beginning approximately two hours after the event.
The telephonic replay will be available for three days.
Live Webcast / Replay URL: Available via www.intelligroup.com or
at www.earnings.com.
An archived version of the webcast will be available for 30 days.
About Intelligroup, Inc.
Intelligroup is an ERP-focused enterprise applications
systems integrator providing consulting, implementation,
testing, application 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 2007 global annual Pinnacle Award from SAP,
was the finalist in Oracle 2007 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. Intelligroup clients include
Varian Medical, Reckitt Benckiser, Royal Greenland,
SAP, Magellan, Hershey’s, Eastman Chemical
and Hitachi. For more information please visit www.intelligroup.com
INVESTOR CONTACTS:
Norberto Aja, David Collins
Jaffoni & Collins Incorporated
(212) 835-8500
Itig@jcir.com
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