BWI: Patni Q1 Revenues at $156.4 Million, in Line with Guidance, Operating Margin Higher 7.7% Sequentially

Press release from Business Wire India
Source: Patni Computer Systems
Wednesday, April 29, 2009 10:00 AM IST (04:30 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Stock exchanges; Technology
Release no: 19817
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Patni Q1 Revenues at $156.4 Million, in Line with Guidance, Operating Margin Higher 7.7% Sequentially


Mumbai, Maharashtra, India, Wednesday, April 29, 2009 -- (Business Wire India) -- Patni Computer Systems Limited (Patni) today announced its financial results for the first quarter ended 31st March 2009.

Performance Highlights for the quarter ended March 31,2009

-- Revenues for the quarter at US$ 156.4 million (Rs. 7,954.8 million)

- Down 11.4% YoY from US$ 176.4 million (Rs. 7,061.2 million)
- Down 11.4% QoQ from US$ 176.4 million (Rs.8,570.0 million)

- Contribution from top customer at 12.3% for the quarter from 11.0% during the previous quarter

- Revenue concentration of Top 10 clients declined from 48.7% to 46.9% during the quarter
- New client acquisition during the quarter were 22 as compared to 18 during previous quarter

-- Operating Income for the quarter at US$ 16.0 million (Rs. 812.4 million)

- Down 7.8% YoY from US$ 17.3 million (Rs.693.4 million)
- Up 7.7% QoQ from US$ 14.8 million (Rs.720.1 million)

-- Net Income for the quarter at US$ 15.0 million (Rs. 760.7 million)

- Down 17.4% YoY from US$ 18.1 million (Rs.724.6 million)
- Down 6.9% QoQ from US$16.1million (Rs. 780.2 million)

-- EPS for the quarter at US$ 0.12 per share (US$ 0.23 per ADS)

-- Future Outlook:

- Q2 CY2009 Revenues are expected to be at US$ 158 million to US$ 159 million and Net Income (Excluding the hedging Gain/Loss) is expected to be in the range of US$ 26.5 million to US$ 27 million
- This guidance is based on Constant Rupee -USD rate of Rs.50 and constant GBP -USD rate of 1.45, EURO-USD rate of 1.30
- Mark to Market Forex loss during Q2 2009 is expected to be in the range of US $10 million based on current estimates. This may change depending on further currency movements during the quarter and will impact our Net Earnings accordingly

Management Comments

Mr.Jeya Kumar, CEO, said, "The demand environment continues to be challenging in the short run, however we are investing for portfolio expansion in all areas. Long term growth prospects of the global delivery model are robust. We will see the benefits of our excellent financial health in further enhancing sustainable differentiation of our strategy."

Speaking on the occasion, Mr. Surjeet Singh, Chief Financial Officer said, "We are putting all levers of cost optimization and reduction at work, while simultaneously investing for long term growth. Currency changes are expected to cause volatility in addition to lower overall business visibility in short run."

Corporate Developments

-- Patni has been ranked No 1 -Green Innovative Information Technology Vendor by the prestigious 2009 Black Book Top Green Outsourcing Vendors Survey

-- Patni ranked among the 'Top 10 Best Performers in IT Services' and IT Infrastructure Services'. The survey conducted by Global Services, an integrated media brand, and neoIT, a leading offshore advisory and management firm, included a panel of international experts assessing companies across geographies. Patni is also featured in the prestigious list of Top 100 innovative service providers of the year, which honours global companies that demonstrate leadership, innovation and outstanding performance in information technology

-- Patni became the First Indian Company to receive global certification by SAP of its application management services. This certification confirms Patni's high level of competency in delivering application management services in support of SAP solutions. Patni entered into a partnership with SAP services to offer global experience in consulting and system integration in support of SAP solutions to the Japanese market

-- Patni opens first delivery centre in Mexico, Latin America.

Financial Statements Analysis:

Revenues

Revenues during the quarter were in line with the guidance at US$ 156.4 million (Rs.7,954.8 million), representing a QoQ and YoY decrease of 11.4% in US dollar terms. Revenue decline at constant currency has been at 10.6% sequentially. Number of active clients was 320 at quarter end as compared to 331 in Q4 2008.

Gross Margin

Gross Margins for the quarter were at 32.9% or US$ 51.5 million (Rs.2,620.3 million) against 34.1% or US$ 60.1 million (Rs.2,921.5 million) in the previous quarter. Overall movement in Gross margins was due to price impact of (-) 1.1%. Change in margin on account of, lower volume and higher visa cost, has been mitigated by cost and operational efficiencies.

Depreciation and amortization expenses in CGS were US$ 4.3 million during the quarter against US$4.5 million during the previous quarter.

Selling General and Administrative Expenses (SGA Expenses)

Sales and marketing expenses during the quarter were at US$ 13.0 million (Rs. 662.5 million) at 8.3% as compared to US$ 13.2 million (Rs.642.1 million) at 7.5% in the previous quarter.

G&A expenses during the quarter were lower at US$ 16.1 million (Rs.818.7 million) or 10.3% as compared to US$18.7 million (Rs.909.3 million) at 10.6% during the previous quarter.

Overall Depreciation and amortization expenses in SGA remained unchanged as compared to previous quarter and were at US$1.9 million for the quarter.

Foreign exchange gain/loss

The revaluation and mark to market foreign exchange loss for the quarter were at US$ 6.5 million (Rs.330.8 million) as compared to foreign exchange loss of US$ 12.6 million (Rs.612.7 million) during the previous quarter.

The quarter end rate for debtor's revaluation was Rs. 50.7. Outstanding contracts at the end of Q1 2009 were about US$ 373 million with contracted in the average range of Rs.40.7 to Rs 51.5.

Operating Income

Operating Income including foreign exchange gain / loss during the quarter was at US $16.0 million (Rs 812.4 million) or at 10.2% against US $14.8 million (Rs.720.1 million) or 8.4% during the previous quarter.

Other Income

For Q1 CY2009, other income (including interest and dividend income net of interest expenses, profit/loss on sale of investments and other miscellaneous income) stood at 1.6% or US$ 2.5 million (Rs.128.4 million) compared to 2.1% or US$ 3.7 million (Rs.177.4 million) during the previous quarter.

Profit before Tax

Profit before tax for the quarter at 11.8% was US$ 18.5 million (Rs.940.9 million), which was marginally higher by 0.1% as compared to US$ 18.5 million (Rs. 897.5 million) during the previous quarter.

Income Taxes

Income tax for the quarter was at US$ 3.5 million (Rs. 180.2 million) at 19.1% effective tax rate on profit before tax as compared to 13.1% during the previous quarter. This change is due to expiry of 3 STPI units during the current year.

Net Income

Consequently, net income for the quarter at 9.6% was US$ 15.0 million (Rs 760.7 million) against US$ 16.1 million (Rs.780.2 million) at 9.1% in the previous quarter.

Balance Sheet and Cash Flow changes

During the quarter, against net income of US$ 15.0 million (Rs.760.7 million), cash from operating activities was at US$ 8.3 million (Rs. 420.7 million) net of changes in current assets and liabilities of US $ (-)10.8 million and non cash charges of US$ 4.1 million. These non cash charges comprise of depreciation and amortization including compensation cost of US$ 5.7 million, and other charges US$ (-) 1.6 million.

Net cash from investing activities was US$ 18.1 million (Rs.918.5 million) including capital expenditure of US$5.8 million (Rs.297.1 million),net proceeds from sale of investments of US$ 12.2 million (Rs.621.4 million).

Net cash outflow on financing activities was US$ 0.1 million (Rs.3.4 million) on other financing activities. Over all cash and cash equivalents (including short term investments) were at US$ 297.1 million (Rs.15,115.2 million), compared to US$ 305.7 million (Rs.14,849.4 million) at close of Q4 2008.

Receivables at the end of Q1 2009 were at US$ 110.1 million as compared to US$ 111.8 million at the end of Q4 2008. Number of days outstanding (Including Unbilled) for current quarter was 83 days as compared to 74 days in Q4 2008.

Important Notes to this release:

- Fiscal Year

Patni follows a January - December fiscal year. The current review covers the financial and operating performance of the Company for the first quarter ended March 31, 2009.

- U.S. GAAP

A Consolidated Statement of Income in US GAAP is available on page 3 of the Fact Sheet attached to this release.

- Percentage analysis

Any percentage amounts, as set forth in this release, unless otherwise indicated, have been calculated on the basis of the U.S. Dollar amounts derived from our consolidated financial statements prepared in accordance with U.S. GAAP, and not on the basis of any translated Rupee amount. Calculation of percentage amounts on the basis of Rupee amounts may lead to results that are different, in a material way, from those calculated as per U.S. Dollar amounts.

- Convenience translation

A Consolidated Statement of Income as per Convenience Translation prepared in accordance with US GAAP is available on page 6 of the Fact Sheet attached to this release. We have translated the financial data derived from our consolidated financial statements prepared in accordance with U.S. GAAP for each period at the noon buying rate in the City of New York on the last business day of such period for cable transfers in Rupees as certified for customs purposes by the Federal Reserve Bank of New York. The translations should not be considered as a representation that such US Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rate stated elsewhere in this document, or at all. Investors are cautioned to not rely on such translated amounts.

- Attached Fact Sheet (results & analysis tables)

About Patni Computer Systems Ltd:

Patni Computer Systems Limited (BSE: PATNI COMPUT, NSE: PATNI, NYSE: PTI) is a global provider of IT Services and business solutions, servicing Global 2000 clients. Patni services its clients through its industry-focused practices, including banking, financial services and insurance (BFSI); manufacturing, retail and distribution (MRD); life sciences; communications, media and utilities (CMU), and its technology-focused practices.

With an employee strength of 14,500; multiple global delivery centers spread across 12 cities worldwide; 27 international offices across the Americas, Europe and Asia-Pacific; Patni has registered revenues of US$ 719 million for the year 2008.

Patni's service offerings include application development and maintenance, enterprise application solutions, business and technology consulting, product engineering services, infrastructure management services, customer interaction services & business process outsourcing, quality assurance and engineering services.

Committed to quality, Patni adds value to its clients' businesses through well-established and structured methodologies, tools and techniques. Patni is an ISO 9001: 2000 certified and SEI-CMMI Level 5 (V 1.2) organization, assessed enterprise wide at P-CMM Level 3. In keeping with its focus on continuous process improvements, Patni adopts Six Sigma practices as an integral part of its quality and process frameworks.

Patni leverages its vast experience spanning three decades; deep domain expertise; full-spectrum services; and suites of IP-led solutions, methodologies and frameworks; in being an effective business transformation partner to its clients.

For more information on Patni, visit www.patni.com

IMPORTANT NOTE:

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, liability for damages on our service contracts, the success of the companies in which Patni has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

To view the Press Release with Tables and Fact Sheet, please click on the links given below:

Press Release with Tables

Fact Sheet
For picture(s)/data to illustrate this release click below:

http://www.BusinessWireIndia.com/attachments/Patni Q1_2009_PressRelease.pdf
Patni Q1_2009_PressRelease.pdf
http://www.BusinessWireIndia.com/attachments/Fact Sheet Q109_v1.pdf
Fact Sheet Q109_v1.pdf


CONTACT DETAILS
Gaurav Agarwal, Investor Relations, Patni US, +1-617-914-8360, investors@patni.com
Gavin Desa, Investor Relations, Citigate Dewe Rogerson India, +91 (22) 40075037, gavin@cdr-india.com
Heena Kanal, Media Relations, Patni India, +91 (22) 66930500, heena.kanal@patni.com
Tony Viola, Media Relations, Patni US, +1-617-354-7424, tony.viola@patni.com

KEYWORDS
CONSUMER, ECONOMY, BANKING, BUSINESS SERVICES, Financial Analyst, IT, STOCK EXCHANGES, TECHNOLOGY, 532517.BO

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