BWI: Patni Q2 Revenues Up 3.3% at $161.9 Million; Net Income Up 91.7% QoQ & 18.7% YoY

Press release from Business Wire India
Source: Patni Computer Systems
Thursday, July 30, 2009 10:43 AM IST (05:13 AM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Stock exchanges; Technology
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Patni Q2 Revenues Up 3.3% at $161.9 Million; Net Income Up 91.7% QoQ & 18.7% YoY


Mumbai, Maharashtra, India, Thursday, July 30, 2009 -- (Business Wire India) -- Patni Computer Systems Limited (Patni) today announced its financial results for the second quarter ended 30th June 2009.

Performance Highlights for the quarter ended June 30,2009

-- Revenues for the quarter at US$ 161.9 million (Rs.7,729.1 million)

- Up 3.3% QoQ from US$ 156.7 million (Rs.7,969.1 million)
- Down 11.3 % YoY from US$ 182.6 million (Rs. 7,837.1 million)
- Contribution from top customer remained unchanged as compared to previous quarter and was at 12.3% for the quarter.

-- Operating Income for the quarter at US$ 24.3 million (Rs.1,158.3 million)

- Up 51.9% QoQ from US$ 16.0 million (Rs.812.4 million)
- Up 44.5% YoY from US$ 16.8 million (Rs.720.7 million)

-- Net Income for the quarter at US$ 28.7 million (Rs. 1,368.5 million)

- Up 91.7% QoQ from US$15.0 million (Rs. 760.7 million)
- Up 18.7% YoY from US$ 24.2 million (Rs.1,037.2 million)

-- EPS for the quarter at US$ 0.22 per share (US$ 0.45 per ADS)

Future Outlook:

-- Q3 CY2009 Revenues are expected to be at US$ 163 million to US$ 165 million and Net Income (Excluding the hedging Gain/Loss) is expected to be in the range of US$ 22.5 million to US$ 23.5 million

- This guidance is based on constant Rupee -USD rate of Rs.48.5 and constant GBP -USD rate of1.55, EURO-USD rate of1.38

- Mark to Market foreign exchange loss during Q3 2009 is expected to be in the range of US$ 4.0 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, Chief Executive Officer, said, "We are pleased with overall operating performance which is ahead of our estimates in this challenging business environment. While growth visibility is shallow in short run, we are working aggressively to realign our overall operations and leverage the changing times to build sustainable competitive advantage in our business. We will continue to invest ahead to create growth beachheads and diversify our business portfolio. We remain bullish on long terms prospects and are investing in extending and deepening the management and overall talent pool of the Company."

Speaking on the occasion, Mr. Surjeet Singh, Chief Financial Officer, said, "Sustained efforts on realignment of cost structures and enhanced focus on operating discipline coupled with positive currency movements helped operating margins during the quarter. We also managed our cash flows well and have a good cash position. Protecting bottom line and simultaneously investing in growth levers in newer segments, markets and service lines is our top priority in addition to acquisitive growth."

Corporate Developments

- Appointment of Executive Vice President and Chief of Operations, Patni appointed Manish Soman as Executive Vice President and Chief of Operations to its Executive Leadership Team. Manish, formerly a part of Genpact's management team brings over 18 years of experience in the IT Services and BPO Industries

- Patni opened its new EMEA headquarters, based at Heathrow in London. The investment in a new regional headquarters with dedicated operational facilities enables Patni to place an increased focus on helping businesses across Europe and the Middle East to achieve both operational efficiencies and continue to innovate in new products and services

- Patni's Asset Management Practice Introduces Outsourced Operational Fund Accounting Service

Patni announced an Operational Fund Accounting Service designed to alleviate the challenges of back office operations that buy-side firms face on a daily basis. As asset management firms continue to look for ways to reduce costs while staying focused on areas of core expertise, Patni has developed a service to manage these critical back-office functions that ensure data consistency, accurate financial reporting, customer data security and privacy; essentially freeing customers to build their businesses

- Patni launches 'Claims as a ServiceTM' (CaaS) for Healthcare Payers

Patni recently announced 'Claims as a ServiceTM' (CaaS), an innovative solution specifically designed for the healthcare payer market. Available for immediate delivery, CaaS is a hosted solution powered by TriZetto's QNXTT core administration platform that combines their market leading software technology with Patni's world-class IT and BPO services

- Patni iCAPAT Solution for Life Sciences Certified as Powered by SAP NetWeaver

Patni announced that its iCAPAT Solution 2.0 for Life Sciences has achieved SAP certification as powered by the SAP NetWeaver® technology platform. The solution has been proven to integrate with SAP® solutions, providing customers with access to a Corrective and Preventive Action (CAPA) platform to meet regulatory compliance requirements for Quality Systems and drive new levels of product quality and operational efficiency

- Patni Launches Inventory Liability & Risk Management Dashboard

Patni announced the launch of an Inventory Liability and Risk Management Dashboard in collaboration with SAP. The solution, built on top of the SAP® Supply Network Collaboration (SAP SNC) application and leveraging the SAP BusinessObjectsT Xcelsius® Enterprise software, helps enterprises calculate in near real time the monetary value of the inventory which is at risk at any given point across the supply chain

- Patni launches 'Patni Learning Edge'

Patni announced the launch of Patni Learning Edge (PLEdge), an industry-academia collaboration focusing on graduate colleges. Patni has signed MoUs with 14 leading graduate educational institutes of Science in Mumbai, and is designed to effectively integrate into the supply chain, bridging the gap that currently exists between formal education and requirements on-ground

Financial Statements Analysis:

Revenues

Revenues during the quarter were higher by 3.3% sequentially to US$ 161.9 million (Rs.7,729.1 million), from US$ 156.7 million (Rs.7,969.1 million) in the preceding quarter. Revenue growth was driven by volume growth of 2.2% (including higher number of days) and 1.1% due to currency impacts. Number of active clients were 294 at quarter end as compared to 320 in Q1 2009.

Gross Margin

Gross Margins for the quarter were at 34.7% or US$ 56.2 million (Rs.2,684.5 million) against 33.1% or US$ 51.8 million (Rs.2,634.5 million) in the previous quarter reflecting an increase of 8.6%. Higher utilization and other efficiencies net of marginal negative rupee change has impacted the margins favorably.

Depreciation and amortization expenses in cost of revenues were US$ 4.6 million during the quarter against US$ 4.3 million during the previous quarter.

Selling General and Administrative Expenses (SGA Expenses)

Sales and marketing expenses during the quarter were at US$ 12.0 million (Rs.572.7 million) at 7.4% as compared to US$ 13.3 million (Rs.676.7 million) at 8.5% in the previous quarter.

G&A expenses during the quarter were lower at US$ 15.9 million (Rs.756.9 million) or 9.8% as compared to US$ 16.1 million (Rs.818.7 million) at 10.3% during the previous quarter.

Overall Depreciation and amortization expenses in SGA were at US$ 2.1 million for the quarter as against US$ 1.9 million in Q1 2009.

Foreign exchange gain/loss

The revaluation and mark to market foreign exchange loss for the quarter were at US$ 4.1 million (Rs.197.2 million) as compared to foreign exchange loss of US$ 6.5 million (Rs.330.8 million) during the previous quarter.

The quarter end rate for debtor's revaluation was Rs.47.90. Outstanding contracts at the end of Q2 2009 were about US$ 319 million which were contracted in the range of Rs.41.1 to Rs 51.2.

Operating Income

Operating Income including foreign exchange gain/ loss during the quarter was at US$ 24.3 million (Rs. 1,158.3 million) or at 15.0% against US $16.0 million (Rs.812.4 million) or 10.2% during the previous quarter, reflecting an increase of 51.9% on QoQ and 44.5% YoY, led by operating and cost efficiencies.

Other Income

For Q2 CY2009, other income (including interest and dividend income net of interest expenses, profit/loss on sale of investments and other miscellaneous income) stood at 6.9% or US$ 11.2 million (Rs.536.0 million) compared to 1.6% or US$ 2.5 million (Rs.128.4 million) during the previous quarter, reflecting a period increase due to fixed maturity investments.

Profit before Tax

Profit before tax for the quarter at 21.9% was US$ 35.5 million (Rs.1,694.2 million), higher by 91.9% as compared to 11.8% or US$ 18.5 million (Rs. 940.9 million) during the previous quarter.

Income Taxes

Income tax for the quarter was at US$ 6.8 million (Rs.325.8 million) at 19.2% effective tax rate on profit before tax as compared to 19.1% during the previous quarter. Overall Tax rate for the year is expected to be at 18.5%-19.5% for the year due to expiry of certain STPI unit benefits.

Net Income

Consequently, net income for the quarter at 17.7% was US$ 28.7 million (Rs.1,368.5 million) against US$ 15.0 million (Rs.760.7 million) at 9.5% in the previous quarter.This is 91.7% increase on QoQ and 18.7% on YoY basis.

Balance Sheet and Cash Flow changes

During the quarter, against net income of US$ 28.7 million (Rs.1,368.5 million), cash from operating activities was at US$ 43.8 million (Rs. 2,091.0 million) net of changes in current assets and liabilities of US $ 17.1 million and non cash charges of US$ (-)1.9 million. These non cash charges comprise of depreciation and amortization of US$ 6.6 million and non cash compensation of US$ 0.8m and, FMP income and other charge of US$ (-) 9.4 million.

Net cash from investing activities was US$ 29.9 million (Rs.1,425.4 million) including capital expenditure of US$ 6.7 million (Rs.319.2 million),net proceeds from sale of investments of US$ 23.2 million (Rs.1,106.2 million).

Net cash outflow on financing activities was US$ 7.9 million (Rs.378.4 million) comprising payment of dividend on common shares of US$ 7.9 million (Rs.375.7 million) and US$ 0.1 million (Rs.2.8 million) on other financing activities. Over all cash and cash equivalents (including short term investments) post revaluation change, were at US$ 347.6 million (Rs.16,595.5 million), compared to US$ 297.1 million (Rs.15,115.2 million) at close of Q1 2009.

Receivables at the end of Q2 2009 were at US$ 100.7 million as compared to US$ 110.1 million at the end of Q1 2009. Number of days outstanding (Including Unbilled) for current quarter was 75 days and improved as compared to 83 days in Q1 2009, in line with estimates.

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 second quarter ended June 30, 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

- To view the Fact Sheet (results & analysis tables), please click on the link given below:

Fact Sheet

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 (BFS) and insurance (I); 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, please click on the link given below:

Press Release with Tables
For picture(s)/data to illustrate this release click below:

http://www.BusinessWireIndia.com/attachments/Patni Q2_2009_PressRelease_Final.pdf
Patni Q2_2009_PressRelease_Final.pdf
http://www.BusinessWireIndia.com/attachments/Fact Sheet Q209.pdf
Fact Sheet Q209.pdf

CONTACT DETAILS
Gaurav Agarwal, Patni US, Investor Relations

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

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