IGATE Q2 net profit down 90% at $3.1 million

Company is due to a one-time charge of $51.8 million

US-based outsourcing firm IGATE today said its net profit declined 89.6% to $3.1 million for the quarter ended June 30, 2014 hit by a one-time charge related to a debt settlement.

The firm had posted a net profit of $30 million in the year-ago period, it said in a filing with the US Securities and Exchange Commission (SEC).

Consolidated revenues rose by 10% to $311.7 million in the April-June quarter of 2014 fiscal against $283.3 million in the same quarter last fiscal.

IGATE follows January-December as fiscal year.

On the decline in net profit, IGATE said it was due to "a one-time charge of $51.8 million arising from the extinguishment of debt."

In the January-March quarter of 2014, IGATE had reported a net income of $31.6 million and revenue of $302.2 million.

Commenting on the performance, IGATE President and CEO Ashok Vemuri said: "Our new brand identity and redesigned value proposition has resonated well with all our stakeholders."

He added that the firm continues to invest in technology and process capabilities with specific focus on digital practice.

"The verticalisation strategy that the firm implemented at the beginning of the year has started yielding dividends with overall growth across industry segments," he said.

IGATE CFO Sujit Sircar said: "We successfully refinanced the high yield bonds placed in 2011 at a much lower interest cost subsequent to the rating upgrades from S&P and Moody's. This has enabled us to reduce more than $50 million in interest cost annually on a Q1 run rate basis."

The firm said it has been able to maintain its margin levels despite the salary increase this quarter.

However, it is closely watching the forex headwinds with the appreciation of the rupee against the US Dollar, Sircar said.

IGATE added nine new clients including five Global 2000 companies during the second quarter.

As of June 30, 2014, the company had 32,742 employees with a net addition of 1,907 people.