Hackensack, NJ – July 29, 2009 – Ness Technologies, Inc. (NASDAQ: NSTC), a global provider of IT services and solutions, today announced financial results for the quarter ended June 30, 2009.
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Second Quarter 2009 Highlights:
• On a GAAP basis:
-- Revenues were $137.2 million, down 20% year-over-year. Approximately half of the decrease, or $17.3 million, was due to foreign currency translation effects on non-dollar revenues.
-- Operating income was $2.1 million, down 81% year-over-year.
-- Net income was $1.0 million, down 87% year-over-year.
-- Diluted net earnings per share were $0.03, compared to $0.21 in the second quarter of 2008.
• On a non-GAAP basis, excluding stock-based compensation expenses and amortization of intangibles ( ):
-- Operating income was $5.0 million, down 62% year-over-year.
-- Net income was $3.4 million, down 65% year-over-year.
-- Diluted net earnings per share were $0.09, compared to $0.25 in the second quarter of 2008.
• Cash and cash equivalents and short-term bank deposits were flat sequentially at $59.2 million as of June 30, 2009.
• Operating cash flows for the quarter were $6.5 million, with record year-to-date operating cash flows of $15.1 million.
• Backlog as of June 30, 2009 was $682 million, flat sequentially and down 15% year-over-year. Excluding the negative effect of foreign currency translation effects from the stronger U.S. dollar, backlog was down 7% year-over-year.
• Headcount was approximately 7,800 as of June 30, 2009.
“Although second quarter conditions remained quite challenging, we are seeing signs that the demand environment is beginning to stabilize in some of our markets,” said Sachi Gerlitz, president and chief executive officer of Ness Technologies. “We delivered earnings on plan and modest sequential revenue growth – on track with our planned recovery – thanks to significant ongoing efforts by our management and staff, and we are seeing pipeline growth again in some parts of the company. It feels good to be turning back from defense to offense.”
• Results by operating segment:
-- The company’s Software Product Engineering segment, which provides outsourced software product research and development services to companies who build or rely on software to generate revenues, performed well in the second quarter, with solid operating margins and moderate year-over-year revenue growth.
-- The company’s System Integration and Application Development segment continued to be impacted in the second quarter by the worldwide economic slowdown, but it delivered sequentially higher operating margins on steady revenues.
-- The company’s Software Distribution segment, which resells third-party enterprise software licenses, underperformed significantly in the second quarter, turning in a small operating loss on a moderate sequential revenue decline.
“We continued to generate good operating cash flows and our balance sheet remains strong, despite the economic environment,” said Ofer Segev, executive vice president and chief financial officer. “Our cost management during the last two quarters helped us remain profitable, and we are a much more efficient company now, which we believe will pay benefits in the future as we resume growth and margin expansion into a recovering economy.”
Guidance
In line with Ness’ financial guidance practices, the company provides earnings per share guidance on a non-GAAP basis only. Ness’ management believes that non-GAAP earnings per share financial guidance provides the best comparative basis for investors to understand and assess the company’s on-going operations and prospects for the future.
Ness reiterates its full year guidance of non-GAAP diluted net earnings per share in the range of $0.40 to $0.60 and revenues in the range of $590 million to $620 million.
This guidance assumes that foreign currency exchange rates remain at July levels.
Conference Call Details
Sachi Gerlitz, president and chief executive officer of Ness Technologies, and Ofer Segev, executive vice president and chief financial officer, will conduct a conference call to discuss the second quarter 2009 results. The call, which will be simultaneously webcast, will begin at 8:30 AM Eastern Time / 5:30 AM Pacific Time on Wednesday, July 29, 2009.
To access the Ness Technologies second quarter 2009 earnings conference call, participants in North America should dial 1-800-399-0427 and international participants should dial +1-973-200-3375. A live audio webcast of the conference call will be available on the investor relations page of the Ness Technologies corporate web site at
http://investor.ness.com. Please visit the web site at least 15 minutes early to register for the teleconference webcast and download any necessary audio software. A replay of the call will be available on the web site approximately two hours after the conference call is completed.
About Ness TechnologiesNess Technologies (NASDAQ: NSTC) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; system integration, application development and consulting; and software distribution. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams. With about 7,800 employees, Ness maintains operations in 18 countries, and partners with numerous software and hardware vendors worldwide. For more information about Ness Technologies, visit
www.ness.com
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ness uses various non-GAAP measures of net income and earnings per share, including adjustments from results based on GAAP to exclude (a) non-cash stock-based compensation expenses in accordance with SFAS 123R and amortization of intangible assets, net of taxes; (b) an insurance settlement related to a 2007 arbitration expense, net of related expenses, net of taxes; and (c) severance expenses, net of taxes. Ness’ management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Ness’ on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.
Forward Looking Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often are preceded by words such as “believes,” “expects,” “may,” “anticipates,” “plans,” “intends,” “assumes,” “will” or similar expressions. Forward-looking statements reflect management’s current expectations, as of the date of this press release, and involve certain risks and uncertainties. Ness’ actual results could differ materially from those anticipated in these forward looking statements as a result of various factors. Some of the factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the “Risk Factors” described in Ness’ Annual Report of Form 10-K filed with the Securities and Exchange Commission on March 16, 2009. Ness is under no obligation, and expressly disclaims any obligation, to update or alter its forward-looking statements, whether as a result of such changes, new information, subsequent events or otherwise.
Media Contact – United States:
John Fitzsimmons
USA: 1-781-223-5833
Email: john.fitzsimmons@ness.com
Media Contact – Israel:
David Kanaan
Intl: +972-54- 425-5307
Email: media.int@ness.com
Investor Relations Contact:
Drew Wright
USA: 1-201-488-3262
Email: investor@ness.com