Teaneck, NJ – May 4, 2011 – Ness Technologies, Inc. (NASDAQ: NSTC and TASE: NSTC), a global provider of IT services and solutions, announced today its financial results for the quarter ended March 31, 2011.
Download full results
First Quarter 2011 Highlights:
· Revenues were $137.3 million, up 3% year-over-year.
· Operating income was $6.9 million, up 186% year-over-year.
On a non-GAAP basis ([1]), operating income was $8.9 million, up 79% year-over-year. On a GAAP and non-GAAP basis, operating margin improved sequentially, reaching the highest levels in ten quarters.
· Net income from continuing operations was $4.2 million, up 497% year-over-year.
On a non-GAAP basis, net income from continuing operations was $5.6 million, up 66% year-over-year.
· Diluted net earnings per share from continuing operations were $0.11, up from $0.02 in the first quarter of 2010.
On a non-GAAP basis, diluted net earnings per share from continuing operations were $0.14, up from $0.09 in the first quarter of 2010.
· In Central and Eastern Europe, operating margin continued to improve, hitting the highest level in nine quarters.
· Operating cash flows from continuing operations were $9.7 million, setting a new first quarter record.
· Cash, cash equivalents and short-term bank deposits were $35.8 million as of March 31, 2011.
· Backlog from continuing operations as of March 31, 2011 was $690 million, up 4% year-over-year.
· Headcount for continuing operations was approximately 6,900 as of March 31, 2011.
“We had a good first quarter and I am very proud of the continued operating margin expansion we delivered. Our steady progress improving operating margins is a direct result of record first quarter results in Israel as well as ongoing improvement in Central and Eastern Europe,” said Sachi Gerlitz, president and chief executive officer of Ness Technologies. “We are making excellent headway on the strategic integration of our business units into one global entity, as manifested by our recent landmark contract with Barclays Capital. We are confident about the year ahead, and look forward to further improvements in our results.”
· Results by operating segment:
§ The company’s Software Product Engineering segment, which provides outsourced software product research and development services to companies that build or rely on software to generate revenues, continued to perform well in the first quarter, with strong quarterly operating margin in its target range and good year-over-year revenue growth.
§ The company’s System Integration and Application Development segment showed only modest year-over-year revenue growth, but with the best non-GAAP operating margin in eleven quarters, due to strong performance in Israel and ongoing improvement in Central and Eastern Europe.
“We are continuing to reap the benefits from the optimization of our operations as well as our improvement in billable utilization,” said Ofer Segev, executive vice president and chief financial officer. “This is evident in our margin expansion, improved earnings and strong first quarter operating cash flows. Our balance sheet is strong, and we remain in our comfort zone regarding liquidity.”
Business Outlook
The company continues to expect top line growth and operating margin expansion in 2011.
Ness reiterates its full year 2011 guidance for revenues from continuing operations in the range of $595 million to $605 million and diluted net earnings per share from continuing operations in the range shown in the reconciliation table below:
|
|
Full year diluted net earnings per share ($) |
|
Low |
High |
|
GAAP basis from continuing operations |
$ 0.42 |
$ 0.48 |
|
Stock-based compensation; amortization of intangible assets; retention expenses related to prior acquisitions; net of taxes |
0.15 |
0.15 |
|
Non-GAAP basis from continuing operations |
$ 0.57 |
$ 0.63 |
The company’s 2011 GAAP guidance excludes future stock-based compensation grants; and the company’s GAAP and non-GAAP guidance further assumes that outstanding diluted shares will average approximately 39 million in 2011 and relevant foreign currency exchange rates will remain at the average levels of April 2011.
For the reasons set forth elsewhere in this release, Ness’ management believes that non-GAAP financial guidance provides the best comparative basis for investors to understand and assess the company’s on-going operations and prospects for the future.
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 first quarter 2011 results. The call, which will be simultaneously webcast, will begin at 8:00 AM Eastern Time / 5:00 AM Pacific Time / 3:00 PM Israel Time on Wednesday, May 4, 2011.
To access the Ness Technologies first quarter 2011 earnings conference call, participants should dial one of the following numbers and provide the password “NESS” to the operator.
North America 1-800-399-0427
Israel 1-80-924-5917
All other locations +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 Technologies
Ness Technologies (NASDAQ: NSTC and TASE: NSTC) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; and system integration, application development, 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 6,900 employees, Ness has operations in North America, Europe, Israel and India, has customers in over 20 countries, and partners with numerous software and hardware vendors worldwide. For more information about Ness, visit www.ness.com.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles (“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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718, “Stock Compensation” (formerly, FASB Statement 123R); (b) amortization of intangible assets; and (c) earn-out and retention expenses related to prior acquisitions; all 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 the business internally and as such has determined that it is important to provide this information to investors.
Ness also uses these non-GAAP measures in the formulation of its financial guidance. This requires Ness management to make assumptions regarding certain factors that could affect future net income and earnings per share, such as the timing and size of future potential acquisitions (which could result in additional non-cash amortization of intangibles), the timing and size of future potential stock-based compensation grants (which could result in additional non-cash stock-based compensation expense), and the timing and size of any one-time income or expenses. The company discloses such assumptions in conjunction with its financial guidance.
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 on Form 10-K filed with the Securities and Exchange Commission on March 4, 2011. 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:
David Kanaan
Intl: +972-54-425-5307
Email: media.int@ness.com
Investor Relations Contacts:
Drew Wright
USA: 1-201-488-3262
Email: investor@ness.com
Maya Lustig
Israel: +972-3-767-5110
Email: maya.lustig@ness.com