Kanbay International, Inc. Reports Strong Second Quarter Results
ROSEMONT, Ill., Aug. 25 /PRNewswire-FirstCall/ -- Kanbay International, Inc. (Nasdaq: KBAY), a global IT services firm focused on the financial services industry, today announced its financial results for the second quarter ended June 30, 2004.
Highlights for the second quarter include:
- Quarterly revenue increased to $44.8 million, up 21% sequentially and 73% year-over-year
- Revenue from third parties increased 37% sequentially and 68% year-over-year
- Operating income in the second quarter was $7.6 million, which was an increase of 31% sequentially and 343% year-over-year
- Second quarter net income of $6.4 million, up 21% sequentially and 189% year-over-year
Total revenue for the second quarter grew 21% sequentially and 73% year-over-year with revenue from third parties increasing by 37% sequentially and 68% year-over-year. Operating income was $7.6 million in the second quarter, which was an increase of 31% sequentially and 343% year-over-year. Net income for the quarter was $6.4 million resulting in diluted earnings per share of $0.21 compared to net income of $5.3 million and diluted earnings per share of $0.18 in the first quarter of 2004.
"We are still leveraging past infrastructure investments that have enabled our revenue growth," according to Bill Weissman, Chief Financial Officer. "With continued strong gross margins and additional economies of scale of our support infrastructure, we continue to move toward our long term operating margin objective of 20%."
"Kanbay continues to experience advantages from our focus on the financial services industry and we are seeing strength across all four of the groups with whom we work -- banking, credit services, insurance, and capital markets," said Raymond Spencer, Chairman and Chief Executive Officer. "Our client base is becoming far more sophisticated in regards to global delivery for IT services. Kanbay's commitment to investing in building deep technical and domain knowledge, combined with over a decade of experience operating a successful global delivery model, continues to give us a competitive advantage."
Mr. Spencer added, "Our clients look to us to lower their total cost of ownership by providing them with high value solutions utilizing Kanbay's Microcosm Model. This model ensures that each individual Kanbay location, from a competency perspective, is a microcosm of the whole company and is the foundation of our highly leveraged global delivery capabilities. We are pleased that our clients recognize the unique value of our approach and we anticipate continued strength going forward."
Conference Call
Kanbay management will host a conference call on August 25th at 10:00 a.m. (ET) to discuss the Company's results of operations for the second quarter. To participate in the call, domestic callers can dial (800) 291-9234 and international callers can dial (617) 614-3923. The passcode for the conference call is 95392302. The conference call will also be webcast and accessible through Kanbay's website at http://www.kanbay.com
Please access the website at least fifteen minutes prior to the call to register and download any required software. A replay of the conference call will be available for one week, until 5:00 p.m. (ET) on September 1, 2004, by dialing (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The passcode for the replay is 37338084. A webcast replay of the conference call will also be available for two weeks following the call, until 5:00 p.m. (ET) on September 8, 2004, through Kanbay's website at http://www.kanbay.com
About Kanbay International, Inc.
Founded in 1989, Kanbay International, Inc. (NASDAQ: KBAY) is a global IT services firm focused on the financial services industry. With over 3,600 employees, Kanbay provides its services primarily to banks, credit service providers, insurance companies, and capital markets firms. The company uses a global delivery model to provide application development, maintenance and support, software package selection and integration, business process and technology advice, network and system security, and specialized services. Kanbay is a CMM Level 5 assessed company headquartered in greater Chicago with offices in the U.S., Canada, U.K., Australia, Hong Kong, Japan, Singapore and India.
Forward-Looking Statements
This release contains statements relating to projections or future results. These statements are forward-looking statements under the federal securities laws. We can make no assurance that any of projections or future results discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this release. For a discussion of important factors that could affect our actual results, please refer to our SEC filings, including the "Risk Factors" section of the prospectus we recently filed with the SEC.
Kanbay International, Inc.
Condensed Consolidated Statement of Income (Unaudited)
(dollars in thousands except per share amounts)
Three months ended Six months ended
June 30 June 30
2004 2003 2004 2003
Net revenues-related
parties $29,331 $16,690 $55,091 $30,904
Net revenues-third
parties 15,419 9,208 26,664 17,109
Total revenues 44,750 25,898 81,755 48,013
Cost of revenues 24,149 14,347 42,914 26,493
Gross profit 20,601 11,551 38,841 21,520
Sales and marketing
expenses 4,183 2,796 8,149 4,930
General and
administrative
expenses 7,378 5,922 14,556 10,993
Stock compensation
expense 307 357 606 668
Total selling, general
and administrative
expenses 11,868 9,075 23,311 16,591
Depreciation and
amortization 1,185 773 2,222 1,524
Gain on sale of fixed
assets (10) -- (20) (7)
Income from operations 7,558 1,703 13,328 3,412
Other income (expense)
Interest expense and
other, net (82) (94) 37 (285)
Equity in earnings of
affiliate 614 617 1,384 990
Total other income/
(expense) 532 523 1,421 705
Income before income
taxes 8,090 2,226 14,749 4,117
Income tax expense 1,660 23 2,990 80
Net income 6,430 2,203 11,759 4,037
Dividends on preferred
stock (125) (152) (277) (302)
Increase in carrying
value of stock subject
to repurchase -- (610) -- (1,804)
Income available to
common stockholders $ 6,305 $ 1,441 $11,482 $ 1,931
Income per share of
common stock
Basic $0.29 $0.07 $0.54 $0.09
Diluted $0.21 $0.05 $0.40 $0.08
Weighted average number
of common shares
outstanding 21,828,474 20,484,721 21,277,125 20,484,721
Weighted average
number of common
and dilutive shares
outstanding 29,908,725 29,200,260 29,421,440 29,195,363
Kanbay International, Inc.
Condensed Consolidated Statement of Financial Position (Unaudited)
(dollars in thousands except per share amounts)
June 30, December 31,
2004 2003
Assets
Current Assets
Cash and cash equivalents $6,621 $17,419
Trade accounts receivable 29,390 10,469
Other current assets 6,528 5,062
Total Current Assets 42,539 32,950
Property and equipment - net 14,492 11,315
Investment in affiliate 23,006 22,185
Other assets 3,944 1,909
Total Assets $83,981 $68,359
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $3,435 $2,312
Accrued and other current liabilities 20,035 18,539
Total Current Liabilities 23,470 20,851
Total Liabilities 23,470 20,851
Stockholders' Equity 60,511 47,508
Total Liabilities and Stockholders' Equity $83,981 $68,359
