Syntel, Inc.
Feb 16, 2017
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Syntel Reports Fourth Quarter and Full Year 2016 Financial Results

 

Highlights:

TROY, Mich., Feb. 16, 2017 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a leading global provider of integrated information technology and knowledge process services, today announced financial results for the fourth quarter and full year, ended December 31, 2016.

Fourth Quarter Financial Highlights

Syntel's revenue for the fourth quarter decreased 6.6 percent to $237.9 million from $254.6 million in the prior-year period, and 1.4 percent from $241.3 million in the third quarter of 2016.  During the fourth quarter, Banking and Financial Services accounted for 48.4 percent of total revenue, with Retail, Logistics and Telecom at 17.6 percent, Healthcare and Life Sciences at 16 percent, Insurance at 13.7 percent, and Manufacturing at 4.3 percent.

The Company's gross margin was 40.2 percent in the fourth quarter, compared to 41.8 percent in the prior-year period and 39.2 percent in the third quarter of 2016.  Selling, General and Administrative (SG&A) expenses were 13.1 percent of revenue in the fourth quarter, compared to 11 percent in the prior-year period and 12.2 percent in the previous quarter.

The fourth quarter income from operations was 27.1 percent of revenue as compared to 30.8 percent in the prior-year period and 27 percent in the third quarter.

Net income for the fourth quarter was $48 million or $0.57 per diluted share, compared to $74.2 million or $0.88 per diluted share in the prior-year period and net loss of $217.2 million or $2.58 per diluted share in the third quarter of 2016. In connection with a special cash dividend and the one-time repatriation of cash announced on September 12, 2016, the Company recognized a one-time tax expense of $271 million (net of foreign tax credits) in the third quarter of 2016.

Full Year 2016 Financial Highlights

Revenue for 2016 decreased 0.2 percent to $966.6 million, from $968.6 million in 2015. The Company's 2016 operating margin was 27.1 percent, compared to 29.3 percent in 2015. Net loss for the year was $57.4 million compared to income of $252.5 million in 2015. The Company reported a net loss of $0.68 in 2016 as compared to earnings of $3.00 per diluted share in 2015.  

During 2016, Syntel spent $17.5 million in CAPEX, largely in support of campus infrastructure, and finished the year with cash and short-term investments of $100 million. The Company added 15 new clients during the year and ended 2016 with 23,011 employees globally.

Operational Highlights

"While we were impacted by challenges seen across several industries in the past year, Syntel has started 2017 with a focus on helping our clients build competitive differentiation and gain operational flexibility in an uncertain business climate," said Syntel Interim CEO and President Rakesh Khanna. "Digital enablement and modernizing existing IT assets are increasingly becoming strategic priorities for our customers as they undergo enterprise-wide technology transformations."

"Syntel has developed cutting-edge capabilities to help customers ‘go digital' as well as high-impact solutions to modernize and evolve their core applications and infrastructure," said Khanna. "Ongoing support for core IT assets remains the largest demand on customer resources. Syntel's holistic approach to digital transformation aligns us with the most pressing business and operational needs of our customers."

2017 Guidance

Based on current visibility levels and an exchange rate assumption of 67 Indian rupees to the dollar, the Company currently expects 2017 revenue of $900 million to $945 million and EPS in the range of $1.75 to $2.00.

Syntel to Host Conference Call

Syntel will discuss its fourth quarter 2016 results today on a conference call at 10:00 a.m. (EDT). To listen to the call, please dial (877) 837-3915 in the US/Canada or (973) 638-3495 internationally.  The call will also be broadcast live via the Internet at Syntel's web site: investor.syntelinc.com. Please access the site at least 15 minutes prior to the call to register and download any necessary software. A replay will be available until February 23, 2017 by dialing (855) 859-2056 and entering "60632903".  International callers may dial (404) 537-3406 and enter the same passcode.

About Syntel
Syntel (Nasdaq:SYNT) is a leading global provider of integrated information technology (IT) and knowledge process services. Syntel helps global enterprises evolve their core business processes, IT applications and infrastructure to succeed in the digital age. Our intelligent automation, scaled agile and cloud platforms ensure efficient delivery of application development and management, testing, and infrastructure solutions. Syntel's digital services enable companies to engage customers, discover insights through analytics and build a connected enterprise through the internet of things. Syntel's "Customer for Life" philosophy builds collaborative partnerships and delivers long-term client value through investments in intellectual property, domain knowledge and industry solutions.

To learn more, visit us at: www.syntelinc.com

Safe Harbor Provision
This news release may include forward-looking statements, including those with respect to the future level of business for Syntel, Inc. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward-looking statements as a result of certain risk factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 or from other factors not currently anticipated.
 

               
  SYNTEL, INC. AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  (IN THOUSANDS, EXCEPT PER SHARE DATA)
               
      THREE MONTHS ENDED   TWELVE MONTHS ENDED
      DECEMBER 31,   DECEMBER 31,
        2016     2015       2016     2015  
               
  Net revenues $   237,887   $   254,580     $   966,550   $   968,612  
  Cost of revenues   142,354     148,061       595,725     584,611  
  Gross profit   95,533     106,519       370,825     384,001  
  Selling, general and administrative expenses   31,060     28,025       108,528     100,256  
               
  Income from operations   64,473     78,494       262,297     283,745  
               
  Other income (expense), net   (2,110 )   14,004       11,088     43,456  
               
  Income before provision for income taxes     62,363       92,498         273,385       327,201  
               
  Income tax expense   14,372     18,263       330,775     74,675  
               
  Net income (Loss) $   47,991   $   74,235     $   (57,390 ) $   252,526  
               
  Other Comprehensive Income/(Loss)           
               
    Foreign currency translation adjustments $   (1,293 ) $   (5,496 )   $   (19,018 ) $   (45,428 )
    Gains on derivatives:          
    Gains arising during period on cash flow hedges     533       -          533       -   
               
    Unrealized gains (Loss) on securities:          
      Unrealized holding gains arising during period     179       6         242       116  
      Reclassification adjustment for gains included in net income     (158 )     (6,879 )       (248 )     (6,580 )
          21       (6,873 )       (6 )     (6,464 )
               
    Defined benefit pension plans:          
      Net Profit (Loss) arising during period     (802 )     802         (802 )     802  
      Amortization of prior service cost included in net periodic pension cost     (82 )     53         (35 )     149  
          (884 )     855         (837 )     951  
               
    Other comprehensive Loss, before tax     (1,623 )     (11,514 )       (19,328 )     (50,941 )
    Income tax benefits related to Other Comprehensive Loss     86       2,148         32       1,576  
    Other comprehensive Loss, net of tax     (1,537 )     (9,366 )       (19,296 )     (49,365 )
               
  Comprehensive Income (Loss) $   46,454   $   64,869     $   (76,686 ) $   203,161  
               
  Dividend Per Share $   -    $   -      $   15.00   $   -   
               
  EARNINGS/(LOSS) PER SHARE:          
    Basic $   0.57   $   0.88     $   (0.68 ) $   3.01  
    Diluted $   0.57   $   0.88     $   (0.68 ) $   3.00  
               
  Weighted average common shares outstanding:          
               
    Basic   84,117     84,079       84,146     83,982  
               
    Diluted   84,163     84,204       84,146     84,149  
               

 

           
  SYNTEL, INC. AND SUBSIDIARIES
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (IN THOUSANDS)
           
      December 31,   December 31,
         2016         2015 
           
           
    ASSETS      
           
  Current assets:      
    Cash and cash equivalents $   78,332     $   500,499
    Short term investments   21,614       540,045
                 
    Accounts receivable, net of allowance for doubtful accounts of $801
at December 31, 2016 and $622 at December 31, 2015, respectively 
  118,299       136,926
    Revenue earned in excess of billings   25,039       30,448
    Other current assets   36,306       36,423
           
      Total current assets     279,590         1,244,341
           
  Property and equipment   227,056       217,922
    Less  accumulated depreciation and amortization   120,580       112,146
           
      Property and equipment, net     106,476         105,776
           
  Goodwill   906       906
           
  Non current Term Deposits with Banks   225       77
           
           
  Deferred income taxes and other non current assets   67,346       72,170
           
    TOTAL ASSETS $    454,543     $    1,423,270
           
    LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY      
    LIABILITIES      
  Current liabilities:      
    Accrued payroll and related costs $   56,650     $   60,339
    Income taxes payable   15,195       11,305
    Accounts payable and other current liabilities   31,559       37,828
    Deferred revenue   7,973       7,716
    Loans and borrowings      21,264         129,981
           
      Total current liabilities     132,641         247,169
           
  Deferred income taxes and other non current liabilities    26,373       17,656
  Non Current loans and borrowings   478,616         - 
           
    TOTAL LIABILITIES     637,630         264,825
           
    SHAREHOLDERS' EQUITY      
           
           
  Total shareholders' (deficit)/equity     (183,087 )       1,158,445
           
  TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY $    454,543     $    1,423,270
           

 

 

 

Contacts:  
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com
Europe and International: Rani Gill, Flame PR, +44 0203 357 9746, Syntel@flamepr.com