Syntel, Inc.
Apr 20, 2017
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Syntel Reports First Quarter 2017 Financial Results

Highlights:

• Q1 revenue of $225.9M, down 6% from year-ago quarter, and 5% sequentially
• Q1 EPS of $0.46 per diluted share, down 27% from year-ago quarter and 20% sequentially
• Q1 cash & short term investments of $74.1M
• Global Headcount of 22,795 on March 31, 2017, versus 24,496 in the year-ago quarter

TROY, Mich., April 20, 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 first quarter, ended March 31, 2017.

First Quarter Financial Highlights

Syntel's revenue for the first quarter decreased 6.4 percent to $225.9 million from $241.4 million in the prior-year period, and 5.1 percent from $237.9 million in the fourth quarter of 2016.  During the first quarter, Banking and Financial Services accounted for 46.9 percent of total revenue, with Retail, Logistics and Telecom at 17.9 percent, Healthcare and Life Sciences at 16.6 percent, Insurance at 14.4 percent, and Manufacturing at 4.2 percent.

The Company's gross margin was 36.5 percent in the first quarter, compared to 37.2 percent in the prior-year period and 40.2 percent in the fourth quarter of 2016.  Selling, General and Administrative (SG&A) expenses were 13.4 percent of revenue in the first quarter, compared to 12.3 percent in the prior-year period and 13.1 percent in the previous quarter.

The first quarter income from operations was 23.1 percent of revenue as compared to 24.9 percent in the prior-year period and 27.1 percent in the fourth quarter 2016.  The sequential decline in operating margin during the first quarter primarily reflects the impact of lower revenue, partially offset by currency-related balance sheet translations.

Net income for the first quarter was $38.4 million or $0.46 per diluted share, compared to $53.1 million or $0.63 per diluted share in the prior-year period and $48 million or $0.57 per diluted share in the fourth quarter of 2016.

During Q1, Syntel spent $2.6 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $74.1 million. The Company ended the quarter with 22,795 employees globally.

Operational Highlights

"We saw weak trends for the Banking and Financial Services and Healthcare segments in Q1 as customers remained cautious in a challenging business environment," said Syntel Interim CEO and President Rakesh Khanna. "Despite this, we have continued to invest in our capabilities and are making solid progress in our plans to strengthen deal closures and return to growth."

"Our expanded focus on our top 50 customers, coupled with our market relevant offerings, is helping to rebuild our pipelines," said Khanna. "Digital remains a priority investment area for our customers and a critical growth driver for Syntel. Our strong digital capabilities and robust automation-driven core IT offerings are resonating well with customers."

2017 Guidance

Based on current visibility levels and an exchange rate assumption of 64.5 Indian rupees to the dollar, the Company currently expects 2017 revenue of $855 million to $900 million and EPS in the range of $1.57 to $1.77.

Syntel to Host Conference Call

Syntel will discuss its first quarter 2017 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 April 27, 2017 by dialing (855) 859-2056 and entering "3045483."  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 and knowledge process services. Syntel helps global enterprises evolve the core by leveraging automation, scaled agile and cloud platforms to build efficient application development and management, testing and infrastructure solutions. Syntel's digital services enable companies to engage customers, discover new insights through analytics, and create a more connected enterprise through the internet of things. Syntel's "Customer for Life" philosophy builds collaborative partnerships and creates long-term client value by investing in IP, solutions and industry-focused delivery teams with deep domain knowledge.

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, 2016 or from other factors not currently anticipated.

        
 SYNTEL, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (UNAUDITED)
 (IN THOUSANDS, EXCEPT PER SHARE DATA)
        
    THREE MONTHS ENDED  
    MARCH 31,  
     2017  2016   
        
 Net revenues$225,869 $241,390   
 Cost of revenues 143,447  151,666   
 Gross profit 82,422  89,724   
 Selling, general and administrative expenses 30,291  29,677   
        
 Income from operations 52,131  60,047   
        
 Other income (expense):    
 Interest Expense (3,376) (570)  
 Other income 496  4,666   
 Other income (expense), net (2,880) 4,096   
        
 Income before provision for income taxes 49,251  64,143   
        
 Income tax expense 10,871  11,086   
        
 Net income$38,380 $53,057   
        
 Other Comprehensive Income      
        
 Foreign currency translation adjustments$6,175 $(1,240)  
        
 Gains on derivatives:    
 Gains arising during period on cash flow hedges 963  -   
        
 Unrealized gains on securities:    
 Unrealized holding gains arising during period 131  1,915   
 Reclassification adjustment for gains included in net income (80) (21)  
     51  1,894   
        
 Defined benefit pension plans:    
 Net Profit arising during period 6  -   
 Amortization of prior service cost included in net periodic pension cost 8  16   
     14  16   
        
 Other comprehensive income, before tax 7,203  670   
 Income tax expenses related to Other Comprehensive Income (403) (735)  
 Other comprehensive income, net of tax 6,800  (65)  
        
 Comprehensive Income   $45,180 $52,992   
        
 EARNINGS PER SHARE:    
 Basic$0.46 $0.63   
 Diluted$0.46 $0.63   
        
 Weighted average common shares outstanding:    
        
 Basic 83,797  84,112   
        
 Diluted 83,834  84,266   
        

 

      
 SYNTEL, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (IN THOUSANDS)
   (Unaudited) (Audited)
   March 31, December 31,
     2017     2016  
      
      
  ASSETS   
      
 Current assets:   
  Cash and cash equivalents$  46,886  $  78,332 
  Short term investments 27,176   21,614 
  Accounts receivable, net of allowance for doubtful accounts of $2,141 at March 31, 2017
 and $801 at December 31, 2016, respectively 
 121,850   118,299 
  Revenue earned in excess of billings 19,496   25,039 
  Other current assets 42,435   36,306 
      
   Total current assets   257,843     279,590 
      
 Property and equipment 237,695   227,056 
  Less  accumulated depreciation and amortization 128,454   120,580 
      
   Property and equipment, net   109,241     106,476 
      
 Goodwill 906   906 
      
 Non current Term Deposits with Banks 236   225 
      
      
 Deferred income taxes and other non current assets 75,342   67,346 
      
  TOTAL ASSETS$   443,568   $   454,543  
      
  LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY   
  LIABILITIES   
 Current liabilities:   
  Accrued payroll and related costs$  50,326  $  56,650 
  Income taxes payable 17,626   15,195 
  Accounts payable and other current liabilities 30,878   31,559 
  Deferred revenue 5,911   7,973 
  Loans and borrowings    18,583     21,264 
      
   Total current liabilities   123,324     132,641 
      
 Deferred income taxes and other non current liabilities  28,356   26,373 
 Non Current loans and borrowings  428,042   478,616 
      
  TOTAL LIABILITIES   579,722     637,630 
      
  SHAREHOLDERS' EQUITY   
      
      
 Total shareholders' (deficit)/equity   (136,154)    (183,087)
      
 TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY$   443,568   $   454,543  
      

 

Contacts:  
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com