Syntel, Inc.
Jul 20, 2017
PDF

Syntel Reports Second Quarter 2017 Financial Results

Highlights:

TROY, Mich., July 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 second quarter, ended June 30, 2017.

Second Quarter Financial Highlights

Syntel's revenue for the second quarter decreased 7.8 percent to $226.8 million from $246 million in the prior-year period, and rose 0.4 percent from $225.9 million in the first quarter of 2017. During the second quarter, Banking and Financial Services accounted for 45.6 percent of total revenue, with Retail, Logistics and Telecom at 18.1 percent, Healthcare and Life Sciences at 17.5 percent, Insurance at 14.6 percent, and Manufacturing at 4.2 percent.

The Company's gross margin was 35.9 percent in the second quarter, compared to 37 percent in the prior-year period and 36.5 percent in the first quarter of 2017. Selling, General and Administrative (SG&A) expenses were 12.7 percent of revenue in the second quarter, compared to 7.4 percent in the prior-year period and 13.4 percent in the previous quarter.

The second quarter income from operations was 23.3 percent of revenue as compared to 29.6 percent in the prior-year period and 23.1 percent in the first quarter 2017.

Net income for the second quarter was $36.7 million or $0.44 per diluted share, compared to $58.8 million or $0.70 per diluted share in the prior-year period and $38.4 million or $0.46 per diluted share in the first quarter of 2017.

During Q2, Syntel spent $1.8 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $87 million. The Company ended the quarter with 21,850 employees globally.

Operational Highlights

"Our customer relationships are strong and we are committed to growing revenue with all clients by supporting their changing technology needs," said Syntel CEO and President Rakesh Khanna. "We expect faster growth from clients 4 to 50 given our relative penetration, the size of the opportunity and our plans to increase revenue from this segment."

"The demand for digital services remained high during the second quarter and our Insurance segment continued to benefit from healthier industry trends," said Khanna. "The broader environment was largely unchanged from last quarter and it will take some time for growth to return across all of our segments. We continue to focus on deal closures, invest in digital and automation-driven services and are encouraged by our strong pipelines."

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 $865 million to $900 million and EPS in the range of $1.62 to $1.77.

Stock Repurchase Plan

The Syntel Board of Directors has authorized a stock repurchase plan under which the Company may repurchase shares of common stock with a total value not to exceed $60,000,000.00. The stock repurchase plan is effective on July 25, 2017 and is authorized to continue through December 31, 2018. Repurchases under the Company's new program may be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. Any repurchased common stock will be available for use in connection with the Company's incentive plan and for other corporate purposes. Syntel had 83,675,545 shares of common stock issued and outstanding as of June 30, 2017.

Syntel to Host Conference Call

Syntel will discuss its second 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 July 27, 2017 by dialing (855) 859-2056 and entering "47210731." 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, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 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 SIX MONTHS ENDED
  JUNE 30, JUNE 30,
   2017  2016   2017  2016 
       
Net revenues$226,811 $246,018  $452,680 $487,408 
Cost of revenues 145,351  155,033   288,798  306,699 
Gross profit 81,460  90,985   163,882  180,709 
Selling, general and administrative expenses 28,699  18,265   58,990  47,942 
       
Income from operations 52,761  72,720   104,892  132,767 
       
Other income (expense):     
Interest Expense (3,216) (575)  (6,592) (1,145)
Other income 462  5,450   958  10,116 
Other income (expense), net (2,754) 4,875   (5,634) 8,971 
       
Income before provision for income taxes 50,007  77,595   99,258  141,738 
       
Income tax expense 13,355  18,804   24,226  29,890 
       
Net income$36,652 $58,791  $75,032 $111,848 
       
Other Comprehensive Income     
       
 Foreign currency translation adjustments$937 $(16,094) $7,112 $(17,334)
       
 Gains/(Losses) on derivatives:     
 Gains (losses) arising during period on cash flow hedges (672) -   291  - 
       
 Unrealized gains/(losses) on securities:     
 Unrealized holding gains arising during period 198  970   241  1,803 
 Reclassification adjustment for gains included in net income (89) (1,130)  (81) (69)
   109  (160)  160  1,734 
       
 Defined benefit pension plans:     
 Net profit arising during period -  -   6  - 
 Amortization of prior service cost included in net periodic pension cost 24  19   32  35 
   24  19   38  35 
       
 Other comprehensive Income (Loss), before tax 398  (16,235)  7,601  (15,565)
 Income tax benefit (expenses) related to Other comprehensive income (loss) 224  22   (179) (713)
 Other comprehensive Income/(loss), net of tax 622  (16,213)  7,422  (16,278)
       
Comprehensive Income $37,274 $42,578  $82,454 $95,570 
       
EARNINGS PER SHARE:     
 Basic$0.44 $0.70  $0.90 $1.33 
 Diluted$0.44 $0.70  $0.89 $1.33 
       
Weighted average common shares outstanding:     
       
 Basic 83,818  84,140   83,807  84,126 
       
 Diluted 83,853  84,278   83,844  84,272 
       

 

     
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
  (Unaudited) (Audited)
  June 30, December 31,
   2017   2016 
     
 ASSETS   
     
Current assets:   
 Cash and cash equivalents$57,447  $78,332 
 Short term investments 29,562   21,614 
         
 Accounts receivable, net of allowance for doubtful accounts of $2,143 at June 30, 2017 and $801 at December 31, 2016, respectively 106,060   118,299 
 Revenue earned in excess of billings 21,319   25,039 
 Other current assets 33,352   36,306 
     
 Total current assets 247,740   279,590 
     
Property and equipment 237,700   227,056 
 Less  accumulated depreciation and amortization 130,495   120,580 
     
 Property and equipment, net 107,205   106,476 
     
Goodwill 906   906 
     
Non current Term Deposits with Banks 237   225 
     
     
Deferred income taxes and other non current assets 78,018   67,346 
     
 TOTAL ASSETS$   434,106   $   454,543  
     
LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY   
LIABILITIES   
Current liabilities:   
 Accrued payroll and related costs$49,131  $56,650 
 Income taxes payable 19,611   15,195 
 Accounts payable and other current liabilities 30,920   31,559 
 Deferred revenue 4,827   7,973 
 Loans and borrowings 20,449   21,264 
     
 Total current liabilities 124,938   132,641 
     
Deferred income taxes and other non current liabilities 28,953   26,373 
Non Current loans and borrowings 377,468   478,616 
     
 TOTAL LIABILITIES 531,359   637,630 
     
SHAREHOLDERS' EQUITY   
     
     
Total shareholders' (deficit)/equity (97,253)  (183,087)
     
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY$   434,106   $   454,543  
     


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