Syntel, Inc.
Oct 20, 2016

Syntel Reports Third Quarter 2016 Financial Results


TROY, Mich., Oct. 20, 2016 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global leader in digital modernization, information technology and knowledge process services for Global 2000 companies, today announced financial results for the third quarter, ended September 30, 2016.

Third Quarter Financial Highlights

Syntel's revenue for the third quarter decreased five percent to $241.3 million from $253.6 million in the prior-year period, and two percent from $246 million in the second quarter of 2016.  During the third quarter, Banking and Financial Services accounted for 48.1 percent of total revenue, with Retail, Logistics and Telecom at 17.2 percent, Healthcare and Life Sciences at 16.4 percent, Insurance at 13.7 percent, and Manufacturing at 4.6 percent.

The Company's gross margin was 39.2 percent in the third quarter, compared to 42.4 percent in the prior-year period and 37 percent in the second quarter of 2016.  Selling, General and Administrative (SG&A) expenses were 12.2 percent of revenue in the third quarter, compared to 6 percent in the prior-year period and 7.4 percent in the previous quarter.

The third quarter income from operations was 27 percent of revenue as compared to 36.5 percent in the prior-year period and 29.6 percent in the second quarter. The sequential decline in operating margin during the third quarter primarily reflects the unfavorable impact of currency-related balance sheet translations, which was partially offset by lower immigration expenses.

In connection with a special cash dividend and the one-time repatriation of cash announced on September 12, the Company recognized a one-time tax expense of $271 million (net of foreign tax credits) in the third quarter of 2016. As a result, net loss for the third quarter was $217.2 million or $2.58 per diluted share, compared to net income of $77.7 million or $0.92 per diluted share in the prior-year period and $58.8 million or $0.70 in the second quarter of 2016.

During Q3, Syntel spent $6.2 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $88.4 million. The Company ended the quarter with 23,055 employees globally.

Operational Highlights

"Market conditions were challenging during the third quarter as macroeconomic, business and regulatory uncertainty impacted customer spending in what is typically a seasonally strong period," said Syntel CEO and President Nitin Rakesh.  "Despite this, we continued to see some signs of stabilization in our insurance segment, including in the personal lines sub-industry."

"Syntel is unwavering in its strategic focus on becoming the global leader in digital modernization. A strong deal pipeline and favorable customer response to our comprehensive offerings in this area give us confidence that our growth trajectory will improve as near-term headwinds abate," said Rakesh.

"During the third quarter our Board declared a special cash dividend of $15 a share, returning considerable value to our shareholders. This decision underscores conviction in our financial and operational strength and in our ability to execute on our strategic focus."

2016 Guidance

Based on current visibility levels and an exchange rate assumption of 67 Indian rupees to the dollar, the Company currently expects 2016 revenue of $960 million to $970 million and loss per share in the range of $0.65 to $0.75.

CFO Appointment

On October 17, 2016, the Board of Directors of Syntel named Anil Agrawal as Chief Financial Officer and Chief Information Security Officer, effective November 1, 2016. Mr. Agrawal, age 39, has been Acting Chief Financial Officer since November 2015 and has been with Syntel since 2001. Mr. Agrawal was previously a General Manager of Finance for Syntel and served as Head of Finance for the Company's India operations from 2007 through December 2011 and Head of Corporate Financial Planning and Analytics from January 2012 to November 2015.

Syntel to Host Conference Call

Syntel will discuss its third 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: 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 October 27, 2016 by dialing (855) 859-2056 and entering "97795475".  International callers may dial (404) 537-3406 and enter the same passcode.

About Syntel
Syntel (Nasdaq:SYNT) is the global leader in digital modernization services, with a core suite of automation-driven IT and knowledge process services. Syntel helps global enterprises thrive in the Two-Speed World™ by building agile, efficient technology infrastructures that blend legacy business models with disruptive digital innovations. Syntel's recursive automation platform, SyntBots®, enables clients to manage, migrate, and modernize their business and technology ecosystems. Syntel believes in a "Customer for Life" philosophy to build collaborative partnerships and creates long-term business value for its clients by investing in IP, solutions and industry-focused delivery teams with deep domain knowledge.

To learn more, visit us at:

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 June 30, 2016 or from other factors not currently anticipated.

   2016  2015   2016  2015 
Net revenues $241,255 $253,636  $728,663 $714,032 
Cost of revenues  146,672  146,061   453,371  436,550 
Gross profit  94,583  107,575   275,292  277,482 
Selling, general and administrative expenses  29,526  15,121   77,468  72,231 
Income from operations  65,057  92,454   197,824  205,251 
Other income, net  4,227  10,227   13,198  29,452 
Income before provision for income taxes  69,284  102,681   211,022  234,703 
Income tax expense  286,513  24,990   316,403  56,412 
Net (Loss)/Income $(217,229)$77,691  $(105,381)$178,291 
Other Comprehensive (Loss)/Income      
Foreign currency translation adjustments $(391)$(34,012) $(17,725)$(39,932)
Unrealized gains (Loss) on securities:      
Unrealized holding gains arising during period  170  1,477   217  4,769 
Reclassification adjustment for gains included in net income  (1,931) (3,341)  (244) (4,360)
   (1,761) (1,864)  (27) 409 
Defined benefit pension plans:      
Net Profit (Loss) arising during period  -  -   -  - 
Amortization of prior service cost included in net periodic pension cost  12  37   47  96 
   12  37   47  96 
Other comprehensive (loss) before tax  (2,140) (35,839)  (17,705) (39,427)
Income tax benefit (expenses) related to Other Comprehensive (loss)/income  659  461   (54) (572)
Other comprehensive (loss), net of tax  (1,481) (35,378)  (17,759) (39,999)
Comprehensive (Loss)/Income $(218,710)$42,313  $(123,140)$138,292 
Dividend Per Share $15.00  -  $15.00  - 
Basic $(2.58)$0.92  $(1.25)$2.12 
Diluted $(2.58)$0.92  $(1.25)$2.12 
Weighted average common shares outstanding:      
Basic  84,214  84,005   84,155  83,950 
Diluted  84,289  84,131   84,278  84,131 


  September 30,December 31,
    2016    2015  
Current assets:   
Cash and cash equivalents $65,244 $500,499 
Short term investments  23,150  540,045 
Accounts receivable, net of allowance for doubtful accounts of $663 at September 30, 2016 and $622 at December 31, 2015, respectively  113,077  136,926 
Revenue earned in excess of billings  32,711  30,448 
Advance to transfer agent for dividend payout  1,261,500  - 
Deferred income taxes and other current assets  36,442  44,575 
Total current assets  1,532,124  1,252,493 
Property and equipment  230,653  217,922 
Less accumulated depreciation and amortization  120,732  112,146 
Property and equipment, net  109,921  105,776 
Goodwill  906  906 
Non current Term Deposits with Banks  229  77 
Deferred income taxes and other non current assets  61,935  64,018 
TOTAL ASSETS $   1,705,115  $   1,423,270  
Current liabilities:   
Accrued payroll and related costs $55,649 $60,339 
Income taxes payable  60,377  11,305 
Accounts payable and other current liabilities  39,065  37,892 
Deferred revenue  3,189  7,716 
Loans and borrowings  15,131  129,981 
Dividends payable  1,261,500  - 
Total current liabilities  1,434,911  247,233 
Other non current liabilities  26,707  17,592 
Non Current loans and borrowings  464,190  - 
TOTAL LIABILITIES  1,925,808  264,825 
Total shareholders' (Deficit)/Equity  (220,693) 1,158,445 
North America/Europe: Jon Luebke, Syntel, 248/619-3503,
Europe and International: Rani Gill, Flame PR, +44 0203 357 9746,