Syntel Reports First Quarter 2017 Financial Results

By GlobeNewswire,  April 20, 2017, 08:30:00 AM EDT


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

Source: Syntel, Inc.

This article appears in: News Headlines

Referenced Stocks: SYNT


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