Highlights:
• Q2 revenue of $246M, up 3% from year-ago quarter, and 2% sequentially
• Q2 EPS of $0.70 per diluted share, down 3% from year-ago quarter, and up 11% sequentially
• Q2 cash & short term investments of $1.1B
• Global Headcount of 23,773 on June 30, 2016, versus 23,006 in the year ago quarter
TROY, Mich., July 21, 2016 (GLOBE NEWSWIRE) — Syntel, Inc. (Nasdaq:SYNT), a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies, today announced financial results for the second quarter, ended June 30, 2016.
Second Quarter Financial Highlights
Syntel’s revenue for the second quarter increased three percent to $246 million from $239.8 million in the prior-year period, and two percent from $241.4 million in the first quarter of 2016. During the second quarter, Banking and Financial Services accounted for 48.9 percent of total revenue, with Retail, Logistics and Telecom at 16.9 percent, Healthcare and Life Sciences at 16.3 percent, Insurance at 13.1 percent, and Manufacturing at 4.8 percent.
The Company’s gross margin was 37 percent in the second quarter, compared to 38 percent in the prior-year period and 37.2 percent in the first quarter of 2016. Selling, General and Administrative (SG&A) expenses were 7.4 percent of revenue in the second quarter, compared to 9.1 percent in the prior-year period and 12.3 percent in the previous quarter.
The second quarter income from operations was 29.6 percent of revenue as compared to 28.9 percent in the prior-year period and 24.9 percent in the first quarter. The sequential rise in operating margin during the second quarter primarily reflects the favorable impact of currency-related balance sheet translations, which was partially offset by immigration expenses and offshore wage increases.
Net income for the second quarter was $58.8 million or $0.70 per diluted share, compared to $60.6 million or $0.72 per diluted share in the prior-year period and net income of $53.1 million or $0.63 in the first quarter of 2016.
During Q2, Syntel spent $5.7 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $1.1 billion. The Company ended the quarter with 23,773 employees globally.
Operational Highlights
“I was pleased to see sequential improvement in the insurance segment as we focused on converting our pipelines,” said Syntel CEO and President Nitin Rakesh. “Parts of this segment are still recovering; however, we continue to anticipate improving growth for insurance later this year. While we made steady progress this quarter, we are seeing added uncertainty which is contributing to volatility in customer spending. We are adjusting our outlook to reflect this.”
“Our customers across every industry are investing in transformation to gain competitive advantage, but they continue to struggle with high costs and latencies inherent in aging systems and applications that are prevalent across Global 2000 organizations,” said Rakesh.
“Syntel’s digital modernization solution powered by our SyntBots recursive automation platform offers a robust combination of technology and services to help our customers execute and fund their strategic initiatives, thereby mitigating impediments to growth and business agility.”
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 $980 million to $1,010 million and EPS in the range of $2.55 to $2.70.
Syntel to Host Conference Call
Syntel will discuss its second 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 July 28, 2016 by dialing (855) 859-2056 and entering “48344679″. 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: 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 March 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 | SIX MONTHS ENDED | ||||||||||||||||||
| JUNE 30, | JUNE 30, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Net revenues | $ | 246,018 | $ | 239,797 | $ | 487,408 | $ | 460,396 | |||||||||||
| Cost of revenues | 155,033 | 148,704 | 306,699 | 290,489 | |||||||||||||||
| Gross profit | 90,985 | 91,093 | 180,709 | 169,907 | |||||||||||||||
| Selling, general and administrative expenses | 18,265 | 21,728 | 47,942 | 57,110 | |||||||||||||||
| Income from operations | 72,720 | 69,365 | 132,767 | 112,797 | |||||||||||||||
| Other income, net | 4,875 | 9,887 | 8,971 | 19,225 | |||||||||||||||
| Income before provision for income taxes | 77,595 | 79,252 | 141,738 | 132,022 | |||||||||||||||
| Income tax expense | 18,804 | 18,673 | 29,890 | 31,422 | |||||||||||||||
| Net income | $ | 58,791 | $ | 60,579 | $ | 111,848 | $ | 100,600 | |||||||||||
| Other Comprehensive Income | |||||||||||||||||||
| Foreign currency translation adjustments | $ | (16,094 | ) | $ | (16,546 | ) | $ | (17,334 | ) | $ | (5,920 | ) | |||||||
| Unrealized gains/(losses) on securities: | |||||||||||||||||||
| Unrealized holding gains arising during period | 970 | 2,413 | 1,803 | 5,178 | |||||||||||||||
| Reclassification adjustment for gains included in net income | (1,130 | ) | (1,712 | ) | (69 | ) | (2,905 | ) | |||||||||||
| (160 | ) | 701 | 1,734 | 2,273 | |||||||||||||||
| Defined benefit pension plans: | |||||||||||||||||||
| Net profit arising during period | – | – | – | – | |||||||||||||||
| Amortization of prior service cost included in net periodic pension cost | 19 | 34 | 35 | 59 | |||||||||||||||
| 19 | 34 | 35 | 59 | ||||||||||||||||
| Other comprehensive loss, before tax | (16,235 | ) | (15,811 | ) | (15,565 | ) | (3,588 | ) | |||||||||||
| Income tax benefit (expenses) related to Other comprehensive income (loss) | 22 | (547 | ) | (713 | ) | (1,033 | ) | ||||||||||||
| Other comprehensive loss, net of tax | (16,213 | ) | (16,358 | ) | (16,278 | ) | (4,621 | ) | |||||||||||
| Comprehensive Income | $ | 42,578 | $ | 44,221 | $ | 95,570 | $ | 95,979 | |||||||||||
| EARNINGS PER SHARE: | |||||||||||||||||||
| Basic | $ | 0.70 | $ | 0.72 | $ | 1.33 | $ | 1.20 | |||||||||||
| Diluted | $ | 0.70 | $ | 0.72 | $ | 1.33 | $ | 1.20 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 84,140 | 83,936 | 84,126 | 83,922 | |||||||||||||||
| Diluted | 84,278 | 84,135 | 84,272 | 84,131 | |||||||||||||||
| SYNTEL, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (IN THOUSANDS) | ||||||||
| (Unaudited) | (Audited) | |||||||
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 702,446 | $ | 500,499 | ||||
| Short term investments | 395,385 | 540,045 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $619 at June 30, 2016 and $622 at December 31, 2015, respectively | 127,605 | 136,926 | ||||||
| Revenue earned in excess of billings | 37,240 | 30,448 | ||||||
| Deferred income taxes and other current assets | 50,977 | 44,575 | ||||||
| Total current assets | 1,313,653 | 1,252,493 | ||||||
| Property and equipment | 224,036 | 217,922 | ||||||
| Less accumulated depreciation and amortization | 116,553 | 112,146 | ||||||
| Property and equipment, net | 107,483 | 105,776 | ||||||
| Goodwill | 906 | 906 | ||||||
| Non current Term Deposits with Banks | 227 | 77 | ||||||
| Deferred income taxes and other non current assets | 63,867 | 64,018 | ||||||
| TOTAL ASSETS | $ | 1,486,136 | $ | 1,423,270 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accrued payroll and related costs | $ | 51,689 | $ | 60,339 | ||||
| Income taxes payable | 16,235 | 11,305 | ||||||
| Accounts payable and other current liabilities | 40,983 | 37,892 | ||||||
| Deferred revenue | 4,050 | 7,716 | ||||||
| Loans and borrowings | 12,725 | 129,981 | ||||||
| Total current liabilities | 125,682 | 247,233 | ||||||
| Other non current liabilities | 18,359 | 17,592 | ||||||
| Non Current loans and borrowings | 84,375 | – | ||||||
| TOTAL LIABILITIES | 228,416 | 264,825 | ||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Total shareholders’ equity | 1,257,720 | 1,158,445 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,486,136 | $ | 1,423,270 | ||||
CONTACT: Contacts: North America/Europe: Jon Luebke, Syntel, 248/619-3503, [email protected] Europe and International: Rani Gill, Flame PR, +44 0203 357 9746, [email protected]