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Syntel Reports First Quarter 2015 Financial Results

Highlights:

  • Q1 revenue of $220.6M, up 1% from year-ago quarter, down 6% sequentially
  • Q1 EPS of $0.48 per diluted share, down 31% from year-ago quarter, and 43% sequentially
  • Q1 cash & short term investments of $867M
  • Global Headcount of 24,534 on March 31, 2015, up 1% versus prior year

TROY, Mich., April 23, 2015 (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 first quarter, ended March 31, 2015.

First Quarter Financial Highlights

Syntel's revenue for the first quarter increased one percent to $220.6 million from $219.5 million in the prior-year period, and declined six percent from $235.3 million in the fourth quarter of 2014. During the first quarter, Banking and Financial Services accounted for 47.8 percent of total revenue, with Retail, Logistics and Telecom at 17.1 percent, Healthcare and Life Sciences at 15.6 percent, Insurance at 15.6 percent, and Manufacturing at 3.9 percent.

The Company's gross margin was 35.7 percent in the first quarter, compared to 43.7 percent in the prior-year period and 41.4 percent in the fourth quarter of 2014. Selling, General and Administrative (SG&A) expenses were 16 percent of revenue in the first quarter, compared to 14.7 percent in the prior-year period and 10.2 percent in the previous quarter.

The first quarter income from operations was 19.7 percent of revenue as compared to 29.1 percent in the prior-year period and 31.2 percent in the fourth quarter. The sequential decline in operating margin during the first quarter primarily reflects lower revenue and the impact of currency-related balance sheet translations.

Net income for the first quarter was $40 million or $0.48 per diluted share, compared to $58.1 million or $0.69 per diluted share in the prior-year period and net income of $70.7 million or $0.84 per diluted share in the fourth quarter of 2014.

During Q1, Syntel spent $4.4 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $867 million. The Company ended the quarter with 24,534 employees globally.

Operational Highlights

"While the first quarter is typically a seasonally weaker period for us, this Q1 got off to a slower start than usual as some of the projects we are engaged on were slow to ramp," said Syntel CEO and President Nitin Rakesh. "We are maintaining our 2015 outlook for EPS and the lower end of our revenue range as the broader environment remains favorable and our pipelines continue to build. We are optimistic that current market conditions support a continuation of the discretionary spending trends seen last year."

"This quarter's performance is not characteristic of Syntel and we have taken actions to ensure that we stay on the growth path we have embarked on," said Rakesh. "One of the quarter's highlights is that business activity in our Healthcare and Life Sciences industry group continued to improve from second-half 2014 as we expanded our services offerings in this industry to further strengthen our market position."

"We remain committed to distinguishing our service delivery with innovative IP and a customer focus that has fortified existing relationships while presenting multiple opportunities to build new ones in our chosen domains. This commitment has helped us assemble a long-term track record of strong execution, and we look forward to building on this in the future."

2015 Guidance

Based on current visibility levels and an exchange rate assumption of 62 Indian rupees to the dollar, the Company currently expects 2015 revenue of $985 million to $1,015 million and EPS in the range of $2.70 to $2.95.

Syntel to Host Conference Call

Syntel will discuss its first quarter 2015 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 30, 2015 by dialing (855) 859-2056 and entering "27576350." International callers may dial (404) 537-3406 and enter the same passcode.

About Syntel

Syntel (Nasdaq:SYNT) is a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies. Syntel's mission is to create new opportunities for clients by harnessing our passion, talent and innovation. We combine technology expertise, industry knowledge and a global delivery model to drive business value creation. Syntel's "Customer for Life" philosophy drives our relentless focus to build long-term, collaborative client partnerships. 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, 2014, 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,
2015 2014
Net revenues $ 220,599 $ 219,523
Cost of revenues 141,785 123,500
Gross profit 78,814 96,023
Selling, general and administrative expenses 35,382 32,221
Income from operations 43,432 63,802
Other income , net 9,338 11,785
Income before provision for income taxes 52,770 75,587
Income tax expense 12,749 17,439
Net income $ 40,021 $ 58,148
Other Comprehensive Income
Foreign currency translation adjustments $ 10,626 $ 24,847
Gains on derivatives:
Gains arising during period on net investment hedges -- 724
Unrealized gains on securities:
Unrealized holding gains arising during period 3,440 2,724
Reclassification adjustment for gains included in net income (1,868) (1,855)
1,572 869
Defined benefit pension plans:
Net Profit arising during period -- --
Amortization of prior service cost included in net periodic pension cost 25 2
25 2
Other comprehensive income, before tax 12,223 26,442
Income tax expenses related to Other Comprehensive Income (486) (252)
Other comprehensive income, net of tax 11,737 26,190
Comprehensive Income $ 51,758 $ 84,338
Dividend per share $ -- $ --
EARNINGS PER SHARE:
Basic $ 0.48 $ 0.69
Diluted $ 0.48 $ 0.69
Weighted average common shares outstanding:
Basic 83,907 83,680
Diluted 84,127 83,944
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)
March 31, December 31,
2015 2014
ASSETS
Current assets:
Cash and cash equivalents $ 281,784 $ 197,708
Short term investments 585,168 669,353
Accounts receivable, net of allowance for doubtful accounts of $703 at March 31, 2015 and December 31, 2014, respectively 114,995 111,993
Revenue earned in excess of billings 40,654 27,493
Deferred income taxes and other current assets 65,190 56,930
Total current assets 1,087,791 1,063,477
Property and equipment 217,320 210,206
Less accumulated depreciation and amortization 106,157 101,155
Property and equipment, net 111,163 109,051
Goodwill 906 906
Non current Term Deposits with Banks 82 105
Deferred income taxes and other non current assets 61,872 50,476
TOTAL ASSETS $ 1,261,814 $ 1,224,015
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 48,336 $ 60,765
Income taxes payable 21,562 23,781
Accounts payable and other current liabilities 35,097 33,573
Deferred revenue 2,294 3,266
Loans and borrowings 6,968 8,852
Total current liabilities 114,257 130,237
Other non current liabilities 16,430 16,198
Non Current loans and borrowings 129,750 129,750
TOTAL LIABILITIES 260,437 276,185
SHAREHOLDERS' EQUITY
Total shareholders' equity 1,001,377 947,830
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,261,814 $ 1,224,015

CONTACT: North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com Asia/Pacific: Sikta Samantaray, +91 9167512186, sikta_samantaray@syntelinc.com

Source:Syntel, Inc.

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