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Syntel Reports Third Quarter 2015 Financial Results

Highlights:

  • Q3 revenue of $253.6M, up 11% from year-ago quarter and 6% sequentially
  • Q3 EPS of $0.92 per diluted share, up 26% from year-ago quarter, and 28% sequentially
  • Q3 cash & short term investments of $980.5M
  • Global Headcount of 23,814 on September 30, 2015, down 2% from year-ago quarter, up 4% sequentially

TROY, Mich., Oct. 21, 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 third quarter, ended September 30, 2015.

Third Quarter Financial Highlights

Syntel's revenue for the third quarter rose to $253.6 million from $228.3 million in the prior-year period and $239.8 million in the second quarter of 2015. During the third quarter, Banking and Financial Services accounted for 49.6 percent of total revenue, with Healthcare and Life Sciences at 16.8 percent, Retail, Logistics and Telecom at 16.3 percent, Insurance at 12.9 percent, and Manufacturing at 4.4 percent.

The Company's gross margin was 42.4 percent in the third quarter, compared to 41.4 percent in the prior-year period and 38 percent in the second quarter of 2015. Selling, General and Administrative (SG&A) expenses were six percent of revenue in the third quarter, compared to 11.6 percent in the prior-year period and 9.1 percent in the previous quarter.

The third quarter income from operations was 36.5 percent of revenue as compared to 29.8 percent in the prior-year period and 28.9 percent in the second quarter. The sequential rise in operating margin during the third quarter primarily reflects higher revenue, the impact of currency-related balance sheet translations, lower visa and immigration-related expenses, as well as an ongoing focus on operational efficiency.

Net income for the third quarter was $77.7 million or $0.92 per diluted share, compared to $61.6 million or $0.73 per diluted share in the prior-year period and net income of $60.6 million or $0.72 per diluted share in the second quarter of 2015.

During Q3, Syntel spent $3.7 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $980.5 million. The Company ended the quarter with 23,814 employees globally.

Operational Highlights

"We are very pleased with Syntel's third quarter performance," said Syntel CEO and President Nitin Rakesh. "Our Healthcare and Life Sciences segment garnered record revenues, aided by the stepped up investments we've made in this strategic industry."

"Our robust digital and automation capabilities and managed services offerings are resonating with customers and helping us access new channels and broaden our market reach," said Rakesh. "We have readied our organization to meet the challenges presented by rapid shifts in the technology landscape, and expect to turn these into profitable growth opportunities."

"Through a relentless focus on innovation and service quality, we strengthened long-term customer relationships this quarter. We also added meaningful new ones that can rely on Syntel as a committed partner to help them navigate change in their businesses."

2015 Guidance

Based on current visibility levels and an exchange rate assumption of 65 Indian rupees to the dollar, the Company currently expects 2015 revenue of $972 million to $977 million and EPS in the range of $2.80 to $2.90.

Syntel to Host Conference Call

Syntel will discuss its third 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 October 28, 2015 by dialing (855) 859-2056 and entering "49590221". International callers may dial (404) 537-3406 and enter the same pass code.

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, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2015 2014 2015 2014
Net revenues $ 253,636 $ 228,332 $ 714,032 $ 676,105
Cost of revenues 146,061 133,804 436,550 396,006
Gross profit 107,575 94,528 277,482 280,099
Selling, general and administrative expenses 15,121 26,566 72,231 85,108
Income from operations 92,454 67,962 205,251 194,991
Other income , net 10,227 10,657 29,452 34,617
Income before provision for income taxes 102,681 78,619 234,703 229,608
Income tax expense 24,990 17,013 56,412 50,570
Net income $ 77,691 $ 61,606 $ 178,291 $ 179,038
Other Comprehensive Income
Foreign currency translation adjustments $ (34,012) $ (22,853) $ (39,932) $ (5,010)
Gains on derivatives:
Gains arising during period on net investment hedges -- -- -- 724
Unrealized gains (Loss) on securities:
Unrealized holding gains arising during period 1,477 3,684 4,769 8,270
Reclassification adjustment for gains included in net income (3,341) (840) (4,360) (3,207)
(1,864) 2,844 409 5,063
Defined benefit pension plans:
Net Profit (Loss) arising during period -- -- -- --
Amortization of prior service cost included in net periodic pension cost 37 12 96 21
37 12 96 21
Other comprehensive income (Loss), before tax (35,839) (19,997) (39,427) 798
Income tax benefit (expenses) related to Other Comprehensive Income (loss) 461 (748) (572) (674)
Other comprehensive income (Loss), net of tax (35,378) (20,745) (39,999) 124
Comprehensive Income $ 42,313 $ 40,861 $ 138,292 $ 179,162
EARNINGS PER SHARE:
Basic $ 0.92 $ 0.73 $ 2.12 $ 2.14
Diluted $ 0.92 $ 0.73 $ 2.12 $ 2.13
Weighted average common shares outstanding:
Basic 84,005 83,832 83,950 83,748
Diluted 84,131 83,968 84,131 83,942
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited) (Audited)
September 30, December 31,
2015 2014
ASSETS
Current assets:
Cash and cash equivalents $ 476,904 $ 197,708
Short term investments 503,587 669,353
Accounts receivable, net of allowance for doubtful accounts of $624 at September 30, 2015 and $703 at December 31, 2014, respectively 115,393 111,993
Revenue earned in excess of billings 41,778 27,493
Deferred income taxes and other current assets 58,660 56,930
Total current assets 1,196,322 1,063,477
Property and equipment 216,016 210,206
Less accumulated depreciation and amortization 108,712 101,155
Property and equipment, net 107,304 109,051
Goodwill 906 906
Non current Term Deposits with Banks 78 105
Deferred income taxes and other non current assets 66,613 50,476
TOTAL ASSETS $ 1,371,223 $ 1,224,015
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 55,216 $ 60,765
Income taxes payable 32,004 23,781
Accounts payable and other current liabilities 40,796 33,573
Deferred revenue 2,834 3,266
Loans and borrowings 132,223 8,852
Total current liabilities 263,073 130,237
Other non current liabilities 16,854 16,198
Non Current loans and borrowings -- 129,750
TOTAL LIABILITIES 279,927 276,185
SHAREHOLDERS' EQUITY
Total shareholders' equity 1,091,296 947,830
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,371,223 $ 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.