Syntel Reports Fourth Quarter and Full Year 2017 Financial Results

Highlights:

  • Q4 revenue of $239.8M, up 0.8% from year-ago quarter, and 3.7% sequentially
  • Q4 EPS of $0.51 per diluted share as compared to $0.57 in the year-ago quarter and $0.58 in the third quarter. Q4 EPS was negatively impacted by approximately $0.11 due to one-time tax provisions.
  • Full year 2017 revenue of $923.8M as compared to $966.6M in the prior-year
  • Full year 2017 EPS of $1.99 as compared to a loss per share of $0.68 in the prior-year. Full year 2016 EPS was negatively impacted by $3.21 per share of one-time tax expense associated with a repatriation of cash.
  • 2017 year-ending cash & short term investments of $122.5M
  • Global Headcount of 22,114 on December 31, 2017, versus 23,011 in the year-ago quarter

TROY, Mich., Feb. 15, 2018 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a leading global provider of integrated information technology and knowledge process services, today announced financial results for the fourth quarter and full year, ended December 31, 2017.

Fourth Quarter Financial Highlights
Syntel's revenue for the fourth quarter increased 0.8 percent to $239.8 million from $237.9 million in the prior-year period, and 3.7 percent from $231.3 million in the third quarter of 2017. During the fourth quarter, Banking and Financial Services accounted for 44.4 percent of total revenue, with Healthcare and Life Sciences at 18.2 percent, Retail, Logistics and Telecom at 17.3 percent, Insurance at 15.6 percent, and Manufacturing at 4.5 percent.

The Company's gross margin was 41.3 percent in the fourth quarter, compared to 40.2 percent in the prior-year period and 38.1 percent in the third quarter of 2017. Selling, General and Administrative (SG&A) expenses were 12.2 percent of revenue in the fourth quarter, compared to 13.1 percent in the prior-year period and 11.7 percent in the previous quarter.

The fourth quarter income from operations was 29.1 percent of revenue as compared to 27.1 percent in the prior-year period and 26.4 percent in the third quarter of 2017.

Net income for the fourth quarter was $42.4 million or $0.51 per diluted share, compared to $48 million or $0.57 per diluted share in the prior-year period and $48.8 million or $0.58 per diluted share in the third quarter of 2017. During the fourth quarter, following the enactment of the Tax Cuts and Jobs Act, Syntel had a one-time impact of approximately $9 million in tax provisions, of which approximately $8 million was related to a repatriation of cash and $1 million was due to an adjustment of deferred tax assets. The combined impact of these provisions reduced fourth quarter EPS by $0.11 per share.

The Company spent $0.1 million to repurchase 5,000 shares of common stock during the fourth quarter.

Full Year 2017 Financial Highlights
Revenue for 2017 decreased 4.4 percent to $923.8 million, from $966.6 million in 2016. The Company's 2017 operating margin was 25.5 percent, compared to 27.1 percent in 2016. Net income for the year was $166.3 million or $1.99 per share. This compares to a net loss of $57.4 million or $0.68 per diluted share in 2016.

During 2017, Syntel spent $8.6 million in CAPEX, largely in support of its global facilities and infrastructure, and finished the year with cash and short-term investments of $122.5 million. The Company spent $16.2 million to repurchase 880,435 shares of common stock. Syntel added 16 new clients during the year and ended 2017 with 22,114 employees globally.

Operational Highlights
"I am pleased with our Q4 results and the solid progress we made in strengthening our position at our top 50 customer accounts during 2017," said Syntel CEO and President Rakesh Khanna. "Our teams have worked diligently to fortify our client relationships, and to identify and close new opportunities."

“In 2018, we will continue to invest in client engagement and in developing innovative digital and automation-powered services to help our customers transform their businesses and adapt to a dynamic competitive environment,” said Khanna. “We still have some work to do, but I am confident that our customer–centric approach will help Syntel make steady progress as we diversify and grow with our customers.”

2018 Guidance
Based on current visibility levels and an exchange rate assumption of 64 Indian rupees to the dollar, the Company currently expects 2018 revenue of $905 million to $950 million and EPS in the range of $1.72 to $1.92.

Syntel to Host Conference Call
Syntel will discuss its fourth quarter 2017 results today on a conference call at 10:00 a.m. (EST). 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 February 22, 2018 by dialing (855) 859-2056 and entering “4299607." 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, the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 or from other factors not currently anticipated.

SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2017 2016 2017 2016
Net revenues$239,808 $237,887 $923,828 $966,550
Cost of revenues 140,772 142,354 572,789 595,725
Gross profit 99,036 95,533 351,039 370,825
Selling, general and administrative expenses 29,173 31,060 115,323 108,528
Income from operations 69,863 64,473 235,716 262,297
Other income (expense), net:
Interest Expense (2,994) (2,724) (12,627) (4,708)
Other income 918 614 2,396 15,796
Other income (expense), net (2,076) (2,110) (10,231) 11,088
Income before provision for income taxes 67,787 62,363 225,485 273,385
Income tax expense 25,384 14,372 59,217 330,775
Net income (Loss)$42,403 $47,991 $166,268 $(57,390)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments$3,957 $(1,293) $9,814 $(19,018)
Gains on derivatives:
Gains arising during period on cash flow hedges 2,141 533 2,774 533
Unrealized gains (Loss) on securities:
Unrealized holding gains arising during period 209 179 387 242
Reclassification adjustment for gains included in net income (321) (158) (115) (248)
(112) 21 272 (6)
Defined benefit pension plans:
Net Profit (Loss) arising during period 1,678 (802) 1,684 (802)
Amortization of prior service cost included in net periodic pension cost 16 (82) 76 (35)
1,694 (884) 1,760 (837)
Other comprehensive Income (Loss), before tax 7,680 (1,623) 14,620 (19,328)
Income tax (expense) benefits related to Other Comprehensive Loss (960) 86 (1,356) 32
Other comprehensive Income (Loss), net of tax 6,720 (1,537) 13,264 (19,296)
Comprehensive Income (Loss)$49,123 $46,454 $179,532 $(76,686)
Dividend Per Share$- $- $- $15.00
EARNINGS/(LOSS) PER SHARE:
Basic$0.51 $0.57 $1.99 $(0.68)
Diluted$0.51 $0.57 $1.99 $(0.68)
Weighted average common shares outstanding:
Basic 83,073 84,117 83,537 84,146
Diluted 83,248 84,163 83,618 84,146

SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31, December 31,
2017
2016
ASSETS
Current assets:
Cash and cash equivalents$95,994 $78,332
Short term investments 26,501 21,614
Accounts receivable, net of allowance for doubtful accounts of $ Nil at December 31, 2017 and $801 at December 31, 2016, respectively 115,052 118,299
Revenue earned in excess of billings 24,995 25,039
Other current assets 29,484 36,306
Total current assets 292,026 279,590
Property and equipment 240,948 227,056
Less accumulated depreciation and amortization 134,650 120,580
Property and equipment, net 106,298 106,476
Goodwill 906 906
Non current Term Deposits with Banks 396 225
Deferred income taxes and other non current assets 84,090 67,346
TOTAL ASSETS$ 483,716 $ 454,543
LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY
LIABILITIES
Current liabilities:
Accrued payroll and related costs$51,497 $56,650
Income taxes payable 21,100 15,195
Accounts payable and other current liabilities 34,762 31,559
Deferred revenue 3,240 7,973
Loans and borrowings 24,268 21,264
Total current liabilities 134,867 132,641
Deferred income taxes and other non current liabilities 27,325 26,373
Non Current loans and borrowings 334,446 478,616
TOTAL LIABILITIES 496,638 637,630
SHAREHOLDERS' EQUITY
Total shareholders' (deficit)/equity (12,922) (183,087)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY$ 483,716 $ 454,543


Contacts: North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com

Source:Syntel, Inc.