Highlights:
  • Q2 revenue of $226.8M, down 8% from year-ago quarter and up 0.4% sequentially
  • Q2 EPS of $0.44 per diluted share, down 37% from year-ago quarter and 5% sequentially
  • Q2 cash & short term investments of $87M
  • Global Headcount of 21,850 on June 30, 2017, versus 23,773 in the year-ago quarter

TROY, Mich., July 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 second quarter, ended June 30, 2017.

Second Quarter Financial Highlights

Syntel's revenue for the second quarter decreased 7.8 percent to $226.8 million from $246 million in the prior-year period, and rose 0.4 percent from $225.9 million in the first quarter of 2017. During the second quarter, Banking and Financial Services accounted for 45.6 percent of total revenue, with Retail, Logistics and Telecom at 18.1 percent, Healthcare and Life Sciences at 17.5 percent, Insurance at 14.6 percent, and Manufacturing at 4.2 percent.

The Company's gross margin was 35.9 percent in the second quarter, compared to 37 percent in the prior-year period and 36.5 percent in the first quarter of 2017. Selling, General and Administrative (SG&A) expenses were 12.7 percent of revenue in the second quarter, compared to 7.4 percent in the prior-year period and 13.4 percent in the previous quarter.

The second quarter income from operations was 23.3 percent of revenue as compared to 29.6 percent in the prior-year period and 23.1 percent in the first quarter 2017.

Net income for the second quarter was $36.7 million or $0.44 per diluted share, compared to $58.8 million or $0.70 per diluted share in the prior-year period and $38.4 million or $0.46 per diluted share in the first quarter of 2017.

During Q2, Syntel spent $1.8 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $87 million. The Company ended the quarter with 21,850 employees globally.

Operational Highlights

"Our customer relationships are strong and we are committed to growing revenue with all clients by supporting their changing technology needs," said Syntel CEO and President Rakesh Khanna. "We expect faster growth from clients 4 to 50 given our relative penetration, the size of the opportunity and our plans to increase revenue from this segment."

"The demand for digital services remained high during the second quarter and our Insurance segment continued to benefit from healthier industry trends," said Khanna. "The broader environment was largely unchanged from last quarter and it will take some time for growth to return across all of our segments. We continue to focus on deal closures, invest in digital and automation-driven services and are encouraged by our strong pipelines."

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 $865 million to $900 million and EPS in the range of $1.62 to $1.77.

Stock Repurchase Plan

The Syntel Board of Directors has authorized a stock repurchase plan under which the Company may repurchase shares of common stock with a total value not to exceed $60,000,000.00. The stock repurchase plan is effective on July 25, 2017 and is authorized to continue through December 31, 2018. Repurchases under the Company's new program may be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. Any repurchased common stock will be available for use in connection with the Company's incentive plan and for other corporate purposes. Syntel had 83,675,545 shares of common stock issued and outstanding as of June 30, 2017.

Syntel to Host Conference Call

Syntel will discuss its second 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 July 27, 2017 by dialing (855) 859-2056 and entering "47210731." International callers may dial (404) 537-3406 and enter the same passcode.

About SyntelSyntel (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 ProvisionThis 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 March 31, 2017 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,
      2017     2016       2017     2016  
             
Net revenues $ 226,811   $ 246,018     $ 452,680   $ 487,408  
Cost of revenues   145,351     155,033       288,798     306,699  
Gross profit   81,460     90,985       163,882     180,709  
Selling, general and administrative expenses   28,699     18,265       58,990     47,942  
             
Income from operations   52,761     72,720       104,892     132,767  
             
Other income (expense):          
Interest Expense   (3,216 )   (575 )     (6,592 )   (1,145 )
Other income   462     5,450       958     10,116  
Other income (expense), net   (2,754 )   4,875       (5,634 )   8,971  
             
Income before provision for income taxes   50,007     77,595       99,258     141,738  
             
Income tax expense   13,355     18,804       24,226     29,890  
             
Net income $ 36,652   $ 58,791     $ 75,032   $ 111,848  
             
Other Comprehensive Income          
             
  Foreign currency translation adjustments $ 937   $ (16,094 )   $ 7,112   $ (17,334 )
             
  Gains/(Losses) on derivatives:          
  Gains (losses) arising during period on cash flow hedges   (672 )   -       291     -  
             
  Unrealized gains/(losses) on securities:          
  Unrealized holding gains arising during period   198     970       241     1,803  
  Reclassification adjustment for gains included in net income   (89 )   (1,130 )     (81 )   (69 )
      109     (160 )     160     1,734  
             
  Defined benefit pension plans:          
  Net profit arising during period   -     -       6     -  
  Amortization of prior service cost included in net periodic pension cost   24     19       32     35  
      24     19       38     35  
             
  Other comprehensive Income (Loss), before tax   398     (16,235 )     7,601     (15,565 )
  Income tax benefit (expenses) related to Other comprehensive income (loss)   224     22       (179 )   (713 )
  Other comprehensive Income/(loss), net of tax   622     (16,213 )     7,422     (16,278 )
             
Co mprehensive Income   $ 37,274   $ 42,578     $ 82,454   $ 95,570  
             
EARNINGS PER SHARE:          
  Basic $ 0.44   $ 0.70     $ 0.90   $ 1.33  
  Diluted $ 0.44   $ 0.70     $ 0.89   $ 1.33  
             
Weighted average common shares outstanding:          
             
  Basic   83,818     84,140       83,807     84,126  
             
  Diluted   83,853     84,278       83,844     84,272  
             

 
         
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
    (Unaudited)   (Audited)
    June 30,   December 31,
      2017       2016  
         
  ASSETS      
         
Current assets:      
  Cash and cash equivalents $ 57,447     $ 78,332  
  Short term investments   29,562       21,614  
                 
  Accounts receivable, net of allowance for doubtful accounts of $2,143 at June 30, 2017 and $801 at December 31, 2016, respectively   106,060       118,299  
  Revenue earned in excess of billings   21,319       25,039  
  Other current assets   33,352       36,306  
         
  Total current assets   247,740       279,590  
         
Property and equipment   237,700       227,056  
  Less  accumulated depreciation and amortization   130,495       120,580  
         
  Property and equipment, net   107,205       106,476  
         
Goodwill   906       906  
         
Non current Term Deposits with Banks   237       225  
         
         
Deferred income taxes and other non current assets   78,018       67,346  
         
  TOTAL ASSETS $     434,106     $     454,543  
         
LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY      
LIABILITIES      
Current liabilities:      
  Accrued payroll and related costs $ 49,131     $ 56,650  
  Income taxes payable   19,611       15,195  
  Accounts payable and other current liabilities   30,920       31,559  
  Deferred revenue   4,827       7,973  
  Loans and borrowings   20,449       21,264  
         
  Total current liabilities   124,938       132,641  
         
Deferred income taxes and other non current liabilities   28,953       26,373  
Non Current loans and borrowings   377,468       478,616  
         
  TOTAL LIABILITIES   531,359       637,630  
         
SHAREHOLDERS' EQUITY      
         
         
Total shareholders' (deficit)/equity   (97,253 )     (183,087 )
         
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY $     434,106     $     454,543  
         

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

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