Press release from GlobeNewswire (a Nasdaq OMX company)
Syntel Reports Third Quarter 2010 Financial Results
Thursday, October 28, 2010
- Q3 revenue of $140.5M, up 34% from year-ago quarter and 8% percent sequentially
- Q3 EPS of $0.73 per diluted share, flat with year-ago quarter and up 8% sequentially
- Q3 cash & short-term investments of $262.0M
- Global Headcount of 16,288 as of September 30, 2010
TROY, Mich., Oct. 28, 2010 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the third quarter, ended September 30, 2010.
Third Quarter Financial Highlights
Syntel's revenue for the third quarter increased 34 percent to $140.5 million, compared to $104.7 million in the prior-year period, and increased eight percent sequentially from $130.6 million in the second quarter of 2010. During the third quarter, Applications Outsourcing accounted for 76 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing seven percent and TeamSourcing at two percent.
The Company's gross margin was 39.6 percent in the third quarter, compared to 49.3 percent in the prior-year period and 39.5 percent in the second quarter of 2010. Selling, General and Administrative (SG&A) expenses were 17.7 percent in the third quarter, compared to 18.1 percent in the prior-year period and 14.6 percent in the previous quarter. Third quarter income from operations was 21.9 percent as compared to 31.2 percent in the prior-year period and 24.8 percent in the second quarter of 2010.
Operating margin in the third quarter was pressured by higher SG&A expenses, including costs associated with aggressive facility expansion programs. SG&A expenses also increased by $1.4M during the quarter and $3.1M sequentially due to exchange rate variations.
Net income for the third quarter was $30.4 million or $0.73 per diluted share, compared to $30.3 million or $0.73 per diluted share in the prior-year period and net income of $28.3 million or $0.68 per diluted share in the second quarter of 2010.
"Overall, business momentum remained strong in the third quarter, as evidenced by our top line performance," said Syntel CEO and President Prashant Ranade. "Revenue growth was broad-based across all key service offerings, and particularly strong in the Financial Services vertical. Syntel also continued to improve its positioning with strategic clients by helping drive both operational efficiency and business innovation."
"In support of our growth plans and longer-term market opportunities, Syntel continues to invest in our business," said Ranade. "During the third quarter, Syntel added an additional 1,362 employees, and our headcount has now grown 30 percent globally since the beginning of 2010. Our new campus in Chennai is now operational, and we have initiated infrastructure expansion programs in both Pune and Mumbai."
Based on current visibility levels and an exchange rate assumption of 44.4 rupees to the dollar, the Company currently expects 2010 revenue of $532 to $535 million and EPS in the range of $2.65 to $2.69.
Syntel to Host Conference Call
Syntel will discuss its third quarter 2010 results today on a conference call at 10:00 a.m. (Eastern). 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 November 4, 2010 by dialing (800) 642-1687 and entering "18671551". International callers may dial (706) 645-9291 and enter the same passcode.
Syntel (Nasdaq:SYNT) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle of business and information systems and processes. The Company is driven by its mission to create new opportunities for clients by harnessing the passion, talent and innovation of Syntel employees worldwide. Syntel leverages dedicated Centers of Excellence, a flexible Global Delivery Model, and a strong track record of building collaborative client partnerships to create sustainable business advantage for Global 2000 organizations. Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. As of September 30, 2010, Syntel employed more than 16,200 people worldwide. To learn more, visit us at: www.syntelinc.com.
Safe Harbor Provision
This news release includes 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, 2009 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.
SYNTEL, INC. AND SUBSIDIARIES
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(IN THOUSANDS, EXCEPT SHARE DATA)|
THREE MONTHS ENDED
NINE MONTHS ENDED
|Net revenues||$ 140,545||$ 104,698||$ 387,233||$ 301,234|
|Cost of revenues||84,881||53,088||230,764||156,496|
|Selling, general and administrative expenses||24,924||18,926||66,286||58,495|
|Income from operations||30,740||32,684||90,183||86,243|
|Other income, principally interest||4,876||3,527||9,118||6,837|
|Income before income taxes||35,616||36,211||99,301||93,080|
|Income tax expense||5,177||5,958||15,471||10,366|
|Net income||$ 30,439||$ 30,253||$ 83,830||$ 82,714|
|Dividend per share||$ 0.06||$ 0.06||$ 0.18||$ 0.18|
|EARNINGS PER SHARE:|
|Basic||$ 0.73||$ 0.73||$ 2.02||$ 2.00|
|Diluted||$ 0.73||$ 0.73||$ 2.02||$ 1.99|
|Weighted average common shares outstanding:|
SYNTEL, INC. AND SUBSIDIARIES
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|September, 30 2010||December, 31 2009|
|Cash and cash equivalents||$ 86,995||$ 87,822|
|Short term investments||175,041||112,243|
|Accounts receivable, net of allowance for doubtful accounts of $3,072 and $3000 at September 30, 2010 and December 31, 2009, respectively||79,533||48,523|
|Revenue earned in excess of billings||11,829||5,809|
|Deferred income taxes and other current assets||42,561||23,739|
|Total current assets||395,959||278,136|
|Property and equipment||163,498||143,911|
|Less accumulated depreciation and amortization||66,015||54,271|
|Property and equipment, net||97,483||89,640|
|Non current Term Deposits with Banks||4,566||23,337|
|Deferred income taxes and other non current assets||28,586||20,603|
|$ 527,500||$ 412,622|
|Accrued payroll and related costs||$ 35,101||$ 26,240|
|Income taxes payable||1,963||777|
|Accounts payable and other current liabilities||29,055||21,139|
|Total current liabilities||73,796||54,044|
|Other non current liabilities||11,427||8,540|
|Total shareholders' equity||442,277||350,038|
|Total liabilities and shareholders' equity||$ 527,500||$ 412,622|
CONTACT: Syntel, Inc. Jon Luebke (248) 619-3503 firstname.lastname@example.org