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Press release from GlobeNewswire (a Nasdaq OMX company)

Syntel Reports Fourth Quarter and Full Year 2011 Financial Results

Thursday, February 16, 2012

Syntel Reports Fourth Quarter and Full Year 2011 Financial Results05:30 EST Thursday, February 16, 2012Highlights: Q4 revenue of $172.4M, up 19% from year-ago quarter and 3% sequentially Q4 EPS of $1.05 per diluted share Full Year revenue increase of 21% to $642.4M Full year EPS of $2.94 per diluted share 2011 year-ending cash & short term investments of $320.4M Global Headcount of 19,484 on December 31, 2011, up 12% versus prior year TROY, Mich., Feb. 16, 2012 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the fourth quarter and full year, ended December 31, 2011.Fourth Quarter Financial Highlights Syntel's revenue for the fourth quarter increased 19 percent to $172.4 million, compared to $144.9 million in the prior-year period, and increased three percent sequentially from $167.6 million in the third quarter of 2011. During the fourth quarter, Applications Outsourcing accounted for 75 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing eight percent and TeamSourcing at two percent. The Company's gross margin was 42.1 percent in the fourth quarter, compared to 38.4 percent in the prior-year period and 39.8 percent in the third quarter of 2011. Selling, General and Administrative (SG&A) expenses were 11.4 percent of revenue in the fourth quarter, compared to 17.4 percent in the prior-year period and 21.9 percent in the previous quarter. Fourth quarter income from operations was 30.7 percent of revenue as compared to 20.9 percent in the prior-year period and 17.9 percent in the third quarter. The sequential rise in operating margin was aided by the depreciation in the Indian rupee, partly offset by advanced hiring, which lowered utilization levels, and compensation-related costs. After reversals of tax reserves and additional tax provisions, having a net favorable impact of $1.9 million, net income for the fourth quarter was $44 million or $1.05 per diluted share, compared to $29.8 million or $0.71 per diluted share in the prior-year period and net income of $26.2 million or $0.63 per diluted share in the third quarter of 2011.Full Year 2011 Financial Highlights Revenue for 2011 increased 20.7 percent to $642.4 million, from $532.1 million in 2010. The Company's 2011 operating margin was 21.5 percent, compared to 22.7 percent in 2010. Net income for the year was $122.9 million compared to $113.6 million in 2010. EPS for 2011 increased 7.7% to $2.94 per diluted share from $2.73 per diluted share in 2010. Year-over-year margins and earnings were impacted by currency fluctuations, wage increases, and costs associated with investments in hiring and infrastructure, among other factors. During 2011, Syntel spent $38.2 million in CAPEX, largely in support of campus infrastructure, paid $10 million in dividends ($0.24 per share), and finished the year with cash and short-term investments of $320.4 million. The Company added 26 new clients during the year and ended 2011 with 19,484 employees globally.Operational Highlights "I am very pleased with our business performance in 2011 as Syntel successfully delivered on our operational and financial goals during the year," said Syntel CEO and President Prashant Ranade. "Year-over-year revenue growth of nearly 21% in 2011 was strong and broad-based; thus, we are confident that we have the right leadership team, market position, offerings, and go-to-market approach to continue to grow in 2012, despite prevailing economic uncertainties." "Our long-term focus drives our ongoing investments in people, services and infrastructure," said Ranade. "We expect to derive considerable value over time from these investments to support the vision we have articulated for our company. Macroeconomic headwinds remain, but we see opportunities for growth ahead as we look to expand relationships within our Global 2000 customer base, as well as cultivate new relationships with clients exploring multi-sourcing and looking for additional opportunities to reduce costs." "The combination of our size, capabilities and culture will serve us well as we help our clients meet their internal operational goals in the current environment."2012 Guidance Based on current visibility levels and an exchange rate assumption of 49.25 Indian rupees to the dollar, the Company currently expects 2012 revenue of $720 to $750 million and EPS in the range of $3.10 to $3.35.Syntel to Host Conference Call Syntel will discuss its fourth quarter and full year 2011 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 February 23, 2012 by dialing (855) 859-2056 and entering "49904379". 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 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 ISO 27001 and ISO 9001:2000 certified. As of December 31, 2011, Syntel employed more than 19,000 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, 2010, the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, or from other factors not currently anticipated.  SYNTEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(IN THOUSANDS, EXCEPT SHARE DATA)                       THREE MONTHS ENDED TWELVE MONTHS ENDED   DECEMBER 31, DECEMBER 31,   2011 2010 2011 2010           Net revenues  $ 172,420  $ 144,900  $ 642,404  $ 532,133 Cost of revenues 99,802 89,278 395,455 320,042 Gross profit 72,618 55,622 246,949 212,091 Selling, general and administrative expenses 19,638 25,270 108,721 91,556           Income from operations 52,980 30,352 138,228 120,535           Other income, principally interest 2,534 4,008 16,208 13,126           Income before income taxes  55,514  34,360  154,436  133,661           Income tax expense 11,554 4,597 31,580 20,068           Net income  $ 43,960  $ 29,763  $ 122,856  $ 113,593                     Dividend per share  $ 0.06  $ 0.56  $ 0.24  $ 0.74          EARNINGS PER SHARE:         Basic  $ 1.06  $ 0.72  $ 2.95  $ 2.74 Diluted  $ 1.05  $ 0.71  $ 2.94  $ 2.73          Weighted average common shares outstanding:                  Basic 41,651 41,570 41,619 41,524           Diluted 41,736 41,679 41,717 41,611    SYNTEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS)        December 31,December 31,  2011  2010             ASSETS           Current assets:     Cash and cash equivalents  $ 104,628  $ 78,505 Short term investments 215,798 208,695 Accounts receivable, net of allowance for doubtful accounts of $2,407 and $3,090 at December 31, 2011 and 2010, respectively  88,573 75,873 Revenue earned in excess of billings 5,131 5,329 Deferred income taxes and other current assets 46,353 43,705        Total current assets  460,483  412,107       Property and equipment 179,576 171,445 Less accumulated depreciation and amortization 73,574 69,338        Property and equipment, net  106,002  102,107       Goodwill 906 906       Non current Term Deposits with Banks 130 66       Deferred income taxes and other non current assets 29,727 30,931          $ 597,248  $ 546,117      LIABILITIES           Current liabilities:     Accrued payroll and related costs  $ 45,949  $ 40,736 Income taxes payable 3,080 2,291 Accounts payable and other current liabilities 35,341 29,384 Deferred revenue 9,692 9,783        Total current liabilities  94,062  82,194       Other non current liabilities 9,997 12,453        Total liabilities  104,059  94,647      SHAREHOLDERS' EQUITY                 Total shareholders' equity  493,189  451,470       Total liabilities and shareholders' equity  $ 597,248  $ 546,117CONTACT: North America/Europe: Jon Luebke, Syntel 248/619-3503, jon_luebke@syntelinc.com AsiaPac: Suruchi Sharma, Syntel +91 9833691415, suruchi_sharma@syntelinc.com