The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from GlobeNewswire (a Nasdaq OMX company)

Syntel Reports Second Quarter 2012 Financial Results

Thursday, July 19, 2012

Syntel Reports Second Quarter 2012 Financial Results05:30 EDT Thursday, July 19, 2012Highlights: Q2 revenue of $179.0M, up 14% from year-ago quarter, and 5% sequentially Q2 EPS of $1.04 per diluted share, up 57% from year-ago quarter, and 6% sequentially Q2 cash & short term investments of $354.9M Global Headcount of 20,060 on June 30, 2012, up 11% versus prior year TROY, Mich., July 19, 2012 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) company today announced financial results for the second quarter, ended June 30, 2012.Second Quarter Financial Highlights Syntel's revenue for the second quarter increased 14 percent to $179 million, compared to $157 million in the prior-year period, and increased five percent sequentially from $170.7 million in the first quarter of 2012. During the second 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 41.3 percent in the second quarter, compared to 36.2 percent in the prior-year period and 41.8 percent in the first quarter of 2012. Selling, General and Administrative (SG&A) expenses were 10.6 percent of revenue in the second quarter, compared to 17.7 percent in the prior-year period and 15.8 percent in the previous quarter. The second quarter income from operations was 30.7 percent of revenue as compared to 18.5 percent in the prior-year period and 26.1 percent in the first quarter. The sequential rise in operating margin primarily reflects the impact of currency-related balance sheet translations and the depreciation in the Indian rupee during the second quarter, which more than offset costs related to offshore wage increases and visas. Net income for the second quarter was $43.4 million or $1.04 per diluted share, compared to $27.6 million or $0.66 per diluted share in the prior-year period and net income of $40.7 million or $0.98 per diluted share in the first quarter of 2012. During Q2, Syntel spent $6.7 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $354.9 million. The Company also added 401 net employees, ending the quarter with 20,060 employees globally.Operational Highlights "We continue to execute along our objectives in the second quarter with an ongoing focus on delivering solutions to meet our clients' business needs," said Syntel CEO and President Prashant Ranade. "We saw growth across the key verticals we serve and continue to feel well-positioned as the year progresses. With an eye on prevailing uncertainty in global economic trends, we still see opportunities to grow our business and strengthen our market standing." "Our planned investments in our intellectual property, our business, and our people remain on track, and we view these as necessary to capture the current market opportunity," said Ranade. "These investments will deliver value over time and help support our future growth." "Newer technologies such as Cloud, mobility and analytics continue to garner high levels of customer interest and are critical to our long-term success and growth. The investments we make and the innovations we develop in these areas will allow us to harness our strengths to create new opportunities for our clients."2012 Guidance Based on current visibility levels and an exchange rate assumption of 55 Indian Rupees to the dollar, the Company currently expects 2012 revenue of $730 to $740 million and EPS in the range of $3.90 to $4.00.Syntel to Host Conference Call Syntel will discuss its second quarter 2012 results today on a conference call at 10:00 a.m. (EDT). To listen to the call, please dial (877) 837-3915 in the U.S./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 26, 2012 by dialing (855) 859-2056 and entering "10983201". 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 assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2008 certified. As of June 30, 2012, Syntel employed more than 20,000 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, 2011, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 or from other factors not currently anticipated.SYNTEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(UNAUDITED)(IN THOUSANDS, EXCEPT SHARE DATA)                       THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,   2012 2011 2012 2011           Net revenues  $ 178,979  $ 156,985  $ 349,723  $ 302,357 Cost of revenues 105,121 100,200 204,413 194,760 Gross profit 73,858 56,785 145,310 107,597 Selling, general and administrative expenses 18,931 27,781 45,877 52,404           Income from operations 54,927 29,004 99,433 55,193           Other income, principally interest 2,455 5,923 10,744 12,042           Income before income taxes  57,382  34,927  110,177  67,235           Income tax expense 13,993 7,287 26,043 14,546           Net income  $ 43,389  $ 27,640  $ 84,134  $ 52,689           Other Comprehensive Income, Net of tax                   Foreign currency translation adjustments  (47,745)  (567)  (31,733)  2,469           Unrealized gains on securities:         Unrealized holding gains arising during period  322  50  358  136 Less: reclassification adjustment for gains included in net income  (204)  (480)  (144)  (526)    118  (430)  214  (390)           Defined benefit pension plans:         Net Profit/(loss) arising during period  (2)  --   (6)  --  Less: amortization of prior service cost included in net periodic pension cost  8  10  17  19    6  10  11  19           Other comprehensive income, before tax  (47,621)  (987)  (31,508)  2,098 Income tax expenses related to Other Comprehensive Income  (36)  74  (68)  70 Other comprehensive income, net of tax  (47,657)  (913)  (31,576)  2,168           Comprehensive Income  (4,268)  26,727  52,558  54,857           Dividend per share  $ 0.06  $ 0.06  $ 0.12  $ 0.12          EARNINGS PER SHARE:         Basic $ 1.04  $ 0.66  $ 2.02  $ 1.27 Diluted  $ 1.04  $ 0.66  $ 2.01  $ 1.26          Weighted average common shares outstanding:                   Basic 41,677 41,605 41,665 41,592           Diluted 41,774 41,696 41,769 41,704    SYNTEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS)         June 30, 2012  December 31, 2011             ASSETS           Current assets:     Cash and cash equivalents  $ 74,815  $ 104,628 Short term investments 280,096 215,798 Accounts receivable, net of allowance for doubtful accounts of $2,000 and $2,407 at June 30 , 2012 and December 31, 2011, respectively  92,479 88,573 Revenue earned in excess of billings 14,328 5,131 Deferred income taxes and other current assets 44,625 46,353       Total current assets  506,343  460,483       Property and equipment 180,663 179,576 Less accumulated depreciation and amortization 76,342 73,574       Property and equipment, net  104,321  106,002       Goodwill 906 906       Non current Term Deposits with Banks 13 130       Deferred income taxes and other non current assets 31,181 29,727       $ 642,764  $ 597,248      LIABILITIES           Current liabilities:     Accrued payroll and related costs  $ 38,155  $ 45,949 Income taxes payable 11,961 3,080 Accounts payable and other current liabilities 34,952 35,341 Deferred revenue 4,539 9,692       Total current liabilities  89,607  94,062       Other non current liabilities 10,624 9,997       Total liabilities  100,231  104,059      SHAREHOLDERS' EQUITY                 Total shareholders' equity  542,533  493,189       Total liabilities and shareholders' equity $ 642,764  $ 597,248 CONTACT: North America/Europe: Jon Luebke, Syntel 248/619-3503, jon_luebke@syntelinc.com AsiaPac: Suruchi Sharma, Syntel +91 9833691415, suruchi_sharma@syntelinc.com