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Press release from GlobeNewswire (a Nasdaq OMX company)

Syntel Reports First Quarter 2013 Financial Results

Thursday, April 18, 2013

Syntel Reports First Quarter 2013 Financial Results

05:30 EDT Thursday, April 18, 2013

Highlights:

  • Q1 revenue of $189.1M, up 11% from year-ago quarter and 1% sequentially
  • Q1 EPS of $1.11 per diluted share, up 14% from year-ago quarter
  • Q1 cash & short term investments of $438M
  • Global Headcount of 22,179 on March 31, 2013, up 13% versus prior year

TROY, Mich., April 18, 2013 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the first quarter, ended March 31, 2013.

First Quarter Financial Highlights

Syntel's revenue for the first quarter increased 11 percent to $189.1 million from $170.7 million in the prior-year period, and increased one percent sequentially from $187.8 million in the fourth quarter of 2012. During the first quarter, Applications Outsourcing accounted for 76 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 16 percent, e-Business contributing six percent and TeamSourcing at two percent.

The Company's gross margin was 41.1 percent in the first quarter, compared to 41.8 percent in the prior-year period and 45.2 percent in the fourth quarter of 2012. Selling, General and Administrative (SG&A) expenses were 13.7 percent of revenue in the first quarter, compared to 15.8 percent in the prior-year period and 15 percent in the fourth quarter of 2012.

The first quarter income from operations was 27.4 percent of revenue as compared to 26.1 percent in the prior-year period and 30.2 percent in the fourth quarter of 2012. The sequential reduction in operating margin reflects advanced hiring, compensation increases, the impact of currency-related balance sheet translations, and the appreciation in the Indian rupee, among other factors.

Net income for the first quarter was $46.4 million or $1.11 per diluted share, compared to $40.7 million or $0.98 per diluted share in the prior-year period and net income of $49.9 million or $1.19 per diluted share in the fourth quarter of 2012.

During Q1, Syntel spent $5.2 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $438 million. The Company also added 772 net employees, ending the quarter with 22,179 employees globally.

Operational Highlights

"I am pleased with our revenue performance in this seasonally weak quarter," said Syntel CEO and President Prashant Ranade. "We are investing in our capabilities and growing our ranks with the aim of enhancing our market position while we pursue our long-term strategic initiatives."

"Customers are demanding solutions that reflect an informed understanding of their industry," said Ranade. "Our business is evolving with our customers' needs and the clear emphasis on capabilities vs. size plays to our particular strength."

"During the first quarter, pipelines continued to build and we still think the overall environment is improved from what we saw a year ago. We are hiring in support of the opportunities we see and were pleased with the level of profitability we delivered this quarter despite the higher headcount. We remain focused on leveraging our strength in providing innovative solutions and a level of service that exceeds our customers' expectations."

2013 Guidance

Based on current visibility levels and an exchange rate assumption of 54 Indian Rupees to the dollar, the Company currently expects 2013 revenue of $785 to $815 million and EPS in the range of $4.25 to $4.50.

Syntel to Host Conference Call

Syntel will discuss its first quarter 2013 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 April 25, 2013 by dialing (855) 859-2056 and entering "34742912". 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 March 31, 2013, Syntel employed more than 22,000 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, 2012 or from other factors not currently anticipated.

     
SYNTEL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
     
  THREE MONTHS ENDED
MARCH 31,
  2013 2012
     
Net revenues  $ 189,106  $ 170,744
Cost of revenues 111,329 99,292
Gross profit 77,777 71,452
Selling, general and administrative expenses 25,904 26,946
     
Income from operations 51,873 44,506
     
Other income, principally interest, net 9,015 8,289
     
Income before provision for income taxes  60,888  52,795
     
Income tax expense 14,464 12,050
     
Net income  $ 46,424  $ 40,745
     
Other Comprehensive Income (Loss)    
     
Foreign currency translation adjustments  $ 1,865  $ 14,831
     
Gains (losses) on derivatives:    
Gains (losses) arising during period on net investment hedges  90  1,181
     
Unrealized gains (losses) on securities:    
Unrealized holding gains arising during period  211  272
Reclassification adjustment for gains included in net income  (823)  (177)
   (612)  95
Defined benefit pension plans:    
Net Profit (loss) arising during period  6  (4)
Amortization of prior service cost included in net periodic pension cost  8  9
   14  5
     
Other comprehensive income (loss), before tax  1,357  16,112
Income tax expenses related to Other Comprehensive Income (loss)  197  (31)
Other comprehensive income (loss), net of tax  1,554  16,081
     
Comprehensive Income  $ 47,978  $ 56,826
     
Dividend per share  $ --   $ 0.06
     
EARNINGS PER SHARE:    
Basic  $ 1.11  $ 0.98
Diluted  $ 1.11  $ 0.98
     
Weighted average common shares outstanding:    
     
Basic 41,742 41,653
     
Diluted 41,839 41,765
 
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
     
  March 31, December 31, 
   2013   2012 
     
     
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 131,196  $ 94,622
Short term investments 306,823 326,653
Accounts receivable, net of allowance for doubtful accounts of $2,161 and $2,168 at March 31, 2013 and December 31, 2012, respectively  84,450 86,004
Revenue earned in excess of billings 25,576 11,875
Deferred income taxes and other current assets 60,840 51,736
     
Total current assets  608,885  570,890
     
Property and equipment 209,477 204,151
Less accumulated depreciation and amortization 87,972 85,033
     
Property and equipment, net  121,505  119,118
     
Goodwill 906 906
     
Non current Term Deposits with Banks 14 14
     
Deferred income taxes and other non current assets 35,163 34,908
     
TOTAL ASSETS  $ 766,473  $ 725,836
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
LIABILITIES    
Current liabilities:    
Accrued payroll and related costs  $ 41,520  $ 49,889
Income taxes payable 11,785 8,873
Accounts payable and other current liabilities 33,393 34,950
Loans and borrowings  50,021 50,029
Deferred revenue 2,708 4,694
     
Total current liabilities  139,427  148,435
     
Other non current liabilities 12,387 11,731
     
Total liabilities  151,814  160,166
     
SHAREHOLDERS' EQUITY    
     
Total shareholders' equity  614,659  565,670
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 766,473  $ 725,836
CONTACT: North America/Europe: Jon Luebke, Syntel,
248/619-3503, jon_luebke@syntelinc.com
Asia/Pacific: Sikta Samantaray,
+91 9167512186, sikta_samantaray@syntelinc.com

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