Highlights: * Q2 revenue of $100.1M * Q2 EPS of $0.61 per diluted share * Q2 cash & short term investments of $158.6M
TROY, Mich., July 29, 2009 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the second quarter, ended June 30, 2009.
Second Quarter Financial Highlights
Syntel's revenue for the second quarter decreased three percent to $100.1 million, compared to $103.4 million in the prior-year period, but increased four percent sequentially from $96.4 million in the first quarter of 2009. Revenue improvement was the result of increased traction in cost-reduction services and appreciation in the Indian rupee. During the second quarter, Applications Outsourcing accounted for 72 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 19 percent, e-Business contributing seven percent and Team Sourcing at two percent.
The Company's gross margin improved to 48.2 percent in the second quarter, compared to 41.1 percent in the prior-year period and 46.5 percent in the first quarter of 2009. Selling, General and Administrative (SG&A) expenses were 20.8 percent in the second quarter, compared to 19.1 percent in the prior-year period and 19.4 percent in the previous quarter. Syntel's income from operations was 27.4 percent in the second quarter as compared to 22.1 percent in the prior-year period and 27.1 percent in the first quarter of 2009.
Operating margins during the quarter were favorably impacted by improved employee productivity and proactive cost management. These benefits were offset by a four percent appreciation in the Indian Rupee which increased both direct costs and SG&A expenses. The negative impact of currency appreciation on operating margin was partially offset by gains in currency hedging, which increased second quarter "other income."
Net income for the second quarter was $25.1 million or $0.61 per diluted share, compared to $17.4 million or $0.42 per diluted share in the prior-year period and net income of $27.3 million or $0.66 per diluted share in the first quarter of 2009.
Operational Highlights
"Syntel was encouraged by improved stabilization in the marketplace and the increasingly positive discussions initiated with our clients during the quarter," said Chief Executive Officer and President Keshav Murugesh. "While discretionary projects remain sidelined, customers are beginning to once again look at cost reduction initiatives which are aligned with their longer-term strategic objectives."
"The timing of new project starts and changes in the marketplace are uncertain going forward. However, based on today's economic environment and our current visibility levels, we believe that the second quarter revenue run-rate represents a minimum level for the balance of 2009. Syntel will continue to focus on driving key investment initiatives and proactive cost management in the second half of the year with the objective of properly positioning the company for long-term sustainable growth."
2009 Guidance
Based on current visibility levels and an exchange rate assumption of 48.7 rupees to the dollar, the Company is updating 2009 guidance to reflect revenue of $395 to $415 million, and EPS in the range of $2.40 to $2.50.
Syntel to Host Conference Call
Syntel will discuss its second quarter results today on a conference call at 10:00 a.m. (Eastern). To listen to the call, please dial (877) 340-7912. The call will also be broadcast live via the Internet at Syntel's web site: www.syntelinc.com under the "Investor Relations" section. 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 August 5, 2009 by dialing (888) 203-1112 and entering "3402536". International callers may dial (719) 457-0821 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. Recently named one of the "50 Best Managed Global Outsourcing Vendors" by The Black Book of Outsourcing, Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. As of June 30, 2009, Syntel employed more than 11,300 people worldwide. To learn more, visit us at: www.syntelinc.com.
Safe Harbor Provision
This news release includes forward-looking statements, including 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 Form 10-K document dated March 12, 2009 and the Company's Quarterly Report on Form 10-Q for the period ending March 31, 2009.
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net revenues $100,102 $103,418 $196,536 $201,932
Cost of revenues 51,846 60,900 103,408 119,728
-------- -------- -------- --------
Gross profit 48,256 42,518 93,128 82,204
Selling, general and
administrative expenses 20,845 19,703 39,569 40,231
-------- -------- -------- --------
Income from operations 27,411 22,815 53,559 41,973
Other income (expense),
principally interest, net 2,325 (920) 3,310 89
-------- -------- -------- --------
Income before income taxes 29,736 21,895 56,869 42,062
Income tax expense 4,624 4,479 4,408 4,212
-------- -------- -------- --------
Net income $ 25,112 $ 17,416 $ 52,461 $ 37,850
======== ======== ======== ========
Dividend per share $ 0.06 $ 0.06 $ 0.12 $ 0.12
EARNINGS PER SHARE:
Basic $ 0.61 $ 0.42 $ 1.27 $ 0.92
Diluted $ 0.61 $ 0.42 $ 1.27 $ 0.92
Weighted average common
shares outstanding:
Basic 41,379 41,173 41,367 41,154
======== ======== ======== ========
Diluted 41,479 41,332 41,457 41,308
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SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
June 30, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 61,591 $ 65,031
Short term investments 97,055 67,293
Accounts receivable, net of allowance for
doubtful accounts of $2,317 and $440 at 49,827 48,558
June 30, 2009 and December 31, 2008,
respectively
Revenue earned in excess of billings 11,409 6,506
Deferred income taxes and other current
assets 22,813 19,373
---------------------
Total current assets 242,695 206,761
Property and equipment 122,133 114,163
Less accumulated depreciation and
amortization 47,966 40,385
---------------------
Property and equipment, net 74,167 73,778
Goodwill 906 906
Deferred income taxes and other non current
assets 16,503 13,400
---------------------
$ 334,271 $ 294,845
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LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 22,122 $ 23,942
Income taxes payable 341 8,630
Accounts payable and other current
liabilities 21,809 25,420
Deferred revenue 3,869 5,116
---------------------
Total current liabilities 48,141 63,108
Other non current liabilities 5,593 4,907
---------------------
Total liabilities 53,734 68,015
SHAREHOLDERS' EQUITY
Total shareholders' equity 280,537 226,830
---------------------
Total liabilities and shareholders' equity $ 334,271 $ 294,845
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