Highlights:
- Q2 revenue of $157.0M, up 20% from year-ago quarter and 8% sequentially
- Q2 EPS of $0.66 per diluted share
- Q2 cash & short term investments of $294.6M
- Global Headcount of 18,027 on June 30, 2011, up 21% versus prior year
TROY, Mich., July 21, 2011 (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, 2011.
Second Quarter Financial Highlights
Syntel's revenue for the second quarter increased 20 percent to $157.0 million, compared to $130.6 million in the prior-year period, and increased eight percent sequentially from $145.4 million in the first quarter of 2011. During the second quarter, Applications Outsourcing accounted for 74 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 16 percent, e-Business contributing eight percent and TeamSourcing at two percent.
The Company's gross margin was 36.2 percent in the second quarter, compared to 39.5 percent in the prior-year period and 35.0 percent in the first quarter of 2011. Selling, General and Administrative (SG&A) expenses were 17.7 percent in the second quarter, compared to 14.6 percent in the prior-year period and 16.9 percent in the previous quarter. Second quarter income from operations was 18.5 percent as compared to 24.8 percent in the prior-year period and 18.0 percent in the first quarter. Operating margins improved sequentially during the second quarter, despite the adverse impact of offshore wage increases, visa fees and costs associated with infrastructure expansion.
Net income for the second quarter was $27.6 million or $0.66 per diluted share, compared to $28.3 million or $0.68 per diluted share in the prior-year period and net income of $25.0 million or $0.60 per diluted share in the first quarter of 2011.
During Q2, Syntel spent $10.3 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $294.6 million. The Company also added 417 net employees, ending the quarter with 18,027 employees globally.
Operational Highlights
"Our second quarter revenue acceleration allowed Syntel to absorb seasonal cost increases and still generate margin improvement," said Syntel CEO and President Prashant Ranade. "Growth was broad-based across services, verticals and geographies and we remain confident in our ability to deepen relationships with our strategic clients. While global economic uncertainty is a concern, we are pleased that at this point in time client spending patterns have not been impacted."
"Syntel is investing in the long-term health of our business, and we expect to continue our hiring and infrastructure build-out plans in the second half of 2011," said Ranade. "These investments are critical to driving long-term sustainable business value for all Syntel stakeholders, including our clients, shareholders and employees."
2011 Guidance
Based on current visibility levels and an exchange rate assumption of 44.5 rupees to the dollar, the Company currently expects 2011 revenue of $625 to $640 million and EPS in the range of $2.75 to $2.90.
Syntel to Host Conference Call
Syntel will discuss its second quarter 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 July 28, 2011 by dialing (800) 642-1687 and entering "81510636". International callers may dial (706) 645-9291 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 9001:2000 certified. As of June 30, 2011, Syntel employed more than 18,000 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 March 31, 2011, or from other factors not currently anticipated.
| SYNTEL, INC. AND SUBSIDIARIES | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
| (IN THOUSANDS, EXCEPT SHARE DATA) | ||||
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||
| JUNE 30, | JUNE 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Net revenues | $ 156,985 | $ 130,649 | $ 302,357 | $ 246,688 |
| Cost of revenues | 100,200 | 79,083 | 194,760 | 145,883 |
| Gross profit | 56,785 | 51,566 | 107,597 | 100,805 |
| Selling, general and administrative expenses | 27,781 | 19,114 | 52,404 | 41,362 |
| Income from operations | 29,004 | 32,452 | 55,193 | 59,443 |
| Other income, principally interest | 5,923 | 1,959 | 12,042 | 4,242 |
| Income before provision for income taxes | 34,927 | 34,411 | 67,235 | 63,685 |
| Income tax expense | 7,287 | 6,151 | 14,546 | 10,294 |
| Net income | $ 27,640 | $ 28,260 | $ 52,689 | $ 53,391 |
| Dividend per share | $ 0.06 | $ 0.06 | $ 0.12 | $ 0.12 |
| EARNINGS PER SHARE: | ||||
| Basic | $ 0.66 | $ 0.68 | $ 1.27 | $ 1.29 |
| Diluted | $ 0.66 | $ 0.68 | $ 1.26 | $ 1.28 |
| Weighted average common shares outstanding: | ||||
| Basic | 41,605 | 41,508 | 41,592 | 41,495 |
| Diluted | 41,696 | 41,580 | 41,704 | 41,573 |
| SYNTEL, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (IN THOUSANDS) | ||
| June, 30 | December, 31 | |
| 2011 | 2010 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 87,656 | $ 78,505 |
| Short term investments | 206,941 | 208,695 |
| Accounts receivable, net of allowance for doubtful accounts of $2,687 and $3,090 at June 30, 2011 and December 31, 2010, respectively | 76,859 | 75,873 |
| Revenue earned in excess of billings | 20,391 | 5,329 |
| Deferred income taxes and other current assets | 52,985 | 43,705 |
| Total current assets | 444,832 | 412,107 |
| Property and equipment | 204,991 | 171,445 |
| Less accumulated depreciation and amortization | 77,712 | 69,338 |
| Property and equipment, net | 127,279 | 102,107 |
| Goodwill | 906 | 906 |
| Non current Term Deposits with Banks | 30 | 66 |
| Deferred income taxes and other non current assets | 31,609 | 30,931 |
| $ 604,656 | $ 546,117 | |
| LIABILITIES | ||
| Current liabilities: | ||
| Accrued payroll and related costs | $ 35,656 | $ 40,736 |
| Income taxes payable | 5,667 | 2,291 |
| Accounts payable and other current liabilities | 37,322 | 29,384 |
| Deferred revenue | 8,996 | 9,783 |
| Total current liabilities | 87,641 | 82,194 |
| Other non current liabilities | 14,460 | 12,453 |
| Total liabilities | 102,101 | 94,647 |
| SHAREHOLDERS' EQUITY | ||
| Total shareholders' equity | 502,555 | 451,470 |
| Total liabilities and shareholders' equity | $ 604,656 | $ 546,117 |