Highlights:
- 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 SUBSIDIARIES | ||||
| CONDENSED 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 SUBSIDIARIES | ||
| CONDENSED 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 |