SYNT Syntel, Inc. (delisted)

Highlights:               

Syntel, Inc. (Nasdaq:SYNT), a global leader in digital modernization, information technology and knowledge process services for Global 2000 companies, today announced financial results for the third quarter, ended September 30, 2016.

Third Quarter Financial Highlights

Syntel's revenue for the third quarter decreased five percent to $241.3 million from $253.6 million in the prior-year period, and two percent from $246 million in the second quarter of 2016.  During the third quarter, Banking and Financial Services accounted for 48.1 percent of total revenue, with Retail, Logistics and Telecom at 17.2 percent, Healthcare and Life Sciences at 16.4 percent, Insurance at 13.7 percent, and Manufacturing at 4.6 percent.

The Company's gross margin was 39.2 percent in the third quarter, compared to 42.4 percent in the prior-year period and 37 percent in the second quarter of 2016.  Selling, General and Administrative (SG&A) expenses were 12.2 percent of revenue in the third quarter, compared to 6 percent in the prior-year period and 7.4 percent in the previous quarter.

The third quarter income from operations was 27 percent of revenue as compared to 36.5 percent in the prior-year period and 29.6 percent in the second quarter. The sequential decline in operating margin during the third quarter primarily reflects the unfavorable impact of currency-related balance sheet translations, which was partially offset by lower immigration expenses.

In connection with a special cash dividend and the one-time repatriation of cash announced on September 12, the Company recognized a one-time tax expense of $271 million (net of foreign tax credits) in the third quarter of 2016. As a result, net loss for the third quarter was $217.2 million or $2.58 per diluted share, compared to net income of $77.7 million or $0.92 per diluted share in the prior-year period and $58.8 million or $0.70 in the second quarter of 2016.

During Q3, Syntel spent $6.2 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $88.4 million. The Company ended the quarter with 23,055 employees globally.

Operational Highlights

"Market conditions were challenging during the third quarter as macroeconomic, business and regulatory uncertainty impacted customer spending in what is typically a seasonally strong period,” said Syntel CEO and President Nitin Rakesh.  "Despite this, we continued to see some signs of stabilization in our insurance segment, including in the personal lines sub-industry."

"Syntel is unwavering in its strategic focus on becoming the global leader in digital modernization. A strong deal pipeline and favorable customer response to our comprehensive offerings in this area give us confidence that our growth trajectory will improve as near-term headwinds abate," said Rakesh.

"During the third quarter our Board declared a special cash dividend of $15 a share, returning considerable value to our shareholders. This decision underscores conviction in our financial and operational strength and in our ability to execute on our strategic focus."

2016 Guidance

Based on current visibility levels and an exchange rate assumption of 67 Indian rupees to the dollar, the Company currently expects 2016 revenue of $960 million to $970 million and loss per share in the range of $0.65 to $0.75.

CFO Appointment

On October 17, 2016, the Board of Directors of Syntel named Anil Agrawal as Chief Financial Officer and Chief Information Security Officer, effective November 1, 2016. Mr. Agrawal, age 39, has been Acting Chief Financial Officer since November 2015 and has been with Syntel since 2001. Mr. Agrawal was previously a General Manager of Finance for Syntel and served as Head of Finance for the Company’s India operations from 2007 through December 2011 and Head of Corporate Financial Planning and Analytics from January 2012 to November 2015.

Syntel to Host Conference Call

Syntel will discuss its third quarter 2016 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 October 27, 2016 by dialing (855) 859-2056 and entering “97795475".  International callers may dial (404) 537-3406 and enter the same passcode.

About SyntelSyntel (Nasdaq:SYNT) is the global leader in digital modernization services, with a core suite of automation-driven IT and knowledge process services. Syntel helps global enterprises thrive in the Two-Speed World™ by building agile, efficient technology infrastructures that blend legacy business models with disruptive digital innovations. Syntel’s recursive automation platform, SyntBots®, enables clients to manage, migrate, and modernize their business and technology ecosystems. Syntel believes in a "Customer for Life" philosophy to build collaborative partnerships and creates long-term business value for its clients by investing in IP, solutions and industry-focused delivery teams with deep domain knowledge.

To learn more, visit us at: www.syntelinc.com

Safe Harbor ProvisionThis news release may include 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, 2015, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 or from other factors not currently anticipated.

SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
		THREE MONTHS ENDED							NINE MONTHS ENDED
		SEPTEMBER 30,							SEPTEMBER 30,
			2016			2015				2016			2015
Net revenues		$	241,255		$	253,636			$	728,663		$	714,032
Cost of revenues			146,672			146,061				453,371			436,550
Gross profit			94,583			107,575				275,292			277,482
Selling, general and administrative expenses			29,526			15,121				77,468			72,231
Income from operations			65,057			92,454				197,824			205,251
Other income, net			4,227			10,227				13,198			29,452
Income before provision for income taxes			69,284			102,681				211,022			234,703
Income tax expense			286,513			24,990				316,403			56,412
Net (Loss)/Income		$	(217,229	)	$	77,691			$	(105,381	)	$	178,291
Other Comprehensive (Loss)/Income
Foreign currency translation adjustments		$	(391	)	$	(34,012	)		$	(17,725	)	$	(39,932	)
Unrealized gains (Loss) on securities:
Unrealized holding gains arising during period			170			1,477				217			4,769
Reclassification adjustment for gains included in net income			(1,931	)		(3,341	)			(244	)		(4,360	)
			(1,761	)		(1,864	)			(27	)		409
Defined benefit pension plans:
Net Profit (Loss) arising during period			-			-				-			-
Amortization of prior service cost included in net periodic pension cost			12			37				47			96
			12			37				47			96
Other comprehensive (loss) before tax			(2,140	)		(35,839	)			(17,705	)		(39,427	)
Income tax benefit (expenses) related to Other Comprehensive (loss)/income			659			461				(54	)		(572	)
Other comprehensive (loss), net of tax			(1,481	)		(35,378	)			(17,759	)		(39,999	)
Comprehensive (Loss)/Income		$	(218,710	)	$	42,313			$	(123,140	)	$	138,292
Dividend Per Share		$	15.00			-			$	15.00			-
(LOSS)/EARNINGS PER SHARE:
Basic		$	(2.58	)	$	0.92			$	(1.25	)	$	2.12
Diluted		$	(2.58	)	$	0.92			$	(1.25	)	$	2.12
Weighted average common shares outstanding:
Basic			84,214			84,005				84,155			83,950
Diluted			84,289			84,131				84,278			84,131

 

SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
		(Unaudited)			(Audited)
		September 30,			December 31,
			2016			2015
ASSETS
Current assets:
Cash and cash equivalents		$	65,244		$	500,499
Short term investments			23,150			540,045
Accounts receivable, net of allowance for doubtful accounts of $663 at September 30, 2016 and $622 at December 31, 2015, respectively			113,077			136,926
Revenue earned in excess of billings			32,711			30,448
Advance to transfer agent for dividend payout			1,261,500			-
Deferred income taxes and other current assets			36,442			44,575
Total current assets			1,532,124			1,252,493
Property and equipment			230,653			217,922
Less accumulated depreciation and amortization			120,732			112,146
Property and equipment, net			109,921			105,776
Goodwill			906			906
Non current Term Deposits with Banks			229			77
Deferred income taxes and other non current assets			61,935			64,018
TOTAL ASSETS		$	1,705,115		$	1,423,270
LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY
LIABILITIES
Current liabilities:
Accrued payroll and related costs		$	55,649		$	60,339
Income taxes payable			60,377			11,305
Accounts payable and other current liabilities			39,065			37,892
Deferred revenue			3,189			7,716
Loans and borrowings			15,131			129,981
Dividends payable			1,261,500			-
Total current liabilities			1,434,911			247,233
Other non current liabilities			26,707			17,592
Non Current loans and borrowings			464,190			-
TOTAL LIABILITIES			1,925,808			264,825
SHAREHOLDERS' (DEFICIT)/EQUITY
Total shareholders' (Deficit)/Equity			(220,693	)		1,158,445
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY		$	1,705,115		$	1,423,270

Contacts:  
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com
Europe and International: Rani Gill, Flame PR, +44 0203 357 9746, Syntel@flamepr.com