Syntel Reports Fourth Quarter and Full Year 2017 Financial Results
February 15 2018 - 8:30AM
Highlights:
Syntel, Inc. (Nasdaq:SYNT), a leading global provider of integrated
information technology and knowledge process services, today
announced financial results for the fourth quarter and full year,
ended December 31, 2017.
Fourth Quarter Financial
HighlightsSyntel's revenue for the fourth quarter
increased 0.8 percent to $239.8 million from $237.9 million in the
prior-year period, and 3.7 percent from $231.3 million in the third
quarter of 2017. During the fourth quarter, Banking and
Financial Services accounted for 44.4 percent of total revenue,
with Healthcare and Life Sciences at 18.2 percent, Retail,
Logistics and Telecom at 17.3 percent, Insurance at 15.6 percent,
and Manufacturing at 4.5 percent.
The Company's gross margin was 41.3 percent in
the fourth quarter, compared to 40.2 percent in the prior-year
period and 38.1 percent in the third quarter of 2017.
Selling, General and Administrative (SG&A) expenses were 12.2
percent of revenue in the fourth quarter, compared to 13.1 percent
in the prior-year period and 11.7 percent in the previous
quarter.
The fourth quarter income from operations was
29.1 percent of revenue as compared to 27.1 percent in the
prior-year period and 26.4 percent in the third quarter of
2017.
Net income for the fourth quarter was $42.4
million or $0.51 per diluted share, compared to $48 million or
$0.57 per diluted share in the prior-year period and $48.8 million
or $0.58 per diluted share in the third quarter of 2017. During the
fourth quarter, following the enactment of the Tax Cuts and Jobs
Act, Syntel had a one-time impact of approximately $9 million in
tax provisions, of which approximately $8 million was related to a
repatriation of cash and $1 million was due to an adjustment of
deferred tax assets. The combined impact of these provisions
reduced fourth quarter EPS by $0.11 per share.
The Company spent $0.1 million to repurchase
5,000 shares of common stock during the fourth quarter.
Full Year 2017 Financial
HighlightsRevenue for 2017 decreased 4.4 percent to $923.8
million, from $966.6 million in 2016. The Company's 2017 operating
margin was 25.5 percent, compared to 27.1 percent in 2016. Net
income for the year was $166.3 million or $1.99 per share. This
compares to a net loss of $57.4 million or $0.68 per diluted share
in 2016.
During 2017, Syntel spent $8.6 million in CAPEX,
largely in support of its global facilities and infrastructure, and
finished the year with cash and short-term investments of $122.5
million. The Company spent $16.2 million to repurchase 880,435
shares of common stock. Syntel added 16 new clients during the year
and ended 2017 with 22,114 employees globally.
Operational Highlights"I am
pleased with our Q4 results and the solid progress we made in
strengthening our position at our top 50 customer accounts during
2017," said Syntel CEO and President Rakesh Khanna. "Our teams have
worked diligently to fortify our client relationships, and to
identify and close new opportunities."
“In 2018, we will continue to invest in client
engagement and in developing innovative digital and
automation-powered services to help our customers transform their
businesses and adapt to a dynamic competitive environment,” said
Khanna. “We still have some work to do, but I am confident that our
customer–centric approach will help Syntel make steady progress as
we diversify and grow with our customers.”
2018 Guidance Based on current
visibility levels and an exchange rate assumption of 64 Indian
rupees to the dollar, the Company currently expects 2018 revenue of
$905 million to $950 million and EPS in the range of $1.72 to
$1.92.
Syntel to Host Conference
CallSyntel will discuss its fourth quarter 2017 results
today on a conference call at 10:00 a.m. (EST). 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 February 22, 2018 by dialing (855) 859-2056 and entering
“4299607." International callers may dial (404) 537-3406 and enter
the same passcode.
About SyntelSyntel
(Nasdaq:SYNT) is a leading global provider of integrated
information technology and knowledge process services. Syntel helps
global enterprises evolve the core by leveraging automation, scaled
agile and cloud platforms to build efficient application
development and management, testing and infrastructure solutions.
Syntel’s digital services enable companies to engage customers,
discover new insights through analytics, and create a more
connected enterprise through the internet of things. Syntel’s
"Customer for Life" philosophy builds collaborative partnerships
and creates long-term client value 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, 2016, the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2017 or from other factors
not currently anticipated.
|
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SYNTEL, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME |
(IN THOUSANDS, EXCEPT PER SHARE
DATA) |
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
DECEMBER 31, |
|
DECEMBER 31, |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
Net
revenues |
$ |
239,808 |
|
$ |
237,887 |
|
|
$ |
923,828 |
|
$ |
966,550 |
|
Cost of
revenues |
|
140,772 |
|
|
142,354 |
|
|
|
572,789 |
|
|
595,725 |
|
Gross profit |
|
99,036 |
|
|
95,533 |
|
|
|
351,039 |
|
|
370,825 |
|
Selling,
general and administrative expenses |
|
29,173 |
|
|
31,060 |
|
|
|
115,323 |
|
|
108,528 |
|
|
|
|
|
|
|
Income from operations |
|
69,863 |
|
|
64,473 |
|
|
|
235,716 |
|
|
262,297 |
|
|
|
|
|
|
|
Other income (expense), net: |
|
|
|
|
|
Interest
Expense |
|
(2,994 |
) |
|
(2,724 |
) |
|
|
(12,627 |
) |
|
(4,708 |
) |
Other
income |
|
918 |
|
|
614 |
|
|
|
2,396 |
|
|
15,796 |
|
Other
income (expense), net |
|
(2,076 |
) |
|
(2,110 |
) |
|
|
(10,231 |
) |
|
11,088 |
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
67,787 |
|
|
62,363 |
|
|
|
225,485 |
|
|
273,385 |
|
|
|
|
|
|
|
Income tax
expense |
|
25,384 |
|
|
14,372 |
|
|
|
59,217 |
|
|
330,775 |
|
|
|
|
|
|
|
Net
income (Loss) |
$ |
42,403 |
|
$ |
47,991 |
|
|
$ |
166,268 |
|
$ |
(57,390 |
) |
|
|
|
|
|
|
Other Comprehensive
Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustments |
$ |
3,957 |
|
$ |
(1,293 |
) |
|
$ |
9,814 |
|
$ |
(19,018 |
) |
Gains on derivatives: |
|
|
|
|
|
Gains
arising during period on cash flow hedges |
|
2,141 |
|
|
533 |
|
|
|
2,774 |
|
|
533 |
|
|
|
|
|
|
|
Unrealized gains (Loss) on securities: |
|
|
|
|
|
Unrealized holding gains arising during period |
|
209 |
|
|
179 |
|
|
|
387 |
|
|
242 |
|
Reclassification adjustment for gains included in net income |
|
(321 |
) |
|
(158 |
) |
|
|
(115 |
) |
|
(248 |
) |
|
|
(112 |
) |
|
21 |
|
|
|
272 |
|
|
(6 |
) |
|
|
|
|
|
|
Defined benefit pension plans: |
|
|
|
|
|
Net
Profit (Loss) arising during period |
|
1,678 |
|
|
(802 |
) |
|
|
1,684 |
|
|
(802 |
) |
Amortization of prior service cost included in net periodic pension
cost |
|
16 |
|
|
(82 |
) |
|
|
76 |
|
|
(35 |
) |
|
|
1,694 |
|
|
(884 |
) |
|
|
1,760 |
|
|
(837 |
) |
|
|
|
|
|
|
Other
comprehensive Income (Loss), before tax |
|
7,680 |
|
|
(1,623 |
) |
|
|
14,620 |
|
|
(19,328 |
) |
Income
tax (expense) benefits related to Other Comprehensive Loss |
|
(960 |
) |
|
86 |
|
|
|
(1,356 |
) |
|
32 |
|
Other comprehensive Income (Loss), net of tax |
|
6,720 |
|
|
(1,537 |
) |
|
|
13,264 |
|
|
(19,296 |
) |
|
|
|
|
|
|
Comprehensive Income (Loss) |
$ |
49,123 |
|
$ |
46,454 |
|
|
$ |
179,532 |
|
$ |
(76,686 |
) |
|
|
|
|
|
|
Dividend Per Share |
$ |
- |
|
$ |
- |
|
|
$ |
- |
|
$ |
15.00 |
|
|
|
|
|
|
|
EARNINGS/(LOSS) PER SHARE: |
|
|
|
|
|
Basic |
$ |
0.51 |
|
$ |
0.57 |
|
|
$ |
1.99 |
|
$ |
(0.68 |
) |
Diluted |
$ |
0.51 |
|
$ |
0.57 |
|
|
$ |
1.99 |
|
$ |
(0.68 |
) |
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
83,073 |
|
|
84,117 |
|
|
|
83,537 |
|
|
84,146 |
|
|
|
|
|
|
|
Diluted |
|
83,248 |
|
|
84,163 |
|
|
|
83,618 |
|
|
84,146 |
|
|
|
|
|
|
|
|
|
|
|
SYNTEL, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(IN THOUSANDS) |
|
|
|
|
|
December 31, |
|
December 31, |
|
2017 |
|
2016 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and
cash equivalents |
$ |
95,994 |
|
|
$ |
78,332 |
|
Short
term investments |
|
26,501 |
|
|
|
21,614 |
|
Accounts
receivable, net of allowance for doubtful accounts of $ Nil at
December 31, 2017 and $801 at December 31, 2016, respectively |
|
115,052 |
|
|
|
118,299 |
|
Revenue
earned in excess of billings |
|
24,995 |
|
|
|
25,039 |
|
Other
current assets |
|
29,484 |
|
|
|
36,306 |
|
|
|
|
|
Total
current assets |
|
292,026 |
|
|
|
279,590 |
|
|
|
|
|
Property
and equipment |
|
240,948 |
|
|
|
227,056 |
|
Less accumulated depreciation and amortization |
|
134,650 |
|
|
|
120,580 |
|
|
|
|
|
Property
and equipment, net |
|
106,298 |
|
|
|
106,476 |
|
|
|
|
|
Goodwill |
|
906 |
|
|
|
906 |
|
|
|
|
|
Non current
Term Deposits with Banks |
|
396 |
|
|
|
225 |
|
|
|
|
|
|
|
|
|
Deferred
income taxes and other non current assets |
|
84,090 |
|
|
|
67,346 |
|
|
|
|
|
TOTAL
ASSETS |
$ |
483,716 |
|
|
$ |
454,543 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
(DEFICIT)/EQUITY |
|
|
|
LIABILITIES |
|
|
|
Current
liabilities: |
|
|
|
Accrued
payroll and related costs |
$ |
51,497 |
|
|
$ |
56,650 |
|
Income
taxes payable |
|
21,100 |
|
|
|
15,195 |
|
Accounts
payable and other current liabilities |
|
34,762 |
|
|
|
31,559 |
|
Deferred
revenue |
|
3,240 |
|
|
|
7,973 |
|
Loans and
borrowings |
|
24,268 |
|
|
|
21,264 |
|
|
|
|
|
Total
current liabilities |
|
134,867 |
|
|
|
132,641 |
|
|
|
|
|
Deferred
income taxes and other non current liabilities |
|
27,325 |
|
|
|
26,373 |
|
Non Current
loans and borrowings |
|
334,446 |
|
|
|
478,616 |
|
|
|
|
|
TOTAL LIABILITIES |
|
496,638 |
|
|
|
637,630 |
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' (deficit)/equity |
|
(12,922 |
) |
|
|
(183,087 |
) |
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
(DEFICIT)/EQUITY |
$ |
483,716 |
|
|
$ |
454,543 |
|
|
|
|
|
Contacts:
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com
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