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8-K - FORM 8-K - SYNTEL INC | d8k.htm |
Exhibit 99.1
Syntel Reports First Quarter 2011 Financial Results
Highlights:
| Q1 revenue of $145.4M, up 25% from year-ago quarter and less than 1% sequentially |
| Q1 EPS of $0.60 per diluted share |
| Q1 cash & short term investments of $278.5M |
| Global Headcount of 17,610 on March 31, 2011, up 29% versus prior year |
TROY, Mich. April 21, 2011 Syntel, Inc. (NASDAQ: SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the first quarter, ended March 31, 2011.
First Quarter Financial Highlights
Syntels revenue for the first quarter increased 25 percent to $145.4 million, compared to $116.0 million in the prior-year period, and increased less than one percent sequentially from $144.9 million in the fourth quarter of 2010. During the first quarter, Applications Outsourcing accounted for 73 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 16 percent, e-Business contributing nine percent and TeamSourcing at two percent.
The Companys gross margin was 35.0 percent in the first quarter, compared to 42.4 percent in the prior-year period and 38.4 percent in the fourth quarter of 2010. Selling, General and Administrative (SG&A) expenses were 16.9 percent in the first quarter, compared to 19.2 percent in the prior-year period and 17.4 percent in the previous quarter. First quarter income from operations was 18.0 percent as compared to 23.3 percent in the prior-year period and 20.9 percent in the fourth quarter of 2010. The sequential reduction in operating margin was the result of compensation increases, advanced hiring which lowered utilization levels, and costs associated with transition revenues.
Net income for the first quarter was $25.0 million or $0.60 per diluted share, compared to $25.1 million or $0.60 per diluted share in the prior-year period and net income of $29.8 million or $0.71 per diluted share in the fourth quarter of 2010.
During Q1, Syntel spent $20.9 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $278.5 million. The company also added 227 net employees, finishing the quarter with 17,610 employees globally.
Operational Highlights
As discussed on our February earnings call, first quarter revenues were flat with fourth quarter levels, said Syntel CEO and President Prashant Ranade. With 2011 budget cycles largely complete, the flow of new project commitments from our clients has begun. We remain encouraged about the growth opportunities within our blue-chip client base, and the role Syntel will play in helping them achieve their 2011 business objectives.
Syntel continues to invest ahead of the curve in the resources and infrastructure necessary to gain market share in our industry, said Ranade. While these costs are temporarily putting pressure on our margins, they are essential to driving enhanced value to our clients and critical to Syntels revenue and profit growth.
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 $610 to $635 million and EPS in the range of $2.70 to $2.90.
Syntel to Host Conference Call
Syntel will discuss its first 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 Syntels 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 April 28, 2011 by dialing (800) 642-1687 and entering 60073439. 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 March 31, 2011, Syntel employed more than 17,600 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 Companys Annual Report on Form 10-K for the year ended December 31, 2010 or from other factors not currently anticipated.
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SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
THREE MONTHS ENDED MARCH 31, |
||||||||
2011 | 2010 | |||||||
Net revenues |
$ | 145,372 | $ | 116,039 | ||||
Cost of revenues |
94,560 | 66,800 | ||||||
Gross profit |
50,812 | 49,239 | ||||||
Selling, general and administrative expenses |
24,623 | 22,248 | ||||||
Income from operations |
26,189 | 26,991 | ||||||
Other income, principally interest |
6,119 | 2,283 | ||||||
Income before income taxes |
32,308 | 29,274 | ||||||
Income tax expense |
7,259 | 4,143 | ||||||
Net income |
$ | 25,049 | $ | 25,131 | ||||
Dividend per share |
$ | 0.06 | $ | 0.06 | ||||
EARNINGS PER SHARE: |
||||||||
Basic |
$ | 0.60 | $ | 0.61 | ||||
Diluted |
$ | 0.60 | $ | 0.60 | ||||
Weighted average common shares outstanding: |
||||||||
Basic |
41,579 | 41,483 | ||||||
Diluted |
41,711 | 41,566 | ||||||
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March, 31 | December, 31 | |||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 69,524 | $ | 78,505 | ||||
Short term investments |
208,957 | 208,695 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $3,096 and $3,090 at March 31, 2011 and December 31, 2010, respectively |
75,689 | 75,873 | ||||||
Revenue earned in excess of billings |
16,344 | 5,329 | ||||||
Deferred income taxes and other current assets |
45,766 | 43,705 | ||||||
Total current assets |
416,280 | 412,107 | ||||||
Property and equipment |
194,241 | 171,445 | ||||||
Less accumulated depreciation and amortization |
73,673 | 69,338 | ||||||
Property and equipment, net |
120,568 | 102,107 | ||||||
Goodwill |
906 | 906 | ||||||
Non current Term Deposits with Banks |
30 | 66 | ||||||
Deferred income taxes and other non current assets |
31,756 | 30,931 | ||||||
$ | 569,540 | $ | 546,117 | |||||
LIABILITIES | ||||||||
Current liabilities: |
||||||||
Accrued payroll and related costs |
$ | 33,470 | $ | 40,736 | ||||
Income taxes payable |
3,956 | 2,291 | ||||||
Accounts payable and other current liabilities |
34,485 | 29,384 | ||||||
Deferred revenue |
6,236 | 9,783 | ||||||
Total current liabilities |
78,147 | 82,194 | ||||||
Other non current liabilities |
13,634 | 12,453 | ||||||
Total liabilities |
91,781 | 94,647 | ||||||
SHAREHOLDERS EQUITY | ||||||||
Total shareholders equity |
477,759 | 451,470 | ||||||
Total liabilities and shareholders equity |
$ | 569,540 | $ | 546,117 | ||||