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SYNTEL INC
Symbol U : SYNT
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Syntel Reports Fourth Quarter 2012 Financial Results

2013-02-14 08:30 ET - News Release

Highlights:

  • Q4 revenue of $187.8M, up 9% from year-ago quarter, and 1% sequentially
  • Q4 EPS of $1.19 per diluted share, up 13% from year-ago quarter, but down 3% sequentially
  • Full year revenue increase of 13% to $723.9M
  • Full year EPS of $4.44 per diluted share
  • 2012 year-ending cash & short term investments of $421.3M
  • Global Headcount of 21,407 on December 31, 2012, up 10% versus prior year

TROY, Mich., Feb. 14, 2013 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) company today announced financial results for the fourth quarter and full year, ended December 31, 2012.

Fourth Quarter Financial Highlights

Syntel's revenue for the fourth quarter increased nine percent to $187.8 million, compared to $172.4 million in the prior-year period, and increased one percent sequentially from $186.4 million in the third quarter of 2012. During the fourth quarter, Applications Outsourcing accounted for 76 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing seven percent and TeamSourcing at two percent.

The Company's gross margin was 45.2 percent in the fourth quarter, compared to 42.1 percent in the prior-year period and 45.5 percent in the third quarter of 2012. Selling, General and Administrative (SG&A) expenses were 15 percent of revenue in the fourth quarter, compared to 11.4 percent in the prior-year period and 15.6 percent in the previous quarter.

The fourth quarter income from operations was 30.2 percent of revenue as compared to 30.7 percent in the prior-year period and 29.9 percent in the third quarter. The sequential rise in operating margin primarily reflects the impact of currency-related balance sheet translations and, to a lesser extent, lower marketing costs.

Net income for the fourth quarter was $49.9 million or $1.19 per diluted share, compared to $44 million or $1.05 per diluted share in the prior-year period and net income of $51.5 million or $1.23 per diluted share in the third quarter of 2012.

Full Year 2012 Financial Highlights

Revenue for 2012 increased 13 percent to $723.9 million, from $642.4 million in 2011. The Company's 2012 operating margin was 29.3 percent, compared to 21.5 percent in 2011. Net income for the year was $185.5 million compared to $122.9 million in 2011. EPS for 2012 increased 50.7% to $4.44 per diluted share from $2.94 per diluted share in 2011. Year-over-year margins and earnings were impacted by currency fluctuations, wage increases, and costs associated with investments in hiring and infrastructure, among other factors.

During 2012, Syntel spent $32.3 million in CAPEX, largely in support of campus infrastructure, paid $106.2 million in regular and special dividends ($2.55 per share), and finished the year with cash and short-term investments of $421.3 million. The Company added 19 new clients during the year and ended 2012 with 21,407 employees globally.

Operational Highlights

"Our fourth quarter results reflect solid execution in a rapidly evolving business environment," said Syntel CEO and President Prashant Ranade. "While we faced some challenges this quarter, healthy growth in our recurring revenue businesses and improving business efficiency helped us navigate through them."

"We will maintain our customer centricity and drive growth in the verticals we serve with our domain-led solutions," said Ranade. "We are optimistic about the opportunities before us, given our positioning within the end markets we serve and our high-quality customer relationships."

"We continue to see an expanding role for global delivery in the years ahead and plan to invest in our capabilities to provide innovative solutions, which will help us garner growth that meets or exceeds overall market growth."

2013 Guidance

Based on current visibility levels and an exchange rate assumption of 53 Indian Rupees to the dollar, the Company currently expects 2013 revenue of $780 to $810 million and EPS in the range of $4.15 to $4.45.

Syntel to Host Conference Call

Syntel will discuss its fourth quarter and full year 2012 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 21, 2013 by dialing (855) 859-2056 and entering "98221987". 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 December 31, 2012, Syntel employed more than 21,000 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 September 30, 2012 or from other factors not currently anticipated.

SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
         
         
  THREE MONTHS ENDED
DECEMBER 31,
TWELVE MONTHS ENDED
DECEMBER 31,
  2012 2011 2012 2011
         
Net revenues  $ 187,773  $ 172,420  $ 723,903  $ 642,404
Cost of revenues 102,918 99,802 408,919 395,455
Gross profit 84,855 72,618 314,984 246,949
Selling, general and administrative expenses 28,131 19,638 103,044 108,721
         
Income from operations 56,724 52,980 211,940 138,228
         
Other income, net 7,280 2,534 27,988 16,208
         
Income before income taxes  64,004  55,514  239,928  154,436
         
Income tax expense 14,077 11,554 54,385 31,580
         
Net income  $ 49,927  $ 43,960  $ 185,543  $ 122,856
         
Other Comprehensive Income(Loss)      
         
Foreign currency translation adjustments  $ (18,349)  $ (33,350)  $ (11,910)  $ (69,832)
         
Gains (losses) on derivatives      
Gains (losses) arising during period on net investment hedges  (324)  (2,817)  (1,558)  (4,077)
         
Unrealized gains(losses) on securities:      
Unrealized holding gains arising during period  513  15  916  158
Reclassification adjustment for gains included in net income  (623)  (195)  (269)  (448)
   (110)  (180)  647  (290)
         
Defined benefit pension plans:      
Net Profit(loss) arising during period  (1,038)  397  (1,051)  437
Amortization of prior service cost included in net periodic pension cost  8  8  32  37
   (1,030)  405  (1,019)  474
         
Other comprehensive income(loss), before tax  (19,813)  (35,942)  (13,840)  (73,725)
Income tax expenses related to Other Comprehensive Income(loss)  382  (82)  141  (124)
Other comprehensive income(loss), net of tax  (19,431)  (36,024)  (13,699)  (73,849)
         
Comprehensive Income(Loss)  $ 30,496  $ 7,936  $ 171,844  $ 49,007
         
Dividend per share  $ 2.31  $ 0.06  $ 2.49  $ 0.24
         
EARNINGS PER SHARE:        
Basic  $ 1.20  $ 1.06  $ 4.45  $ 2.95
Diluted  $ 1.19  $ 1.05  $ 4.44  $ 2.94
         
Weighted average common shares outstanding:      
         
Basic 41,739 41,651 41,697 41,619
         
Diluted 41,833 41,736 41,793 41,717
 
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
     
 December 31,  
2012 
December 31,  
2011 
     
     
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 94,622  $ 104,628
Short term investments 326,653 215,798
Accounts receivable, net of allowance for doubtful accounts of $2,168 and $2,407 at December 31 , 2012 and December 31, 2011, respectively  86,004 88,573
Revenue earned in excess of billings 11,875 5,131
Deferred income taxes and other current assets 48,341 46,353
     
 Total current assets  567,495  460,483
     
Property and equipment 204,151 179,576
Less accumulated depreciation and amortization 85,033 73,574
     
 Property and equipment, net  119,118  106,002
     
Goodwill 906 906
     
Non current Term Deposits with Banks 14 130
     
     
Deferred income taxes and other non current assets 34,908 29,727
   
TOTAL ASSETS $ 722,441  $ 597,248
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
LIABILITIES    
Current liabilities:    
Accrued payroll and related costs  $ 49,889  $ 45,949
Income taxes payable 9,799 3,080
Accounts payable and other current liabilities 30,629 35,341
Loans and borrowings  50,029  -- 
Deferred revenue 4,694 9,692
     
 Total current liabilities  145,040  94,062
     
Other non current liabilities 11,731 9,997
     
 Total liabilities  156,771  104,059
     
SHAREHOLDERS' EQUITY    
     
     
Total shareholders' equity  565,670  493,189
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 722,441  $ 597,248
CONTACT: North America/Europe:
         Jon Luebke, Syntel
         248/619-3503
         jon_luebke@syntelinc.com
         
         Asia/Pacific:
         Sikta Samantaray
         +91 9167512186
         sikta_samantaray@syntelinc.com

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