Highlights:
- Q1 revenue of $219.5M, up 16% from year-ago quarter, down 2% sequentially
- Q1 EPS of $1.39 per diluted share, up 25% from year-ago quarter, down 12% sequentially
- Q1 cash & short term investments of $712.9M
- Global Headcount of 24,207 on March 31, 2014, up 9% versus prior year
TROY, Mich., April 17, 2014 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) company today announced financial results for the first quarter, ended March 31, 2014.
First Quarter Financial Highlights
Syntel's revenue for the first quarter increased 16 percent to $219.5 million, compared to $189.1 million in the prior-year period, and decreased two percent sequentially from $223.3 million in the fourth quarter of 2013. During the first quarter, Banking and Financial Services accounted for 49% of total revenue, with Healthcare and Life Sciences at 17%, Retail, Logistics and Telecom at 16%, Insurance at 15% and Manufacturing at 3%.
The Company's gross margin was 43.7 percent in the first quarter, compared to 41.1 percent in the prior-year period and 47.1 percent in the fourth quarter of 2013. Selling, General and Administrative (SG&A) expenses were 14.7 percent of revenue in the first quarter, compared to 13.6 percent in the prior-year period and 13.3 percent in the previous quarter.
The first quarter income from operations was 29.1 percent of revenue as compared to 27.5 percent in the prior-year period and 33.7 percent in the fourth quarter. The sequential decline in operating margin primarily reflects the impact of higher employee headcount and compensation-related expense and currency-related balance sheet translations.
Net income for the first quarter was $58.1 million or $1.39 per diluted share, compared to $46.4 million or $1.11 per diluted share in the prior-year period and net income of $66.3 million or $1.58 per diluted share in the fourth quarter of 2013.
During Q1, Syntel spent $3.8 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $712.9 million. The Company also added 555 net employees, ending the quarter with 24,207 employees globally.
Operational Highlights
"Syntel started 2014 on a solid footing and we look forward to building on this in the months ahead," said Syntel CEO and President Prashant Ranade. "Our focus on our core strengths has never wavered and our customers rely on our consistency to manage through the constant change they face in their businesses."
"We have built our company around serving the needs of our customers; this is evident in the depth of our domain expertise and our commitment to providing high value solutions tied to their evolving businesses," said Ranade. "Our commitment to our clients' long-term success guides many of our investments as we collaborate to achieve mutual success."
"I am optimistic about the future opportunities this long-term view affords us and our aim is to target investments in strategic areas that will further differentiate our service offerings."
2014 Guidance
Based on current visibility levels and an exchange rate assumption of 60 Indian Rupees to the dollar, the Company currently expects 2014 revenue of $915 to $940 million and EPS in the range of $5.10 to $5.28.
Syntel to Host Conference Call
Syntel will discuss its first quarter 2014 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 April 24, 2014 by dialing (855) 859-2056 and entering "29148363". 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 March 31, 2014, Syntel employed more than 24,000 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, 2013 or from other factors not currently anticipated.
| SYNTEL, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
| (UNAUDITED) | ||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | ||
| THREE MONTHS ENDED | ||
| MARCH 31, | ||
| 2014 | 2013 | |
| Net revenues | $ 219,523 | $ 189,106 |
| Cost of revenues | 123,500 | 111,329 |
| Gross profit | 96,023 | 77,777 |
| Selling, general and administrative expenses | 32,221 | 25,693 |
| Income from operations | 63,802 | 52,084 |
| Other income, net | 11,785 | 8,804 |
| Income before provision for income taxes | 75,587 | 60,888 |
| Income tax expense | 17,439 | 14,464 |
| Net income | $ 58,148 | $ 46,424 |
| Other Comprehensive Income (loss) | ||
| Foreign currency translation adjustments | $ 24,847 | $ 1,865 |
| Gains (losses) on derivatives: | ||
| Gains (losses) arising during period on net investment hedges | 724 | 90 |
| Unrealized gains (losses) on securities: | ||
| Unrealized holding gains arising during period | 2,724 | 211 |
| Reclassification adjustment for gains included in net income | (1,855) | (823) |
| 869 | (612) | |
| Defined benefit pension plans: | ||
| Net Profit (loss) arising during period | -- | 6 |
| Amortization of prior service cost included in net periodic pension cost | 2 | 8 |
| 2 | 14 | |
| Other comprehensive income (loss), before tax | 26,442 | 1,357 |
| Income tax benefit (expense) related to Other Comprehensive Income (loss) | (252) | 197 |
| Other comprehensive income (loss), net of tax | 26,190 | 1,554 |
| Comprehensive Income | $ 84,338 | $ 47,978 |
| Dividend per share | $ -- | $ -- |
| EARNINGS PER SHARE: | ||
| Basic | $ 1.39 | $ 1.11 |
| Diluted | $ 1.39 | $ 1.11 |
| Weighted average common shares outstanding: | ||
| Basic | 41,840 | 41,742 |
| Diluted | 41,972 | 41,839 |
| SYNTEL, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (UNAUDITED) | ||
| (IN THOUSANDS) | ||
| March 31, | December 31, | |
| 2014 | 2013 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 221,839 | $ 178,757 |
| Short term investments | 491,046 | 490,177 |
| Accounts receivable, net of allowance for doubtful accounts of $2,033 and $2,022 at March 31, 2014 and December 31, 2013, respectively | 105,109 | 101,974 |
| Revenue earned in excess of billings | 33,262 | 22,275 |
| Deferred income taxes and other current assets | 65,437 | 49,929 |
| Total current assets | 916,693 | 843,112 |
| Property and equipment | 207,240 | 198,687 |
| Less accumulated depreciation and amortization | 95,533 | 89,082 |
| Property and equipment, net | 111,707 | 109,605 |
| Goodwill | 906 | 906 |
| Non current Term Deposits with Banks | -- | 163 |
| Deferred income taxes and other non current assets | 45,574 | 43,390 |
| TOTAL ASSETS | $ 1,074,880 | $ 997,176 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| LIABILITIES | ||
| Current liabilities: | ||
| Accrued payroll and related costs | $ 46,176 | $ 56,308 |
| Income taxes payable | 21,636 | 19,224 |
| Accounts payable and other current liabilities | 38,622 | 36,661 |
| Deferred revenue | 3,096 | 4,729 |
| Loans and borrowings | 7,724 | 7,363 |
| Total current liabilities | 117,254 | 124,285 |
| Other non current liabilities | 12,816 | 11,970 |
| Non Current loans and borrowings | 136,500 | 138,375 |
| TOTAL LIABILITIES | 266,570 | 274,630 |
| SHAREHOLDERS' EQUITY | ||
| Total shareholders' equity | 808,310 | 722,546 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,074,880 | $ 997,176 |