Syntel Reports Fourth Quarter and Full Year 2017 Financial Results
-- Q4 revenue of $239.8M, up 0.8% from year-ago quarter, and 3.7% sequentially
• Q4 EPS of $0.51 per diluted share as compared to $0.57 in the year-ago quarter and $0.58 in the third quarter. Q4 EPS was negatively impacted by approximately $0.11 due to one-time tax provisions.
-- Full year 2017 revenue of $923.8M as compared to $966.6M in the prior-year
• Full year 2017 EPS of $1.99 as compared to a loss per share of $0.68 in the prior-year. Full year 2016 EPS was negatively impacted by $3.21 per share of one-time tax expense associated with a repatriation of cash.
-- 2017 year-ending cash & short term investments of $122.5M
-- Global Headcount of 22,114 on December 31, 2017, versus 23,011 in the year-ago quarter
Syntel, Inc. (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 Highlights
Syntels 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 Companys 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 Highlights
Revenue for 2017 decreased 4.4 percent to $923.8 million, from $966.6 million in 2016. The Companys 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.
"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."
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 Call
Syntel 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 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 February 22, 2018 by dialing (855) 859-2056 and entering "4299607." International callers may dial (404) 537-3406 and enter the same passcode.
Syntel (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. Syntels digital services enable companies to engage customers, discover new insights through analytics, and create a more connected enterprise through the internet of things. Syntels "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 Provision
This 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 Companys Annual Report on Form 10-K for the year ended December 31, 2016, the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 or from other factors not currently anticipated.
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
TWELVE MONTHS ENDED
Cost of revenues
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Income before provision for income taxes
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Unrealized holding gains arising during period
Reclassification adjustment for gains included in net income
Defined benefit pension plans:
Net Profit (Loss) arising during period
Amortization of prior service cost included in net periodic pension cost
Other comprehensive Income (Loss), before tax
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Dividend Per Share
EARNINGS/(LOSS) PER SHARE:
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SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Short term investments
Accounts receivable, net of allowance for doubtful accounts of $ Nil at December 31, 2017 and $801 at December 31, 2016, respectively
Revenue earned in excess of billings
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Total current assets
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accumulated depreciation and amortization
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LIABILITIES AND SHAREHOLDERS (DEFICIT)/EQUITY
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TOTAL LIABILITIES AND SHAREHOLDERS (DEFICIT)/EQUITY
North America/Europe: Jon Luebke, Syntel, 248/619-3503, firstname.lastname@example.org
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