Syntel Reports Fourth Quarter and Full Year 2016 Financial Results
-- Q4 revenue of $237.9M, down 7% from year-ago quarter, and 1% sequentially
• Q4 EPS of $0.57 per diluted share as compared to $0.88 in the year-ago quarter and a loss of $2.58 in the third quarter. Q3 2016 EPS was negatively impacted by $3.21 per share of one-time tax expense associated with a one-time repatriation of cash.
-- Full year 2016 revenue of $966.6M as compared to $968.6M in the prior-year.
-- Full year 2016 loss per share of $0.68 as compared to EPS of $3.00 in the prior-year.
-- 2016 year-ending cash & short term investments of $100M
-- Global Headcount of 23,011 on December 31, 2016, versus 24,537 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, 2016.
Fourth Quarter Financial Highlights
Syntels revenue for the fourth quarter decreased 6.6 percent to $237.9 million from $254.6 million in the prior-year period, and 1.4 percent from $241.3 million in the third quarter of 2016. During the fourth quarter, Banking and Financial Services accounted for 48.4 percent of total revenue, with Retail, Logistics and Telecom at 17.6 percent, Healthcare and Life Sciences at 16 percent, Insurance at 13.7 percent, and Manufacturing at 4.3 percent.
The Companys gross margin was 40.2 percent in the fourth quarter, compared to 41.8 percent in the prior-year period and 39.2 percent in the third quarter of 2016. Selling, General and Administrative (SG&A) expenses were 13.1 percent of revenue in the fourth quarter, compared to 11 percent in the prior-year period and 12.2 percent in the previous quarter.
The fourth quarter income from operations was 27.1 percent of revenue as compared to 30.8 percent in the prior-year period and 27 percent in the third quarter.
Net income for the fourth quarter was $48 million or $0.57 per diluted share, compared to $74.2 million or $0.88 per diluted share in the prior-year period and net loss of $217.2 million or $2.58 per diluted share in the third quarter of 2016. In connection with a special cash dividend and the one-time repatriation of cash announced on September 12, 2016, the Company recognized a one-time tax expense of $271 million (net of foreign tax credits) in the third quarter of 2016.
Full Year 2016 Financial Highlights
Revenue for 2016 decreased 0.2 percent to $966.6 million, from $968.6 million in 2015. The Companys 2016 operating margin was 27.1 percent, compared to 29.3 percent in 2015. Net loss for the year was $57.4 million compared to income of $252.5 million in 2015. The Company reported a net loss of $0.68 in 2016 as compared to earnings of $3.00 per diluted share in 2015.
During 2016, Syntel spent $17.5 million in CAPEX, largely in support of campus infrastructure, and finished the year with cash and short-term investments of $100 million. The Company added 15 new clients during the year and ended 2016 with 23,011 employees globally.
"While we were impacted by challenges seen across several industries in the past year, Syntel has started 2017 with a focus on helping our clients build competitive differentiation and gain operational flexibility in an uncertain business climate," said Syntel Interim CEO and President Rakesh Khanna. "Digital enablement and modernizing existing IT assets are increasingly becoming strategic priorities for our customers as they undergo enterprise-wide technology transformations."
"Syntel has developed cutting-edge capabilities to help customers go digital as well as high-impact solutions to modernize and evolve their core applications and infrastructure," said Khanna. "Ongoing support for core IT assets remains the largest demand on customer resources. Syntels holistic approach to digital transformation aligns us with the most pressing business and operational needs of our customers."
Based on current visibility levels and an exchange rate assumption of 67 Indian rupees to the dollar, the Company currently expects 2017 revenue of $900 million to $945 million and EPS in the range of $1.75 to $2.00.
Syntel to Host Conference Call
Syntel will discuss its fourth quarter 2016 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 February 23, 2017 by dialing (855) 859-2056 and entering "60632903". International callers may dial (404) 537-3406 and enter the same passcode.
Syntel (SYNT) is a leading global provider of integrated information technology (IT) and knowledge process services. Syntel helps global enterprises evolve their core business processes, IT applications and infrastructure to succeed in the digital age. Our intelligent automation, scaled agile and cloud platforms ensure efficient delivery of application development and management, testing, and infrastructure solutions. Syntels digital services enable companies to engage customers, discover insights through analytics and build a connected enterprise through the internet of things. Syntels "Customer for Life" philosophy builds collaborative partnerships and delivers long-term client value through investments in intellectual property, domain knowledge and industry solutions.
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, 2015, the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 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
Selling, general and administrative expenses
Income from operations
Other income (expense), net
Income before provision for income taxes
Income tax expense
Net income (Loss)
Other Comprehensive Income/(Loss)
Foreign currency translation adjustments
Gains arising during period on cash flow hedges
Unrealized gains (Loss) on securities:
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 Loss, before tax
Income tax benefits related to Other Comprehensive Loss
Other comprehensive Loss, net of tax
Comprehensive Income (Loss)
Dividend Per Share
EARNINGS/(LOSS) PER SHARE:
Weighted average common shares outstanding:
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Short term investments
Accounts receivable, net of allowance for doubtful accounts of $801
at December 31, 2016 and $622 at December 31, 2015, respectively
Revenue earned in excess of billings
Other current assets
Total current assets
Property and equipment
accumulated depreciation and amortization
Property and equipment, net
Non current Term Deposits with Banks
Deferred income taxes and other non current assets
LIABILITIES AND SHAREHOLDERS (DEFICIT)/EQUITY
Accrued payroll and related costs
Income taxes payable
Accounts payable and other current liabilities
Loans and borrowings
Total current liabilities
Deferred income taxes and other non current liabilities
Non Current loans and borrowings
Total shareholders (deficit)/equity
TOTAL LIABILITIES AND SHAREHOLDERS (DEFICIT)/EQUITY
North America/Europe: Jon Luebke, Syntel, 248/619-3503, firstname.lastname@example.org
Europe and International: Rani Gill, Flame PR, +44 0203 357 9746, Syntel@flamepr.com
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