SYNT
$26.87
Syntel
$1.16
4.51%
Earnings Details
4th Quarter December 2017
Thursday, February 15, 2018 8:30:34 AM
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Summary

Syntel Guides Revenue Above Estimates

Syntel (SYNT) reported 4th Quarter December 2017 earnings of $0.62 per share on revenue of $239.8 million. The consensus earnings estimate was $0.39 per share on revenue of $214.7 million. Revenue grew 0.8% on a year-over-year basis.

The company said it expects 2018 earnings of $1.72 to $1.92 per share on revenue of $905.0 million to $950.0 million. The current consensus earnings estimate is $1.82 per share on revenue of $892.6 million for the year ending December 31, 2018.

Syntel Inc along with its subsidiaries is engaged in providing digital transformation, information technology, and knowledge process outsourcing services. Its services include programming, systems integration, outsourcing and overall project management.

Results
Reported Earnings
$0.62
Earnings Whisper
-
Consensus Estimate
$0.39
Reported Revenue
$239.8 Mil
Revenue Estimate
$214.7 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

Syntel Reports Fourth Quarter and Full Year 2017 Financial Results

Highlights:

-- 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

Syntel’s 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 Company’s 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 Company’s 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.

Operational Highlights

"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."

2018 Guidance

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 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 22, 2018 by dialing (855) 859-2056 and entering "4299607." International callers may dial (404) 537-3406 and enter the same passcode.

About Syntel

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. Syntel’s digital services enable companies to engage customers, discover new insights through analytics, and create a more connected enterprise through the internet of things. Syntel’s "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 Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company’s 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
DECEMBER 31,
DECEMBER 31,
2017
2016
2017
2016
Net revenues
$
239,808
$
237,887
$
923,828
$
966,550
Cost of revenues
140,772
142,354
572,789
595,725
Gross profit
99,036
95,533
351,039
370,825
Selling, general and administrative expenses
29,173
31,060
115,323
108,528
Income from operations
69,863
64,473
235,716
262,297
Other income (expense), net:
Interest Expense
(2,994
)
(2,724
)
(12,627 )
(4,708
)
Other income
918
614
2,396
15,796
Other income (expense), net
(2,076
)
(2,110
)
(10,231 )
11,088
Income before provision for income taxes
67,787
62,363
225,485
273,385
Income tax expense
25,384
14,372
59,217
330,775
Net income (Loss)
$
42,403
$
47,991
$
166,268
$
(57,390 )
Other Comprehensive Income (Loss)
Foreign currency translation adjustments
$
3,957
$
(1,293
)
$
9,814
$
(19,018 )
Gains on derivatives:
Gains arising during period on cash flow hedges
2,141
533
2,774
533
Unrealized gains (Loss) on securities:
Unrealized holding gains arising during period
209
179
387
242
Reclassification adjustment for gains included in net income
(321
)
(158
)
(115
)
(248
)
(112
)
21
272
(6
)
Defined benefit pension plans:
Net Profit (Loss) arising during period
1,678
(802
)
1,684
(802
)
Amortization of prior service cost included in net periodic pension cost
16
(82
)
76
(35
)
1,694
(884
)
1,760
(837
)
Other comprehensive Income (Loss), before tax
7,680
(1,623
)
14,620
(19,328 )
Income tax (expense) benefits related to Other Comprehensive Loss
(960
)
86
(1,356
)
32
Other comprehensive Income (Loss), net of tax
6,720
(1,537
)
13,264
(19,296 )
Comprehensive Income (Loss)
$
49,123
$
46,454
$
179,532
$
(76,686 )
Dividend Per Share
$
-
$
-
$
-
$
15.00
EARNINGS/(LOSS) PER SHARE:
Basic
$
0.51
$
0.57
$
1.99
$
(0.68
)
Diluted
$
0.51
$
0.57
$
1.99
$
(0.68
)
Weighted average common shares outstanding:
Basic
83,073
84,117
83,537
84,146
Diluted
83,248
84,163
83,618
84,146
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
December 31,
2017
2016
ASSETS
Current assets:
Cash and cash equivalents
$
95,994
$
78,332
Short term investments
26,501
21,614
Accounts receivable, net of allowance for doubtful accounts of $ Nil at December 31, 2017 and $801 at December 31, 2016, respectively
115,052
118,299
Revenue earned in excess of billings
24,995
25,039
Other current assets
29,484
36,306
Total current assets
292,026
279,590
Property and equipment
240,948
227,056
Less
accumulated depreciation and amortization
134,650
120,580
Property and equipment, net
106,298
106,476
Goodwill
906
906
Non current Term Deposits with Banks
396
225
Deferred income taxes and other non current assets
84,090
67,346
TOTAL ASSETS
$
483,716
$
454,543
LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/EQUITY
LIABILITIES
Current liabilities:
Accrued payroll and related costs
$
51,497
$
56,650
Income taxes payable
21,100
15,195
Accounts payable and other current liabilities
34,762
31,559
Deferred revenue
3,240
7,973
Loans and borrowings
24,268
21,264
Total current liabilities
134,867
132,641
Deferred income taxes and other non current liabilities
27,325
26,373
Non Current loans and borrowings
334,446
478,616
TOTAL LIABILITIES
496,638
637,630
SHAREHOLDERS’ EQUITY
Total shareholders’ (deficit)/equity
(12,922 )
(183,087 )
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/EQUITY
$
483,716
$
454,543
Contacts:
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com

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