Insurance Technology Industry News

TMCNet:  Syntel Reports Fourth Quarter and Full Year 2016 Financial Results

[February 16, 2017]

Syntel Reports Fourth Quarter and Full Year 2016 Financial Results

Highlights:

  • 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

TROY, Mich., Feb. 16, 2017 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq: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

Syntel's 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 Company's 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 Company's 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.

Operational Highlights

"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. Syntel’s holistic approach to digital transformation aligns us with the most pressing business and operational needs of our customers.”

2016 Guidance

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 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 23, 2017 by dialing (855) 859-2056 and entering “60632903".  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 (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. Syntel’s digital services enable companies to engage customers, discover insights through analytics and build a connected enterprise through the internet of things. Syntel’s "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 Company's Annual Report on Form 10-K for the year ended December 31, 2015, the Company's 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
   DECEMBER 31, DECEMBER 31,
    2016  2015   2016  2015 
        
 Net revenues$  237,887 $  254,580  $  966,550 $  968,612 
 Cost of revenues 142,354  148,061   595,725  584,611 
 Gross profit 95,533  106,519   370,825  384,001 
 Selling, general and administrative expenses 31,060  28,025   108,528  100,256 
        
 Income from operations 64,473  78,494   262,297  283,745 
        
 Other income (expense), net (2,110) 14,004   11,088  43,456 
        
 Income before provision for income taxes   62,363    92,498     273,385    327,201 
        
 Income tax expense 14,372  18,263   330,775  74,675 
        
 Net income (Loss)$  47,991 $  74,235  $  (57,390)$  252,526 
        
 Other Comprehensive Income/(Loss)      
        
  Foreign currency translation adjustments$  (1,293)$  (5,496) $  (19,018)$  (45,428)
  Gains on derivatives:     
  Gains arising during period on cash flow edges   533    -      533    -  
        
  Unrealized gains (Loss) on securities:     
    Unrealized holding gains arising during period   179    6     242    116 
    Reclassification adjustment for gains included in net income   (158)   (6,879)    (248)   (6,580)
      21    (6,873)    (6)   (6,464)
        
  Defined benefit pension plans:     
    Net Profit (Loss) arising during period   (802)   802     (802)   802 
    Amortization of prior service cost included in net periodic pension cost   (82)   53     (35)   149 
      (884)   855     (837)   951 
        
  Other comprehensive Loss, before tax   (1,623)   (11,514)    (19,328)   (50,941)
  Income tax benefits related to Other Comprehensive Loss   86    2,148     32    1,576 
  Other comprehensive Loss, net of tax   (1,537)   (9,366)    (19,296)   (49,365)
        
 Comprehensive Income (Loss) $  46,454 $  64,869  $  (76,686)$  203,161 
        
 Dividend Per Share $  -  $  -   $  15.00 $  -  
        
 EARNINGS/(LOSS) PER SHARE:     
  Basic$  0.57 $  0.88  $  (0.68)$  3.01 
  Diluted$  0.57 $  0.88  $  (0.68)$  3.00 
        
 Weighted average common shares outstanding:     
        
  Basic 84,117  84,079   84,146  83,982 
        
  Diluted 84,163  84,204   84,146  84,149 
        

 

      
 SYNTEL, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (IN THOUSANDS)
      
   December 31, December 31,
     2016     2015 
      
      
  ASSETS   
      
 Current assets:   
  Cash and cash equivalents$  78,332  $  500,499
  Short term investments 21,614   540,045
         
  Accounts receivable, net of allowance for doubtful accounts of $801
at December 31, 2016 and $622 at December 31, 2015, respectively 
 118,299   136,926
  Revenue earned in excess of billings 25,039   30,448
  Other current assets 36,306   36,423
      
    Total current assets   279,590     1,244,341
      
 Property and equipment 227,056   217,922
  Less  accumulated depreciation and amortization 120,580   112,146
      
    Property and equipment, net   106,476     105,776
      
 Goodwill 906   906
      
 Non current Term Deposits with Banks 225   77
      
      
 Deferred income taxes and other non current assets 67,346   72,170
      
  TOTAL ASSETS$   454,543   $   1,423,270
      
  LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY   
  LIABILITIES   
 Current liabilities:   
  Accrued payroll and related costs$  56,650  $  60,339
  Income taxes payable 15,195   11,305
  Accounts payable and other current liabilities 31,559   37,828
  Deferred revenue 7,973   7,716
  Loans and borrowings    21,264     129,981
      
    Total current liabilities   132,641     247,169
      
 Deferred income taxes and other non current liabilities  26,373   17,656
 Non Current loans and borrowings 478,616     - 
      
  TOTAL LIABILITIES   637,630     264,825
      
  SHAREHOLDERS' EQUITY   
      
      
 Total shareholders' (deficit)/equity   (183,087)    1,158,445
      
 TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)/EQUITY$   454,543   $   1,423,270
      


 

 

Contacts: 
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com
Europe and International: Rani Gill, Flame PR, +44 0203 357 9746, Syntel@flamepr.com

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