Highlights:
-- Q3 revenue increased to $104.7M, up 1% from year-ago quarter
and 5% sequentially
-- Q3 EPS of $0.73 per diluted share, up 36% from year-ago quarter
and 20% sequentially
-- Q3 cash & short term investments of $174.9M
TROY, Mich., Oct. 29, 2009 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the third quarter, ended September 30, 2009.
Third Quarter Financial Highlights
Syntel's revenue for the third quarter increased one percent to $104.7 million, compared to $103.8 million in the prior-year period, and increased five percent sequentially from $100.1 million in the second quarter of 2009. Sequential revenue improvement was driven by our Applications Outsourcing service offering, and growth was broad-based across all verticals. During the third quarter, Applications Outsourcing accounted for 74 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 18 percent, e-Business contributing six percent and Team Sourcing at two percent.
The Company's gross margin improved to 49.3 percent in the third quarter, compared to 44.3 percent in the prior-year period and 48.2 percent in the second quarter of 2009. Selling, General and Administrative (SG&A) expenses were 18.1 percent in the third quarter, compared to 19.1 percent in the prior-year period and 20.8 percent in the previous quarter. Syntel's income from operations expanded to 31.2 percent in the third quarter as compared to 25.2 percent in the prior-year period and 27.4 percent in the second quarter of 2009.
Sequentially, operating margins during the quarter were favorably impacted by improved utilization, employee productivity and a 0.6% depreciation in the Indian Rupee.
Net income for the third quarter was $30.3 million or $0.73 per diluted share, compared to $22.1 million or $0.54 per diluted share in the prior-year period and net income of $25.1 million or $0.61 per diluted share in the second quarter of 2009.
Operational Highlights
"Increasing stability in the business environment and a gradual improvement in customer confidence had a positive effect on our top line during the third quarter," said Chief Executive Officer and President Keshav Murugesh. "While our clients remain comfortable in moving forward with cost reduction initiatives, they are now increasingly willing to discuss longer-term business plans and strategic technology investments."
"The strong financial and operating discipline at Syntel has been evident in our financial performance during a very difficult nine month period. We expect that as the demand environment for offshore services improves, margin pressure will increase. Syntel continues to invest in the people, infrastructure and new services necessary to drive long-term sustainable value for all of our key stakeholders."
2009 Guidance
Based on current visibility levels and an exchange rate assumption of 47.0 rupees to the dollar, the Company is updating 2009 guidance to reflect revenue of $405 to $408 million, and EPS in the range of $2.60 to $2.65.
Syntel to Host Conference Call
Syntel will discuss its third quarter results today on a conference call at 10:00 a.m. (Eastern). To listen to the call, please dial (888) 510-1783. The call will also be broadcast live via the Internet at Syntel's web site: www.syntelinc.com under the "Investor Relations" section. 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 November 5, 2009 by dialing (888) 203-1112 and entering "5634944". International callers may dial (719) 457-0820 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. Recently named one of the "50 Best Managed Global Outsourcing Vendors" by The Black Book of Outsourcing, Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. As of September 30, 2009, Syntel employed more than 11,400 people worldwide. To learn more, visit us at: www.syntelinc.com.
Safe Harbor Provision
This news release includes forward-looking statements, including 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 Form 10-K document dated March 12, 2009 and the Company's Quarterly Report on Form 10-Q for the period ending June 30, 2009.
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net revenues $ 104,698 $ 103,765 $ 301,234 $ 305,697
Cost of revenues 53,088 57,814 156,496 177,542
--------- --------- --------- ---------
Gross profit 51,610 45,951 144,738 128,155
Selling, general and
administrative expenses 18,926 19,815 58,495 60,046
--------- --------- --------- ---------
Income from operations 32,684 26,136 86,243 68,109
Other income, principally
interest, net 3,527 629 6,837 718
--------- --------- --------- ---------
Income before provision
for income taxes 36,211 26,765 93,080 68,827
Income tax expense 5,958 4,620 10,366 8,832
--------- --------- --------- ---------
Net income $ 30,253 $ 22,145 $ 82,714 $ 59,995
========= ========= ========= =========
Dividend per share $ 0.06 $ 0.06 $ 0.18 $ 0.18
EARNINGS PER SHARE:
Basic $ 0.73 $ 0.54 $ 2.00 $ 1.46
Diluted $ 0.73 $ 0.54 $ 1.99 $ 1.45
Weighted average common
shares outstanding:
Basic 41,431 41,275 41,388 41,194
========= ========= ========= =========
Diluted 41,507 41,347 41,473 41,321
========= ========= ========= =========
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
Sept. 30, Dec. 31,
2009 2008
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 70,860 $ 65,031
Short term investments 104,026 67,293
Accounts receivable, net of allowance for
doubtful accounts of $2,349 and $440 at
September 30, 2009 and December 31, 2008,
respectively 46,518 48,558
Revenue earned in excess of billings 13,949 6,506
Deferred income taxes and other current assets 24,005 20,099
--------------------
Total current assets 259,358 207,487
Property and equipment 129,592 114,163
Less accumulated depreciation and
amortization 51,083 40,385
--------------------
Property and equipment, net 78,509 73,778
Goodwill 906 906
Non current Term Deposits with Banks 12,739 72
Deferred income taxes and other non
current assets 18,960 13,328
--------------------
$ 370,472 $ 295,571
====================
LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 25,811 $ 23,942
Income taxes payable 1,177 8,630
Accounts payable and other current
liabilities 23,810 25,420
Deferred revenue 3,673 5,116
--------------------
Total current liabilities 54,471 63,108
Other non current liabilities 7,171 5,633
--------------------
Total liabilities 61,642 68,741
SHAREHOLDERS' EQUITY
Total shareholders' equity 308,830 226,830
--------------------
Total liabilities and shareholders' equity $ 370,472 $ 295,571
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