updated 4/21/2011 8:46:53 AM ET 2011-04-21T12:46:53

Highlights:

  • Q1 revenue of $145.4M, up 25% from year-ago quarter and less than 1% sequentially
  • Q1 EPS of $0.60 per diluted share
  • Q1 cash & short term investments of $278.5M
  • Global Headcount of 17,610 on March 31, 2011, up 29% versus prior year

TROY, Mich., April 21, 2011 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the first quarter, ended March 31, 2011.

First Quarter Financial Highlights

Syntel's revenue for the first quarter increased 25 percent to $145.4 million, compared to $116.0 million in the prior-year period, and increased less than one percent sequentially from $144.9 million in the fourth quarter of 2010. During the first quarter, Applications Outsourcing accounted for 73 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 16 percent, e-Business contributing nine percent and TeamSourcing at two percent.

The Company's gross margin was 35.0 percent in the first quarter, compared to 42.4 percent in the prior-year period and 38.4 percent in the fourth quarter of 2010. Selling, General and Administrative (SG&A) expenses were 16.9 percent in the first quarter, compared to 19.2 percent in the prior-year period and 17.4 percent in the previous quarter. First quarter income from operations was 18.0 percent as compared to 23.3 percent in the prior-year period and 20.9 percent in the fourth quarter of 2010. The sequential reduction in operating margin was the result of compensation increases, advanced hiring which lowered utilization levels, and costs associated with transition revenues.

Net income for the first quarter was $25.0 million or $0.60 per diluted share, compared to $25.1 million or $0.60 per diluted share in the prior-year period and net income of $29.8 million or $0.71 per diluted share in the fourth quarter of 2010.

During Q1, Syntel spent $20.9 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $278.5 million. The Company also added 227 net employees, finishing the quarter with 17,610 employees globally.

Operational Highlights

"As discussed on our February earnings call, first quarter revenues were flat with fourth quarter levels," said Syntel CEO and President Prashant Ranade. "With 2011 budget cycles largely complete, the flow of new project commitments from our clients has begun. We remain encouraged about the growth opportunities within our blue-chip client base, and the role Syntel will play in helping them achieve their 2011 business objectives."

"Syntel continues to invest ahead of the curve in the resources and infrastructure necessary to gain market share in our industry," said Ranade. "While these costs are temporarily putting pressure on our margins, they are essential to driving enhanced value to our clients and critical to Syntel's revenue and profit growth."

2011 Guidance

Based on current visibility levels and an exchange rate assumption of 44.5 rupees to the dollar, the Company currently expects 2011 revenue of $610 to $635 million and EPS in the range of $2.70 to $2.90.

Syntel to Host Conference Call

Syntel will discuss its first quarter 2011 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 April 28, 2011 by dialing (800) 642-1687 and entering "60073439". International callers may dial (706) 645-9291 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. Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. As of March 31, 2011, Syntel employed more than 17,600 people worldwide. To learn more, visit us at: www.syntelinc.com .

Safe Harbor Provision

This news release includes 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, 2010 or from other factors not currently anticipated.

SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
     
  THREE MONTHS ENDED
  MARCH 31,
  2011 2010
     
Net revenues  $ 145,372  $ 116,039
Cost of revenues 94,560 66,800
Gross profit 50,812 49,239
Selling, general and administrative expenses 24,623 22,248
     
Income from operations 26,189 26,991
     
Other income, principally interest 6,119 2,283
     
Income before income taxes  32,308  29,274
     
Income tax expense 7,259 4,143
     
Net income  $ 25,049  $ 25,131
     
     
Dividend per share  $ 0.06  $ 0.06
     
EARNINGS PER SHARE:    
Basic  $ 0.60  $ 0.61
Diluted  $ 0.60  $ 0.60
     
Weighted average common shares outstanding:  
     
Basic 41,579 41,483
     
Diluted 41,711 41,566
     
 
 
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
     
  March 31, December 31,
   2011   2010 
     
     
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 69,524  $ 78,505
Short term investments 208,957 208,695
Accounts receivable, net of allowance for doubtful accounts of $3,096

and $3,090 at March 31, 2011 and December 31, 2010, respectively 
75,689 75,873
Revenue earned in excess of billings 16,344 5,329
Deferred income taxes and other current assets 45,766 43,705
     
 Total current assets  416,280  412,107
     
Property and equipment 194,241 171,445
Less accumulated depreciation and amortization 73,673 69,338
     
 Property and equipment, net  120,568  102,107
     
Goodwill 906 906
     
Non current Term Deposits with Banks 30 66
     
     
Deferred income taxes and other non current assets 31,756 30,931
     
   $ 569,540  $ 546,117
     
LIABILITIES    
     
Current liabilities:    
Accrued payroll and related costs  $ 33,470  $ 40,736
Income taxes payable 3,956 2,291
Accounts payable and other current liabilities 34,485 29,384
Deferred revenue 6,236 9,783
     
 Total current liabilities  78,147  82,194
     
Other non current liabilities 13,634 12,453
     
 Total liabilities  91,781  94,647
     
SHAREHOLDERS' EQUITY    
     
     
Total shareholders' equity  477,759  451,470
     
Total liabilities and shareholders' equity  $ 569,540  $ 546,117
CONTACT: Jon Luebke
         Syntel
         (248) 619-3503
         jon_luebke@syntelinc.com

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