Highlights: aEURc Q3 revenue $103।8M aEURc Q3 EPS of $0.54 per diluted share aEURc Quarter-ending global headcount of 12,277 aEURc Company revises Outlook for 2008
TROY, Mich., Oct 23, 2008 (BUSINESS WIRE) -- Syntel, Inc. (SYNT: 
SYNT 22.25, +2.95, +15.3%) , a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the third quarter, ended September 30, 2008.
syntel inc com
Last: 22.25+2.95+15.28%
4:00pm 10/23/2008
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4:00pm 10/23/2008
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Third Quarter Financial Highlights
Syntel's total revenue for the third quarter increased 18 percent to $103.8 million, compared to $87.9 million in the prior-year period and less than one percent sequentially from $103.4 million in the second quarter of 2008. The Company's gross margin was 44.3 percent in the third quarter, compared to 39.8 percent in the prior-year period and 41.1 percent in the second quarter of 2008.
During the third quarter, Applications Outsourcing accounted for 68 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 19 percent, e-Business contributing 11 percent and Team Sourcing at two percent.
The Company's Selling, General and Administrative (SG&A) expenses were 19.1 percent in the third quarter of 2008, compared to 20.9 percent in the prior-year period and 19.1 percent in the second quarter of 2008. Syntel's income from operations expanded to 25.2 percent in the third quarter, compared to 19.0 percent in the prior-year period and 22.1 percent in the second quarter of 2008.
Operating margins during the quarter were favorably impacted by depreciation in the Indian Rupee. This benefit was partially offset by losses in currency hedging, which negatively impacted "other income".
Net income for the third quarter was $22.1 million or $0.54 per diluted share, compared to $18.3 million or $0.44 per diluted share in the prior-year period and net income of $17.4 million or $0.42 per diluted share in the second quarter of 2008.
During the third quarter, Syntel added 10 new clients and two new "Hunting Licenses" or preferred partnership agreements, bringing the total number to 92 strategic relationships.
Operational Highlights
"The macroeconomic environment during the third quarter continued to deteriorate, resulting in reduced customer confidence and increasingly conservative behavior," said Syntel Chairman and Chief Executive Officer Bharat Desai. "Although the overall economy is currently struggling, the mega-trend toward globalization of services remains intact. Syntel as an organization remains focused on the long-term business opportunity and creating value for all key stakeholders."
"While third quarter revenue was pressured by foreign exchange and demand softness, earnings power was strong. Based on the current economic environment, we are cautious in our outlook for the upcoming quarter and early 2009, and have adjusted our guidance accordingly," said Keshav Murugesh, Syntel's President and Chief Operating Officer. "We remain optimistic, however, about the health of our growing business pipeline and the overall positioning of the Company. We continue to invest in target markets, verticals and services to help our customers achieve their business objectives."
2008 Guidance
Based on current visibility levels and an exchange rate assumption of 48.8 rupees to the dollar, the Company is updating 2008 guidance to reflect revenue of $408 to $412 million and EPS in the range of $1.88 to $1.93.
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 (877) 219-1781. 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 by dialing (800) 642-1687 and entering "69524818" from 2:00 p.m. on October 23, 2008 until midnight on October 31, 2008. International callers may dial (706) 645-9291 and enter the same passcode.
About Syntel
Syntel (SYNT: ![]()
SYNT 22.25, +2.95, +15.3%) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle ofbusiness 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 tocreate 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 has over 12,200 employees worldwide, is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. To learn more, visit us at: www.syntelinc.com.
syntel inc com
Last: 22.25+2.95+15.28%
4:00pm 10/23/2008
Delayed quote data
4:00pm 10/23/2008
Delayed quote data
Sponsored by:
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 11, 2008 and the Company's Quarterly Report on Form 10-Q for the period ending June 30, 2008.
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2008 2007 2008 2007
Net revenues $ 103,765 $ 87,885 $ 305,697 $ 243,672
Cost of revenues 57,814 52,887 177,542 148,486
Gross profit 45,951 34,998 128,155 95,186
Selling, general and administrative expenses 19,815 18,333 60,046 47,431
Income from operations 26,136 16,665 68,109 47,755
Other income (expense), net 629 1,659 718 4,328
Income before provision for income taxes 26,765 18,324 68,827 52,083
Income tax expense 4,620 11 8,832 5,131
Net income $ 22,145 $ 18,313 $ 59,995 $ 46,952
Dividend per share $ 0.06 $ 0.06 $ 0.18 $ 0.18
EARNINGS PER SHARE:
Basic $ 0.54 $ 0.45 $ 1.46 $ 1.14
Diluted $ 0.54 $ 0.44 $ 1.45 $ 1.14
Weighted average common shares outstanding:
Basic 41,275 41,100 41,194 41,036
Diluted 41,347 41,256 41,321 41,253
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 69,442 $ 61,555
Short term investments 49,225 54,643
Accounts receivable, net of allowance for doubtful accounts of $443 55,319 51,783
and $499 at September 30, 2008 and December 31, 2007, respectively
Revenue earned in excess of billings 11,829 7,340
Deferred income taxes and other current assets 27,588 23,761
Total current assets 213,403 199,082
Property and equipment 121,321 110,186
Less accumulated depreciation and amortization 47,989 44,602
Property and equipment, net 73,332 65,584
Goodwill 906 906
Deferred income taxes and other noncurrent assets 11,507 6,032
$ 299,148 $ 271,604
LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 26,333 $ 27,242
Income taxes payable 11,129 10,580
Accounts payable and other current liabilities 26,585 22,341
Deferred revenue 3,709 3,691
Total liabilities 67,756 63,854
SHAREHOLDERS' EQUITY
Total shareholders' equity 231,392 207,750
Total liabilities and shareholders' equity $ 299,148 $ 271,604
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