Accenture Reports First-Quarter Fiscal 2013 Results, With Record Quarterly Revenues and EPS
Accenture Reports First-Quarter Fiscal 2013 Results, With Record Quarterly
Revenues and EPS
– Revenues increase 2% in U.S. dollars and 5% in local currency, to
$7.2 billion –
– EPS up 10%, to $1.06 –
– Operating income increases 7%, to $1.05 billion, with operating margin of
14.5% –
– New bookings are $7.5 billion, with consulting bookings of $4.2 billion and
outsourcing bookings of $3.3 billion –
– Company raises outlook for full-year EPS to range of $4.24 to $4.32 –
Business Wire
NEW YORK -- December 19, 2012
Accenture (NYSE: ACN) reported financial results for the first quarter of
fiscal 2013, ended Nov. 30, 2012, with record net revenues of $7.2 billion, an
increase of 2 percent in U.S. dollars and 5 percent in local currency over the
same period last year. Diluted earnings per share were $1.06, an increase of
$0.10, or 10 percent, over the same period last year.
Operating income was $1.05 billion, an increase of 7 percent over the same
period last year, and operating margin was 14.5 percent, a year-over-year
expansion of more than 60 basis points.
New bookings for the quarter were $7.5 billion, with consulting bookings of
$4.2 billion and outsourcing bookings of $3.3 billion.
Pierre Nanterme, Accenture’s chief executive officer, said, “We are pleased
with our first-quarter results, in particular our ability to drive profitable
growth despite the continued volatility in the global economic environment.
Revenue growth, which included a strong 13 percent local-currency increase in
outsourcing, was in line with our expectations. We also delivered very good
profitability, reflecting our disciplined management of the business.
“Looking ahead, we remain focused on the successful execution of our growth
strategy and are investing to further differentiate our industry and
technology capabilities, as well as to expand our geographic footprint in key
growth markets. We are raising our business outlook for both EPS and operating
margin for the full fiscal year and remain well-positioned to continue
delivering value for our clients and shareholders.”
Financial Review
Revenues before reimbursements (“net revenues”) for the first quarter of
fiscal 2013 were $7.22 billion, compared with $7.07 billion for the first
quarter of fiscal 2012, an increase of 2 percent in U.S. dollars and 5 percent
in local currency and within the company’s guided range of $7.1 billion to
$7.35 billion. The foreign-exchange impact of approximately negative 3 percent
was consistent with the assumption provided in the company’s fourth-quarter
earnings release.
* Consulting net revenues for the quarter were $3.96 billion, a decrease of
3 percent in U.S. dollars and flat in local currency compared with the
first quarter of fiscal 2012.
* Outsourcing net revenues were $3.26 billion, an increase of 9 percent in
U.S. dollars and 13 percent in local currency over the first quarter of
fiscal 2012.
Diluted EPS for the quarter were $1.06, compared with $0.96 for the first
quarter last year. The $0.10 increase in EPS reflects:
* $0.07 from higher revenue and operating results, including the unfavorable
impact of foreign exchange;
* $0.02 from a lower effective tax rate; and
* $0.02 from a lower share count;
partially offset by:
* $0.01 from lower non-operating income.
Gross margin (gross profit as a percentage of net revenues) for the quarter
was 32.8 percent, compared with 31.8 percent for the first quarter last year.
Selling, general and administrative (SG&A) expenses for the quarter were
$1.32 billion, or 18.2 percent of net revenues, compared with $1.27 billion,
or approximately 17.9 percent of net revenues, for the first quarter last
year.
Operating income for the quarter increased 7 percent, to $1.05 billion, or
14.5 percent of net revenues, compared with $981 million, or 13.9 percent of
net revenues, for the first quarter of fiscal 2012. The operating margin
expansion of more than 60 basis points reflects improvements in contract
profitability and overall cost management compared with the first quarter last
year.
The company’s effective tax rate for the quarter was 26.8 percent, compared
with 28.3 percent for the first quarter last year. The lower rate in the first
quarter of fiscal 2013 was primarily due to higher benefits related to final
determinations of prior-year tax liabilities.
Net income for the quarter was $766 million, compared with $712 million for
the first quarter last year, an 8 percent increase.
Operating cash flow for the quarter was negative $109 million, and property
and equipment additions were $87 million. Free cash flow, defined as operating
cash flow net of property and equipment additions, was negative $195 million.
Operating cash flow and free cash flow for the first quarter of fiscal 2013
include a discretionary cash contribution of $500 million the company made to
its U.S. defined benefit pension plan, which had a net impact, after tax, of
$350 million. For the same period last year, operating cash flow was
$475 million; property and equipment additions were $81 million; and free cash
flow was $394 million.
Days services outstanding, or DSOs, were 32 days at Nov. 30, 2012, compared
with 27 days at Aug. 31, 2012 and 32 days at Nov. 30, 2011.
Accenture’s total cash balance at Nov. 30, 2012 was $5.7 billion, compared
with $6.6 billion at Aug. 31, 2012.
Utilization for the quarter was 88 percent, compared with 87 percent for the
fourth quarter of fiscal 2012 and 87 percent for the first quarter of fiscal
2012. Attrition for the first quarter of fiscal 2013 was 11 percent, compared
with 12 percent for the fourth quarter of fiscal 2012 and 12 percent for the
first quarter of fiscal 2012.
New Bookings
New bookings for the first quarter were $7.5 billion and reflect a negative
2 percent foreign-currency impact compared with new bookings in the first
quarter last year.
* Consulting new bookings were $4.2 billion, or 56 percent of total new
bookings.
* Outsourcing new bookings were $3.3 billion, or 44 percent of total new
bookings.
Net Revenues by Operating Group
Net revenues by operating group were as follows:
* Communications, Media & Technology: $1.46 billion, compared with
$1.54 billion for the first quarter of fiscal 2012, a decrease of
5 percent in U.S. dollars and 1 percent in local currency.
* Financial Services: $1.56 billion, compared with $1.48 billion for the
first quarter of fiscal 2012, an increase of 5 percent in U.S. dollars and
9 percent in local currency.
* Health & Public Service: $1.17 billion, compared with $1.05 billion for
the first quarter of fiscal 2012, an increase of 11 percent in U.S.
dollars and 13 percent in local currency.
* Products: $1.70 billion, compared with $1.67 billion for the first quarter
of fiscal 2012, an increase of 2 percent in U.S. dollars and 5 percent in
local currency.
* Resources: $1.32 billion, compared with $1.33 billion for the first
quarter of fiscal 2012, flat in U.S. dollars and an increase of 3 percent
in local currency.
Net Revenues by Geographic Region
Net revenues by geographic region were as follows:
* Americas: $3.33 billion, compared with $3.07 billion for the first quarter
of fiscal 2012, an increase of 8 percent in U.S. dollars and 10 percent in
local currency.
* Europe, Middle East and Africa (EMEA): $2.82 billion, compared with
$3.01 billion for the first quarter of fiscal 2012, a decrease of
6 percent in U.S. dollars and flat in local currency.
* Asia Pacific: $1.06 billion, compared with $991 million for the first
quarter of fiscal 2012, an increase of 7 percent in U.S. dollars and
8 percent in local currency.
Returning Cash to Shareholders
Accenture continues to return cash to shareholders through cash dividends and
share repurchases.
Dividend
On Nov. 15, 2012, a semi-annual cash dividend of $0.81 per share was paid to
Accenture plc Class A ordinary shareholders of record at the close of business
on Oct. 12, 2012 and to Accenture SCA Class I common shareholders of record
at the close of business on Oct. 9, 2012. These cash dividend payments totaled
$560 million. This dividend represents an increase of 13.5 cents per share, or
20 percent, over the company’s previous semi-annual dividend, declared in
March.
Share Repurchase Activity
During the first quarter of fiscal 2013, Accenture repurchased or redeemed
3.3 million shares for a total of $221 million, including approximately
656,000 shares repurchased in the open market.
Accenture’s total remaining share repurchase authority at Nov. 30, 2012 was
approximately $4.05 billion.
At Nov. 30, 2012, Accenture had approximately 693 million total shares
outstanding, including 641 million Accenture plc Class A ordinary shares and
52 million Accenture SCA Class I common shares and Accenture Canada Holdings
Inc. exchangeable shares.
Business Outlook
Second Quarter Fiscal 2013
Accenture expects net revenues for the second quarter of fiscal 2013 to be in
the range of $6.9 billion to $7.15 billion. This range assumes a
foreign-exchange impact of negative 1 percent compared with the second quarter
of fiscal 2012.
Full Fiscal Year 2013
For fiscal 2013, the company continues to expect net revenue growth to be in
the range of 5 percent to 8 percent in local currency.
Accenture’s business outlook for the full 2013 fiscal year continues to assume
a foreign-exchange impact of negative 1 percent compared with fiscal 2012.
The company has raised its outlook for diluted EPS for fiscal 2013 to the
range of $4.24 to $4.32 from its previously guided range of $4.22 to $4.30.
Accenture has raised its outlook for operating margin for the full fiscal year
to the range of 14.1 percent to 14.2 percent, an expansion of 20 to 30 basis
points. The company’s previously guided range was 14.0 percent to 14.1
percent.
The company continues to expect operating cash flow to be in the range of
$3.2 billion to $3.5 billion; property and equipment additions to be
$420 million; and free cash flow to be in the range of $2.8 billion to
$3.1 billion.
The company continues to expect to return at least $3.3 billion to its
shareholders in fiscal 2013 through dividends and share repurchases.
The company continues to expect its annual effective tax rate to be in the
range of 26 percent to 27 percent.
Accenture continues to target new bookings for fiscal 2013 in the range of
$31 billion to $34 billion.
Conference Call and Webcast Details
Accenture will host a conference call at 4:30 p.m. EST today to discuss its
first-quarter fiscal 2013 financial results. To participate, please dial +1
(800) 230-1059 [+1 (612) 234-9959 outside the United States, Puerto Rico and
Canada] approximately 15 minutes before the scheduled start of the call. The
conference call will also be accessible live on the Investor Relations section
of the Accenture Web site at www.accenture.com.
A replay of the conference call will be available online at www.accenture.com
beginning at 7:00 p.m. EST today, Wednesday, Dec. 19, and continuing until
Thursday, March 28, 2013. A podcast of the conference call will be available
online at www.accenture.com beginning approximately 24 hours after the call
and continuing until Thursday, March 28, 2013. The replay will also be
available via telephone by dialing +1 (800) 475-6701 [+1 (320) 365-3844
outside the United States, Puerto Rico and Canada] and entering access code
271680 from 7:00 p.m. EST Wednesday, Dec. 19 through Thursday, March 28, 2013.
About Accenture
Accenture is a global management consulting, technology services and
outsourcing company, with approximately 259,000 people serving clients in more
than 120 countries. Combining unparalleled experience, comprehensive
capabilities across all industries and business functions, and extensive
research on the world’s most successful companies, Accenture collaborates with
clients to help them become high-performance businesses and governments. The
company generated net revenues of US$27.9 billion for the fiscal year ended
Aug. 31, 2012. Its home page is www.accenture.com.
Non-GAAP Financial Information
This news release includes certain non-GAAP financial information as defined
by Securities and Exchange Commission Regulation G. Pursuant to the
requirements of this regulation, reconciliations of this non-GAAP financial
information to Accenture’s financial statements as prepared under generally
accepted accounting principles (GAAP) are included in this press release.
Financial results “in local currency” are calculated by restating
current-period activity into U.S. dollars using the comparable prior-year
period’s foreign-currency exchange rates. Accenture’s management believes
providing investors with this information gives additional insights into
Accenture’s results of operations. While Accenture’s management believes that
the non-GAAP financial measures herein are useful in evaluating Accenture’s
operations, this information should be considered as supplemental in nature
and not as a substitute for the related financial information prepared in
accordance with GAAP.
Forward-Looking Statements
Except for the historical information and discussions contained herein,
statements in this news release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,”
“intends,” “plans,” “projects,” “believes,” “estimates,” “positioned,”
“outlook” and similar expressions are used to identify these forward-looking
statements. These statements involve a number of risks, uncertainties and
other factors that could cause actual results to differ materially from those
expressed or implied. These include, without limitation, risks that: the
company’s results of operations could be adversely affected by volatile,
negative or uncertain economic conditions and the effects of these conditions
on the company’s clients’ businesses and levels of business activity; the
company’s business depends on generating and maintaining ongoing, profitable
client demand for the company’s services and solutions, and a significant
reduction in such demand could materially affect the company’s results of
operations; if the company is unable to keep its supply of skills and
resources in balance with client demand around the world and attract and
retain professionals with strong leadership skills, the company’s business,
the utilization rate of the company’s professionals and the company’s results
of operations may be materially adversely affected; the markets in which the
company competes are highly competitive, and the company might not be able to
compete effectively; the company could have liability or the company’s
reputation could be damaged if the company fails to protect client and/or
company data or information systems as obligated by law or contract or if the
company’s information systems are breached; as a result of the company’s
geographically diverse operations and its growth strategy to continue
geographic expansion, the company is more susceptible to certain risks; the
company’s results of operations could be materially adversely affected by
fluctuations in foreign currency exchange rates; the company’s Global Delivery
Network is increasingly concentrated in India and the Philippines, which may
expose it to operational risks; the company’s results of operations could
materially suffer if the company is not able to obtain sufficient pricing to
enable it to meet its profitability expectations; if the company’s pricing
estimates do not accurately anticipate the cost, risk and complexity of the
company performing its work or third parties upon whom it relies do not meet
their commitments, then the company’s contracts could have delivery
inefficiencies and be unprofitable; the company’s work with government clients
exposes the company to additional risks inherent in the government contracting
environment; the company’s business could be materially adversely affected if
the company incurs legal liability in connection with providing its services
and solutions; the company’s results of operations and ability to grow could
be materially negatively affected if the company cannot adapt and expand its
services and solutions in response to ongoing changes in technology and
offerings by new entrants; the company’s alliance relationships may not be
successful or may change, which could adversely affect the company’s results
of operations; outsourcing services and the continued expansion of the
company’s other services and solutions into new areas subject the company to
different operational risks than its consulting and systems integration
services; the company’s services or solutions could infringe upon the
intellectual property rights of others or the company might lose its ability
to utilize the intellectual property of others; the company has only a limited
ability to protect its intellectual property rights, which are important to
the company’s success; the company’s ability to attract and retain business
and employees may depend on its reputation in the marketplace; the company
might not be successful at identifying, acquiring or integrating businesses or
entering into joint ventures; the company’s profitability could suffer if its
cost-management strategies are unsuccessful, and the company may not be able
to improve its profitability through improvements to cost-management to the
degree it has done in the past; many of the company’s contracts include
payments that link some of its fees to the attainment of performance or
business targets and/or require the company to meet specific service levels,
which could increase the variability of the company’s revenues and impact its
margins; changes in the company’s level of taxes, and audits, investigations
and tax proceedings, or changes in the company’s treatment as an Irish
company, could have a material adverse effect on the company’s results of
operations and financial condition; if the company is unable to manage the
organizational challenges associated with its size, the company might be
unable to achieve its business objectives; if the company is unable to collect
its receivables or unbilled services, the company’s results of operations,
financial condition and cash flows could be adversely affected; the company’s
share price and results of operations could fluctuate and be difficult to
predict; the company’s results of operations and share price could be
adversely affected if it is unable to maintain effective internal controls;
the company may be subject to criticism and negative publicity related to its
incorporation in Ireland; as well as the risks, uncertainties and other
factors discussed under the “Risk Factors” heading in Accenture plc’s most
recent annual report on Form 10-K and other documents filed with or furnished
to the Securities and Exchange Commission. Statements in this news release
speak only as of the date they were made, and Accenture undertakes no duty to
update any forward-looking statements made in this news release or to conform
such statements to actual results or changes in Accenture’s expectations.
ACCENTURE PLC
CONSOLIDATED INCOME STATEMENTS
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
Three Months Ended November 30,
2012 % of Net 2011 % of Net
Revenues Revenues
REVENUES:
Revenues before
reimbursements $ 7,219,961 100 % $ 7,074,497 100 %
("Net revenues")
Reimbursements 448,075 514,611
Revenues 7,668,036 7,589,108
OPERATING
EXPENSES:
Cost of services:
Cost of services
before 4,853,768 67.2 % 4,822,957 68.2 %
reimbursable
expenses
Reimbursable 448,075 514,611
expenses
Cost of services 5,301,843 5,337,568
Sales and 868,202 12.0 % 837,477 11.8 %
marketing
General and
administrative 448,852 6.2 % 432,517 6.1 %
costs
Reorganization 465 408
costs, net
Total operating 6,619,362 6,607,970
expenses
OPERATING INCOME 1,048,674 14.5 % 981,138 13.9 %
Interest income 8,767 10,512
Interest expense (4,549 ) (4,158 )
Other (expense) (6,436 ) 5,535
income, net
INCOME BEFORE 1,046,456 14.5 % 993,027 14.0 %
INCOME TAXES
Provision for 280,425 281,270
income taxes
NET INCOME 766,031 10.6 % 711,757 10.1 %
Net income
attributable to
noncontrolling
interests
(58,955 ) (61,956 )
in Accenture
SCA and Accenture
Canada Holdings
Inc.
Net income
attributable to
noncontrolling (8,259 ) (7,715 )
interests – other
(1)
NET INCOME
ATTRIBUTABLE TO $ 698,817 9.7 % $ 642,086 9.1 %
ACCENTURE PLC
CALCULATION OF
EARNINGS PER
SHARE:
Net income
attributable to $ 698,817 $ 642,086
Accenture plc
Net income
attributable to
noncontrolling
interests
58,955 61,956
in Accenture
SCA and Accenture
Canada Holdings
Inc. (2)
Net income for
diluted earnings $ 757,772 $ 704,042
per share
calculation
EARNINGS PER
SHARE:
- Basic $ 1.09 $ 1.00
- Diluted (3) $ 1.06 $ 0.96
WEIGHTED AVERAGE
SHARES:
- Basic 639,659,238 644,285,298
- Diluted (3) 716,368,102 730,745,055
Cash dividends $ 0.81 $ 0.675
per share
_________________
(1) Comprised primarily of noncontrolling interest attributable to the noncontrolling
shareholders of Avanade, Inc.
(2) Diluted earnings per share assumes the redemption of all Accenture SCA Class I
common shares owned by holders of
noncontrolling interests and the exchange of all Accenture Canada Holdings Inc.
exchangeable shares for Accenture plc
Class A ordinary shares on a one-for-one basis.
(3) Diluted weighted average Accenture plc Class A ordinary shares and earnings per
share amounts in fiscal 2012 have been
restated to reflect additional restricted share units issued to holders of restricted
share units in connection with the fiscal 2013
payment of cash dividends.
ACCENTURE PLC
SUMMARY OF REVENUES
(In thousands of U.S. dollars)
(Unaudited)
Percent Percent
Increase Increase
Three Months Ended November (Decrease) (Decrease)
30, U.S. Local
2012 2011 Dollars Currency
OPERATING GROUPS
Communications, Media & Technology $ 1,458,786 $ 1,535,186 (5 %) (1 %)
Financial 1,562,942 1,483,839 5 9
Services
Health & Public 1,174,710 1,054,302 11 13
Service
Products 1,698,543 1,669,553 2 5
Resources 1,321,465 1,326,875 0 3
Other 3,515 4,742 n/m n/m
TOTAL Net 7,219,961 7,074,497 2 % 5 %
Revenues
Reimbursements 448,075 514,611 (13 )
TOTAL REVENUES $ 7,668,036 $ 7,589,108 1 %
GEOGRAPHY
Americas $ 3,333,120 $ 3,074,717 8 % 10 %
EMEA 2,824,896 3,008,528 (6 ) 0
Asia Pacific 1,061,945 991,252 7 8
TOTAL Net $ 7,219,961 $ 7,074,497 2 % 5 %
Revenues
TYPE OF WORK
Consulting $ 3,960,676 $ 4,083,424 (3 %) 0 %
Outsourcing 3,259,285 2,991,073 9 13
TOTAL Net $ 7,219,961 $ 7,074,497 2 % 5 %
Revenues
_________________
n/m = not
meaningful
OPERATING INCOME BY OPERATING GROUP (OG)
Three Months Ended November 30,
2012 2011
Operating Operating Operating Operating Increase
OPERATING GROUPS (Decrease)
Income Margin Income Margin
Communications, Media & $ 183,048 13 % $ 228,527 15 % $ (45,479 )
Technology
Financial 241,098 15 214,855 14 26,243
Services
Health & Public 143,459 12 112,834 11 30,625
Service
Products 235,692 14 218,775 13 16,917
Resources 245,377 19 206,147 16 39,230
Total $ 1,048,674 14.5 % $ 981,138 13.9 % $ 67,536
ACCENTURE PLC
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
November 30, 2012 August 31, 2012
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,678,892 $ 6,640,526
Short-term investments 2,349 2,261
Receivables from clients, net 3,501,506 3,080,877
Unbilled services, net 1,487,964 1,399,834
Other current assets 1,342,815 1,464,433
Total current assets 12,013,526 12,587,931
NON-CURRENT ASSETS:
Unbilled services, net 11,121 12,151
Investments 27,902 28,180
Property and equipment, net 799,443 779,494
Other non-current assets 3,556,028 3,257,659
Total non-current assets 4,394,494 4,077,484
TOTAL ASSETS $ 16,408,020 $ 16,665,415
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current portion of long-term $ 13 $ 11
debt and bank borrowings
Accounts payable 890,233 903,847
Deferred revenues 2,127,658 2,275,052
Accrued payroll and related 3,338,958 3,428,838
benefits
Other accrued liabilities 1,620,497 1,501,457
Total current liabilities 7,977,359 8,109,205
NON-CURRENT LIABILITIES:
Long-term debt 19 22
Other non-current liabilities 3,436,670 3,931,760
Total non-current liabilities 3,436,689 3,931,782
TOTAL ACCENTURE PLC 4,506,633 4,145,833
SHAREHOLDERS' EQUITY
NONCONTROLLING INTERESTS 487,339 478,595
TOTAL SHAREHOLDERS' EQUITY 4,993,972 4,624,428
TOTAL LIABILITIES AND $ 16,408,020 $ 16,665,415
SHAREHOLDERS' EQUITY
ACCENTURE PLC
CONSOLIDATED CASH FLOWS STATEMENTS
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended November 30,
2012 2011
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 766,031 $ 711,757
Depreciation, amortization and 139,924 132,625
asset impairments
Share-based compensation expense 114,170 100,558
Change in assets and (1,128,940 ) (469,682 )
liabilities/other, net
Net cash (used in) provided by (108,815 ) 475,258
operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and (86,547 ) (80,875 )
equipment
Purchases of businesses and (209,952 ) (160,055 )
investments, net of cash acquired
Other investing, net 762 1,019
Net cash used in investing (295,737 ) (239,911 )
activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of 164,606 139,947
ordinary shares
Purchases of shares (220,831 ) (285,105 )
Cash dividends paid (560,135 ) (474,896 )
Other financing, net 38,698 32,437
Net cash used in financing (577,662 ) (587,617 )
activities
Effect of exchange rate changes 20,580 (256,902 )
on cash and cash equivalents
NET DECREASE IN CASH AND CASH (961,634 ) (609,172 )
EQUIVALENTS
CASH AND CASH EQUIVALENTS, 6,640,526 5,701,078
beginning of period
CASH AND CASH EQUIVALENTS, end of $ 5,678,892 $ 5,091,906
period
Contact:
Accenture
Roxanne Taylor, + 917-452-5106
roxanne.taylor@accenture.com
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