Accenture Reports First-Quarter Fiscal 2013 Result 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 —
NEW YORK; Dec. 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.
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