Accenture Reports Strong First-Quarter Fiscal 2007 Financial Results, With Record Quarterly Revenues and Double-Digit EPS Growth
Accenture (NYSE: ACN) reported strong financial results for the
first quarter of fiscal 2007, ended Nov. 30, with net revenues of
$4.75 billion, an increase of 14 percent in U.S. dollars over the same
period last year and above the high end of the company's previously
stated expectations. GAAP diluted earnings per share were $0.46, an
increase of 28 percent over the first quarter of fiscal 2006.
The company achieved the highest quarterly net revenues in its
history, driven by record net revenues across all three geographic
regions and all five operating groups, with exceptional top-line
performance from its Financial Services, Products and Resources
operating groups. Consulting and outsourcing net revenues were also
the highest in any quarter, with double-digit increases in both areas.
New bookings were $5.5 billion, with a quarterly record in consulting
bookings of $3 billion.
In addition, Accenture grew operating income by 19 percent and
expanded its operating margin by 50 basis points, to 12.8 percent. The
company also maintained its strong balance sheet, with $2.84 billion
in cash and fixed-income securities classified as investments on its
balance sheet at Nov. 30, 2006.
William D. Green, Accenture's CEO, said, "We had a tremendous
first quarter, with our outstanding top- and bottom-line performance
demonstrating continued success in executing our strategy. We exceeded
our overall revenue expectations, achieving solid growth across nearly
every dimension of our business. With $5.5 billion in new bookings, we
are seeing sustained demand for our services, particularly in
consulting. Our success gives us confidence for the periods ahead. We
paid a cash dividend in the first quarter and returned cash to
shareholders through further share repurchases. We remain focused on
differentiating Accenture in the marketplace and delivering value for
both our clients and shareholders."
Financial Review
Revenues before reimbursements ("net revenues") for the first
quarter of fiscal 2007 were $4.75 billion, compared with $4.17 billion
for the first quarter of fiscal 2006, an increase of 14 percent in
U.S. dollars and 11 percent in local currency.
-- Consulting net revenues were $2.91 billion, an increase of 13
percent in U.S. dollars and 10 percent in local currency over
the first quarter last year.
-- Outsourcing net revenues were $1.84 billion, an increase of 16
percent in U.S. dollars and 13 percent in local currency over
the same period last year.
GAAP diluted EPS for the first quarter of fiscal 2007 increased 28
percent, to $0.46, compared with $0.36 for the first quarter last
year.
GAAP operating income for the first quarter of fiscal 2007 was
$610 million, or 12.8 percent of net revenues, compared with
$513 million, or 12.3 percent of net revenues, for the first quarter
last year. This represents a 50 basis-point expansion in operating
margin.
Gross margin (gross profit as a percentage of net revenues) for
the first quarter of fiscal 2007 was 30.1 percent, compared with
31.7 percent for the first quarter of fiscal 2006.
Selling, general and administrative expenses in the first quarter
of fiscal 2007 were $817 million, or 17.2 percent of net revenues,
compared with $802 million, or 19.2 percent of net revenues, in the
first quarter last year.
The company's effective tax rate for the first quarter of fiscal
2007 was 36.7 percent.
GAAP income before minority interest was $406 million in the first
quarter of fiscal 2007, compared with $328 million in the same period
of fiscal 2006.
For the three months ended Nov. 30, 2006, operating cash flow was
$166 million, and property and equipment additions were $67 million.
Free cash flow, defined as operating cash flow net of property and
equipment additions, for the first quarter of 2007 was $99 million.
Accenture's total cash balance at Nov. 30, 2006 was $2.44 billion,
compared with $3.07 billion at Aug. 31, 2006. Cash combined with $407
million of fixed-income securities classified as investments on the
company's balance sheet was $2.84 billion at Nov. 30, 2006, compared
with $3.53 billion at Aug. 31, 2006. Total debt at Nov. 30, 2006 was
$32 million.
New Bookings
New bookings for the first quarter of fiscal 2007 were
$5.5 billion.
-- Consulting bookings were $3.0 billion, or 54 percent of new
bookings, the highest quarterly consulting bookings in the
company's history.
-- Outsourcing accounted for $2.5 billion, or 46 percent, of new
bookings.
Net Revenues by Operating Group
Net revenues for Accenture's five operating groups were as
follows:
-- Communications & High Tech: $1,096 million, compared with
$1,048 million for the first quarter of fiscal 2006, an
increase of 5 percent in U.S. dollars and 2 percent in local
currency.
-- Financial Services: $1,067 million, compared with $855 million
for the same period last year, an increase of 25 percent in
U.S. dollars and 21 percent in local currency.
-- Government: $628 million, compared with $598 million for the
year-ago period, an increase of 5 percent in U.S. dollars and
4 percent in local currency.
-- Products: $1,195 million, compared with $1,017 million for the
year-ago period, an increase of 17 percent in U.S. dollars and
14 percent in local currency.
-- Resources: $763 million, compared with $650 million for the
same period last year, an increase of 17 percent in U.S.
dollars and 14 percent in local currency.
Net Revenues by Geographic Region
All three geographic regions achieved record-high quarterly
revenues. Net revenues by geographic region were as follows:
-- Americas: $2.09 billion, compared with $1.86 billion for the
first quarter of fiscal 2006, an increase of 13 percent in
U.S. dollars and 12 percent in local currency.
-- Europe, Middle East and Africa (EMEA): $2.30 billion, compared
with $2.01 billion for the first quarter of fiscal 2006, an
increase of 15 percent in U.S. dollars and 9 percent in local
currency.
-- Asia Pacific: $361 million, compared with $303 million for the
year-ago period, an increase of 19 percent in both local
currency and U.S. dollars.
Share Repurchase Activity
During the first quarter of fiscal 2007, Accenture repurchased or
redeemed a total of 24.4 million shares for a total of $723.7 million.
At Nov. 30, 2006, Accenture had $1.4 billion of share repurchase
authority remaining.
Dividend
On Nov. 15, 2006, a cash dividend of $0.35 per share was paid on
Accenture Ltd's Class A common shares to shareholders of record at the
close of business on Oct. 13, 2006. On Nov. 15, 2006, a cash dividend
of $0.35 per share was also paid on Accenture SCA Class I common
shares to shareholders of record at the close of business on Oct. 5,
2006.
Business Outlook
Second Quarter Fiscal 2007
Accenture expects net revenues for the second quarter of fiscal
2007 to be in the range of $4.6 billion to $4.8 billion.
Fiscal Year 2007
For the full fiscal year 2007, Accenture continues to expect net
revenue growth to be in the range of 9 percent to 12 percent in local
currency. The Company has raised its outlook for GAAP diluted EPS by
$.03 to a range of $1.80 to $1.85, up from its previously expected
range of $1.77 to $1.82.
The company continues to expect operating cash flow to be
$1.95 billion to $2.15 billion; property and equipment additions to be
$335 million; and free cash flow to be in the range of $1.6 billion to
$1.8 billion. The expected annual effective tax rate remains in the
range of 34 percent to 37 percent. Accenture continues to target new
bookings for fiscal 2007 in the range of $22 billion to $24 billion.
Conference Call and Webcast Details
Accenture will host a conference call at 4:30 p.m. EST today to
discuss its first-quarter 2007 financial results. To participate,
please dial +1 (888) 428-4480 (+1 (612) 234-9960 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 and podcast of the conference call will be available
online at www.accenture.com for approximately two weeks beginning at
9:45 p.m. EST Wednesday, Dec. 20. 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
852452 from 9:45 p.m. EST Wednesday, Dec. 20 through 11:59 p.m. EST
Wednesday, Jan. 3, 2007.
About Accenture
Accenture is a global management consulting, technology services
and outsourcing company. Committed to delivering innovation, Accenture
collaborates with its clients to help them become high-performance
businesses and governments. With deep industry and business process
expertise, broad global resources and a proven track record, Accenture
can mobilize the right people, skills, and technologies to help
clients improve their performance. With more than 145,000 people in 49
countries, the company generated net revenues of US$16.65 billion for
the fiscal year ended Aug. 31, 2006. Its home page is
www.accenture.com.
Forward-Looking Statements
This news release contains forward-looking statements relating to
our operations and results of operations, the accuracy of which is
necessarily subject to risks and uncertainties. Factors that could
cause actual results to differ materially from those expressed or
implied include general economic conditions and the factors discussed
under the "Risk Factors" heading in the Business section of our most
recent annual report on Form 10-K and other documents filed with or
furnished to the Securities and Exchange Commission. 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.
Non-GAAP Financial Information
This press 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. Accenture's management
believes providing investors with this information gives additional
insights into Accenture's results of operations. While Accenture's
management believes that these non-GAAP financial measures 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.
-0-
*T
ACCENTURE LTD
CONSOLIDATED INCOME STATEMENTS
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
Three Months Ended November 30,
-----------------------------------------------
% of Net % of Net
2006 Revenues 2005 Revenues
------------- --------- ------------- ---------
REVENUES:
Revenues before
reimbursements (Net
revenues) $ 4,754,088 100% $ 4,169,475 100%
Reimbursements 412,271 373,541
------------- -------------
Revenues 5,166,359 4,543,016
OPERATING EXPENSES:
Cost of services:
Cost of services
before reimbursable
expenses 3,321,844 69.9% 2,849,167 68.3%
Reimbursable
expenses 412,271 373,541
------------- -------------
Cost of services 3,734,115 3,222,708
Sales and marketing 436,930 9.2% 408,602 9.8%
General and
administrative costs 379,643 8.0% 393,766 9.4%
Reorganization costs 6,079 5,384
------------- -------------
Total operating
expenses 4,556,767 4,030,460
------------- -------------
OPERATING INCOME 609,592 12.8% 512,556 12.3%
Gain on investments,
net 2,854 1,438
Interest income 36,307 30,353
Interest expense (5,122) (4,685)
Other expense (2,466) (15,947)
------------- -------------
INCOME BEFORE INCOME
TAXES 641,165 13.5% 523,715 12.6%
Provision for income
taxes 235,308 195,869
------------- -------------
INCOME BEFORE MINORITY
INTEREST 405,857 8.5% 327,846 7.9%
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (115,813) (110,136)
Minority interest -
other (1) (5,812) (2,770)
------------- -------------
NET INCOME $ 284,232 6.0% $ 214,940 5.2%
============= =============
CALCULATION OF EARNINGS
PER SHARE:
Net income $ 284,232 $ 214,940
Minority interest in
Accenture SCA and
Accenture Canada
Holdings Inc. (2) 115,813 110,136
------------- -------------
Net income for diluted
earnings per share
calculation $ 400,045 $ 325,076
============= =============
EARNINGS PER SHARE:
- Basic $ 0.47 $ 0.37
============= =============
- Diluted $ 0.46 $ 0.36
============= =============
WEIGHTED AVERAGE
SHARES:
- Basic 598,612,668 586,267,569
- Diluted 875,332,780 914,057,273
Cash dividends per
share $ 0.35 $ 0.30
-----------------------
(1) Minority interest - other is comprised primarily of minority
interest attributable to the minority shareholders of Avanade, Inc.
(2) Diluted earnings per share assumes the redemption and exchange of
all Accenture SCA Class I common shares and Accenture Canada Holdings
Inc. exchangeable shares, respectively, for Accenture Ltd Class A
common shares on a one-for-one basis.
*T
-0-
*T
ACCENTURE LTD
(In thousands of U.S. dollars)
(Unaudited)
SUMMARY OF REVENUES
Three Months Ended
November 30, Percent
----------------------- of Total
Percent Fiscal
Percent Increase 2007
Increase Local Net
2006 2005 US$ Currency Revenues
----------- ----------- -------- --------- ---------
OPERATING GROUPS
Communications &
High Tech $1,096,390 $1,047,541 5% 2% 23%
Financial
Services 1,067,247 854,872 25% 21% 23%
Government 627,828 598,119 5% 4% 13%
Products 1,194,668 1,017,035 17% 14% 25%
Resources 762,990 650,286 17% 14% 16%
Other 4,965 1,622 n/m n/m --
----------- ----------- ---------
TOTAL Net
Revenues 4,754,088 4,169,475 14% 11% 100%
=========
Reimbursements 412,271 373,541 10%
----------- -----------
TOTAL REVENUES $5,166,359 $4,543,016 14%
=========== ===========
GEOGRAPHY
Americas $2,090,105 $1,855,490 13% 12% 44%
EMEA 2,302,680 2,010,669 15% 9% 48%
Asia Pacific 361,303 303,316 19% 19% 8%
----------- ----------- ---------
TOTAL Net
Revenues $4,754,088 $4,169,475 14% 11% 100%
=========== =========== =========
TYPE OF WORK
Consulting $2,909,453 $2,576,639 13% 10% 61%
Outsourcing 1,844,635 1,592,836 16% 13% 39%
----------- ----------- ---------
TOTAL Net
Revenues $4,754,088 $4,169,475 14% 11% 100%
=========== =========== =========
-----------------
n/m = not meaningful
*T
-0-
*T
OPERATING INCOME BY OPERATING GROUP (OG)
Three Months Ended November 30,
-------------------------------------------
2006 2005
---------------------- --------------------
Percent
Percent of of OG Percent
OPERATING Operating OG Net Operating Net Increase
GROUPS Income Revenues Income Revenues (Decrease)
----------- ---------- ---------- --------- -----------
Communications
& High Tech $ 134,401 12% $ 172,306 16% (22%)
Financial
Services 133,892 13% 81,603 10% 64%
Government 28,362 5% 61,622 10% (54%)
Products 207,079 17% 117,733 12% 76%
Resources 105,858 14% 79,292 12% 34%
----------- ----------
Total $ 609,592 12.8% $ 512,556 12.3% 19%
=========== ==========
*T
-0-
*T
ACCENTURE LTD
CONSOLIDATED BALANCE SHEETS
November 30, 2006 and August 31, 2006
(In thousands of U.S. dollars)
November 30, 2006 August 31, 2006
------------------ -----------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,437,530 $ 3,066,988
Short-term investments 298,851 352,951
Receivables from clients, net 2,257,954 1,916,450
Unbilled services 1,549,652 1,350,211
Other current assets 658,934 667,221
------------------ -----------------
Total current assets 7,202,921 7,353,821
------------------ -----------------
NON-CURRENT ASSETS:
Unbilled services 77,904 105,081
Investments 123,049 125,119
Property and equipment, net 715,881 727,692
Other non-current assets 1,094,818 1,106,367
------------------ -----------------
Total non-current assets 2,011,652 2,064,259
------------------ -----------------
TOTAL ASSETS $ 9,214,573 $ 9,418,080
================== =================
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Short-term debt $ 26,468 $ 24,792
Accounts payable 829,302 856,087
Deferred revenues 1,478,007 1,511,259
Accrued payroll and related
benefits 1,767,803 1,693,796
Other accrued liabilities 1,820,386 1,730,548
------------------ -----------------
Total current liabilities 5,921,966 5,816,482
------------------ -----------------
NON-CURRENT LIABILITIES:
Long-term debt 5,109 27,065
Other non-current liabilities 832,990 812,400
------------------ -----------------
Total non-current liabilities 838,099 839,465
------------------ -----------------
MINORITY INTEREST 730,483 867,878
SHAREHOLDERS' EQUITY 1,724,025 1,894,255
------------------ -----------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 9,214,573 $ 9,418,080
================== =================
*T