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Third Quarter Results for Fiscal 2014
Jul 29, 2014
Key highlights:
- Third fiscal quarter revenue of
$902 million , within the$885-$915 million guidance range. Foreign currency movements positively affected revenue by approximately$3 million relative to the second quarter of fiscal 2014 - Third fiscal quarter non-GAAP operating income of
$151 million ; non-GAAP operating margin of 16.7%; GAAP operating income of$125 million - Third fiscal quarter diluted non-GAAP EPS of
$0.81 , within the$0.75-$0.81 guidance range, excluding amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects - Diluted GAAP EPS of
$0.68 for the third fiscal quarter, within the$0.61-$0.69 guidance range - Free cash flow of
$173 million for the third fiscal quarter - Twelve-month backlog of
$2.97 billion at the end of the third fiscal quarter, up$30 million from the end of the second quarter of fiscal 2014 - Repurchased
$93 million of ordinary shares during the third fiscal quarter - The board of directors approved a
$0.155 per share quarterly cash dividend to be paid onOctober 17, 2014 - Fourth quarter fiscal 2014 guidance: Expected revenue of approximately
$890-$920 million . Expected diluted non-GAAP EPS of approximately$0.75-$0.81 , excluding amortization of purchased intangible assets and other acquisition-related costs and approximately$0.05-$0.06 per share of equity-based compensation expense, net of related tax effects. Expected diluted GAAP EPS of approximately$0.61-$0.69
"We are pleased with our third fiscal quarter performance, which reflects healthy customer activity in
Gelman continued, "During the quarter, we continued to support our North American customers in their strategic initiatives. Along these lines, we are today pleased to announce that
Gelman said, "In Europe, we made further progress at
Gelman concluded, "As we embark on our fourth fiscal quarter, we remain highly focused on our execution, which includes securing new business, improving our operating efficiency and continuously expanding our product suite with innovative new offerings. We are on-track to deliver full year revenue growth towards the mid-point of our previously guided range of 5% to 8%. This outlook naturally reflects many moving parts, including with respect to consolidation activity amongst North American wireless and Pay TV operators. Our free cash flow generation continues to be robust, and we remain committed towards the balanced allocation of our capital over the long term. Taking all these factors into consideration, we continue to expect diluted non-GAAP earnings per share growth of 6% to 9% for the full fiscal year."
Discussion of Third Fiscal Quarter Financial Results
Free cash flow was
Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was
Financial Outlook
Quarterly Cash Dividend Program
On
Conference Call Details
Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes, non-GAAP net income and non-GAAP diluted earnings per share growth. These non-GAAP measures exclude the following items:
- amortization of purchased intangible assets and other acquisition related costs;
- equity-based compensation expense; and
- tax effects related to the above.
These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.
For its internal budgeting process and in monitoring the results of the business,
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This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about
AMDOCS LIMITED |
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Consolidated Statements of Income (in thousands, except per share data) |
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Three months ended |
Nine months ended |
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June 30, |
June 30, |
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2014 |
2013 |
2014 |
2013 |
|||||
Revenue: |
||||||||
License |
$ 11,861 |
$ 18,616 |
$ 65,247 |
$ 59,433 |
||||
Service |
890,616 |
822,716 |
2,598,129 |
2,441,196 |
||||
902,477 |
841,332 |
2,663,376 |
2,500,629 |
|||||
Operating expenses: |
||||||||
Cost of license |
639 |
561 |
2,235 |
1,839 |
||||
Cost of service |
583,965 |
546,108 |
1,723,056 |
1,619,215 |
||||
Research and development |
64,863 |
59,583 |
190,292 |
179,002 |
||||
Selling, general and administrative |
112,681 |
103,396 |
335,078 |
313,539 |
||||
Amortization of purchased intangible |
15,326 |
8,520 |
43,174 |
28,358 |
||||
777,474 |
718,168 |
2,293,835 |
2,141,953 |
|||||
Operating income |
125,003 |
123,164 |
369,541 |
358,676 |
||||
Interest and other expense, net |
748 |
2,726 |
4,060 |
4,591 |
||||
Income before income taxes |
124,255 |
120,438 |
365,481 |
354,085 |
||||
Income taxes |
14,428 |
880 |
43,862 |
30,600 |
||||
Net income |
$ 109,827 |
$ 119,558 |
$ 321,619 |
$ 323,485 |
||||
Basic earnings per share |
$ 0.69 |
$ 0.74 |
$ 2.02 |
$ 2.00 |
||||
Diluted earnings per share |
$ 0.68 |
$ 0.73 |
$ 1.99 |
$ 1.98 |
||||
Basic weighted average number of shares |
159,257 |
160,914 |
159,574 |
161,350 |
||||
Diluted weighted average number of shares |
161,725 |
162,667 |
161,939 |
163,048 |
||||
Cash dividends declared per share |
$ 0.155 |
$ 0.130 |
$ 0.440 |
$ 0.390 |
AMDOCS LIMITED Selected Financial Metrics (in thousands, except per share data) |
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Three months ended |
Nine months ended |
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June 30, |
June 30, |
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2014 |
2013 |
2014 |
2013 |
|||||
Revenue |
$ 902,477 |
$ 841,332 |
$ 2,663,376 |
$ 2,500,629 |
||||
Non-GAAP operating income |
150,849 |
141,551 |
446,735 |
418,935 |
||||
Non-GAAP net income |
130,919 |
134,430 |
385,333 |
373,154 |
||||
Non-GAAP diluted earnings per |
$ 0.81 |
$ 0.83 |
$ 2.38 |
$ 2.29 |
||||
Diluted weighted average number |
161,725 |
162,667 |
161,939 |
163,048 |
AMDOCS LIMITED Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP (in thousands) |
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Three months ended |
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Reconciliation items |
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GAAP |
Amortization of |
Equity based |
Tax effect
|
Non-GAAP |
|
Operating expenses: |
|||||
Cost of license |
$ 639 |
$ - |
$ - |
$ - |
$ 639 |
Cost of service |
583,965 |
- |
(4,297) |
- |
579,668 |
Research and |
64,863 |
- |
(880) |
- |
63,983 |
Selling, general and |
112,681 |
- |
(5,343) |
- |
107,338 |
Amortization of |
15,326 |
(15,326) |
- |
- |
- |
Total operating expenses |
777,474 |
(15,326) |
(10,520) |
- |
751,628 |
Operating income |
125,003 |
15,326 |
10,520 |
- |
150,849 |
Income taxes |
14,428 |
- |
- |
4,754 |
19,182 |
Net income |
$ 109,827 |
$ 15,326 |
$ 10,520 |
$ (4,754) |
$ 130,919 |
Three months ended |
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Reconciliation items |
|||||
GAAP |
Amortization of |
Equity based |
Tax effect
|
Non-GAAP |
|
Operating expenses: |
|||||
Cost of license |
$ 561 |
$ - |
$ - |
$ - |
$ 561 |
Cost of service |
546,108 |
- |
(4,937) |
- |
541,171 |
Research and |
59,583 |
- |
(1,060) |
- |
58,523 |
Selling, general and |
103,396 |
- |
(3,870) |
- |
99,526 |
Amortization of |
8,520 |
(8,520) |
- |
- |
- |
Total operating expenses |
718,168 |
(8,520) |
(9,867) |
- |
699,781 |
Operating income |
123,164 |
8,520 |
9,867 |
- |
141,551 |
Income taxes |
880 |
- |
- |
3,515 |
4,395 |
Net income |
$ 119,558 |
$ 8,520 |
$ 9,867 |
$ (3,515) |
$ 134,430 |
AMDOCS LIMITED Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP (in thousands) |
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Nine months ended |
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Reconciliation items |
||||||||||
GAAP |
Amortization of |
Equity based |
Tax effect
|
Non-GAAP |
||||||
Operating expenses: |
||||||||||
Cost of license |
$ 2,235 |
$ - |
$ - |
$ - |
$ 2,235 |
|||||
Cost of service |
1,723,056 |
- |
(13,220) |
- |
1,709,836 |
|||||
Research and |
190,292 |
- |
(2,685) |
- |
187,607 |
|||||
Selling, general and |
335,078 |
- |
(18,115) |
- |
316,963 |
|||||
Amortization of |
43,174 |
(43,174) |
- |
- |
- |
|||||
Total operating expenses |
2,293,835 |
(43,174) |
(34,020) |
- |
2,216,641 |
|||||
Operating income |
369,541 |
43,174 |
34,020 |
- |
446,735 |
|||||
Income taxes |
43,862 |
- |
- |
13,480 |
57,342 |
|||||
Net income |
$ 321,619 |
$ 43,174 |
$ 34,020 |
$ (13,480) |
$ 385,333 |
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Nine months ended |
||||||||||
Reconciliation items |
||||||||||
GAAP |
Amortization of |
Equity based |
Tax effect
|
Non-GAAP |
||||||
Operating expenses: |
||||||||||
Cost of license |
$ 1,839 |
$ - |
$ - |
$ - |
$ 1,839 |
|||||
Cost of service |
1,619,215 |
- |
(14,440) |
- |
1,604,775 |
|||||
Research and |
179,002 |
- |
(3,060) |
- |
175,942 |
|||||
Selling, general and |
313,539 |
- |
(14,401) |
- |
299,138 |
|||||
Amortization of |
28,358 |
(28,358) |
- |
- |
- |
|||||
Total operating expenses |
2,141,953 |
(28,358) |
(31,901) |
- |
2,081,694 |
|||||
Operating income |
358,676 |
28,358 |
31,901 |
- |
418,935 |
|||||
Income taxes |
30,600 |
- |
- |
10,590 |
41,190 |
|||||
Net income |
$ 323,485 |
$ 28,358 |
$ 31,901 |
$ (10,590) |
$ 373,154 |
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AMDOCS LIMITED Condensed Consolidated Balance Sheets (in thousands) |
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As of |
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June 30, |
September 30, |
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ASSETS |
||||
Current assets |
||||
Cash, cash equivalents and short-term interest-bearing investments |
$ 1,174,610 |
$ 1,326,380 |
||
Accounts receivable, net, including unbilled of $137,504 and $110,626, |
755,622 |
678,219 |
||
Deferred income taxes and taxes receivable |
156,809 |
125,880 |
||
Prepaid expenses and other current assets |
146,917 |
151,595 |
||
Total current assets |
2,233,958 |
2,282,074 |
||
Equipment and leasehold improvements, net |
276,101 |
275,544 |
||
Goodwill and other intangible assets, net |
2,127,360 |
1,975,060 |
||
Other noncurrent assets |
393,417 |
393,135 |
||
Total assets |
$ 5,030,836 |
$ 4,925,813 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
Current liabilities |
||||
Accounts payable, accruals and other |
$ 720,300 |
$ 683,768 |
||
Short-term financing arrangements |
- |
200,000 |
||
Deferred revenue |
212,691 |
151,112 |
||
Deferred income taxes and taxes payable |
70,224 |
39,376 |
||
Total current liabilities |
1,003,215 |
1,074,256 |
||
Other noncurrent liabilities |
598,160 |
576,774 |
||
Shareholders' equity |
3,429,461 |
3,274,783 |
||
Total liabilities and shareholders' equity |
$ 5,030,836 |
$ 4,925,813 |
AMDOCS LIMITED Consolidated Statements of Cash Flows (in thousands) |
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Nine months ended June 30, |
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2014 |
2013 |
|||
Cash Flow from Operating Activities: |
||||
Net income |
$ 321,619 |
$ 323,485 |
||
Reconciliation of net income to net cash provided by operating activities: |
||||
Depreciation and amortization |
116,911 |
107,400 |
||
Equity-based compensation expense |
34,020 |
31,901 |
||
Deferred income taxes |
(5,336) |
1,829 |
||
Excess tax benefit from equity-based compensation |
(574) |
(275) |
||
Loss from short-term interest-bearing investments |
737 |
1,873 |
||
Net changes in operating assets and liabilities, net of amounts acquired: |
||||
Accounts receivable |
(40,570) |
31,559 |
||
Prepaid expenses and other current assets |
2,828 |
(12,010) |
||
Other noncurrent assets |
(17,639) |
23,056 |
||
Accounts payable, accrued expenses and accrued personnel |
25,955 |
(59,279) |
||
Deferred revenue |
55,625 |
(18,360) |
||
Income taxes payable |
5,802 |
(14,391) |
||
Other noncurrent liabilities |
16,980 |
22,054 |
||
Net cash provided by operating activities |
516,358 |
438,842 |
||
Cash Flow from Investing Activities: |
||||
Payments for purchase of equipment and leasehold improvements, net |
(77,881) |
(80,151) |
||
Proceeds from sale of short-term interest-bearing investments |
284,926 |
258,121 |
||
Net cash paid for acquisitions |
(180,540) |
- |
||
Purchase of short-term interest-bearing investments |
(294,091) |
(324,982) |
||
Other |
3,348 |
(4,161) |
||
Net cash used in investing activities |
(264,238) |
(151,173) |
||
Cash Flow from Financing Activities: |
||||
Payments under financing arrangements |
(200,000) |
(200,000) |
||
Repurchase of shares |
(261,916) |
(270,251) |
||
Proceeds from employee stock options exercised |
116,041 |
154,105 |
||
Payments of dividends |
(66,363) |
(63,079) |
||
Payments under capital lease and other |
(136) |
(825) |
||
Net cash used in financing activities |
(412,374) |
(380,050) |
||
Net decrease in cash and cash equivalents |
(160,254) |
(92,381) |
||
Cash and cash equivalents at beginning of period |
1,014,192 |
879,158 |
||
Cash and cash equivalents at end of period |
$ 853,938 |
$ 786,777 |
||
AMDOCS LIMITED Supplementary Information (in millions) |
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Three months ended |
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June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
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North America |
$ 647.2 |
$ 651.7 |
$ 628.0 |
$ 608.9 |
$ 619.2 |
|||||
Europe |
114.6 |
113.8 |
117.0 |
101.9 |
98.0 |
|||||
Rest of the World |
140.7 |
131.4 |
119.0 |
134.4 |
124.1 |
|||||
Total Revenue |
$ 902.5 |
$ 896.9 |
$ 864.0 |
$ 845.2 |
$ 841.3 |
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As of |
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June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
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Emerging Markets Revenue |
$ 116.9 |
$ 103.4 |
$ 100.7 |
$ 113.8 |
$ 101.3 |
|||||
As of |
||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
||||||
Managed Services Revenue |
$ 438.0 |
$ 426.3 |
$ 429.3 |
$ 414.0 |
$ 417.1 |
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Three months ended |
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June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
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Customer Experience |
$ 870.8 |
$ 863.6 |
$ 829.6 |
$ 809.3 |
$ 803.2 |
|||||
Directory |
31.7 |
33.3 |
34.4 |
35.9 |
38.1 |
|||||
Total Revenue |
$ 902.5 |
$ 896.9 |
$ 864.0 |
$ 845.2 |
$ 841.3 |
|||||
As of |
||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
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12-Month Backlog |
$ 2,970 |
$ 2,940 |
$ 2,890 |
$ 2,870 |
$ 2,830 |
SOURCE
Matthew Smith, Director, Investor Relations, Amdocs, 314-212-8328, E-mail: dox_info@amdocs.com