This is a summary of the fourth quarter fiscal 2008 earnings call conducted by Accenture Ltd. (ACN) on September 25, 2008.
Management:
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Chairman, CEO: William D. Green
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CFO: Pamela J. Craig
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COO: Stephen J. Rohleder
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Managing Director of IR: Richard Clark
Key Investor Issues:
- Fourth-quarter net income was $434.8 million, up 37% from a year ago when the consulting and outsourcing company made $316.8 million.
- Net income per diluted share was 67 cents versus 50 cents.
- Net revenue rose 17% to $6 billion.
- Operating income rose 22% to $785 million, and operating margin expanded by 50 basis points compared with the fourth quarter last year.
- For the next fiscal year, Accenture forecast net revenue growth of 9% to 12% and EPS of $2.85 to $2.93.
Fourth Quarter Highlights:
- The company delivered strong quarterly revenues of $6 billion driven by double-digit growth in US dollars across all of the operating groups and geographies.
- Accenture delivered record annual revenues of $23.4 billion.
- EPS grew by 35% for both the quarter and the full year. We expanded operating margin for both the quarter and the year.
Accenture had its highest ever quarterly bookings of $7.7 billion and the highest ever annual bookings of $26.8 billion, exceeding the top end of the guided range.
- The company generated strong cash flow of $944 million for the quarter and $2.48 billion for the year.
- Accenture continues to return cash to shareholders through share repurchases and it just announced its fourth annual dividend.
- The company ended the year with more than 186,000 people.
Net revenues for the fourth quarter were $6 million, an increase of 17% in US dollars and 10% in local currency over the period last year.
Accenture had strong revenue generation for the quarter coming in right where it had expected to, at the midpoint of the guided range.
- Consulting revenues were $3.6 billion an increase of 19% in US dollars and 11% in local currency.
- Outsourcing revenues were $2.4 billion an increase of 15% in US dollars and 9% in local currency.
Net revenues for the full fiscal year were $23.4 billion, an increase of 19% in US dollars and 11% in local currency.
- Consulting revenues were $14.1 billion an increase of 19% in US dollars and 11% in local currency.
- Outsourcing revenues were $9.3 billion an increase of 18% in US dollars and 11% in local currency.
For the fourth quarter gross margin was 31.7% compared with 31.2% in the same period last year, a more than 50 point basis point expansion driven by higher contract profitability.
- Gross margin for the full year was 30.7% consistent with fiscal year 2007 even though Accenture absorbed higher comp increases and slightly lower utilization in fiscal 2008.
- SG&A costs for the fourth quarter were $1.12 billion or 18.6% of net revenues. This compares with $945 million or 18.5% of net revenues in last year’s fourth quarter.
- SG&A costs for the full year were $4.15 billion or 17.7% of net revenues. This compares with fiscal year 2007 SG&A expense of $3.52 billion or 17.9% of net revenues, a 20 basis point reduction from fiscal 2007 and consistent with the objective to grow SG&A at a rate slower than the revenue.
Operating income for the fourth quarter increased 22% to $785 million reflecting a 13.1% operating margin.
This compares with $642 million or a 12.6% operating margin in the same period last year, an expansion of more than 50 basis points driven by strong gross margins in the quarter. Full-year operating margin was 12.9%, a 20 basis point improvement over fiscal 2007 and within the annual guided range of 12.8% to 13.1%.
The effective tax rate for the fourth quarter was 31.8%.
- The year-to-date effective tax rate was 29.3% consistent with the guided range of 28% to 30%.
- Income before minority interest for the fourth quarter was $550 million compared with $431 million in the same period last year, an increase of 28%.
- For the fiscal year income before minority interest was $2.2 billion compared with $1.7 billion in fiscal 2007, also an increase of 28%.
Diluted earnings per share for the fourth quarter were $0.67 an increase of $0.17 or 35% over diluted EPS of $0.50 in last year’s fourth quarter.
