CA Technologies Reports Second Quarter Fiscal Year 2012 Results - CA Technologies
{{search ? 'Close':'Search'}}

CA Technologies Reports Second Quarter Fiscal Year 2012 Results


  • Revenue $1.2 Billion, Up 5 Percent in Constant Currency and 10 Percent as Reported
  • GAAP EPS $0.47,  Down 7 Percent in Constant Currency and Up 9 Percent as Reported
  • Non-GAAP EPS $0.51, Down 1 Percent in Constant Currency and Up 6 Percent as Reported
  • GAAP and Non-GAAP EPS Results Include a $0.06 Impact from Previously Announced Workforce Reduction
  • Cash Flow from Operations $190 Million, Up 37 Percent in Constant Currency and 47 percent as Reported
  • Updates Full Year Outlook

ISLANDIA, N.Y., Oct. 26, 2011 – CA Technologies (NASDAQ:CA) today reported financial results for its second quarter of fiscal year 2012, ended Sept 30, 2011.

FINANCIAL OVERVIEW

Note: All financial results have been adjusted to reflect discontinued operations.

EXECUTIVE COMMENTARY

“We achieved our objectives for earnings per share, cash and margin for the second quarter,” said Bill McCracken, chief executive officer, CA Technologies.  “However, we were not pleased with one area, new product sales, relative to our expectations.  As a result, we have revised our revenue outlook to reflect the shortfall in new product sales and the macroeconomic environment.  But we also have raised the bottom end of our earnings per share guidance to reflect continued operational efficiency and discipline.  

“In the second half of the 2012 fiscal year, we will focus on improving new product sales by expanding our product penetration, improving execution in EMEA and driving consistent performance in our acquired companies.  We remain convinced that our strategic direction and supporting investments are the right ones, and are confident that we will meet our revised outlook.  We also are mindful of making the right choices to maximize shareholder returns and will continue to return cash through stock repurchases and dividends.”  

REVENUE AND BOOKINGS

During the second quarter, the Company saw demand for its security management solutions, along with mainframe capacity.  Just over 3 percentage points of revenue growth in constant currency and 8 percentage points as reported were driven by organic products, while  2 percentage points in constant currency and 2 percentage points as reported came from the products  and services from the  acquisitions of Base Technologies, Hyperformix, Inc., Torokina, ITKO and Arcot Systems, Inc.  About 61 percent of the Company’s revenue came from North America, while 39 percent came from international operations.

Revenue year-over-year:

  • Total revenue was $1.2 billion, up 5 percent in constant currency and 10 percent as reported.
  • Total revenue backlog was $8.07 billion, up 4 percent in constant currency and as reported.  The current portion of revenue backlog was $3.55 billion, up 3 percent in constant currency and 4 percent as reported.
  • North America revenue was $735 million, up 10 percent in constant currency and 11 percent as reported.
  • International revenue was $465 million, down 1 percent in constant currency and up 10 percent as reported.

Bookings year-over year:

  • Total bookings in the second quarter were $972 million, down 4 percent in constant currency and 3 percent as reported. 
  • The Company signed a total of 10 license agreements with contract values in excess of $10 million each, for an aggregate contract value of $321 million.  During the second quarter of fiscal year 2011, the Company signed a total of 14 license agreements with contract values in excess of $10 million each, for an aggregate contract value of $361 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 3.59 years, compared with 3.47 years for the same period in fiscal year 2011.
  • North America bookings were $664 million, flat in constant currency and as reported. 
  • International bookings were $308 million, down 11 percent in constant currency and 8 percent as reported. 

EXPENSES AND MARGIN

Year-over-year GAAP results:

  • Operating expenses, before interest and income taxes, were $867 million, up 11 percent in constant currency and 10 percent as reported.
  • Operating income, before interest and income taxes, was $333 million, down 6 percent in constant currency and up 10 percent as reported.
  • Operating margin was 28 percent, flat with the prior year period.

Year-over-year non-GAAP results, which exclude purchased software and intangibles amortization, pre-fiscal year 2010 restructuring costs, and certain other gains and losses (including recoveries and certain costs associated with derivative litigation matters and share-based compensation expense), and which include gains and losses on hedges that mature within the quarter, but which exclude gains and losses on hedges that do not mature within the quarter:

  • Operating expenses, before interest and income taxes, were $822 million, up 12 percent in constant currency and up 17 percent as reported.
  • Operating income, before interest and income taxes, was $378 million, down 7 percent in constant currency and 2 percent as reported.
  • Operating margin was 32 percent, down 3 percentage points from the prior year period. 

For the second quarter of fiscal year 2012, the Company’s effective GAAP tax rate was 27.8 percent, compared to 24.5 percent in the prior year.  The Company’s effective non-GAAP tax rate was 31.5 percent, compared to 33.3 percent in the prior year. 

GAAP and non-GAAP EPS were unfavorably affected by $44 million in costs, or about $0.06 per share on a GAAP and Non-GAAP basis, associated with a planned workforce reduction of approximately 400 positions announced during the quarter.  The affects of the expenses incurred by the workforce reduction were offset by revenue growth, positive currency fluctuations, a reduced share count and lower interest costs.

SEGMENT INFORMATION

Beginning in the first quarter of fiscal year 2012, CA Technologies began reporting segment results in three areas:  Mainframe Solutions, Enterprise Solutions and Services.

  • Mainframe Solutions revenue was $655 million, up 2 percent in constant currency and 7 percent as reported.  Operating expense was $308 million and operating profit was $347 million.  Operating margin was 53 percent, down from 57 percent a year ago. Excluding the effects of the costs of the workforce reduction, Mainframe Solutions operating margin would have been 56 percent.
  • Enterprise Solutions revenue was $449 million, up 9 percent in constant currency and 14 percent as reported.  Operating expense was $422 million and operating profit was $27 million.  Operating margin was 6 percent, down from 8 percent a year ago. Excluding the effects of the costs of the workforce reduction, Enterprise Solutions operating margin would have been 10 percent.
  • Services revenue was $96 million, up 16 percent in constant currency and 22 percent as reported.  Operating expense was $92 million and operating profit was $4 million.  Operating margin was 4 percent, up from 3 percent a year ago. Excluding the effects of the costs of the workforce reduction, Services operating margin would have been 5 percent.

CASH FLOW FROM CONTINUING OPERATIONS

Cash flow from continuing operations in the second quarter was $190 million, compared to $129 million in the prior year.  Cash flow was favorably affected by improved collections, especially in North America, and lower cash taxes. In addition, cash flow was unfavorably affected by higher disbursements, primarily driven to higher payroll resulting from acquisitions and increased commission expense.

CAPITAL STRUCTURE

  • Cash, cash equivalents and marketable securities at Sept. 30, 2011 were $2.38 billion.
  • With $1.31 billion in total debt outstanding and approximately $60 million in notional pooling, the Company’s net cash, cash equivalents and marketable securities position was $1.01 billion.
  • In the second quarter, the Company repurchased approximately 9.7 million shares of stock, for approximately $200 million and distributed about $25 million in dividends. 
  • The Company’s outstanding share count at Sept. 30, 2011 was 489 million.

BUSINESS HIGHLIGHTS

During the second quarter the Company announced:

  • The appointment of Marco Comastri as president, Europe, Middle East and Africa (EMEA). Comastri joins CA Technologies with an outstanding track record in the IT industry, having helped drive growth at such companies as Microsoft, IBM and, most recently, Poste Italiane.
  • The availability of 10 new and updated products and solutions that advance the Company’s strategy for enabling cloud-connected enterprises and helping customers realize the business value of agility. 
  • The completion of the acquisitions of privately-held Interactive TKO, Inc. (ITKO) and Watchmouse B.V. (WatchMouse). The acquisitions expand the breadth of solutions CA Technologies offers enterprises and service providers for using and providing cloud computing to rapidly deliver business services.
  • The availability of CA Mainframe Application Tuner, which combines two application performance management (APM) tools with new integration capabilities to help IT organizations proactively pinpoint and resolve performance issues that could reduce user productivity and consume extra system resources.
  • The appointment of Jens Alder to its Board of Directors. Alder currently serves as chairman of Sanitas Krankenversicherung, one of Switzerland’s largest health insurers and RTX Telecom A/S, a telecommunications component and handset producer based in Denmark.

OUTLOOK FOR FISCAL YEAR 2012

The Company adjusted its outlook for fiscal year 2012.  The following guidance represents "forward-looking statements" (as defined below).
The Company expects the following:

  • Total revenue growth updated to a range of 5 percent to 6 percent in constant currency, compared to the previous outlook of 6 percent to 8 percent.  At Sept. 30, 2011 exchange rates, this translates to reported revenue of $4.7 billion to $4.8 billion.
  • GAAP diluted earnings per share growth updated to a range of 6 percent to 9 percent in constant currency, compared to the previous outlook of 5 percent to 9 percent.  At Sept. 30, 2011 exchange rates, this translates to reported diluted earnings per share of $1.78 to $1.83.
  • Non-GAAP diluted earnings per share growth updated to a range of 7 percent to 10 percent in constant currency, compared to the previous outlook of 6 percent to 10 percent.  At Sept. 30, 2011 exchange rates, this translates to reported non-GAAP diluted earnings per share of $2.13 to $2.18.
  • Cash flow from operations growth continues in a range of 3 percent to 5 percent in constant currency.  At Sept. 30, 2011 exchange rates, this translates to reported cash flow from operations of $1.44 billion to $1.47 billion.

The Company expects a full-year GAAP operating margin of 28 percent and non-GAAP operating margin of 34 percent.  The Company also expects a full-year GAAP and non-GAAP tax rate in a range of 31 to 32 percent.  The Company anticipates approximately 478 million shares outstanding at fiscal year 2012 year-end and weighted average diluted shares outstanding of approximately 491 million for the fiscal year.

Press Contacts


ABOUT CA TECHNOLOGIES

CA Technologies (NASDAQ: CA) provides IT management solutions that help customers manage and secure complex IT environments to support agile business services. Organizations leverage CA Technologies software and SaaS solutions to accelerate innovation, transform infrastructure and secure data and identities, from the data center to the cloud. Learn more about CA Technologies at www.ca.com.

LEGAL NOTICES

Copyright © 2011 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

Highlight – CA Technologies Blog

The world of enterprise IT is changing, fast. Keep up.

Contact
Call us at 1-800-225-5224
Call us at 1-800-225-5224
Email
Get in touch with CA
Email Us

Chat with CA

Just give us some brief information and we'll connect you to the right CA Expert.

Our hours of availability are 8AM - 5PM CST.

All Fields Required

connecting

We're matching your request.

Unfortunately, we can't connect you to an agent. If you are not automatically redirected please click here.

  • {{message.agentProfile.name}} will be helping you today.

    View Profile


  • Transfered to {{message.agentProfile.name}}

    {{message.agentProfile.name}} joined the conversation

    {{message.agentProfile.name}} left the conversation

  • Your chat with {{$storage.chatSession.messages[$index - 1].agentProfile.name}} has ended.
    Thank you for your interest in CA.


    How Did We Do?
    Let us know how we did so that we can maintain a quality experience.

    Take Our Survey >

    Rate Your Chat Experience.

    {{chat.statusMsg}}

agent is typing