CA Technologies Reports Second Quarter Fiscal Year 2013 Results - CA Technologies
{{search ? 'Close':'Search'}}

CA Technologies Reports Second Quarter Fiscal Year 2013 Results


  • Revenue $1.152 Billion, Flat in Constant Currency and Down 4 Percent as Reported
  • GAAP EPS $0.48, Up 15 Percent in Constant Currency and 2 Percent as Reported
  • Non-GAAP EPS $0.59, Up 22 Percent in Constant Currency and 16 Percent as Reported
  • Cash Flow from Continuing Operations $89 Million, Down 50 Percent in Constant Currency and 53 Percent as Reported
  • Updates Outlook for Full Fiscal Year 2013

ISLANDIA, N.Y., October 25, 2012 – CA Technologies (NASDAQ:CA) today reported financial results for its second quarter of fiscal year 2013, ended September 30, 2012.

FINANCIAL OVERVIEW

EXECUTIVE COMMENTARY

“While we had anticipated that several areas of our business would be down in the second quarter, our new product and capacity sales fell short of our expectations,” said Bill McCracken, chief executive officer, CA Technologies.  “Our performance was also affected by the weakening global economy, which elongated sales cycles. Despite this difficult environment, we were able to meet our expectations for margin through disciplined expense management.

“We will continue to implement our customer market segmentation model, introduce new products and solutions throughout the second half, and build out our partner network.  We also will manage carefully our expenses to drive healthy operating margins for the full year,” said McCracken.

REVENUE AND BOOKINGS

About 63 percent of the Company’s revenue came from North America, while 37 percent came from International operations.

Revenue year-over-year:

  • Total revenue was $1.152 billion, flat in constant currency and down 4 percent as reported.
  • Total revenue backlog was $7.460 billion, down 7 percent in constant currency and 8 percent as reported.  The current portion of revenue backlog was $3.453 billion, down 2 percent in constant currency and 3 percent as reported.  The Company continues to see a drop in backlog as contracts come off the balance sheet prior to an expected increase in the fiscal year 2014 renewal portfolio.
  • North America revenue was $730 million, flat in constant currency and down 1 percent as reported.
  • International revenue was $422 million, flat in constant currency and down 9 percent as reported.

Bookings year-over-year:

  • Total bookings in the second quarter were $837 million, down 13 percent in constant currency and 14 percent as reported, due in part to lower Enterprise Solutions new product sales, mainframe capacity sales and renewals.
  • The Company renewed a total of 10 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $232 million.  During the second quarter of fiscal year 2012, the Company renewed a total of 10 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $321 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 3.11 years, compared with 3.59 years for the same period in fiscal year 2012.
  • North America bookings were $500 million, down 25 percent in constant currency and as reported. 
  • International bookings were $337 million, up 14 percent in constant currency and 9 percent as reported. 

EXPENSES AND MARGIN

Year-over-year GAAP results:

  • Operating expenses, before interest and income taxes, were $815 million, down 5 percent in constant currency and 6 percent as reported.
  • Operating income, before interest and income taxes, was $337 million, up 12 percent in constant currency and 1 percent as reported.
  • Operating margin was 29 percent, up 1 percentage point from the prior year period.

Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, and certain other gains and losses.  The results also include gains and losses on hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter.

  • Operating expenses, before interest and income taxes, were $746 million, down 6 percent in constant currency and 9 percent as reported.
  • Operating income, before interest and income taxes, was $406 million, up 12 percent in constant currency and 7 percent as reported.
  • Operating margin was 35 percent, up 3 percentage points from the prior year period.

For the second quarter of fiscal year 2013, the Company’s effective GAAP tax rate was 32.1 percent, compared with 27.8 percent in the prior year period.  The Company’s effective non-GAAP tax rate was 30.8 percent, compared with 31.5 percent in the prior year period. 

GAAP and non-GAAP earnings per share in the second quarter of fiscal year 2012 were adversely affected by $44 million in costs, or about $0.06 per share, associated with a workforce reduction.  GAAP and non-GAAP operating margin in last year’s second quarter also were adversely affected by 3 percentage points each by the workforce reduction.

SEGMENT INFORMATION

  • Mainframe Solutions revenue was $619 million, down 2 percent in constant currency and 5 percent as reported.  Operating expense was $247 million and operating profit was $372 million.  Operating margin was 60 percent, up from 53 percent a year ago. There was a negative 3 percentage point operating margin impact in the prior period associated with the above-mentioned workforce reduction.
  • Enterprise Solutions revenue was $438 million, up 1 percent in constant currency and down 2 percent as reported.  Operating expense was $410 million and operating profit was $28 million.  Operating margin was 6 percent, flat from a year ago. There also was a negative 4 percentage point operating margin impact in the prior period associated with the workforce reduction.
  • Services revenue was $95 million, up 3 percent in constant currency and down 1 percent as reported.  Operating expense was $89 million and operating profit was $6 million.  Operating margin was 6 percent, up from 4 percent a year ago.

CASH FLOW FROM CONTINUING OPERATIONS

Cash flow from continuing operations in the second quarter was $89 million, compared with $190 million in the prior year.  The decrease was primarily due to a decrease in cash collections as a result of lower billings.

CAPITAL STRUCTURE

  • Cash, cash equivalents and investments at Sept. 30, 2012 were $2.248 billion.
  • With $1.294 billion in total debt outstanding and a borrowing position of $164 million on the Company’s notional pooling arrangement, the Company’s net cash, cash equivalents and investments were $790 million.
  • During the quarter, the Company repurchased 9.7 million shares in the market for approximately $250 million.
  • The Company is currently authorized to repurchase an additional $654 million of common stock through fiscal year 2014.
  • The Company’s outstanding share count at Sept. 30, 2012 was 454 million.
  • During the quarter, the Company distributed $116 million in dividends.

BUSINESS HIGHLIGHTS

During the second quarter the Company:

  • Announced it has been named the market share leader in the worldwide cloud systems management software market by IDC, a leading IT market research and advisory firm***;
  • Introduced a new version of CA Infrastructure Management (CA IM), the cornerstone of the Company’s converged infrastructure management solution that enables a superior and differentiated customer experience;  
  • Announced it has been named as a component of the Dow Jones Sustainability Indexes (DJSI) World Index and North America Index for the second consecutive year: and,
  • Introduced an enhanced CA Nimsoft Monitor with advanced network flow analysis, enabling customers to visualize their IP traffic in ways that can assist them in optimizing application service levels.

***IDC, Worldwide Cloud Systems Management Software 2011 Vendor Shares: Market Moves Beyond Self-Service, Doc #236556 August 2012.

OUTLOOK FOR FISCAL YEAR 2013

The Company updated its revenue and GAAP and non-GAAP earnings per share from continuing operations and cash flow from continuing operations guidance for fiscal year 2013.  The following guidance consists of "forward-looking statements" (as defined below).
The Company expects the following:

  • Total revenue growth in a range of negative 3 percent to negative 1 percent in constant currency.  At Sept. 30, 2012 exchange rates, this translates to reported revenue of $4.58 billion to $4.67 billion.  Previously, revenue growth guidance was 1 percent to 2 percent in constant currency.  
  • GAAP diluted earnings per share from continuing operations growth in constant currency in a range of 8 percent to 12 percent.  At Sept. 30, 2012 exchange rates, this translates to GAAP reported diluted earnings per share of $1.99 to $2.07.  Previously, GAAP diluted earnings per share from continuing operations growth in constant currency was in a range of 12 percent to 14 percent.
  • Non-GAAP diluted earnings per share from continuing operations growth in constant currency in a range of 6 percent to 10 percent.  At Sept. 30, 2012 exchange  rates, this translates to reported non-GAAP diluted earnings per share of $2.36 to $2.44.  Previously, non-GAAP diluted earnings per share from continuing operations growth in constant currency was in a range of 10 percent to 12 percent.
  • Cash flow from continuing operations growth in a range of negative 8 percent to negative 4 percent in constant currency.  At Sept. 30, 2012 exchange rates, this translates to reported cash flow from continuing operations of $1.38 billion to $1.44 billion.  Previously, cash flow from continuing operations growth was in a range of 4 percent to 6 percent in constant currency.

This outlook also assumes no material acquisitions and a partial currency hedge of operating income.  The Company expects a full-year GAAP operating margin of 30 percent, down from the previously stated 31 percent and continues to expect a non-GAAP operating margin of 36 percent.  The Company also continues to expect an effective full-year GAAP and non-GAAP tax rate to come in closer to the high-end of the 30 to 31 percent provided at the outset of the fiscal year.

The Company anticipates approximately 449 million shares outstanding at fiscal year 2013 year-end and weighted average diluted shares outstanding of approximately 458 million for the fiscal year.

The Company also said it is modifying its long-term guidance. While the multi-year guidance previously provided is the proper set of long-term financial objectives for CA Technologies, the Company now expects the timeline to achieve these objectives will be extended beyond its original expectations.

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 © 2012 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

Highlight CA Blog

Timely topics and trends that are shaping the application economy.

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