CA Technologies Reports Third Quarter Fiscal Year 2013 Results - CA Technologies
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CA Technologies Reports Third Quarter Fiscal Year 2013 Results


  • Revenue $1.195 Billion, Down 4 Percent in Constant Currency and 5 Percent as Reported
  • GAAP EPS $0.55, Up 4 Percent in Constant Currency and 2 Percent as Reported
  • Non-GAAP EPS $0.63, Down 2 Percent in Constant Currency and 3 Percent as Reported
  • Cash Flow from Continuing Operations $566 Million, Up 42 Percent in Constant Currency and 43 Percent as Reported
  • Reaffirms Outlook for Full Fiscal Year 2013

NEW YORK, N.Y., January 22, 2013 – CA Technologies (NASDAQ:CA) today reported financial results for its third quarter of fiscal year 2013, ended December 31, 2012.

FINANCIAL OVERVIEW

EXECUTIVE COMMENTARY
 
“I am very pleased to be a part of the CA Technologies team,” said CA Technologies CEO Mike Gregoire.  “While we are encouraged by improvements we saw in the business during our third quarter, including increased demand for our Nimsoft, Infrastructure Management and Service Virtualization offerings, we know that we need to do more to accelerate innovation, gain market share and better differentiate our solutions in the marketplace.

“We also know there is room for improvement in our cost of sales and in the speed and intensity with which we pursue our objectives,” he continued.  “Over the next few months we will perform a detailed diagnostic of where we are, and lay out a plan on how to achieve our strategic and financial goals.”      

REVENUE AND BOOKINGS

About 62 percent of the Company’s third quarter fiscal year 2013 revenue came from North America, while 38 percent came from International operations.

Revenue year-over-year:

  • Total revenue was $1.195 billion, down 4 percent in constant currency and 5 percent as reported.  A $39 million single license payment the Company received in the third quarter of fiscal year 2012 added 3 percentage points to the decrease in the third quarter of fiscal year 2013 revenue.
  • Total revenue backlog was $7.488 billion, down 8 percent in constant currency and 7 percent as reported.  The current portion of revenue backlog was $3.495 billion, down 2 percent in constant currency and 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 renewals.
  • North America revenue was $745 million, down 6 percent in constant currency and as reported.  The single license payment contributed 5 percentage points to this decrease.
  • International revenue was $450 million, down 2 percent in constant currency and 5 percent as reported.

Bookings year-over-year:

  • Total bookings in the third quarter were $1.261 billion, down 2 percent in constant currency and as reported. The single license payment in the third quarter of fiscal year 2012 added 3 percentage points of decline to fiscal year 2013 total bookings.  The Company executed a total of 18 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $477 million.  During the third quarter of fiscal year 2012, the Company executed a total of 12 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $452 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 2.97 years, compared with 3.53 years for the same period in fiscal year 2012.
  • North America bookings were $685 million, down 11 percent in constant currency and as reported.  The single license payment in the third quarter of fiscal year 2012 added 5 percentage points of decline from the year ago period.  
  • International bookings were $576 million, up 13 percent in constant currency and 11 percent as reported.

EXPENSES AND MARGIN

Year-over-year GAAP results:

  • Operating expenses, before interest and income taxes, were $825 million, down 2 percent in constant currency and 3 percent as reported.
  • Operating income, before interest and income taxes, was $370 million, down 10 percent in constant currency and as reported.
  • Operating margin was 31 percent, down 2 percentage points 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 $767 million, down 1 percent in constant currency and 3 percent as reported.  The decrease in operating expenses was primarily due to lower general and administrative, sales and marketing and product development costs, offset in part by higher severance costs.
  • Operating income, before interest and income taxes, was $428 million, down 9 percent in constant currency and 10 percent as reported.
  • Operating margin was 36 percent, down 2 percentage points from the prior year period.

The single license payment added $0.05 to GAAP and non-GAAP earnings per share and 2 percentage points to GAAP and non-GAAP operating margin in the third quarter of fiscal year 2012.  

For the third quarter of fiscal year 2013, the Company’s effective GAAP tax rate was 29.9 percent, compared with 34.9 percent in the prior year period.  The Company’s effective non-GAAP tax rate was 30.7 percent, compared with 31.5 percent in the prior year period. 

SEGMENT INFORMATION

  • Mainframe Solutions revenue was $622 million, down 8 percent in constant currency and 9 percent as reported. The single license payment in the third quarter of fiscal 2012 contributed 6 percentage points to the year-over-year decline.  Operating expense was $248 million and operating profit was $374 million.  Operating margin was 60 percent, up 1 percentage point from a year ago.
  • Enterprise Solutions revenue was $476 million, flat in constant currency and as reported.  Operating expense was $426 million and operating profit was $50 million.  Operating margin was 11 percent, down 1 percentage point from a year ago.
  • Services revenue was $97 million, down 5 percent in constant currency and 6 percent as reported.  Operating expense was $93 million and operating profit was $4 million.  Operating margin was 4 percent, down 7 percentage points from a year ago.

CASH FLOW FROM CONTINUING OPERATIONS

Cash flow from continuing operations in the third quarter was $566 million, compared with $396 million in the prior year.  The quarter included an increase of $150 million in single installment payments year-over-year, primarily attributable to one single installment payment of more than $100 million.

CAPITAL STRUCTURE

  • Cash, cash equivalents and investments at Dec. 31, 2012 were $2.548 billion.
  • With $1.301 billion in total debt outstanding and a borrowing position of $140 million on the Company’s notional pooling arrangement, the Company’s net cash, cash equivalents and investments were $1.107 billion.
  • During the quarter, the Company repurchased 3.4 million shares in the market for approximately $75 million.
  • The Company is currently authorized to repurchase an additional $579 million of common stock through fiscal year 2014.
  • The Company’s outstanding share count at Dec. 31, 2012 was 451 million.
  • During the quarter, the Company distributed $114 million in dividends.

BUSINESS HIGHLIGHTS

During the third quarter, the Company announced:

OUTLOOK FOR FISCAL YEAR 2013 Update

The Company reaffirmed 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 Dec. 31, 2012 exchange rates, this translates to reported revenue of $4.58 billion to $4.67 billion.
  • GAAP diluted earnings per share from continuing operations growth in constant currency in a range of 8 percent to 12 percent.  At Dec. 31, 2012 exchange rates, this translates to GAAP reported diluted earnings per share of $2.00 to $2.08.
  • Non-GAAP diluted earnings per share from continuing operations growth in constant currency in a range of 6 percent to 10 percent.  At Dec. 31, 2012 exchange rates, this translates to reported non-GAAP diluted earnings per share of $2.36 to $2.44. 
  • Cash flow from continuing operations growth in a range of negative 8 percent to negative 4 percent in constant currency.  At Dec. 31, 2012 exchange rates, this translates to reported cash flow from continuing operations of $1.39 billion to $1.45 billion. 

This outlook also assumes no material acquisitions and a partial currency hedge of operating income.  The Company continues to expect a full-year GAAP operating margin of 30 percent and 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 range 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 457 million for the fiscal year.

Webcast

This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company’s website, including a supplemental financial package, as well as a webcast that the Company will host at 5 p.m. ET today to discuss its unaudited third quarter results.  The webcast will be archived on the website. Individuals can access the webcast, as well as this press release and supplemental financial information, at http://ca.com/invest or listen to the call at 1-877-561-2748.  The international participant number is 1-720-545-0044.

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 © 2013 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

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