CA Technologies Reports Fourth Quarter and Full Fiscal Year 2016 Results - CA Technologies
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CA Technologies Reports Fourth Quarter and Full Fiscal Year 2016 Results


  • Achieved FY2016 Guidance for Revenue, Operating Margin, and EPS, and Exceeded for CFFO
  • 4Q and FY2016 Revenue of $1.009 Billion and $4.025 Billion, Respectively
  • 4Q and FY2016 GAAP EPS of $0.41 and $1.78, Respectively
  • 4Q and FY2016 Non-GAAP EPS of $0.60 and $2.43, Respectively
  • 4Q and FY2016 Cash Flow From Continuing Operations of $471 Million and $1,034 Million, Respectively

NEW YORK, May 11, 2016 - CA Technologies (NASDAQ: CA) today reported financial results for its fourth quarter and full fiscal year 2016, which ended March 31, 2016.

Mike Gregoire, CA Technologies Chief Executive Officer, said:

“I am pleased to report that we achieved our guidance for full-year revenue, operating margin and EPS results, and exceeded guidance for full-year cash flow from continuing operations.

“Our efforts to reposition the product portfolio, refine our go-to-market strategy, and sharpen our focus on customer success have culminated in new sales growth for the year. This was a notable improvement relative to prior years. At the same time, there is still work to do to drive the level of sustained growth that our company is capable of delivering.

“Looking forward, we will continue to manage the business with thoughtful discipline, and remain committed to our strategic imperative of delivering long term growth and profitability.”

FINANCIAL OVERVIEW

 

REVENUE AND BOOKINGS

Fourth Quarter

  • Total revenue declined as a result of an unfavorable foreign exchange effect of $28 million. Our fiscal 2016 acquisitions of Rally Software Development Corp. and Xceedium, Inc. (“our fiscal 2016 acquisitions”) contributed approximately 3 points of revenue growth for the quarter.
  • Total bookings declined primarily due to lower renewals and, to a lesser extent, lower new product sales.
  • The Company executed a total of 13 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $271 million. During the fourth quarter of fiscal 2015, the Company executed a total of 19 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $507 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 2.66 years, compared with 3.05 years for the same period in fiscal 2015.


Full Year

 

  • Total revenue declined primarily as a result of an unfavorable foreign exchange effect of $212 million. Our fiscal 2016 acquisitions contributed approximately 2 points of revenue growth for the year.
  • Total bookings grew primarily due to higher renewals, which included a renewal with a large system integrator in excess of $500 million in fiscal 2016 and, to a lesser extent, bookings related to our fiscal 2016 acquisitions.
  • The Company executed a total of 48 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1.965 billion. During fiscal 2015, the Company executed a total of 51 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1.448 billion.
  • The weighted average duration of subscription and maintenance bookings for fiscal 2016 was 3.71 years, compared with 3.24 years for fiscal 2015.

 

EXPENSES, MARGIN AND EARNINGS PER SHARE

Fourth Quarter

  • GAAP and non-GAAP operating expenses decreased primarily as a result of a decline in non-acquisition personnel-related costs, partially offset by costs from our fiscal 2016 acquisitions. 
  • In the fourth quarter of fiscal 2015, GAAP and non-GAAP operating expenses were affected by $40 million from severance costs.
  • GAAP EPS was positively impacted by $0.17 from an improvement in GAAP operating margin, which was partially offset by $0.04 impact from unfavorable foreign exchange and $0.04 impact from an increase in GAAP effective tax rate.
  • Non-GAAP EPS was positively impacted by $0.17 from an improvement in non-GAAP operating margin, which was partially offset by $0.07 impact from unfavorable foreign exchange and $0.06 impact from an increase in non-GAAP effective tax rate.


Full Year

  • GAAP and non-GAAP operating expenses decreased primarily as a result of a decrease in non-acquisition personnel-related costs and a favorable foreign exchange effect, partially offset by costs from our fiscal 2016 acquisitions.
  • GAAP EPS was negatively impacted by $0.24 impact from unfavorable foreign exchange, $0.08 impact from our fiscal 2016 acquisitions and $0.04 impact from an increase in GAAP effective tax rate. These items were partially offset by a $0.27 improvement in GAAP operating margin and $0.05 increase from an overall share count reduction.
  • Non-GAAP EPS was negatively impacted by $0.24 impact from unfavorable foreign exchange, $0.08 impact from our fiscal 2016 acquisitions and $0.06 impact from an increase in non-GAAP effective tax rate. These items were partially offset by a $0.21 improvement in non-GAAP operating margin and $0.07 increase from an overall share count reduction.
  • The increase in both GAAP and non-GAAP effective tax rates was primarily due to the favorable resolutions of uncertain tax positions in fiscal 2015 relating to the completion of the examination of our U.S. federal income tax returns for the tax years ended March 31, 2011 and 2012.

 

SELECTED HIGHLIGHTS

Leadership and recognition during the quarter include:

  • CA Technologies was recognized as a 2016 World’s Most Ethical Company® by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices.
  • For the fourth year in a row, CA Technologies was once again named as a recipient of the NorthFace ScoreBoard AwardSM from Omega Management Group Corp in recognition of achieving excellence in customer service and support for 2015.
  • CA Technologies was again named a leader by KuppingerCole in its Leadership Compass: Access Management and Federation.(1)
  • CA Technologies was named a leader by the IDC Marketscape: Worldwide Enterprise IT PPM 2016 Vendor Assessment.(2)

Customer traction for CA Technologies innovation during the quarter include:

  • A global health insurance and benefits provider chose CA Agile Central as their enterprise standard for agile management, displacing deployments from two other vendors.
  • A leader in the global money-transfer space standardized on CA Release Automation to accelerate and improve the quality of their development processes.
  • A global consumer products company selected CA Privileged Access Management after a competitive proof-of concept evaluation for its ease of deployment and demonstrated value.
  • A multinational pharmaceutical company chose CA Project and Portfolio Management SaaS for its IT operations and M&A activities.
  • A leading SaaS company chose to expand its footprint with CA API Management after observing the value of the product at one of its acquired companies.

SEGMENT INFORMATION

Fourth Quarter

  • Mainframe Solutions revenue declined primarily due to an unfavorable foreign exchange effect and insufficient revenue from prior period new sales to offset the decline in revenue contribution from renewals. Operating margin increased compared with the year-ago period primarily due to the decline in personnel-related costs.
  • Enterprise Solutions revenue increased as a result of additional revenue associated with our fiscal 2016 acquisitions, which contributed approximately 7 points of revenue growth for the quarter. Operating margin increased primarily due to lower non-acquisition related costs partially offset by additional costs from our fiscal 2016 acquisitions.
  • Services revenue decreased due to an unfavorable foreign exchange effect. Operating margin improved primarily due to a decrease in personnel-related costs as a result of our prior period severance actions.


Full Year

  • Mainframe Solutions revenue declined primarily due to an unfavorable foreign exchange effect and, to a lesser extent, insufficient revenue from new sales to offset the decline in revenue contribution from renewals. Mainframe Solutions operating margin increased primarily due to a decrease in personnel-related costs.
  • Enterprise Solutions revenue declined due to an unfavorable foreign exchange effect. Excluding the unfavorable effect of foreign exchange, Enterprise Solutions revenue increased as a result of additional revenue associated with our fiscal 2016 acquisitions, which contributed approximately 5 points of revenue growth for the year. Enterprise Solutions operating margin decreased primarily due to costs from our fiscal 2016 acquisitions, partially offset by a decrease in non-acquisition personnel-related costs.
  • Services revenue decreased primarily due to an unfavorable foreign exchange effect and, to a lesser extent, a decline in professional services engagements in the first half of fiscal 2016 and during fiscal 2015, partially offset by an increase in services revenue from our Rally acquisition. Operating margin for Services increased primarily due to a decrease in personnel-related costs as a result of our prior period severance actions and a decrease in external consulting costs.


CASH FLOW FROM OPERATIONS

  • Cash flow from continuing operations for the fourth quarter was $471 million, compared with $485 million in the prior year. Cash flow from operations decreased primarily due to an unfavorable effect of foreign exchange.
  • For the full year, cash flow from continuing operations was $1.034 billion, compared with $1.030 billion in the prior fiscal year. Cash flow from operations increased slightly due to lower disbursements, lower payments associated with our Fiscal Year 2014 Rebalancing Plan and lower income tax payments, net, offset by a decrease in cash collections from billings, which included lower single installment payments. There was an overall unfavorable effect from foreign exchange of $82 million on net cash provided by continuing operating activities.  


CAPITAL STRUCTURE

  • Cash, cash equivalents and investments at March 31, 2016 were $2.812 billion.
  • With $1.953 billion in total debt outstanding and $139 million in notional pooling, the Company’s net cash, cash equivalents and investments position was $720 million.
  • For fiscal 2016, the Company repurchased 26 million shares of stock for $707 million.
  • As of March 31, 2016, the Company is currently authorized to purchase $750 million of its common stock under its current stock repurchase program that was authorized in November 2015.
  • During the fourth quarter of fiscal 2016, the Company distributed $104 million in dividends to shareholders. For fiscal 2016, the Company distributed $429 million in dividends to shareholders.
  • The Company’s outstanding share count at March 31, 2016 was 413 million.


OUTLOOK FOR FISCAL 2017

The following outlook for fiscal 2017 contains "forward-looking statements" (as defined below).

The Company expects the following:

  • Total revenue to increase in a range of flat to plus 1 percent in constant currency.  At March 31, 2016 exchange rates, this translates to reported revenue of $4.04 billion to $4.08 billion.
  • GAAP diluted earnings per share from continuing operations to increase in a range of 3 percent to 6 percent in constant currency.  At March 31, 2016 exchange rates, this translates to reported GAAP diluted earnings per share from continuing operations of $1.92 to $1.97.
  • Non-GAAP diluted earnings per share from continuing operations to increase in a range of 1 percent to 3 percent in constant currency.  At March 31, 2016 exchange rates, this translates to reported non-GAAP diluted earnings per share from continuing operations of $2.51 to $2.56.
  • Cash flow from continuing operations to increase in a range of 1 percent to 5 percent in constant currency.  At March 31, 2016 exchange rates, this translates to reported cash flow from continuing operations of $1.06 billion to $1.10 billion.

This outlook assumes no material acquisitions. The Company expects a full-year GAAP operating margin of 30 percent and non-GAAP operating margin of 38 percent. The Company also expects a full-year GAAP and non-GAAP effective tax rate of between 28 percent and 29 percent.

The Company anticipates approximately 410 million shares outstanding at fiscal 2017 year-end and weighted average diluted shares outstanding of approximately 414 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 conference call and webcast that the Company will host at 5:00 p.m. ET today to discuss its unaudited fourth quarter and full fiscal year results.  The webcast will be archived on the website. Individuals can access the webcast, as well as the press release and supplemental financial information at http://ca.com/invest or can listen to the call at 1-877-561-2748.  The international participant number is 1-720-545-0044.

(1) KuppingerCole Leadership Compass: Access Management and Federation, March 2016

(2) 2016 IDC MarketScape: Worldwide Enterprise IT PPM 2016 Vendor Assessment - Enabling Business Execution and Optimization, February 2016, IDC #US40473615

 

Press Contacts


Traci Tsuchiguchi

CA Technologies
Phone: (650) 534-9814

Saswato Das

CA Technologies
Phone: +1 (646) 710 6690

Jennifer DiClerico

CA Technologies
Phone: (212) 415-6997

ABOUT CA TECHNOLOGIES

CA Technologies (NASDAQ:CA) creates software that fuels transformation for companies and enables them to seize the opportunities of the application economy. Software is at the heart of every business in every industry. From planning, to development, to management and security, CA is working with companies worldwide to change the way we live, transact, and communicate – across mobile, private and public cloud, distributed and mainframe environments. Learn more at www.ca.com.

LEGAL NOTICES

Copyright © 2016 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

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