10-QPeriod: Q2 FY2013

Accenture plc Quarterly Report for Q2 Ended Feb 28, 2013

Filed March 28, 2013For Securities:ACN

Summary

Accenture plc reported solid financial results for the second quarter and first half of fiscal year 2013. For the second quarter, net revenues increased by 4% in both U.S. dollars and local currency to $7.06 billion. Net income attributable to Accenture plc rose significantly to $1.10 billion, leading to diluted earnings per share of $1.65, up from $0.97 in the prior year quarter. This performance was bolstered by a substantial benefit from the settlement of U.S. federal tax audits and the recognition of previously accrued reorganization liabilities. For the six-month period, net revenues grew 3% in U.S. dollars and 5% in local currency to $14.28 billion. Net income attributable to Accenture plc reached $1.80 billion, with diluted earnings per share of $2.71. The company demonstrated strong growth in its outsourcing business, which now represents 47% of net revenues for the quarter, while consulting revenues saw a slight decline but are expected to return to positive growth in the second half of the fiscal year. Accenture maintained healthy operating margins and demonstrated robust cash flow from operations, supported by strategic investments in acquisitions and share repurchases.

Financial Highlights

53 data points
Beta

Revenue

$7.49B

29.8% Gross Margin

Net Income

$1.10B

14.7% Net Margin

EPS (Diluted)

$1.65

Total Assets

$16.36B

Cash & Equivalents

$5.64B

Free Cash Flow

$543.98M

Financial Statements
Beta
Revenue$7.49B
Cost of Revenue$5.26B
Gross Profit$2.23B
Operating Expenses$6.33B
Operating Income$1.16B
Interest Expense$3.64M
Net Income$1.10B
EPS (Basic)$1.70
EPS (Diluted)$1.65
Shares Outstanding (Basic)649.52M
Shares Outstanding (Diluted)715.71M

Key Highlights

  • 1Net revenues for Q2 FY2013 increased 4% to $7.06 billion (in both USD and local currency).
  • 2Net income attributable to Accenture plc for Q2 FY2013 surged to $1.10 billion, up from $643.9 million in Q2 FY2012.
  • 3Diluted earnings per share (EPS) for Q2 FY2013 was $1.65, a significant increase from $0.97 in the prior year quarter.
  • 4Outsourcing revenues showed strong growth, increasing 9% in USD and 10% in local currency for Q2 FY2013, now comprising 47% of total net revenues.
  • 5The company recognized a substantial benefit of $223.8 million from reorganization costs (net) in Q2 FY2013, impacting operating income and EPS positively.
  • 6A $243 million benefit related to settlements of U.S. federal tax audits also positively impacted the quarter's results.
  • 7Cash and cash equivalents stood at $5.64 billion as of February 28, 2013, reflecting a decrease from $6.64 billion at the end of fiscal year 2012, influenced by share repurchases and dividend payments.

Frequently Asked Questions

The significant increase in net income and diluted EPS was primarily driven by two extraordinary items: a $223.8 million benefit from the settlement of previously accrued reorganization liabilities and a $243 million tax benefit from the settlement of U.S. federal tax audits. These items significantly boosted profitability for the quarter.

The outsourcing segment demonstrated strong performance with revenue growth of 9% in U.S. dollars and 10% in local currency. Outsourcing now represents 47% of net revenues for the quarter. In contrast, consulting revenues experienced a slight decrease of 1% in both U.S. dollars and local currency, though the company expects a return to positive consulting revenue growth in the second half of fiscal 2013.

Accenture expects quarterly year-over-year revenues to continue to increase modestly in the second half of fiscal 2013. Growth is anticipated to vary across operating groups and geographic regions, with growth in certain areas partially offset by lower growth or declines in others. The company anticipates returning to positive consulting revenue growth in the second half of fiscal 2013.

During the first six months of fiscal 2013, Accenture used cash significantly for share repurchases ($829.8 million) and dividend payments ($560.1 million). Investing activities used $472.4 million, primarily for acquisitions. Operating activities provided $525.4 million in cash, though this was lower than the prior year due to a discretionary pension contribution and higher net client balances.