Amdocs Limited Reports Record Quarterly Revenue of $845M, Up 2.8% YoY

Expects Fiscal 2014 Revenue Growth of 4-8% YoY

Quarterly Cash Dividend to be Raised From $0.13 to $0.155 Per Share, Subject to Shareholder Approval

Nov 05, 2013, 16:02 ET from Amdocs Limited

ST. LOUIS, Nov. 5, 2013 /PRNewswire/ --

Key highlights:

  • Signed definitive agreement to acquire Celcite Management Solutions, LLC for approximately $129 million in cash, subject to customary closing conditions. Additional consideration may be paid later based on the achievement of certain performance metrics. Closed acquisition of Actix on September 19, 2013

  • Fourth fiscal quarter revenue of $845 million, within the $830-$860 million guidance range. Foreign currency movements had a negligible effect on revenue relative to the third quarter of fiscal 2013

  • Fourth fiscal quarter non-GAAP operating income of $141 million; non-GAAP operating margin of 16.7%; GAAP operating income of $123 million

  • Fourth fiscal quarter diluted non-GAAP EPS of $0.63, within the $0.60-$0.66 guidance range, excluding amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects

  • Diluted GAAP EPS of $0.54 for the fourth fiscal quarter, within the $0.50-$0.58 guidance range

  • Free cash flow of $205 million for the fourth fiscal quarter

  • Twelve-month backlog of $2.87 billion at the end of the fourth fiscal quarter, up $40 million from the end of the third quarter of fiscal 2013

  • Repurchased $97 million of ordinary shares during the fourth fiscal quarter

  • The board of directors approved a $0.13 per share quarterly cash dividend to be paid on January 17, 2014, and approved an increase in the quarterly cash dividend to $0.155 per share to be paid on April 17, 2014, subject to shareholder approval

  • First quarter fiscal 2014 guidance: Expected revenue of approximately $845-$875 million which includes the consolidation of Actix for the full quarter but does not incorporate any contribution from Celcite as the deal may not close within the quarter.  Expected diluted non-GAAP EPS of approximately $0.72-$0.78, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects.  Expected diluted GAAP EPS of approximately $0.58-$0.66

  • Fiscal 2014 guidance: Expected revenue growth of 4-8%, which incorporates an organic growth outlook of roughly 2-5% and an aggregate expected contribution from Actix and Celcite of approximately 2-3%.  Expected non-GAAP diluted earnings per share growth of roughly 6-9%, which incorporates modest accretion from the combined impact of Actix and Celcite and the impact of anticipated share repurchase activity over the course of the fiscal year

Amdocs Limited (NYSE: DOX) today reported that for its fiscal quarter ended September 30, 2013, revenue was $845.2 million, up 0.5% sequentially from the third fiscal quarter of 2013 and up 2.8% as compared to last year's fourth fiscal quarter. Net income on a non-GAAP basis was $103.4 million, or $0.63 per diluted share, compared to non-GAAP net income of $115.7 million, or $0.70 per diluted share, in the fourth quarter of fiscal 2012. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $14.4 million, net of related tax effects, in the fourth quarter of fiscal 2013 and excludes such amortization and other acquisition related costs and equity-based compensation expenses of $17.7 million, net of related tax effects, in the fourth quarter of fiscal 2012. The Company's GAAP net income for the fourth quarter of fiscal 2013 was $89.0 million, or $0.54 per diluted share, compared to GAAP net income of $98.0 million, or $0.60 per diluted share, in the prior fiscal year's fourth quarter. 

"We concluded fiscal 2013 with solid fourth quarter results and delivered full year non-GAAP earnings per share growth at the high end of our guidance issued at the start of the year. In North America, we closed out a strong year as we helped our customers respond to rapidly changing competitive dynamics, particularly in the wireless market.  In the emerging markets, the progression of highly complex transformation projects led to strong sequential growth in the fourth quarter and double-digit revenue growth for the full year.  While revenue in Europe declined in fiscal 2013 due to the anticipated completion of some transformation programs and a challenging operating environment, sequential trends exhibited stability throughout the year.  Furthermore, we demonstrated significant progress with some of the largest service providers in Europe and we are well placed to compete for new opportunities as they arise," said Eli Gelman, chief executive officer of Amdocs Management Limited.

Gelman continued, "We have continued to secure new project awards which broaden and extend our customer relationships. In Europe, we signed a five year extension to an existing managed services agreement with Elisa, which included an expansion of scope to cover legacy billing and third-party mediation systems. Additionally, Montenegro's Crnogorski Telekom, an affiliate of Deutsche Telekom, selected Amdocs to consolidate and modernize its Business Support Systems (BSS). In the emerging markets, True Corporation, the only quad-play provider in Thailand, awarded Amdocs a five-year extension to provide ongoing support and development of True's convergent billing platform."  

Gelman said, "We are continuing to use M&A as a vehicle to execute on our strategy, allocating capital towards companies with leadership positions in new growth markets.  Today we signed a definitive agreement to acquire Celcite, a leading provider of network management and self-optimizing network (SON) solutions. Combined with the acquisition of Actix, which closed in the fourth quarter, we are expanding on our existing portfolio of network software to address specific carrier pain points such as network congestion. With these transactions, we expect to leverage Amdocs' strong reputation for innovation and delivery excellence to expand upon the early successes of Actix and Celcite in the network software optimization marketplace."

Gelman concluded, "Looking into fiscal 2014, we will continue to closely monitor macro and industry specific risks, including the lingering uncertainties resulting from recent consolidation activity in North America. Overall, we now expect to grow our revenues 4% to 8% in fiscal 2014, reflecting stable growth in our core business and the announced acquisitions that support our long-term strategy. Demonstrating our confidence in the future success of Amdocs, our board has approved an increase in our quarterly cash dividend to $0.155 per share to be paid in April 2014, subject to shareholder approval. This dividend represents a significant increase of 19% over the current dividend rate and further underscores our commitment to enhancing long-term shareholder value."  

Financial Discussion of Fourth Fiscal Quarter Results  Free cash flow was $205 million for the quarter, comprised of cash flow from operations of $232 million less $27 million in net capital expenditures and other.

Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $2.87 billion at the end of the fourth quarter of fiscal 2013. 

Fiscal Year 2013 Results For the fiscal year ended September 30, 2013, revenue increased by 3.0% to $3.3 billion. Fiscal 2013 net income on a non-GAAP basis was $476.5 million, or $2.92 per diluted share (excluding amortization of purchased intangible assets and other acquisition related costs, and equity-based compensation expenses of $64.1 million, net of related tax effects), compared to non-GAAP net income of $460.0 million, or $2.71 per diluted share, in fiscal 2012 (excluding amortization of purchased intangible assets and other acquisition related costs, gain on sale of investment and equity-based compensation expenses of $68.6 million, net of related tax effects). The Company's GAAP net income in fiscal 2013 was $412.4 million, or $2.53 per diluted share, compared to GAAP net income of $391.4 million, or $2.31 per diluted share, in fiscal 2012.

Financial Outlook  Amdocs expects that revenue for the first quarter of fiscal 2014 will be approximately $845-$875 million. Diluted earnings per share on a non-GAAP basis for the first fiscal quarter are expected to be $0.72-$0.78, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the first fiscal quarter will be $0.58-$0.66

Quarterly Cash Dividend Program On November 5, 2013, the Board approved the Company's next quarterly cash dividend payment of $0.13 per share and set December 31, 2013 as the record date for determining the shareholders entitled to receive the dividend, which is payable on January 17, 2014. The Board also approved an increase in the Company's quarterly cash dividend payment to $0.155, which would be payable on April 17, 2014. The increase in the dividend payment is subject to shareholder approval.

Conference Call Details  Amdocs will host a conference call on November 5, 2013 at 5:00 p.m. Eastern Time to discuss the Company's fourth fiscal quarter results. The call will be carried live on the Internet via the Amdocs website, www.amdocs.com.

Non-GAAP Financial Measures This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP interest and other expense, net, non-GAAP income taxes, non-GAAP net income and non-GAAP diluted earnings per share growth. These non-GAAP measures exclude the following items:

  • amortization of purchased intangible assets and other acquisition related costs;
  • gain on sale of investment;
  • equity-based compensation expense; and
  • tax effects related to the above.

These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs' results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP interest and other expense, net, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income and non-GAAP diluted earnings per share growth when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.

For its internal budgeting process and in monitoring the results of the business, Amdocs' management uses financial statements that do not include amortization of purchased intangible assets and other acquisition related costs, gain on sale of investment, equity-based compensation expense and related tax effects. Amdocs' management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these items in reviewing its results and those of its competitors, because the amounts of the items between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the items.

Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of service, research and development, selling, general and administrative, operating income, interest and other expense, net, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

About Amdocs  For 30 years, Amdocs has ensured service providers' success and embraced their biggest challenges. To win in the connected world, service providers rely on Amdocs to simplify the customer experience, harness the data explosion, stay ahead with new services and improve operational efficiency. The global company uniquely combines a market-leading BSS, OSS and network control product portfolio with value-driven professional services and managed services operations.  With revenue of $3.3 billion in fiscal 2013, Amdocs and its 20,000 employees serve customers in more than 70 countries.

Amdocs: Embrace Challenge, Experience Success.

For more information, visit Amdocs at www.amdocs.com.

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs' growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs' ability to grow in the business markets that it serves, Amdocs' ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2012 filed on December 11, 2012 and our Form 6-K furnished for the first quarter of fiscal 2013 on February 12, 2013, for the second quarter of fiscal 2013 on May 16, 2013 and for the third quarter of fiscal 2013 on August 12, 2013.

 

 

AMDOCS LIMITED

Consolidated Statements of Income

(in thousands, except per share data)

Three months ended

Twelve months ended

September 30,

September 30,

2013

2012

2013

2012

Revenue:

License

$           22,180

$          23,966

$       81,613

$     120,443

Service

823,045

798,162

3,264,241

3,126,460

845,225

822,128

3,345,854

3,246,903

Operating expenses:

Cost of license

763

541

2,602

3,523

Cost of service

545,235

528,998

2,164,450

2,081,945

Research and development

61,264

61,548

240,266

242,063

Selling, general and administrative

105,035

104,814

418,574

424,671

Amortization of purchased intangible assets and other

10,052

12,726

38,410

52,229

722,349

708,627

2,864,302

2,804,431

Operating income

122,876

113,501

481,552

442,472

Interest and other (expense) income, net

(1,484)

116

(6,075)

(948)

Income before income taxes

121,392

113,617

475,477

441,524

Income taxes

32,438

15,596

63,038

50,153

Net income

$           88,954

$          98,021

$     412,439

$      391,371

Basic earnings per share

$               0.55

$              0.60

$           2.56

$            2.33

Diluted earnings per share

$               0.54

$              0.60

$           2.53

$            2.31

Basic weighted average number of shares outstanding

161,268

163,468

161,330

168,275

Diluted weighted average number of shares outstanding

163,326

164,689

163,118

169,437

Cash dividends declared per share

$               0.13

$              0.13

$           0.52

$            0.13

 

AMDOCS LIMITED

Selected Financial Metrics

(in thousands, except per share data)

Three months ended

Twelve months ended

September 30,

September 30,

2013

2012

2013

2012

Revenue

$    845,225

$     822,128

$    3,345,854

$    3,246,903

Non-GAAP operating income

141,367

136,673

560,302

538,130

Non-GAAP net income

103,385

115,684

476,539

459,998

Non-GAAP diluted earnings per share

$          0.63

$           0.70

$             2.92

$             2.71

Diluted weighted average number of shares outstanding

163,326

164,689

163,118

169,437

 

AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

 (in thousands)

Three months ended

September 30, 2013

Reconciliation items

GAAP      

Amortization of purchased intangible assets and other

Equity based compensation expense  

Tax effect      

Non-GAAP      

Operating expenses:

Cost of license

$       763

$           -

$           -

$          -

$         763

Cost of service

545,235

-

(3,844)

-

541,391

Research and development

61,264

-

(745)

-

60,519

Selling, general and administrative

105,035

-

(3,850)

-

101,185

Amortization of purchased intangible assets and other

10,052

(10,052)

-

-

-

Total operating expenses

722,349

(10,052)

(8,439)

-

703,858

Operating income

122,876

10,052

8,439

-

141,367

Income taxes

32,438

-

-

4,060

36,498

Net income

$  88,954

$ 10,052

$   8,439

$ (4,060)

$  103,385

Three months ended

September 30, 2012

Reconciliation items

GAAP  

Amortization of purchased intangible assets and other

Equity based compensation expense  

Tax effect  

Non-GAAP  

Operating expenses:

Cost of license

$       541

$           -

$           -

$          -

$          541

Cost of service

528,998

-

(5,265)

-

523,733

Research and development

61,548

-

(1,039)

-

60,509

Selling, general and administrative

104,814

-

(4,142)

-

100,672

Amortization of purchased intangible assets and other

12,726

(12,726)

-

-

-

Total operating expenses

708,627

(12,726)

(10,446)

-

685,455

Operating income

113,501

12,726

10,446

-

136,673

Income taxes

15,596

-

-

5,509

21,105

Net income

$  98,021

$ 12,726

$ 10,446

$ (5,509)

$   115,684

 

AMDOCS LIMITED

Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP

(in thousands)

Twelve months ended

September 30, 2013

Reconciliation items

GAAP  

Amortization of purchased intangible assets and other

Equity based compensation expense  

Tax effect  

Non-GAAP  

Operating expenses:

Cost of license

$     2,602

$                -

$                 -

$            -

$     2,602

Cost of service

2,164,450

-

(18,284)

-

2,146,166

  Research and development

240,266

-

(3,805)

-

236,461

  Selling, general and administrative

418,574

-

(18,251)

-

400,323

Amortization of purchased intangible assets and     other

38,410

(38,410)

-

-

-

Total operating expenses

2,864,302

(38,410)

(40,340)

-

2,785,552

Operating income

481,552

38,410

40,340

-

560,302

Income taxes

63,038

-

-

14,650

77,688

Net income

$ 412,439

$       38,410

$       40,340

$ (14,650)

$ 476,539

Twelve months ended

September 30, 2012

Reconciliation items

GAAP  

Amortization of purchased intangible assets and other

Equity based compensation expense  

Gain on sale of investment  

Tax effect  

Non-GAAP  

Operating expenses:

Cost of license

$     3,523

$                -

$                -

$                 -

$            -

$     3,523

Cost of service

2,081,945

-

(22,641)

-

-

2,059,304

  Research and development

242,063

-

(4,320)

-

-

237,743

Selling, general and  administrative

424,671

-

(16,468)

-

-

408,203

Amortization of purchased intangible assets and     other

52,229

(52,229)

-

-

-

-

Total operating expenses

2,804,431

(52,229)

(43,429)

-

-

2,708,773

Operating income

442,472

52,229

43,429

-

-

538,130

Interest and other expense, net

 

948

-

-

 

6,270

-

 

7,218

Income taxes

50,153

-

-

-

20,761

70,914

Net income

$ 391,371

$       52,229

$       43,429

$        (6,270)

$ (20,761)

$ 459,998

 

AMDOCS LIMITED

Condensed Consolidated Balance Sheets

(in thousands)

As of

September 30,  2013

September 30, 2012

ASSETS

Current assets

Cash, cash equivalents and short-term interest-bearing investments

$      1,326,380

$      1,118,177

Accounts receivable, net, including unbilled of $110,626 and $130,697, respectively

678,219

687,223

Deferred income taxes and taxes receivable

125,880

109,282

Prepaid expenses and other current assets

151,595

126,388

    Total current assets

2,282,074

2,041,070

Equipment and leasehold improvements, net

275,544

277,907

Goodwill and other intangible assets, net

1,975,060

1,883,064

Other noncurrent assets

393,135

443,182

Total assets

$      4,925,813

$      4,645,223

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Accounts payable, accruals and other

$         683,768

$         690,823

Short-term financing arrangements

200,000

200,000

Deferred revenue

151,112

145,184

Deferred income taxes and taxes payable

39,376

29,551

    Total current liabilities

1,074,256

1,065,558

Other noncurrent liabilities

576,774

546,463

Shareholders' equity

3,274,783

3,033,202

Total liabilities and shareholders' equity

$      4,925,813

$      4,645,223

 

AMDOCS LIMITED

Consolidated Statements of Cash Flows

(in thousands)

Year ended September 30,

2013

2012

Cash Flow from Operating Activities:

Net income

$             412,439

$             391,371

Reconciliation of net income to net cash provided by operating activities:

    Depreciation and amortization

140,776

159,614

    Equity-based compensation expense

40,339

43,429

    Deferred income taxes

12,485

(4,857)

Excess tax benefit from equity-based compensation

(366)

(181)

Gain on sale of investment

-

(9,172)

    Loss from short-term interest-bearing investments

2,269

3,041

Net changes in operating assets and liabilities, net of amounts acquired:

    Accounts receivable

29,999

(106,551)

    Prepaid expenses and other current assets

(86)

1,601

    Other noncurrent assets

29,384

19,734

    Accounts payable, accrued expenses and accrued personnel

(4,104)

60,200

    Deferred revenue

(15,078)

(55,811)

    Income taxes payable

(5,268)

14,305

    Other noncurrent liabilities

27,758

(2,654)

Net cash provided by operating activities

670,547

514,069

Cash Flow from Investing Activities:

Payments for purchase of equipment and leasehold improvements, net

(106,724)

(122,053)

Proceeds from sale of short-term interest-bearing investments

311,677

440,145

Purchase of short-term interest-bearing investments

(386,876)

(337,989)

Net cash paid for acquisitions

(112,405)

-

Cash received from sale of investment

-

11,172

Other

(2,801)

(8,564)

Net cash used in investing activities

(297,129)

(17,289)

Cash Flow from Financing Activities:

Borrowings under financing arrangements

200,000

200,000

Payments under financing arrangements

(200,000)

(250,000)

Repurchase of shares

(367,061)

(484,608)

Proceeds from employee stock options exercised

213,430

86,674

Payments of dividends

(84,008)

-

Payments under capital lease and other

(745)

(1,059)

Net cash used in financing activities

(238,384)

(448,993)

Net increase in cash and cash equivalents

135,034

47,787

Cash and cash equivalents at beginning of period

879,158

831,371

Cash and cash equivalents at end of period

$          1,014,192

$             879,158

 

AMDOCS LIMITED

Supplementary Information

(in millions)

Three months ended

September 30, 2013

June 30, 2013

March 31, 2013

December 31, 2012

September 30, 2012

North America

$      608.9

$      619.2

$      601.3

$      593.6

$      570.4

Europe

101.9

98.0

99.3

99.2

113.1

Rest of World

134.4

124.1

132.3

133.6

138.6

Total Revenue

$      845.2

$      841.3

$      832.9

$      826.4

$      822.1

 

Three months ended

September 30, 2013

June 30, 2013

March 31, 2013

December 31, 2012

September 30, 2012

Emerging Markets Revenue

$      113.8

$      101.3

$      98.1

$      98.2

$      99.9

 

Three months ended

September 30, 2013

June 30, 2013

March 31, 2013

December 31, 2012

September 30, 2012

Managed Services Revenue

$      414.0

$      417.1

$      439.8

$      429.8

$      423.7

 

Three months ended

September 30, 2013

June 30, 2013

March 31, 2013

December 31, 2012

September 30, 2012

Customer Experience Systems

$      809.3

$      803.2

$      789.3

$      783.8

$      783.1

Directory

35.9

38.1

43.6

42.6

39.0

Total Revenue

$      845.2

$      841.3

$      832.9

$      826.4

$      822.1

 

As of

September 30, 2013

June 30, 2013

March 31, 2013

December 31, 2012

September 30, 2012

12-Month Backlog

$      2,870

$      2,830

$      2,810

$      2,800

$      2,790

 

 

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SOURCE Amdocs Limited



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