Teradata Reports 2013 Third Quarter Results

- Revenue of $666 million was up 3 percent, up 5 percent in constant currency(1)

- GAAP EPS $0.59, non-GAAP EPS $0.70(2)

Oct 31, 2013, 06:55 ET from Teradata Corporation

ATLANTA, Oct. 31, 2013 /PRNewswire-FirstCall/ -- Teradata Corporation, (NYSE: TDC), a global leader in analytic data platforms, marketing and analytic applications, and consulting services, today reported revenue of $666 million for the quarter ended September 30, 2013, an increase of 3 percent from $647 million in the third quarter of 2012. Third quarter revenue increased 5 percent year-over-year when compared in constant currency.(1)

(Logo: http://photos.prnewswire.com/prnh/20130716/CL47933LOGO )

Gross margin was 53.8 percent, versus 55.8 percent in the third quarter of 2012, as reported under U.S. Generally Accepted Accounting Principles (GAAP). On a non-GAAP basis, excluding stock-based compensation expense and special items, gross margin was 55.0 percent, versus 56.9 percent in the prior year period.(2)

Teradata reported third quarter net income of $98 million, or $0.59 per diluted share, which compared to net income of $104 million, or $0.60 per diluted share, in the third quarter of 2012. Stock-based compensation expense and other special items reduced Teradata's third quarter net income by $18 million (or 11 cents of earnings per diluted share as reported under GAAP).(2) Excluding stock-based compensation expense and special items, non-GAAP net income in the third quarter of 2013 was $116 million, or $0.70 per diluted share, versus $119 million, or $0.69 per diluted share, in the third quarter of 2012.(2)

"Our continued investments and innovations in data warehousing, big data analytics and integrated marketing will further extend our market leadership and competitive position," said Mike Koehler, president and chief executive officer, Teradata Corporation.  "These are three strategic and growing markets that will remain high priorities for companies around the world for the next several years."

Segment Revenue Performance

For the Three

Months Ended

For the Nine

Months Ended

September 30

September 30

(in millions)

(in millions)

2013

2012

% Chg

As

Rpt'd

%

Chg in

CC**

2013

2012

% Chg

As

Rpt'd

%

Chg in

CC**

  Americas

$409

$384

7%

7%

$1,169

$1,170

0%

0%

  International*

$257

$263

-2%

0%

$754

$755

0%

2%

Total Revenue

$666

$647

3%

5%

$1,923

$1,925

0%

1%

* For comparison purposes, prior-year amounts have been reclassified to conform to the current-year presentation.

**Constant currency.

 

Operating Income Third quarter GAAP operating income of $132 million compared to $143 million reported in the third quarter of 2012. On a non-GAAP basis, operating income was $158 million versus $166 million in the third quarter of 2012.(2) The difference was primarily due to less favorable revenue mix and higher selling expense largely driven by the addition of sales resources during the last 12 months. 

Cash Flow During the third quarter of 2013, Teradata generated $64 million of cash from operating activities, compared to $107 million in the prior-year period. Teradata generated $29 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software)(3) in the third quarter of 2013, versus $67 million in the same period in 2012.

Year to date, Teradata generated $447 million of cash from operating activities, compared to $451 million in the prior-year period. Teradata generated $347 million of free cash flow(3) in the first nine months of 2013, versus $342 million in the same period in 2012.

Balance Sheet Teradata ended the quarter with $862 million in cash, a $36 million increase from June 30, 2013. As of September 30, 2013, Teradata had total debt of $278 million outstanding under a term loan. Additionally, Teradata has $300 million available through a pre-arranged credit facility; however, no funds were drawn from the credit facility.

2013 Outlook Teradata expects full-year 2013 revenue to be approximately the same as reported in 2012, an increase of 1 percent when measured in constant currency.(1)

Teradata expects earnings per share for the full-year 2013 to be in the $2.27-$2.37 range on a GAAP basis and $2.70-$2.80 on a non-GAAP basis, which excludes stock-based compensation expense and other special items.(2)

A conference call is scheduled today at 8:30 a.m. (ET) to discuss the company's third quarter 2013 results. Access to the conference call, as well as a replay of the call, is available on Teradata's web site at www.teradata.com/investor.

Supplemental financial information regarding Teradata's operating results is also available on the Investor Relations page of Teradata's web site.

1.

The impact of currency is determined by calculating the prior-period results using the current-year monthly average currency rates. See the foreign currency fluctuation schedule on the Investor Relations page of the company's web site at www.teradata.com/investor, which is used to determine revenue on a constant currency ("CC") basis.

 

For the Three

Months Ended

For the Nine

Months Ended

September 30

September 30

(in millions)

(in millions)

Revenue

2013

2012

%Chg

As

Rpt'd

%Chg

In CC

2013

2012

%Chg

As

Rpt'd

%Chg

In CC

  Products

  (software/hardware)

$306

$306

0%

1%

$858

$935

-8%

-8%

  Consulting services

$200

$194

3%

6%

$593

$552

7%

9%

  Maintenance services

$160

$147

9%

11%

$472

$438

8%

9%

     Total Services

$360

$341

6%

8%

$1,065

$990

8%

9%

Total Revenue

$666

$647

3%

5%

$1,923

$1,925

0%

1%

By segment

  Americas

$409

$384

7%

7%

$1,169

$1,170

0%

0%

  International*

$257

$263

-2%

0%

$754

$755

0%

2%

Total Revenue

$666

$647

3%

5%

$1,923

$1,925

0%

1%

* For comparison purposes, prior-year amounts have been reclassified to conform to the current-year presentation.

2.

Teradata reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP. However, as described below, the company believes that certain non-GAAP measures (such as non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted share, or EPS, which exclude certain items as well as free cash flow) are useful for investors. Our non-GAAP measures are not meant to be considered in isolation or as substitutes for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

Special items included in Teradata's 2013 third quarter GAAP operating income results as reported in this release included $12 million of stock-based compensation expense; $11 million of amortization of acquisition-related intangible assets; and $3 million of acquisition transaction and integration expenses.

Special items for Teradata's year-to-date non-GAAP net income as reported in this release also included a $4 million income tax expense related to the 2012 U.S. Research & Development tax credit, which was retroactively enacted in the first quarter of 2013. The 2012 R&D tax credit benefit was included in Teradata's non-GAAP results in the fourth quarter of 2012, since the benefit related the 2012 tax reporting period. However, Teradata did not include the tax benefit in its GAAP results in the fourth quarter of 2012 due to the American Taxpayer Relief Act of 2012 not being enacted until the first quarter of 2013. As a result, the $4 million income tax benefit is included in Teradata's year-to-date 2013 GAAP net income, but excluded from the company's year-to-date non-GAAP net income.

The following tables reconcile Teradata's actual and projected results and EPS under GAAP to the company's actual and projected non-GAAP results and EPS for the periods presented, which exclude certain items. Our management regularly uses supplemental non-GAAP financial measures, such as gross margin, operating income, net income and EPS, excluding certain items internally, to understand, manage and evaluate our business and support operating decisions. The company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the company's ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allow investors a view of the company's operating results excluding special items, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.

 

Teradata's reconciliation of GAAP to non-GAAP results included in this release.

(in millions, except per share data)

For the Three

For the Nine

Months Ended

September 30

Months Ended

September 30

Gross Margin:

2013

2012

%Chg

as

Rpt'd

2013

2012

%Chg

As

Rpt'd

 GAAP Gross Margin

$358

$361

-1%

$1,042

$1,081

-4%

   % of Revenue

53.8%

55.8%

54.2%

56.2%

  Excluding:

   Stock-based compensation expense

2

1

5

3

   Purchase accounting adjustments

-

-

-

2

   Amortization of acquisition-related intangible assets

6

7

19

16

   Transaction, integration and reorganization related

    costs

-

-

1

1

 Non-GAAP Gross Margin   

$366

$369

-1%

$1,067

$1,103

-3%

   % of Revenue

55.0%

56.9%

55.5%

57.2%

Operating Income:

 GAAP Operating Income

$132

$143

-8%

$355

$430

-17%

   % of Revenue

19.8%

22.1%

18.5%

22.3%

  Excluding:

   Stock-based compensation expense

12

10

39

31

   Purchase accounting adjustments

-

-

-

2

   Amortization of acquisition-related intangible assets

11

11

33

26

   Transaction, integration and reorganization related     costs

3

2

9

12

 Non-GAAP Operating Income   

$158

$166

-5%

$436

$501

-13%

   % of Revenue

23.7%

25.6%

22.7%

26.0%

Net Income:

 GAAP Net Income

$98

$104

-6%

$265

$307

-14%

   % of Revenue

14.7%

16.1%

13.8%

15.9%

  Excluding:

   Stock-based compensation expense

8

6

26

19

   Purchase accounting adjustments

-

-

-

1

   Amortization of acquisition-related intangible assets

8

7

22

17

   Transaction, integration and reorganization related     costs

2

2

6

10

   2012 R&D Tax Credit, enacted in 2013

-

-

-4

-

 Non-GAAP Net Income   

$116

$119

-3%

$315

$354

-11%

   % of Revenue

17.4%

18.4%

16.4%

18.3%

 

For the Three

Months Ended

For the Nine

Months Ended

September 30

September 30

Full-Year

Diluted Earnings Per Share:

2013

2012

2013

2012

2013

Guidance

 GAAP Diluted Earnings Per Share

$0.59

$0.60

$1.59

$1.78

$2.27 - $2.37

  Excluding:

   Stock-based compensation expense

$0.05

$0.04

$0.16

$0.11

$0.21

   Purchase accounting adjustments

-

-

-

$0.01

-

   Amortization of acquisition-related intangible    assets

$0.05

$0.04

$0.13

$0.10

$0.17

   Transaction, integration and reorganization related

   costs

$0.01

$0.01

$0.03

$0.06

$0.07

   2012 R&D Tax Credit, enacted in 2013

-

-

($0.02)

-

($0.02)

 Non-GAAP Diluted Earnings Per Share

$0.70

$0.69

$1.89

$2.06

$2.70 - $2.80

 

3.

As described above, the company believes that free cash flow is a useful non-GAAP measure for investors. Teradata defines free cash flow as cash provided/used by operating activities less capital expenditures for property and equipment, and additions to capitalized software. Free cash flow does not have a uniform definition under GAAP and therefore, Teradata's definition may differ from other companies' definitions of this measure. Teradata's management uses free cash flow to assess the financial performance of the company and believes it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures for, among other things, investment in the company's existing businesses, strategic acquisitions, strengthening the company's balance sheet, repurchase of the company's stock and repayment of the company's debt obligations, if any. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure. This non-GAAP measure is not meant to be considered in isolation, as a substitute for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

 

For the Three

Months Ended

September 30

For the Nine

Months Ended

September 30

(in millions)

(in millions)

2013

2012

2013

2012

Cash provided by operating activities (GAAP)

$64

$104

$447

$451

   Less capital expenditures for:

      Expenditures for property and equipment

(13)

(18)

(44)

(49)

      Additions to capitalized software

(22)

(22)

(56)

(60)

           Total capital expenditures

(35)

(40)

(100)

(109)

Free Cash Flow (non-GAAP measure)(3)

$29

$67

$347

$342

 

Note to Investors This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts' earnings estimates, among other things. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause Teradata's actual results to differ materially. In addition to the factors discussed in this release, other risks and uncertainties could affect our future results, and could cause actual results to differ materially from those expressed in such forward-looking statements. Such factors include those relating to: the global economic environment in general or on the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers, and other general economic and business conditions; the rapidly changing and intensely competitive nature of the information technology industry and the analytics data solutions business, including ongoing consolidation activity, threats from new and emerging analytic data technologies and competitors, and increased pressure on price/performance for data warehousing solutions; fluctuations in our operating results, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues; risks inherent in operating in foreign countries, including the impact of economic, political, legal, regulatory, compliance, cultural, foreign currency fluctuations and other conditions abroad; the timely and successful development, production or acquisition and market acceptance of new and existing products and services, including our ability to accelerate market acceptance of new products and services as well as the reliability, quality and operability of new products because of the difficulty and complexity associated with their testing and production; tax rates; turnover of workforce and the ability to attract and retain skilled employees; availability and successful exploitation of new acquisition and alliance opportunities; our ability to execute integration plans for newly acquired entities, including the possibility that expected synergies and operating efficiencies may not be achieved, that such integration efforts may be more difficult, time-consuming or costly than expected, and that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; recurring revenue may decline or fail to be renewed; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company's accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors described from time-to-time in the company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K and subsequent quarterly reports on Forms 10-Q, as well as the company's annual reports to stockholders. The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Teradata Teradata (NYSE: TDC), a global leader in analytic data platforms, marketing and analytic applications, and consulting services, helps organizations become more competitive by increasing the value of their data and customer relationships. Visit teradata.com for details.

Get to know Teradata: Twitter: https://twitter.com/teradatanews  Facebook: http://www.facebook.com/Teradata  YouTube: http://www.youtube.com/user/teradata  LinkedIn: http://www.linkedin.com/company/teradata/products 

Teradata is a trademark or registered trademark of Teradata Corporation in the United States and other countries.

 

Schedule A

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)

For the Period Ended September 30

Three Months

Nine Months

2013

2012

% Chg

2013

2012

% Chg

Revenue

Products 

$             306

$             306

0%

$             858

$             935

-8%

Services

360

341

6%

1,065

990

8%

Total revenue

666

647

3%

1,923

1,925

0%

Product gross margin

188

211

546

638

% of Revenue

61.4%

69.0%

63.6%

68.2%

Services gross margin

170

150

496

443

% of Revenue

47.2%

44.0%

46.6%

44.7%

Total gross margin

358

361

1,042

1,081

% of Revenue

53.8%

55.8%

54.2%

56.2%

Selling, general and administrative expenses

183

174

547

518

Research and development expenses

43

44

140

133

Income from operations

132

143

355

430

% of Revenue

19.8%

22.1%

18.5%

22.3%

Other expense, net

-

-

(1)

(1)

Income before income taxes

132

143

354

429

% of Revenue

19.8%

22.1%

18.4%

22.3%

Income tax expense

34

39

89

122

% Tax rate

25.8%

27.3%

25.1%

28.4%

Net income

$               98

$             104

$             265

$             307

% of Revenue

14.7%

16.1%

13.8%

15.9%

Net income per common share

Basic 

$            0.60

$            0.62

$            1.62

$            1.82

Diluted

$            0.59

$            0.60

$            1.59

$            1.78

Weighted average common shares outstanding

Basic

163.2

168.8

164.0

168.4

Diluted

166.4

172.4

167.1

172.1

 

Schedule B

TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)

September 30,

 June 30, 

 December 31, 

2013

2013

2012

Assets

Current assets

   Cash and cash equivalents

$                862

$                  826

$                  729

   Accounts receivable, net

546

514

668

   Inventories

67

70

47

   Other current assets

85

83

90

Total current assets

1,560

1,493

1,534

Property and equipment, net

157

156

150

Capitalized software, net

189

182

173

Goodwill

945

934

932

Acquired intangible assets

159

168

186

Deferred income taxes

25

24

29

Other assets

83

85

62

Total assets

$             3,118

$               3,042

$               3,066

Liabilities and stockholders' equity

Current liabilities

   Accounts payable

$                  98

$                  105

$                  141

   Payroll and benefits liabilities

124

116

158

   Deferred revenue

374

422

375

   Other current liabilities

126

131

132

Total current liabilities

722

774

806

Long-term debt

255

263

274

Pension and other postemployment plan liabilities

81

72

73

Long-term deferred revenue

26

29

30

Deferred tax liabilities

87

86

83

Other liabilities

29

28

21

Total liabilities

1,200

1,252

1,287

Stockholders' equity

Preferred stock

-

-

-

Common stock

2

2

2

Paid-in capital

963

941

898

Treasury Stock

(989)

(988)

(806)

Retained earnings

1,921

1,823

1,656

Accumulated other comprehensive income

21

12

29

Total stockholders' equity

1,918

1,790

1,779

Total liabilities and stockholders' equity

$             3,118

$               3,042

$               3,066

 

Schedule C

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

For the Period Ended September 30

Three Months

Nine Months

2013

2012

2013

2012

Operating activities

Net income

$                        98

$                      104

$                      265

$                      307

Adjustments to reconcile net income to net cash provided

  by operating activities:

     Depreciation and amortization

39

32

109

93

     Stock-based compensation expense

12

10

39

31

     Excess tax benefit from stock-based compensation

(3)

(9)

(7)

(33)

     Deferred income taxes

1

6

7

28

     Changes in assets and liabilities:

        Receivables

(31)

(19)

126

(20)

        Inventories

4

(5)

(19)

21

        Current payables and accrued expenses

(14)

45

(86)

23

        Deferred revenue

(51)

(53)

(5)

19

        Other assets and liabilities

9

(4)

18

(18)

Net cash provided by operating activities

64

107

447

451

Investing activities

Expenditures for property and equipment

(13)

(18)

(44)

(49)

Additions to capitalized software

(22)

(22)

(56)

(60)

Business acquisitions and other investing activities, net

-

(1)

(39)

(239)

Net cash used in investing activities

(35)

(41)

(139)

(348)

Financing activities

Repurchases of common stock

(3)

(2)

(187)

(39)

Repayments of long-term borrowings

(3)

(4)

(11)

(8)

Excess tax benefit from stock-based compensation

3

9

7

33

Other financing activities, net

8

12

23

48

Net cash provided by (used in) financing activities

5

15

(168)

34

Effect of exchange rate changes on cash and cash equivalents

2

7

(7)

-

Increase in cash and cash equivalents

36

88

133

137

Cash and cash equivalents at beginning of period

826

821

729

772

Cash and cash equivalents at end of period

$                      862

$                      909

$                      862

$                      909

 

Schedule D

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions)

For the Period Ended September 30

Three Months

Nine Months

2013

2012

% Change As

Reported

% Change

Constant

Currency

2013

2012

% Change As

Reported

% Change

Constant

Currency

Segment Revenue

Americas

$    409

$    384

7%

7%

$   1,169

$    1,170

0%

0%

International

257

263

-2%

0%

754

755

0%

2%

Total revenue

666

647

3%

5%

1,923

1,925

0%

1%

Segment gross margin

Americas

233

229

668

703

   % of Revenue

57.0%

59.6%

57.1%

60.1%

International

125

132

374

378

   % of Revenue

48.6%

50.2%

49.6%

50.1%

Total gross margin

358

361

1,042

1,081

% of Revenue

53.8%

55.8%

54.2%

56.2%

Selling, general and administrative expenses

183

174

547

518

Research and development expenses

43

44

140

133

Income from operations

$    132

$    143

$      355

$       430

% of Revenue

19.8%

22.1%

18.5%

22.3%

 

 

 

SOURCE Teradata Corporation



RELATED LINKS

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