Technology outsourcing and consulting firm Accenture Plc. (ACN) reported fiscal fourth-quarter results after the closing bell yesterday. The company’s GAAP net income fell to $254.7 million, or 39 cents per share, from $434.8 million, or 67 cents per share a year ago. Excluding a restructuring charge, earnings per share came in at 63 cents, which matched the Zacks Consensus Estimate.
The New York-based company said total revenues slipped 16.1% year over year to $5.5 billion, while net revenues, excluding reimbursements, declined 14.2% to $5.15 billion. The sluggish revenue performance was caused by weak global economic conditions and unfavorable currency translations.
The company stated that Consulting revenues dipped 19.2% year over year to $2.9 billion, while Outsourcing revenues fell 6.7% to $2.2 billion. New bookings during the quarter also contracted to $5.54 billion, compared to a record $7.67 billion in the year-ago period.
Net Revenues by Operating Group
In terms of operating groups, Communications & High Tech recorded a decline of 21% year over year to $1.1 billion, while the flagship Products group fell by 17% to $1.3 billion. Financial Services posted a decrease of 19% year over year to $1.0 billion, while Resources group’s net revenues shrank 10% to $942.5 million. Public Services group was the lone bright spot as it recorded a growth of 6% year over year to $776.3 million.
Net Revenues by Geography
In terms of geographic regions, net revenues in the Americas reduced 11% year over year to $2.26 billion, while the EMEA (Europe, the Middle East and Africa) region declined 20% to $2.27 billion. However, net revenues from Asia Pacific grew 1% year over year to $607.7 million, which partially offset the decline in the other two regions.
Accenture’s gross margin, as a percentage of net revenues, expanded 50 points (bps) year over year to 32.3% primarily due to improved margins in outsourcing contracts. Selling general and administrative expenses, as a percentage of net revenues, increased 50 bps year over year to 19.1% mainly due to higher selling costs.
The company also recorded a restructuring charge of $252.6 million (4.9% of net revenues) related to global real-estate consolidation initiatives and realignment of workforce, primarily at the senior-executive level. Accordingly, operating income fell 46.5% year over year to $419.6 million, while operating margin declined 490 bps to 8.2%.
Balance Sheet
The company has a strong balance sheet with negligible long-term debt. Cash and equivalents at the end of the quarter was $4.5 billion, compared to $3.6 billion in the year-ago quarter. The increase was primarily driven by improved receivables position as days services outstanding (DSOs) came down to 28 days from 37 days last year.
During the quarter, Accenture repurchased 15.3 million shares for $525 million, while in the entire fiscal 2009 the company bought back 58 million shares for a total of $1.9 billion. Meanwhile, the company also boosted the annual dividend on its shares by 50% to 75 cents per share and said that it has received approval from the board of directors to buy back additional shares worth $4 billion.
Outlook
Looking ahead, Accenture anticipates net revenues during fiscal first-quarter to range between $5.3 billion and $5.5 billion. Moreover, net revenues during full fiscal 2010 is expected grow between a negative 3% and positive 1% in local currency terms, while earnings per share is expected between $2.64 and $2.72. The guidance is below the Zacks Consensus Estimate of $2.76 per share, which has edged up a penny over the past week as 2 of 16 covering analysts raised expectations.
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