Acxiom Announces First Quarter Results

Mon Jul 30, 2012 4:08pm EDT

* Reuters is not responsible for the content in this press release.

Acxiom Announces First Quarter Results

Diluted earnings per share up 31 percent;

Income from operations up 23 percent

Acxiom® Corporation (Nasdaq: ACXM), a recognized leader in marketing services and technology, today announced financial results for the first quarter of fiscal year 2013 ended June 30, 2012.

Revenue from continuing operations was $272 million, down 2 percent compared to $276 million for the first quarter last year. Income from continuing operations increased 23 percent to $25 million in the current quarter, compared to $21 million in the prior year. Earnings per diluted share attributable to Acxiom stockholders were up approximately 31 percent in the current quarter to $0.17, compared to diluted earnings per share of $0.13 in the same period.

Operating cash flow increased 7 percent to $195 million for the trailing twelve months, compared with $182 million for the trailing twelve months ended June 30, 2011. Free cash flow to equity increased 154 percent to $175 million for the trailing twelve months, compared with $69 million for the trailing twelve months ended June 30, 2011. Free cash flow to equity for the trailing twelve months includes $73 million in proceeds from the sale of the Company’s background screening business. Free cash flow available to equity is a non-GAAP financial measure. A reconciliation to the comparable GAAP measure, operating cash flow, is attached.

“We are making progress – but we still have much to do,” said Acxiom CEO Scott Howe. “While our margins have improved and we’ve strengthened our managerial capability and focus, this year will continue to be a period of investment and transition. Our objective is straightforward – get better every day we come to work.”

First Quarter Highlights:

  • 0perating margin increased to 9.4 percent, up approximately 2 percentage points year over year.
  • Acxiom repurchased 2.4 million shares for $33 million during the quarter. Since August 2011, the company has repurchased 8.1 million shares, or approximately 10 percent of the outstanding common stock, for $100 million.
  • In the quarter, Acxiom expanded its global partner program. The company was selected by Mindshare, a leading global media network, as the consumer insights provider for CORE, Mindshare’s new data-driven marketing intelligence platform. Through CORE, Acxiom delivers its unique breadth and accuracy of consumer insights to data-driven marketers. In Australia, the company and Yahoo!7 announced a new partnership to leverage Acxiom’s extensive offline data to deliver more highly effective online advertising.
  • Tim Cadogan, CEO of OpenX Technologies and former SVP of Global Advertising Marketplaces for Yahoo!, has been named to the Acxiom Board of Directors.
  • John Battelle, founder and executive chairman of Federated Media Publishing, has been nominated as a candidate for election to the Board at the company’s August 16, 2012, annual stockholders meeting.

Segment Results:

  • Marketing and Data Services: Revenue for the first quarter was $186 million, roughly flat compared to $185 million for the same period a year ago. U.S. revenue of $160 million was up 2 percent, but was offset by declines internationally. Income from operations for the first quarter was $18 million, compared to $17 million in the prior period. Operating margin was 10 percent, compared to 9 percent in the previous year.
  • IT Infrastructure Management: Revenue for the first quarter decreased 4 percent to $70 million, compared with $73 million for the same period a year ago. Income from operations for the quarter was $9 million, compared to $4 million in the prior period. Operating margin was approximately 13 percent compared to 6 percent a year ago.
  • Other Services: Revenue for the first quarter was $16 million, down from $18 million in the prior year. Losses from operations were approximately $2 million, compared to $1 million in the prior period.

Financial Guidance

The following projections are forward looking and are subject to certain risks and uncertainties that could cause actual results to differ materially as detailed in the Forward Looking Statements section of this press release. Acxiom’s estimates for fiscal 2013 are as follows:

  • Revenue from continuing operations is expected to be flat to slightly down.
  • Earnings per diluted share attributable to Acxiom shareholders are expected to be in the range of $0.60 to $0.65.

For the second quarter of fiscal 2013, revenue from continuing operations is expected to be down roughly 5 percent principally as a result of expected declines in the Company’s IT Infrastructure Management and Other Services segments.

Conference Call

Acxiom will hold a conference call at 4:00 p.m. CDT today to further discuss this information. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.

Web Link to Financials

You may link to http://www.acxiom.com/FY13_Q1_Financials for the detailed financial information we typically attach to our earnings releases.

About Acxiom

Acxiom is a recognized leader in marketing services and technology that enable marketers to successfully manage audiences, personalize consumer experiences and create profitable customer relationships. Our superior industry-focused, consultative approach combines consumer data and analytics, databases, data integration and consulting solutions for personalized, multichannel marketing strategies. Acxiom leverages over 40 years of experience in data management to deliver high-performance, highly secure, reliable information management services. Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas, USA, and serves clients around the world from locations in the United States, Europe, Asia-Pacific, and South America. For more information about Acxiom, visit Acxiom.com.

Forward Looking Statements

This release and today’s conference call may contain forward-looking statements including, without limitation, statements regarding expected levels of revenue from continuing operations and earnings per share as well as statements regarding building momentum, and our plans to invest in and transition our business. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce the amount of business they do with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients, which could lead to decreases in our operating results; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that we may be unable to quickly and seamlessly integrate our new executive officers; the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that the historical seasonality of our business may change; the possibility that we will not be able to achieve cost reductions and avoid unanticipated costs; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A, RISK FACTORS” in our Annual Report on Form 10-K for the year ended March 31, 2012, which was filed with the Securities and Exchange Commission on May 25, 2012.

With respect to the provision of products or services outside our primary base of operations in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in scale, competition, culture, laws and regulations.

We undertake no obligation to update the information contained in this press release or any other forward-looking statement.

Acxiom is a registered trademark of Acxiom Corporation.

 

ACXIOM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
             
 
For the Three Months Ended
June 30,
$ %
2012 2011 Variance   Variance
 
Revenue:
Marketing and data services 185,676 184,996 680 0.4 %
IT Infrastructure management services 70,290 73,050 (2,760 ) (3.8 %)
Other services 15,693   17,998   (2,305 ) (12.8 %)
Total revenue 271,659 276,044 (4,385 ) (1.6 %)
 
Operating costs and expenses:
Cost of revenue 209,326 218,289 8,963 4.1 %
Selling, general and administrative 36,749 36,807 58 0.2 %
Gains, losses and other items, net 160   244   84 34.4 %
 
Total operating costs and expenses 246,235   255,340   9,105 3.6 %
 

Income from operations

25,424   20,704   4,720 22.8 %
% Margin 9.4 % 7.5 %
Other income (expense):
Interest expense (3,240 ) (5,455 ) 2,215 40.6 %
Other, net (547 ) (87 ) (460 ) (528.7 %)
 
Total other income (expense) (3,787 ) (5,542 ) 1,755 31.7 %
 
Earnings from continuing operations before income taxes 21,637 15,162 6,475 42.7 %
 
Income taxes 8,438   6,063   (2,375 ) (39.2 %)
 
Net earnings from continuing operations 13,199 9,099 4,100 45.1 %
 
Earnings from discontinued operations, net of tax -   916   (916 ) (100.0 %)
 
Net earnings 13,199 10,015 3,184 31.8 %
 
Less: Net loss attributable to noncontrolling interest (134 ) (960 ) 826 86.0 %
 
Net earnings attributable to Acxiom 13,333   10,975   2,358 21.5 %
 
Basic earnings per share:
Net earnings from continuing operations 0.17 0.11 0.06 54.5 %
Earnings from discontinued operations 0.00   0.01   (0.01 ) (100.0 %)
Net earnings 0.17   0.12   0.05 41.7 %
 
Net earnings attributable to Acxiom stockholders 0.17   0.14   0.03 21.4 %
 
 
Diluted earnings per share:
Net earnings from continuing operations 0.17 0.11 0.06 54.5 %
Earnings from discontinued operations 0.00   0.01   (0.01 ) (100.0 %)
Net earnings 0.17   0.12   0.05 41.7 %
 
Net earnings attributable to Acxiom stockholders 0.17   0.13   0.04 30.8 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
       
 
For the Three Months Ended
 
June 30, June 30,
2012 2011
 
Basic earnings per share from continuing operations:
Numerator - net earnings 13,199 9,099
Denominator - weighted-average shares outstanding 76,473 80,942
Basic earnings per share 0.17 0.11
 
Basic earnings per share - net earnings attributable to Acxiom stockholders:
Numerator - net earnings attributable to Acxiom 13,333 10,975
Denominator - weighted-average shares outstanding 76,473 80,942
Basic earnings per share - net earnings attributable to Acxiom stockholders 0.17 0.14
 
Diluted earnings per share from continuing operations:
Numerator - net earnings 13,199 9,099
 
Denominator - weighted-average shares outstanding 76,473 80,942
Dilutive effect of common stock options, warrants and restricted stock 1,584 1,072
78,057 82,014
 
Diluted earnings per share from continuing operations 0.17 0.11
 
Diluted earnings per share - net earnings attributable to Acxiom stockholders:
Numerator - net earnings attributable to Acxiom 13,333 10,975
 
Denominator - weighted-average shares outstanding 76,473 80,942
Dilutive effect of common stock options, warrants, and restricted stock 1,584 1,072
78,057 82,014
 
Diluted earnings per share - net earnings attributable to Acxiom stockholders 0.17 0.13
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
       
 
For the Three Months Ended
 
June 30, June 30,
Revenue: 2012 2011
 
Marketing and data services 185,676 184,996
IT Infrastructure management services 70,290 73,050
Other services 15,693   17,998  
 
Total revenue 271,659   276,044  
 
 
Income from continuing operations:

 

Marketing and data services 18,366 17,260
IT Infrastructure management services 8,831 4,247
Other services (1,613 ) (559 )
Corporate (160 ) (244 )
 
Total income from continuing operations 25,424   20,704  
 
Margin:
 
Marketing and data services 9.9 % 9.3 %
IT Infrastructure management services 12.6 % 5.8 %
Other services -10.3 % -3.1 %
 
Total margin 9.4 % 7.5 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
         
June 30, March 31, $ %
2012 2012 Variance   Variance

Assets

Current assets:
Cash and cash equivalents 179,282 229,648 (50,366 ) (21.9 %)
Trade accounts receivable, net 172,549 169,446 3,103 1.8 %
Deferred income taxes 14,688 15,107 (419 ) (2.8 %)
Other current assets 58,064   57,804   260 100.0 %
 
Total current assets 424,583 472,005 (47,422 ) (10.0 %)
 
Property and equipment 798,908 913,073 (114,165 ) (12.5 %)
Less - accumulated depreciation and amortization 555,973   659,700   (103,727 ) (15.7 %)
 
Property and equipment, net 242,935   253,373   (10,438 ) (4.1 %)
 
Software, net of accumulated amortization 14,501 13,211 1,290 9.8 %
Goodwill 381,439 382,285 (846 ) (0.2 %)
Purchased software licenses, net of accumulated amortization 24,548 25,294 (746 ) (2.9 %)
Deferred costs, net 56,600 61,977 (5,377 ) (8.7 %)
Data acquisition costs 13,785 15,009 (1,224 ) (8.2 %)
Other assets, net 3,163   3,697   (534 ) (14.4 %)
 
1,161,554   1,226,851   (65,297 ) (5.3 %)
 

Liabilities and Stockholders' Equity

Current liabilities:
Current installments of long-term debt 24,905 26,336 (1,431 ) (5.4 %)
Trade accounts payable 23,442 31,030 (7,588 ) (24.5 %)
Accrued payroll and related expenses 31,585 54,839 (23,254 ) (42.4 %)
Other accrued expenses 78,535 77,062 1,473 1.9 %
Deferred revenue 52,588 59,949 (7,361 ) (12.3 %)
Income taxes 9,966   16,400   (6,434 ) (39.2 %)
 
Total current liabilities 221,021   265,616   (44,595 ) (16.8 %)
 
Long-term debt 248,613 251,886 (3,273 ) (1.3 %)
 
Deferred income taxes 91,643 93,039 (1,396 ) (1.5 %)
 
Other liabilities 4,134 4,455 (321 ) (7.2 %)
 
Stockholders' equity:
Common stock 12,055 12,003 52 0.4 %
Additional paid-in capital 865,229 860,165 5,064 0.6 %
Retained earnings 549,692 536,359 13,333 2.5 %
Accumulated other comprehensive income 11,929 13,601 (1,672 ) (12.3 %)
Treasury stock, at cost (842,736 ) (810,381 ) (32,355 ) (4.0 %)
Total Acxiom stockholders' equity 596,169 611,747 (15,578 ) (2.5 %)
Noncontrolling interest (26 ) 108   (134 ) (124.1 %)
 
Total equity 596,143   611,855   (15,712 ) (2.6 %)
 
1,161,554   1,226,851   (65,297 ) (5.3 %)
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
   
For the Three Months Ended
June 30,
2012   2011
 
Cash flows from operating activities:
Net earnings 13,199 10,015
Non-cash operating activities:
Depreciation and amortization 30,995 35,295
Loss on disposal or impairment of assets 24 -
Deferred income taxes (1,403 ) 37
Non-cash stock compensation expense 2,653 2,355
Changes in operating assets and liabilities:
Accounts receivable (4,609 ) (3,622 )
Other assets (1,397 ) (8,517 )
Deferred costs (647 ) (386 )
Accounts payable and other liabilities (33,464 ) (3,674 )
Deferred revenue (7,218 ) 1,251  
Net cash provided (used) by operating activities (1,867 ) 32,754  
Cash flows from investing activities:
Capitalized software (3,673 ) (529 )
Capital expenditures (3,538 ) (12,577 )
Data acquisition costs (2,302 ) (2,776 )
Net cash paid in acquisitions -   (255 )
Net cash used by investing activities (9,513 ) (16,137 )
Cash flows from financing activities:
Payments of debt (6,856 ) (32,312 )
Sale of common stock 1,761 39
Contingent consideration paid for prior acquisitions (287 ) (326 )
Acquisition of treasury stock (33,097 ) -  
Net cash used by financing activities (38,479 ) (32,599 )
Effect of exchange rate changes on cash (507 ) 53  
 
Net change in cash and cash equivalents (50,366 ) (15,929 )
Cash and cash equivalents at beginning of period 229,648   206,973  
Cash and cash equivalents at end of period 179,282   191,044  
 
Supplemental cash flow information:
Cash paid during the period for:
Interest 3,223 5,589
Income taxes 16,193 1,098
Payments on capital leases and installment payment arrangements 4,562 4,794
Payments on software and data license liabilities 129 367
Other debt payments, excluding line of credit 2,165 2,151
Prepayment of debt - 25,000
Noncash investing and financing activities:

Acquisition of property and equipment under capital lease and installment payment arrangements

2,157 3,747
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
                 
                         
06/30/11   09/30/11   12/31/11   03/31/12   FY2012 06/30/12 TTM 6/30/11   TTM 6/30/12
 
Net cash provided (used) by operating activities 32,754 57,714 82,540 56,443 229,451 (1,867 ) 181,985 194,830
 
Less:
Disposition of operations - (1,043 ) - 73,468 72,425 - - 72,425
Capitalized software (529 ) (991 ) (1,647 ) (2,095 ) (5,262 ) (3,673 ) (3,858 ) (8,406 )
Capital expenditures (12,577 ) (12,134 ) (14,436 ) (12,444 ) (51,591 ) (3,538 ) (62,846 ) (42,552 )
Data acquisition costs (2,776 ) (1,774 ) (3,999 ) (3,763 ) (12,312 ) (2,302 ) (11,816 ) (11,838 )
Payments on capital leases and installment payment arrangements (4,794 ) (4,184 ) (4,709 ) (4,644 ) (18,331 ) (4,562 ) (21,183 ) (18,099 )
Payments on software and data license liabilities (367 ) (124 ) (125 ) (2,300 ) (2,916 ) (129 ) (4,790 ) (2,678 )
Other required debt payments (2,151 )   (2,155 )   (2,159 )   (2,164 )   (8,629 ) (2,165 ) (8,476 )   (8,643 )
 
Total 9,560     35,309     55,465     102,501     202,835   (18,236 ) 69,016     175,039  
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
               
                    Q1 FY13 to Q1 FY12
06/30/11   09/30/11   12/31/11   03/31/12   FY2012 06/30/12 %   $
Revenue:
Marketing and data services 184,996 195,857 187,461 203,400 771,714 185,676 0.4 % 680
IT Infrastructure management services 73,050 73,712 77,173 67,590 291,525 70,290 -3.8 % (2,760 )
Other services 17,998     16,863     16,259     16,265     67,385   15,693   -12.8 %   (2,305 )
Total revenue 276,044 286,432 280,893 287,255 1,130,624 271,659 -1.6 % (4,385 )
 
Operating costs and expenses:
Cost of revenue 218,289 217,487 213,925 213,788 863,489 209,326 4.1 % 8,963
Selling, general and administrative 36,807 39,429 36,318 38,577 151,131 36,749 0.2 % 58
Impairment of goodwill and other intangibles - - 17,803 - 17,803 - 0
Gains, losses and other items, net 244     2,465     (2,671 )   12,600     12,638   160   34.4 %   84  
 
Total operating costs and expenses 255,340 259,381 265,375 264,965 1,045,061 246,235 3.6 % 9,105
 
Income from operations 20,704 27,051 15,518 22,290 85,563 25,424 22.8 % 4,720
% Margin 7.5 % 9.4 % 5.5 % 7.8 % 7.6 % 9.4 %
Other income (expense)
Interest expense (5,455 ) (4,719 ) (3,883 ) (3,391 ) (17,448 ) (3,240 ) -40.6 % 2,215
Other, net (87 )   (965 )   (98 )   (219 )   (1,369 ) (547 ) -528.7 %   (460 )
Total other income (expense) (5,542 ) (5,684 ) (3,981 ) (3,610 ) (18,817 ) (3,787 ) 31.7 % 1,755
 
Earnings from continuing operations before income taxes 15,162 21,367 11,537 18,680 66,746 21,637 42.7 % 6,475
Income taxes 6,063     9,528     9,700     3,838     29,129   8,438   -39.2 %   (2,375 )
 
Net earnings from continuing operations 9,099 11,839 1,837 14,842 37,617 13,199 45.1 % 4,100
 
Earnings from discontinued operations, net of tax 916     1,138     814     31,031     33,899   -   -100.0 %   (916 )
 
Net earnings 10,015 12,977 2,651 45,873 71,516 13,199 31.8 % 3,184
 

Less: Net earnings (loss) attributable to noncontrolling interest

(960 )   685     (5,279 )   (193 )   (5,747 ) (134 ) 86.0 %   826  
 
Net earnings attributable to Acxiom 10,975     12,292     7,930     46,066     77,263   13,333   21.5 %   2,358  
 

Diluted earnings per share - net earnings attributable to Acxiom stockholders

0.13     0.15     0.10     0.58     0.96   0.17   30.8 %   0.04  
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
                 
                    Q1 FY13 to Q1 FY12
06/30/11   09/30/11   12/31/11   03/31/12   FY2012 06/30/12 %   $
 
Revenue:
 
Marketing and data services 184,996 195,857 187,461 203,400 771,714 185,676 0 % 680
IT Infrastructure management services 73,050 73,712 77,173 67,590 291,525 70,290 -4 % (2,760 )
Other services 17,998     16,863     16,259     16,265     67,385   15,693   -13 %   (2,305 )
 
Total revenue 276,044     286,432     280,893     287,255     1,130,624   271,659   -2 %   (4,385 )
 
Income from operations:
 
Marketing and data services 17,260 27,078 21,388 30,094 95,820 18,366 6 % 1,106
IT Infrastructure management services 4,247 5,091 9,795 5,855 24,988 8,831 108 % 4,584
Other services (559 ) (2,653 ) (533 ) (1,059 ) (4,804 ) (1,613 ) -189 % (1,054 )
Corporate (244 )   (2,465 )   (15,132 )   (12,600 )   (30,441 ) (160 ) 34 %   84  
 
Total income (loss) from operations 20,704     27,051     15,518     22,290     85,563   25,424   23 %   4,720  
 
Margin:
 
Marketing and data services 9.3 % 13.8 % 11.4 % 14.8 % 12.4 % 9.9 %
IT Infrastructure management services 5.8 % 6.9 % 12.7 % 8.7 % 8.6 % 12.6 %
Other services -3.1 % -15.7 % -3.3 % -6.5 % -7.1 % -10.3 %
 
Total 7.5 % 9.4 % 5.5 % 7.8 % 7.6 % 9.4 %
 

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Acxiom Investor Relations
Katharine Boyce, 501-342-1321
investor.relations@acxiom.com
EACXM