CA Inc. Beats 4Q Earnings, Rev Down - Analyst Blog
May 08 2013 - 5:42AM
Zacks
CA Inc. (CA)
reported fourth-quarter 2013 adjusted earnings per share (“EPS”) of
65 cents, ahead of the Zacks Consensus Estimate of 53 cents.
Revenues
Total revenue in the reported
quarter was $1.15 billion, down 3.4% from $1.19 billion in the
year-ago quarter. When adjusted for currency, revenues declined
2.0% year over year. This was due to a decline in Mainframe
Solutions and the Enterprise solutions business.
Revenue
Segments
Mainframe Solutions generated
revenues of $620.0 million, down 1.4% year over year. Enterprise
Solutions’ revenues were $432.0 million, down 7.3% year over year.
Services’ revenues were down 6.5% year over year to $99.0
million.
Bookings
The company witnessed total bookings of $1.46 billion, down 5.0% on
a reported basis. North America bookings were $986.0 million, up
10.0% on a reported basis. The company won a large government
contract, which constituted a major part of this booking.
International Bookings were $477.0
million, down 26.0% from the year-ago quarter.
The company renewed 27 license
agreements during fiscal 2013, with contract value in excess of
$10.0 million each.
Operating
Results
GAAP income from continuing
operations before interest and income taxes was $274.0 million,
down 8.9% from $301.0 million reported in the year-ago quarter.
Therefore, the operating margin for the quarter was 24.0% down from
25.0% reported in the year-ago quarter.
On a GAAP basis, net income was
$242.0 million or 53 cents per share versus $211.0 million 45 cents
per share in the year-ago quarter. Excluding special items, such as
software amortization, intangible amortization, restructuring and
other and hedging gains/losses, but including stock-based
compensation expenses, non-GAAP net income in the fourth quarter
stood at 65 cents per share versus 52 cents in the prior-year
quarter.
Balance Sheet, Cash Flow
& Share Repurchase
CA generated cash flow from
continuing operations of $570 million, up 0.7% from $566.0 million
on a reported basis. Cash, cash equivalents and investments was
$2.78 billion, up from $2.55 billion reported in previous quarter.
Considering the company’s total outstanding debt of $1.29 billion,
net cash, cash equivalents and investments was $1.35 billion.
Moreover, during the reported
quarter, CA repurchased around 3 million shares of stock for $74.0
million.
Guidance
For fiscal 2014, the company expects total revenue is expected to
decline in the range of 4.0% to 2.0%. CA expects growth in non-GAAP
earnings per share from continuing operations to decline in the
range of 4.0%–7.0%, amounting to $2.35 to $2.43. Cash flow from
continuing operations is expected to decline in the range of 29.0%
to 35.0%. Moreover, the company has also declared that it would be
taking a charge of approximately $150 million in the fiscal year
2014, which will help them to take care of its business
priorities.
Outlook
CA Inc. reported mixed
fourth-quarter results, with bottom-line exceeding the Zacks
Consensus Estimate and revenues missing the same. Most of CA’s
revenue generating segments was adversely affected during the
reported quarter, yet cash position improved sequentially. The
company’s guidance for fiscal 2014 appears to be modest.
However, we are positive about the
CA Inc’s increased cloud exposure. Decent renewal rate, modest cash
position and share repurchase also appear encouraging. On the other
hand, increasing competition and exposure to Europe remain
concerns.
CA currently has a Zacks Rank #3
(Hold).
Investors can also consider other
stocks in the technology industry that are currently performing
well such as Aspen Tech Inc. (AZPN),
Progress Software (PRGS) with a
Zacks Rank #1 (Strong Buy) and Symantec Corp.
(SYMC) having a Zacks Rank#2.
ASPEN TECH INC (AZPN): Free Stock Analysis Report
CA INC (CA): Free Stock Analysis Report
PROGRESS SOFTWA (PRGS): Free Stock Analysis Report
SYMANTEC CORP (SYMC): Free Stock Analysis Report
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