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Accenture (ACN)

Q3 2012 Earnings Call

June 28, 2012 4:30 pm ET


KC McClure

Pierre Nanterme - Chief Executive Officer and Director

Pamela J. Craig - Chief Financial Officer


Darrin D. Peller - Barclays Capital, Research Division

Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division

Rod Bourgeois - Sanford C. Bernstein & Co., LLC., Research Division

Bryan Keane - Deutsche Bank AG, Research Division

Julio C. Quinteros - Goldman Sachs Group Inc., Research Division

Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division

David Grossman - Stifel, Nicolaus & Co., Inc., Research Division

Keith F. Bachman - BMO Capital Markets U.S.

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Edward S. Caso - Wells Fargo Securities, LLC, Research Division

Ashwin Shirvaikar - Citigroup Inc, Research Division



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Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to Accenture's Third Quarter Fiscal 2012 Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference is being recorded. I would now like to turn the conference over to our host, Managing Director of Investor Relations, Ms. KC McClure. Please go ahead.

KC McClure

Thank you, Tom, and thanks, everyone, for joining us today on our third quarter fiscal 2012 earnings announcement. As Tom just mentioned, I'm KC McClure, Managing Director of Investor Relations. With me today are Pierre Nanterme, our Chief Executive Officer; and Pamela Craig, our Chief Financial Officer.

We hope you've had an opportunity to review the news release we issued a short time ago. Let me quickly outline the agenda for today's call. Pierre will begin with an overview of our results. Pam will take you through the financial details, including the income statement and balance sheet, along with some key operational metrics for the third quarter. Pierre will then provide a brief update on market positioning and progress against our growth strategy. Pam will then provide our business outlook for the fourth quarter and full fiscal year 2012 and then we will take your questions before Pierre provides a wrap-up at the end of the call.

As a reminder, when we discuss revenues during today's call, we're talking about revenues before reimbursement, or net revenues. Some of the matters we'll discuss on this call are forward-looking, including the business outlook. You should keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements and that such statements are not a guarantee of our future performance.

Such risks and uncertainties include, but are not limited to, general economic conditions and those factors set forth in today's news release and discussed under the Risk Factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q and other SEC filings.

During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of those measures, where appropriate, to GAAP in our news release or on the Investor Relations section of our website at As always, Accenture assumes no obligation to update the information presented on this conference call. Now let me turn the call over to Pierre.

Pierre Nanterme

Thank you, KC, and thanks everyone for joining us today. We are pleased with our results for the third quarter, which demonstrate that our strategy and the diversity of our business continue to differentiate Accenture in the marketplace and enable us to drive profitable growth. Here are a few highlights.

We delivered new bookings of $7.3 billion, bringing us to $23 billion for the first 3 quarters of the year. Revenues were $7.2 billion, up 9% in local currency, with growth across all 5 operating groups and all 3 geographic regions and outstanding revenue growth in outsourcing. We delivered earnings per share of $1.03, an increase of 11%. We increased operating income 12% to $1.1 billion and expanded operating margin to 14.8%.

We continue to have a very strong balance sheet, ending the quarter with a cash balance of $5.6 billion. And we returned more than $1.1 billion in cash to shareholders through share repurchases and the payment of our semi-annual cash dividend. Given how we see our business shaping up for the year, we are confirming our outlook for revenue growth of 10% to 12% for the year.

Now let me hand over to Pam who will review the numbers in greater detail. Pam, over to you.

Pamela J. Craig

Thank you, Pierre, and thanks to all of you for listening today. I am pleased to give you some details on Accenture's fiscal year 2012 third quarter financial results. We delivered solid bookings, tracking to our full year outlook and revenues right at the midpoint of the Q3 range we provided in March.

Revenue growth was driven by continued strength in outsourcing and demand that spans our global operating groups for our diverse mix of service offerings. We also delivered overall margin expansion and continue to drive strong cash flow. We achieved double-digit EPS growth for the quarter, reflecting the profitable growth in our business. And we continue to have a strong balance sheet.

Now let's get to the numbers. Unless I state otherwise, all figures are U.S. GAAP except the items that are not part of the financial statements or that are calculations. New bookings for the quarter were $7.29 billion and reflect a negative 4% foreign exchange impact compared with new bookings in the third quarter last year. Consulting bookings were $4.05 billion, and outsourcing bookings were $3.24 billion. And as a reminder, our outsourcing bookings in particular can be lumpy from quarter to quarter.

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