Kurt Peters , Senior Executive Editor
LITTLE ROCK, Ark., Oct 25, 2006 -- Acxiom(R) Corporation (Nasdaq: ACXM) today announced financial results for the second quarter of fiscal 2007 ended September 30, 2006. Acxiom will hold a conference call at 4:30 p.m. CDT today to discuss this information further. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.acxiom.com.
Year over year, second-quarter earnings per diluted share increased 213 percent to $.25. Consolidated net earnings for the quarter increased 204 percent to $21.7 million. Gross margin increased to 27.5 percent from 26.2 percent in the same quarter a year ago. Second-quarter revenue totaled $348.3 million, an increase of 5.4 percent over the same quarter last year.
"We are pleased that Acxiom delivered another solid performance in the second quarter and remains on track to meet the fiscal 2007 targets we communicated at our Sept. 27 analysts` meeting in New York," Company Leader Charles D. Morgan said. "We continue to execute the fundamentals of our business and are delivering the results that we expected. I believe we are well positioned for a successful second half of the fiscal year."
Highlights of Acxiom`s second-quarter performance include:
-- Revenue of $348.3 million, up 5.4 percent from $330.5 million in the second quarter a year ago.
-- Income from operations of $41.9 million, a 123 percent increase compared to $18.8 million in the second quarter last year. Last year`s second-quarter results included the impact of net pretax charges of $15.8 million associated with restructuring, the sale of non-strategic operations and other unusual items. Excluding the impact of those charges, income from operations would have been up 21 percent. A reconciliation of the adjusted prior-year information is attached to this press release.
-- Diluted earnings per share of $.25, a 213 percent increase compared to $.08 in the second quarter of fiscal 2006. The impact of the net charges described above reduced diluted EPS by $.12 for the second quarter last year. Excluding this impact, diluted earnings per share increased 25 percent.
-- Operating cash flow of $64.4 million and free cash flow available to equity of $15.3 million. Free cash flow available to equity is a non-GAAP financial measure, and a reconciliation to the comparable GAAP measure, operating cash flow, is attached to this press release.
-- Gross margin of 27.5 percent compared to 26.2 percent in the same quarter last year.
-- Computer, communications and other equipment expense equaling 20.9 percent of revenue compared to 23.1 percent of revenue in the second quarter of fiscal 2006.
"The improvement in our earnings and margins - assisted by reduced computer expense as a percentage of revenue - shows the increasing strength of our business and the results of our initiatives to improve operational efficiencies," Morgan said.
Morgan also noted that Acxiom recently completed new contracts with Procter & Gamble Co., E*TRADE FINANCIAL Corporation, D&B; and Safety-Kleen Systems, Inc.
The Company`s expectations are communicated in the Financial Road Map, which includes a chart summarizing the one-year and long-term goals as well as an explanation of the assumptions and definitions that accompany these goals. Acxiom`s current Financial Road Map reflects the Company`s current expectations for fiscal year 2007, and the long-term goals reflect expected performance in fiscal 2010.
Detailed information from our analysts` day September 27 in New York is also posted on www.acxiom.com.
These financial projections are based on the assumptions and limitations set forth in the Financial Road Map. These projections are forward looking, and actual results may differ materially. These projections may be impacted by mergers, acquisitions, divestitures or other business combinations that may be completed in the future as well as the other factors set forth below.
Acxiom Corporation (Nasdaq: ACXM) integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom`s innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas, with locations throughout the United States and Europe, and in Australia and China.
For more information, visit www.acxiom.com.
This release and today`s conference call contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially. Such statements may include but are not necessarily limited to the following: that the Company is continuing to experience continued improvement and momentum in financial performance, that we expect that continued focus on expense controls will lead to continued improvement in operating margins, that the projected revenue, operating margin, return on assets and return on invested capital, operating cash flow and free cash flow, borrowings, dividends and other metrics referred to in the Financial Road Map attached to this release will be within the estimated ranges; that the Company has identified categories of opportunity that provide upside to the ranges of the Financial Road Map, that the estimations of revenue, earnings, cash flow, growth rates, restructuring charges and expense reductions will be within the estimated ranges; and that the business pipeline and our anticipated cost structure will allow us to continue to meet or exceed revenue, cash flow and other projections. The following are important factors, among others, that could cause actual results to differ materially from these forward-looking statements: The possibility that certain contracts may not be closed, or may not be closed within the anticipated time frames; the possibility that clients may attempt to reduce the amount of business they do with the Company; the possibility that in the event that a change of control of the Company was sought that certain of the clients of the Company would invoke certain provisions in their contracts resulting in a decline in the revenue and profit of the Company; the possibility that certain contracts may not generate the anticipated revenue or profitability; the possibility that negative changes in economic or other conditions might lead to a reduction in demand for our products and services; the possibility of an economic slowdown or that economic conditions in general will not be as expected; the possibility that the historical seasonality of our business may change; the possibility that significant customers may experience extreme, severe economic difficulty; the possibility that the integration of acquired businesses may not be as successful as planned; 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 sales cycles may lengthen; the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations; the possibility that we won`t be able to properly motivate our sales force or other associates; the possibility that we won`t be able to achieve cost reductions and avoid unanticipated costs; the possibility that we won`t be able to continue to receive credit upon satisfactory terms and conditions; the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies; the possibility that we may be subjected to pricing pressure due to market conditions and/or competitive 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 changes in accounting pronouncements may occur and may impact these projections; the possibility that we won`t be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that there will be changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not limited to litigation, legislation, regulations and customs relating to our ability to collect, manage, aggregate and use data; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services; the possibility that we may enter into short-term contracts which would affect the predictability of our revenues; the possibility that the amount of ad hoc, volume-based and project work will not be as expected; the possibility that we may experience a loss of data center capacity or interruption of telecommunication links or power sources; the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties; the possibility that postal rates may increase, thereby leading to reduced volumes of business; the possibility that our clients may cancel or modify their agreements 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 we experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; the possibility that the services of the United States Postal Service, their global counterparts and other delivery systems may be disrupted; and the possibility that we may be affected by other competitive factors.
With respect to the Financial Road Map, all of the above factors apply, along with the following which were assumptions made in creating the Financial Road Map: that the U.S. and global economies will continue to improve at a moderate pace; that global growth will continue to be strong and that globalization trends will continue to grow at an increasing pace; that Acxiom`s computer, communications and other equipment expenses will continue to fall as a percentage of revenue; that the Customer Information Infrastructure (CII) grid-based environment will continue to be implemented successfully over the next 3-4 years and that the new CII infrastructure will continue to provide increasing operational efficiencies; that the acquisitions of companies operating primarily outside of the United States will be successfully integrated and that significant efficiencies will be realized from this integration; relating to operating cash flow and free cash flow, that sufficient operating and capital lease arrangements will continue to be available to the Company to provide for the financing of most of its computer equipment and that software suppliers will continue to provide financing arrangements for most of the software purchases; relating to revolving credit line balance, that free cash flow will meet expectations and that the Company will use free cash flow to pay down bank debt, buy back stock and fund dividends; relating to annual dividends, that the Board of Directors will continue to approve quarterly dividends and will vote to increase dividends over time; relating to diluted shares, that the Company will meet its cash flow expectations and that potential dilution created through the issuance of equity instruments will be mitigated by continued stock repurchases in accordance with the Company`s stock repurchase program. 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.
Other factors are detailed from time to time in our periodic reports and registration statements filed with the United States Securities and Exchange Commission. We believe that we have the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast.
We undertake no obligation to update the information contained in this press release, including the Financial Road Map or any other forward-looking statement.
Acxiom is a registered trademark of Acxiom Corporation.