Acxiom Reports Mixed 3Q

Zacks

Acxiom Corporation (ACXM) reported earnings per share of 19 cents in the third quarter of 2013 (ended Dec 30, 2012) compared with 10 cents in the year-ago quarter. The quarterly earnings were well ahead of the Zacks Consensus Estimate by 18.8%. Excluding one-time items, EPS decreased 14% to 19 cents in the reported quarter.

Revenues

Total revenue came in at $273 million, down 3.0% year over year and missing the Zacks Consensus Estimate of $278 million.

The Marketing and Data Services segment sales edged up 1.4% year over year to $190.1 million. The increase in revenues in this segment was driven by increase in U.S. revenue (up 4% to $160 million) offset by lower international revenues.

The company’s IT Infrastructure Management segment fell around 9.0% annually to reach $70 million.

Other Services revenues dropped nearly 19.7% year over year to $13 million in the reported quarter.

Margins

Operating margin for the quarter came in at 9.8% versus 5.5% in the year-ago quarter. The annual rise in margin was driven by the company’s IT infrastructure management segment.

Marketing and Data Services operating margin was 10% compared to 11.0% in the previous-year quarter. The IT Infrastructure Management segment reported an operating margin of 14.0%, up from 13.0% in the year-ago quarter. Other Services operating margin came in at (6.3%) versus (3.3%) in the previous-year quarter.

Balance Sheet and Cash Flows

Acxiom ended Dec 31, 2012 with cash and cash equivalents of $186.2 million, down from $229.6 million at the end of Mar 31, 2012. Net trade accounts receivable came in at $182.4 million, up from $169.4 million at the end of Mar 31, 2012.

Long-term debt came in at $240.7 million as on Dec 31, 2012, down from $251.8 million at the end of Mar 31, 2012.

The net cash provided by operating activities was $38.5 million during the third quarter of 2013 compared to $82.5 million in the prior year period. The decline in operating cash flow was attributable to higher working capital and increased tax payments.

Share Repurchase

In the reported quarter, the company repurchased 1 million shares for $18.3 million. A total of 9.9 million shares were bought back by Acxiom for $131 million since Aug 2011.

Outlook

Concurrent with the earnings release, management provided its guidance for fiscal 2013. For fiscal 2013, management expects revenues to be down approximately 2.5% annually. The decline is due to a decrease in IT infrastructure management and international operations. The company expects earnings per share to be 73 cents for full year 2013 compared to the prior guidance of 70 cents.

Revenues from top 100 customers, representing over 80% of all US marketing and data service revenues were up over 9% year-to-date. Going forward, the company intends to focus more on expanding its client base and cater to the needs of small and mid-tier customers with the release of new products. However, the company faces intense competition from industry bigwigs, which include formidable names such as Harte-Hanks (HHS) and Amdocs Limited (DOX).

Acxiom currently has a Zacks Rank #3 (Hold). One of its competitors, Unisys Corporation (UIS) carries a Zacks Rank #2 (Buy).
 

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