| Teradata Announces 2009 Third Quarter Results
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Teradata logo. (PRNewsFoto/TERADATA CORPORATION)
DAYTON, OH UNITED STATES
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Raises EPS Guidance for Full Year 2009
ATLANTA, Nov. 5 /PRNewswire-FirstCall/ -- Teradata Corporation (NYSE:
TDC), the world's largest company solely focused on data warehousing and
enterprise analytics, today reported revenue of $425 million for the
quarter ended September 30, 2009, a 3 percent decrease from $439 million in
the third quarter of 2008.( )( )Revenue decreased 2 percent from the third
quarter of 2008, when adjusted for 1 percentage point of negative impact
from currency fluctuation.(1)( )
(Logo: http://www.newscom.com/cgi-bin/prnh/20090909/TERADATALOGO )
Gross margin in the third quarter was 53.4 percent, versus 54.0 percent
in the third quarter of 2008. Product gross margin was 62.3 percent, versus
64.3 percent during the third quarter of 2008. As expected, amortization of
software development costs was higher versus the prior-year quarter.
Services gross margin improved 200 basis points to 46.2 percent due to
higher professional services margin, as Teradata continues to effectively
manage expenses while increasing the productivity of the company's
professional services resources.
Teradata reported third-quarter net income under Generally Accepted
Accounting Principles (GAAP) of $63 million, or $0.36 per diluted share,
compared to net income of $60 million, or $0.33 per diluted share, in the
third quarter of 2008.
Included in Teradata's 2009 third quarter results was a $5 million
impairment charge ($0.02 per share) to write down the value of a historical
equity investment. Excluding this item, non-GAAP earnings per share was
$0.38 in the third quarter 2009.(2) Included in Teradata's 2008 third
quarter results was a $3 million impairment charge ($0.01 per share) to
write down the value of a historical equity investment and a $3 million
increase in the income tax provision ($0.02 per share) related to
Teradata's estimated 2007 federal income tax accrual when compared to the
filing of its 2007 federal income tax return in the third quarter of 2008.
Excluding these items, non-GAAP earnings per share was $0.36 in the third
quarter of 2008.(2)
"We are pleased to report another solid quarter for Teradata, with net
income and earnings per share increasing over the prior year period. Growth
in our EMEA region and our professional services business along with good
operational execution were key elements driving our results in the
quarter," said Mike Koehler, president and chief executive officer of
Teradata Corporation. "As a result, we are increasing our earnings guidance
for full year 2009 to $1.32 - $1.36 per share, or $1.34 - $1.38 on a
non-GAAP basis.(2) ( )
"With continued focus on extending our technology and services
leadership, we remain committed to providing our customers with the
analytics and agility to cut through the complexities of their businesses
and help them drive better results.
"Ongoing investments in technology, partnerships and people, along with
the discipline and dedication of our Teradata team, should position
Teradata well to lead the enterprise data warehousing market going
forward."
Regional Operating Segment Results
Teradata reports its results in three regional operating segments.
Americas
Teradata generated $247 million of revenue in its Americas region in
the third quarter of 2009, down 2 percent from $253 million in the third
quarter of 2008. Currency translation did not have a meaningful impact on
the third quarter year-over-year revenue comparison for the Americas
region.(1)
Gross margin in the Americas region in the quarter was 55.9 percent,
compared to 56.9 percent in the third quarter of 2008. Gross margin in the
quarter was lower due to the decline in product revenue from the prior year
period and a higher amount of services revenue. And, as expected, product
gross margin was lower in the quarter due to increased amortization of
software development costs.
Europe, Middle East and Africa (EMEA)
Revenue in Teradata's EMEA region in the third quarter of 2009 was $109
million, up 3 percent from $106 million generated in the third quarter of
2008. Revenue increased 9 percent when adjusted for currency translation,
which negatively impacted the revenue comparison in the EMEA region by 6
percentage points.(1)
Gross margin in the EMEA region was 53.2 percent, versus 51.9 percent
in the third quarter of 2008. Gross margin in EMEA improved in the third
quarter of 2009 due to higher product revenue and improved professional
services margin, more than offsetting the increased amortization of
capitalized software development costs.
Asia Pacific /Japan (APJ)
Teradata generated $69 million of revenue in its APJ region in the
quarter, a 14 percent decrease from $80 million in the third quarter of
2008. The revenue decline in the APJ region was 17 percent when adjusted
for 3 percentage points of benefit from currency translation.(1)( )
Gross margin in the APJ region in the quarter was 44.9 percent,
compared to 47.5 percent in the third quarter of 2008. The decrease in
gross margin was driven primarily by the impact of lower product revenue
volume, the under-absorption of overhead costs and higher amortization of
capitalized software development costs as compared to the prior-year
period.
Operating Income
Third-quarter operating income of $88 million was up from $86 million
reported in the third quarter of 2008, as service gross margin improvement
and lower selling, general and administrative expense more than offset the
company's incremental investment in new sales territories and the impact of
currency translation.
Other Items
"Other Income (Expense)" was $4 million of expense in the third quarter
of 2009, compared to $1 million of expense in the third quarter of 2008.
The expense in both periods was driven by impairment charges taken in the
quarter related to previous equity investments. Interest income in the
third quarter of 2009 was significantly lower than in the third quarter of
2008, due to the lower interest rate environment. Excluding the impairment
charges for the historical equity investments, Other Income would have been
$1 million in the third quarter of 2009 and $2 million in the third quarter
of 2008.(2)( )
The effective income tax rate in the third quarter of 2009 was 25.0
percent, versus 29.4 percent in the prior-year period.
Cash Flow
During the third quarter of 2009, Teradata generated $96 million of
cash from operating activities, compared to $94 million in the prior-year
period. Capital expenditures in the third quarter of 2009 were $21 million,
compared to $15 million in the third quarter of 2008. Teradata generated
$75 million of free cash flow( )(cash from operations less capital
expenditures and additions to capitalized software)(3) in the third quarter
of 2009, versus generating $79 million in the same period in 2008.
During the first nine months of 2009, Teradata generated $364 million
of cash from operating activities, compared to $322 million in the
prior-year period. Capital expenditures in the first nine months of 2009
were $61 million, compared to $58 million in the same period in 2008.
During the first three quarters of 2009, Teradata generated $303 million of
free cash flow, versus $264 million in the same period in 2008.
For the periods
---------------
ended September 30
------------------
(in millions)
Three Months Nine months
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income (GAAP) $63 $60 $170 $171
=== === ==== ====
Cash provided by operating activities
(GAAP) $96 $94 $364 $322
Less capital expenditures for:
----
Expenditures for property and
equipment (5) (2) (18) (13)
Additions to capitalized software (16) (13) (43) (45)
---- ---- ---- ----
Total capital expenditures (21) (15) (61) (58)
Free Cash Flow (non-GAAP measure) (3) $75 $79 $303 $264
=== === ==== ====
Free Cash Flow as a percentage of Net
Income (3) 119% 132% 178% 154%
Balance Sheet
Teradata ended the third quarter of 2009 with $704 million in cash, a
$66 million increase from June 30, 2009. In addition, the company used
approximately $21 million of cash to repurchase approximately 830,000
shares during the third quarter of 2009. During the first nine months of
2009, the company used approximately $71 million to repurchase
approximately 3.5 million shares. Teradata had no debt outstanding as of
September 30, 2009.
2009 Outlook
Teradata is increasing its expectation for 2009 full-year GAAP earnings
to $1.32 - $1.36 per share, from its previous earnings guidance range of
$1.22 - $1.28 per share. On a non-GAAP basis, excluding the impairment
charge ($0.02 per share) related to a prior equity investment, Teradata
expects 2009 earnings per share in the $1.34 - $1.38 range.(2)
Although Teradata continues to expect that selling, general and
administrative expenses for the full-year will be down from 2008, selling
expense, research and development expenses, as well as amortization of
capitalized software costs, are expected to be higher in the fourth quarter
of 2009 compared to these items in the prior quarters of 2009. The company
continues to expect revenue to be down 1 to 3 percent in constant currency
for the full year.
Revised Prior
2009 FY 2009 FY
Guidance Guidance
-------- --------
Year-over-year revenue change: (1) - (3)% (1) - (3)%
(in constant currency)(1)
Earnings per share (EPS) - GAAP $1.32 - $1.36 $1.22 - $1.28
Earnings per share (EPS) - Non-GAAP (2) $1.34 - $1.38 $1.22 - $1.28
2009 Third-Quarter Earnings Conference Call
A conference call is scheduled today at 8:30 a.m. (EST) to discuss the
company's third-quarter 2009 results. Access to the conference call, as
well as a replay of the call, is available on Teradata's web site at
http://www.teradata.com/investor.
Supplemental financial information regarding Teradata's operating
results is also available on the Investor page of Teradata's web site.
About Teradata
Teradata Corporation (NYSE: TDC) is the world's largest company solely
focused on raising intelligence through data warehousing, data warehouse
appliances, consulting services and enterprise analytics. Teradata is in
more than 60 countries and on the web at http://www.teradata.com.
Teradata is a trademark or registered trademark of Teradata Corporation
in the United States and other countries.
1. The impact of currency is determined by calculating the prior period
results using the current-year monthly average currency rates. See the
foreign currency schedule on the Investor page of the company's web site
http://www.teradata.com/investor.
For the Periods Ended September 30
--------------------------------------------------------
$millions Three Months Nine Months
--------- ---------------------------- ----------------------------
% % % %
Change Change Change Change
As Constant As Constant
Revenue 2009 2008 Reported Currency 2009 2008 Reported Currency
------- ---- ---- -------- -------- ---- ---- -------- --------
Products
(software/
hardware) $191 $213 (10)% (9)% $533 $599 (11)% (7)%
------------
Professional
services 124 118 5% 5% 357 351 2% 6%
-----------
Maintenance
services 110 108 2% 4% 323 319 1% 5%
------------- --- --- --- ---
Total
services 234 226 4% 5% 680 670 1% 6%
---------
Total revenue $425 $439 (3)% (2)% $1,213 $1,269 (4)% 0%
-------------
By segment/
region
-------------
Americas
region $247 $253 (2)% (2)% $681 $699 (3)% (1)%
--------
EMEA region 109 106 3% 9% 324 337 (4)% 9%
-----------
APJ region 69 80 (14) % (17)% 208 233 (11)% (10)%
---------- -- --
Total revenue $425 $439 (3)% (2)% $1,213 $1,269 (4)% 0%
-------------
2. Teradata reports its results in accordance with Generally Accepted
Accounting Principles in the United States, or GAAP. However, as described
below, the company believes that certain non-GAAP measures, such as free
cash flow, non-GAAP EPS, non-GAAP operating income, and non-GAAP other
income (expense), all of which exclude certain items, are useful for
investors. Our non-GAAP measures are not meant to be considered in
isolation, or as substitutes for or superior to results determined in
accordance with GAAP, and should be read only in conjunction with our
condensed consolidated financial statements prepared in accordance with
GAAP.
Teradata's management regularly uses supplemental non-GAAP financial
measures, such as EPS excluding certain items, internally to understand,
manage and evaluate our business and make operating decisions. The company
believes such non-GAAP financial measures provide useful information to
investors regarding the underlying business trends and performance of the
company's ongoing operations, and are useful for period-over-period
comparisons of such operations and results. The company also believes this
information is useful for investors because it can provide consistency and
comparability with past reports and projections of future results.
The following table reconciles Teradata's earnings per diluted share,
or EPS, under GAAP in the third quarter of 2009 and 2008, as well as the
company's full-year 2009 guidance, to the non-GAAP measures, which excludes
certain items.
Reconciliation of GAAP to Non-GAAP Q3 2009 Q3 2008 FY 2009
Measures: Actual Actual Guidance
------- ------- ---------
Diluted Earnings Per Share (GAAP) $0.36 $0.33 $1.32 - 1.36
Excluding:
Impairment of equity investment (0.02) (0.01) (0.02)
Federal income tax accrual
adjustment (0.02)
Adjusted Diluted Earnings Per Share
(Non-GAAP) $0. 38 $0.36 $1.34 - 1.38
Teradata's management also looks at the company's operating results
(excluding certain items) to assess financial performance. The company
believes this information is useful for investors because it can provide a
more complete understanding of Teradata's underlying operational
performance, as well as consistency and comparability with past reports.
The following table reconciles Teradata's Other Income (Expense) under GAAP
in the third quarter of 2009 and 2008 to the company's results during the
period excluding certain items.
Reconciliation of GAAP to Non-GAAP Measures:
(shown in millions) Q3 2009 Q3 2008
Actual Actual
------- -------
Other Income (Expense) (GAAP) $(4) $(1)
Excluding:
Impairment charge to write down the value
of equity investment (5) (3)
--- ---
Adjusted Other Income (Expense) (Non-GAAP) $1 $2
3. Teradata defines free cash flow as cash provided/used by operating
activities less capital expenditures for property and equipment, and
additions to capitalized software. Free cash flow does not have a uniform
definition under GAAP; therefore, Teradata's definition may differ from
other companies' definitions of this measure. Teradata's management uses
free cash flow to assess the financial performance of the company, and
believes it is useful for investors because it relates the operating cash
flow of the company to the capital that is spent to continue and improve
business operations. In particular, free cash flow indicates the amount of
cash generated after capital expenditures for - among other things -
investment in the company's existing businesses; strategic acquisitions;
strengthening the company's balance sheet; repurchase of company stock; and
repayment of the company's debt obligations, if any. Free cash flow does
not represent the residual cash flow available for discretionary
expenditures since there may be other nondiscretionary expenditures that
are not deducted from the measure.
Note to Investors
This news release contains forward-looking statements, including
statements as to anticipated or expected results, beliefs, opinions and
future financial performance, within the meaning of Section 21E of the
Securities and Exchange Act of 1934. Forward-looking statements include
projections of revenue, profit growth and other financial items, future
economic performance and statements concerning analysts' earnings
estimates, among other things. These forward-looking statements are based
on current expectations and assumptions and involve risks and uncertainties
that could cause Teradata's actual results to differ materially.
In addition to the factors discussed in this release, other risks and
uncertainties could affect our future results, and could cause actual
results to differ materially from those expressed in such forward-looking
statements. Such factors include those relating to: the current global
economic downturn and its impact on the markets in general or on the
ability of our suppliers to meet their commitments to us, or the timing of
purchases by our current and potential customers, and other general
economic and business conditions; the rapidly changing and intensely
competitive nature of the information technology industry and the
enterprise data warehousing business, including the increased pressure on
price/performance for data warehousing solutions; fluctuations in our
operating results, unanticipated delays or accelerations in our sales
cycles and the difficulty of accurately estimating revenues; risks inherent
in operating in foreign countries, including the impact of economic,
political, legal, regulatory, compliance, cultural, foreign currency
fluctuations and other conditions abroad; the timely and successful
development, production or acquisition and market acceptance of new and
existing products and services, including our ability to accelerate market
acceptance of new products and services as well as the reliability, quality
and operability of new products because of the difficulty and complexity
associated with their testing and production; tax rates; turnover of
workforce and the ability to attract and retain skilled employees;
availability and successful exploitation of new acquisition and alliance
opportunities; changes in Generally Accepted Accounting Principles (GAAP)
and the resulting impact, if any, on the company's accounting policies;
continued efforts to establish and maintain best-in-class internal
information technology and control systems; and other factors described
from time to time in the company's filings with the U.S. Securities and
Exchange Commission, including its annual report on Form 10-K and
subsequent quarterly reports on Forms 10-Q, as well as the company's annual
reports to stockholders. The company does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Schedule A
TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
For the Periods Ended September 30
---------------------------------------
Three Months Nine Months
------------------ ------------------
2009 2008 % Chg 2009 2008 % Chg
---- ---- ----- ---- ---- -----
Revenue
Products $191 $213 -10% $533 $599 -11%
Services 234 226 4% 680 670 1%
--- --- --- ---
Total revenue 425 439 -3% 1,213 1,269 -4%
Product gross margin 119 137 341 388
% of Revenue 62.3% 64.3% 64.0% 64.8%
Services gross margin 108 100 319 292
% of Revenue 46.2% 44.2% 46.9% 43.6%
---- ---- ---- ----
Total gross margin 227 237 660 680
% of Revenue 53.4% 54.0% 54.4% 53.6%
Selling, general and
administrative expenses 113 123 345 371
Research and development
expenses 26 28 83 78
-- -- -- --
Income from operations 88 86 232 231
% of Revenue 20.7% 19.6% 19.1% 18.2%
Other income (expense), net (4) (1) (4) 4
Income before income taxes 84 85 228 235
% of Revenue 19.8% 19.4% 18.8% 18.5%
Income tax expense 21 25 58 64
-- -- -- --
% Tax rate 25.0% 29.4% 25.4% 27.2%
Net income $63 $60 $170 $171
=== === ==== ====
% of Revenue 14.8% 13.7% 14.0% 13.5%
Net income per common share
Basic $0.37 $0.34 $0.99 $0.95
Diluted $0.36 $0.33 $0.98 $0.94
Weighted average common shares
outstanding
Basic 171.7 177.5 172.4 179.1
Diluted 174.1 179.4 174.1 181.0
Schedule B
TERADATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except per share amounts)
Sept. 30, June 30, Dec. 31, Sept. 30,
2009 2009 2008 2008
--------- -------- -------- ---------
Assets
------
Current assets
Cash and cash equivalents $704 $638 $402 $328
Short term investments - - 40 50
Accounts receivable, net 326 342 451 380
Inventories 46 45 44 42
Other current assets 71 73 78 58
-- -- -- --
Total current assets 1,147 1,098 1,015 858
Property and equipment, net 90 91 88 89
Capitalized software, net 97 93 80 79
Goodwill 110 108 110 106
Deferred income taxes 81 92 109 129
Other assets 14 22 28 35
-- -- -- --
Total assets $1,539 $1,504 $1,430 $1,296
====== ====== ====== ======
Liabilities and stockholders' equity
------------------------------------
Current liabilities
Accounts payable $81 $81 $99 $77
Payroll and benefits liabilities 96 80 83 80
Deferred revenue 265 302 255 237
Other current liabilities 71 76 103 99
-- -- --- --
Total current liabilities 513 539 540 493
Pension and other postemployment
plan liabilities 82 80 83 83
Other liabilities 29 27 30 6
-- -- -- --
Total liabilities 624 646 653 582
--- --- --- ---
Stockholders' equity
Preferred stock - - - -
Common stock 2 2 2 2
Paid-in capital 606 592 572 557
Treasury Stock (210) (188) (137) (99)
Retained earnings 499 437 329 250
Accumulated other comprehensive
income 18 15 11 4
-- -- -- --
Total stockholders' equity 915 858 777 714
--- --- --- ---
Total liabilities and stockholders'
equity $1,539 $1,504 $1,430 $1,296
====== ====== ====== ======
Schedule C
TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
For the Periods Ended September 30
----------------------------------
Three Months Nine Months
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Operating activities
Net income $63 $60 $170 $171
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 19 14 46 47
Stock-based compensation expense 6 5 17 15
Excess tax benefit from
stock-based compensation (1) - (2) (1)
Deferred income taxes 7 13 23 29
Impairment on equity investment 5 3 5 3
Changes in assets and
liabilities:
Receivables 16 65 121 141
Inventories (1) - (1) 9
Current payables and accrued
expenses 17 (22) (16) (60)
Deferred revenue (35) (46) 7 (3)
Other assets and liabilities - 2 (6) (29)
-- -- -- ---
Net cash provided by operating
activities 96 94 364 322
Investing activities
Proceeds from sales and maturities
of short-term investments - - 65 -
Purchase of short-term investments - - (25) (50)
Expenditures for property and
equipment (5) (2) (18) (13)
Additions to capitalized software (16) (13) (43) (45)
Other investing activities and
business acquisitions, net - - 6 (24)
-- -- -- ---
Net cash used in investing activities (21) (15) (15) (132)
Financing activities
Repurchase of common stock (21) (65) (71) (137)
Excess tax benefit from stock-based
compensation 1 - 2 1
Other financing activities, net 6 2 14 6
-- -- -- --
Net cash used in financing activities (14) (63) (55) (130)
Effect of exchange rate changes on
cash and cash equivalents 5 (5) 8 (2)
-- -- -- --
Increase in cash and cash equivalents 66 11 302 58
Cash and cash equivalents at beginning
of period 638 317 402 270
--- --- --- ---
Cash and cash equivalents at end of
period $704 $328 $704 $328
==== ==== ==== ====
Schedule D
TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions)
For the Periods Ended September 30
---------------------------------------------------------
Three Months Nine Months
---------------------------- ----------------------------
% Change % Change % Change % Change
As Constant As Constant
2009 2008 Reported Currency 2009 2008 Reported Currency
---- ---- -------- -------- ---- ---- -------- --------
Revenue
Americas $247 $253 -2% -2% $681 $699 -3% -1%
EMEA 109 106 3% 9% 324 337 -4% 9%
APJ 69 80 -14% -17% 208 233 -11% -10%
-- -- --- ---
Total revenue 425 439 -3% -2% 1,213 1,269 -4% 0%
Segment gross
margin
Americas 138 144 388 394
% of Revenue 55.9% 56.9% 57.0% 56.4%
EMEA 58 55 175 175
% of Revenue 53.2% 51.9% 54.0% 51.9%
APJ 31 38 97 111
% of Revenue 44.9% 47.5% 46.6% 47.6%
---- ---- ---- ----
Total gross
margin 227 237 660 680
% of Revenue 53.4% 54.0% 54.4% 53.6%
Selling,
general and
administrative
expenses 113 123 345 371
Research and
development
expenses 26 28 83 78
-- -- -- --
Income from
operations $88 $86 $232 $231
=== === ==== ====
% of Revenue 20.7% 19.6% 19.1% 18.2%
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