Accenture plc. (ACN)

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Accenture plc (ACN)

Investor and Analyst Conference

October 08, 2013 11:00 am ET


KC McClure - Managing Director, Investor Relations

David P. Rowland - Chief Financial Officer

Pierre Nanterme - Chairman and Chief Executive Officer


David Togut - Evercore Partners Inc., Research Division

Steven Milunovich - UBS Investment Bank, Research Division

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

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

Ashwin Shirvaikar - Citigroup Inc, Research Division

Ashish Sabadra - Deutsche Bank AG, Research Division



The video webcast has begun. Please welcome back Managing Director, Investor Relations, Accenture, KC McClure.

KC McClure

Let me welcome everybody that has joined us on the webcast, as well as those of you back from our brief break. I'm KC McClure, Managing Director of Investor Relations.

For those of you who have joined us today via the webcast, you will be able to find the remarks from the earlier part of the session posted to the Investor Relations section of our website. We expect to have this posted over the next couple of days.

I would like to remind you that some of the matters we will discuss in today's conference constitute forward-looking statements relating to Accenture's operations and results. We wish to caution investors not to place undue reliance on any such forward-looking statements. Any statements other than statements of historical fact may be forward-looking statements.

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 in the presentations and 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 under the Risk Factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q and other documents filed or furnished to the Securities and Exchange Commission.

As always, Accenture assumes no obligation to update any statements made in these presentations or to conform such statements to actual results or changes in Accenture's assumptions and expectations.

I'd also like to remind you that we will not be providing you with an update for, or making comments related to our first quarter of fiscal '14.

With that, let me turn it over to our CFO, David Rowland.

David P. Rowland

Thank you, KC. Let me start by saying how excited I am to have the opportunity to speak with you this morning. Of course, I've known many of you in my previous role, and for those of you that I haven't known, I've had the opportunity to meet quite a few of you over the last 4 or 5 months, as I've been traveling around transitioning into the CFO role, but certainly, there's nothing like the opportunity to talk to you all at once and to have the opportunity to answer your questions in a live forum.

I hear our leaders talk about our growth strategy quite often, but I have to say that no matter how many times I hear it, I'm struck by the level of focus, clarity and distinctiveness reflected in our strategy and the degree to which we're truly unique in the breadth and diversity of what we do. But as distinctive and compelling as our strategy is, as CFO, I know that it's only meaningful if it ultimately translates into strong financial results and an attractive value proposition for our shareholders.

So this morning, I want to anchor back to the business outlook that I provided on our earnings call just 2 weeks ago to provide some additional color around our rationale and to talk more broadly about what we're focused on to drive shareholder value in a way that we think is truly differentiated.

And then, following my comments, Pierre will join me on my stage -- on the stage, or on my stage perhaps, for some Q&A, where we'll do our best to answer your questions.

So let me start by just briefly summarizing the key elements of our business outlook. Starting with bookings, our range of $32 billion to $35 billion aligns with our revenue guidance, as you would expect, with overall book-to-bill of 1.1 to 1.2, which is very similar to what we delivered in '13. We expect to see a continued strong contribution from large megadeals as we drive the transformation in business services agenda that you heard about this morning.

Regarding revenues, we see a range of 2% to 6% growth in local currency, with the midpoint of that range being essentially identical to the 4.2% growth that we delivered in '13. We see continued stronger contribution from outsourcing growth, with consulting growth being roughly flattish to modestly stronger than the 1% growth we delivered in '13.

We're targeting continued expansion in our operating margin of 10 to 30 basis points, and importantly, expect to continue to drive more significant improvements in our underlying cost structure so that we can fund the investment program that Shawn alluded to earlier this morning, while still delivering our margin expansion.

Our EPS range of $4.42 to $4.54 reflects 5% to 8% growth in U.S. dollars, higher than our revenue growth, and includes an FX drag of about 1%, as well as a higher tax rate in '14 compared to the unusually low tax rate that we had in '13. And we see cash flow in the range of $3.2 billion to $3.5 billion, which allows for the possibility of some increase in DSO, but still reflects very strong cash flow in absolute terms.

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