Second Quarter recurring fee revenue
growth driven by acquisition of NACC and 6% organic
growth
Broadridge Financial Solutions, Inc. (NYSE:BR) today reported
financial results for the second quarter and six months ended
December 31, 2016 of its fiscal year 2017.
Summary Financial Results |
|
Second Quarter |
|
|
Six Months |
|
Dollars in
millions, except per share data |
|
|
2017 |
|
|
2016 |
|
Change |
|
|
2017 |
|
|
2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
893 |
|
$ |
639 |
|
40 |
% |
|
$ |
1,788 |
|
$ |
1,234 |
|
45 |
% |
Recurring
fee revenues |
|
|
536 |
|
|
399 |
|
34 |
% |
|
|
1,053 |
|
|
792 |
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
59 |
|
|
70 |
|
(16 |
%) |
|
|
125 |
|
|
129 |
|
(3 |
%) |
|
Operating income
margin |
|
|
6.6 |
% |
|
11.0 |
% |
|
|
|
7.0 |
% |
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating income - Non-GAAP |
|
|
84 |
|
|
80 |
|
6 |
% |
|
|
166 |
|
|
148 |
|
12 |
% |
|
Adjusted operating
income margin - Non-GAAP |
|
|
9.4 |
% |
|
12.5 |
% |
|
|
|
9.3 |
% |
|
12.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
$ |
0.25 |
|
$ |
0.33 |
|
(24 |
%) |
|
$ |
0.52 |
|
$ |
0.61 |
|
(15 |
%) |
Adjusted
EPS - Non-GAAP |
|
$ |
0.39 |
|
$ |
0.38 |
|
3 |
% |
|
$ |
0.75 |
|
$ |
0.71 |
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
Closed
sales |
|
$ |
56 |
|
$ |
49 |
|
15 |
% |
|
$ |
77 |
|
$ |
66 |
|
18 |
% |
“Broadridge delivered another solid quarter,” said Rich Daly,
Broadridge’s President and Chief Executive Officer. “We reported
strong revenue growth, driven by the acquisition of NACC and
organic growth of our recurring fee revenues. We also
continued to benefit from strong momentum in Closed sales, which
positions us well to sustain growth going forward. Our
success reflects the breadth of our products and the depth of our
relationships with industry-leading clients."
“We are well on track to achieve our three year financial
objectives and our fiscal 2017 key guidance metrics of recurring
fee revenue growth of 29% to 31%, Adjusted EPS growth of 12% to
17%, and Closed sales in the range of $140 million to $180
million,” Mr. Daly concluded.
Fiscal Year 2017 Financial GuidanceThe Company
updated its guidance for fiscal year 2017:
Broadridge 2017
Financial Guidance |
|
Current |
|
Prior |
|
|
|
|
|
Recurring fee revenue
growth |
|
29-31% |
|
*
* |
Total revenue
growth |
|
40-42% |
|
43-45% |
|
|
|
|
|
Adjusted operating
income margin - Non-GAAP |
|
~15% |
|
*
* |
|
|
|
|
|
Diluted earnings per
share growth |
|
2-7% |
|
9-14% |
Adjusted earnings per
share growth - Non-GAAP |
|
12-17% |
|
*
* |
|
|
|
|
|
Free cash flow -
Non-GAAP |
|
$350-400M |
|
*
* |
Closed sales |
|
$140-180M |
|
*
* |
|
|
|
|
|
Segments: |
|
|
|
|
ICS Total revenue
growth |
|
50-52% |
|
55-57% |
ICS Pre-tax margin |
|
~12% |
|
~14% |
|
|
|
|
|
GTO Total revenue
growth |
|
6-9% |
|
4-6% |
GTO Pre-tax margin |
|
~19.5% |
|
~18.5% |
|
|
|
|
|
* * = unchanged |
|
|
|
|
Financial Results for Second Quarter Fiscal Year
2017
RevenuesRevenues for the second quarter of
fiscal year 2017 increased 40% to $893 million, from $639 million
for the prior year period. Revenues from acquisitions contributed
$273 million of this total increase, with the revenues of the North
American Customer Communications business acquired from DST
Systems, Inc. ("NACC") contributing $267 million.
Recurring fee revenues rose 34% to $536 million from $399
million. The increase in recurring fee revenues reflected
organic growth of 6%, including 4% from Net New Business and 2%
from internal growth. Acquisitions accounted for the remainder of
the increase, including $106 million from the acquisition of
NACC.
Distribution revenues rose $149 million, or 76%, to $346
million, largely driven by the acquisition of NACC. Event-driven
revenues declined 48% to $30 million from $57 million. Changes in
foreign currency rates lowered Broadridge's revenue by $6 million
as compared to the prior year period.
Operating IncomeFor the second quarter of
fiscal year 2017:
- Operating income was $59 million, a decrease of $11 million, or
16%, compared to $70 million for the prior year period, driven by a
decline in event-driven revenue and higher acquisition-related
amortization expense primarily due to the acquisition of NACC.
Operating income margin decreased to 6.6%, compared to 11.0% for
the prior year period.
- Adjusted operating income was $84 million, an increase of $4
million, or 6%, compared to $80 million for the prior year period.
Adjusted operating income margin decreased to 9.4%, compared to
12.5% for the prior year period.
Interest Expense and Other Non-operating
ExpensesInterest expense, net for the second quarter of
fiscal year 2017 was $11 million, an increase of $4 million, or
66%, compared to $6 million for the prior year period. The increase
was primarily due to higher interest expense driven by higher
indebtedness. Other non-operating expenses, net were essentially
unchanged at $2 million.
Net Earnings and Earnings per ShareFor the
second quarter of fiscal year 2017:
- Net earnings decreased 25% to $30 million, compared to $40
million for the prior year period.
- Adjusted net earnings were essentially unchanged at $47
million, compared to $46 million for the prior year period.
- Diluted earnings per share decreased 24% to $0.25, compared to
$0.33 for the prior year period.
- Adjusted earnings per share increased 3% to $0.39 from $0.38
for the prior year period.
Segment and Other Results for Second Quarter Fiscal Year
2017
Investor Communication Solutions ("ICS")ICS revenues for the
second quarter of fiscal year 2017 increased $238 million, or 50%,
to $710 million, compared to $472 million in the prior year period.
Revenues from the acquisition of NACC contributed $267 million of
this total increase.
ICS recurring fee revenues in the second quarter of fiscal year
2017 rose $116 million, or 53%, to $334 million. The increase
reflected: (i) contributions from our recent acquisitions (49pts),
including (48pts) from the NACC acquisition; and (ii) Net New
Business (4pts). ICS distribution revenues rose $149 million, or
76%, to $346 million. Event-driven revenues declined $27
million to $30 million, largely as a result of lower mutual fund
proxy volumes.
Position growth compared to the same period in the prior year,
which is a component of internal growth, was 1% for mutual fund
interims and 4% for annual equity proxy communications.
ICS earnings before income taxes declined $28 million, or 61%,
to $18 million. The decline was primarily due to lower
event-driven fee revenues and higher amortization related to the
acquisitions of NACC and the Inveshare technology assets. Pre-tax
margins decreased by 7.2 percentage points to 2.6%.
Global Technology and Operations ("GTO")GTO revenues for the
second quarter of fiscal year 2017 increased $22 million, or 12%,
to $202 million, compared to $180 million in the prior year period.
The increase was attributable to higher Net New Business (4pts),
internal growth from higher trade and non-trade activity levels
(4pts) and revenue from recent acquisitions (3pts).
GTO earnings before income taxes rose $17 million, or 57%, to
$46 million, reflecting strong revenue growth and recent efficiency
initiatives. Pre-tax margins increased by 6.6 percentage points to
22.9%.
Other
Other Pre-tax loss increased by $5 million in the second quarter
of fiscal year 2017 to $21 million from $16 million in the prior
year period. The biggest contributor to the increased loss was a $4
million increase in net interest expense.
Additional Second Quarter Fiscal Year 2017
Events
Acquisition of M&O SystemsOn November 4, 2016, Broadridge
completed the acquisition of M&O Systems, Inc. (“M&O”).
M&O is a provider of SaaS-based compensation management and
related solutions for broker-dealers and registered investment
advisors. The aggregate purchase price was $25 million in cash,
subject to customary working capital and other closing
adjustments.
Financial Results for the Six Months Ended December 31,
2016
RevenuesRevenues for the six months ended
December 31, 2016 ("six months fiscal 2017") increased 45% to
$1,788 million, from $1,234 million for the prior year period.
Revenues from acquisitions contributed $551 million of this total
increase, with the revenues of NACC contributing $539 million.
Recurring fee revenues rose 33% to $1,053 million from $792
million. The increase in recurring fee revenues reflected:
contributions from our recent acquisitions (28pts), including $212
million from the acquisition of NACC, gains from Net New Business
(4pts) and internal growth (1pt).
Distribution revenues rose $330 million, or 89%, to $702
million, largely driven by the acquisition of NACC. Changes in
foreign currency rates lowered Broadridge's revenue by $10 million
as compared to the prior year period.
Operating IncomeFor six months fiscal 2017:
- Operating income was $125 million, a decrease of $4 million, or
3%, compared to $129 million for the prior year period. Operating
income margin decreased to 7.0%, compared to 10.5% for the prior
year period.
- Adjusted operating income was $166 million, an increase of $18
million, or 12%, compared to $148 million for the prior year
period. Adjusted operating income margin decreased to 9.3%,
compared to 12.0% for the prior year period.
- The decrease in Operating income and increase in Adjusted
operating income was primarily due to the acquisition of NACC.
Interest Expense and Other Non-operating
ExpensesInterest expense, net for six months fiscal 2017
was $21 million, an increase of $8 million, or 65%, compared to $13
million for the prior year period. The increase was primarily due
to higher interest expense driven by higher indebtedness. Other
non-operating expenses, net were $7 million, an increase of $3
million, primarily due to higher foreign currency transaction
losses.
Net Earnings and Earnings per ShareFor six
months fiscal 2017:
- Net earnings decreased 14% to $64 million, compared to $74
million for the prior year period.
- Adjusted net earnings increased 5% to $91 million, compared to
$86 million for the prior year period.
- Diluted earnings per share decreased 15% to $0.52, compared to
$0.61 for the prior year period.
- Adjusted earnings per share increased 6% to $0.75 from $0.71
for the prior year period.
Segment and Other Results for Six Months Fiscal
2017
Investor Communication Solutions ("ICS")ICS revenues for six
months fiscal 2017 increased $532 million, or 59%, to $1,433
million, compared to $901 million in the prior year period.
Revenues from acquisitions contributed $542 million of this total
increase, with NACC revenues contributing $539 million.
ICS recurring fee revenues rose $229 million, or 53%, to $663
million. The increase reflected: (i) contributions from our
recent acquisitions (49pts), including (49pts) from the NACC
acquisition; and (ii) Net New Business (4pts). ICS distribution
revenues rose $330 million, or 89%, to $702 million.
Event-driven revenues declined $28 million to $67 million as a
result of lower mutual fund proxy volumes.
Position growth compared to the same period in the prior year,
which is a component of internal growth, was 1% for mutual fund
interims and 2% for annual equity proxy communications.
ICS earnings before income taxes declined $29 million, or 36%,
to $51 million. The decline was primarily due to lower
event-driven fee revenues and higher amortization related to the
acquisitions of NACC and the Inveshare technology assets. Pre-tax
margins decreased by 5.3 percentage points to 3.6%.
Global Technology and Operations ("GTO")GTO revenues for six
months fiscal 2017 increased $33 million, or 9%, to $390 million,
compared to $357 million in the prior year period. The increase was
attributable to higher Net New Business (4pts), revenue from recent
acquisitions (3pts) and internal growth from higher trade and
non-trade activity levels (2pts).
GTO earnings before income taxes rose $25 million, or 41%, to
$85 million, reflecting robust revenue growth and efficiency
initiatives. Pre-tax margins increased by 5.0 percentage points to
21.7%.
OtherOther Pre-tax loss increased by $14 million for six months
fiscal 2017 to $44 million from $30 million in the prior year
period. The biggest contributor to the increased loss was an $8
million increase in net interest expense.
Subsequent Event - Revolving Credit Facility
AmendmentIn February 2017, the Company entered into an
amended and restated $1 billion five-year revolving credit
facility, which replaced the $750 million five-year revolving
credit facility entered into in August 2014. The Fiscal 2017
Revolving Credit Facility is comprised of a $900 million U.S.
dollar tranche and a $100 million multicurrency tranche.
Earnings Conference CallAn analyst conference
call will be held today, Wednesday, February 8, 2017 at 8:30
a.m. ET. A live webcast of the call will be available to the public
on a listen-only basis. To listen to the live event and access the
slide presentation, visit Broadridge’s Investor Relations website
at www.broadridge-ir.com prior to the start of the webcast. To
listen to the call, investors may also dial 1-844-316-2037 within
the United States and international callers may dial
1-213-785-7185.
A replay of the webcast will be available and can be accessed in
the same manner as the live webcast at the Broadridge Investor
Relations site. Through February 22, 2017, the recording will also
be available by dialing 1-855-859-2056 passcode: 16509431 within
the United States or 1-404-537-3406 passcode: 16509431 for
international callers.
Explanation and Reconciliation of the Company’s Use of
Non-GAAP Financial MeasuresThe Company’s results in this
press release are presented in accordance with U.S. GAAP except
where otherwise noted. In certain circumstances, results have been
presented that are not generally accepted accounting principles
measures (“Non-GAAP”). These Non-GAAP measures are Adjusted
Operating income, Adjusted Operating income margin, Adjusted Net
earnings, Adjusted earnings per share, and Free cash flow. These
Non-GAAP financial measures should be viewed in addition to, and
not as a substitute for, the Company’s reported results.
The Company believes our Non-GAAP financial measures help
investors understand how management plans, measures and evaluates
the Company’s business performance. Management believes that
Non-GAAP measures provide consistency in its financial reporting
and facilitates investors’ understanding of the Company’s operating
results and trends by providing an additional basis for comparison.
Management uses these Non-GAAP financial measures to, among other
things, evaluate our ongoing operations, for internal planning and
forecasting purposes and in the calculation of performance-based
compensation. In addition, and as a consequence of the importance
of these Non-GAAP financial measures in managing our business, the
Company’s Compensation Committee of the Board of Directors
incorporates Non-GAAP financial measures in the evaluation process
for determining management compensation.
Adjusted Operating Income, Adjusted Operating Income
Margin, Adjusted Net Earnings and Adjusted Earnings per
ShareThese Non-GAAP measures reflect Operating income,
Operating income margin, Net earnings, and Diluted earnings per
share, as adjusted to exclude the impact of certain costs,
expenses, gains and losses and other specified items that
management believes are not indicative of our ongoing operating
performance. These adjusted measures exclude the impact of
Amortization of Acquired Intangibles and Purchased Intellectual
Property, and Acquisition and Integration Costs. Amortization
of Acquired Intangibles and Purchased Intellectual Property
represents non-cash expenses associated with the Company's
acquisition activities. Acquisition and Integration Costs represent
certain transaction and integration costs associated with the
Company’s acquisition activities. We exclude Amortization of
Acquired Intangibles and Purchased Intellectual Property, and
Acquisition and Integration Costs from these measures because
excluding such information provides us with an understanding of the
results from the primary operations of our business and these items
do not reflect ordinary operations or earnings. Management believes
these measures may be useful to an investor in evaluating the
underlying operating performance of our business.
Free Cash FlowIn addition to the Non-GAAP
financial measures discussed above, we provide Free cash flow
information because we consider Free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated that could be used for
dividends, share repurchases, strategic acquisitions and other
discretionary investments. Free cash flow is a Non-GAAP
financial measure and is defined by the Company as Net cash flows
provided by operating activities less Capital expenditures and
Software purchases and capitalized internal use software.
Reconciliations of such Non-GAAP measures to the most directly
comparable financial measures presented in accordance with GAAP can
be found in the tables that are part of this press release.
Forward-Looking StatementsThis press release
and other written or oral statements made from time to time by
representatives of Broadridge may contain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Statements that are not historical in nature,
and which may be identified by the use of words such as “expects,”
“assumes,” “projects,” “anticipates,” “estimates,” “we believe,”
“could be” and other words of similar meaning, are forward-looking
statements. In particular, information appearing in the “Fiscal
Year 2017 Financial Guidance” section are forward-looking
statements. These statements are based on management’s expectations
and assumptions and are subject to risks and uncertainties that may
cause actual results to differ materially from those expressed.
These risks and uncertainties include those risk factors discussed
in Part I, “Item 1A. Risk Factors” of our Annual Report on Form
10-K for the fiscal year ended June 30, 2016 (the “2016 Annual
Report”), as they may be updated in any future reports filed with
the Securities and Exchange Commission. All forward-looking
statements speak only as of the date of this press release and are
expressly qualified in their entirety by reference to the factors
discussed in the 2016 Annual Report.
These risks include: the success of Broadridge in retaining and
selling additional services to its existing clients and in
obtaining new clients; Broadridge’s reliance on a relatively small
number of clients, the continued financial health of those clients,
and the continued use by such clients of Broadridge’s services with
favorable pricing terms; changes in laws and regulations affecting
Broadridge’s clients or the services provided by Broadridge; any
material breach of Broadridge security affecting its clients’
customer information; declines in participation and activity in the
securities markets; the failure of Broadridge’s outsourced data
center services provider to provide the anticipated levels of
service; a disaster or other significant slowdown or failure of
Broadridge’s systems or error in the performance of Broadridge’s
services; overall market and economic conditions and their impact
on the securities markets; Broadridge’s failure to keep pace with
changes in technology and demands of its clients; Broadridge’s
ability to attract and retain key personnel; the impact of new
acquisitions and divestitures; and competitive conditions.
Broadridge disclaims any obligation to update or revise
forward-looking statements that may be made to reflect events or
circumstances that arise after the date made or to reflect the
occurrence of unanticipated events, other than as required by
law.
About BroadridgeBroadridge Financial Solutions,
Inc. (NYSE:BR) is a leading provider of investor communications and
technology-driven solutions for banks, broker-dealers, mutual funds
and corporate issuers. Broadridge’s investor and customer
communications, securities processing and managed services
solutions help clients reduce their capital investments in
operations infrastructure, allowing them to increase their focus on
core business activities. With over 50 years of experience,
Broadridge’s infrastructure underpins proxy voting services for
over 90% of public companies and mutual funds in North America, and
processes on average over $5 trillion in equity and fixed income
trades per day. Broadridge employs approximately 10,000
associates in 16 countries. For more information about
Broadridge, please visit www.broadridge.com.
Broadridge Financial Solutions,
Inc. |
|
Condensed Consolidated Statements of
Earnings |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
$ |
892.6 |
|
|
$ |
638.9 |
|
|
$ |
1,787.9 |
|
|
$ |
1,233.7 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
revenues |
707.8 |
|
|
464.5 |
|
|
1,425.7 |
|
|
903.1 |
|
Selling, general
and administrative expenses |
126.0 |
|
|
104.2 |
|
|
237.3 |
|
|
201.3 |
|
Total operating expenses |
833.8 |
|
|
568.7 |
|
|
1,663.1 |
|
|
1,104.4 |
|
|
|
|
|
|
|
|
|
Operating income |
58.8 |
|
|
70.2 |
|
|
124.9 |
|
|
129.3 |
|
Interest expense,
net |
10.6 |
|
|
6.4 |
|
|
21.0 |
|
|
12.7 |
|
Other non-operating
expenses, net |
2.5 |
|
|
2.4 |
|
|
6.7 |
|
|
3.6 |
|
Earnings before income
taxes |
45.7 |
|
|
61.3 |
|
|
97.2 |
|
|
113.0 |
|
Provision for income
taxes |
15.6 |
|
|
21.1 |
|
|
33.4 |
|
|
39.2 |
|
Net earnings |
$ |
30.1 |
|
|
$ |
40.2 |
|
|
$ |
63.8 |
|
|
$ |
73.8 |
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
$ |
0.25 |
|
|
$ |
0.34 |
|
|
$ |
0.54 |
|
|
$ |
0.62 |
|
Diluted earnings per
share |
$ |
0.25 |
|
|
$ |
0.33 |
|
|
$ |
0.52 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
118.7 |
|
|
118.5 |
|
|
118.6 |
|
|
118.4 |
|
Diluted |
121.5 |
|
|
122.0 |
|
|
121.5 |
|
|
121.9 |
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
$ |
0.33 |
|
|
$ |
0.30 |
|
|
$ |
0.66 |
|
|
$ |
0.60 |
|
Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
|
Condensed Consolidated Balance
Sheets |
(In millions, except per share
amounts) |
(Unaudited) |
|
December 31, 2016 |
|
June 30, 2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
235.7 |
|
|
$ |
727.7 |
|
Accounts
receivable, net of allowance for doubtful accounts of $3.0 and
$2.3, respectively |
515.5 |
|
|
453.4 |
|
Other
current assets |
148.1 |
|
|
108.0 |
|
Total
current assets |
899.4 |
|
|
1,289.1 |
|
Property, plant and
equipment, net |
145.5 |
|
|
112.2 |
|
Goodwill |
1,139.6 |
|
|
999.3 |
|
Intangible assets,
net |
485.9 |
|
|
210.3 |
|
Other non-current
assets |
296.8 |
|
|
261.8 |
|
Total
assets |
$ |
2,967.3 |
|
|
$ |
2,872.7 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Current
portion of long-term debt |
$ |
124.9 |
|
|
$ |
124.8 |
|
Accounts
payable |
140.6 |
|
|
133.2 |
|
Accrued
expenses and other current liabilities |
294.2 |
|
|
352.2 |
|
Deferred
revenues |
78.5 |
|
|
82.7 |
|
Total
current liabilities |
638.2 |
|
|
692.9 |
|
Long-term debt,
excluding current portion |
1,081.1 |
|
|
890.7 |
|
Deferred taxes |
72.8 |
|
|
61.6 |
|
Deferred revenues |
71.6 |
|
|
70.3 |
|
Other non-current
liabilities |
117.7 |
|
|
111.8 |
|
Total
liabilities |
1,981.5 |
|
|
1,827.3 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity: |
|
|
|
Preferred
stock: Authorized, 25.0 shares; issued and outstanding, none |
— |
|
|
— |
|
Common
stock, $0.01 par value: 650.0 shares authorized; 154.5 and 154.5
shares issued, respectively; and 118.2 and 118.3 shares
outstanding, respectively |
1.6 |
|
|
1.6 |
|
Additional paid-in capital |
951.6 |
|
|
901.2 |
|
Retained
earnings |
1,283.5 |
|
|
1,297.8 |
|
Treasury
stock, at cost: 36.3 and 36.2 shares, respectively |
(1,189.9 |
) |
|
(1,116.9 |
) |
Accumulated other comprehensive loss |
(60.9 |
) |
|
(38.2 |
) |
Total
stockholders’ equity |
985.8 |
|
|
1,045.5 |
|
Total
liabilities and stockholders’ equity |
$ |
2,967.3 |
|
|
$ |
2,872.7 |
|
Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
Abridged Condensed Consolidated Statements of
Cash Flows |
(In millions) |
(Unaudited) |
|
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
Cash Flows From
Operating Activities |
|
|
|
Net earnings |
$ |
63.8 |
|
|
$ |
73.8 |
|
Adjustments
to reconcile Net earnings to Net cash flows (used in) provided by
operating activities: |
Depreciation and amortization |
34.5 |
|
|
25.8 |
|
Amortization of acquired intangibles and purchased intellectual
property |
33.1 |
|
|
16.2 |
|
Amortization of other assets |
15.2 |
|
|
12.5 |
|
Stock-based compensation expense |
22.8 |
|
|
22.2 |
|
Deferred
income taxes |
(8.9 |
) |
|
(13.8 |
) |
Excess
tax benefits from stock-based compensation awards |
(22.0 |
) |
|
(5.5 |
) |
Other |
5.3 |
|
|
4.3 |
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired: |
|
|
|
Current
assets and liabilities: |
|
|
|
Decrease
in Accounts receivable, net |
29.3 |
|
|
36.7 |
|
Increase
in Other current assets |
(22.8 |
) |
|
(20.5 |
) |
Decrease
in Accounts payable |
(1.9 |
) |
|
(14.0 |
) |
Decrease
in Accrued expenses and other current liabilities |
(100.2 |
) |
|
(68.1 |
) |
Decrease
in Deferred revenues |
(5.5 |
) |
|
(6.3 |
) |
Non-current assets and liabilities: |
|
|
|
Increase
in Other non-current assets |
(57.4 |
) |
|
(23.8 |
) |
Increase
in Other non-current liabilities |
9.3 |
|
|
3.2 |
|
Net cash flows (used
in) provided by operating activities |
(5.5 |
) |
|
42.6 |
|
Cash Flows From
Investing Activities |
|
|
|
Capital
expenditures |
(19.9 |
) |
|
(28.7 |
) |
Software purchases and
capitalized internal use software |
(12.1 |
) |
|
(8.2 |
) |
Acquisitions, net of
cash acquired |
(428.4 |
) |
|
(13.3 |
) |
Purchase of
intellectual property |
(90.0 |
) |
|
— |
|
Equity method
investment |
(3.0 |
) |
|
(1.8 |
) |
Net cash flows used in
investing activities |
(553.4 |
) |
|
(52.0 |
) |
Cash Flows From
Financing Activities |
|
|
|
Proceeds from Long-term
debt |
230.0 |
|
|
105.0 |
|
Repayments on Long-term
debt |
(40.0 |
) |
|
(40.0 |
) |
Excess tax benefits
from stock-based compensation awards |
22.0 |
|
|
5.5 |
|
Dividends paid |
(74.0 |
) |
|
(67.4 |
) |
Purchases of Treasury
stock |
(101.2 |
) |
|
(10.6 |
) |
Proceeds from exercise
of stock options |
34.0 |
|
|
11.0 |
|
Payment of contingent
consideration liabilities |
— |
|
|
(1.0 |
) |
Costs related to
issuance of bonds |
(0.7 |
) |
|
— |
|
Net cash flows provided
by financing activities |
70.2 |
|
|
2.5 |
|
Effect of exchange rate
changes on Cash and cash equivalents |
(3.3 |
) |
|
(12.2 |
) |
Net change in Cash and
cash equivalents |
(492.0 |
) |
|
(19.0 |
) |
Cash and cash
equivalents, beginning of period |
727.7 |
|
|
324.1 |
|
Cash and cash
equivalents, end of period |
$ |
235.7 |
|
|
$ |
305.1 |
|
Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
Segment Results |
(In millions) |
(Unaudited) |
|
Segment results: |
|
|
Revenues |
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
(in millions) |
Investor Communication
Solutions |
$ |
709.6 |
|
|
$ |
471.7 |
|
|
$ |
1,432.9 |
|
|
$ |
901.4 |
|
Global Technology and
Operations |
201.8 |
|
|
180.3 |
|
|
389.6 |
|
|
357.0 |
|
Foreign currency
exchange |
(18.8 |
) |
|
(13.0 |
) |
|
(34.6 |
) |
|
(24.7 |
) |
Total |
$ |
892.6 |
|
|
$ |
638.9 |
|
|
$ |
1,787.9 |
|
|
$ |
1,233.7 |
|
|
Earnings (Loss) before Income
Taxes |
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
(in millions) |
Investor Communication
Solutions |
$ |
18.2 |
|
|
$ |
46.1 |
|
|
$ |
51.1 |
|
|
$ |
80.0 |
|
Global Technology and
Operations |
46.3 |
|
|
29.4 |
|
|
84.6 |
|
|
59.8 |
|
Other |
(20.8 |
) |
|
(15.7 |
) |
|
(43.6 |
) |
|
(29.6 |
) |
Foreign currency
exchange |
2.0 |
|
|
1.5 |
|
|
5.2 |
|
|
2.8 |
|
Total |
$ |
45.7 |
|
|
$ |
61.3 |
|
|
$ |
97.2 |
|
|
$ |
113.0 |
|
Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
Reconciliation of Non-GAAP to GAAP
Measures |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
(in millions) |
Operating income
(GAAP) |
$ |
58.8 |
|
|
$ |
70.2 |
|
|
$ |
124.9 |
|
|
$ |
129.3 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
20.4 |
|
|
8.1 |
|
|
33.1 |
|
|
16.2 |
|
Acquisition and Integration Costs |
5.0 |
|
|
1.5 |
|
|
7.8 |
|
|
2.7 |
|
Adjusted Operating
income (Non-GAAP) |
$ |
84.2 |
|
|
$ |
79.7 |
|
|
$ |
165.8 |
|
|
$ |
148.2 |
|
|
|
|
|
|
|
|
|
Operating income
margin (GAAP) |
6.6 |
% |
|
11.0 |
% |
|
7.0 |
% |
|
10.5 |
% |
Adjusted Operating income margin (Non-GAAP) |
9.4 |
% |
|
12.5 |
% |
|
9.3 |
% |
|
12.0 |
% |
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
(in millions) |
Net earnings
(GAAP) |
$ |
30.1 |
|
|
$ |
40.2 |
|
|
$ |
63.8 |
|
|
$ |
73.8 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
20.4 |
|
|
8.1 |
|
|
33.1 |
|
|
16.2 |
|
Acquisition and Integration Costs |
5.0 |
|
|
1.5 |
|
|
7.8 |
|
|
2.7 |
|
Tax
impact of adjustments |
(8.7 |
) |
|
(3.3 |
) |
|
(14.1 |
) |
|
(6.6 |
) |
Adjusted Net earnings
(Non-GAAP) |
$ |
46.8 |
|
|
$ |
46.5 |
|
|
$ |
90.7 |
|
|
$ |
86.1 |
|
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Diluted earnings per
share (GAAP) |
$ |
0.25 |
|
|
$ |
0.33 |
|
|
$ |
0.52 |
|
|
$ |
0.61 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
0.17 |
|
|
0.07 |
|
|
0.27 |
|
|
0.13 |
|
Acquisition and Integration Costs |
0.04 |
|
|
0.01 |
|
|
0.06 |
|
|
0.02 |
|
Tax
impact of adjustments |
(0.07 |
) |
|
(0.03 |
) |
|
(0.12 |
) |
|
(0.05 |
) |
Adjusted earnings per
share (Non-GAAP) |
$ |
0.39 |
|
|
$ |
0.38 |
|
|
$ |
0.75 |
|
|
$ |
0.71 |
|
|
Six Months Ended December
31, |
|
2016 |
|
2015 |
|
(in millions) |
Net cash flows (used
in) provided by operating activities (GAAP) |
$ |
(5.5 |
) |
|
$ |
42.6 |
|
|
|
|
|
Capital expenditures
and Software purchases and capitalized internal use software |
(32.0 |
) |
|
(36.9 |
) |
Free cash flow
(Non-GAAP) |
$ |
(37.5 |
) |
|
$ |
5.7 |
|
Note: Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
Reconciliation of Non-GAAP to GAAP
Measures |
Adjusted Earnings Per Share Growth, Adjusted
Operating Income Margin and Free Cash Flow |
Fiscal Year 2017 Guidance |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
Adjusted
Earnings Per Share Growth Rate (1) |
|
|
Diluted
earnings per share (GAAP) |
|
2% - 7%
growth |
Adjusted
earnings per share (Non-GAAP) |
|
12% -
17% growth |
|
|
|
Adjusted
Operating Income Margin (2) |
|
|
Operating
income margin % (GAAP) |
|
~13% |
Adjusted
Operating income margin % (Non-GAAP) |
|
~15% |
|
|
|
Free Cash
Flow |
|
|
Net cash flows
provided by operating activities (GAAP) |
|
$470 -
$550 |
Capital
expenditures and Software purchases and capitalized internal use
software |
|
(120) -
(150) |
Free cash flow
(Non-GAAP) |
|
$350 - $400 |
|
|
|
(1) Adjusted EPS growth (Non-GAAP) is adjusted to exclude
the projected impact of Amortization of Acquired Intangibles and
Purchased Intellectual Property, and Acquisition and Integration
Costs, and is calculated using diluted shares outstanding. Fiscal
year 2017 Non-GAAP Adjusted EPS guidance estimates exclude
Amortization of Acquired Intangibles and Purchased Intellectual
Property, and Acquisition and Integration Costs, net of taxes, of
approximately $0.47 per share.
(2) Adjusted Operating income margin (Non-GAAP) is
adjusted to exclude the projected impact of Amortization of
Acquired Intangibles and Purchased Intellectual Property, and
Acquisition and Integration Costs. Fiscal year 2017 Non-GAAP
Adjusted Operating income margin guidance estimates exclude
Amortization of Acquired Intangibles and Purchased Intellectual
Property, and Acquisition and Integration Costs of approximately
$87 million.
Contact Information
Investors:
W. Edings Thibault
Investor Relations
(516) 472-5129
Media:
Gregg Rosenberg
Corporate Communications
(212) 918-6966
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