Third quarter recurring fee revenue up
30%; Adjusted EPS up 19%; and YTD Closed sales up 33%
Broadridge Financial Solutions, Inc. (NYSE:BR) today reported
financial results for the third quarter and nine months ended
March 31, 2017.
Summary Financial Results |
|
Third Quarter |
|
|
Nine Months |
|
Dollars in
millions, except per share data |
|
|
2017 |
|
2016 |
Change |
|
|
2017 |
|
2016 |
Change |
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
$1,009 |
$689 |
46% |
|
$2,797 |
$1,923 |
45% |
Recurring
fee revenues |
|
|
592 |
|
455 |
30% |
|
|
1,645 |
|
1,246 |
32% |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
110 |
|
101 |
9% |
|
|
235 |
|
230 |
2% |
|
Operating income
margin |
|
|
10.9% |
|
14.6% |
|
|
|
8.4% |
|
12.0% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating income - Non-GAAP |
|
|
134 |
|
110 |
22% |
|
|
299 |
|
258 |
16% |
|
Adjusted operating
income margin - Non-GAAP |
|
|
13.2% |
|
15.9% |
|
|
|
10.7% |
|
13.4% |
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
$0.63 |
$0.52 |
21% |
|
$1.15 |
$1.13 |
2% |
Adjusted
EPS - Non-GAAP |
|
$0.69 |
$0.58 |
19% |
|
$1.43 |
$1.28 |
12% |
|
|
|
|
|
|
|
|
|
|
Closed
sales |
|
$48 |
$29 |
66% |
|
$125 |
$94 |
33% |
“After a strong third quarter, Broadridge remains
well-positioned to deliver on its full year guidance,” said Rich
Daly, Broadridge’s President and Chief Executive Officer. “We
reported very healthy revenue growth, driven by the acquisition of
NACC and organic growth of our recurring fee revenues, and double
digit Adjusted operating income and Adjusted EPS growth. I am
also pleased by the continued record results in Closed sales, which
should contribute to Broadridge’s growth over 2018 and beyond.”
“Our strong results, coupled with the stability of our business
model, have enabled us to balance rewarding our long-term
shareholders in the form of a strong and growing dividend and share
buybacks, while making investments to enhance our business.
In total, we returned $140 million to shareholders in the third
quarter, while making a small tuck-in acquisition to strengthen our
GTO segment.”
“As we near the end of our fiscal year, we are reaffirming our
fiscal year 2017 guidance for our key metrics. Our guidance,
which calls for 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, puts Broadridge right on track to
achieve the three year financial objectives we set in December
2014,” Mr. Daly concluded.
Fiscal Year 2017 Financial Guidance
The Company reaffirmed its fiscal year 2017 guidance.
Broadridge
Fiscal Year 2017 Financial Guidance
|
|
|
|
Recurring fee revenue
growth |
29-31% |
Total revenue
growth |
40-42% |
|
|
Adjusted operating
income margin - Non-GAAP |
~15% |
|
|
Diluted earnings per
share growth |
2-7% |
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% |
ICS Pre-tax margin |
~12% |
|
|
GTO Total revenue
growth |
6-9% |
GTO Pre-tax margin |
~21%* |
|
|
* previously
~19.5% |
|
Financial Results for Third Quarter Fiscal Year
2017
Revenues
Revenues for the three months ended March 31, 2017 ("third
quarter of fiscal year 2017") increased 46% to $1,009 million, from
$689 million for the prior year period. Revenues from acquisitions
contributed $283 million of this total increase, with the revenues
of the North American Customer Communications business acquired
from DST Systems, Inc. ("NACC") contributing $277 million.
Recurring fee revenues rose 30% to $592 million from $455
million. The increase in recurring fee revenues reflected
organic growth of 4%, including 5% from Net New Business partially
offset by negative 1% internal growth. Acquisitions accounted for
the remainder of the increase, including $111 million from the
acquisition of NACC.
Distribution revenues rose $172 million, or 85%, to $376
million, largely driven by the acquisition of NACC. Event-driven
revenues increased 26% to $61 million from $48 million. Changes in
foreign currency rates lowered Broadridge's total revenue by $2
million as compared to the prior year period.
Operating Income
For the third quarter of fiscal year 2017:
- Operating income was $110 million, an increase of $9 million,
or 9%, compared to $101 million for the prior year period.
Operating income margin decreased to 10.9%, compared to 14.6% for
the prior year period.
- Adjusted operating income was $134 million, an increase of $24
million, or 22%, compared to $110 million for the prior year
period. Adjusted operating income margin decreased to 13.2%,
compared to 15.9% for the prior year period.
- The decrease in Operating income margin and Adjusted operating
income margin was primarily due to the acquisition of NACC.
Interest Expense and Other non-operating
Income/Expenses
Interest expense, net for the third quarter of fiscal year 2017
was $11 million, an increase of $4 million, or 66%, compared to $7
million for the prior year period. The increase was primarily due
to higher interest expense driven by higher indebtedness.
Other non-operating income, net was $7 million, an increase of
$8 million compared to Other non-operating expenses, net of $1
million for the prior year period. The third quarter of fiscal year
2017 includes a $9 million non-cash, nontaxable gain on investment
from the acquisition of Message Automation Limited (the "MAL
investment gain").
Net Earnings and Earnings per Share
For the third quarter of fiscal year 2017:
- Net earnings increased 19% to $76 million, compared to $64
million for the prior year period.
- Adjusted net earnings increased 19% to $83 million, compared to
$70 million for the prior year period.
- Diluted earnings per share increased 21% to $0.63, compared to
$0.52 for the prior year period.
- Adjusted earnings per share increased 19% to $0.69 from $0.58
for the prior year period.
Segment and Other Results for Third Quarter of Fiscal
Year 2017
Investor Communication Solutions ("ICS")ICS revenues for the
third quarter of fiscal year 2017 increased $311 million, or 60%,
to $826 million, compared to $515 million in the prior year period.
Revenues from the acquisition of NACC contributed $277 million of
this total increase.
ICS recurring fee revenues in the third quarter of fiscal year
2017 rose $126 million, or 48%, to $389 million. The increase
reflected: (i) contributions from the NACC acquisition (42pts);
(ii) Net New Business (6pts) and (iii) flat internal growth. ICS
distribution revenues rose $172 million, or 85%, to $376
million. Event-driven revenues increased $12 million to $61
million, largely as a result of higher mutual fund proxy
volumes.
Position growth, which is a component of internal growth, was 5%
for mutual fund and ETF interims and 6% for annual equity proxy
communications.
ICS earnings before income taxes increased $7 million, or 10%,
to $74 million. The increase was primarily due to higher
recurring and event-driven fee revenues, partially offset by higher
operating expenses, which includes higher amortization related to
the acquisitions of NACC and the Inveshare technology assets.
Pre-tax margins decreased by 4.1 percentage points to 8.9%.
Global Technology and Operations ("GTO")GTO revenues for the
third quarter of fiscal year 2017 increased $11 million, or 6%, to
$203 million, compared to $191 million in the prior year period.
The increase was attributable to higher Net New Business (5pts) and
revenue from recent acquisitions (3pts), partially offset by
negative internal growth (-2pts). Excluding the impact of the APTP
re-contracting in the prior year period, internal growth was
essentially flat.
GTO earnings before income taxes rose $4 million, or 10%, to $44
million, reflecting strong revenue growth and recent efficiency
initiatives. Pre-tax margins increased by 0.9 percentage points to
21.9%.
OtherOther Pre-tax loss was essentially flat in the third
quarter of fiscal year 2017 at $14 million from $15 million in the
prior year period.
Additional Third Quarter of Fiscal Year 2017
Events
Acquisition of Message Automation LimitedIn March 2017,
Broadridge acquired Message Automation Limited ("MAL"). MAL is a
specialist provider of post-trade control solutions for sell-side
and buy-side firms. The Company owned 25% of MAL and purchased the
remaining 75% for an aggregate purchase price of $24 million in
cash, subject to customary working capital and other closing
adjustments. As a result of the acquisition, Broadridge recorded a
$9 million non-cash, nontaxable investment gain on its minority
ownership interest.
Financial Results for the Nine Months Ended March 31,
2017
Revenues
Revenues for the nine months ended March 31, 2017 ("the
nine months fiscal 2017") increased 45% to $2,797 million, from
$1,923 million for the prior year period. Revenues from
acquisitions contributed $834 million of this total increase, with
the revenues of NACC contributing $816 million.
Recurring fee revenues rose 32% to $1,645 million from $1,246
million. The increase in recurring fee revenues reflected:
contributions from our recent acquisitions (27pts), including $323
million from the acquisition of NACC, and gains from Net New
Business (4pts).
Distribution revenues rose $503 million, or 87%, to $1,078
million, largely driven by the acquisition of NACC. Event-driven
revenues decreased 11% to $128 million from $143 million. Changes
in foreign currency rates lowered Broadridge's total revenue by $12
million, or 1%, as compared to the prior year period.
Operating Income
For the nine months fiscal 2017:
- Operating income was $235 million, an increase of $5 million,
or 2%, compared to $230 million for the prior year period.
Operating income margin decreased to 8.4%, compared to 12.0% for
the prior year period.
- Adjusted operating income was $299 million, an increase of $41
million, or 16%, compared to $258 million for the prior year
period. Adjusted operating income margin decreased to 10.7%,
compared to 13.4% for the prior year period.
- The decrease in Operating income margin and Adjusted operating
income margin was primarily due to the acquisition of NACC.
Interest Expense and Other Non-operating
Income/Expenses
Interest expense, net for the nine months fiscal 2017 was $32
million, an increase of $13 million, or 66%, compared to $19
million for the prior year period. The increase was primarily due
to higher interest expense driven by higher indebtedness.
Other non-operating income, net was $1 million, an increase of
$5 million compared to Other non-operating expenses, net of $4
million for the prior year period. The nine months fiscal 2017
includes the $9 million MAL investment gain.
Net Earnings and Earnings per Share
For the nine months fiscal 2017:
- Net earnings increased 2% to $140 million, compared to $137
million for the prior year period.
- Adjusted net earnings increased 11% to $174 million, compared
to $156 million for the prior year period.
- Diluted earnings per share increased 2% to $1.15, compared to
$1.13 for the prior year period.
- Adjusted earnings per share increased 12% to $1.43 from $1.28
for the prior year period.
Segment and Other Results for The Nine Months Fiscal
2017
Investor Communication SolutionsICS revenues for the nine months
fiscal 2017 increased $843 million, or 59%, to $2,259 million,
compared to $1,417 million in the prior year period. Revenues from
acquisitions contributed $819 million of this total increase, with
NACC revenues contributing $816 million.
ICS recurring fee revenues rose $355 million, or 51%, to $1,053
million. The increase reflected: (i) contributions from our
recent acquisitions (47pts), including (46pts) from the NACC
acquisition; (ii) Net New Business (4pts) and (iii) flat internal
growth. ICS distribution revenues rose $503 million, or 87%, to
$1,078 million. Event-driven revenues declined $15 million to
$128 million as a result of lower mutual fund proxy volumes and
corporate action activity.
Position growth compared to the same period in the prior year,
was 3% for mutual fund interims and 3% for annual equity proxy
communications.
ICS earnings before income taxes declined $22 million, or 15%,
to $125 million. The decline was primarily due to higher
operating expenses, which includes higher amortization related to
the acquisitions of NACC and the Inveshare technology assets and
lower event-driven fee revenues. Pre-tax margins decreased by 4.9
percentage points to 5.5%.
Global Technology and OperationsGTO revenues for the nine months
fiscal 2017 increased $44 million, or 8%, to $592 million, compared
to $548 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 partially offset by contract renewals
(1pt).
GTO earnings before income taxes rose $29 million, or 29%, to
$129 million, reflecting robust revenue growth and efficiency
initiatives. Pre-tax margins increased by 3.6 percentage points to
21.8%.
OtherOther Pre-tax loss increased by $14 million for the nine
months fiscal 2017 to $58 million from $44 million in the prior
year period. The biggest contributors to the increased loss was a
$13 million increase in net interest expense, increased foreign
currency transaction losses of $4 million and a gain on the sale of
an asset in the prior fiscal year, partially offset by a $9 million
MAL investment gain.
Earnings Conference Call
An analyst conference call will be held today, Wednesday,
May 10, 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 1-844-348-2805 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 May 24, 2017, the recording will also be
available by dialing 1-855-859-2056 passcode: 16509432 within the
United States or 1-404-537-3406 passcode: 16509432 for
international callers.
Explanation and Reconciliation of the Company’s Use of
Non-GAAP Financial Measures
The Company’s results in this press release are presented in
accordance with U.S. generally accepted accounting principles
("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
Share
These 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, Acquisition and Integration
Costs and the MAL investment gain. 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, Acquisition and Integration Costs and the
MAL investment gain 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 Flow
In 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 Statements
This 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 Broadridge
Broadridge 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 March
31, |
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
$ |
1,008.9 |
|
|
$ |
688.8 |
|
|
$ |
2,796.8 |
|
|
$ |
1,922.5 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
revenues |
773.7 |
|
|
486.5 |
|
|
2,199.5 |
|
|
1,389.6 |
|
Selling,
general and administrative expenses |
125.5 |
|
|
101.7 |
|
|
362.8 |
|
|
303.0 |
|
Total
operating expenses |
899.2 |
|
|
588.2 |
|
|
2,562.3 |
|
|
1,692.6 |
|
Operating income |
109.7 |
|
|
100.6 |
|
|
234.6 |
|
|
229.9 |
|
Interest expense,
net |
10.8 |
|
|
6.5 |
|
|
31.8 |
|
|
19.2 |
|
Other non-operating
(income) expenses, net |
(7.4 |
) |
|
0.7 |
|
|
(0.8 |
) |
|
4.4 |
|
Earnings before income
taxes |
106.3 |
|
|
93.4 |
|
|
203.5 |
|
|
206.4 |
|
Provision for income
taxes |
30.4 |
|
|
29.7 |
|
|
63.8 |
|
|
68.9 |
|
Net earnings |
$ |
75.9 |
|
|
$ |
63.7 |
|
|
$ |
139.7 |
|
|
$ |
137.4 |
|
Basic earnings per
share |
$ |
0.64 |
|
|
$ |
0.54 |
|
|
$ |
1.18 |
|
|
$ |
1.16 |
|
Diluted earnings per
share |
$ |
0.63 |
|
|
$ |
0.52 |
|
|
$ |
1.15 |
|
|
$ |
1.13 |
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
117.8 |
|
|
118.2 |
|
|
118.3 |
|
|
118.3 |
|
Diluted |
120.7 |
|
|
121.7 |
|
|
121.3 |
|
|
121.8 |
|
Dividends declared per
common share |
$ |
0.33 |
|
|
$ |
0.30 |
|
|
$ |
0.99 |
|
|
$ |
0.90 |
|
|
Amounts
may not sum due to rounding. |
Broadridge Financial Solutions,
Inc. |
|
Condensed Consolidated Balance
Sheets |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
March 31, 2017 |
|
June 30, 2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
269.5 |
|
|
$ |
727.7 |
|
Accounts
receivable, net of allowance for doubtful accounts of $3.1 and
$2.3, respectively |
661.2 |
|
|
453.4 |
|
Other
current assets |
187.5 |
|
|
108.0 |
|
Total
current assets |
1,118.2 |
|
|
1,289.1 |
|
Property, plant and
equipment, net |
169.5 |
|
|
112.2 |
|
Goodwill |
1,161.5 |
|
|
999.3 |
|
Intangible assets,
net |
483.9 |
|
|
210.3 |
|
Other non-current
assets |
308.8 |
|
|
261.8 |
|
Total
assets |
$ |
3,242.0 |
|
|
$ |
2,872.7 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Current
portion of long-term debt |
$ |
125.0 |
|
|
$ |
124.8 |
|
Accounts
payable |
191.9 |
|
|
133.2 |
|
Accrued
expenses and other current liabilities |
364.0 |
|
|
352.2 |
|
Deferred
revenues |
205.0 |
|
|
82.7 |
|
Total
current liabilities |
885.9 |
|
|
692.9 |
|
Long-term debt,
excluding current portion |
1,141.6 |
|
|
890.7 |
|
Deferred taxes |
70.7 |
|
|
61.6 |
|
Deferred revenues |
75.0 |
|
|
70.3 |
|
Other non-current
liabilities |
126.4 |
|
|
111.8 |
|
Total
liabilities |
2,299.7 |
|
|
1,827.3 |
|
Commitments and
contingencies (Note 13) |
|
|
|
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 117.1 and 118.3 shares
outstanding, respectively |
1.6 |
|
|
1.6 |
|
Additional paid-in capital |
972.3 |
|
|
901.2 |
|
Retained
earnings |
1,320.8 |
|
|
1,297.8 |
|
Treasury
stock, at cost: 37.4 and 36.2 shares, respectively |
(1,291.8 |
) |
|
(1,116.9 |
) |
Accumulated other comprehensive loss |
(60.5 |
) |
|
(38.2 |
) |
Total
stockholders’ equity |
942.3 |
|
|
1,045.5 |
|
Total
liabilities and stockholders’ equity |
$ |
3,242.0 |
|
|
$ |
2,872.7 |
|
|
Amounts may
not sum due to rounding. |
Broadridge Financial Solutions,
Inc. |
|
Condensed Consolidated Statements of Cash
Flows |
(In millions) |
(Unaudited) |
|
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
Cash Flows From
Operating Activities |
|
|
|
Net earnings |
$ |
139.7 |
|
|
$ |
137.4 |
|
Adj. to reconcile Net
earnings to Net cash flows (used in) provided by operating
activities: |
|
|
|
Depreciation and amortization |
51.2 |
|
|
39.2 |
|
Amortization of acquired intangibles and purchased intellectual
property |
52.8 |
|
|
24.0 |
|
Amortization of other assets |
22.9 |
|
|
19.5 |
|
Stock-based compensation expense |
34.7 |
|
|
34.5 |
|
Deferred
income taxes |
(16.1 |
) |
|
(20.6 |
) |
Excess
tax benefits from stock-based compensation awards |
(29.0 |
) |
|
(11.1 |
) |
Other |
(0.4 |
) |
|
1.6 |
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired: |
|
|
|
Current
assets and liabilities: |
|
|
|
Increase
in Accounts receivable, net |
(114.6 |
) |
|
(56.0 |
) |
Increase
in Other current assets |
(60.0 |
) |
|
(51.9 |
) |
Increase
in Accounts payable |
42.5 |
|
|
6.8 |
|
Decrease
in Accrued expenses and other current liabilities |
(23.8 |
) |
|
(13.9 |
) |
Increase
in Deferred revenues |
118.3 |
|
|
90.9 |
|
Non-current assets and liabilities: |
|
|
|
Increase
in Other non-current assets |
(76.8 |
) |
|
(44.3 |
) |
Increase
in Other non-current liabilities |
20.7 |
|
|
5.0 |
|
Net cash flows provided
by operating activities |
162.1 |
|
|
161.1 |
|
Cash Flows From
Investing Activities |
|
|
|
Capital
expenditures |
(51.7 |
) |
|
(43.1 |
) |
Software purchases and
capitalized internal use software |
(17.8 |
) |
|
(13.0 |
) |
Acquisitions, net of
cash acquired |
(448.1 |
) |
|
(15.4 |
) |
Purchase of
intellectual property |
(90.0 |
) |
|
— |
|
Equity method
investment |
(4.5 |
) |
|
(3.3 |
) |
Other investing
activities |
(0.9 |
) |
|
(3.4 |
) |
Net cash flows used in
investing activities |
(613.0 |
) |
|
(78.2 |
) |
Cash Flows From
Financing Activities |
|
|
|
Proceeds from Long-term
debt |
355.0 |
|
|
210.0 |
|
Repayments on Long-term
debt |
(105.0 |
) |
|
(80.0 |
) |
Excess tax benefits
from stock-based compensation awards |
29.0 |
|
|
11.1 |
|
Dividends paid |
(113.6 |
) |
|
(103.0 |
) |
Purchases of Treasury
stock |
(212.6 |
) |
|
(97.0 |
) |
Proceeds from exercise
of stock options |
45.4 |
|
|
21.0 |
|
Payment of contingent
consideration liabilities |
(0.7 |
) |
|
(1.0 |
) |
Costs related to
amendment of revolving credit facility |
(1.8 |
) |
|
— |
|
Costs related to
issuance of bonds |
(0.7 |
) |
|
— |
|
Net cash flows used in
financing activities |
(4.9 |
) |
|
(38.9 |
) |
Effect of exchange rate
changes on Cash and cash equivalents |
(2.4 |
) |
|
(13.7 |
) |
Net change in Cash and
cash equivalents |
(458.2 |
) |
|
30.4 |
|
Cash and cash
equivalents, beginning of period |
727.7 |
|
|
324.1 |
|
Cash and cash
equivalents, end of period |
$ |
269.5 |
|
|
$ |
354.4 |
|
|
Amounts may
not sum due to rounding. |
Broadridge Financial Solutions,
Inc. |
|
Segment Results |
(In millions) |
(Unaudited) |
|
|
Revenues |
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Investor Communication
Solutions |
$ |
826.4 |
|
|
$ |
515.4 |
|
|
$ |
2,259.3 |
|
|
$ |
1,416.8 |
|
Global Technology and
Operations
|
202.7 |
|
|
191.3 |
|
|
592.3 |
|
|
548.3 |
|
Foreign currency
exchange |
(20.1 |
) |
|
(17.8 |
) |
|
(54.8 |
) |
|
(42.6 |
) |
Total |
$ |
1,008.9 |
|
|
$ |
688.8 |
|
|
$ |
2,796.8 |
|
|
$ |
1,922.5 |
|
|
Earnings (Loss) before Income
Taxes |
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Investor Communication
Solutions |
$ |
73.9 |
|
|
$ |
67.1 |
|
|
$ |
125.0 |
|
|
$ |
147.1 |
|
Global Technology and
Operations
|
44.3 |
|
|
40.2 |
|
|
128.9 |
|
|
100.0 |
|
Other |
(14.4 |
) |
|
(14.8 |
) |
|
(58.0 |
) |
|
(44.3 |
) |
Foreign currency
exchange |
2.5 |
|
|
0.9 |
|
|
7.6 |
|
|
3.6 |
|
Total |
$ |
106.3 |
|
|
$ |
93.4 |
|
|
$ |
203.5 |
|
|
$ |
206.4 |
|
|
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 March
31, |
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Operating income
(GAAP) |
$ |
109.7 |
|
|
$ |
100.6 |
|
|
$ |
234.6 |
|
|
$ |
229.9 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
19.7 |
|
|
7.8 |
|
|
52.8 |
|
|
24.0 |
|
Acquisition and Integration Costs |
4.2 |
|
|
1.3 |
|
|
12.0 |
|
|
4.0 |
|
Adjusted Operating
income (Non-GAAP) |
$ |
133.6 |
|
|
$ |
109.8 |
|
|
$ |
299.4 |
|
|
$ |
257.9 |
|
|
|
|
|
|
|
|
|
Operating
income margin (GAAP) |
10.9 |
% |
|
14.6 |
% |
|
8.4 |
% |
|
12.0 |
% |
Adjusted
Operating income margin (Non-GAAP) |
13.2 |
% |
|
15.9 |
% |
|
10.7 |
% |
|
13.4 |
% |
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Net earnings
(GAAP) |
$ |
75.9 |
|
|
$ |
63.7 |
|
|
$ |
139.7 |
|
|
$ |
137.4 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
19.7 |
|
|
7.8 |
|
|
52.8 |
|
|
24.0 |
|
Acquisition and Integration Costs |
4.2 |
|
|
1.3 |
|
|
12.0 |
|
|
4.0 |
|
MAL
investment gain |
(9.3 |
) |
|
— |
|
|
(9.3 |
) |
|
— |
|
Tax
impact of adjustments |
(7.2 |
) |
|
(2.8 |
) |
|
(21.3 |
) |
|
(9.4 |
) |
Adjusted Net earnings
(Non-GAAP) |
$ |
83.3 |
|
|
$ |
70.0 |
|
|
$ |
174.0 |
|
|
$ |
156.1 |
|
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Diluted earnings per
share (GAAP) |
$ |
0.63 |
|
|
$ |
0.52 |
|
|
$ |
1.15 |
|
|
$ |
1.13 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
0.16 |
|
|
0.06 |
|
|
0.44 |
|
|
0.20 |
|
Acquisition and Integration Costs |
0.03 |
|
|
0.01 |
|
|
0.10 |
|
|
0.03 |
|
MAL
investment gain |
(0.08 |
) |
|
— |
|
|
(0.08 |
) |
|
— |
|
Tax
impact of adjustments |
(0.06 |
) |
|
(0.02 |
) |
|
(0.18 |
) |
|
(0.08 |
) |
Adjusted earnings per
share (Non-GAAP) |
$ |
0.69 |
|
|
$ |
0.58 |
|
|
$ |
1.43 |
|
|
$ |
1.28 |
|
|
Nine Months Ended March 31, |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
(in millions) |
Net cash flows provided
by operating activities (GAAP) |
$ |
162.1 |
|
|
$ |
161.1 |
|
|
|
|
|
Capital expenditures
and Software purchases and capitalized internal use software
|
(69.4 |
) |
|
(56.1 |
) |
Free cash flow
(Non-GAAP) |
$ |
92.6 |
|
|
$ |
105.0 |
|
|
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, Acquisition and Integration Costs, and the
MAL investment gain 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, Acquisition and Integration Costs,
and the MAL investment gain, net of taxes, of approximately $0.42
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 $92 million. |
Contact Information
Investors:
W. Edings Thibault
Investor Relations
(516) 472-5129
Media:
Gregg Rosenberg
Corporate Communications
(212) 918-6966
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