Fiscal Year Diluted EPS Growth of 7% and
Adjusted EPS growth of 15%
Broadridge Financial Solutions, Inc. (NYSE:BR) today reported
financial results for the fourth quarter of its fiscal year 2017.
Results for the three and twelve months ended June 30, 2017
compared with the same period last year were as follows:
Summary Financial Results |
|
Fourth Quarter |
|
|
Fiscal Year |
|
Dollars in
millions, except per share data |
|
|
2017 |
|
2016 |
Change |
|
|
2017 |
|
2016 |
Change |
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
1,346 |
$ |
975 |
38 |
% |
|
$ |
4,143 |
$ |
2,897 |
43 |
% |
Recurring
fee revenues |
|
|
806 |
|
649 |
24 |
% |
|
|
2,451 |
|
1,895 |
29 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
297 |
|
270 |
10 |
% |
|
|
532 |
|
500 |
6 |
% |
|
Operating income
margin |
|
|
22.1 |
% |
|
27.7 |
% |
|
|
|
12.8 |
% |
|
17.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating income - Non-GAAP |
|
|
324 |
|
279 |
16 |
% |
|
|
623 |
|
537 |
16 |
% |
|
Adjusted operating
income margin - Non-GAAP |
|
|
24.1 |
% |
|
28.6 |
% |
|
|
|
15.0 |
% |
|
18.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
$ |
1.57 |
$ |
1.40 |
12 |
% |
|
$ |
2.70 |
$ |
2.53 |
7 |
% |
Adjusted
EPS - Non-GAAP |
|
$ |
1.71 |
$ |
1.45 |
18 |
% |
|
$ |
3.13 |
$ |
2.73 |
15 |
% |
|
|
|
|
|
|
|
|
|
|
Closed
sales |
|
$ |
64 |
$ |
57 |
12 |
% |
|
$ |
188 |
$ |
151 |
25 |
% |
Richard J. Daly, President and Chief Executive Officer
commented, “Broadridge ended fiscal 2017 on a strong note, driving
record results. Revenues rose 43% to $4.1 billion, fueled by 6%
organic growth in recurring fee revenues and the acquisition of
DST’s NACC business, and Adjusted EPS increased 15% to $3.13. I am
especially pleased by our strong closed sales results. Closed sales
rose 25% to a record $188 million in fiscal 2017, including $64
million in the fourth quarter, positioning Broadridge well for
future growth.”
Given our multi-year focus, I am proud to report that Broadridge
achieved the three year financial objectives we set out at our
investor day in December 2014 by delivering three year compound
annual growth in recurring revenue of 14% and Adjusted earnings
growth of 11%. We look forward to providing another set of three
year objectives at our next investor day this coming December. Our
guidance for fiscal year 2018 calls for another strong year, with
recurring fee revenue growth in the range of 4% to 6%, Adjusted EPS
growth of 15% to 19%, and closed sales in the range of $170 million
to $210 million,” he added.
“The Board of Directors approved an 11% increase in our annual
dividend amount to $1.46 per share based on Broadridge's fiscal
year 2017 performance and their confidence in the strength of our
business. I am proud to note that Broadridge has raised its
dividend every year since becoming a public company in 2007, with
fiscal year 2018 marking the sixth consecutive double digit
increase,” Mr. Daly concluded.
Fiscal Year 2018 Financial Guidance
The Company anticipates:
Recurring fee revenue
growth |
|
|
|
4-6% |
Total revenue
growth |
|
|
|
2-3% |
|
|
|
|
|
Operating income margin
- GAAP |
|
|
|
~14% |
Adjusted operating
income margin - Non-GAAP |
|
|
|
~16% |
|
|
|
|
|
Diluted earnings per
share growth* |
|
|
|
15-19% |
Adjusted earnings per
share growth* - Non-GAAP |
|
|
|
15-19% |
|
|
|
|
|
Free cash flow* -
Non-GAAP |
|
|
|
$400-450M |
Closed sales |
|
|
|
$170-210M |
|
|
|
|
|
|
|
|
|
|
* Includes
projected $25 million, or $0.19 per share, from excess tax benefit
from stock-based compensation |
Financial Results for Fourth Quarter Fiscal Year
2017
Revenues
Revenues for the three months ended June 30, 2017 ("fourth
quarter of fiscal year 2017") increased 38% to $1,346 million from
$975 million for the prior year period. Revenues from acquisitions
contributed $258 million of this total increase, with the revenues
of the North American Customer Communications business acquired
from DST Systems, Inc. ("NACC") contributing $251 million.
Recurring fee revenues rose 24% to $806 million from $649
million. The increase in recurring fee revenues reflected organic
growth of 8%, including 4% from internal growth and 3% from Net New
Business. Acquisitions accounted for the remainder of the increase,
including $101 million from the acquisition of NACC.
Distribution revenues rose $188 million, or 65%, to $476
million, largely driven by the acquisition of NACC. Event-driven
revenues increased 62% to $91 million from $56 million. Changes in
foreign currency rates lowered Broadridge's total revenue by $8
million as compared to the prior year period.
Operating Income
For the fourth quarter of fiscal year 2017:
- Operating income was $297 million, an increase of $27 million,
or 10%, compared to $270 million for the prior year period.
Operating income margin decreased to 22.1% compared to 27.7% for
the prior year period.
- Adjusted operating income was $324 million, an increase of $45
million, or 16%, compared to $279 million for the prior year
period. Adjusted operating income margin decreased to 24.1%
compared to 28.6% 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 fourth quarter of fiscal year 2017
was $11 million, an increase of $4 million, or 68%, 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 $2 million, an increase of
less than $1 million compared to Other non-operating expenses, net
of $1 million for the prior year period.
Net Earnings and Earnings per Share
For the fourth quarter of fiscal year 2017:
- Net earnings increased 10% to $187 million, compared to $170
million for the prior year period.
- Adjusted net earnings increased 16% to $204 million, compared
to $176 million for the prior year period.
- Diluted earnings per share increased 12% to $1.57, compared to
$1.40 for the prior year period.
- Adjusted earnings per share increased 18% to $1.71 from $1.45
for the prior year period.
Segment and Other Results for Fourth Quarter Fiscal Year
2017
Investor Communication Solutions ("ICS")ICS revenues for the
fourth quarter of fiscal year 2017 increased $358 million, or 45%,
to $1,162 million, compared to $804 million in the prior year
period. Revenues from the acquisition of NACC contributed $251
million of this total increase.
ICS recurring fee revenues in the fourth quarter of fiscal year
2017 rose $136 million, or 30%, to $596 million. The increase
reflected: (i) contributions from the NACC acquisition (22pts);
(ii) internal growth (5pts) and (iii) Net New Business (2pts). ICS
distribution revenues rose $188 million, or 65%, to $476
million. Event-driven revenues increased $35 million to $91
million, largely as a result of higher mutual fund proxy
volumes.
Position growth, which is a component of internal growth, was 7%
for mutual fund and exchange-traded fund interims and 10% for
annual equity proxy communications.
ICS earnings before income taxes increased $34 million, or 13%,
to $296 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 intellectual property
assets. Pre-tax margins decreased by 7.1 percentage points to
25.5%.
Global Technology and Operations ("GTO")GTO revenues for the
fourth quarter of fiscal year 2017 increased $21 million, or 11%,
to $210 million, compared to $190 million in the prior year period.
The increase was attributable to: (i) higher Net New Business
(6pts); (ii) revenue from recent acquisitions (4pts) and (iii)
internal growth (1pt).
GTO earnings before income taxes rose $5 million, or 15%, to $41
million, reflecting strong revenue growth and recent efficiency
initiatives. Pre-tax margins increased by 0.6 percentage points to
19.3%.
OtherOther Pre-tax loss increased 52% in the fourth quarter of
fiscal year 2017 to $53 million from $35 million in the prior year
period. The increase was primarily due to higher expense related to
efficiency initiatives and higher interest expense driven by higher
indebtedness.
Financial Results for the Fiscal Year Ended June 30,
2017
Revenues
Revenues for the fiscal year ended June 30, 2017 increased 43%
to $4,143 million, from $2,897 million for the prior year period.
Revenues from acquisitions contributed $1,092 million of this total
increase, with the revenues of NACC contributing $1,067
million.
Recurring fee revenues rose 29% to $2,451 million from $1,895
million. The increase in recurring fee revenues reflected:
contributions from our recent acquisitions (24pts), including $424
million from the acquisition of NACC, gains from Net New Business
(4pts) and internal growth (2pts).
Distribution revenues rose $690 million, or 80%, to $1,554
million, largely driven by the acquisition of NACC. Event-driven
revenues increased 10% to $219 million from $199 million. Changes
in foreign currency rates lowered Broadridge's total revenue by $20
million as compared to the prior year period.
Operating Income
For fiscal year 2017:
- Operating income was $532 million, an increase of $31 million,
or 6%, compared to $500 million for the prior year period.
Operating income margin decreased to 12.8%, compared to 17.3% for
the prior year period.
- Adjusted operating income was $623 million, an increase of $86
million, or 16%, compared to $537 million for the prior year
period. Adjusted operating income margin decreased to 15.0%,
compared to 18.5% 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 fiscal year ended June 30, 2017
was $43 million, an increase of $17 million, or 66%, compared to
$26 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 less than $1 million, a
decrease of $5 million compared to Other non-operating expenses,
net of $6 million for the prior year period. The fiscal year ended
June 30, 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 fiscal year 2017:
- Net earnings increased 6% to $327 million, compared to $307
million for the prior year period.
- Adjusted net earnings increased 14% to $378 million, compared
to $332 million for the prior year period.
- Diluted earnings per share increased 7% to $2.70, compared to
$2.53 for the prior year period.
- Adjusted earnings per share increased 15% to $3.13 from $2.73
for the prior year period.
Segment and Other Results for Fiscal Year
2017
Investor Communication SolutionsICS revenues for the fiscal year
2017 increased $1,201 million, or 54%, to $3,421 million, compared
to $2,220 million in the prior year period. Revenues from
acquisitions contributed $1,070 million of this total increase,
with NACC revenues contributing $1,067 million.
ICS recurring fee revenues rose $491 million, or 42%, to $1,649
million, compared to $1,157 million in the prior year period.
The increase reflected: (i) contributions from the NACC acquisition
(37pts); (ii) Net New Business (4pts) and (iii) internal growth
(2pts). ICS distribution revenues rose $690 million, or 80%, to
$1,554 million. Event-driven revenues increased $19 million to $219
million as a result of higher mutual fund proxy volumes.
Position growth compared to the same period in the prior year,
was 4% for mutual fund interims and 8% for annual equity proxy
communications.
ICS earnings before income taxes increased $12 million, or 3%,
to $421 million. The increase was primarily due to higher
revenues, partially offset by higher operating expenses, which
includes higher amortization related to the acquisitions of NACC
and the Inveshare intellectual property assets as well as higher
integration costs related to NACC. Pre-tax margins decreased by 6.1
percentage points to 12.3%.
Global Technology and OperationsGTO revenues for fiscal year
2017 increased $65 million, or 9%, to $803 million, compared to
$738 million in the prior year period. The increase was
attributable to higher Net New Business (5pts), 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 $34 million, or 25%, to
$170 million, reflecting robust revenue growth and efficiency
initiatives. Pre-tax margins increased by 2.8 percentage points to
21.1%.
OtherOther Pre-tax loss increased by $32 million for fiscal year
2017 to $111 million from $79 million in the prior year period. The
biggest contributors to the increased loss were a $17 million
increase in net interest expense, and higher expense related to
efficiency initiatives, partially offset by the $9 million MAL
investment gain.
Other Events
Dividend Declaration and IncreaseOn August 9, 2017, Broadridge's
Board of Directors declared a quarterly dividend of $0.365 per
share payable on October 3, 2017 to shareholders of record on
September 15, 2017. This declaration reflects the Board's approval
of an increase in the annual dividend amount by 11% from $1.32 to
$1.46, subject to the discretion of the Board to declare quarterly
dividends. With this increase, the Company's annual dividend has
increased for the tenth consecutive year since becoming a public
company in 2007.
Acquisition of Spence Johnson
On July 11, 2017, Broadridge announced the acquisition of Spence
Johnson Limited ("Spence Johnson"). Spence Johnson is a leading
provider of global institutional data and intelligence to the asset
management industry.
Earnings Conference Call
An analyst conference call will be held today, Thursday,
August 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 August 24, 2017, the recording will also be
available by dialing 1-855-859-2056 passcode: 62382291 within the
United States or 1-404-537-3406 passcode: 62382291 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 2018 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; any material breach of Broadridge security
affecting its clients’ customer information; changes in laws and
regulations affecting Broadridge’s clients or the services provided
by Broadridge; 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) a global fintech
leader, is the leading provider of investor communications and
technology-driven solutions to banks, broker-dealers, mutual funds
and corporate issuers globally. Broadridge's investor
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 percent of public companies and mutual funds in North
America, and processes more than $5 trillion in fixed income and
equity trades per day. Broadridge employs over 10,000 full time
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 June 30, |
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
$ |
1,345.7 |
|
|
$ |
974.5 |
|
|
$ |
4,142.6 |
|
|
$ |
2,897.0 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
revenues |
910.1 |
|
|
586.3 |
|
|
3,109.6 |
|
|
1,975.9 |
|
Selling, general
and administrative expenses |
138.6 |
|
|
117.9 |
|
|
501.4 |
|
|
420.9 |
|
Total operating expenses |
1,048.7 |
|
|
704.2 |
|
|
3,611.0 |
|
|
2,396.8 |
|
Operating income |
297.0 |
|
|
270.3 |
|
|
531.6 |
|
|
500.3 |
|
Interest expense,
net |
10.9 |
|
|
6.5 |
|
|
42.7 |
|
|
25.7 |
|
Other non-operating
(income) expenses, net |
1.5 |
|
|
1.3 |
|
|
0.8 |
|
|
5.6 |
|
Earnings before income
taxes |
284.7 |
|
|
262.5 |
|
|
488.1 |
|
|
468.9 |
|
Provision for income
taxes |
97.6 |
|
|
92.5 |
|
|
161.4 |
|
|
161.4 |
|
Net earnings |
$ |
187.1 |
|
|
$ |
170.1 |
|
|
$ |
326.8 |
|
|
$ |
307.5 |
|
Basic earnings per
share |
$ |
1.60 |
|
|
$ |
1.44 |
|
|
$ |
2.77 |
|
|
$ |
2.60 |
|
Diluted earnings per
share |
$ |
1.57 |
|
|
$ |
1.40 |
|
|
$ |
2.70 |
|
|
$ |
2.53 |
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
117.1 |
|
|
118.1 |
|
|
118.0 |
|
|
118.3 |
|
Diluted |
119.5 |
|
|
121.1 |
|
|
120.8 |
|
|
121.6 |
|
Dividends declared per
common share |
$ |
0.33 |
|
|
$ |
0.30 |
|
|
$ |
1.32 |
|
|
$ |
1.20 |
|
Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
Condensed Consolidated Balance
Sheets |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
|
June 30, 2017 |
|
June 30, 2016 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
271.1 |
|
|
$ |
727.7 |
|
Accounts
receivable, net of allowance for doubtful accounts of $3.7 and
$2.3, respectively |
|
589.5 |
|
|
453.4 |
|
Other
current assets |
|
129.0 |
|
|
108.0 |
|
Total
current assets |
|
989.6 |
|
|
1,289.1 |
|
Property, plant and
equipment, net |
|
198.1 |
|
|
112.2 |
|
Goodwill |
|
1,159.3 |
|
|
999.3 |
|
Intangible assets,
net |
|
486.4 |
|
|
210.3 |
|
Other non-current
assets |
|
316.4 |
|
|
261.8 |
|
Total
assets |
|
$ |
3,149.8 |
|
|
$ |
2,872.7 |
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Current
portion of long-term debt |
|
$ |
— |
|
|
$ |
124.8 |
|
Accounts
payable |
|
167.2 |
|
|
133.2 |
|
Accrued
expenses and other current liabilities |
|
495.3 |
|
|
352.2 |
|
Deferred
revenues |
|
82.4 |
|
|
82.7 |
|
Total
current liabilities |
|
744.9 |
|
|
692.9 |
|
Long-term debt,
excluding current portion |
|
1,102.1 |
|
|
890.7 |
|
Deferred taxes |
|
82.0 |
|
|
61.6 |
|
Deferred revenues |
|
74.3 |
|
|
70.3 |
|
Other non-current
liabilities |
|
142.7 |
|
|
111.8 |
|
Total
liabilities |
|
2,146.0 |
|
|
1,827.3 |
|
Commitments and
contingencies |
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Preferred
stock: Authorized, 25.0 shares; issued and outstanding, none |
|
— |
|
|
— |
|
Common
stock, $0.01 par value: Authorized, 650.0 shares; issued, 154.5 and
154.5 shares, respectively; outstanding, 116.5 and 118.3 shares,
respectively |
|
1.6 |
|
|
1.6 |
|
Additional paid-in capital |
|
987.6 |
|
|
901.2 |
|
Retained
earnings |
|
1,469.4 |
|
|
1,297.8 |
|
Treasury
stock, at cost: 38.0 and 36.2 shares, respectively |
|
(1,398.9 |
) |
|
(1,116.9 |
) |
Accumulated other comprehensive loss |
|
(55.8 |
) |
|
(38.2 |
) |
Total
stockholders’ equity |
|
1,003.8 |
|
|
1,045.5 |
|
Total
liabilities and stockholders’ equity |
|
$ |
3,149.8 |
|
|
$ |
2,872.7 |
|
Amounts may not sum due to rounding.
|
Broadridge Financial Solutions,
Inc. |
Condensed Consolidated Statements of Cash
Flows |
(In millions) |
(Unaudited) |
|
|
|
Years ended June 30, |
|
|
2017 |
|
2016 |
Cash Flows From
Operating Activities |
|
|
|
|
Net earnings |
|
$ |
326.8 |
|
|
$ |
307.5 |
|
Adjustments to
reconcile Net earnings to Net cash flows provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
68.6 |
|
|
52.6 |
|
Amortization of acquired intangibles and purchased intellectual
property |
|
72.6 |
|
|
31.8 |
|
Amortization of other assets |
|
31.9 |
|
|
26.6 |
|
Stock-based compensation expense |
|
46.1 |
|
|
43.1 |
|
Deferred
income taxes |
|
(14.7 |
) |
|
(5.9 |
) |
Excess
tax benefits from stock-based compensation awards |
|
(40.6 |
) |
|
(21.3 |
) |
Other |
|
0.5 |
|
|
(4.6 |
) |
Changes in operating
assets and liabilities, net of assets and liabilities
acquired: |
|
|
|
|
Current
assets and liabilities: |
|
|
|
|
Increase
in Accounts receivable, net |
|
(44.4 |
) |
|
(5.3 |
) |
(Increase) decrease in Other current assets |
|
5.6 |
|
|
(12.5 |
) |
Increase
in Accounts payable |
|
16.2 |
|
|
6.2 |
|
Increase
in Accrued expenses and other current liabilities |
|
119.2 |
|
|
69.6 |
|
Increase
(decrease) in Deferred revenues |
|
(4.5 |
) |
|
2.9 |
|
Non-current assets and liabilities: |
|
|
|
|
Increase
in Other non-current assets |
|
(90.7 |
) |
|
(59.5 |
) |
Increase
in Other non-current liabilities |
|
23.2 |
|
|
6.5 |
|
Net cash flows provided
by operating activities |
|
515.9 |
|
|
437.7 |
|
Cash Flows From
Investing Activities |
|
|
|
|
Capital
expenditures |
|
(85.4 |
) |
|
(57.7 |
) |
Software purchases and
capitalized internal use software |
|
(28.3 |
) |
|
(17.8 |
) |
Acquisitions, net of
cash acquired |
|
(448.7 |
) |
|
(53.0 |
) |
Purchase of
intellectual property |
|
(90.0 |
) |
|
— |
|
Equity method
investment |
|
(6.0 |
) |
|
(4.9 |
) |
Other investing
activities |
|
(0.9 |
) |
|
(3.4 |
) |
Net cash flows used in
investing activities |
|
(659.3 |
) |
|
(136.9 |
) |
Cash Flows From
Financing Activities |
|
|
|
|
Repayments on Senior
notes |
|
(125.0 |
) |
|
— |
|
Proceeds from Long-term
debt |
|
500.0 |
|
|
807.9 |
|
Repayments on Long-term
debt |
|
(290.0 |
) |
|
(475.0 |
) |
Excess tax benefit from
stock-based compensation awards |
|
40.6 |
|
|
21.3 |
|
Dividends paid |
|
(152.2 |
) |
|
(138.2 |
) |
Purchases of Treasury
stock |
|
(342.8 |
) |
|
(119.8 |
) |
Proceeds from exercise
of stock options |
|
60.9 |
|
|
24.8 |
|
Payment of contingent
consideration liabilities |
|
(0.7 |
) |
|
(8.9 |
) |
Costs related to
amendment of revolving credit facility |
|
(1.8 |
) |
|
— |
|
Costs related to
issuance of bonds |
|
(0.7 |
) |
|
(3.6 |
) |
Net cash flows provided
by (used in) financing activities |
|
(311.7 |
) |
|
108.6 |
|
Effect of exchange rate
changes on Cash and cash equivalents |
|
(1.6 |
) |
|
(5.7 |
) |
Net change in Cash and
cash equivalents |
|
(456.7 |
) |
|
403.7 |
|
Cash and cash
equivalents, beginning of fiscal year |
|
727.7 |
|
|
324.1 |
|
Cash and cash
equivalents, end of fiscal year |
|
$ |
271.1 |
|
|
$ |
727.7 |
|
Amounts may not sum due to rounding.
Broadridge Financial Solutions,
Inc. |
Segment Results |
(In millions) |
(Unaudited) |
Segment results: |
|
|
Revenues |
|
Three Months Ended June 30, |
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(in millions) |
Investor Communication
Solutions |
$ |
1,162.1 |
|
|
$ |
803.6 |
|
|
$ |
3,421.4 |
|
|
$ |
2,220.4 |
|
Global Technology and
Operations |
210.4 |
|
|
189.7 |
|
|
802.7 |
|
|
738.0 |
|
Foreign currency
exchange |
(26.7 |
) |
|
(18.8 |
) |
|
(81.5 |
) |
|
(61.4 |
) |
Total |
$ |
1,345.7 |
|
|
$ |
974.5 |
|
|
$ |
4,142.6 |
|
|
$ |
2,897.0 |
|
|
Earnings (Loss) before Income
Taxes |
|
Three Months Ended June 30, |
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(in millions) |
Investor Communication
Solutions |
$ |
296.0 |
|
|
$ |
262.0 |
|
|
$ |
421.0 |
|
|
$ |
409.1 |
|
Global Technology and
Operations |
40.7 |
|
|
35.5 |
|
|
169.6 |
|
|
135.4 |
|
Other |
(52.6 |
) |
|
(34.7 |
) |
|
(110.5 |
) |
|
(79.0 |
) |
Foreign currency
exchange |
0.5 |
|
|
(0.3 |
) |
|
8.1 |
|
|
3.4 |
|
Total |
$ |
284.7 |
|
|
$ |
262.5 |
|
|
$ |
488.1 |
|
|
$ |
468.9 |
|
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 June 30, |
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(in millions) |
Operating income
(GAAP) |
$ |
297.0 |
|
|
$ |
270.3 |
|
|
$ |
531.6 |
|
|
$ |
500.3 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
19.7 |
|
|
7.9 |
|
|
72.6 |
|
|
31.8 |
|
Acquisition and
Integration Costs |
7.1 |
|
|
1.0 |
|
|
19.1 |
|
|
5.0 |
|
Adjusted Operating
income (Non-GAAP) |
$ |
323.9 |
|
|
$ |
279.2 |
|
|
$ |
623.3 |
|
|
$ |
537.1 |
|
|
|
|
|
|
|
|
|
Operating income
margin (GAAP) |
22.1 |
% |
|
27.7 |
% |
|
12.8 |
% |
|
17.3 |
% |
Adjusted
Operating income margin (Non-GAAP) |
24.1 |
% |
|
28.6 |
% |
|
15.0 |
% |
|
18.5 |
% |
|
Three Months Ended June 30, |
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(in millions) |
Net earnings
(GAAP) |
$ |
187.1 |
|
|
$ |
170.1 |
|
|
$ |
326.8 |
|
|
$ |
307.5 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
19.7 |
|
|
7.9 |
|
|
72.6 |
|
|
31.8 |
|
Acquisition and Integration Costs |
7.1 |
|
|
1.0 |
|
|
19.1 |
|
|
5.0 |
|
MAL
investment gain (a) |
— |
|
|
— |
|
|
(9.3 |
) |
|
— |
|
Tax
impact of adjustments |
(9.6 |
) |
|
(3.3 |
) |
|
(30.9 |
) |
|
(12.7 |
) |
Adjusted Net earnings
(Non-GAAP) |
$ |
204.3 |
|
|
$ |
175.6 |
|
|
$ |
378.3 |
|
|
$ |
331.7 |
|
(a) Represents a non-cash, nontaxable gain on investment.
|
Three Months Ended June 30, |
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Diluted earnings per
share (GAAP) |
$ |
1.57 |
|
|
$ |
1.40 |
|
|
$ |
2.70 |
|
|
$ |
2.53 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
0.17 |
|
|
0.06 |
|
|
0.60 |
|
|
0.26 |
|
Acquisition and Integration Costs |
0.06 |
|
|
0.01 |
|
|
0.16 |
|
|
0.04 |
|
MAL
investment gain |
— |
|
|
— |
|
|
(0.08 |
) |
|
— |
|
Tax
impact of adjustments |
(0.08 |
) |
|
(0.03 |
) |
|
(0.26 |
) |
|
(0.10 |
) |
Adjusted earnings per
share (Non-GAAP) |
$ |
1.71 |
|
|
$ |
1.45 |
|
|
$ |
3.13 |
|
|
$ |
2.73 |
|
|
Fiscal Year Ended June 30, |
|
2017 |
|
2016 |
|
(in millions) |
Net cash flows provided
by operating activities (GAAP) |
$ |
515.9 |
|
|
$ |
437.7 |
|
|
|
|
|
Capital expenditures
and Software purchases and capitalized internal use software |
(113.7 |
) |
|
(75.5 |
) |
Free cash flow
(Non-GAAP) |
$ |
402.2 |
|
|
$ |
362.2 |
|
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 2018 Guidance |
(In millions, except per share
amounts) |
(Unaudited) |
|
Adjusted
Earnings Per Share Growth Rate (1) (2) |
|
|
Diluted
earnings per share (GAAP) |
|
15% -
19% growth |
Adjusted
earnings per share (Non-GAAP) |
|
15% -
19% growth |
|
|
|
Adjusted
Operating Income Margin (3) |
|
|
Operating
income margin % (GAAP) |
|
~14% |
Adjusted
Operating income margin % (Non-GAAP) |
|
~16% |
|
|
|
Free Cash Flow
(2) |
|
|
Net cash flows
provided by operating activities (GAAP) |
|
$510 -
$580 |
Capital
expenditures and Software purchases and capitalized internal use
software |
|
(110) -
(130) |
Free cash flow
(Non-GAAP) |
|
$400 - $450 |
|
|
|
(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 2018 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 $0.50 per share.
(2) Includes projected $25 million, or $0.19 per share,
from excess tax benefit from stock-based compensation.
(3) 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 2018 Non-GAAP
Adjusted Operating income margin guidance estimates exclude
Amortization of Acquired Intangibles and Purchased Intellectual
Property, and Acquisition and Integration Costs of approximately
$90 million.
Contact Information
Investors:
W. Edings Thibault
Investor Relations
(516) 472-5129
Media:
Gregg Rosenberg
Corporate Communications
(212) 918-6966
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