Broadridge Financial Solutions, Inc. (NYSE:BR) today reported
financial results for the second quarter and six months ended
December 31, 2017 of its fiscal year 2018.
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Summary Financial Results |
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Second Quarter |
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Six Months |
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Dollars in
millions, except per share data, unaudited |
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2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Total
revenues |
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$1,013 |
$893 |
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13% |
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$1,938 |
$1,788 |
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8% |
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Recurring
fee revenues |
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562 |
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536 |
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5% |
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1,110 |
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1,053 |
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5% |
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Operating
income |
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115 |
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59 |
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96% |
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200 |
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125 |
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60% |
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Operating income
margin |
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11.4% |
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6.6% |
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10.3% |
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7.0% |
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Adjusted
operating income - Non-GAAP |
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137 |
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84 |
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63% |
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243 |
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166 |
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47% |
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Adjusted operating
income margin - Non-GAAP |
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13.6% |
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9.4% |
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12.6% |
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9.3% |
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Diluted
EPS |
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$0.52 |
$0.25 |
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108% |
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$0.93 |
$0.52 |
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79% |
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Adjusted
EPS - Non-GAAP |
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$0.79 |
$0.39 |
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103% |
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$1.32 |
$0.75 |
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76% |
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Closed
sales |
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$39 |
$56 |
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(31)% |
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$62 |
$77 |
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(20)% |
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“Broadridge delivered very strong fiscal second quarter results,
including Adjusted EPS growth of 103%,” said Richard J. Daly,
Broadridge’s Chief Executive Officer. “Recurring fee revenues grew
by 5% and total revenues grew by 13% as we benefited again from an
elevated level of event-driven activity. The quality of our
dialogues with key clients remains very high, which we believe
positions us well for future growth.”
“We are raising our guidance for total revenues and Adjusted EPS
growth for fiscal year 2018, driven by the strong event-driven
revenues generated in the first half of the year and by the impact
of lower tax rates. We are also raising our three year Adjusted EPS
growth objective to reflect the positive impact of lower U.S.
corporate tax rates," Mr. Daly added.
Fiscal Year 2018 Financial Guidance -
Revised
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Original |
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Revised |
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Recurring fee revenue
growth |
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4-6% |
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4-6% |
Total revenue
growth |
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2-3% |
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2-4% |
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Operating income margin
- GAAP |
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~14% |
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~14% |
Adjusted operating
income margin - Non-GAAP |
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~16% |
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~16% |
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Diluted earnings per
share growth* |
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15-19% |
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22-26% |
Adjusted earnings per
share growth* - Non-GAAP |
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15-19% |
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27-31% |
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Free cash flow* -
Non-GAAP |
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$400-450M |
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$500-550M |
Closed sales |
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$170-210M |
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$170-210M |
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* Revised
guidance includes projected $20 million, or $0.17 per share, from
excess tax benefits from stock-based compensation |
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Financial Results for the Second Quarter Fiscal Year
2018
Revenues
Revenues for the three months ended December 31, 2017 ("second
quarter of fiscal year 2018") increased 13% to $1,013 million from
$893 million in the prior year period.
Recurring fee revenues rose 5% to $562 million. The increase in
recurring fee revenues reflected organic growth of 4%, including 3%
from Net New Business, 1% from our recent acquisitions and 1% from
internal growth. Event-driven fee revenues rose 227% to $97
million, primarily from increased mutual fund proxy activity and
equity proxy contests. Distribution revenues increased $25 million,
or 7%, to $370 million. Changes in foreign currency rates
positively impacted revenues by $1 million as compared to the prior
year period.
Operating Income
For the second quarter of fiscal year 2018:
- Operating income was $115 million, an increase of $56 million,
or 96%, compared to $59 million for the prior year period.
Operating income margin increased to 11.4% compared to 6.6% for the
prior year period.
- Adjusted operating income was $137 million, an increase of $53
million, or 63%, compared to $84 million for the prior year period.
Adjusted operating income margin increased to 13.6%, compared to
9.4% for the prior year period.
- The increases in Operating income margin and Adjusted operating
income margin are primarily due to the increase in event-driven fee
revenues.
Interest Expense and Other Non-Operating
Expenses
Interest expense, net for the second quarter of fiscal year 2018
was $10 million, a decrease of less than $1 million, or 4%,
compared to $11 million for the prior year period. The decrease was
primarily due to lower interest expense driven by a more favorable
mix of interest rates on outstanding borrowings.
Other non-operating expenses, net were $1 million, a decrease of
$1 million, or 44%, compared to $2 million for the prior year
period. The decrease was primarily due to lower expense of $1
million related to fluctuations in foreign currency exchange
rates.
Effective Tax Rate
The effective tax rate for the second quarter of fiscal year
2018 was 40.0% compared to 34.1% for the prior year period. During
the second quarter, the Company incurred a net total of $16 million
("the net tax charge") tax expense resulting from the recent
changes to U.S. tax laws. These expenses included $32 million in
charges relating to earnings of certain foreign subsidiaries and
earnings deemed repatriated for U.S. tax purposes. The charges were
offset by a $16 million benefit from the remeasurement of the
Company's net U.S. federal and state deferred tax liabilities.
Excluding that net $16 million charge, the provision for income
taxes would have been $25 million for the second quarter of fiscal
2018, and the effective tax rate would have been 24.3%.
Net Earnings and Earnings per Share
For the second quarter of fiscal year 2018:
- Net earnings increased 106% to $62 million, compared to $30
million for the prior year period.
- Adjusted net earnings increased 102% to $95 million, compared
to $47 million for the prior year period.
- Diluted earnings per share increased 108% to $0.52, compared to
$0.25 for the prior year period.
- Adjusted earnings per share increased 103% to $0.79 from $0.39
for the prior year period.
Segment and Other Results for Second Quarter Fiscal Year
2018
Investor Communication Solutions ("ICS")
ICS revenues for the second quarter of fiscal year 2018 were
$802 million, an increase of $98 million, or 14%, compared to $704
million for the prior year period.
- Recurring fee revenues rose $5 million, or 2%, to $334 million.
The increase was primarily driven by Net New Business from
increases in revenues from Closed sales and revenues from
acquisitions.
- Event-driven fee revenues increased $68 million, or 227%, to
$97 million, the result of increased mutual fund proxy activity and
equity proxy contests.
- Position growth compared to the same period in the prior year,
which is a component of internal growth, was 10% for mutual fund
interims.
- Distribution revenues increased $25 million, or 7%, to $370
million.
Earnings before income taxes for the second quarter of fiscal
year 2018 were $72 million, an increase of $52 million, or 255%,
compared to $20 million for the prior year period, primarily due to
higher event-driven fee revenues and recurring fee revenues.
Pre-tax margins increased by 6.1 percentage points to 9.0% from
2.9%.
Global Technology and Operations ("GTO")
GTO revenues for the second quarter of fiscal year 2018 were
$228 million, an increase of $21 million, or 10%, compared to $207
million in the prior year period. The increase was attributable to:
(i) higher Net New Business from Closed sales (5pts), (ii) internal
growth from higher trade and non-trade activity levels (3pts) and
(iii) revenue from recent acquisitions (2pts).
GTO earnings before income taxes were $51 million, an increase
of $6 million, or 14%, compared to $44 million in the prior year
period, primarily due to higher organic revenues. Pre-tax margins
increased by 0.8 percentage points to 22.2% from 21.4%
OtherOther Pre-tax loss increased 27% in the second quarter of
fiscal year 2018 to $26 million from $21 million in the prior year
period. The increased loss was primarily due to higher expense
related to corporate charges, including efficiency initiatives.
Financial Results for the Six Months Ended December 31,
2017
Revenues
Revenues for the six months ended December 31, 2017 increased 8%
to $1,938 million from $1,788 million in the prior year period.
Recurring fee revenues rose 5% to $1,110 million. The increase
in recurring fee revenues reflected organic growth of 4%, including
3% from Net New Business, 1% from our recent acquisitions and 1%
from internal growth. Event-driven fee revenues rose 133% to $157
million, primarily from increased mutual fund proxy activity and
equity proxy contests.
Distribution revenues increased $2 million, or less than 1%, to
$705 million. Changes in foreign currency rates positively impacted
revenues by $1 million as compared to the prior year period.
Operating Income
For the six months ended December 31, 2017:
- Operating income was $200 million, an increase of $75 million,
or 60%, compared to $125 million for the prior year period.
Operating income margin increased to 10.3% compared to 7.0% for the
prior year period.
- Adjusted operating income was $243 million, an increase of $78
million, or 47%, compared to $166 million for the prior year
period. Adjusted operating income margin increased to 12.6%
compared to 9.3% for the prior year period.
- The increases in Operating income margin and Adjusted operating
income margin are primarily due to the increase in event-driven fee
revenues and recurring fee revenues.
Interest Expense and Other Non-Operating
Expenses
Interest expense, net for the six months ended December 31, 2017
was $20 million, a decrease of $1 million, or 7%, compared to $21
million for the prior year period. The decrease was primarily due
to lower interest expense driven by a more favorable mix of
interest rates on outstanding borrowings.
Other non-operating expenses, net were $2 million, a decrease of
$5 million, or 69%, compared to $7 million for the prior year
period. The decrease was primarily due to lower expense of $3
million related to fluctuations in foreign currency exchange rates
and lower expense of $1 million related to equity method
investments.
Effective Tax Rate
The effective tax rate for the six months ended December 31,
2017 was 37.0%, compared to 34.4% for the prior year period.
Excluding the net tax charge of $16 million incurred in the second
quarter, the provision for income taxes would have been $50 million
for the six months ended December 31, 2017, and the effective tax
rate would have been 28.0%.
Net Earnings and Earnings per Share
For the six months ended December 31, 2017:
- Net earnings increased 76% to $112 million, compared to $64
million for the prior year period.
- Adjusted net earnings increased 75% to $159 million, compared
to $91 million for the prior year period.
- Diluted earnings per share increased 79% to $0.93, compared to
$0.52 for the prior year period.
- Adjusted earnings per share increased 76% to $1.32 from $0.75
for the prior year period.
Segment and Other Results for Six Months Ended December
31, 2017
Investor Communication Solutions ("ICS")
ICS revenues for the six months ended December 31, 2017 were
$1,529 million, an increase of $106 million, or 7%, compared to
$1,422 million for the prior year period.
- Recurring fee revenues rose $15 million, or 2%, to $667
million. The increase was primarily driven by Net New Business from
increases in revenues from Closed sales and revenues from
acquisitions.
- Event-driven fee revenues increased $89 million, or 133%, to
$157 million, the result of increased mutual fund proxy activity
and equity proxy contests.
- Position growth compared to the same period in the prior year,
which is a component of internal growth, was 10% for mutual fund
interims.
- Distribution revenues increased $2 million to $705
million.
Earnings before income taxes for the six months ended December
31, 2017 were $118 million, an increase of $63 million, or 114%,
compared to $55 million for the prior year period, primarily due to
higher event-driven fee revenues and recurring fee revenues.
Pre-tax margins increased by 3.8 percentage points to 7.7% from
3.9%.
Global Technology and Operations ("GTO")
GTO revenues for the six months ended December 31, 2017 were
$443 million, an increase of $43 million, or 11%, compared to $400
million in the prior year period. The increase was attributable to:
(i) higher Net New Business from Closed sales (5pts), (ii) internal
growth from higher trade and non-trade activity levels (3pts) and
(iii) revenue from recent acquisitions (3pts).
GTO earnings before income taxes were $96 million, an increase
of $15 million, or 19%, compared to $81 million in the prior year
period, primarily due to higher organic revenues. Pre-tax margins
increased by 1.5 percentage points to 21.6% from 20.1%.
OtherOther Pre-tax loss increased 10% in the six months ended
December 31, 2017 to $48 million from $44 million in the prior year
period. The increased loss was primarily due to higher expense
related to corporate charges, including efficiency initiatives.
Changes in U.S. Federal Tax Laws
The Tax Cuts and Jobs Act (the "Tax Act") was enacted into law
on December 22, 2017. One of the primary provisions of this new
legislation is a reduction of the U.S. federal corporate statutory
rate to 21% from 35%. With a fiscal year ending June 30, 2018,
Broadridge's full year corporate rate will be subject to a blended
rate that includes both the new and old rates. Beginning in fiscal
year 2019, the Company will realize the full benefit of the lower
corporate statutory rate in its provision for income taxes.
In addition, as a result of the changes in tax laws, Broadridge
incurred a net charge of $16 million tax expense related to the
repatriation of earnings from certain foreign subsidiaries and the
remeasurement of the Company's net U.S. federal and state deferred
tax liabilities. This amount is provisional and represents the
Company's best estimate of the expected impact from the tax law
changes. The ultimate impact of these changes may differ from
Broadridge's estimate due to changes in interpretations and
assumptions made by the Company, additional regulatory guidance
that may be issued, as well as the amount of our fiscal year 2018
earnings before taxes.
Acquisitions of Summit Financial and Morningstar's 15(c)
Board Consulting Services
On October 2, 2017, Broadridge acquired Summit Financial
Disclosure, LLC (“Summit”). Summit is a full service financial
document management solutions provider, including document
composition and regulatory filing services. Summit's document
composition and regulatory filing services will be integrated with
Broadridge's proxy voting and shareholder communications services
to create an end-to-end solution that spans the entire corporate
disclosure lifecycle from private funding, through capital markets
transactions and ongoing communications to regulators and
shareholders.
On January 2, 2018, Broadridge acquired Morningstar's 15(c)
Board Consulting Services unit, which provides materials to the
boards of directors and executive teams of mutual funds, helping
them meet their 15(c) fiduciary duties to review and approve the
fee agreements with each of their investment advisors. The
acquisition should strengthen Broadridge's ability to be the most
complete source for independent, verifiable data that mutual fund
boards of directors rely on to fulfill their governance
responsibilities.
Earnings Conference Call
An analyst conference call will be held today, Thursday,
February 8, 2018 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 February 22, 2018, the recording will also
be available by dialing 1-855-859-2056 passcode: 2846427 within the
United States or 1-404-537-3406 passcode: 2846427 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 Tax Act items. 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. Tax Act
items represent the net impact of a U.S. federal transition tax on
earnings of certain foreign subsidiaries, foreign jurisdiction
withholding taxes and certain benefits related to the remeasurement
of the Company's net U.S. federal and state deferred tax
liabilities attributable to the Tax Act.
We exclude Amortization of Acquired Intangibles and Purchased
Intellectual Property, Acquisition and Integration Costs and Tax
Act items 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, other
investments, as well as debt servicing. 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 as well as 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, 2017 (the “2017 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 2017
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 on average 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.
Contact
InformationInvestors:
W. Edings ThibaultInvestor Relations(516) 472-5129
Media:
Gregg RosenbergCorporate Communications(212) 918-6966
|
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, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
|
|
$ |
1,012.8 |
|
|
$ |
892.6 |
|
|
$ |
1,937.6 |
|
|
$ |
1,787.9 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
|
769.8 |
|
|
707.8 |
|
|
1,496.4 |
|
|
1,425.7 |
|
Selling, general
and administrative expenses |
|
|
127.9 |
|
|
126.0 |
|
|
241.7 |
|
|
237.3 |
|
Total operating expenses |
|
|
897.7 |
|
|
833.8 |
|
|
1,738.1 |
|
|
1,663.1 |
|
Operating income |
|
|
115.1 |
|
|
58.8 |
|
|
199.5 |
|
|
124.9 |
|
Interest expense,
net |
|
|
10.2 |
|
|
10.6 |
|
|
19.6 |
|
|
21.0 |
|
Other non-operating
(income) expenses, net |
|
|
1.4 |
|
|
2.5 |
|
|
2.1 |
|
|
6.7 |
|
Earnings before income
taxes |
|
|
103.5 |
|
|
45.7 |
|
|
177.8 |
|
|
97.2 |
|
Provision for income
taxes |
|
|
41.4 |
|
|
15.6 |
|
|
65.8 |
|
|
33.4 |
|
Net earnings |
|
|
$ |
62.1 |
|
|
$ |
30.1 |
|
|
$ |
112.0 |
|
|
$ |
63.8 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
|
$ |
0.53 |
|
|
$ |
0.25 |
|
|
$ |
0.96 |
|
|
$ |
0.54 |
|
Diluted earnings per
share |
|
|
$ |
0.52 |
|
|
$ |
0.25 |
|
|
$ |
0.93 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
116.6 |
|
|
118.7 |
|
|
116.5 |
|
|
118.6 |
|
Diluted |
|
|
120.3 |
|
|
121.5 |
|
|
120.1 |
|
|
121.5 |
|
Dividends declared per
common share |
|
|
$ |
0.365 |
|
|
$ |
0.33 |
|
|
$ |
0.73 |
|
|
$ |
0.66 |
|
Amounts may not sum due to rounding.
|
Broadridge Financial Solutions,
Inc. |
Condensed Consolidated Balance
Sheets |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
December 31, 2017 |
|
June 30, 2017 |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
366.5 |
|
|
$ |
271.1 |
|
Accounts
receivable, net of allowance for doubtful accounts of $5.0 and
$3.7, respectively |
|
|
575.1 |
|
|
589.5 |
|
Other
current assets |
|
|
109.6 |
|
|
129.0 |
|
Total
current assets |
|
|
1,051.2 |
|
|
989.6 |
|
Property, plant and
equipment, net |
|
|
202.5 |
|
|
198.1 |
|
Goodwill |
|
|
1,193.1 |
|
|
1,159.3 |
|
Intangible assets,
net |
|
|
464.1 |
|
|
486.4 |
|
Other non-current
assets |
|
|
339.1 |
|
|
316.4 |
|
Total
assets |
|
|
$ |
3,249.9 |
|
|
$ |
3,149.8 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
|
$ |
134.3 |
|
|
$ |
167.2 |
|
Accrued
expenses and other current liabilities |
|
|
372.5 |
|
|
495.3 |
|
Deferred
revenues |
|
|
79.2 |
|
|
82.4 |
|
Total
current liabilities |
|
|
586.0 |
|
|
744.9 |
|
Long-term debt |
|
|
1,222.7 |
|
|
1,102.1 |
|
Deferred taxes |
|
|
52.5 |
|
|
82.0 |
|
Deferred revenues |
|
|
83.4 |
|
|
74.3 |
|
Other non-current
liabilities |
|
|
231.2 |
|
|
142.7 |
|
Total
liabilities |
|
|
2,175.9 |
|
|
2,146.0 |
|
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 116.6 and 116.5 shares
outstanding, respectively |
|
|
1.6 |
|
|
1.6 |
|
Additional paid-in capital |
|
|
1,012.6 |
|
|
987.6 |
|
Retained
earnings |
|
|
1,496.3 |
|
|
1,469.4 |
|
Treasury
stock, at cost: 37.8 and 38.0 shares, respectively |
|
|
(1,398.0 |
) |
|
(1,398.9 |
) |
Accumulated other comprehensive loss |
|
|
(38.4 |
) |
|
(55.8 |
) |
Total
stockholders’ equity |
|
|
1,074.0 |
|
|
1,003.8 |
|
Total
liabilities and stockholders’ equity |
|
|
$ |
3,249.9 |
|
|
$ |
3,149.8 |
|
Amounts may not sum due to rounding.
|
Broadridge Financial Solutions,
Inc. |
Condensed Consolidated Statements of Cash
Flows |
|
(In millions;
unaudited) |
Six Months Ended December
31, |
|
2017 |
|
2016 |
Cash Flows From
Operating Activities |
|
|
|
Net earnings |
$ |
112.0 |
|
|
$ |
63.8 |
|
Adjustments to
reconcile Net earnings to Net cash flows provided by operating
activities: |
|
|
|
Depreciation and amortization |
40.0 |
|
|
34.5 |
|
Amortization of acquired intangibles and purchased intellectual
property |
39.2 |
|
|
33.1 |
|
Amortization of other assets |
22.9 |
|
|
19.6 |
|
Stock-based compensation expense |
24.7 |
|
|
22.8 |
|
Deferred
income taxes |
(11.2 |
) |
|
(8.9 |
) |
Excess
tax benefits from stock-based compensation awards |
— |
|
|
(22.0 |
) |
Other |
(1.7 |
) |
|
0.8 |
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired: |
|
|
|
Current
assets and liabilities: |
|
|
|
Decrease
in Accounts receivable, net |
18.0 |
|
|
29.3 |
|
Increase
in Other current assets |
(6.2 |
) |
|
(22.8 |
) |
Decrease
in Accounts payable |
(9.3 |
) |
|
(1.9 |
) |
Decrease
in Accrued expenses and other current liabilities |
(138.2 |
) |
|
(100.2 |
) |
Decrease
in Deferred revenues |
(5.5 |
) |
|
(5.5 |
) |
Non-current assets and liabilities: |
|
|
|
Increase
in Other non-current assets |
(37.9 |
) |
|
(57.4 |
) |
Increase
in Other non-current liabilities |
95.1 |
|
|
9.3 |
|
Net cash flows provided
by (used in) operating activities |
141.8 |
|
|
(5.5 |
) |
Cash Flows From
Investing Activities |
|
|
|
Capital
expenditures |
(42.1 |
) |
|
(19.9 |
) |
Software purchases and
capitalized internal use software |
(10.4 |
) |
|
(12.1 |
) |
Acquisitions, net of
cash acquired |
(30.2 |
) |
|
(428.4 |
) |
Purchase of
intellectual property |
— |
|
|
(90.0 |
) |
Equity method
investments |
(2.8 |
) |
|
(3.0 |
) |
Net cash flows used in
investing activities |
(85.4 |
) |
|
(553.4 |
) |
Cash Flows From
Financing Activities |
|
|
|
Proceeds from Long-term
debt |
190.0 |
|
|
230.0 |
|
Repayments on Long-term
debt |
(70.0 |
) |
|
(40.0 |
) |
Excess tax benefits
from stock-based compensation awards |
— |
|
|
22.0 |
|
Dividends paid |
(80.4 |
) |
|
(74.0 |
) |
Purchases of Treasury
stock |
(3.0 |
) |
|
(101.2 |
) |
Proceeds from exercise
of stock options |
4.4 |
|
|
34.0 |
|
Costs related to
issuance of bonds |
— |
|
|
(0.7 |
) |
Other financing
activities |
(5.5 |
) |
|
— |
|
Net cash flows provided
by financing activities |
35.4 |
|
|
70.2 |
|
Effect of exchange rate
changes on Cash and cash equivalents |
3.6 |
|
|
(3.3 |
) |
Net change in Cash and
cash equivalents |
95.4 |
|
|
(492.0 |
) |
Cash and cash
equivalents, beginning of period |
271.1 |
|
|
727.7 |
|
Cash and cash
equivalents, end of period |
$ |
366.5 |
|
|
$ |
235.7 |
|
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, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Investor Communication
Solutions |
$ |
802.2 |
|
|
$ |
704.4 |
|
|
$ |
1,528.6 |
|
|
$ |
1,422.4 |
|
Global Technology and
Operations |
228.0 |
|
|
207.0 |
|
|
442.9 |
|
|
400.2 |
|
Foreign currency
exchange |
(17.4 |
) |
|
(18.8 |
) |
|
(33.9 |
) |
|
(34.6 |
) |
Total |
$ |
1,012.8 |
|
|
$ |
892.6 |
|
|
$ |
1,937.6 |
|
|
$ |
1,787.9 |
|
|
|
|
|
Earnings (Loss) before Income
Taxes |
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Investor Communication
Solutions |
$ |
72.4 |
|
|
$ |
20.4 |
|
|
$ |
118.0 |
|
|
$ |
55.1 |
|
Global Technology and
Operations |
50.6 |
|
|
44.2 |
|
|
95.7 |
|
|
80.6 |
|
Other |
(26.5 |
) |
|
(20.8 |
) |
|
(48.0 |
) |
|
(43.6 |
) |
Foreign currency
exchange |
7.0 |
|
|
2.0 |
|
|
12.1 |
|
|
5.2 |
|
Total |
$ |
103.5 |
|
|
$ |
45.7 |
|
|
$ |
177.8 |
|
|
$ |
97.2 |
|
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, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Operating income
(GAAP) |
$ |
115.1 |
|
|
$ |
58.8 |
|
|
$ |
199.5 |
|
|
$ |
124.9 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased Intellectual Property |
19.7 |
|
|
20.4 |
|
|
39.2 |
|
|
33.1 |
|
Acquisition and
Integration Costs |
2.6 |
|
|
5.0 |
|
|
4.7 |
|
|
7.8 |
|
Adjusted Operating
income (Non-GAAP) |
$ |
137.5 |
|
|
$ |
84.2 |
|
|
$ |
243.4 |
|
|
$ |
165.8 |
|
Operating income
margin (GAAP) |
11.4 |
% |
|
6.6 |
% |
|
10.3 |
% |
|
7.0 |
% |
Adjusted
Operating income margin (Non-GAAP) |
13.6 |
% |
|
9.4 |
% |
|
12.6 |
% |
|
9.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Net earnings
(GAAP) |
$ |
62.1 |
|
|
$ |
30.1 |
|
|
$ |
112.0 |
|
|
$ |
63.8 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
19.7 |
|
|
20.4 |
|
|
39.2 |
|
|
33.1 |
|
Acquisition and Integration Costs |
2.6 |
|
|
5.0 |
|
|
4.7 |
|
|
7.8 |
|
Taxable adjustments |
22.4 |
|
|
25.3 |
|
|
43.8 |
|
|
40.9 |
|
Tax Act
items |
16.1 |
|
|
— |
|
|
16.1 |
|
|
— |
|
Tax
impact of adjustments (a) |
(5.9 |
) |
|
(8.7 |
) |
|
(13.0 |
) |
|
(14.1 |
) |
Adjusted Net earnings
(Non-GAAP) |
$ |
94.7 |
|
|
$ |
46.8 |
|
|
$ |
158.9 |
|
|
$ |
90.7 |
|
|
|
Three Months Ended December
31, |
|
Six Months Ended December
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Diluted earnings per
share (GAAP) |
$ |
0.52 |
|
|
$ |
0.25 |
|
|
$ |
0.93 |
|
|
$ |
0.52 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
0.16 |
|
|
0.17 |
|
|
0.33 |
|
|
0.27 |
|
Acquisition and Integration Costs |
0.02 |
|
|
0.04 |
|
|
0.04 |
|
|
0.06 |
|
Taxable adjustments |
0.19 |
|
|
0.21 |
|
|
0.37 |
|
|
0.34 |
|
Tax Act
tax items |
0.13 |
|
|
— |
|
|
0.13 |
|
|
— |
|
Tax
impact of adjustments (a) |
(0.05 |
) |
|
(0.07 |
) |
|
(0.11 |
) |
|
(0.12 |
) |
Adjusted earnings per
share (Non-GAAP) |
$ |
0.79 |
|
|
$ |
0.39 |
|
|
$ |
1.32 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Calculated using the GAAP effective tax rate, adjusted to
exclude the net $16.1 million charges associated with the Tax Act,
as well as $1.5 million and $3.0 million of excess tax benefits
associated with stock-based compensation for the three and six
months ended December 31, 2017. For purposes of calculating the
Adjusted earnings per share, the same adjustments were made on a
per share basis.
|
|
|
Six Months Ended December
31, |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
(in millions) |
Net cash flows provided
by (used in) operating activities (GAAP) |
$ |
141.8 |
|
|
$ |
(5.5 |
) |
Capital expenditures
and Software purchases and capitalized internal use software |
(52.5 |
) |
|
(32.0 |
) |
Free cash flow
(Non-GAAP) |
$ |
89.3 |
|
|
$ |
(37.5 |
) |
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) |
|
|
|
Original |
|
Revised |
|
|
|
|
Adjusted
Earnings Per Share Growth Rate (1) (2) |
|
|
|
Diluted
earnings per share (GAAP) |
15% -
19% growth |
|
22% -
26% growth |
Adjusted
earnings per share (Non-GAAP) |
15% -
19% growth |
|
27% -
31% growth |
|
|
|
|
Adjusted
Operating Income Margin (3) |
|
|
|
Operating
income margin % (GAAP) |
~14% |
|
~14% |
Adjusted
Operating income margin % (Non-GAAP) |
~16% |
|
~16% |
|
|
|
|
Free Cash Flow
(2) |
|
|
|
Net cash flows
provided by operating activities (GAAP) |
$510 -
$580 |
|
$610 -
$680 |
Capital
expenditures and Software purchases and capitalized internal use
software |
(110) -
(130) |
|
(110) -
(130) |
Free cash flow
(Non-GAAP) |
$400 - $450 |
|
$500 - $550 |
|
|
|
|
(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 Tax Act items, 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, Acquisition and Integration Costs,
net of taxes, and Tax Act items of approximately $0.65 per
share.
(2) Revised guidance includes projected $20 million, or
$0.17 per share, from excess tax benefits 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, Acquisition and Integration Costs of approximately $90
million.
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