Third Quarter Diluted EPS Growth of 43%
and Adjusted EPS growth of 45%
Broadridge Financial Solutions, Inc. (NYSE:BR) today reported
financial results for the third quarter and nine months ended March
31, 2018 of its fiscal year 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Financial Results |
|
Third Quarter |
|
|
Nine Months |
|
Dollars in
millions, except per share data, unaudited |
|
|
2018 |
|
2017 |
Change |
|
|
2018 |
|
2017 |
Change |
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
$ |
1,072 |
$ |
1,009 |
6 |
% |
|
$ |
3,009 |
$ |
2,797 |
8 |
% |
Recurring
fee revenues |
|
|
639 |
|
592 |
8 |
% |
|
|
1,749 |
|
1,645 |
6 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
130 |
|
110 |
19 |
% |
|
|
330 |
|
235 |
40 |
% |
|
Operating income
margin |
|
|
12.1% |
|
10.9% |
|
|
|
10.9% |
|
8.4% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating income - Non-GAAP |
|
|
152 |
|
134 |
13 |
% |
|
|
395 |
|
299 |
32 |
% |
|
Adjusted Operating
income margin - Non-GAAP |
|
|
14.1% |
|
13.2% |
|
|
|
13.1% |
|
10.7% |
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS |
|
$ |
0.90 |
$ |
0.63 |
43 |
% |
|
$ |
1.84 |
$ |
1.15 |
60 |
% |
Adjusted
EPS - Non-GAAP |
|
$ |
1.00 |
$ |
0.69 |
45 |
% |
|
$ |
2.33 |
$ |
1.43 |
63 |
% |
|
|
|
|
|
|
|
|
|
|
Closed
sales |
|
$ |
38 |
$ |
48 |
(20 |
)% |
|
$ |
100 |
$ |
125 |
(20 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“Broadridge continued its strong performance in the third
quarter of 2018. Recurring fee revenue rose 8%, Adjusted Operating
income increased 13% and, aided by a lower tax rate, Adjusted EPS
grew 45%," said Rich Daly, Broadridge’s Chief Executive Officer.
"We are raising our fiscal year 2018 guidance for Adjusted EPS
growth to 31-35% from 27-31% and reaffirming our outlook for
revenue growth and margin expansion."
“As we close out fiscal year 2018, we remain confident that
Broadridge is on track to meet the three year financial objectives
we laid out at our Investor Day last December. Our discussions with
clients remain very active, and the investments we have made over
the past several years to strengthen our product line continue to
position us well for future growth,” Mr. Daly added.
Fiscal Year 2018 Financial Guidance
|
|
|
|
|
|
|
Prior1 |
|
Current |
|
|
|
|
|
Recurring fee revenue
growth |
|
4-6% |
|
4-6% |
Total revenue
growth |
|
2-4% |
|
2-4% |
|
|
|
|
|
Operating income margin
- GAAP |
|
~14% |
|
~14% |
Adjusted Operating
income margin - Non-GAAP |
|
~16% |
|
~16% |
|
|
|
|
|
Diluted earnings per
share growth2 |
|
22-26% |
|
28-33% |
Adjusted Earnings per
share growth2 - Non-GAAP |
|
27-31% |
|
31-35% |
|
|
|
|
|
Free cash flow2 -
Non-GAAP |
|
$500-550M |
|
$500-550M |
Closed sales |
|
$170-210M |
|
$170-210M |
|
|
|
|
|
1 Prior
guidance as of February 8, 2018. |
2 Current
EPS Guidance and Free cash flow Guidance includes projected $35
million, or $0.27 per share, from excess tax benefits from
stock-based compensation. |
|
Financial Results for the Third Quarter Fiscal Year
2018
Revenues
Revenues for the three months ended March 31, 2018 ("third
quarter of fiscal year 2018") increased 6% to $1,072 million from
$1,009 million in the prior year period.
Recurring fee revenues rose 8% to $639 million. The increase in
recurring fee revenues reflected organic growth of 7%, including
internal growth (4pts), gains from Net New Business (3pts) and
contributions from our recent acquisitions (1pt). Event-driven fee
revenues rose 9% to $67 million, primarily from increased equity
proxy contests which were partially offset by decreased mutual fund
proxy activity. Distribution revenues increased $9 million, or 2%,
to $385 million. Changes in foreign currency rates positively
impacted revenues by $1 million as compared to the prior year
period.
Operating Income
For the third quarter of fiscal year 2018:
- Operating income was $130 million, an increase of $20 million,
or 19%, compared to $110 million for the prior year period.
Operating income margin increased to 12.1%, compared to 10.9% for
the prior year period.
- Adjusted Operating income was $152 million, an increase of $18
million, or 13%, compared to $134 million for the prior year
period. Adjusted Operating income margin increased to 14.1%,
compared to 13.2% for the prior year period.
- The increases in Operating income margin and Adjusted Operating
income margin are primarily due to the increase in recurring fee
revenues.
Interest Expense and Other Non-Operating
Income
Interest expense, net for the third quarter of fiscal year 2018
was $9 million, a decrease of $2 million, or 17%, compared to $11
million for the prior year period. The decrease was primarily due
to lower interest expense of $1 million and a $1 million increase
in interest income.
Other non-operating income, net was $4 million, a decrease of $3
million, or 43%, compared to $7 million for the prior year period.
The decrease was primarily due to a decrease of $4 million in
investment gains.
Effective Tax Rate
The effective tax rate for the third quarter of fiscal year 2018
was 12.9% compared to 28.6% for the prior year period. The decrease
in the effective tax rate is primarily due to the recognition of a
$16 million excess tax benefit attributable to stock-based
compensation as well as the corporate tax rate change under the Tax
Cuts and Jobs Act (the “Tax Act”).
Net Earnings and Earnings per Share
For the third quarter of fiscal year 2018:
- Net earnings increased 44% to $109 million, compared to $76
million for the prior year period.
- Adjusted Net earnings increased 46% to $121 million, compared
to $83 million for the prior year period.
- Diluted earnings per share increased 43% to $0.90, compared to
$0.63 for the prior year period.
- Adjusted earnings per share increased 45% to $1.00 compared to
$0.69 for the prior year period.
Segment and Other Results for Third Quarter Fiscal Year
2018
Investor Communication Solutions ("ICS")
ICS revenues for the third quarter of fiscal year 2018 were $855
million, an increase of $35 million, or 4%, compared to $820
million for the prior year period.
- Recurring fee revenues rose $20 million, or 5%, to $403
million. The increase was attributable to: (i) internal growth
(2pts), (ii) Net New Business from increases in revenues from
Closed sales (2pts) and (iii) revenues from acquisitions
(1pt).
- Event-driven fee revenues increased $6 million, or 9%, to $67
million, the result of increased equity proxy contest activity
which was partially offset by decreased mutual fund proxy
activity.
- Position growth compared to the same period in the prior year,
which is a component of internal growth, was 8% for mutual fund and
exchange traded fund ("ETF") interims.
- Distribution revenues increased $9 million, or 2%, to $385
million.
Earnings before income taxes for the third quarter of fiscal
year 2018 were $93 million, an increase of $18 million, or 23%,
compared to $75 million for the prior year period, primarily due to
higher recurring fee revenues and event-driven fee revenues.
Pre-tax margins increased by 1.7 percentage points to 10.9% from
9.2%.
Global Technology and Operations ("GTO")
GTO revenues for the third quarter of fiscal year 2018 were $235
million, an increase of $27 million, or 13%, compared to $209
million in the prior year period. The increase was attributable to:
(i) internal growth from higher trade and non-trade activity levels
(7pts), (ii) higher Net New Business from Closed sales (4pts), and
(iii) revenue from acquisitions (1pt).
GTO earnings before income taxes were $57 million, an increase
of $15 million, or 34%, compared to $43 million in the prior year
period, primarily due to higher organic revenues. Pre-tax margins
increased by 3.9 percentage points to 24.4% from 20.5%.
OtherOther Pre-tax loss increased 101% in the third quarter of
fiscal year 2018 to $29 million from $14 million in the prior year
period. The increased loss was primarily due to higher expense
related to corporate charges, including efficiency and growth
initiatives, higher performance-based compensation expense of $5
million and a decrease of $4 million in investment gains in the
current year period.
Financial Results for the Nine Months Ended March 31,
2018
Revenues
Revenues for the nine months ended March 31, 2018 increased 8%
to $3,009 million from $2,797 million in the prior year period.
Recurring fee revenues rose 6% to $1,749 million. The increase
in recurring fee revenues reflected organic growth of 5%, including
3% from Net New Business, 2% from internal growth and 1% from our
recent acquisitions. Event-driven fee revenues rose 74% to $223
million, primarily from increased mutual fund proxy activity and
equity proxy contests.
Distribution revenues increased $12 million, or 1%, to $1,090
million. Changes in foreign currency rates positively impacted
revenues by $2 million as compared to the prior year period.
Operating Income
For the nine months ended March 31, 2018:
- Operating income was $330 million, an increase of $95 million,
or 40%, compared to $235 million for the prior year period.
Operating income margin increased to 10.9%, compared to 8.4% for
the prior year period.
- Adjusted Operating income was $395 million, an increase of $95
million, or 32%, compared to $299 million for the prior year
period. Adjusted Operating income margin increased to 13.1%,
compared to 10.7% 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 nine months ended March 31, 2018
was $29 million, a decrease of $3 million, or 10%, compared to $32
million for the prior year period. The decrease was primarily due
to $2 million of lower interest expense and a $1 million increase
in interest income.
Other non-operating income, net was $2 million, an increase of
$1 million, or 163%, compared to $1 million for the prior year
period. The increase was primarily due to lower expense of $3
million related to fluctuations in foreign currency exchange rates
and lower losses related to minority equity investments of $2
million partially offset by a decrease of $4 million in investment
gains.
Effective Tax Rate
The effective tax rate for the nine months ended March 31, 2018
was 27.0%, compared to 31.4% for the prior year period. The
decrease in the effective tax rate is primarily due to the
recognition of a $19 million excess tax benefit attributable to
stock-based compensation as well as a reduced federal rate,
partially offset by $16 million of net tax charges relating to the
enactment of the Tax Act.
During the second quarter of fiscal year 2018, 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 the $19 million excess tax benefit and the net tax
charge of $16 million, the provision for income taxes would have
been $84 million for the nine months ended March 31, 2018, and the
effective tax rate would have been 27.9%.
Net Earnings and Earnings per Share
For the nine months ended March 31, 2018:
- Net earnings increased 58% to $221 million, compared to $140
million for the prior year period.
- Adjusted Net earnings increased 61% to $280 million, compared
to $174 million for the prior year period.
- Diluted earnings per share increased 60% to $1.84, compared to
$1.15 for the prior year period.
- Adjusted earnings per share increased 63% to $2.33 compared to
$1.43 for the prior year period.
Segment and Other Results for Nine Months Ended March
31, 2018
Investor Communication Solutions
ICS revenues for the nine months ended March 31, 2018 were
$2,384 million, an increase of $141 million, or 6%, compared to
$2,243 million for the prior year period.
- Recurring fee revenues rose $35 million, or 3%, to $1,071
million. The increase was attributable to: (i) Net New Business
from increases in revenues from Closed sales (2pts), internal
growth (1pt) and (ii) revenues from acquisitions (1pt).
- Event-driven fee revenues increased $95 million, or 74%, to
$223 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
and ETF interims.
- Distribution revenues increased $12 million to $1,090
million.
Earnings before income taxes for the nine months ended March 31,
2018 were $211 million, an increase of $80 million, or 62%,
compared to $131 million for the prior year period, primarily due
to higher event-driven fee revenues and recurring fee revenues.
Pre-tax margins increased by 3.1 percentage points to 8.9% from
5.8%.
Global Technology and Operations
GTO revenues for the nine months ended March 31, 2018 were $678
million, an increase of $69 million, or 11%, compared to $609
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 (4pts) and
(iii) revenue from recent acquisitions (2pts).
GTO earnings before income taxes were $153 million, an increase
of $30 million, or 24%, compared to $123 million in the prior year
period, primarily due to higher organic revenues. Pre-tax margins
increased by 2.2 percentage points to 22.5% from 20.3%.
OtherOther Pre-tax loss increased 33% in the nine months ended
March 31, 2018 to $77 million from $58 million in the prior year
period. The increased loss was primarily due to higher expense
related to corporate charges, including efficiency and growth
initiatives, a decrease of $4 million in investment gains and
higher performance based compensation expense of $4 million in the
current year period.
Changes in U.S. Federal Tax Laws
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.
Acquisition of ActivePath
In March 2018, the Company acquired ActivePath Solutions Ltd.
("ActivePath"), a digital technology company with technology that
enhances the consumer experience associated with consumer
statements, bills, and regulatory communications. The
aggregate purchase price was $25 million.
Earnings Conference Call
An analyst conference call will be held today, Tuesday,
May 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 May 22, 2018, the recording will also be
available by dialing 1-855-859-2056 passcode: 7293137 within the
United States or 1-404-537-3406 passcode: 7293137 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: (i) Amortization of Acquired
Intangibles and Purchased Intellectual Property, (ii) Acquisition
and Integration Costs, (iii) Tax Act items, (iv) the Gain on Sale
of Securities and (v) the Message Automation Limited ("MAL")
investment gain. Amortization of Acquired Intangibles and Purchased
Intellectual Property represents non-cash amortization 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. The Gain on Sale of
Securities represents a non-operating gain on the sale of
securities associated with the Company's retirement plan
obligations. The MAL investment gain represents a non-cash,
nontaxable gain on investment from the Company’s acquisition of MAL
in March 2017.
We exclude Amortization of Acquired Intangibles and Purchased
Intellectual Property, Acquisition and Integration Costs, Tax Act
items, Gain on Sale of Securities and the MAL investment gain from
our earnings 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 adjusted 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, 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 50 percent of public companies and mutual funds globally, 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 March
31, |
|
Nine Months Ended March 31, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
|
$ |
1,071.9 |
|
|
$ |
1,008.9 |
|
|
$ |
3,009.5 |
|
|
$ |
2,796.8 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
|
803.1 |
|
|
773.7 |
|
|
2,299.5 |
|
|
2,199.5 |
|
Selling, general
and administrative expenses |
|
|
138.8 |
|
|
125.5 |
|
|
380.5 |
|
|
362.8 |
|
Total operating expenses |
|
|
941.9 |
|
|
899.2 |
|
|
2,680.0 |
|
|
2,562.3 |
|
Operating income |
|
|
130.0 |
|
|
109.7 |
|
|
329.5 |
|
|
234.6 |
|
Interest expense,
net |
|
|
9.0 |
|
|
10.8 |
|
|
28.6 |
|
|
31.8 |
|
Other non-operating
income, net |
|
|
(4.2 |
) |
|
(7.4 |
) |
|
(2.1 |
) |
|
(0.8 |
) |
Earnings before income
taxes |
|
|
125.2 |
|
|
106.3 |
|
|
303.0 |
|
|
203.5 |
|
Provision for income
taxes |
|
|
16.2 |
|
|
30.4 |
|
|
81.9 |
|
|
63.8 |
|
Net earnings |
|
|
$ |
109.1 |
|
|
$ |
75.9 |
|
|
$ |
221.1 |
|
|
$ |
139.7 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
|
$ |
0.93 |
|
|
$ |
0.64 |
|
|
$ |
1.89 |
|
|
$ |
1.18 |
|
Diluted earnings per
share |
|
|
$ |
0.90 |
|
|
$ |
0.63 |
|
|
$ |
1.84 |
|
|
$ |
1.15 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
116.9 |
|
|
117.8 |
|
|
116.7 |
|
|
118.3 |
|
Diluted |
|
|
120.9 |
|
|
120.7 |
|
|
120.3 |
|
|
121.3 |
|
Dividends declared per
common share |
|
|
$ |
0.365 |
|
|
$ |
0.33 |
|
|
$ |
1.095 |
|
|
$ |
0.99 |
|
Amounts may not sum due to rounding.
|
Broadridge Financial Solutions,
Inc. |
|
Condensed Consolidated Balance
Sheets |
(In millions, except per share
amounts) |
(Unaudited) |
|
|
|
|
March 31,2018 |
|
June 30,2017 |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
352.1 |
|
|
$ |
271.1 |
|
Accounts
receivable, net of allowance for doubtful accounts of $5.8 and
$3.7, respectively |
|
|
714.1 |
|
|
589.5 |
|
Other
current assets |
|
|
136.9 |
|
|
129.0 |
|
Total current assets |
|
|
1,203.0 |
|
|
989.6 |
|
Property, plant and
equipment, net |
|
|
197.9 |
|
|
198.1 |
|
Goodwill |
|
|
1,231.3 |
|
|
1,159.3 |
|
Intangible assets,
net |
|
|
490.2 |
|
|
486.4 |
|
Other non-current
assets |
|
|
362.4 |
|
|
316.4 |
|
Total assets |
|
|
$ |
3,484.7 |
|
|
$ |
3,149.8 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
|
$ |
147.4 |
|
|
$ |
167.2 |
|
Accrued
expenses and other current liabilities |
|
|
434.5 |
|
|
495.3 |
|
Deferred
revenues |
|
|
185.4 |
|
|
82.4 |
|
Total current liabilities |
|
|
767.3 |
|
|
744.9 |
|
Long-term debt |
|
|
1,203.1 |
|
|
1,102.1 |
|
Deferred taxes |
|
|
42.8 |
|
|
82.0 |
|
Deferred revenues |
|
|
77.5 |
|
|
74.3 |
|
Other non-current
liabilities |
|
|
232.3 |
|
|
142.7 |
|
Total liabilities |
|
|
2,323.0 |
|
|
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 117.3 and 116.5
shares outstanding, respectively |
|
|
1.6 |
|
|
1.6 |
|
Additional paid-in capital |
|
|
1,038.9 |
|
|
987.6 |
|
Retained
earnings |
|
|
1,562.6 |
|
|
1,469.4 |
|
Treasury
stock, at cost: 37.2 and 38.0 shares, respectively |
|
|
(1,406.6 |
) |
|
(1,398.9 |
) |
Accumulated other comprehensive loss |
|
|
(34.6 |
) |
|
(55.8 |
) |
Total stockholders’ equity |
|
|
1,161.8 |
|
|
1,003.8 |
|
Total liabilities and stockholders’
equity |
|
|
$ |
3,484.7 |
|
|
$ |
3,149.8 |
|
|
Amounts may not sum due to rounding.
|
Broadridge Financial Solutions,
Inc. |
Condensed Consolidated Statements of Cash
Flows |
|
Dollars in millions,
unaudited |
Nine Months Ended March 31, |
|
2018 |
|
2017 |
Cash Flows From
Operating Activities |
|
|
|
Net earnings |
$ |
221.1 |
|
|
$ |
139.7 |
|
Adjustments to
reconcile Net earnings to Net cash flows provided by operating
activities: |
|
|
|
Depreciation and amortization |
60.7 |
|
|
51.2 |
|
Amortization of acquired intangibles and purchased intellectual
property |
59.4 |
|
|
52.8 |
|
Amortization of other assets |
35.5 |
|
|
29.6 |
|
Stock-based compensation expense |
39.2 |
|
|
34.7 |
|
Deferred
income taxes |
(21.5 |
) |
|
(16.1 |
) |
Excess
tax benefits from stock-based compensation awards |
— |
|
|
(29.0 |
) |
Other |
(15.2 |
) |
|
(7.1 |
) |
Changes in operating
assets and liabilities, net of assets and liabilities
acquired: |
|
|
|
Current
assets and liabilities: |
|
|
|
Increase
in Accounts receivable, net |
(121.3 |
) |
|
(114.6 |
) |
Increase
in Other current assets |
(33.3 |
) |
|
(60.0 |
) |
Increase
in Accounts payable |
3.0 |
|
|
42.5 |
|
Decrease
in Accrued expenses and other current liabilities |
(80.1 |
) |
|
(23.8 |
) |
Increase
in Deferred revenues |
99.8 |
|
|
118.3 |
|
Non-current assets and liabilities: |
|
|
|
Increase
in Other non-current assets |
(69.2 |
) |
|
(76.8 |
) |
Increase
in Other non-current liabilities |
96.7 |
|
|
20.7 |
|
Net cash flows provided
by operating activities |
274.8 |
|
|
162.1 |
|
Cash Flows From
Investing Activities |
|
|
|
Capital
expenditures |
(54.8 |
) |
|
(51.7 |
) |
Software purchases and
capitalized internal use software |
(15.9 |
) |
|
(17.8 |
) |
Acquisitions, net of
cash acquired |
(63.0 |
) |
|
(448.1 |
) |
Purchase of
intellectual property |
(40.0 |
) |
|
(90.0 |
) |
Equity method
investments |
(4.0 |
) |
|
(4.5 |
) |
Other investing
activities |
— |
|
|
(0.9 |
) |
Net cash flows used in
investing activities |
(177.6 |
) |
|
(613.0 |
) |
Cash Flows From
Financing Activities |
|
|
|
Proceeds from Long-term
debt |
260.0 |
|
|
355.0 |
|
Repayments on Long-term
debt |
(160.0 |
) |
|
(105.0 |
) |
Excess tax benefits
from stock-based compensation awards |
— |
|
|
29.0 |
|
Dividends paid |
(123.0 |
) |
|
(113.6 |
) |
Purchases of Treasury
stock |
(29.8 |
) |
|
(212.6 |
) |
Proceeds from exercise
of stock options |
38.1 |
|
|
45.4 |
|
Payment of contingent
consideration obligations |
— |
|
|
(0.7 |
) |
Costs related to
amendment of revolving credit facility |
— |
|
|
(1.8 |
) |
Costs related to
issuance of bonds |
— |
|
|
(0.7 |
) |
Other financing
activities |
(5.5 |
) |
|
— |
|
Net cash flows used in
financing activities |
(20.2 |
) |
|
(4.9 |
) |
Effect of exchange rate
changes on Cash and cash equivalents |
4.1 |
|
|
(2.4 |
) |
Net change in Cash and
cash equivalents |
81.0 |
|
|
(458.2 |
) |
Cash and cash
equivalents, beginning of period |
271.1 |
|
|
727.7 |
|
Cash and cash
equivalents, end of period |
$ |
352.1 |
|
|
$ |
269.5 |
|
Amounts may not sum due to rounding.
|
Broadridge Financial Solutions,
Inc. |
Segment Results |
(In millions) |
(Unaudited) |
|
Segment results: |
|
|
Revenues |
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Investor Communication
Solutions |
$ |
855.3 |
|
|
$ |
820.5 |
|
|
$ |
2,384.0 |
|
|
$ |
2,242.9 |
|
Global Technology and
Operations |
235.2 |
|
|
208.6 |
|
|
678.1 |
|
|
608.8 |
|
Foreign currency
exchange |
(18.6 |
) |
|
(20.1 |
) |
|
(52.5 |
) |
|
(54.8 |
) |
Total |
$ |
1,071.9 |
|
|
$ |
1,008.9 |
|
|
$ |
3,009.5 |
|
|
$ |
2,796.8 |
|
|
|
|
Earnings (Loss) before Income
Taxes |
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Investor Communication
Solutions |
$ |
93.0 |
|
|
$ |
75.5 |
|
|
$ |
211.0 |
|
|
$ |
130.5 |
|
Global Technology and
Operations |
57.3 |
|
|
42.7 |
|
|
152.9 |
|
|
123.3 |
|
Other |
(29.0 |
) |
|
(14.4 |
) |
|
(77.0 |
) |
|
(58.0 |
) |
Foreign currency
exchange |
3.9 |
|
|
2.5 |
|
|
16.1 |
|
|
7.6 |
|
Total |
$ |
125.2 |
|
|
$ |
106.3 |
|
|
$ |
303.0 |
|
|
$ |
203.5 |
|
|
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, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Operating income
(GAAP) |
$ |
130.0 |
|
|
$ |
109.7 |
|
|
$ |
329.5 |
|
|
$ |
234.6 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
20.2 |
|
|
19.7 |
|
|
59.4 |
|
|
52.8 |
|
Acquisition and Integration Costs |
1.3 |
|
|
4.2 |
|
|
6.0 |
|
|
12.0 |
|
Adjusted Operating
income (Non-GAAP) |
$ |
151.5 |
|
|
$ |
133.6 |
|
|
$ |
394.9 |
|
|
$ |
299.4 |
|
Operating income margin
(GAAP) |
12.1 |
% |
|
10.9 |
% |
|
10.9 |
% |
|
8.4 |
% |
Adjusted Operating
income margin (Non-GAAP) |
14.1 |
% |
|
13.2 |
% |
|
13.1 |
% |
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Net earnings
(GAAP) |
$ |
109.1 |
|
|
$ |
75.9 |
|
|
$ |
221.1 |
|
|
$ |
139.7 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
20.2 |
|
|
19.7 |
|
|
59.4 |
|
|
52.8 |
|
Acquisition and Integration Costs |
1.3 |
|
|
4.2 |
|
|
6.0 |
|
|
12.0 |
|
Gain on
Sale of Securities |
(5.5 |
) |
|
— |
|
|
(5.5 |
) |
|
— |
|
Taxable adjustments |
16.1 |
|
|
23.9 |
|
|
59.9 |
|
|
64.8 |
|
Tax Act
items |
— |
|
|
— |
|
|
16.1 |
|
|
— |
|
MAL
investment gain |
— |
|
|
(9.3 |
) |
|
— |
|
|
(9.3 |
) |
Tax
impact of adjustments (a) |
(3.7 |
) |
|
(7.2 |
) |
|
(16.7 |
) |
|
(21.3 |
) |
Adjusted Net earnings
(Non-GAAP) |
$ |
121.4 |
|
|
$ |
83.3 |
|
|
$ |
280.4 |
|
|
$ |
174.0 |
|
|
|
|
Three Months Ended March
31, |
|
Nine Months Ended March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Diluted earnings per
share (GAAP) |
$ |
0.90 |
|
|
$ |
0.63 |
|
|
$ |
1.84 |
|
|
$ |
1.15 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of Acquired Intangibles and Purchased Intellectual
Property |
0.17 |
|
|
0.16 |
|
|
0.49 |
|
|
0.44 |
|
Acquisition and Integration Costs |
0.01 |
|
|
0.03 |
|
|
0.05 |
|
|
0.10 |
|
Gain on
Sale of Securities |
(0.05 |
) |
|
— |
|
|
(0.05 |
) |
|
— |
|
Taxable adjustments |
0.13 |
|
|
0.20 |
|
|
0.50 |
|
|
0.53 |
|
Tax Act
items |
— |
|
|
— |
|
|
0.13 |
|
|
— |
|
MAL
investment gain |
— |
|
|
(0.08 |
) |
|
— |
|
|
(0.08 |
) |
Tax
impact of adjustments (a) |
(0.03 |
) |
|
(0.06 |
) |
|
(0.14 |
) |
|
(0.18 |
) |
Adjusted earnings per
share (Non-GAAP) |
$ |
1.00 |
|
|
$ |
0.69 |
|
|
$ |
2.33 |
|
|
$ |
1.43 |
|
|
(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 $15.6 million and $18.6 million of excess tax benefits
associated with stock-based compensation for the three and nine
months ended March 31, 2018. For purposes of calculating the
Adjusted earnings per share, the same adjustments were made on a
per share basis.
|
|
Nine Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(in millions) |
Net cash flows provided
by operating activities (GAAP) |
$ |
274.8 |
|
|
$ |
162.1 |
|
Capital expenditures
and Software purchases and capitalized internal use software |
(70.6 |
) |
|
(69.4 |
) |
Free cash flow
(Non-GAAP) |
$ |
204.2 |
|
|
$ |
92.6 |
|
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) |
|
|
Prior (4) |
|
Current |
|
|
|
|
Adjusted
Earnings Per Share Growth Rate (1) (2) |
|
|
|
Diluted
earnings per share (GAAP) |
22% -
26% growth |
|
28% -
33% growth |
Adjusted
earnings per share (Non-GAAP) |
27% -
31% growth |
|
31% -
35% 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) |
$610 -
$680 |
|
$610 -
$680 |
Capital
expenditures and Software purchases and capitalized internal use
software |
(110) -
(130) |
|
(110) -
(130) |
Free cash flow
(Non-GAAP) |
$500 - $550 |
|
$500 - $550 |
|
|
|
|
(1) Adjusted earnings per share growth (Non-GAAP) is
adjusted to exclude the projected impact of Amortization of
Acquired Intangibles and Purchased Intellectual Property,
Acquisition and Integration Costs, the Gain on Sale of Securities,
and Tax Act items and is calculated using diluted shares
outstanding. Fiscal year 2018 Non-GAAP Adjusted earnings per share
guidance estimates exclude Amortization of Acquired Intangibles and
Purchased Intellectual Property, Acquisition and Integration Costs,
and the Gain on Sale of Securities, net of taxes, and Tax Act
items, of approximately $0.64 per share.
(2) Current EPS Guidance and Free cash flow Guidance
includes projected $35 million, or $0.27 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, and Acquisition and Integration Costs of approximately
$90 million.
(4) Prior guidance as of February 8, 2018.
Broadridge Financial Sol... (NYSE:BR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Broadridge Financial Sol... (NYSE:BR)
Historical Stock Chart
From Jul 2023 to Jul 2024