NEW YORK, Aug. 1, 2019 /PRNewswire/ -- Broadridge
Financial Solutions, Inc. (NYSE: BR) today reported financial
results for the fourth quarter of its fiscal year 2019. Results for
the three months and fiscal year ended June
30, 2019 compared with the same period last year were as
follows:
Summary Financial
Results
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|
Dollars in
millions, except per share data
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$1,211
|
$1,320
|
(8)%
|
|
$4,362
|
$4,330
|
1%
|
Recurring fee
revenues
|
|
813
|
862
|
(6)%
|
|
2,759
|
2,610
|
6%
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
241
|
266
|
(10)%
|
|
653
|
598
|
9%
|
|
Operating income
margin
|
|
19.9%
|
20.2%
|
|
15.0%
|
13.8%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
income - Non-GAAP
|
|
267
|
291
|
(8)%
|
|
746
|
688
|
8%
|
|
Adjusted Operating
income margin - Non-GAAP
|
|
22.1%
|
22.0%
|
|
17.1%
|
15.9%
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$1.55
|
$1.72
|
(10)%
|
|
$4.06
|
$3.56
|
14%
|
Adjusted EPS -
Non-GAAP
|
|
$1.72
|
$1.86
|
(8)%
|
|
$4.66
|
$4.19
|
11%
|
|
|
|
|
|
|
|
|
|
Closed
sales
|
|
$72
|
$115
|
(37)%
|
|
$233
|
$215
|
9%
|
"Fiscal year 2019 was a strong year as we generated double-digit
EPS growth and executed against our strategic goals," said
Tim Gokey, Broadridge's President
and Chief Executive Officer. "Broadridge achieved 6% Recurring fee
revenue growth and 11% Adjusted EPS growth. We also closed out the
year on a very positive note as a strong fourth quarter powered
another year of record Closed sales, and we made three tuck-in
acquisitions that will further strengthen our business.
"Today, we are announcing an 11% increase to our annual dividend
for fiscal 2020 to $2.16 per share,"
Mr. Gokey added. "Broadridge has now increased its annual dividend
every year since becoming a public company, and 2019 marks the eighth consecutive double-digit
increase.
"We expect fiscal year 2020 to be another strong year, with
recurring revenue growth of 8-10% and Adjusted EPS growth of 8-12%.
Broadridge is well on track to meet the three-year objectives
through 2020 laid out at our 2017 Investor Day, and we remain well
positioned for medium- and long-term growth," Mr. Gokey
concluded.
Fiscal Year 2020 Financial
Guidance
The Company anticipates:
|
|
|
Recurring fee revenue
growth
|
|
8-10%
|
Total revenue
growth
|
|
3-6%
|
|
|
|
Operating income
margin - GAAP
|
|
~15%
|
Adjusted Operating
income margin - Non-GAAP
|
|
~18%
|
|
|
|
Diluted earnings per
share growth
|
|
5-9%
|
Adjusted earnings per
share growth - Non-GAAP
|
|
8-12%
|
|
|
|
Closed
sales
|
|
$190-230M
|
|
|
|
Note: Fiscal year
2020 guidance includes $20 million of excess tax benefits related
to stock-based compensation.
|
|
|
|
Adoption of New Accounting Standards
Effective
July 1, 2018, Broadridge adopted
Accounting Standards Update No. 2014-09 "Revenue from Contracts
with Customers" and its related amendments (the "ASC 606 revenue
accounting change") using the modified retrospective transition
approach. Under this transition approach, results for reporting
periods beginning after July 1, 2018
reflect the ASC 606 revenue accounting change while prior period
amounts have not been adjusted and continue to be reported in
accordance with historical accounting guidelines. Where noted
however, discussions of recurring fee revenue growth and points of
growth are presented assuming that the ASC 606 revenue accounting
change had been applied to fiscal 2018 revenues. Please refer to
Broadridge's Annual Report on Form 10-K for the fiscal year ended
June 30, 2019 (the "2019 Annual
Report") for additional information related to this change.
Financial Results for the Fourth Quarter 2019 compared to
Fourth Quarter 2018
- Total revenues for the three months ended June 30, 2019 ("Fourth Quarter 2019") decreased
8% to $1,211 million from
$1,320 million in the prior year
period ("Fourth Quarter 2018"). Considering the impact of the ASC
606 revenue accounting change, Total revenues would have increased
$13 million, or 1%.
- Recurring fee revenues for the Fourth Quarter 2019 decreased 6%
to $813 million from $862 million.
- Considering the impact of the ASC 606 revenue accounting
change, Recurring fee revenues would have increased $49 million, or 6%, reflecting (i) organic growth
of 5pts and (ii) growth from acquisitions of 1pt.
- Event-driven fee revenues decreased $10
million, or 16%, to $51
million, mainly from lower mutual fund proxy activity.
- Distribution revenues decreased $45
million, or 11%, to $378
million, the result of lower transactional print volumes,
the decrease in Event-driven fee activity, and the impact of the
ASC 606 revenue accounting change.
- The strengthening of the U.S. dollar against other currencies
negatively impacted revenues by $7
million.
- Operating income was $241
million, a decrease of $25
million, or 10%. Operating income margin decreased to 19.9%,
compared to 20.2% in Fourth Quarter 2018.
- Adjusted Operating income was $267
million, a decrease of $24
million, or 8%. Adjusted Operating income margin increased
to 22.1%, compared to 22.0% for the prior year period.
- The decreases in Operating income and Adjusted Operating income
are primarily due to the decrease in Recurring fee revenues driven
by the ASC 606 revenue accounting change.
- Interest expense, net was $11
million, an increase of $1
million, or 14%, primarily due to an increase in interest
expense from higher borrowings.
- The effective tax rate for the Fourth Quarter 2019 was 20.3%
compared to 19.8% in Fourth Quarter 2018. The increase in the
effective tax rate is primarily attributable to the recognition of
a $10 million excess tax benefit
attributable to stock-based compensation, compared to a
$22 million excess tax benefit in the
comparable prior year period offset partially by a lower corporate
income tax rate.
- Net earnings decreased 11% to $183
million and Adjusted Net earnings decreased 9% to
$203 million.
- Diluted earnings per share decreased 10% to $1.55, compared to $1.72 in the Fourth Quarter 2018 and Adjusted
earnings per share decreased 8% to $1.72, compared to $1.86 in Fourth Quarter 2018.
- The decreases in Diluted earnings per share and Adjusted
earnings per share are primarily due to the decrease in Recurring
fee revenues driven by the ASC 606 revenue accounting change.
Segment and Other Results for the Fourth Quarter 2019
compared to Fourth Quarter 2018
Investor Communication
Solutions ("ICS")
- ICS total revenues for the Fourth Quarter 2019 were
$990 million, a decrease of
$122 million, or 11%. Considering the
impact of the ASC 606 revenue accounting change, Total revenues
would have increased $1 million.
- Recurring fee revenues for the Fourth Quarter 2019 declined
$67 million or 11%, to $561 million.
- Considering the impact of the ASC 606 revenue accounting
change, recurring fee revenues would have increased $30 million in the Fourth Quarter 2019. The
$30 million, or 6%, increase was
attributable to: (i) Net New Business from increases in revenues
from Closed sales (3pts), (ii) higher internal growth (2pt), and
(iii) revenues from acquisitions (1pt).
- Event-driven fee revenues decreased $10
million, or 16%, to $51
million, mainly from lower mutual fund proxy activity
compared to the Fourth Quarter 2018.
- Distribution revenues decreased $45
million, or 11%, to $378
million as a result of lower transactional print volumes,
the decrease in Event-driven fee revenues, and the impact of the
ASC 606 revenue accounting change.
- ICS earnings before income taxes for the Fourth Quarter 2019
were $219 million, a decrease of
$65 million, or 23%, primarily due to
the decrease in recurring fee revenues driven by the ASC 606
revenue accounting change. Pre-tax margins decreased by 3.4
percentage points to 22.1% from 25.5%.
Global Technology and Operations ("GTO")
- GTO recurring fee revenues were $253
million, an increase of $19
million, or 8%.
- The $19 million increase is
primarily attributable to: (i) revenues from acquisitions (3pts),
(ii) Net New Business from Closed sales (3pts) and (iii) higher
internal growth (2pts).
- The impact of the ASC 606 revenue accounting change was
negligible.
- GTO earnings before income taxes for the Fourth Quarter 2019
were $64 million, an increase of
$18 million, or 39%, compared to
$46 million in the prior year period,
primarily due to higher revenues and expense management. Pre-tax
margins increased by 5.6 percentage points to 25.4% from
19.8%.
Other
- Other Loss before income tax decreased 27% in the Fourth
Quarter 2019 to $55 million from
$74 million in Fourth Quarter 2018.
The decreased loss was primarily due to lower spending on growth
initiatives and other corporate expenses, partially offset by an
increase in contingent consideration liability due to the
performance of acquisitions.
Financial Results for the Fiscal Year Ended June 30, 2019 compared to Fiscal Year
2018
- Total revenues for the fiscal year ended June 30, 2019 ("Fiscal Year 2019") increased 1%
to $4,362 million from $4,330 million in the prior year period ("Fiscal
Year 2018"). Recurring fee revenues for fiscal year 2019 increased
6% to $2,759 million from
$2,610 million.
- The impact of the ASC 606 revenue accounting change on
recurring fee revenue was negligible.
- Event-driven fee revenues decreased $39
million, or 14%, to $244
million, as a result of lower equity proxy contest and
mutual fund proxy activity compared to Fiscal Year 2018.
- Distribution revenues decreased $52
million, or 3%, to $1,461
million from lower transactional print volumes and the
decrease in Event-driven fee revenues.
- The strengthening of the U.S. dollar against other currencies
negatively impacted revenues by $25
million.
- Operating income was $653
million, an increase of $55
million, or 9%. Operating income margin increased to 15.0%,
compared to 13.8%.
- Adjusted Operating income was $746
million, an increase of $58
million, or 8%, Adjusted Operating income margin increased
to 17.1%, compared to 15.9% in Fiscal Year 2018.
- The increases in Operating income margin and Adjusted Operating
income margin are primarily due to the increase in Recurring fee
revenues.
- Interest expense, net for Fiscal Year 2019 was $42 million, an increase of $3 million, or 8%, primarily due to higher
borrowing costs.
- The effective tax rate for Fiscal Year 2019 was 20.6% compared
to 23.7%. The decrease in the effective tax rate is primarily due
to the lower U.S. federal corporate income tax rate under the Tax
Cuts and Jobs Act (the "Tax Act") partially offset by the
recognition of $19 million in excess
tax benefits attributable to stock-based compensation as compared
to $41 million for Fiscal Year
2018.
- Net earnings increased 13% to $482
million and Adjusted Net earnings increased 10% to
$554 million.
- Diluted earnings per share increased 14% to $4.06, compared to $3.56 in Fiscal Year 2018 and Adjusted earnings
per share increased 11% to $4.66,
compared to $4.19 in Fiscal Year
2018.
Segment and Other Results for Fiscal Year 2019 compared to
Fiscal Year 2018
Investor Communication Solutions
- ICS Total revenues for Fiscal Year 2019 were $3,511 million, an increase of $15 million, or 0%. The impact of ASC 606 revenue
accounting change was negligible.
- ICS Recurring fee revenues rose $107
million, or 6%, to $1,806
million.
- The increase in Recurring fee revenue was attributable to: (i)
Net New Business from increases in revenues from Closed sales
(4pts), (ii) higher internal growth (1pt), and (iii) revenues from
acquisitions (1pt).
- Event-driven fee revenues decreased $39
million, or 14%, to $244
million, as a result of lower equity proxy contest and
mutual fund proxy activity compared to Fiscal Year 2018.
- Distribution revenues decreased $52
million, or 3%, to $1,461
million from lower transactional print volumes and the
decrease in Event-driven fee revenues.
- ICS earnings before income taxes were $508 million, an increase of $14 million, or 3%, primarily due to the increase
in Recurring fee revenues more than offsetting lower Event-driven
fee revenues. Pre-tax margins increased by 0.4 percentage points to
14.5% from 14.1%.
Global Technology and Operations
- GTO Recurring fee revenues were $954
million, an increase of $42
million, or 5%. The impact of ASC 606 revenue accounting
change was negligible.
- The $42 million increase in GTO
revenues was attributable to: (i) higher Net New Business from
Closed sales (3pts), (ii) higher internal growth (1pt) and (iii)
revenues from acquisitions (1pt).
- GTO earnings before income taxes were $210 million, an increase of $11 million, or 6%, primarily due to higher
organic revenues, partially offset by the impact of incremental
expenditures to win, implement and support new business as well as
ongoing new product development. Pre-tax margins increased by 0.2
percentage points to 22.1% from 21.9%.
Other
- Other Pre-tax loss decreased 14% in Fiscal Year 2019 to
$131 million. The decreased loss was
primarily due to lower spending on growth initiatives and other
corporate expenses, partially offset by a decrease in investment
gains and higher interest expense compared to Fiscal Year
2018.
Acquisitions
In the Fourth Quarter 2019, Broadridge
completed three acquisitions with an aggregate purchase price of
$406 million. The largest of the
acquisitions was the purchase of RPM Technologies for $303 million, which includes deferred acquisition
payments of approximately $43 million
expected to be paid in the fiscal first quarter of 2020.
- Rockall Technologies Limited: In May
2019, the Company acquired Rockall Technologies Limited, a
market leading provider of securities-based lending ("SBL") and
collateral management solutions for wealth management firms and
commercial banks. The acquisition expands Broadridge's core
front-to-back office wealth capabilities, providing innovative SBL
and collateral management technology solutions to help firms manage
risk and optimize clients' securities lending and financing
needs.
- RPM Technologies: In June 2019,
the Company acquired RPM Technologies, a leading Canadian provider
of enterprise wealth management software solutions and services.
The acquisition brings important new capabilities and
next-generation technology to clients of both RPM and
Broadridge.
- Retirement plan custody and trust assets of TD Ameritrade Trust
Company: In June 2019, the Company
acquired the retirement plan custody and trust assets from TD
Ameritrade Trust Company, a subsidiary of TD Ameritrade Holding
Company. The acquisition expands Broadridge's suite of solutions
for the growing qualified and non-qualified retirement plan
services market and the support it provides for third-party
administrators, financial advisors, record-keepers, banks, and
brokers.
Dividend Declaration and Increase
On July 31, 2019, Broadridge's Board of Directors
declared a quarterly dividend of $0.54 per share payable on October 3, 2019 to stockholders of record on
September 13, 2019. This
declaration reflects the Board's approval of an increase in the
annual dividend amount by 11% from $1.94 to $2.16,
subject to the discretion of the Board to declare quarterly
dividends. With this increase, the Company's annual dividend
has increased for the 13th consecutive year since becoming a public
company in 2007.
Earnings Conference Call
An analyst conference call
will be held today, Thursday, August 1,
2019 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 1-877-328-2502 within
the United States and
international callers may dial 1-412-317-5419.
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 15,
2019, the recording will also be available by dialing
1-877-344-7529 passcode: 10133774 within the United States or 1-412-317-0088 passcode:
10133774 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 and (iv) the Gain on
Sale of Securities. 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.
We exclude Tax Act items and Gain on Sale of Securities from our
adjusted 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. We also exclude the impact of Amortization
of Acquired Intangibles and Purchased Intellectual Property, as
these non-cash amounts are significantly impacted by the timing and
size of individual acquisitions and do not factor into the
Company's capital allocation decisions, management compensation
metrics or multi-year objectives. Furthermore, management believes
that this adjustment enables better comparison of our results as
Amortization of Acquired Intangibles and Purchased Intellectual
Property will not recur in future periods once such intangible
assets have been fully amortized. Although we exclude Amortization
of Acquired Intangibles and Purchased Intellectual Property from
our adjusted earnings measures, our management believes that it is
important for investors to understand that these intangible assets
contribute to revenue generation. Amortization of intangible assets
that relate to past acquisitions will recur in future periods until
such intangible assets have been fully amortized. Any future
acquisitions may result in the amortization of additional
intangible assets.
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 2020 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 2019 (the "2019 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 2019
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; a material security breach or
cybersecurity attack affecting the information of Broadridge's
clients; 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 key service providers 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 $4 billion global Fintech leader and a part
of the S&P 500® Index, is a leading provider of
investor communications and technology-driven solutions to banks,
broker-dealers, asset and wealth managers 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 U.S. $7
trillion in fixed income and equity trades per day of U.S. and
Canadian securities. Broadridge employs over 11,000 full-time
associates in 18 countries. For more information about Broadridge,
please visit www.broadridge.com.
Contact Information
Investors:
W. Edings Thibault
Investor Relations
(516) 472-5129
Media:
Gregg
Rosenberg
Corporate Communications
(212) 918-6966
Condensed
Consolidated Statements of Earnings
|
(Unaudited)
|
|
In millions,
except per share amounts
|
|
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
$
|
1,211.2
|
|
|
$
|
1,320.4
|
|
|
$
|
4,362.2
|
|
|
$
|
4,329.9
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
811.6
|
|
|
869.5
|
|
|
3,131.9
|
|
|
3,167.4
|
|
Selling, general and
administrative expenses
|
|
|
158.8
|
|
|
184.7
|
|
|
577.5
|
|
|
564.5
|
|
Total operating
expenses
|
|
|
970.4
|
|
|
1,054.2
|
|
|
3,709.5
|
|
|
3,731.8
|
|
Operating
income
|
|
|
240.8
|
|
|
266.2
|
|
|
652.7
|
|
|
598.1
|
|
Interest expense,
net
|
|
|
(11.4)
|
|
|
(10.0)
|
|
|
(41.8)
|
|
|
(38.6)
|
|
Other non-operating
income (expenses), net
|
|
|
0.7
|
|
|
1.8
|
|
|
(3.7)
|
|
|
1.5
|
|
Earnings before
income taxes
|
|
|
230.0
|
|
|
258.0
|
|
|
607.3
|
|
|
561.0
|
|
Provision for income
taxes
|
|
|
46.8
|
|
|
51.2
|
|
|
125.2
|
|
|
133.1
|
|
Net
earnings
|
|
|
$
|
183.2
|
|
|
$
|
206.9
|
|
|
$
|
482.1
|
|
|
$
|
427.9
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
$
|
1.59
|
|
|
$
|
1.76
|
|
|
$
|
4.16
|
|
|
$
|
3.66
|
|
Diluted earnings per
share
|
|
|
$
|
1.55
|
|
|
$
|
1.72
|
|
|
$
|
4.06
|
|
|
$
|
3.56
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
115.3
|
|
|
117.2
|
|
|
115.9
|
|
|
116.8
|
|
Diluted
|
|
|
117.8
|
|
|
120.4
|
|
|
118.8
|
|
|
120.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not
sum due to rounding.
|
In millions,
except per share amounts
|
|
|
June 30,
2019
|
|
June 30,
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
273.2
|
|
|
$
|
263.9
|
|
Accounts receivable,
net of allowance for doubtful accounts of
$2.6 and $2.7, respectively
|
|
|
664.0
|
|
|
615.0
|
|
Other current
assets
|
|
|
105.2
|
|
|
112.2
|
|
Total current
assets
|
|
|
1,042.3
|
|
|
991.1
|
|
Property, plant and
equipment, net
|
|
|
189.0
|
|
|
204.1
|
|
Goodwill
|
|
|
1,500.0
|
|
|
1,254.9
|
|
Intangible assets,
net
|
|
|
556.2
|
|
|
494.1
|
|
Other non-current
assets
|
|
|
593.1
|
|
|
360.5
|
|
Total
assets
|
|
|
$
|
3,880.7
|
|
|
$
|
3,304.7
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Payables and accrued
expenses
|
|
|
$
|
711.7
|
|
|
$
|
671.0
|
|
Contract
liabilities
|
|
|
90.9
|
|
|
106.3
|
|
Total current
liabilities
|
|
|
802.6
|
|
|
777.3
|
|
Long-term
debt
|
|
|
1,470.4
|
|
|
1,053.4
|
|
Deferred
taxes
|
|
|
86.7
|
|
|
57.9
|
|
Contract
liabilities
|
|
|
160.7
|
|
|
75.2
|
|
Other non-current
liabilities
|
|
|
232.8
|
|
|
246.5
|
|
Total
liabilities
|
|
|
2,753.2
|
|
|
2,210.4
|
|
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, 114.3 and
116.3 shares, respectively
|
|
|
1.6
|
|
|
1.6
|
|
Additional paid-in
capital
|
|
|
1,109.3
|
|
|
1,048.5
|
|
Retained
earnings
|
|
|
2,087.7
|
|
|
1,727.0
|
|
Treasury stock, at
cost: 40.2 and 38.1 shares, respectively
|
|
|
(1,999.8)
|
|
|
(1,630.8)
|
|
Accumulated other
comprehensive loss
|
|
|
(71.2)
|
|
|
(51.9)
|
|
Total stockholders'
equity
|
|
|
1,127.5
|
|
|
1,094.3
|
|
Total liabilities and
stockholders' equity
|
|
|
$
|
3,880.7
|
|
|
$
|
3,304.7
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not
sum due to rounding.
|
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
Dollars in
millions
|
Fiscal
Year
|
|
2019
|
|
2018
|
Cash Flows From
Operating Activities
|
|
|
|
Net
earnings
|
$
|
482.1
|
|
|
$
|
427.9
|
|
Adjustments to
reconcile net earnings to net cash flows provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
85.2
|
|
|
82.1
|
|
Amortization of
acquired intangibles and purchased intellectual property
|
87.4
|
|
|
81.4
|
|
Amortization of other
assets
|
87.4
|
|
|
48.5
|
|
Stock-based
compensation expense
|
58.4
|
|
|
55.1
|
|
Deferred income
taxes
|
(3.5)
|
|
|
(9.3)
|
|
Other
|
(37.6)
|
|
|
(21.2)
|
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired:
|
|
|
|
Current assets and
liabilities:
|
|
|
|
Increase in Accounts
receivable, net
|
(34.9)
|
|
|
(18.6)
|
|
Increase in Other
current assets
|
(7.3)
|
|
|
(7.6)
|
|
(Decrease) Increase
in Payables and accrued expenses
|
(10.9)
|
|
|
9.6
|
|
Increase in Contract
liabilities
|
15.1
|
|
|
20.8
|
|
Non-current assets
and liabilities:
|
|
|
|
Increase in Other
non-current assets
|
(188.3)
|
|
|
(83.5)
|
|
Increase in Other
non-current liabilities
|
83.8
|
|
|
108.3
|
|
Net cash flows
provided by operating activities
|
617.0
|
|
|
693.6
|
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(50.6)
|
|
|
(76.7)
|
|
Software purchases
and capitalized internal use software
|
(22.0)
|
|
|
(21.2)
|
|
Acquisitions, net of
cash acquired
|
(354.7)
|
|
|
(108.3)
|
|
Purchase of
intellectual property
|
—
|
|
|
(40.0)
|
|
Other investing
activities
|
(6.3)
|
|
|
(3.1)
|
|
Net cash flows used
in investing activities
|
(433.5)
|
|
|
(249.3)
|
|
Cash Flows From
Financing Activities
|
|
|
|
Debt
proceeds
|
803.1
|
|
|
340.0
|
|
Debt
repayments
|
(387.4)
|
|
|
(390.0)
|
|
Dividends
paid
|
(211.2)
|
|
|
(165.8)
|
|
Proceeds from
exercise of stock options
|
31.1
|
|
|
52.0
|
|
Purchases of Treasury
stock
|
(397.8)
|
|
|
(277.1)
|
|
Other financing
activities
|
(10.8)
|
|
|
(9.0)
|
|
Net cash flows used
in financing activities
|
(173.1)
|
|
|
(449.9)
|
|
Effect of exchange
rate changes on Cash and cash equivalents
|
(1.1)
|
|
|
(1.6)
|
|
Net change in Cash
and cash equivalents
|
9.2
|
|
|
(7.2)
|
|
Cash and cash
equivalents, beginning of period
|
263.9
|
|
|
271.1
|
|
Cash and cash
equivalents, end of period
|
$
|
273.2
|
|
|
$
|
263.9
|
|
|
|
|
|
|
|
|
|
Amounts may not
sum due to rounding.
|
Segment
Results
|
(Unaudited)
|
|
|
Dollars in
millions
|
Revenues
|
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Investor
Communication Solutions
|
$
|
990.1
|
|
|
$
|
1,111.7
|
|
|
$
|
3,511.1
|
|
|
$
|
3,495.6
|
|
Global Technology and
Operations
|
252.6
|
|
|
233.5
|
|
|
953.5
|
|
|
911.6
|
|
Foreign currency
exchange
|
(31.5)
|
|
|
(24.8)
|
|
|
(102.4)
|
|
|
(77.3)
|
|
Total
|
$
|
1,211.2
|
|
|
$
|
1,320.4
|
|
|
$
|
4,362.2
|
|
|
$
|
4,329.9
|
|
|
Earnings (Loss)
before Income
Taxes
|
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Investor
Communication Solutions
|
$
|
218.6
|
|
|
$
|
283.6
|
|
|
$
|
508.4
|
|
|
$
|
494.6
|
|
Global Technology and
Operations
|
64.2
|
|
|
46.3
|
|
|
210.3
|
|
|
199.3
|
|
Other
|
(54.7)
|
|
|
(74.5)
|
|
|
(130.9)
|
|
|
(151.4)
|
|
Foreign currency
exchange
|
1.9
|
|
|
2.5
|
|
|
19.4
|
|
|
18.6
|
|
Total
|
$
|
230.0
|
|
|
$
|
258.0
|
|
|
$
|
607.3
|
|
|
$
|
561.0
|
|
|
|
|
|
|
|
|
|
Pre-tax
margins:
|
|
|
|
|
|
|
|
Investor
Communication Solutions
|
22.1
|
%
|
|
25.5
|
%
|
|
14.5
|
%
|
|
14.1
|
%
|
Global Technology and
Operations
|
25.4
|
%
|
|
19.8
|
%
|
|
22.1
|
%
|
|
21.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not
sum due to rounding.
|
Supplemental
Reporting Detail - Additional Product Line Reporting
|
(Unaudited)
|
|
Dollars in
millions
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
Investor
Communication Solutions
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
Equity
Proxy
|
$
|
211.4
|
|
|
$
|
298.1
|
|
|
(29)
|
%
|
|
$
|
437.0
|
|
|
$
|
406.8
|
|
|
7
|
%
|
Mutual fund and
exchange-traded funds
("ETF") interims
|
65.3
|
|
|
58.3
|
|
|
12
|
%
|
|
265.9
|
|
|
221.4
|
|
|
20
|
%
|
Customer
communications and fulfillment
|
177.8
|
|
|
180.6
|
|
|
(2)
|
%
|
|
736.4
|
|
|
760.1
|
|
|
(3)
|
%
|
Other ICS
|
106.3
|
|
|
91.1
|
|
|
17
|
%
|
|
366.5
|
|
|
310.6
|
|
|
18
|
%
|
Total ICS Recurring fee revenues
|
560.7
|
|
|
628.0
|
|
|
(11)
|
%
|
|
1,805.8
|
|
|
1,698.9
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and
other
|
28.3
|
|
|
34.9
|
|
|
(19)
|
%
|
|
107.3
|
|
|
134.4
|
|
|
(20)
|
%
|
Mutual
funds
|
22.7
|
|
|
25.8
|
|
|
(12)
|
%
|
|
137.2
|
|
|
149.4
|
|
|
(8)
|
%
|
Total ICS Event-driven fee revenues
|
51.0
|
|
|
60.7
|
|
|
(16)
|
%
|
|
244.5
|
|
|
283.9
|
|
|
(14)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
378.4
|
|
|
422.9
|
|
|
(11)
|
%
|
|
1,460.8
|
|
|
1,512.9
|
|
|
(3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ICS
Revenues
|
$
|
990.1
|
|
|
$
|
1,111.7
|
|
|
(11)
|
%
|
|
$
|
3,511.1
|
|
|
$
|
3,495.6
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Technology
and Operations
|
|
|
|
|
|
|
|
|
|
|
|
Equities and
Other
|
$
|
209.2
|
|
|
$
|
193.0
|
|
|
8
|
%
|
|
$
|
788.9
|
|
|
$
|
757.2
|
|
|
4
|
%
|
Fixed
income
|
43.4
|
|
|
40.5
|
|
|
7
|
%
|
|
164.6
|
|
|
154.3
|
|
|
7
|
%
|
Total GTO Recurring fee revenues
|
252.6
|
|
|
233.5
|
|
|
8
|
%
|
|
953.5
|
|
|
911.6
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange
|
(31.5)
|
|
|
(24.8)
|
|
|
27
|
%
|
|
(102.4)
|
|
|
(77.3)
|
|
|
32
|
%
|
Total Revenues
|
$
|
1,211.2
|
|
|
$
|
1,320.4
|
|
|
(8)
|
%
|
|
$
|
4,362.2
|
|
|
$
|
4,329.9
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
Type
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fee
revenues
|
$
|
813.3
|
|
|
$
|
861.5
|
|
|
(6)
|
%
|
|
$
|
2,759.3
|
|
|
$
|
2,610.4
|
|
|
6
|
%
|
Event-driven fee
revenues
|
51.0
|
|
|
60.7
|
|
|
(16)
|
%
|
|
244.5
|
|
|
283.9
|
|
|
(14)
|
%
|
Distribution
revenues
|
378.4
|
|
|
422.9
|
|
|
(11)
|
%
|
|
1,460.8
|
|
|
1,512.9
|
|
|
(3)
|
%
|
Foreign currency
exchange
|
(31.5)
|
|
|
(24.8)
|
|
|
27
|
%
|
|
(102.4)
|
|
|
(77.3)
|
|
|
32
|
%
|
Total Revenues
|
$
|
1,211.2
|
|
|
$
|
1,320.4
|
|
|
(8)
|
%
|
|
$
|
4,362.2
|
|
|
$
|
4,329.9
|
|
|
1
|
%
|
|
Amounts may not
sum due to rounding.
|
Select Operating
Metrics
|
(Unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
|
|
Fiscal Year
Ended
June
30,
|
|
|
|
Dollars in
millions
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
Sales
|
$72.1
|
|
$115.1
|
|
(37)%
|
|
$233.3
|
|
$214.9
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Record
Growth1
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
proxy
|
6%
|
|
11%
|
|
|
|
6%
|
|
11%
|
|
|
|
Mutual fund
interims
|
5%
|
|
13%
|
|
|
|
9%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal Trade
Growth2
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
—%
|
|
17%
|
|
|
|
6%
|
|
15%
|
|
|
|
Fixed
Income
|
9%
|
|
10%
|
|
|
|
5%
|
|
6%
|
|
|
|
Amounts may not
sum due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock record
growth and interim record growth measure the annual change in total
positions eligible for equity proxy and mutual fund and ETF interim
communications, respectively, for equity and mutual fund position
data reported to Broadridge in both the current and prior year
periods.
|
|
|
|
|
(2) Internal
trade growth represents the growth in trade volumes for Broadridge
clients whose contracts are linked to trade volumes and who were on
Broadridge's trading platforms in both the current and prior year
period.
|
|
|
Reconciliation of
Non-GAAP to GAAP Measures
|
(Unaudited)
|
|
Dollars in
millions, except per share amounts
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Operating income
(GAAP)
|
$
|
240.8
|
|
|
$
|
266.2
|
|
|
$
|
652.7
|
|
|
$
|
598.1
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual
Property
|
23.1
|
|
|
22.1
|
|
|
87.4
|
|
|
81.4
|
|
Acquisition and
Integration Costs
|
3.2
|
|
|
2.8
|
|
|
6.4
|
|
|
8.8
|
|
Adjusted Operating
income (Non-GAAP)
|
$
|
267.1
|
|
|
$
|
291.0
|
|
|
$
|
746.5
|
|
|
$
|
688.2
|
|
Operating income
margin (GAAP)
|
19.9
|
%
|
|
20.2
|
%
|
|
15.0
|
%
|
|
13.8
|
%
|
Adjusted Operating
income margin (Non-GAAP)
|
22.1
|
%
|
|
22.0
|
%
|
|
17.1
|
%
|
|
15.9
|
%
|
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net earnings
(GAAP)
|
$
|
183.2
|
|
|
$
|
206.9
|
|
|
$
|
482.1
|
|
|
$
|
427.9
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual
Property
|
23.1
|
|
|
22.1
|
|
|
87.4
|
|
|
81.4
|
|
Acquisition and
Integration Costs
|
3.2
|
|
|
2.8
|
|
|
6.4
|
|
|
8.8
|
|
Gain on Sale of
Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.5)
|
|
Taxable
adjustments
|
26.3
|
|
|
24.8
|
|
|
93.8
|
|
|
84.7
|
|
Tax Act
items
|
—
|
|
|
(0.7)
|
|
|
—
|
|
|
15.4
|
|
Tax impact of
adjustments (a)
|
(6.7)
|
|
|
(7.3)
|
|
|
(22.3)
|
|
|
(23.9)
|
|
Adjusted Net earnings
(Non-GAAP)
|
$
|
202.9
|
|
|
$
|
223.7
|
|
|
$
|
553.6
|
|
|
$
|
504.1
|
|
|
Three Months
Ended
June 30,
|
|
Fiscal Year
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Diluted earnings per
share (GAAP)
|
$
|
1.55
|
|
|
$
|
1.72
|
|
|
$
|
4.06
|
|
|
$
|
3.56
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual
Property
|
0.20
|
|
|
0.18
|
|
|
0.74
|
|
|
0.68
|
|
Acquisition and
Integration Costs
|
0.03
|
|
|
0.02
|
|
|
0.05
|
|
|
0.07
|
|
Gain on Sale of
Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.05)
|
|
Taxable
adjustments
|
0.22
|
|
|
0.21
|
|
|
0.79
|
|
|
0.70
|
|
Tax Act
items
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
0.13
|
|
Tax impact of
adjustments (a)
|
(0.06)
|
|
|
(0.06)
|
|
|
(0.19)
|
|
|
(0.20)
|
|
Adjusted earnings per
share (Non-GAAP)
|
$
|
1.72
|
|
|
$
|
1.86
|
|
|
$
|
4.66
|
|
|
$
|
4.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Calculated
using the GAAP effective tax rate, adjusted to exclude $10.1
million and $19.3 million of excess tax benefits associated with
stock-based compensation for the three months and fiscal year ended
June 30, 2019, and $22.3 million and $40.9 million of excess tax
benefits associated with stock-based compensation for the three
months and fiscal year ended June 30, 2018, as well as the net $0.7
million benefits and $15.4 million charges associated with the Tax
Act for the three months and fiscal year ended June 30, 2018.
For purposes of calculating the Adjusted earnings per share, the
same adjustments were made on a per share basis.
|
Dollars in
millions
|
Fiscal Year
Ended
June 30,
|
|
2019
|
|
2018
|
|
|
Net cash flows
provided by operating activities (GAAP)
|
$
|
617.0
|
|
|
$
|
693.6
|
|
Capital expenditures
and Software purchases and capitalized internal use
software
|
(72.6)
|
|
|
(97.9)
|
|
Free cash flow
(Non-GAAP)
|
$
|
544.4
|
|
|
$
|
595.7
|
|
|
|
|
|
Amounts may not
sum due to rounding.
|
Fiscal Year 2020
Guidance
|
Reconciliation of
Non-GAAP to GAAP Measures
|
Adjusted Earnings
Per Share Growth and Adjusted Operating Income
Margin
|
(Unaudited)
|
|
|
|
|
Dollars in
millions, except per share amounts
|
|
|
|
|
|
FY20 Adjusted
Earnings Per Share Growth Rate (a)
|
|
|
Diluted earnings per
share (GAAP)
|
|
5% - 9%
growth
|
Adjusted earnings per
share (Non-GAAP)
|
|
8% - 12%
growth
|
|
|
|
FY20 Adjusted
Operating Income Margin (b)
|
|
|
Operating income
margin % (GAAP)
|
|
~15%
|
Adjusted Operating
income margin % (Non-GAAP)
|
|
~18%
|
|
(a) Adjusted
earnings per share 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 2020 Non-GAAP Adjusted earnings per share guidance estimates
exclude Amortization of Acquired Intangibles and Purchased
Intellectual Property, and Acquisition and Integration Costs, net
of taxes, of approximately $0.76 per share.
|
|
(b) 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 2020 Non-GAAP Adjusted Operating income margin
guidance estimates exclude Amortization of Acquired Intangibles and
Purchased Intellectual Property, and Acquisition and Integration
Costs of approximately $118 million.
|
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SOURCE Broadridge Financial Solutions, Inc.