NEW YORK, Jan. 31, 2020 /PRNewswire/ -- Broadridge
Financial Solutions, Inc. (NYSE: BR) today reported financial
results for the second quarter and six months ended December 31, 2019 of its fiscal year 2020.
Results compared with the same period last year were as follows:
Summary Financial
Results
|
|
Second
Quarter
|
|
Six
Months
|
|
Dollars in
millions, except per share data
|
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$969
|
$953
|
2%
|
$1,917
|
$1,926
|
|
Recurring fee
revenues
|
|
648
|
604
|
7%
|
1,272
|
1,179
|
8%
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
27
|
78
|
(66)%
|
100
|
178
|
(44)%
|
|
Operating income
margin
|
|
2.8%
|
8.2%
|
|
5.2%
|
9.3%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
income - Non-GAAP
|
|
94
|
101
|
(7)%
|
198
|
224
|
(12)%
|
|
Adjusted Operating
income margin - Non- GAAP
|
|
9.7%
|
10.6%
|
|
10.3%
|
11.6%
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$0.09
|
$0.42
|
(79)%
|
$0.56
|
$1.06
|
(47)%
|
Adjusted EPS -
Non-GAAP
|
|
$0.53
|
$0.56
|
(5)%
|
$1.22
|
$1.35
|
(10)%
|
|
|
|
|
|
|
|
|
|
Closed
sales
|
|
$45
|
$106
|
(57)%
|
$83
|
$124
|
(33)%
|
"Broadridge continued to execute well in a mixed quarter.
Recurring revenues rose 7% to $648
million, driven by strong revenue from sales as well as
contributions from recent acquisitions," said Tim Gokey, Broadridge's Chief Executive Officer.
"Event-driven activity declined 36%, leading to a 5% decline in
Adjusted EPS in a seasonally small quarter. Importantly, demand
remains robust with strong Closed sales and performance by our
recent acquisitions.
"As we enter the more significant second half, we expect a
pick-up in organic growth and full-year Recurring revenue growth of
8-10%. We also expect to deliver within our 8-12% Adjusted EPS
guidance, albeit at the low end. We continue to be well on-track to
achieve the three-year objectives laid out at our 2017 Investor
Day, including the high end of our Adjusted EPS objectives," Mr.
Gokey added. "Broadridge remains very well-positioned for growth,
and we continue to invest in new products and technology to create
value."
Fiscal Year 2020 Financial Guidance - Updated
|
|
|
Change /
Update1
|
Recurring fee revenue
growth
|
|
8-10%
|
No change
|
Total revenue
growth
|
|
3-6%
|
No change
|
|
|
|
|
Operating income
margin - GAAP
|
|
~14%
|
Reduced from
~15%2
|
Adjusted Operating
income margin - Non-GAAP
|
|
~18%
|
No change
|
|
|
|
|
Diluted earnings per
share growth
|
|
(4)-0%
|
Reduced from
5-9%2
|
Adjusted earnings per
share growth - Non-GAAP
|
|
8-12%
|
Expected to be at
low end of range
|
|
|
|
|
Closed
sales
|
|
$190-230M
|
No change
|
|
|
|
|
(1) From full-year
guidance provided in earnings release Q1 FY20 on
11/6/2019
|
(2) Fiscal Year
2020 GAAP Operating income margin and Diluted EPS growth guidance
has been updated to reflect the impact of acquisitions made in the
second quarter and the impact of the IBM Private Cloud
Charges
|
Financial Results for the Second Quarter Fiscal Year 2020
compared to the Second Quarter Fiscal Year 2019
- Total revenues increased 2% to $969 million from $953
million in the prior year period.
-
- Recurring fee revenues increased 7% to $648 million from $604
million. The increase in recurring fee revenues includes
6pts of growth from acquisitions. Organic growth was
1.5%.
- Event-driven fee revenues decreased $17
million, or 36%, to $31
million, mainly from lower mutual fund proxy activity.
- Distribution revenues decreased $6
million, or 2%, to $317
million, primarily from the decrease in event-driven fee
revenues.
- Operating income was $27
million, a decrease of $51
million, or 66%. Operating income margin decreased to 2.8%,
compared to 8.2% for the prior year period.
-
- Adjusted Operating income was $94
million, a decrease of $7
million, or 7%. Adjusted Operating income margin decreased
to 9.7%, compared to 10.6% for the prior year period.
- The decrease in Operating income was primarily due to higher
acquisition amortization expense, charges associated with the
Company's new private cloud services agreement with IBM (the "IBM
Private Cloud Agreement"), and the decrease in event-driven fee
revenues. The decrease in Adjusted Operating income was
primarily due to the decrease in event-driven fee
revenues.
- Interest expense, net was $14 million, an increase of $3 million, or 30%, primarily due to an increase
in interest expense from higher borrowings related to
acquisitions.
- The effective tax rate was 3.8% compared to 22.4%
in the Second Quarter 2019. The effective tax rate was impacted by
discrete tax items relative to pre-tax income, including excess tax
benefits of $2.2 million, which
increased from $0.8 million in the
Second Quarter 2019.
- Net earnings decreased 80% to $10 million and Adjusted Net earnings decreased
7% to $62 million.
-
- Diluted earnings per share decreased 79% to $0.09, compared to $0.42 in the Second Quarter 2019 and Adjusted
earnings per share decreased 5% to $0.53, compared to $0.56 in the Second Quarter 2019.
- The decrease in Diluted earnings per share was primarily due to
higher acquisition amortization expense, charges associated with
the IBM Private Cloud Agreement, and a decrease in event-driven fee
revenues. The decrease in Adjusted earnings per share was primarily
due to a decrease in event-driven fee revenues.
Segment and Other Results for the Second Quarter 2020
compared to Second Quarter 2019
The results for the Company's Advisor Solutions services that
were previously reported in our Investor Communication Solutions
segment are now reported within the Global Technology and
Operations segment. As a result, our prior period segment results
have been revised to reflect this change.
Investor Communication Solutions ("ICS")
- ICS total revenues were $716
million, a decrease of $12
million, or 2%.
-
- Recurring fee revenues increased $11
million, or 3%, to $368
million. The increase was attributable to revenues from net
new business (3pts) and acquisition growth (3pts), partially offset
by internal growth (-3pts).
- Event-driven fee revenues decreased $17
million, or 36%, to $31
million, mainly from lower mutual fund proxy activity
compared to the Second Quarter 2019.
- Distribution revenues decreased $6
million, or 2%, to $317
million, primarily from the decrease in event-driven
activity.
- ICS earnings before income taxes were $22 million, a decrease of $15 million, or 40%, primarily due to the
decrease in event-driven fee revenues more than offsetting the
contribution from higher recurring fee revenues. Pre-tax margins
decreased to 3.1% from 5.1%.
Global Technology and Operations ("GTO")
- GTO recurring fee revenues were $281
million, an increase of $34
million, or 14%. The increase was attributable to the
combination of revenues from acquisitions (10pts) and organic
growth (4pts).
- GTO earnings before income taxes were $49 million, an increase of $2 million, or 3%, compared to $48 million in the prior year period. The
increased earnings were primarily due to higher organic revenues,
partially offset by the impact of expenditures to implement and
support new business. Pre-tax margins decreased to 17.4% from
19.2%.
Other
- Other Loss before income tax increased 144% to $68 million from $28
million in the Second Quarter 2019. The increased loss was
primarily due to charges associated with the IBM Private Cloud
Agreement, and higher interest expense compared to the prior year
period.
Financial Results for the Six Months Fiscal Year 2020
compared to the Six Months Fiscal Year 2019
- Total revenues fell slightly to $1,917 million from $1,926
million in the prior year period.
-
- Recurring fee revenues increased 8% to $1,272 million from $1,179
million. The increase in recurring fee revenues includes
6pts of growth from acquisitions.
- Event-driven fee revenues decreased $54
million, or 43%, to $71
million, mainly from lower mutual fund proxy activity.
- Distribution revenues decreased $33
million, or 5%, to $630
million, primarily from the decrease in event-driven fee
revenues.
- Operating income was $100
million, a decrease of $78
million, or 44%. Operating income margin decreased to 5.2%,
compared to 9.3% in the prior year period.
-
- Adjusted Operating income was $198
million, a decrease of $26
million, or 12%. Adjusted Operating income margin decreased
to 10.3%, compared to 11.6% for the prior year period.
- The decrease in Operating income was primarily due to higher
acquisition amortization expense, charges associated with the IBM
Private Cloud Agreement, and the decrease in event-driven fee
revenues. The decrease in Adjusted Operating income was
primarily due to the decrease in event-driven fee
revenues.
- Interest expense, net was $27 million, an increase of $7 million, or 32%, primarily due to an increase
in interest expense from higher borrowings related to
acquisitions.
- The effective tax rate was 11.2% compared to 17.6%
in the prior year period. The effective tax rate was impacted by
discrete tax items relative to pre-tax income, including excess tax
benefits of $8 million, unchanged
from $8 million in the prior year
period.
- Net earnings decreased 48% to $66 million and Adjusted Net earnings decreased
12% to $142 million.
-
- Diluted earnings per share decreased 47% to $0.56, compared to $1.06 in the prior year period and Adjusted
earnings per share decreased 10% to $1.22, compared to $1.35 in the prior year period.
- The decrease in Diluted earnings per share was primarily due to
higher acquisition amortization expense, charges associated with
the IBM Private Cloud Agreement, and a decrease in event-driven fee
revenues. The decrease in Adjusted earnings per share was
primarily due to a decrease in event-driven fee revenues.
Segment and Other Results for the Six Months Fiscal Year 2020
compared to the Six Months Fiscal Year 2019
The results for
the Company's Advisor Solutions services that were previously
reported in our Investor Communication Solutions segment are now
reported within the Global Technology and Operations segment. As a
result, our prior period segment results have been revised to
reflect this change.
Investor Communication Solutions
- ICS total revenues were $1,418
million, a decrease of $65
million, or 4%.
-
- Recurring fee revenues increased $23
million, or 3%, to $717
million. The increase was attributable to the combination of
revenues from acquisitions (2pts) and organic growth (1pt).
- Event-driven fee revenues decreased $54
million, or 43%, to $71
million, mainly from lower mutual fund proxy activity
compared to the prior year period.
- Distribution revenues decreased $33
million, or 5%, to $630
million, primarily from the decrease in event-driven
activity.
- ICS earnings before income taxes were $45 million, a decrease of $51 million, or 53%, primarily due to decreased
event-driven fee revenues more than offsetting the contribution
from higher recurring fee revenues. Pre-tax margins decreased to
3.2% from 6.4%.
Global Technology and Operations
- GTO recurring fee revenues were $555
million, an increase of $69
million, or 14%. Revenue from acquisitions contributed
(11pts) to the increase.
- GTO earnings before income taxes were $105 million, an increase of $11 million, or 12%, compared to $94 million in the prior year period. The
increased earnings were primarily due to higher revenues from
acquisitions, including software license sales, and higher organic
revenues, partially offset by the impact of expenditures to
implement and support new business. Pre-tax margins decreased to
19.0% from 19.4%.
Other
- Other Loss before income tax increased 75% to $89 million from $51
million in the six months ended December 31, 2019. The increased loss was
primarily due to charges associated with the IBM Private Cloud
Agreement, and higher interest expense compared to the prior year
period.
Launch of Broadridge Private Cloud
On December 31, 2019, Broadridge and IBM entered
into the IBM Private Cloud Agreement under which IBM will operate,
manage and support the Broadridge Private Cloud, the Company's
private cloud global distributed platforms and products. This
agreement has an initial term of approximately 10 years and three
months, expiring on March 31, 2030.
As a result of this agreement, Broadridge expects to transfer the
ownership of certain Company-owned hardware located at Company
facilities worldwide along with the Company's maintenance
agreements associated with such hardware to IBM. Accordingly,
the Company has recorded charges of $33.4
million representing a charge on the hardware assets to be
transferred to IBM and other charges related to the IBM Private
Cloud Agreement (the "IBM Private Cloud Charges").
Second Quarter 2020 Acquisitions
Broadridge completed
three primary acquisitions in the Second Quarter 2020, with an
aggregate purchase price of approximately $227 million.
- Shadow Financial Systems, Inc. ("Shadow Financial"): In
October 2019, the Company acquired
Shadow Financial, a provider of multi-asset class post-trade
solutions for the capital markets industry. The acquisition builds
upon Broadridge's post-trade processing capabilities by adding a
market-ready solution for exchanges, inter-dealer brokers and
proprietary trading firms. In addition, the acquisition adds
capabilities across exchange traded derivatives and cryptocurrency.
The purchase price was approximately $39
million.
- Fi360, Inc.: In November 2019,
the Company acquired Fi360, Inc., a provider of fiduciary and
Regulation Best Interest solutions for the wealth and retirement
industry, including the accreditation and continuing education for
the Accredited Investment Fiduciary® (AIF®) Designation, the
leading designation focused on fiduciary responsibility. The
acquisition is expected to enhance Broadridge's retirement
solutions by providing wealth and retirement advisors with
fiduciary tools that will complement its Matrix trust and trading
platform and further strengthen Broadridge's data and analytics
tools and solutions suite. The purchase price was approximately
$120 million.
- Clear Structure Financial Technology, LLC ("ClearStructure"):
In November 2019, the Company
acquired ClearStructure, a global provider of portfolio management
solutions for the private debt markets. ClearStructure's component
services are expected to enhance Broadridge's existing multi-asset
class, front-to-back office asset management technology suite,
providing Broadridge clients with a capability to access the public
and private markets. The purchase price was approximately
$69 million.
Third Quarter 2020 Acquisition
In January 2020, the Company signed an agreement to
acquire FundsLibrary Limited ("FundsLibrary"), a leader in fund
document and data dissemination in the European market. The
combination of FundsLibrary's capabilities with Broadridge's
existing regulatory communications offerings is expected to enable
Broadridge to reduce complexity and cost for global fund managers,
helping them to increase distribution opportunities and meet their
regulatory requirements across multiple jurisdictions. The
acquisition is expected to close in February
2020, with an expected purchase price of approximately
$69 million net of cash acquired and
subject to normal closing adjustments.
Earnings Conference Call
An analyst conference call
will be held today, Friday, January 31,
2020 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 February 14,
2020, the recording will also be available by dialing
1-877-344-7529 passcode: 10136507 within the United States or 1-412-317-0088 passcode:
10136507 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, and (iii) IBM Private Cloud Charges.
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. IBM Private
Cloud Charges represent a charge on the hardware assets to be
transferred to IBM and other charges related to the IBM Private
Cloud Agreement.
We exclude IBM Private Cloud Charges from our Adjusted Operating
income and other earnings measures because excluding such
information provides us with an understanding of the results from
the primary operations of our business and this item does 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, is a
leading provider of investor communications and technology-driven
solutions to banks, broker-dealers, asset and wealth managers and
corporate issuers. 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 securities trades per day. Broadridge is
part of the S&P 500® Index and employs over 11,000
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
December 31,
|
|
Six Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
$
|
968.7
|
|
$
|
953.4
|
|
$
|
1,917.2
|
|
$
|
1,926.2
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
780.9
|
|
734.0
|
|
1,508.4
|
|
1,473.0
|
Selling, general and
administrative expenses
|
|
161.0
|
|
141.2
|
|
309.0
|
|
274.9
|
Total operating
expenses
|
|
941.9
|
|
875.2
|
|
1,817.3
|
|
1,747.9
|
Operating
income
|
|
26.8
|
|
78.2
|
|
99.9
|
|
178.3
|
Interest expense,
net
|
|
(13.9)
|
|
(10.7)
|
|
(27.0)
|
|
(20.4)
|
Other non-operating
income (expenses), net
|
|
(2.4)
|
|
(3.2)
|
|
1.4
|
|
(4.4)
|
Earnings before
income taxes
|
|
10.5
|
|
64.3
|
|
74.3
|
|
153.6
|
Provision for income
taxes
|
|
0.4
|
|
14.4
|
|
8.3
|
|
27.0
|
Net
earnings
|
|
$
|
10.1
|
|
$
|
49.9
|
|
$
|
66.0
|
|
$
|
126.6
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
0.09
|
|
$
|
0.43
|
|
$
|
0.58
|
|
$
|
1.09
|
Diluted earnings per
share
|
|
$
|
0.09
|
|
$
|
0.42
|
|
$
|
0.56
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
114.7
|
|
116.3
|
|
114.5
|
|
116.3
|
Diluted
|
|
117.2
|
|
119.1
|
|
117.1
|
|
119.4
|
|
Amounts may not
sum due to rounding.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
In millions,
except per share amounts
|
|
|
December 31,
2019
|
|
June 30,
2019
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
234.0
|
|
$
|
273.2
|
Accounts receivable,
net of allowance for doubtful accounts of $2.7 and $2.6,
respectively
|
|
|
616.0
|
|
664.0
|
Other current
assets
|
|
|
160.7
|
|
105.2
|
Total current
assets
|
|
|
1,010.6
|
|
1,042.3
|
Property, plant and
equipment, net
|
|
|
137.5
|
|
189.0
|
Goodwill
|
|
|
1,660.8
|
|
1,500.0
|
Intangible assets,
net
|
|
|
611.2
|
|
556.2
|
Other non-current
assets
|
|
|
964.5
|
|
593.1
|
Total
assets
|
|
|
$
|
4,384.6
|
|
$
|
3,880.7
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current portion of
long-term debt
|
|
|
$
|
399.5
|
|
$
|
—
|
Payables and accrued
expenses
|
|
|
615.4
|
|
711.7
|
Contract
liabilities
|
|
|
109.9
|
|
90.9
|
Total current
liabilities
|
|
|
1,124.8
|
|
802.6
|
Long-term
debt
|
|
|
1,449.3
|
|
1,470.4
|
Deferred
taxes
|
|
|
98.9
|
|
86.7
|
Contract
liabilities
|
|
|
150.3
|
|
160.7
|
Other non-current
liabilities
|
|
|
435.9
|
|
232.8
|
Total
liabilities
|
|
|
3,259.2
|
|
2,753.2
|
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 114.8 and 114.3 shares outstanding,
respectively
|
|
|
1.6
|
|
1.6
|
Additional paid-in
capital
|
|
|
1,150.1
|
|
1,109.3
|
Retained
earnings
|
|
|
2,030.1
|
|
2,087.7
|
Treasury stock, at
cost: 39.7 and 40.2 shares, respectively
|
|
|
(1,988.7)
|
|
(1,999.8)
|
Accumulated other
comprehensive loss
|
|
|
(67.7)
|
|
(71.2)
|
Total stockholders'
equity
|
|
|
1,125.4
|
|
1,127.5
|
Total liabilities and
stockholders' equity
|
|
|
$
|
4,384.6
|
|
$
|
3,880.7
|
|
Amounts may not
sum due to rounding.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
In
millions
|
Six Months
Ended
December 31,
|
|
2019
|
|
2018
|
Cash Flows From
Operating Activities
|
|
|
|
Net
earnings
|
$
|
66.0
|
|
$
|
126.6
|
Adjustments to
reconcile net earnings to net cash flows provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
41.4
|
|
42.5
|
Amortization of
acquired intangibles and purchased intellectual property
|
58.4
|
|
43.2
|
Amortization of other
assets
|
49.7
|
|
44.6
|
Write-down of
long-lived assets
|
31.8
|
|
—
|
Stock-based
compensation expense
|
30.3
|
|
29.4
|
Deferred income
taxes
|
(0.8)
|
|
(10.0)
|
Other
|
(12.9)
|
|
(13.4)
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired:
|
|
|
|
Current assets and
liabilities:
|
|
|
|
Decrease in Accounts
receivable, net
|
53.2
|
|
11.0
|
Increase in Other
current assets
|
(38.5)
|
|
(12.1)
|
Decrease in Payables
and accrued expenses
|
(155.0)
|
|
(158.4)
|
Increase in Contract
liabilities
|
11.5
|
|
13.3
|
Non-current assets and
liabilities:
|
|
|
|
Increase in Other
non-current assets
|
(167.7)
|
|
(87.3)
|
Increase in Other
non-current liabilities
|
44.0
|
|
52.8
|
Net cash flows
provided by operating activities
|
11.5
|
|
82.1
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(31.6)
|
|
(21.0)
|
Software purchases
and capitalized internal use software
|
(11.4)
|
|
(9.3)
|
Acquisitions, net of
cash acquired
|
(269.6)
|
|
—
|
Other investing
activities
|
(18.7)
|
|
(1.8)
|
Net cash flows used
in investing activities
|
(331.2)
|
|
(32.0)
|
Cash Flows From
Financing Activities
|
|
|
|
Debt
proceeds
|
1,226.1
|
|
210.0
|
Debt
repayments
|
(841.8)
|
|
(70.0)
|
Dividends
paid
|
(117.2)
|
|
(99.0)
|
Purchases of Treasury
Stock
|
—
|
|
(120.3)
|
Proceeds from
exercise of stock options
|
21.6
|
|
19.1
|
Other financing
activities
|
(8.3)
|
|
(1.8)
|
Net cash flows
provided by (used in) financing activities
|
280.5
|
|
(61.9)
|
Effect of exchange
rate changes on Cash and cash equivalents
|
—
|
|
(2.3)
|
Net change in Cash
and cash equivalents
|
(39.2)
|
|
(14.1)
|
Cash and cash
equivalents, beginning of period
|
273.2
|
|
263.9
|
Cash and cash
equivalents, end of period
|
$
|
234.0
|
|
$
|
249.8
|
|
Amounts may not
sum due to rounding.
|
Segment
Results
|
(Unaudited)
|
|
In
millions
|
Three Months
Ended
December 31,
|
|
Six Months
Ended
December 31,
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
Investor
Communication Solutions
|
$
|
715.6
|
|
|
$
|
727.8
|
|
|
$
|
1,418.2
|
|
|
$
|
1,482.8
|
|
Global Technology and
Operations
|
280.9
|
|
|
247.0
|
|
|
554.8
|
|
|
485.4
|
|
Foreign currency
exchange
|
(27.8)
|
|
|
(21.4)
|
|
|
(55.8)
|
|
|
(42.0)
|
|
Total
|
$
|
968.7
|
|
|
$
|
953.4
|
|
|
$
|
1,917.2
|
|
|
$
|
1,926.2
|
|
|
|
|
|
|
|
Earnings (Loss)
before Income Taxes
|
|
|
|
|
|
Investor
Communication Solutions
|
$
|
22.1
|
|
|
$
|
36.8
|
|
|
$
|
45.1
|
|
|
$
|
95.6
|
|
Global Technology and
Operations
|
49.0
|
|
|
47.5
|
|
|
105.5
|
|
|
94.1
|
|
Other
|
(68.1)
|
|
|
(27.9)
|
|
|
(89.3)
|
|
|
(51.0)
|
|
Foreign currency
exchange
|
7.5
|
|
|
7.9
|
|
|
13.0
|
|
|
15.0
|
|
Total
|
$
|
10.5
|
|
|
$
|
64.3
|
|
|
$
|
74.3
|
|
|
$
|
153.6
|
|
|
|
|
|
|
|
|
|
Pre-tax
margins:
|
|
|
|
|
|
|
|
Investor Communication
Solutions
|
3.1
|
%
|
|
5.1
|
%
|
|
3.2
|
%
|
|
6.4
|
%
|
Global Technology and
Operations
|
17.4
|
%
|
|
19.2
|
%
|
|
19.0
|
%
|
|
19.4
|
%
|
|
Amounts may not
sum due to rounding.
|
|
Note: The results
for the Company's Advisor Solutions services that were previously
reported in our Investor Communication Solutions reportable segment
are now reported within the Global Technology and Operations
reportable segment. As a result, our prior period segment results
have been revised to reflect this change in reporting segments,
which resulted in transferring $10.4 million and $21.1 million of
revenues, respectively, and $0.3 million and $0.4 million of
earnings before income taxes, respectively, for the three and six
months ended December 31, 2018.
|
Supplemental
Reporting Detail - Additional Product Line Reporting
|
(Unaudited)
|
|
In
millions
|
Three Months
Ended
December 31,
|
|
Six Months
Ended
December 31,
|
Investor
Communication Solutions
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
Equity
Proxy
|
$
|
42.2
|
|
$
|
41.7
|
|
1
|
%
|
|
$
|
72.0
|
|
$
|
72.7
|
|
(1)
|
%
|
Mutual fund and
exchange-traded funds ("ETF") interims
|
65.1
|
|
60.7
|
|
7
|
%
|
|
130.5
|
|
118.5
|
|
10
|
%
|
Customer
communications and fulfillment
|
176.6
|
|
182.6
|
|
(3)
|
%
|
|
347.5
|
|
357.5
|
|
(3)
|
%
|
Other ICS
|
83.5
|
|
71.9
|
|
16
|
%
|
|
166.7
|
|
145.3
|
|
15
|
%
|
Total ICS Recurring fee revenues
|
367.5
|
|
357.0
|
|
3
|
%
|
|
716.7
|
|
694.0
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and
other
|
15.3
|
|
19.5
|
|
(22)
|
%
|
|
32.8
|
|
43.6
|
|
(25)
|
%
|
Mutual
funds
|
15.7
|
|
28.6
|
|
(45)
|
%
|
|
38.3
|
|
81.4
|
|
(53)
|
%
|
Total ICS Event-driven fee revenues
|
31.0
|
|
48.1
|
|
(36)
|
%
|
|
71.1
|
|
125.1
|
|
(43)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
317.0
|
|
322.7
|
|
(2)
|
%
|
|
630.3
|
|
663.7
|
|
(5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ICS
Revenues
|
$
|
715.6
|
|
$
|
727.8
|
|
(2)
|
%
|
|
$
|
1,418.2
|
|
$
|
1,482.8
|
|
(4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Technology
and Operations
|
|
|
|
|
|
|
|
|
|
|
|
Equities and
Other
|
$
|
237.2
|
|
$
|
206.8
|
|
15
|
%
|
|
$
|
468.1
|
|
$
|
405.3
|
|
15
|
%
|
Fixed
income
|
43.7
|
|
40.1
|
|
9
|
%
|
|
86.8
|
|
80.1
|
|
8
|
%
|
Total GTO Recurring fee revenues
|
280.9
|
|
247.0
|
|
14
|
%
|
|
554.8
|
|
485.4
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange
|
(27.8)
|
|
(21.4)
|
|
30
|
%
|
|
(55.8)
|
|
(42.0)
|
|
33
|
%
|
Total Revenues
|
$
|
968.7
|
|
$
|
953.4
|
|
2
|
%
|
|
$
|
1,917.2
|
|
$
|
1,926.2
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
Type
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fee
revenues
|
$
|
648.4
|
|
$
|
603.9
|
|
7
|
%
|
|
$
|
1,271.6
|
|
$
|
1,179.5
|
|
8
|
%
|
Event-driven fee
revenues
|
31.0
|
|
48.1
|
|
(36)
|
%
|
|
71.1
|
|
125.1
|
|
(43)
|
%
|
Distribution
revenues
|
317.0
|
|
322.7
|
|
(2)
|
%
|
|
630.3
|
|
663.7
|
|
(5)
|
%
|
Foreign currency
exchange
|
(27.8)
|
|
(21.4)
|
|
30
|
%
|
|
(55.8)
|
|
(42.0)
|
|
33
|
%
|
Total Revenues
|
$
|
968.7
|
|
$
|
953.4
|
|
2
|
%
|
|
$
|
1,917.2
|
|
$
|
1,926.2
|
|
—
|
%
|
|
Amounts may not
sum due to rounding.
|
|
Note: The results
for the Company's Advisor Solutions services that were previously
reported in our Investor Communication Solutions reportable segment
are now reported within the Global Technology and Operations
reportable segment. As a result, our prior period segment results
have been revised to reflect this change in reporting
segments.
|
Select Operating
Metrics
|
(Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
|
|
Six Months
Ended
December 31,
|
|
|
|
In
millions
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
Sales
|
$45.1
|
|
$105.9
|
|
(57)%
|
|
$82.7
|
|
$124.3
|
|
(33)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Record
Growth1
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
proxy
|
11%
|
|
15%
|
|
|
|
10%
|
|
15%
|
|
|
|
Mutual fund
interims
|
6%
|
|
20%
|
|
|
|
4%
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal Trade
Growth2
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
(16)%
|
|
16%
|
|
|
|
(12)%
|
|
18%
|
|
|
|
Fixed
Income
|
6%
|
|
6%
|
|
|
|
12%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 proxies and mutual fund
& ETF interims, respectively, for equities 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 clients
whose contracts are linked to trade volumes and who were on
Broadridge's trading platforms in both the current and prior year
periods.
|
|
|
Reconciliation of
Non-GAAP to GAAP Measures
|
(Unaudited)
|
|
In millions,
except per share amounts
|
Three Months
Ended
December 31,
|
|
Six Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Reconciliation of
Adjusted Operating Income
|
|
Operating income
(GAAP)
|
$
|
26.8
|
|
|
$
|
78.2
|
|
|
$
|
99.9
|
|
|
$
|
178.3
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased Intellectual Property
|
30.3
|
|
|
21.3
|
|
|
58.4
|
|
|
43.2
|
|
Acquisition and
Integration Costs
|
3.4
|
|
|
1.3
|
|
|
5.9
|
|
|
2.2
|
|
IBM Private
Cloud Charges
|
33.4
|
|
|
—
|
|
|
33.4
|
|
|
—
|
|
Adjusted Operating
income (Non-GAAP)
|
$
|
93.9
|
|
|
$
|
100.8
|
|
|
$
|
197.5
|
|
|
$
|
223.7
|
|
Operating income
margin (GAAP)
|
2.8
|
%
|
|
8.2
|
%
|
|
5.2
|
%
|
|
9.3
|
%
|
Adjusted Operating
income margin (Non-GAAP)
|
9.7
|
%
|
|
10.6
|
%
|
|
10.3
|
%
|
|
11.6
|
%
|
Reconciliation of
Adjusted Net earnings
|
|
Net earnings
(GAAP)
|
$
|
10.1
|
|
|
$
|
49.9
|
|
|
$
|
66.0
|
|
|
$
|
126.6
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased Intellectual Property
|
30.3
|
|
|
21.3
|
|
|
58.4
|
|
|
43.2
|
|
Acquisition and
Integration Costs
|
3.4
|
|
|
1.3
|
|
|
5.9
|
|
|
2.2
|
|
IBM Private Cloud
Charges
|
33.4
|
|
|
—
|
|
|
33.4
|
|
|
|
Taxable
adjustments
|
67.1
|
|
|
22.6
|
|
|
97.7
|
|
|
45.4
|
|
Tax impact of
adjustments (a)
|
(14.8)
|
|
|
(5.3)
|
|
|
(21.3)
|
|
|
(10.3)
|
|
Adjusted Net earnings
(Non-GAAP)
|
$
|
62.4
|
|
|
$
|
67.2
|
|
|
$
|
142.3
|
|
|
$
|
161.8
|
|
Reconciliation of
Adjusted EPS
|
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP)
|
$
|
0.09
|
|
|
$
|
0.42
|
|
|
$
|
0.56
|
|
|
$
|
1.06
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased Intellectual Property
|
0.26
|
|
|
0.18
|
|
|
0.50
|
|
|
0.36
|
|
Acquisition and
Integration Costs
|
0.03
|
|
|
0.01
|
|
|
0.05
|
|
|
0.02
|
|
IBM Private Cloud
Charges
|
0.28
|
|
|
—
|
|
|
0.28
|
|
|
—
|
|
Taxable
adjustments
|
0.57
|
|
|
0.19
|
|
|
0.83
|
|
|
0.38
|
|
Tax impact of
adjustments (a)
|
(0.13)
|
|
|
(0.04)
|
|
|
(0.18)
|
|
|
(0.09)
|
|
Adjusted earnings per
share (Non-GAAP)
|
$
|
0.53
|
|
|
$
|
0.56
|
|
|
$
|
1.22
|
|
|
$
|
1.35
|
|
|
(a) Calculated
using the GAAP effective tax rate, adjusted to exclude $2.2 million
and $7.9 million of excess tax benefits associated with stock-based
compensation for the three and six months ended December 31, 2019,
and $0.8 million and $7.9 million of excess tax benefits associated
with stock-based compensation for the three and six months ended
December 31, 2018. For purposes of calculating Adjusted
earnings per share, the same adjustments were made on a per share
basis.
|
|
Amounts may not
sum due to rounding.
|
Reconciliation of
Free Cash Flow
|
|
Net cash flows
provided by operating activities (GAAP)
|
$
|
11.5
|
|
$
|
82.1
|
Capital expenditures
and Software purchases and capitalized internal use
software
|
(43.0)
|
|
(30.3)
|
Free cash flow
(Non-GAAP)
|
$
|
(31.5)
|
|
$
|
51.8
|
Fiscal Year 2020
Guidance
|
Reconciliation of
Non-GAAP to GAAP Measures
|
Adjusted Earnings
Per Share Growth and Adjusted Operating Income
Margin
|
(Unaudited)
|
|
|
|
FY20 Adjusted
Earnings Per Share Growth Rate (a)
|
|
|
Diluted earnings per
share (GAAP)
|
|
(4)-0%
|
Adjusted earnings per
share (Non-GAAP)
|
|
8-12%
|
|
|
|
FY20 Adjusted
Operating Income Margin (b)
|
|
|
Operating income
margin % (GAAP)
|
|
~14%
|
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, Acquisition and Integration Costs,
and IBM Private Cloud Charges, 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, Acquisition and
Integration Costs, and IBM Private Cloud Charges, net of taxes, of
approximately $1.11 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, Acquisition and Integration Costs,
and IBM Private Cloud Charges. Fiscal year 2020 Non-GAAP Adjusted
Operating income margin guidance estimates exclude Amortization of
Acquired Intangibles and Purchased Intellectual Property,
Acquisition and Integration Costs, and IBM Private Cloud Charges of
approximately $170 million.
|
View original
content:http://www.prnewswire.com/news-releases/broadridge-reports-second-quarter-and-six-months-fiscal-year-2020-results-300996661.html
SOURCE Broadridge Financial Solutions, Inc.