NEW YORK, May 8, 2020 /PRNewswire/ -- Broadridge
Financial Solutions, Inc. (NYSE: BR) today reported financial
results for the third quarter and nine months ended March 31, 2020 of its fiscal year 2020. Results
compared with the same period last year were as follows:
Summary Financial
Results
|
|
Third
Quarter
|
|
Nine
Months
|
|
Dollars in
millions, except per share data
|
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$1,250
|
$1,225
|
2%
|
$3,167
|
$3,151
|
1%
|
Recurring fee
revenues
|
|
835
|
767
|
9%
|
2,106
|
1,947
|
8%
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
226
|
234
|
(3)%
|
326
|
412
|
(21)%
|
|
Operating income
margin
|
|
18.1%
|
19.1%
|
|
10.3%
|
13.1%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
income - Non-GAAP
|
|
262
|
256
|
3%
|
460
|
479
|
(4)%
|
|
Adjusted Operating
income margin - Non-GAAP
|
|
21.0%
|
20.9%
|
|
14.5%
|
15.2%
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$1.43
|
$1.45
|
(1)%
|
$1.99
|
$2.51
|
(21)%
|
Adjusted EPS -
Non-GAAP
|
|
$1.67
|
$1.59
|
5%
|
$2.88
|
$2.94
|
(2)%
|
|
|
|
|
|
|
|
|
|
Closed
sales
|
|
$44
|
$37
|
20%
|
$127
|
$161
|
(21)%
|
"Broadridge is making a real difference in this volatile and
uncertain time and I have been inspired by how our associates have
stepped up to meet this incredible challenge," said Tim Gokey, Broadridge's Chief Executive Officer.
"The importance of what we do to power global trading and wealth
management, enable safe and effective corporate governance, and
keep investors informed has never been greater. Our scalable and
resilient technology has operated flawlessly in periods of heavy
market volume, our production facilities have delivered a
successful proxy season in the face of extraordinary safety
measures, and we are poised to deliver more than four times as many
Virtual Shareholder Meetings as last year. We remain focused on
keeping our associates safe, serving our clients, and helping our
communities. I am extremely proud of every member of the Broadridge
team.
"Our financial performance during the Third Quarter and our
outlook for Fiscal Year 2020 underscores the resilience of
Broadridge's business model. Third Quarter Recurring revenues rose
9% and Adjusted EPS rose 5% even in the face of significantly lower
event-driven activity and proxy timing shift. While tempered by
lower event-driven activity, our updated guidance calls for
continued growth in the fourth quarter, reflecting the essential
nature of our work and the dedication of our associates," Mr. Gokey
added.
Fiscal Year 2020 Financial Guidance
|
|
|
Change / Update
1
|
Recurring fee revenue
growth
|
|
8 – 10%
|
No change
|
Total revenue
growth
|
|
3 – 6%
|
Expected to be at
low end of range
|
|
|
|
|
Operating income
margin - GAAP
|
|
~14%
|
No change
|
Adjusted Operating
income margin - Non-GAAP
|
|
~18%
|
No change
|
|
|
|
|
Diluted earnings per
share growth
|
|
(7) – (3)%
|
Reduced from
(4) – 0%
|
Adjusted earnings per
share growth - Non-GAAP
|
|
5 – 7%
|
Reduced from low
end of 8 – 12%
|
|
|
|
|
Closed
sales
|
|
$190-230M
|
No change
|
|
(1) From full-year
guidance provided in earnings release Q2 FY20 on
1/31/2020
|
Financial Results for the Third Quarter Fiscal Year 2020
compared to the Third Quarter Fiscal Year 2019
- Total revenues increased 2% to $1,250 million from $1,225
million in the prior year period.
-
- Recurring fee revenues increased 9% to $835 million from $767
million. The increase in recurring fee revenues includes
6pts of growth from acquisitions. Organic growth was 3pts. Internal
growth was neutral with positive growth in our GTO segment driven
by higher trading volumes resulting from market uncertainty related
to the Covid-19 pandemic ("Covid-19"), offset by negative internal
growth in our ICS segment driven by a shift of proxy communications
into the fourth quarter also as a result of Covid-19.
- Event-driven fee revenues decreased $29
million, or 43%, to $39
million, mainly from lower mutual fund proxy activity and
equity proxy contests.
- Distribution revenues decreased $6
million, or 1%, to $412
million, primarily from the decrease in event-driven fee
revenues.
- Operating income was $226
million, a decrease of $7
million, or 3%. Operating income margin decreased to 18.1%,
compared to 19.1% for the prior year period.
-
- Adjusted Operating income was $262
million, an increase of $6
million, or 3%. Adjusted Operating income margin increased
to 21.0%, compared to 20.9% for the prior year period.
- The decrease in Operating income was primarily due to the
impact of lower event-driven fee revenues and higher acquisition
amortization expense, partially offset by higher recurring fee
revenues. The increase in Adjusted Operating income was primarily
due to the increase in recurring fee revenues more than offsetting
the impact of lower event-driven fee revenues.
- Interest expense, net was $16 million, an increase of $6 million, or 62%, primarily due to an increase
in interest expense from higher borrowings related to
acquisitions.
- The effective tax rate was 20.7% compared to 23.0%
in the Third Quarter 2019. The effective tax rate was impacted by
higher discrete tax benefits relative to pre-tax income, including
excess tax benefits of $2 million,
which increased from $1 million in
the Third Quarter 2019.
- Net earnings decreased 3% to $167 million and Adjusted Net earnings increased
3% to $195 million.
-
- Diluted earnings per share decreased 1% to $1.43, compared to $1.45 in the Third Quarter 2019 and Adjusted
earnings per share increased 5% to $1.67, compared to $1.59 in the Third Quarter 2019.
- The decrease in Diluted earnings per share was primarily due to
the decrease in event-driven fee revenues and higher acquisition
amortization expense, partially offset by higher recurring fee
revenues. The increase in Adjusted earnings per share was primarily
due to an increase in recurring fee revenues more than offsetting a
decrease in event-driven fee revenues.
Segment and Other Results for the Third Quarter 2020 compared
to the Third Quarter 2019
Beginning in the first quarter 2020, 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 $980
million, a decrease of $26
million, or 3%.
-
- Recurring fee revenues increased $9
million, or 2%, to $529
million. The increase was attributable to revenues from net
new business (3pts) and acquisition growth (3pts), partially offset
by internal growth (-4pts). Internal growth was negatively impacted
by a shift of proxy communications into the fourth quarter as a
result of Covid-19.
- Event-driven fee revenues decreased $29
million, or 43%, to $39
million, mainly from lower mutual fund proxy activity and
equity proxy contests.
- Distribution revenues decreased $6
million, or 1%, to $412
million, primarily from the decrease in event-driven
activity.
- ICS earnings before income taxes were $159 million, a decrease of $34 million, or
17%, primarily due to the decrease in event-driven fee revenues and
the shift of proxy communications into the fourth quarter, which
more than offset the contribution from the increase in other
recurring fee revenues. Pre-tax margins decreased to 16.2% from
19.2%.
Global Technology and Operations ("GTO")
- GTO recurring fee revenues were $305
million, an increase of $58
million, or 23%. The increase was attributable to the
combination of revenues from acquisitions (12pts) and organic
growth (11pts). Internal growth benefited from higher trading
volumes resulting from market uncertainty related to Covid-19.
- GTO earnings before income taxes were $67 million, an increase of $14 million, or 26%, compared to $53 million in the prior year period. The
increased earnings were primarily due to higher organic revenues,
partially offset by expenditures to implement and support new
business. Pre-tax margins increased to 22.1% from 21.5%.
Other
- Other Loss before income tax decreased 29% to $18 million from $25
million in the Third Quarter 2019. The decreased loss before
income taxes was primarily due to lower corporate expenses,
partially offset by interest expense versus the prior year
period.
Financial Results for the Nine Months Fiscal Year 2020
compared to the Nine Months Fiscal Year 2019
- Total revenues increased 1% to $3,167 million from $3,151
million in the prior year period.
-
- Recurring fee revenues increased 8% to $2,106 million from $1,947
million. The increase in recurring fee revenues includes
6pts of growth from acquisitions.
- Event-driven fee revenues decreased $83
million, or 43%, to $110
million, mainly from lower mutual fund proxy activity and
equity proxy contests.
- Distribution revenues decreased $39
million, or 4%, to $1,042
million, primarily from the decrease in event-driven fee
revenues.
- Operating income was $326
million, a decrease of $86
million, or 21%. Operating income margin decreased to 10.3%,
compared to 13.1% in the prior year period.
-
- Adjusted Operating income was $460
million, a decrease of $20
million, or 4%. Adjusted Operating income margin decreased
to 14.5%, compared to 15.2% for the prior year period.
- The decrease in Operating income was primarily due to the
decrease in event-driven fee revenues, charges associated with the
IBM Private Cloud Agreement, and higher acquisition amortization
expense, partially offset by higher recurring fee revenues.
The decrease in Adjusted Operating income was primarily due to the
decrease in event-driven fee revenues partially offset by higher
recurring fee revenues.
- Interest expense, net was $43 million, an increase of $13 million, or 42%, primarily due to an increase
in interest expense from higher borrowings primarily related to
acquisitions.
- The effective tax rate was 18.3% compared to 20.8%
in the prior year period. The effective tax rate was impacted by
higher discrete tax items relative to pre-tax income, including
excess tax benefits of $10 million,
slightly higher from $9 million in
the prior year period.
- Net earnings decreased 22% to $233 million and Adjusted Net earnings decreased
4% to $337 million.
-
- Diluted earnings per share decreased 21% to $1.99, compared to $2.51 in the prior year period and Adjusted
earnings per share decreased 2% to $2.88, compared to $2.94 in the prior year period.
- The decrease in Diluted earnings per share was primarily due to
the decrease in event-driven fee revenues, charges associated with
the IBM Private Cloud Agreement, and higher acquisition
amortization expense, partially offset by higher recurring fee
revenues. The decrease in Adjusted earnings per share was primarily
due to a decrease in event-driven fee revenues partially offset by
higher recurring fee revenues.
Segment and Other Results for the Nine Months Fiscal Year
2020 compared to the Nine Months Fiscal Year 2019
Beginning in the first quarter 2020, 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 $2,398
million, a decrease of $90
million, or 4%.
-
- Recurring fee revenues increased $32
million, or 3%, to $1,246
million. The increase was attributable to revenues from
acquisitions (3pts), as organic growth was essentially flat.
- Event-driven fee revenues decreased $83
million, or 43%, to $110
million, mainly from lower mutual fund proxy activity and
equity proxy contests compared to the prior year period.
- Distribution revenues decreased $39
million, or 4%, to $1,042
million, primarily from the decrease in event-driven
activity.
- ICS earnings before income taxes were $204 million, a decrease of $84 million, or 29%, primarily due to lower
event-driven fee revenues more than offsetting the contribution
from higher recurring fee revenues. Pre-tax margins decreased to
8.5% from 11.6%.
Global Technology and Operations
- GTO recurring fee revenues were $860
million, an increase of $127
million, or 17%. Revenue from acquisitions contributed
(11pts) to the increase and organic growth contributed (6pts).
- GTO earnings before income taxes were $173 million, an increase of $25 million, or 17%, compared to $147 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 and the amortization of acquired
intangibles. Pre-tax margins were flat at 20.1%.
Other
- Other Loss before income tax increased 40% to $107 million from $76
million in the nine months ended March 31, 2020. The increased loss was primarily
due to charges associated with the IBM Private Cloud Agreement, and
higher interest expense versus the prior year period.
Third Quarter 2020 Acquisition
In February 2020, the Company
acquired 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
purchase price was approximately $70
million net of cash acquired.
Earnings Conference Call
An analyst conference call will be held today, Friday, May 8, 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 May 22, 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 described and discussed in Part I, "Item
1A. Risk Factors" of our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020 (the
"Third Quarter Report") and 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 Third Quarter
Report and the 2019 Annual Report.
These risks include:
- the potential impact and effects of Covid-19 on the business of
Broadridge, Broadridge's results of operations and financial
performance, any measures Broadridge has and may take in response
to Covid-19 and any expectations Broadridge may have with respect
thereto;
- 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
(516) 472-5129
Media:
Gregg
Rosenberg
(212) 918-6966
Condensed
Consolidated Statements of Earnings
(Unaudited)
|
|
In millions,
except per share amounts
|
|
Three Months
Ended
March 31,
|
|
Nine Months
Ended
March 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
|
$
|
1,249.9
|
|
|
$
|
1,224.8
|
|
|
$
|
3,167.1
|
|
|
$
|
3,151.0
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
872.5
|
|
|
847.3
|
|
|
2,380.9
|
|
|
2,320.3
|
|
Selling, general and
administrative expenses
|
|
151.1
|
|
|
143.9
|
|
|
460.1
|
|
|
418.7
|
|
Total operating
expenses
|
|
1,023.7
|
|
|
991.2
|
|
|
2,841.0
|
|
|
2,739.1
|
|
Operating
income
|
|
226.3
|
|
|
233.6
|
|
|
326.1
|
|
|
411.9
|
|
Interest expense,
net
|
|
(16.2)
|
|
|
(10.0)
|
|
|
(43.2)
|
|
|
(30.4)
|
|
Other non-operating
income (expenses), net
|
|
0.4
|
|
|
—
|
|
|
1.8
|
|
|
(4.3)
|
|
Earnings before
income taxes
|
|
210.5
|
|
|
223.6
|
|
|
284.8
|
|
|
377.2
|
|
Provision for income
taxes
|
|
43.6
|
|
|
51.4
|
|
|
52.0
|
|
|
78.4
|
|
Net
earnings
|
|
$
|
166.8
|
|
|
$
|
172.2
|
|
|
$
|
232.8
|
|
|
$
|
298.8
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
1.46
|
|
|
$
|
1.49
|
|
|
$
|
2.03
|
|
|
$
|
2.57
|
|
Diluted earnings per
share
|
|
$
|
1.43
|
|
|
$
|
1.45
|
|
|
$
|
1.99
|
|
|
$
|
2.51
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
114.6
|
|
|
115.7
|
|
|
114.6
|
|
|
116.1
|
|
Diluted
|
|
117.0
|
|
|
118.5
|
|
|
117.1
|
|
|
119.1
|
|
|
Amounts may not
sum due to rounding.
|
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
In millions,
except per share amounts
|
|
|
March 31,
2020
|
|
June 30,
2019
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
402.1
|
|
|
$
|
273.2
|
|
Accounts receivable,
net of allowance for doubtful accounts
of $3.8 and $2.6, respectively
|
|
|
814.7
|
|
|
664.0
|
|
Other current
assets
|
|
|
144.2
|
|
|
105.2
|
|
Total current
assets
|
|
|
1,361.0
|
|
|
1,042.3
|
|
Property, plant and
equipment, net
|
|
|
153.9
|
|
|
189.0
|
|
Goodwill
|
|
|
1,704.5
|
|
|
1,500.0
|
|
Intangible assets,
net
|
|
|
611.4
|
|
|
556.2
|
|
Other non-current
assets
|
|
|
1,082.6
|
|
|
593.1
|
|
Total
assets
|
|
|
$
|
4,913.5
|
|
|
$
|
3,880.7
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current portion of
long-term debt
|
|
|
$
|
399.8
|
|
|
$
|
—
|
|
Payables and accrued
expenses
|
|
|
737.2
|
|
|
711.7
|
|
Contract
liabilities
|
|
|
118.0
|
|
|
90.9
|
|
Total current
liabilities
|
|
|
1,255.0
|
|
|
802.6
|
|
Long-term
debt
|
|
|
1,679.9
|
|
|
1,470.4
|
|
Deferred
taxes
|
|
|
112.8
|
|
|
86.7
|
|
Contract
liabilities
|
|
|
159.7
|
|
|
160.7
|
|
Other non-current
liabilities
|
|
|
503.6
|
|
|
232.8
|
|
Total
liabilities
|
|
|
3,710.9
|
|
|
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 114.5 and
114.3 shares outstanding, respectively
|
|
|
1.6
|
|
|
1.6
|
|
Additional paid-in
capital
|
|
|
1,169.3
|
|
|
1,109.3
|
|
Retained
earnings
|
|
|
2,135.1
|
|
|
2,087.7
|
|
Treasury stock, at
cost: 40.0 and 40.2 shares, respectively
|
|
|
(2,036.2)
|
|
|
(1,999.8)
|
|
Accumulated other
comprehensive loss
|
|
|
(67.2)
|
|
|
(71.2)
|
|
Total stockholders'
equity
|
|
|
1,202.5
|
|
|
1,127.5
|
|
Total liabilities and
stockholders' equity
|
|
|
$
|
4,913.5
|
|
|
$
|
3,880.7
|
|
|
Amounts may not
sum due to rounding.
|
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
In
millions
|
Nine Months
Ended
March 31,
|
|
2020
|
|
2019
|
Cash Flows From
Operating Activities
|
|
|
|
Net
earnings
|
$
|
232.8
|
|
|
$
|
298.8
|
|
Adjustments to
reconcile net earnings to net cash flows provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
56.5
|
|
|
63.7
|
|
Amortization of
acquired intangibles and purchased intellectual property
|
90.9
|
|
|
64.3
|
|
Amortization of other
assets
|
76.0
|
|
|
66.8
|
|
Write-down of
long-lived assets
|
32.1
|
|
|
—
|
|
Stock-based
compensation expense
|
47.6
|
|
|
46.8
|
|
Deferred income
taxes
|
9.7
|
|
|
17.4
|
|
Other
|
(16.0)
|
|
|
(27.2)
|
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired:
|
|
|
|
Current assets and
liabilities:
|
|
|
|
Increase in Accounts
receivable, net
|
(142.7)
|
|
|
(174.0)
|
|
Increase in Other
current assets
|
(21.7)
|
|
|
(13.3)
|
|
Decrease in Payables
and accrued expenses
|
(22.7)
|
|
|
(55.1)
|
|
Increase in Contract
liabilities
|
18.2
|
|
|
18.6
|
|
Non-current assets and
liabilities:
|
|
|
|
Increase in Other
non-current assets
|
(244.7)
|
|
|
(140.9)
|
|
Increase in Other
non-current liabilities
|
39.6
|
|
|
51.9
|
|
Net cash flows
provided by operating activities
|
155.6
|
|
|
217.9
|
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(48.5)
|
|
|
(30.9)
|
|
Software purchases
and capitalized internal use software
|
(25.0)
|
|
|
(15.5)
|
|
Acquisitions, net of
cash acquired
|
(339.1)
|
|
|
—
|
|
Other investing
activities
|
(15.3)
|
|
|
(2.8)
|
|
Net cash flows used
in investing activities
|
(427.9)
|
|
|
(49.1)
|
|
Cash Flows From
Financing Activities
|
|
|
|
Debt
proceeds
|
1,575.3
|
|
|
370.0
|
|
Debt
repayments
|
(960.6)
|
|
|
(250.0)
|
|
Dividends
paid
|
(179.2)
|
|
|
(155.1)
|
|
Purchases of Treasury
Stock
|
(50.5)
|
|
|
(120.3)
|
|
Proceeds from
exercise of stock options
|
26.4
|
|
|
23.6
|
|
Other financing
activities
|
(9.8)
|
|
|
(7.1)
|
|
Net cash flows
provided by (used in) financing activities
|
401.6
|
|
|
(138.8)
|
|
Effect of exchange
rate changes on Cash and cash equivalents
|
(0.4)
|
|
|
(1.9)
|
|
Net change in Cash
and cash equivalents
|
128.9
|
|
|
28.2
|
|
Cash and cash
equivalents, beginning of period
|
273.2
|
|
|
263.9
|
|
Cash and cash
equivalents, end of period
|
$
|
402.1
|
|
|
$
|
292.1
|
|
|
Amounts may not
sum due to rounding.
|
Segment
Results
(Unaudited)
|
|
In
millions
|
Three Months
Ended
March 31,
|
|
Nine Months
Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
|
|
|
|
|
Investor
Communication Solutions
|
$
|
980.2
|
|
|
$
|
1,005.9
|
|
|
$
|
2,398.4
|
|
|
$
|
2,488.7
|
|
Global Technology and
Operations
|
305.5
|
|
|
247.8
|
|
|
860.3
|
|
|
733.2
|
|
Foreign currency
exchange
|
(35.8)
|
|
|
(28.9)
|
|
|
(91.6)
|
|
|
(70.9)
|
|
Total
|
$
|
1,249.9
|
|
|
$
|
1,224.8
|
|
|
$
|
3,167.1
|
|
|
$
|
3,151.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
before Income Taxes
|
|
|
|
|
|
Investor
Communication Solutions
|
$
|
159.2
|
|
|
$
|
192.9
|
|
|
$
|
204.3
|
|
|
$
|
288.5
|
|
Global Technology and
Operations
|
67.4
|
|
|
53.4
|
|
|
172.9
|
|
|
147.5
|
|
Other
|
(17.8)
|
|
|
(25.2)
|
|
|
(107.1)
|
|
|
(76.3)
|
|
Foreign currency
exchange
|
1.6
|
|
|
2.5
|
|
|
14.6
|
|
|
17.5
|
|
Total
|
$
|
210.5
|
|
|
$
|
223.6
|
|
|
$
|
284.8
|
|
|
$
|
377.2
|
|
|
|
|
|
|
|
|
|
Pre-tax
margins:
|
|
|
|
|
|
|
|
Investor Communication
Solutions
|
16.2
|
%
|
|
19.2
|
%
|
|
8.5
|
%
|
|
11.6
|
%
|
Global Technology and
Operations
|
22.1
|
%
|
|
21.5
|
%
|
|
20.1
|
%
|
|
20.1
|
%
|
|
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 $11.2 million and $32.3 million of
revenues, respectively, and $0.9 million and $1.3 million of
earnings before income taxes, respectively, for the three and nine
months ended March 31, 2019.
|
Supplemental
Reporting Detail - Additional Product Line Reporting
(Unaudited)
|
|
In
millions
|
Three Months
Ended
March 31,
|
|
Nine Months
Ended
March 31,
|
Investor
Communication Solutions
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
Equity
Proxy
|
$
|
136.4
|
|
|
$
|
152.9
|
|
|
(11)
|
%
|
|
$
|
208.4
|
|
|
$
|
225.6
|
|
|
(8)
|
%
|
Mutual fund and
exchange-traded funds ("ETF") interims
|
87.2
|
|
|
82.1
|
|
|
6
|
%
|
|
217.7
|
|
|
200.6
|
|
|
9
|
%
|
Customer
communications and fulfillment
|
208.0
|
|
|
201.1
|
|
|
3
|
%
|
|
555.5
|
|
|
558.6
|
|
|
(1)
|
%
|
Other ICS
|
97.4
|
|
|
83.5
|
|
|
17
|
%
|
|
264.2
|
|
|
228.8
|
|
|
15
|
%
|
Total ICS Recurring fee revenues
|
529.0
|
|
|
519.6
|
|
|
2
|
%
|
|
1,245.8
|
|
|
1,213.6
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and
other
|
22.1
|
|
|
35.4
|
|
|
(38)
|
%
|
|
54.9
|
|
|
79.0
|
|
|
(31)
|
%
|
Mutual
funds
|
17.0
|
|
|
33.1
|
|
|
(49)
|
%
|
|
55.3
|
|
|
114.5
|
|
|
(52)
|
%
|
Total ICS Event-driven fee revenues
|
39.1
|
|
|
68.4
|
|
|
(43)
|
%
|
|
110.3
|
|
|
193.5
|
|
|
(43)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
412.1
|
|
|
417.9
|
|
|
(1)
|
%
|
|
1,042.4
|
|
|
1,081.6
|
|
|
(4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ICS
Revenues
|
$
|
980.2
|
|
|
$
|
1,005.9
|
|
|
(3)
|
%
|
|
$
|
2,398.4
|
|
|
$
|
2,488.7
|
|
|
(4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Technology
and Operations
|
|
|
|
|
|
|
|
|
|
|
|
Equities and
Other
|
$
|
259.4
|
|
|
$
|
206.7
|
|
|
25
|
%
|
|
$
|
727.4
|
|
|
$
|
612.0
|
|
|
19
|
%
|
Fixed
income
|
46.1
|
|
|
41.1
|
|
|
12
|
%
|
|
132.9
|
|
|
121.2
|
|
|
10
|
%
|
Total GTO Recurring fee revenues
|
305.5
|
|
|
247.8
|
|
|
23
|
%
|
|
860.3
|
|
|
733.2
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange
|
(35.8)
|
|
|
(28.9)
|
|
|
24
|
%
|
|
(91.6)
|
|
|
(70.9)
|
|
|
29
|
%
|
Total Revenues
|
$
|
1,249.9
|
|
|
$
|
1,224.8
|
|
|
2
|
%
|
|
$
|
3,167.1
|
|
|
$
|
3,151.0
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
Type
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fee
revenues
|
$
|
834.5
|
|
|
$
|
767.4
|
|
|
9
|
%
|
|
$
|
2,106.1
|
|
|
$
|
1,946.8
|
|
|
8
|
%
|
Event-driven fee
revenues
|
39.1
|
|
|
68.4
|
|
|
(43)
|
%
|
|
110.3
|
|
|
193.5
|
|
|
(43)
|
%
|
Distribution
revenues
|
412.1
|
|
|
417.9
|
|
|
(1)
|
%
|
|
1,042.4
|
|
|
1,081.6
|
|
|
(4)
|
%
|
Foreign currency
exchange
|
(35.8)
|
|
|
(28.9)
|
|
|
24
|
%
|
|
(91.6)
|
|
|
(70.9)
|
|
|
29
|
%
|
Total Revenues
|
$
|
1,249.9
|
|
|
$
|
1,224.8
|
|
|
2
|
%
|
|
$
|
3,167.1
|
|
|
$
|
3,151.0
|
|
|
1
|
%
|
|
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
March 31,
|
|
|
|
Nine Months
Ended
March 31,
|
|
|
|
In
millions
|
2020
|
|
2019
|
|
%
Change
|
|
2020
|
|
2019
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
Sales
|
$44.4
|
|
$36.9
|
|
20%
|
|
$127.1
|
|
$161.2
|
|
(21)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Record
Growth1
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
proxy
|
7%
|
|
3%
|
|
|
|
8%
|
|
6%
|
|
|
|
Mutual fund
interims
|
—%
|
|
6%
|
|
|
|
3%
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal Trade
Growth2
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
28%
|
|
(6)%
|
|
|
|
2%
|
|
8%
|
|
|
|
Fixed
Income
|
19%
|
|
—%
|
|
|
|
15%
|
|
3%
|
|
|
|
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
March 31,
|
|
Nine Months
Ended
March 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Reconciliation of
Adjusted Operating Income
|
|
Operating income
(GAAP)
|
$
|
226.3
|
|
|
$
|
233.6
|
|
|
$
|
326.1
|
|
|
$
|
411.9
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization Tof
Acquired Intangibles and Purchased
Intellectual Property
|
32.5
|
|
|
21.2
|
|
|
90.9
|
|
|
64.3
|
|
Acquisition and
Integration Costs
|
3.0
|
|
|
0.9
|
|
|
9.0
|
|
|
3.1
|
|
IBM Private
Cloud Charges
|
0.2
|
|
|
—
|
|
|
33.6
|
|
|
—
|
|
Adjusted Operating
income (Non-GAAP)
|
$
|
262.1
|
|
|
$
|
255.7
|
|
|
$
|
459.6
|
|
|
$
|
479.4
|
|
Operating income
margin (GAAP)
|
18.1
|
%
|
|
19.1
|
%
|
|
10.3
|
%
|
|
13.1
|
%
|
Adjusted Operating
income margin (Non-GAAP)
|
21.0
|
%
|
|
20.9
|
%
|
|
14.5
|
%
|
|
15.2
|
%
|
|
|
|
|
Reconciliation of
Adjusted Net earnings
|
|
Net earnings
(GAAP)
|
$
|
166.8
|
|
|
$
|
172.2
|
|
|
$
|
232.8
|
|
|
$
|
298.8
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual Property
|
32.5
|
|
|
21.2
|
|
|
90.9
|
|
|
64.3
|
|
Acquisition and
Integration Costs
|
3.0
|
|
|
0.9
|
|
|
9.0
|
|
|
3.1
|
|
IBM Private Cloud
Charges
|
0.2
|
|
|
—
|
|
|
33.6
|
|
|
—
|
|
Taxable
adjustments
|
35.8
|
|
|
22.1
|
|
|
133.5
|
|
|
67.5
|
|
Tax impact of
adjustments (a)
|
(7.6)
|
|
|
(5.4)
|
|
|
(29.0)
|
|
|
(15.7)
|
|
Adjusted Net earnings
(Non-GAAP)
|
$
|
195.0
|
|
|
$
|
188.9
|
|
|
$
|
337.3
|
|
|
$
|
350.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EPS
|
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP)
|
$
|
1.43
|
|
|
$
|
1.45
|
|
|
$
|
1.99
|
|
|
$
|
2.51
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual Property
|
0.28
|
|
|
0.18
|
|
|
0.78
|
|
|
0.54
|
|
Acquisition and
Integration Costs
|
0.03
|
|
|
0.01
|
|
|
0.08
|
|
|
0.03
|
|
IBM Private Cloud
Charges
|
—
|
|
|
—
|
|
|
0.29
|
|
|
—
|
|
Taxable
adjustments
|
0.31
|
|
|
0.19
|
|
|
1.14
|
|
|
0.57
|
|
Tax impact of
adjustments (a)
|
(0.07)
|
|
|
(0.05)
|
|
|
(0.25)
|
|
|
(0.13)
|
|
Adjusted earnings per
share (Non-GAAP)
|
$
|
1.67
|
|
|
$
|
1.59
|
|
|
$
|
2.88
|
|
|
$
|
2.94
|
|
(a) Calculated
using the GAAP effective tax rate, adjusted to exclude $1.9 million
and $9.9 million of excess tax benefits associated with stock-based
compensation for the three and nine months ended March 31, 2020,
and $1.3 million and $9.2 million of excess tax benefits associated
with stock-based compensation for the three and nine months ended
March 31, 2019. 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)
|
$
|
155.6
|
|
|
$
|
217.9
|
|
Capital expenditures
and Software purchases and capitalized internal use
software
|
(73.5)
|
|
|
(46.3)
|
|
Free cash flow
(Non-GAAP)
|
$
|
82.2
|
|
|
$
|
171.6
|
|
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)
|
|
(7) – (3)%
|
Adjusted earnings per
share (Non-GAAP)
|
|
5 – 7%
|
|
|
|
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 $1.12 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-third-quarter-fiscal-2020-results-301055503.html
SOURCE Broadridge Financial Solutions, Inc.