Recurring revenues grew 6%; up 8% constant
currency
Diluted EPS grew 20% and Adjusted EPS grew
11%
Reaffirming Fiscal Year 2023 Guidance,
including 6 - 9% Recurring revenue growth
constant
currency and 7 - 11% Adjusted EPS growth
NEW
YORK, Feb. 2, 2023 /PRNewswire/
-- Broadridge Financial Solutions, Inc. (NYSE:BR) today
reported financial results for the second quarter ended
December 31, 2022 of its fiscal year
2023. 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
|
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
|
|
|
|
|
|
|
|
|
Recurring
revenues
|
|
$840
|
$793
|
6 %
|
$1,646
|
$1,543
|
7 %
|
Constant currency growth -
Non-GAAP
|
|
|
|
|
8 %
|
|
|
9 %
|
Total
revenues
|
|
$1,293
|
$1,260
|
3 %
|
$2,576
|
$2,452
|
5 %
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
$108
|
$69
|
57 %
|
$195
|
$172
|
14 %
|
Margin
|
|
|
8.3 %
|
5.5 %
|
|
7.6 %
|
7.0 %
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
income - Non-GAAP
|
|
$173
|
$141
|
23 %
|
$323
|
$318
|
2 %
|
Margin -
Non-GAAP
|
|
|
13.4 %
|
11.2 %
|
|
12.5 %
|
12.9 %
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$0.48
|
$0.40
|
20 %
|
$0.91
|
$0.97
|
(6 %)
|
Adjusted EPS -
Non-GAAP
|
|
$0.91
|
$0.82
|
11 %
|
$1.75
|
$1.89
|
(7 %)
|
|
|
|
|
|
|
|
|
|
Closed sales
|
|
$65
|
$82
|
(20 %)
|
$94
|
$112
|
(16 %)
|
"Broadridge delivered strong results in the second quarter,"
said Tim Gokey, Broadridge's CEO.
"Recurring revenues grew 8% constant currency and Adjusted EPS grew
11%, driven by continued revenue growth and disciplined expense
management. We continue to see growth driven by conversion of sales
backlog into new revenue and strength in investor
participation.
"The strength of our results and the resilience of our business
keep us on track to deliver on our full-year guidance, including
6-9% Recurring revenue growth constant currency and 7-11% Adjusted
EPS growth. As a result, we continue to expect to deliver at or
above the higher end of our three-year financial objectives,
including 7-9% Recurring revenue and 8-12% Adjusted EPS growth," he
added.
Fiscal Year 2023
Financial Guidance
|
|
|
FY'23
Guidance
|
Updates /
Changes
|
Recurring revenue
growth constant currency - Non-GAAP
|
|
6 -
9%
|
No Change
|
Adjusted Operating
income margin - Non-GAAP
|
|
Increase of ~50
bps
|
No Change
|
Adjusted earnings per
share growth - Non-GAAP
|
|
7 -
11%
|
No Change
|
Closed sales
|
|
$270 -
$310M
|
No Change
|
Financial Results for Second Quarter Fiscal Year 2023
compared to Second Quarter Fiscal Year 2022
- Total revenues increased 3% to $1,293 million from $1,260
million.
-
- Recurring revenues increased $47
million, or 6%, to $840
million. Recurring revenue growth constant currency
(Non-GAAP) was 8%, driven by organic growth from a combination of
growth in Net New Business in GTO and ICS and Internal Growth,
primarily in our ICS business.
- Event-driven revenues decreased $27
million, or 42%, to $38
million, primarily due to the decrease in volume of mutual
fund proxy communications.
- Distribution revenues increased $13
million, or 3%, to $415
million, primarily driven by the impact of a postage rate
increase of approximately $20
million, partially offset by lower volume of ICS mutual fund
communications.
- Operating income was $108
million, an increase of $39
million, or 57%. Operating income margin increased to 8.3%,
compared to 5.5% for the prior year period, due to the growth in
Recurring revenues and lower amortization expense from acquired
intangible assets, more than offsetting lower event-driven
revenues, an increase in low-margin distribution revenues, growth
investments and other expenses.
-
- Adjusted Operating income was $173 million, an increase of $32 million, or 23%. The increase was primarily
driven by higher Recurring revenues, partially offset by lower
event-driven revenues. Adjusted Operating income margin increased
to 13.4% compared to 11.2% for the prior year period. The increase
in pass through distribution revenues negatively impacted margins
by approximately 20 basis points.
- Interest expense, net was $34
million, an increase of $13
million, primarily due to an increase in interest expense
from higher borrowing costs, partially offset by savings from the
Company's cross-currency swap transaction.
- The effective tax rate was 20.0% compared to 9.1% in the
prior year period. The effective tax rate for the three months
ended December 31, 2022 was adversely
impacted by lower discrete tax benefits, primarily attributable to
the excess tax benefits related to equity compensation.
- Net earnings increased 22% to $58
million and Adjusted Net earnings increased 11% to
$108 million.
-
- Diluted earnings per share increased 20% to $0.48, compared to $0.40 in the prior year period, and
- Adjusted earnings per share increased 11% to
$0.91, compared to $0.82 in the prior year period.
Segment and Other Results for Second Quarter Fiscal Year 2023
compared to Second Quarter Fiscal Year 2022
Investor Communication Solutions ("ICS")
- ICS total revenues were $919
million, an increase of $27
million, or 3%.
-
- Recurring revenues increased $40
million or 9%, to $467
million. Recurring revenue growth constant currency
(Non-GAAP) was 10%, driven by organic growth from a combination of
Internal Growth and Net New Business.
- By product line, Recurring revenue growth and Recurring revenue
growth constant currency (Non-GAAP) were as follows:
-
- Regulatory rose 9% and 9%, respectively, driven by mutual
fund/ETF position growth of 6%, and equity position growth of 9% in
the quarter;
- Data-driven fund solutions rose 9% and 11%, respectively,
driven by growth in our mutual fund trade processing business and
growth in our data and analytics solutions;
- Issuer rose 12% and 12%, respectively, driven by growth in our
registered shareholder solutions and governance solutions products;
and
- Customer communications rose 10% and 11%, respectively, driven
by higher print and digital communications.
- Event-driven revenues decreased $27
million, or 42%, to $38
million, primarily due to the decrease in volume of mutual
fund proxy communications.
- Distribution revenues increased $13
million, or 3%, to $415
million primarily driven by the impact of current year
postage rate increase of approximately $20
million, partially offset by lower volume of mutual fund
communications.
- ICS earnings before income taxes increased by $6 million, or 11%, to $65
million. The earnings benefit from higher Recurring revenue
was partially offset by lower event-driven revenue. Operating
expenses rose 2%, or $21 million, to
$855 million. Amortization expense
from acquired intangibles decreased by $1
million to $15 million in the
second quarter of fiscal year 2023. Pre-tax margins increased to
7.1% from 6.6%.
Global Technology and Operations ("GTO")
- GTO Recurring revenues were $373
million, an increase of $7
million, or 2%. Recurring revenue growth constant currency
(Non-GAAP) was 6%, driven by organic growth from a combination of
Net New Business and Internal Growth.
- By product line, Recurring revenue growth and the corresponding
Recurring revenue growth constant currency (Non-GAAP) were as
follows:
-
- Capital markets rose 6% and 12%, respectively, driven by
Broadridge Trading and Connectivity Solutions ("BTCS"), higher
internal growth, and Net New Business; and
- Wealth and Investment management declined 5% and 3%,
respectively, as lower term license renewals more than offset
revenue from Net New Business.
- GTO earnings before income taxes were $44 million, an increase of $10 million, or 30%. The increase was driven
primarily by the $7 million growth in
Recurring revenues. Pre-tax margins increased to 11.8% from 9.2%.
Amortization expense from acquired intangibles decreased by
$8 million to $39 million in the second quarter of fiscal year
2023 period due to the impact of changes in foreign exchange rates
and the run-off of older acquisitions.
Other
- Other loss before income tax decreased to $37 million from $41
million in the prior year period, primarily due to lower
selling, general and administrative expenses which more than
offsets a $13 million increase in net
interest expense.
Financial Results for the Six Months Fiscal Year 2023
compared to the Six Months Fiscal Year 2022
- Total revenues increased 5% to $2,576 million from $2,452
million.
-
- Recurring revenues increased $103
million, or 7%, to $1,646
million. Recurring revenue growth constant currency
(Non-GAAP) was 9%, driven by organic growth from a combination of
growth in Net New Business and Internal Growth in both ICS and
GTO.
- Event-driven revenues decreased $41
million, or 29%, to $100
million, primarily due to the decrease in volume of mutual
fund proxy communications.
- Distribution revenues increased $61
million, or 8%, to $830
million, primarily driven by the impact of a postage rate
increase of approximately $53
million.
- Operating income was $195
million, an increase of $23
million, or 14%. Operating income margin increased to 7.6%,
compared to 7.0% for the prior year period, due to growth in
Recurring revenues and lower amortization expense from acquired
intangible assets more than offsetting lower event-driven revenues,
an increase in low-margin distribution revenues, growth investments
and other expenses.
-
- Adjusted Operating income was $323 million, an increase of $6 million, or 2%. The increase was primarily
driven by higher Recurring revenues, partially offset by lower
event-driven revenues and growth investments and other spending.
Adjusted Operating income margin decreased to 12.5% compared to
12.9% for the prior year period. The increase in pass through
distribution revenues negatively impacted margins by approximately
50 basis points.
- Interest expense, net was $61
million, an increase of $17
million, primarily due to an increase in interest expense
from higher borrowing costs, partially offset by savings from the
Company's cross-currency swap transaction.
- The effective tax rate was 15.2% compared to 12.1% in
the prior year period. The effective tax rate was adversely
impacted by lower discrete tax benefits, primarily attributable to
the excess tax benefits related to equity compensation.
- Net earnings decreased 6% to $108
million and Adjusted Net earnings decreased 7% to
$208 million.
-
- Diluted earnings per share decreased 6% to $0.91, compared to $0.97 in the prior year period, and
- Adjusted earnings per share decreased 7% to $1.75, compared to $1.89 in the prior year period.
Segment and Other Results for the Six Months Fiscal Year 2023
compared to the Six Months Fiscal Year 2022
Investor Communication Solutions
- ICS total revenues were $1,840
million, an increase of $94
million, or 5%.
-
- Recurring revenues increased $73
million, or 9%, to $910
million. Recurring revenue growth constant currency
(Non-GAAP) was also 9%, driven by organic growth from a combination
of Net New Business and Internal Growth.
- By product line, Recurring revenue growth and Recurring revenue
growth constant currency (Non-GAAP) were as follows:
-
- Regulatory rose 6% and 6%, respectively, driven by mutual
fund/ETF position growth of 10%, as well as a modest contribution
from equity position growth of 9%;
- Data-driven fund solutions rose 10% and 12%, respectively,
driven by growth in our mutual fund trade processing business and
continued growth in our data and analytics solutions;
- Issuer rose 14% and 14%, respectively, with growth across all
product solutions; and
- Customer communications rose 10% and 11%, respectively, driven
by higher print and digital communications.
- Event-driven revenues decreased $41
million, or 29%, to $100
million, primarily due to the decrease in volume of mutual
fund proxy communications.
- Distribution revenues increased $61
million, or 8%, to $830
million primarily driven by the impact of a postage rate
increase of approximately $53
million.
- ICS earnings before income taxes declined $16 million, or 12% to $125 million. The earnings benefit from higher
Recurring revenue was offset by lower event-driven revenue, higher
postage and distribution expenses, and increased costs from prior
year investments. Operating expenses rose 7%, or $110 million, to $1,715
million. Amortization expense from acquired intangibles
decreased by $7 million to
$30 million in the first six months
of fiscal year 2023. Pre-tax margins decreased to 6.8% from
8.1%.
Global Technology and Operations
- GTO Recurring revenues were $736
million, an increase of $30
million, or 4%. Recurring revenue growth constant currency
(Non-GAAP) was 8%, driven by organic growth from a combination of
Internal Growth and Net New Business.
- By product line, Recurring revenue growth and Recurring revenue
growth constant currency (Non-GAAP) were as follows:
-
- Capital markets rose 8% and 13%, respectively, driven by BTCS,
higher internal growth, and Net New Business; and
- Wealth and Investment management declined 1% and increased 1%,
respectively, as the revenue from Net New Business was partially
offset by lower term license renewals.
- GTO earnings before income taxes were $84 million, an increase of $32 million, or 61%. The increase was driven
primarily by the $30 million growth
in Recurring revenues. Pre-tax margins increased to 11.5% from
7.4%. Amortization expense from acquired intangibles decreased by
$15 million to $79 million in the first six months of fiscal
year 2023 period due to the impact of changes in foreign exchange
rates and the run-off of older acquisitions.
Other
- Other loss before income tax increased to $82 million from $64
million in the prior year period, primarily due increased
net interest expense of $17
million.
Change in Foreign Exchange Rates
Beginning with the first quarter of fiscal year 2023, the
Company changed reporting for segment revenues, segment earnings
(loss) before income taxes, segment amortization of acquired
intangibles and purchased intellectual property, and Closed sales
to reflect the impact of actual foreign exchange rates applicable
to the individual periods presented. The presentation of these
metrics for the prior periods has been changed to conform to the
current period presentation. Total consolidated revenues and
earnings before income taxes were not impacted. For additional
information, please see the Company's Form 8-K filed on
September 26, 2022.
Earnings Conference Call
An analyst conference call will be held today, February 2, 2023 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 9,
2023, the recording will also be available by dialing
1-877-344-7529 within the United
States or 1-412-317-0088 for international callers, using
passcode 5052694 for either dial-in number.
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. 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,
Free cash flow, and Recurring revenue growth constant currency.
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, and for internal planning
and forecasting purposes. 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 are adjusted to exclude the impact of
certain costs, expenses, gains and losses and other specified items
the exclusion of which management believes provides insight
regarding our ongoing operating performance. Depending on the
period presented, these adjusted measures exclude the impact of
certain of the following items: (i) Amortization of Acquired
Intangibles and Purchased Intellectual Property, (ii) Acquisition
and Integration Costs, (iii) Real Estate Realignment and Covid-19
Related Expenses, (iv) Investment Gain, and (v) Russia-Related Exit
Costs. 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. Real
Estate Realignment and Covid-19 Related Expenses are comprised of
two major components: Real Estate Realignment Expenses, and
Covid-19 Related Expenses. Real Estate Realignment Expenses are
expenses associated with the exit of certain of the Company's
leased facilities in response to the Covid-19 pandemic, which
consist of the impairment of certain right of use assets, leasehold
improvements and equipment, as well as other related facility exit
expenses directly resulting from, and attributable to, the exit of
these leased facilities. Covid-19 Related Expenses are direct and
incremental expenses incurred by the Company to protect the health
and safety of Broadridge associates during the Covid-19 outbreak,
including expenses associated with monitoring the temperatures for
associates entering our facilities, enhancing the safety of our
office environment in preparation for workers to return to Company
facilities on a more regular basis, ensuring proper social
distancing in our production facilities, personal protective
equipment, enhanced cleaning measures in our facilities, and other
safety related expenses. Investment Gain represents a
non-operating, non-cash gain on a privately held investment.
Russia-Related Exit Costs are direct and incremental costs
associated with the Company's wind down of business activities in
Russia in response to Russia's invasion of Ukraine, including relocation-related expenses
of impacted associates.
We exclude Acquisition and Integration Costs, Real Estate
Realignment and Covid-19 Related Expenses, the Investment Gain, and
Russia-Related Exit Costs from our Adjusted Operating income (as
applicable) and other adjusted earnings measures because excluding
such information provides us with an understanding of the results
from the primary operations of our business and enhances
comparability across fiscal reporting periods, as these items are
not reflective of our underlying operations or performance. 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.
Recurring revenue growth constant currency
As a multi-national company, we are subject to variability of
our reported U.S. dollar results due to changes in foreign currency
exchange rates. The exclusion of the impact of foreign currency
exchange fluctuations from our Recurring revenue growth, or what we
refer to as amounts expressed "on a constant currency basis," is a
Non-GAAP measure. We believe that excluding the impact of foreign
currency exchange fluctuations from our Recurring revenue growth
provides additional information that enables enhanced comparison to
prior periods.
Changes in Recurring revenue growth expressed on a constant
currency basis are presented excluding the impact of foreign
currency exchange fluctuations. To present this information,
current period results for entities reporting in currencies other
than the U.S. dollar are translated into U.S. dollars at the
average exchange rates in effect during the corresponding period of
the comparative year, rather than at the actual average exchange
rates in effect during the current fiscal year.
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," "on track," and other words
of similar meaning, are forward-looking statements. In particular,
information appearing in the "Fiscal Year 2023 Financial Guidance"
section and statements about our three-year objectives 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 Annual
Report on Form 10-K for the year ended June
30, 2022 (the "2022 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 2022 Annual
Report.
These risks include:
- changes in laws and regulations affecting Broadridge's clients
or the services provided by Broadridge;
- 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;
- the potential impact and effects of the Covid-19 pandemic
("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;
- 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, economic and geopolitical conditions and their
impact on the securities markets;
- the success of Broadridge in retaining and selling additional
services to its existing clients and in obtaining new clients;
- Broadridge's failure to keep pace with changes in technology
and demands of its clients;
- competitive conditions;
- Broadridge's ability to attract and retain key personnel;
and
- the impact of new acquisitions and divestitures.
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
(NYSE: BR), a global Fintech leader with over $5 billion in revenues, provides the critical
infrastructure that powers investing, corporate governance and
communications to enable better financial lives. We deliver
technology-driven solutions to banks, broker-dealers, asset and
wealth managers and public companies. Broadridge's infrastructure
serves as a global communications hub enabling corporate governance
by linking thousands of public companies and mutual funds to tens
of millions of individual and institutional investors around the
world. In addition, Broadridge's technology and operations
platforms underpin the daily trading of on average more than U.S.
$9 trillion of equities, fixed income
and other securities globally. A certified Great Place to Work®,
Broadridge is a part of the S&P 500® Index,
employing over 14,000 associates in 21 countries. For more
information about Broadridge, please visit www.broadridge.com.
Contact Information
Investors
broadridgeir@broadridge.com
Media
Gregg.rosenberg@broadridge.com
Condensed
Consolidated Statements of Earnings
(Unaudited)
|
|
In millions, except
per share amounts
|
|
Three Months
Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues
|
|
$ 1,292.9
|
|
$ 1,259.6
|
|
$ 2,576.2
|
|
$ 2,452.5
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
988.2
|
|
978.4
|
|
1,978.7
|
|
1,892.5
|
Selling, general and
administrative expenses
|
|
196.8
|
|
212.3
|
|
402.1
|
|
387.8
|
Total operating
expenses
|
|
1,185.0
|
|
1,190.7
|
|
2,380.8
|
|
2,280.3
|
Operating
income
|
|
107.9
|
|
68.9
|
|
195.4
|
|
172.1
|
Interest expense,
net
|
|
(34.1)
|
|
(21.4)
|
|
(61.0)
|
|
(44.0)
|
Other non-operating
income (expenses), net
|
|
(1.9)
|
|
4.4
|
|
(7.1)
|
|
2.0
|
Earnings before income
taxes
|
|
71.9
|
|
51.9
|
|
127.3
|
|
130.1
|
Provision for income
taxes
|
|
14.4
|
|
4.7
|
|
19.3
|
|
15.7
|
Net earnings
|
|
$
57.5
|
|
$
47.2
|
|
$
108.0
|
|
$
114.4
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
0.49
|
|
$
0.40
|
|
$
0.92
|
|
$
0.98
|
Diluted earnings per
share
|
|
$
0.48
|
|
$
0.40
|
|
$
0.91
|
|
$
0.97
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
117.7
|
|
116.6
|
|
117.6
|
|
116.4
|
Diluted
|
|
118.9
|
|
118.7
|
|
118.9
|
|
118.5
|
|
Amounts may not sum
due to rounding.
|
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
In millions, except
per share amounts
|
|
|
December 31,
2022
|
|
June 30,
2022
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
280.0
|
|
$
224.7
|
Accounts receivable,
net of allowance for doubtful accounts of
$5.9 and $6.8, respectively
|
|
|
860.2
|
|
946.9
|
Other current
assets
|
|
|
142.5
|
|
156.8
|
Total current
assets
|
|
|
1,282.7
|
|
1,328.4
|
Property, plant and
equipment, net
|
|
|
143.3
|
|
150.9
|
Goodwill
|
|
|
3,388.2
|
|
3,484.9
|
Intangible assets,
net
|
|
|
931.2
|
|
1,077.1
|
Deferred client
conversion and start-up costs
|
|
|
1,437.9
|
|
1,232.3
|
Other non-current
assets
|
|
|
867.9
|
|
895.3
|
Total
assets
|
|
|
$
8,051.3
|
|
$
8,168.8
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Payables and accrued
expenses
|
|
|
$
824.2
|
|
$
1,114.9
|
Contract
liabilities
|
|
|
194.7
|
|
198.5
|
Total current
liabilities
|
|
|
1,018.9
|
|
1,313.4
|
Long-term
debt
|
|
|
4,105.4
|
|
3,793.0
|
Deferred
taxes
|
|
|
404.4
|
|
446.1
|
Contract
liabilities
|
|
|
261.1
|
|
215.8
|
Other non-current
liabilities
|
|
|
474.8
|
|
481.5
|
Total
liabilities
|
|
|
6,264.7
|
|
6,249.8
|
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, 117.7 and
117.3
shares, respectively
|
|
|
1.6
|
|
1.6
|
Additional paid-in
capital
|
|
|
1,401.9
|
|
1,344.7
|
Retained
earnings
|
|
|
2,761.3
|
|
2,824.0
|
Treasury stock, at
cost: 36.8 and 37.2 shares, respectively
|
|
|
(2,017.2)
|
|
(2,024.8)
|
Accumulated other
comprehensive income (loss)
|
|
|
(361.0)
|
|
(226.3)
|
Total stockholders'
equity
|
|
|
1,786.6
|
|
1,919.1
|
Total liabilities and
stockholders' equity
|
|
|
$
8,051.3
|
|
$
8,168.8
|
|
Amounts may not sum
due to rounding.
|
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
In
millions
|
Six Months
Ended
December
31,
|
|
2022
|
|
2021
|
Cash Flows From
Operating Activities
|
|
|
|
Net earnings
|
$
108.0
|
|
$
114.4
|
Adjustments to
reconcile net earnings to net cash flows used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
42.5
|
|
41.1
|
Amortization of
acquired intangibles and purchased intellectual property
|
109.5
|
|
131.2
|
Amortization of other
assets
|
64.1
|
|
66.3
|
Write-down of
long-lived assets
|
0.5
|
|
8.1
|
Stock-based
compensation expense
|
36.5
|
|
36.2
|
Deferred income
taxes
|
(35.3)
|
|
16.4
|
Other
|
(3.7)
|
|
(19.3)
|
Changes in operating
assets and liabilities, net of assets and liabilities
acquired:
|
|
|
|
Current assets and
liabilities:
|
|
|
|
Decrease in Accounts receivable, net
|
110.9
|
|
49.2
|
(Increase) decrease in Other current assets
|
13.2
|
|
(32.5)
|
Decrease in Payables and accrued expenses
|
(307.4)
|
|
(236.5)
|
Increase in Contract liabilities
|
2.0
|
|
28.3
|
Non-current assets and
liabilities:
|
|
|
|
Increase in Other non-current assets
|
(291.8)
|
|
(321.5)
|
Increase in Other non-current liabilities
|
69.4
|
|
24.0
|
Net cash flows used in
operating activities
|
(81.4)
|
|
(94.6)
|
Cash Flows From
Investing Activities
|
|
|
|
Capital
expenditures
|
(15.9)
|
|
(11.3)
|
Software purchases and
capitalized internal use software
|
(17.2)
|
|
(17.9)
|
Acquisitions, net of
cash acquired
|
—
|
|
(13.3)
|
Other investing
activities
|
(2.0)
|
|
(11.4)
|
Net cash flows used in
investing activities
|
(35.1)
|
|
(53.9)
|
Cash Flows From
Financing Activities
|
|
|
|
Debt
proceeds
|
580.0
|
|
480.0
|
Debt
repayments
|
(270.0)
|
|
(211.0)
|
Dividends
paid
|
(160.3)
|
|
(141.2)
|
Purchases of Treasury
stock
|
(2.5)
|
|
(1.7)
|
Proceeds from exercise
of stock options
|
32.2
|
|
40.5
|
Other financing
activities
|
(2.5)
|
|
(7.5)
|
Net cash flows provided
by financing activities
|
176.9
|
|
159.2
|
Effect of exchange rate
changes on Cash and cash equivalents
|
(5.0)
|
|
(4.1)
|
Net change in Cash and
cash equivalents
|
55.3
|
|
6.6
|
Cash and cash
equivalents, beginning of period
|
224.7
|
|
274.5
|
Cash and cash
equivalents, end of period
|
$
280.0
|
|
$
281.2
|
|
Amounts may not sum
due to rounding.
|
Segment
Results
(Unaudited)
|
|
In
millions
|
Three Months
Ended
December
31,
|
Six Months
Ended
December
31,
|
|
2022
|
|
2021
|
2022
|
|
2021
|
Revenues
|
|
|
Investor Communication
Solutions
|
$
919.4
|
|
$
892.7
|
$ 1,840.0
|
|
$ 1,746.1
|
Global Technology and
Operations
|
373.5
|
|
366.9
|
736.2
|
|
706.4
|
Total
|
$ 1,292.9
|
|
$ 1,259.6
|
$ 2,576.2
|
|
$ 2,452.5
|
|
|
|
Earnings before
Income Taxes
|
|
|
Investor Communication
Solutions
|
$
64.9
|
|
$
58.7
|
$
124.9
|
|
$
141.2
|
Global Technology and
Operations
|
44.0
|
|
33.9
|
84.3
|
|
52.5
|
Other
|
(37.0)
|
|
(40.8)
|
(81.9)
|
|
(63.5)
|
Total
|
$
71.9
|
|
$
51.9
|
$
127.3
|
|
$
130.1
|
|
|
|
|
|
|
|
Pre-tax
margins:
|
|
|
|
|
|
|
Investor Communication
Solutions
|
7.1 %
|
|
6.6 %
|
6.8 %
|
|
8.1 %
|
Global Technology and
Operations
|
11.8 %
|
|
9.2 %
|
11.5 %
|
|
7.4 %
|
|
|
|
|
|
|
|
Amortization of
acquired intangibles and purchased intellectual
property
|
|
|
|
Investor Communication
Solutions
|
$
14.9
|
|
$
16.1
|
$
30.4
|
|
$
36.9
|
Global Technology and
Operations
|
38.8
|
|
46.4
|
79.1
|
|
94.2
|
Total
|
$
53.7
|
|
$
62.5
|
$
109.5
|
|
$
131.2
|
|
|
|
|
|
|
|
Amounts may not sum
due to rounding.
|
Supplemental
Reporting Detail - Additional Product Line Reporting
(Unaudited)
|
|
In
millions
|
Three Months
Ended
December
31,
|
|
Six Months
Ended
December
31,
|
|
2022
|
|
2021
|
|
%
Change
|
|
2022
|
|
2021
|
|
Change
|
Investor
Communication Solutions
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory
|
$
180.7
|
|
$
166.2
|
|
9 %
|
|
$
351.5
|
|
$
331.7
|
|
6 %
|
Data-driven fund
solutions
|
96.4
|
|
88.5
|
|
9 %
|
|
188.9
|
|
171.8
|
|
10 %
|
Issuer
|
26.5
|
|
23.7
|
|
12 %
|
|
50.4
|
|
44.2
|
|
14 %
|
Customer
communications
|
163.4
|
|
148.1
|
|
10 %
|
|
319.3
|
|
289.0
|
|
10 %
|
Total ICS Recurring revenues
|
466.9
|
|
426.5
|
|
9 %
|
|
910.1
|
|
836.7
|
|
9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and
other
|
25.2
|
|
24.6
|
|
2 %
|
|
54.7
|
|
52.2
|
|
5 %
|
Mutual
funds
|
12.4
|
|
40.1
|
|
(69 %)
|
|
45.6
|
|
88.9
|
|
(49 %)
|
Total ICS Event-driven revenues
|
37.6
|
|
64.7
|
|
(42 %)
|
|
100.2
|
|
141.0
|
|
(29 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
revenues
|
414.9
|
|
401.4
|
|
3 %
|
|
829.7
|
|
768.4
|
|
8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ICS
Revenues
|
$
919.4
|
|
$
892.7
|
|
3 %
|
|
$
1,840.0
|
|
$
1,746.1
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Technology
and Operations
|
|
|
|
|
|
|
|
|
|
|
|
Capital
markets
|
$
235.3
|
|
$
221.0
|
|
6 %
|
|
$
462.0
|
|
$
429.6
|
|
8 %
|
Wealth and investment
management
|
138.2
|
|
145.9
|
|
(5 %)
|
|
274.2
|
|
276.8
|
|
(1 %)
|
Total GTO Recurring revenues
|
373.5
|
|
366.9
|
|
2 %
|
|
736.2
|
|
706.4
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
$
1,292.9
|
|
$
1,259.6
|
|
3 %
|
|
$
2,576.2
|
|
$
2,452.5
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues by
Type
|
|
|
|
|
|
|
|
|
|
|
|
Recurring
revenues
|
$
840.4
|
|
$
793.5
|
|
6 %
|
|
$
1,646.2
|
|
$
1,543.0
|
|
7 %
|
Event-driven
revenues
|
37.6
|
|
64.7
|
|
(42 %)
|
|
100.2
|
|
141.0
|
|
(29 %)
|
Distribution
revenues
|
414.9
|
|
401.4
|
|
3 %
|
|
829.7
|
|
768.4
|
|
8 %
|
Total Revenues
|
$
1,292.9
|
|
$
1,259.6
|
|
3 %
|
|
$
2,576.2
|
|
$
2,452.5
|
|
5 %
|
|
Amounts may not sum
due to rounding.
|
Select Operating
Metrics
(Unaudited)
|
|
In millions
|
Three Months
Ended
December 31,
|
|
|
|
Six Months Ended
December 31,
|
|
|
|
2022
|
|
2021
|
|
%
Change
|
|
2022
|
|
2021
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
sales1
|
$65.4
|
|
$82.2
|
|
(20 %)
|
|
$94.4
|
|
$112.0
|
|
(16) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Record
Growth2
|
|
|
|
|
|
|
|
|
|
|
|
Equity positions (Stock
records)
|
9 %
|
|
20 %
|
|
|
|
9 %
|
|
29 %
|
|
|
Mutual fund/ETF
positions (Interim records)
|
6 %
|
|
12 %
|
|
|
|
10 %
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal Trade
Growth3
|
5 %
|
|
1 %
|
|
|
|
5 %
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not sum
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
1Refer to
the "Results of Operations" section of Broadridge's Form 10-Q for a
description of Closed sales and its calculation.
|
|
|
|
|
|
|
|
|
|
|
|
|
2Stock
record growth (also referred to as "SRG" or "equity position
growth") measures the estimated annual change in positions eligible
for equity
proxy materials. Interim record growth (also referred to as "IRG"
or "mutual fund/ETF position growth") measures the estimated change
in mutual fund
and exchange traded fund positions eligible for interim
communications. These metrics are calculated from equity proxy and
mutual fund/ETF
position data reported to Broadridge for the same issuers or funds
in both the current and prior year periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
3Represents
the estimated change in daily average 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,
|
|
2022
|
|
2021
|
2022
|
|
2021
|
Reconciliation of
Adjusted Operating Income
|
|
|
Operating income
(GAAP)
|
$
107.9
|
|
$ 68.9
|
$
195.4
|
|
$
172.1
|
Adjustments:
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual Property
|
53.7
|
|
62.5
|
109.5
|
|
131.2
|
Acquisition and
Integration Costs
|
3.7
|
|
7.8
|
7.7
|
|
10.7
|
Real Estate
Realignment and Covid-19 Related Expenses (a)
|
—
|
|
1.7
|
—
|
|
3.5
|
Russia-Related
Exit Costs (c)
|
7.9
|
|
—
|
10.5
|
|
—
|
Adjusted Operating
income (Non-GAAP)
|
$
173.1
|
|
$
140.8
|
$
323.2
|
|
$
317.5
|
Operating income margin
(GAAP)
|
8.3 %
|
|
5.5 %
|
7.6 %
|
|
7.0 %
|
Adjusted Operating
income margin (Non-GAAP)
|
13.4 %
|
|
11.2 %
|
12.5 %
|
|
12.9 %
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted Net earnings
|
|
|
Net earnings
(GAAP)
|
$ 57.5
|
|
$ 47.2
|
$
108.0
|
|
$
114.4
|
Adjustments:
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual Property
|
53.7
|
|
62.5
|
109.5
|
|
131.2
|
Acquisition and
Integration Costs
|
3.7
|
|
7.8
|
7.7
|
|
10.7
|
Real Estate
Realignment and Covid-19 Related Expenses (a)
|
—
|
|
1.7
|
—
|
|
3.5
|
Investment
Gain
|
—
|
|
(7.5)
|
—
|
|
(7.5)
|
Russia-Related Exit
Costs (c)
|
6.8
|
|
—
|
9.3
|
|
—
|
Subtotal of
adjustments
|
64.1
|
|
64.4
|
126.6
|
|
137.8
|
Tax impact of
adjustments (d)
|
(13.2)
|
|
(14.3)
|
(26.4)
|
|
(28.7)
|
Adjusted Net earnings
(Non-GAAP)
|
$
108.4
|
|
$ 97.3
|
$
208.2
|
|
$
223.5
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EPS
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP)
|
$ 0.48
|
|
$ 0.40
|
$ 0.91
|
|
$ 0.97
|
Adjustments:
|
|
|
|
|
|
|
Amortization of
Acquired Intangibles and Purchased
Intellectual Property
|
0.45
|
|
0.53
|
0.92
|
|
1.11
|
Acquisition and
Integration Costs
|
0.03
|
|
0.07
|
0.06
|
|
0.09
|
Real Estate
Realignment and Covid-19 Related Expenses (b)
|
—
|
|
0.01
|
—
|
|
0.03
|
Investment
Gain
|
—
|
|
(0.06)
|
—
|
|
(0.06)
|
Russia-Related Exit
Costs
|
0.06
|
|
—
|
0.08
|
|
—
|
Subtotal of
adjustments
|
0.54
|
|
0.54
|
1.06
|
|
1.16
|
Tax impact of
adjustments (d)
|
(0.11)
|
|
(0.12)
|
(0.22)
|
|
(0.24)
|
Adjusted earnings per
share (Non-GAAP)
|
$ 0.91
|
|
$ 0.82
|
$ 1.75
|
|
$ 1.89
|
|
(a) Real Estate
Realignment were ($0.1 million) and ($0.2 million) for the three
and six months ended December 31, 2021, respectively. Covid-19
Related Expenses were $1.8 million and $3.7 million for the three
and six months ended December 31, 2021, respectively.
|
|
(b) Real Estate Realignment Expenses impacted Adjusted
earnings per share by $0.00 for the three and six months ended
December 31, 2021. Covid-19 Related Expenses impacted Adjusted
earnings per share by $0.02 and $0.03 for the three and six months
ended December 31, 2021, respectively.
|
|
(c) Total
Russia-Related Exit costs were $6.8 million, comprised of $7.9
million of operating expenses, offset by a gain of $1.2 million in
non-operating income for the three months ended December 31, 2022.
For the six months ended December 31, 2022, total costs were $9.3
million, comprised of $10.5 million of operating expenses, offset
by the gain of $1.2 million in non-operating income.
|
|
(d) Calculated using
the GAAP effective tax rate, adjusted to exclude $0.5 million and
$7.2 million of excess tax benefits associated with stock-based
compensation for the three and six months ended December 31, 2022,
respectively, and $7.1 million and $11.5 million of excess tax
benefits associated with stock-based compensation for the three and
six months ended December 31, 2021, respectively. For purposes of
calculating the Adjusted earnings per share, the same adjustments
were made on a per share basis.
|
|
|
Six Months Ended
December 31,
|
|
2022
|
|
2021
|
Reconciliation of
Free cash flow
|
|
Net cash flows used in
operating activities (GAAP)
|
$
(81.4)
|
|
$
(94.6)
|
Capital expenditures
and Software purchases and capitalized internal use
software
|
(33.1)
|
|
(29.2)
|
Free cash flow
(Non-GAAP)
|
$ (114.5)
|
|
$ (123.8)
|
|
|
|
|
Reconciliation of
Recurring Revenue Growth Constant Currency
|
|
|
|
|
|
Three Months Ended
December 31, 2022
|
Investor
Communication Solutions
|
Regulatory
|
|
Data-
Driven
Fund
Solutions
|
|
Issuer
|
|
Customer
Comms.
|
|
Total
|
Recurring revenue
growth (GAAP)
|
9 %
|
|
9 %
|
|
12 %
|
|
10 %
|
|
9 %
|
Impact of foreign
currency exchange
|
1 %
|
|
2 %
|
|
— %
|
|
— %
|
|
1 %
|
Recurring revenue
growth constant
currency (Non-GAAP)
|
9 %
|
|
11 %
|
|
12 %
|
|
11 %
|
|
10 %
|
|
Six Months Ended
December 31, 2022
|
Investor
Communication Solutions
|
Regulatory
|
|
Data-
Driven
Fund
Solutions
|
|
Issuer
|
|
Customer
Comms.
|
|
Total
|
Recurring revenue
growth (GAAP)
|
6 %
|
|
10 %
|
|
14 %
|
|
10 %
|
|
9 %
|
Impact of foreign
currency exchange
|
— %
|
|
2 %
|
|
— %
|
|
— %
|
|
1 %
|
Recurring revenue
growth constant
currency (Non-GAAP)
|
6 %
|
|
12 %
|
|
14 %
|
|
11 %
|
|
9 %
|
|
Three Months Ended
December 31, 2022
|
Global Technology
and Operations
|
Capital
Markets
|
|
Wealth and
Investment
Management
|
|
Total
|
Recurring revenue
growth (GAAP)
|
6 %
|
|
(5 %)
|
|
2 %
|
Impact of foreign
currency exchange
|
6 %
|
|
3 %
|
|
5 %
|
Recurring revenue
growth constant
currency (Non-GAAP)
|
12 %
|
|
(3 %)
|
|
6 %
|
|
Six Months Ended
December 31, 2022
|
Global Technology
and Operations
|
Capital
Markets
|
|
Wealth and
Investment
Management
|
|
Total
|
Recurring revenue
growth (GAAP)
|
8 %
|
|
(1 %)
|
|
4 %
|
Impact of foreign
currency exchange
|
5 %
|
|
2 %
|
|
4 %
|
Recurring revenue
growth constant
currency (Non-GAAP)
|
13 %
|
|
1 %
|
|
8 %
|
|
|
|
|
|
Three Months
Ended
December 31,
2022
|
|
Six Months Ended
December 31, 2022
|
Consolidated
|
Total
|
|
Total
|
Recurring revenue
growth (GAAP)
|
6 %
|
|
7 %
|
Impact of foreign
currency exchange
|
2 %
|
|
2 %
|
Recurring revenue
growth constant currency (Non-GAAP)
|
8 %
|
|
9 %
|
|
Amounts may not sum
due to rounding
|
2023
Guidance
Reconciliation of
Non-GAAP to GAAP Measures
(Unaudited)
|
|
FY23 Recurring revenue
growth (a)
|
|
|
Impact of foreign
currency exchange
|
|
—
|
Recurring revenue
growth constant currency - Non-GAAP
|
|
6 - 9%
|
|
|
|
FY23 Adjusted Operating
income margin (b)
|
|
|
Operating income
margin % - GAAP
|
|
Increase of ~ 150
bps
|
Adjusted Operating
income margin % - Non-GAAP
|
|
Increase of ~ 50
bps
|
|
|
|
FY23 Adjusted earnings
per share growth rate (c)
|
|
|
Diluted earnings per
share - GAAP
|
|
~13 - 17%
growth
|
Adjusted earnings per
share - Non-GAAP
|
|
7 - 11%
growth
|
|
(a) The Company is
unable to reconcile its forward-looking Recurring revenue growth
constant currency fiscal year 2023 guidance without unreasonable
efforts because of the uncertainty in the amounts of future foreign
currency exchange rates. For the same reason, the Company is unable
to address the probable significance of the unavailable
information, which could be material to future results.
|
|
(b) Adjusted
Operating income margin guidance (Non-GAAP) is adjusted to exclude
the projected $255 million impact of Amortization of Acquired
Intangibles and Purchased Intellectual Property, Acquisition and
Integration Costs, and Russia-Related Exit Costs.
|
|
(c) Adjusted
earnings per share growth guidance (Non-GAAP) is adjusted to
exclude the projected $1.65 per share impact of Amortization of
Acquired Intangibles and Purchased Intellectual Property,
Acquisition and Integration Costs, and Russia-Related Exit Costs,
and is calculated using diluted shares
outstanding.
|
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content:https://www.prnewswire.com/news-releases/broadridge-reports-second-quarter-fiscal-2023-results-301736859.html
SOURCE Broadridge Financial Solutions, Inc.