PR Newswire
NEW YORK, Nov. 6, 2019
NEW YORK, Nov. 6, 2019 /PRNewswire/ -- Broadridge Financial Solutions, Inc. (NYSE: BR) today reported financial results for the first quarter ended September 30, 2019 of its fiscal year 2020. Results compared with the same period last year were as follows:
Summary Financial Results | First Quarter | |||||||
Dollars in millions, except per share data | 2020 | 2019 | Change | |||||
Total revenues | $949 | $973 | (2) | % | ||||
Recurring fee revenues | 623 | 576 | 8 | % | ||||
Operating income | 73 | 100 | (27) | % | ||||
Operating income margin | 7.7% | 10.3% | ||||||
Adjusted Operating income - Non-GAAP | 104 | 123 | (16) | % | ||||
Adjusted Operating income margin - Non-GAAP | 10.9% | 12.6% | ||||||
Diluted EPS | $0.48 | $0.64 | (25) | % | ||||
Adjusted EPS - Non-GAAP | $0.68 | $0.79 | (14) | % | ||||
Closed sales | $38 | $18 | 103 | % |
"Broadridge reported solid first quarter results and is well-positioned to deliver a strong fiscal year 2020," said Tim Gokey, Broadridge's Chief Executive Officer. "Recurring revenues rose 8% and we generated record first quarter Closed sales. We also continued to make targeted M&A investments in each of our core franchises, further positioning us for long-term growth. As expected, event-driven revenues returned to normalized levels from last year's record first quarter.
"We are reaffirming our fiscal year 2020 guidance, including recurring fee revenue growth of 8-10% and Adjusted EPS growth of 8-12%," Mr. Gokey added. "Broadridge is well on-track to achieve our three-year objectives laid out at the 2017 Investor Day, including the high end of our Adjusted EPS objectives."
Fiscal Year 2020 Financial Guidance - Unchanged
Recurring fee revenue growth | 8-10% | |
Total revenue growth | 3-6% | |
Operating income margin - GAAP | ~15% | |
Adjusted Operating income margin - Non-GAAP | ~18% | |
Diluted earnings per share growth | 5-9% | |
Adjusted earnings per share growth - Non-GAAP | 8-12% | |
Closed sales | $190-230M | |
Financial Results for the First Quarter Fiscal Year 2020 compared to the First Quarter Fiscal Year 2019
Segment and Other Results for the First Quarter 2020 compared to First Quarter 2019
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.
Investor Communication Solutions ("ICS")
Global Technology and Operations ("GTO")
Other
First Quarter 2020 Acquisitions
In September 2019, the Company acquired Financial Database Services, a provider of compensation management, compliance and advisor onboarding solutions for the wealth management industry. The acquisition expands Broadridge's capabilities and technology solutions for the wealth management industry. Terms of the deal were not disclosed.
Second Quarter 2020 Acquisitions
Broadridge completed three acquisitions subsequent to September 30, 2019 with an aggregate purchase price of approximately $171 million.
In October 2019, the Company also acquired Appatura Inc. Appatura's technology and operational capabilities enable asset managers and other issuers to streamline the composition of regulatory and marketing communications, enabling greater consistency and accuracy in content through a more automated process, while meeting regulatory requirements. Terms of the transaction were not disclosed.
Earnings Conference Call
An analyst conference call will be held today, Wednesday, November 6, 2019 at 8:30 a.m. ET. A live webcast of the call will be available to the public on a listen-only basis. To listen to the live event and access the slide presentation, visit Broadridge's Investor Relations website at www.broadridge-ir.com prior to the start of the webcast. To listen to the call, investors may also dial 1-877-328-2502 within the United States and international callers may dial 1-412-317-5419.
A replay of the webcast will be available and can be accessed in the same manner as the live webcast at the Broadridge Investor Relations site. Through November 20, 2019, 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, and (ii) Acquisition and Integration 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.
We 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:
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 full-time associates in 18 countries.
For more information about Broadridge, please visit www.broadridge.com.
Contact Information
Investors:
W. Edings Thibault
Investor Relations
(516) 472-5129
Media:
Gregg Rosenberg
Corporate Communications
(212) 918-6966
Condensed Consolidated Statements of Earnings | |||||||
(Unaudited) | |||||||
In millions, except per share amounts | Three Months Ended | ||||||
2019 | 2018 | ||||||
Revenues | $ | 948.6 | $ | 972.8 | |||
Operating expenses: | |||||||
Cost of revenues | 727.5 | 739.0 | |||||
Selling, general and administrative expenses | 148.0 | 133.7 | |||||
Total operating expenses | 875.4 | 872.7 | |||||
Operating income | 73.1 | 100.1 | |||||
Interest expense, net | (13.1) | (9.6) | |||||
Other non-operating income (expenses), net | 3.8 | (1.2) | |||||
Earnings before income taxes | 63.8 | 89.3 | |||||
Provision for income taxes | 7.9 | 12.6 | |||||
Net earnings | $ | 55.9 | $ | 76.7 | |||
Basic earnings per share | $ | 0.49 | $ | 0.66 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.64 | |||
Weighted-average shares outstanding: | |||||||
Basic | 114.4 | 116.4 | |||||
Diluted | 117.1 | 119.7 | |||||
Amounts may not sum due to rounding. |
Condensed Consolidated Balance Sheets | |||||||
(Unaudited) | |||||||
In millions, except per share amounts | September 30, | June 30, | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 358.3 | $ | 273.2 | |||
Accounts receivable, net of allowance for doubtful accounts of $2.1 and $2.6, respectively | 600.7 | 664.0 | |||||
Other current assets | 136.2 | 105.2 | |||||
Total current assets | 1,095.1 | 1,042.3 | |||||
Property, plant and equipment, net | 186.2 | 189.0 | |||||
Goodwill | 1,495.1 | 1,500.0 | |||||
Intangible assets, net | 546.8 | 556.2 | |||||
Other non-current assets | 896.9 | 593.1 | |||||
Total assets | $ | 4,220.1 | $ | 3,880.7 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 399.4 | $ | — | |||
Payables and accrued expenses | 547.9 | 711.7 | |||||
Contract liabilities | 93.5 | 90.9 | |||||
Total current liabilities | 1,040.9 | 802.6 | |||||
Long-term debt | 1,368.8 | 1,470.4 | |||||
Deferred taxes | 96.0 | 86.7 | |||||
Contract liabilities | 154.7 | 160.7 | |||||
Other non-current liabilities | 416.3 | 232.8 | |||||
Total liabilities | 3,076.6 | 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 114.6 and 114.3 shares outstanding, respectively | 1.6 | 1.6 | |||||
Additional paid-in capital | 1,131.1 | 1,109.3 | |||||
Retained earnings | 2,082.0 | 2,087.7 | |||||
Treasury stock, at cost: 39.8 and 40.2 shares, respectively | (1,991.6) | (1,999.8) | |||||
Accumulated other comprehensive loss | (79.5) | (71.2) | |||||
Total stockholders' equity | 1,143.4 | 1,127.5 | |||||
Total liabilities and stockholders' equity | $ | 4,220.1 | $ | 3,880.7 | |||
Amounts may not sum due to rounding. |
Condensed Consolidated Statements of Cash Flows | |||||
(Unaudited) | |||||
In millions | Three Months Ended | ||||
2019 | 2018 | ||||
Cash Flows From Operating Activities | |||||
Net earnings | $ | 55.9 | $ | 76.7 | |
Adjustments to reconcile net earnings to net cash flows used in operating activities: | |||||
Depreciation and amortization | 20.5 | 21.2 | |||
Amortization of acquired intangibles and purchased intellectual property | 28.1 | 21.9 | |||
Amortization of other assets | 22.8 | 21.6 | |||
Stock-based compensation expense | 11.8 | 10.7 | |||
Deferred income taxes | 7.5 | (1.4) | |||
Other | (11.0) | (5.4) | |||
Changes in operating assets and liabilities, net of assets and liabilities acquired: | |||||
Current assets and liabilities: | |||||
Decrease (increase) in Accounts receivable, net | 63.8 | (1.0) | |||
Increase in Other current assets | (33.4) | (4.6) | |||
Decrease in Payables and accrued expenses | (190.5) | (199.3) | |||
Increase (decrease) in Contract liabilities | 3.1 | (4.0) | |||
Non-current assets and liabilities: | |||||
Increase in Other non-current assets | (74.4) | (45.6) | |||
Increase in Other non-current liabilities | 9.4 | 13.6 | |||
Net cash flows used in operating activities | (86.4) | (95.5) | |||
Cash Flows From Investing Activities | |||||
Capital expenditures | (14.1) | (8.7) | |||
Software purchases and capitalized internal use software | (6.2) | (6.8) | |||
Acquisitions, net of cash acquired | (48.1) | — | |||
Other investing activities | (17.9) | (0.8) | |||
Net cash flows used in investing activities | (86.3) | (16.3) | |||
Cash Flows From Financing Activities | |||||
Debt proceeds | 337.5 | 120.0 | |||
Debt repayments | (40.0) | (30.0) | |||
Dividends paid | (55.4) | (42.5) | |||
Purchases of Treasury Stock | — | (1.1) | |||
Proceeds from exercise of stock options | 18.5 | 7.6 | |||
Other financing activities | (2.5) | 0.1 | |||
Net cash flows provided by financing activities | 258.1 | 54.2 | |||
Effect of exchange rate changes on Cash and cash equivalents | (0.2) | (1.6) | |||
Net change in Cash and cash equivalents | 85.1 | (59.3) | |||
Cash and cash equivalents, beginning of period | 273.2 | 263.9 | |||
Cash and cash equivalents, end of period | $ | 358.3 | $ | 204.7 | |
Amounts may not sum due to rounding. |
Segment Results | |||||||
(Unaudited) | |||||||
In millions | Three Months Ended | ||||||
2019 | 2018 | ||||||
Revenues | |||||||
Investor Communication Solutions | $ | 702.6 | $ | 755.0 | |||
Global Technology and Operations | 273.9 | 238.4 | |||||
Foreign currency exchange | (28.0) | (20.7) | |||||
Total | $ | 948.6 | $ | 972.8 | |||
Earnings (Loss) before Income Taxes | |||||||
Investor Communication Solutions | $ | 23.0 | $ | 58.8 | |||
Global Technology and Operations | 56.4 | 46.5 | |||||
Other | (21.1) | (23.2) | |||||
Foreign currency exchange | 5.6 | 7.1 | |||||
Total | $ | 63.8 | $ | 89.3 | |||
Pre-tax margins: | |||||||
Investor Communication Solutions | 3.3 | % | 7.8 | % | |||
Global Technology and Operations | 20.6 | % | 19.5 | % |
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. |
Supplemental Reporting Detail - Additional Product Line Reporting | ||||||||
(Unaudited) | ||||||||
In millions | Three Months Ended | |||||||
Investor Communication Solutions | 2019 | 2018 | Change | |||||
Equity Proxy | $ | 29.8 | $ | 31.0 | (4) | % | ||
Mutual fund and exchange-traded funds ("ETF") interims | 65.3 | 57.8 | 13 | % | ||||
Customer communications and fulfillment | 170.9 | 174.9 | (2) | % | ||||
Other ICS | 83.2 | 73.4 | 13 | % | ||||
Total ICS Recurring fee revenues | 349.2 | 337.1 | 4 | % | ||||
Equity and other | 17.5 | 24.1 | (27) | % | ||||
Mutual funds | 22.6 | 52.8 | (57) | % | ||||
Total ICS Event-driven fee revenues | 40.1 | 76.9 | (48) | % | ||||
Distribution revenues | 313.3 | 341.0 | (8) | % | ||||
Total ICS Revenues | $ | 702.6 | $ | 755.0 | (7) | % | ||
Global Technology and Operations | ||||||||
Equities and Other | $ | 230.9 | $ | 198.4 | 16 | % | ||
Fixed income | 43.1 | 40.0 | 8 | % | ||||
Total GTO Recurring fee revenues | 273.9 | 238.4 | 15 | % | ||||
Foreign currency exchange | (28.0) | (20.7) | 35 | % | ||||
Total Revenues | $ | 948.6 | $ | 972.8 | (2) | % | ||
Revenues by Type | ||||||||
Recurring fee revenues | $ | 623.2 | $ | 575.5 | 8 | % | ||
Event-driven fee revenues | 40.1 | 76.9 | (48) | % | ||||
Distribution revenues | 313.3 | 341.0 | (8) | % | ||||
Foreign currency exchange | (28.0) | (20.7) | 35 | % | ||||
Total Revenues | $ | 948.6 | $ | 972.8 | (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 September 30, | |||||
In millions | 2019 | 2018 | % Change | ||
Closed Sales | $37.6 | $18.5 | 103% | ||
Record Growth1 | |||||
Equity proxy | 7% | 14% | |||
Mutual fund interims | 1% | 7% | |||
Internal Trade Growth2 | |||||
Equity | (7)% | 19% | |||
Fixed Income | 19% | 4% | |||
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 | ||||||
2019 | 2018 | ||||||
Reconciliation of Adjusted Operating Income | |||||||
Operating income (GAAP) | $ | 73.1 | $ | 100.1 | |||
Adjustments: | |||||||
Amortization of Acquired Intangibles and Purchased Intellectual Property | 28.1 | 21.9 | |||||
Acquisition and Integration Costs | 2.5 | 0.9 | |||||
Adjusted Operating income (Non-GAAP) | $ | 103.7 | $ | 122.9 | |||
Operating income margin (GAAP) | 7.7 | % | 10.3 | % | |||
Adjusted Operating income margin (Non-GAAP) | 10.9 | % | 12.6 | % | |||
Reconciliation of Adjusted Net earnings | |||||||
Net earnings (GAAP) | $ | 55.9 | $ | 76.7 | |||
Adjustments: | |||||||
Amortization of Acquired Intangibles and Purchased Intellectual Property | 28.1 | 21.9 | |||||
Acquisition and Integration Costs | 2.5 | 0.9 | |||||
Taxable adjustments | 30.6 | 22.8 | |||||
Tax impact of adjustments (a) | (6.5) | (5.0) | |||||
Adjusted Net earnings (Non-GAAP) | $ | 80.0 | $ | 94.5 | |||
Reconciliation of Adjusted EPS | |||||||
Diluted earnings per share (GAAP) | $ | 0.48 | $ | 0.64 | |||
Adjustments: | |||||||
Amortization of Acquired Intangibles and Purchased Intellectual Property | 0.24 | 0.18 | |||||
Acquisition and Integration Costs | 0.02 | 0.01 | |||||
Taxable adjustments | 0.26 | 0.19 | |||||
Tax impact of adjustments (a) | (0.06) | (0.04) | |||||
Adjusted earnings per share (Non-GAAP) | $ | 0.68 | $ | 0.79 | |||
Reconciliation of Free Cash Flow | |||||||
Net cash flows used in operating activities (GAAP) | $ | (86.4) | $ | (95.5) | |||
Capital expenditures and Software purchases and capitalized internal use software | (20.2) | (15.5) | |||||
Free cash flow (Non-GAAP) | $ | (106.7) | $ | (111.0) |
(a) Calculated using the GAAP effective tax rate, adjusted to exclude excess tax benefits associated with stock-based compensation of $5.7 million in Q1 FY20 and $7.0 million in Q1 FY19. For purposes of calculating the Adjusted earnings per share, the same adjustments were made on a per share basis. |
Amounts may not sum due to rounding. |
Fiscal Year 2020 Guidance | ||
Reconciliation of Non-GAAP to GAAP Measures | ||
Adjusted Earnings Per Share Growth and Adjusted Operating Income Margin | ||
(Unaudited) | ||
FY20 Adjusted Earnings Per Share Growth Rate (a) | ||
Diluted earnings per share (GAAP) | 5% - 9% growth | |
Adjusted earnings per share (Non-GAAP) | 8% - 12% growth | |
FY20 Adjusted Operating Income Margin (b) | ||
Operating income margin % (GAAP) | ~15% | |
Adjusted Operating income margin % (Non-GAAP) | ~18% | |
(a) Adjusted earnings per share growth (Non-GAAP) is adjusted to exclude the projected impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, and Acquisition and Integration Costs, and is calculated using diluted shares outstanding. Fiscal year 2020 Non-GAAP Adjusted earnings per share guidance estimates exclude Amortization of Acquired Intangibles and Purchased Intellectual Property, and Acquisition and Integration Costs, net of taxes, of approximately $0.81 per share. |
(b) Adjusted Operating income margin (Non-GAAP) is adjusted to exclude the projected impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, and Acquisition and Integration Costs. Fiscal year 2020 Non-GAAP Adjusted Operating income margin guidance estimates exclude Amortization of Acquired Intangibles and Purchased Intellectual Property, and Acquisition and Integration Costs of approximately $124 million. |
View original content:http://www.prnewswire.com/news-releases/broadridge-reports-first-quarter-fiscal-year-2020-results-300952396.html
SOURCE Broadridge Financial Solutions, Inc.
We use cookies to tailor your experience, measure site performance and present relevant offers and advertisements. By clicking ‘Accept’ or any content on this site, you agree that cookies can be placed on your browser. You can view our privacy policy to learn more.
If you would like to get more data, alerts and access to Real Vision videos, join us as an Insider Tracking Advantage Ultra member