LAKE SUCCESS, NY--(Marketwire - May 8, 2008) - Broadridge Financial Solutions, Inc.
(
NYSE:
BR), a leading global provider of technology-based outsourcing
solutions to the financial services industry, today reported earnings of
$29.5 million, or $0.21 per share for the third quarter ended March 31,
2008, compared to $41.9 million or $0.30 per share for the
comparable quarter of the previous fiscal year.
Commenting on the results, Richard J. Daly, Chief Executive Officer, said,
"Our third quarter results are directly in line with our expectations. We
are pleased that we were able to achieve this performance during a
difficult time for the markets we serve. Our Investor Communication
Solutions segment, historically responsible for over 70% of our annual
revenues and earnings, continued to perform well. In our Securities
Processing Solutions segment, we successfully completed an implementation
for Royal Bank of Canada, which achieved what had been the elusive goal of
consolidating retail and institutional securities processing onto one
platform, and added new wealth management capabilities. Our year-to-date
results combined with our view into our fourth and largest quarter lead us
to revise our earnings per share guidance range to $1.35 - $1.45 from $1.30
- $1.40, Non-GAAP, which excludes one-time transition expenses."
For the third quarter of fiscal year 2008, net revenues grew 1.2% to $498.8
million compared to $492.8 million for the same period last year. Net
earnings decreased 29.6% to $29.5 million from $41.9 million, and diluted
earnings per share decreased to $0.21 per share on slightly more
weighted-average shares outstanding, compared to $0.30 per share in the
third quarter of fiscal year 2007. Excluding expense adjustments for
one-time transition expenses and interest on debt related to Broadridge's
March 2007 spin-off from Automatic Data Processing, Inc. (
NYSE:
ADP), the
Non-GAAP net earnings for the third quarter of fiscal year 2008 decreased
to $36.5 million from $42.0 million, a decrease of 13.1%, to $0.26 per
share from $0.30 per share, compared to the same period last year.
Revenue growth of 1.2% in the third quarter of fiscal year 2008 was driven
primarily by sales and internal growth, as well as favorable foreign
exchange rates, and offset by the loss of two large clients previously
announced in fiscal year 2007. Pre-tax margin of 9.7% decreased by 4.5
percentage points, half of which related to the aforementioned spin-off
expense adjustments, and the remainder of which was due to the two client
losses and incremental investments. Our closed sales for the quarter of
$48.2 million and $116.0 million year-to-date are both above last year's
comparable quarter and year-to-date results.
For the nine months ended March 31, 2008, net revenues grew by 3.7% to
$1,415.1 million primarily driven by sales, internal growth from higher
market activity, and favorable foreign exchange rates. Pre-tax margins of
10.9% decreased by 1.0 percentage point in fiscal year 2008, resulting from
the aforementioned spin-off expense adjustments, higher incremental
investments and the two client losses in fiscal year 2007, compared to the
same period last year. Diluted earnings per share decreased 5.6% to $0.67
for the first nine months of fiscal year 2008, compared to diluted earnings
per share of $0.71 in the first nine months of fiscal year 2007. Excluding
the aforementioned spin-off expense adjustments, the Non-GAAP net earnings
for the nine months ended March 31, 2008, grew to $116.0 million from $99.5
million, an increase of 16.6%, or $0.82 per share from $0.72 per share,
compared to the same period last year. A reconciliation of Non-GAAP to
GAAP measures is included at the end of this release.
Analysis of Third Quarter Fiscal Year 2008
In the third quarter of fiscal year 2007, we changed our method for
determining intersegment transfer pricing. This change had no impact on
our consolidated results. In the business segment discussion below, we
compare actual results for the third quarter of fiscal year 2008 to results
for the third quarter of fiscal year 2007. A reconciliation of the results
for the nine months ended March 31, 2008 and the nine months ended March
31, 2007, as reported, is included at the end of this release.
Investor Communication Solutions
Net revenues for the Investor Communication Solutions segment increased
0.9% compared to the third quarter of fiscal year 2007, to $342.9 million
in the third quarter of fiscal year 2008. The increase was driven
primarily by sales and internal growth, both recurring and event-driven,
offset by the client loss. Operating margin increased 0.2 percentage
points compared to the third quarter of fiscal year 2007 reflecting product
mix and scale in the business.
Securities Processing Solutions
Net revenues for the Securities Processing Solutions segment decreased 4.3%
compared to the third quarter of fiscal year 2007, to $129.0 million in the
third quarter of fiscal year 2008. The decrease was primarily related to
the client loss, partially offset by sales. Operating margin decreased 5.2
percentage points compared to the third quarter of fiscal year 2007 as a
result of the client loss in fiscal year 2007 and higher expenses
associated with incremental investments.
Clearing and Outsourcing Solutions
Net revenues for the Clearing and Outsourcing Solutions segment decreased
1.3% compared to the third quarter of fiscal year 2007, to $22.9 million in
the third quarter of fiscal year 2008. The decrease was driven by the
client loss and lower net interest, significantly offset by new business
growth across the clearing services and outsourcing businesses and internal
growth from increased clearing trade volume. New business increased
revenue by 12.0%. Operating loss of $0.5 million for the third quarter of
fiscal year 2008 improved by $0.6 million from a loss of $1.1 million in
the third quarter of fiscal year 2007.
Fiscal Year 2008 Financial Guidance
We are raising the fiscal year 2008 financial guidance as follows: (1) 2% -
4% revenue growth and (2) Non-GAAP earnings per share before one-time
transition expenses within a range of $1.35 - $1.45 (GAAP earnings per
share of $1.29 - $1.39), based on diluted weighted-average shares
outstanding of approximately 141 million shares.
Mr. Daly commented, "The first nine months of our fiscal year have been
very good. This, in addition to the improved visibility we now have into
our fourth quarter, our biggest fiscal quarter each year in terms of
revenue and earnings, puts us in a position to increase our guidance
range."
Non-GAAP Measures
In certain circumstances, results have been presented that are Non-GAAP
measures and should be viewed in addition to, and not as a substitute for,
the Company's reported results. Management believes such Non-GAAP measures
provide investors a more complete understanding of Broadridge's underlying
operational results. These Non-GAAP measures are indicators that
management uses to provide additional meaningful comparisons between
current results and prior reported results, and as a basis for planning and
forecasting for future periods. A reconciliation of Non-GAAP to GAAP
measures is available in the accompanying schedules to this release and on
the Broadridge Investor Relations home page at
www.broadridge-ir.com.
Earnings Conference Call
An analyst conference call will be held today, Thursday, May 8th 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 webcast and view the slide
presentation, go to
www.broadridge-ir.com and click on the webcast icon.
The presentation will be available to download and print approximately 30
minutes before the webcast on the Broadridge Investor Relations home page
at
www.broadridge-ir.com. Broadridge's news releases, current financial
information, SEC filings and Investor Relations presentations are
accessible on the same website.
About Broadridge
Broadridge Financial Solutions, Inc., with over $2.0 billion in revenues
and more than 40 years of experience, is a leading global provider of
technology-based outsourcing solutions to the financial services industry.
Our systems and services include investor communication, securities
processing, and clearing and outsourcing solutions. We offer advanced,
integrated systems and services that are dependable, scalable and
cost-efficient. Our systems help reduce the need for clients to make
significant capital investments in operations infrastructure, thereby
allowing them to increase their focus on core business activities. For more
information about Broadridge, please visit
www.broadridge.com.
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, such as our
fiscal year 2008 financial guidance, and which may be identified by the use
of words like "expects," "assumes," "projects," "anticipates," "estimates,"
"we believe," "could be" and other words of similar meaning, 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 ended June 30, 2007 (the "2007 Annual Report"). Any forward-looking
statements are qualified in their entirety by reference to the factors
discussed in the 2007 Annual Report. These risks include: Broadridge's
success in retaining and selling additional services to its existing
clients and obtaining new clients; the pricing of Broadridge's products and
services; changes in laws affecting the investor communication services
provided by Broadridge; changes in laws regulating registered clearing
agencies and broker-dealers; declines in trading volume, market prices,
liquidity of securities markets or proprietary trading activity;
Broadridge's ability to continue to obtain data center services from its
former parent company, Automatic Data Processing, Inc. ("ADP");
Broadridge's debt levels and financing costs, including the impact of its
credit ratings on such costs; the ability of Broadridge to develop brand
recognition and its reputation with its clients and employees following its
separation from ADP in March 2007; the incurrence of additional costs
attributable to Broadridge's operations as a stand-alone public company;
changes in technology; availability of skilled technical employees; the
impact of new acquisitions and divestitures; competitive conditions; and
overall market and economic conditions. Broadridge disclaims any obligation
to update any forward-looking statements, whether as a result of new
information, future events or otherwise.
Broadridge Financial Solutions, Inc.
Condensed Consolidated and Combined Statements of Earnings
(In millions except per share amounts)
(Unaudited)
Three Months Nine Months
Ended March 31, Ended March 31,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Services revenues $ 485.6 $ 477.6 $ 1,371.6 $ 1,320.5
Other 19.4 21.8 67.8 61.9
--------- --------- --------- ---------
Total revenues 505.0 499.4 1,439.4 1,382.4
Interest expense from securities
operations 6.2 6.6 24.3 18.2
--------- --------- --------- ---------
Net revenues 498.8 492.8 1,415.1 1,364.2
--------- --------- --------- ---------
Operating expenses:
Cost of net revenues 383.1 375.1 1,063.0 1,050.9
Selling, general and
administrative expenses 60.0 47.6 171.6 149.2
Other expenses, net 7.3 0.2 25.7 1.8
--------- --------- --------- ---------
Total operating expenses 450.4 422.9 1,260.3 1,201.9
--------- --------- --------- ---------
Earnings before income taxes 48.4 69.9 154.8 162.3
Provision for income taxes 18.9 28.0 60.4 63.9
--------- --------- --------- ---------
Net earnings $ 29.5 $ 41.9 $ 94.4 $ 98.4
========= ========= ========= =========
Earnings per share:
Basic $ 0.21 $ 0.30 $ 0.68 $ 0.71
Diluted $ 0.21 $ 0.30 $ 0.67 $ 0.71
Weighted-average shares
outstanding:
Basic 139.9 138.8 139.7 138.8
Diluted 141.3 138.8 140.9 138.8
Dividends declared per common share $ 0.06 na $ 0.18 na
na - not applicable
Broadridge Financial Solutions, Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
March 31, June 30,
2008 2007
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 269.8 $ 88.6
Cash and securities segregated for regulatory
purposes and securities deposited with clearing
organizations 2.5 66.4
Accounts receivable, net of allowance for
doubtful accounts of $3.2 and $2.6,
respectively 381.2 502.7
Securities clearing receivables, net of
allowance for doubtful accounts of $2.1 and
$2.1, respectively 1,695.9 1,241.2
Other current assets 138.0 61.1
--------- ---------
Total current assets 2,487.4 1,960.0
Property, plant and equipment, net 78.3 77.4
Other non-current assets 154.7 129.2
Goodwill 484.9 480.2
Intangible assets, net 31.7 31.4
--------- ---------
Total assets $ 3,237.0 $ 2,678.2
========= =========
Liabilities and Stockholders Equity
Current liabilities:
Accounts payable $ 111.5 $ 91.5
Accrued expenses and other current liabilities 172.2 287.9
Securities clearing payables 1,557.0 915.4
Deferred revenues 109.2 24.6
Short-term borrowings 38.0 109.2
--------- ---------
Total current liabilities 1,987.9 1,428.6
Long-term debt 482.8 617.7
Other non-current liabilities 60.3 61.0
Deferred revenues 65.2 39.8
--------- ---------
Total liabilities 2,596.2 2,147.1
--------- ---------
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, 140.1 shares and 139.3 shares,
respectively 1.4 1.4
Additional paid-in capital 450.8 412.9
Retained earnings 158.8 90.3
Treasury stock -- at cost, 0.1 and 0.0 shares,
respectively (2.0) (0.1)
Accumulated other comprehensive income 31.8 26.6
--------- ---------
Total stockholders equity 640.8 531.1
--------- ---------
Total liabilities and stockholders
equity $ 3,237.0 $ 2,678.2
========= =========
Broadridge Financial Solutions, Inc.
Segment Results
(In millions)
(Unaudited)
Net Revenues
-------------------------------------------
Three Months Nine Months
Ended March 31, Ended March 31,
--------------------- ---------------------
2008 2007 2008 2007
---------- --------- ---------- ---------
Investor Communication
Solutions $ 342.9 $ 339.7 $ 945.2 $ 934.8
Securities Processing Solutions 129.0 134.8 381.0 379.0
Clearing and Outsourcing
Solutions 22.9 23.2 72.3 68.2
Other 0.2 -- 7.8 (7.9)
Foreign exchange 3.8 (4.9) 8.8 (9.9)
---------- --------- ---------- ---------
Total $ 498.8 $ 492.8 $ 1,415.1 $ 1,364.2
========== ========= ========== =========
Earnings before Income Taxes
-------------------------------------------
Three Months Nine Months
Ended March 31, Ended March 31,
--------------------- ---------------------
2008 2007 2008 2007
---------- --------- ---------- ---------
Investor Communication
Solutions $ 32.4 $ 31.3 $ 89.4 $ 72.6
Securities Processing
Solutions 36.0 44.6 109.8 113.2
Clearing and Outsourcing
Solutions (0.5) (1.1) (4.1) (11.3)
Other (20.9) (2.6) (43.9) (7.9)
Foreign exchange 1.4 (2.3) 3.6 (4.3)
---------- --------- ---------- ---------
Total $ 48.4 $ 69.9 $ 154.8 $ 162.3
========== ========= ========== =========
Broadridge Financial Solutions, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Earnings, Margin and Per Share Reconciliation
(In millions, except per share and margin data)
(Unaudited)
Three Months Ended March 31, 2008
------------------------------------------
Earnings
Before Diluted
Income Pre-tax Net Earnings
Taxes Margin Earnings Per Share
---------- --------- ---------- ---------
GAAP basis measures $ 48.4 9.7% $ 29.5 $ 0.21
Non-GAAP adjustments:
One-time transition
expenses 4.2 0.8% 2.5 0.02
Interest on new debt & other 7.3 1.5% 4.5 0.03
---------- --------- ---------- ---------
Total Non-GAAP adjustments 11.5 2.3% 7.0 0.05
---------- --------- ---------- ---------
Non-GAAP measures $ 59.9 12.0% $ 36.5 $ 0.26
========== ========= ========== =========
Three Months Ended March 31, 2007
------------------------------------------
Earnings
Before Diluted
Income Pre-tax Net Earnings
Taxes Margin Earnings Per Share
---------- --------- ---------- ---------
GAAP basis measures $ 69.9 14.2% $ 41.9 $ 0.30
Non-GAAP adjustments:
One-time transition expenses -- -- -- --
Interest on new debt & other 0.2 -- 0.1 --
---------- --------- ---------- ---------
Total Non-GAAP adjustments 0.2 -- 0.1 --
---------- --------- ---------- ---------
Non-GAAP measures $ 70.1 14.2% $ 42.0 $ 0.30
========== ========= ========== =========
Broadridge Financial Solutions, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Earnings, Margin and Per Share Reconciliation
(In millions, except per share and margin data)
(Unaudited)
Nine Months Ended March 31, 2008
------------------------------------------
Earnings
Before Diluted
Income Pre-tax Net Earnings
Taxes Margin Earnings Per Share
---------- --------- ---------- ---------
GAAP basis measures $ 154.8 10.9% $ 94.4 $ 0.67
Non-GAAP adjustments:
One-time transition expenses 9.8 0.7% 5.9 0.04
Interest on new debt & other 25.7 1.8% 15.7 0.11
---------- --------- ---------- ---------
Total Non-GAAP adjustments 35.5 2.5% 21.6 0.15
---------- --------- ---------- ---------
Non-GAAP measures $ 190.3 13.4% $ 116.0 $ 0.82
========== ========= ========== =========
Nine Months Ended March 31, 2007
------------------------------------------
Earnings
Before Diluted
Income Pre-tax Net Earnings
Taxes Margin Earnings Per Share
---------- --------- ---------- ---------
GAAP basis measures $ 162.3 11.9% $ 98.4 $ 0.71
Non-GAAP adjustments:
One-time transition expenses -- -- -- --
Interest on new debt & other 1.8 0.1% 1.1 0.01
---------- --------- ---------- ---------
Total Non-GAAP adjustments 1.8 0.1% 1.1 0.01
---------- --------- ---------- ---------
Non-GAAP measures $ 164.1 12.0% $ 99.5 $ 0.72
========== ========= ========== =========
Broadridge Financial Solutions, Inc.
Intersegment Transfer Price Reconciliation
(In millions except margin data)
(Unaudited)
Three Months Nine Months
Ended March 31, Ended March 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Investor Communications Solutions
Net revenue as reported $ 342.9 $ 339.7 $ 945.2 $ 934.8
Transfer pricing adjustment -- -- -- (2.0)
-------- -------- -------- --------
Net revenue as adjusted - Non-GAAP $ 342.9 $ 339.7 $ 945.2 $ 932.8
-------- -------- -------- --------
EBT as reported $ 32.4 $ 31.3 $ 89.4 $ 72.6
Transfer pricing adjustment -- -- -- (0.7)
-------- -------- -------- --------
EBT as adjusted - Non-GAAP $ 32.4 $ 31.3 $ 89.4 $ 71.9
-------- -------- -------- --------
Margin % as reported 9.4% 9.2% 9.5% 7.8%
Margin % as adjusted - Non-GAAP 9.4% 9.2% 9.5% 7.7%
Securities Processing Solutions
Net revenue as reported $ 129.0 $ 134.8 $ 381.0 $ 379.0
Transfer pricing adjustment -- -- -- (6.0)
-------- -------- -------- --------
Net revenue as adjusted - Non-GAAP $ 129.0 $ 134.8 $ 381.0 $ 373.0
-------- -------- -------- --------
EBT as reported $ 36.0 $ 44.6 $ 109.8 $ 113.2
Transfer pricing adjustment -- -- -- (4.3)
-------- -------- -------- --------
EBT as adjusted - Non-GAAP $ 36.0 $ 44.6 $ 109.8 $ 108.9
-------- -------- -------- --------
Margin % as reported 27.9% 33.1% 28.8% 29.9%
Margin % as adjusted - Non-GAAP 27.9% 33.1% 28.8% 29.2%
Clearing and Outsourcing Solutions
Net revenue as reported $ 22.9 $ 23.2 $ 72.3 $ 68.2
Transfer pricing adjustment -- -- -- --
-------- -------- -------- --------
Net revenue as adjusted - Non-GAAP $ 22.9 $ 23.2 $ 72.3 $ 68.2
-------- -------- -------- --------
EBT as reported $ (0.5) $ (1.1) $ (4.1) $ (11.3)
Transfer pricing adjustment -- -- -- 5.0
-------- -------- -------- --------
EBT as adjusted - Non-GAAP $ (0.5) $ (1.1) $ (4.1) $ (6.3)
-------- -------- -------- --------
Margin % as reported -2.2% -4.7% -5.7% -16.6%
Margin % as adjusted - Non-GAAP -2.2% -4.7% -5.7% -9.2%
Contact Information: Contact:
Investor Relations
Marvin Sims
Broadridge Financial Solutions, Inc.
(516) 472-5477