Recurring revenues grew 4%; up 4% constant currency
Diluted EPS rose to $1.79 and Adjusted EPS increased 9% to $2.23
Q3 Closed sales rose 29%; up 19% year-to-date
Expecting FY’24 Recurring revenue growth constant currency at the low end of 6-9% guidance range, Adjusted EPS growth at the middle of 8-12% range, and record Closed sales
NEW YORK, May 8, 2024 /PRNewswire/ — Broadridge Financial Solutions, Inc. (NYSE: BR) today reported financial results for the third quarter ended March 31, 2024 of its fiscal year 2024. 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 |
2024 |
2023 |
Change |
2024 |
2023 |
Change |
|
|
Recurring revenues |
$1,126 |
$1,082 |
4 % |
$2,896 |
$2,728 |
6 % |
|
|
Constant currency growth (Non-GAAP) |
4 % |
6 % |
|||||
|
Total revenues |
$1,726 |
$1,646 |
5 % |
$4,563 |
$4,222 |
8 % |
|
|
Operating income |
$303 |
$287 |
6 % |
$576 |
$482 |
19 % |
|
|
Margin |
17.5 % |
17.4 % |
12.6 % |
11.4 % |
|||
|
Adjusted Operating income (Non-GAAP) |
$370 |
$345 |
7 % |
$743 |
$668 |
11 % |
|
|
Margin (Non-GAAP) |
21.4 % |
21.0 % |
16.3 % |
15.8 % |
|||
|
Diluted EPS |
$1.79 |
$1.67 |
7 % |
$3.14 |
$2.58 |
22 % |
|
|
Adjusted EPS (Non-GAAP) |
$2.23 |
$2.05 |
9 % |
$4.24 |
$3.81 |
11 % |
|
|
Closed sales |
$80 |
$62 |
29 % |
$185 |
$156 |
19 % |
|
“Broadridge reported 4% Recurring revenue growth and 9% Adjusted EPS growth in a quarter that was modestly impacted by the timing of annual meetings,” said Tim Gokey, Broadridge CEO. “Closed sales rose 29% as we continue to execute on our strategy to democratize and digitize governance, simplify and innovate trading in capital markets, and modernize wealth management.
“Entering our fourth quarter, Broadridge is poised to deliver another year of steady and consistent growth. For fiscal 2024, we expect Recurring revenue growth constant currency at the low end of our 6-9% guidance range and are reaffirming our outlook for Adjusted EPS growth at the middle of our 8-12% range, as well as record Closed sales of $280-320 million. We also expect to deliver on our full year objective of 100% free flow conversion, positioning Broadridge to return additional capital to shareholders while funding tuck-in M&A,” Mr. Gokey added.
“Broadridge remains well-positioned for long-term growth and is on track to deliver on our three-year growth objectives including 5-8% organic Recurring revenue growth, 7-9% total Recurring revenue growth constant currency, and 8-12% Adjusted EPS growth.”
Fiscal Year 2024 Financial Guidance
|
FY’24 Guidance |
Updates |
||
|
Recurring revenue growth constant currency (Non-GAAP) |
6 – 9% |
Low end of range |
|
|
Adjusted Operating income margin (Non-GAAP) |
~20% |
No Change |
|
|
Adjusted Earnings per share growth (Non-GAAP) |
8 – 12% |
Middle of range |
|
|
Closed sales |
$280 – $320M |
No Change |
Financial Results for Third Quarter Fiscal Year 2024 compared to Third Quarter Fiscal Year 2023
Total revenues increased 5% to $1,726 million from $1,646 million.
Recurring revenues increased $44 million, or 4%, to $1,126 million. Recurring revenue growth constant currency (Non-GAAP) was 4%, all organic, driven by Net New Business and Internal Growth.
Event-driven revenues increased $15 million, or 29%, to $67 million, driven by equity proxy contests in the quarter.
Distribution revenues increased $21 million, or 4%, to $533 million, driven by the postage rate increase of approximately $30 million offset by lower communications volumes.
Operating income was $303 million, an increase of $16 million, or 6%. Operating income margin increased to 17.5%, compared to 17.4% for the prior year period, primarily due to higher Recurring revenues and higher event-driven revenues.
Adjusted Operating income was $370 million, an increase of $25 million, or 7%. Adjusted Operating income margin was 21.4% compared to 21.0% for the prior year period. The combination of higher distribution revenue and higher float income had a net benefit of 20 basis points.
Interest expense, net was $35 million, a decrease of $3 million, primarily due to a decrease in average borrowings, partially offset by an increase in interest expense from higher borrowing costs.
The effective tax rate was 19.8% compared to 20.6% in the prior year period. The effective tax rate for the three months ended March 31, 2024 was primarily driven by a higher excess tax benefit related to equity compensation, relative to pre-tax income, as compared to the prior year period.
Net earnings increased 8% to $214 million and Adjusted Net earnings increased 9% to $267 million.
Diluted earnings per share increased 7% to $1.79, compared to $1.67 in the prior year period, and
Adjusted earnings per share increased 9% to $2.23, compared to $2.05 in the prior year period.
Segment and Other Results for Third Quarter Fiscal Year 2024 compared to Third Quarter Fiscal Year 2023
Investor Communication Solutions (“ICS”)
Total revenues were $1,301 million, an increase of $44 million, or 4%.
Recurring revenues increased $8 million or 1%, to $701 million. Recurring revenue growth constant currency (Non-GAAP) was 1%, all organic, driven by Net New Business partially offset by Internal Growth. Internal Growth was negatively impacted by the timing of equity proxy and mutual fund communications.
By product line, Recurring revenue growth and Recurring revenue growth constant currency (Non-GAAP) were as follows:
Regulatory was essentially flat. The positive impact of equity position growth of 5% was offset by a delay in proxy communications, which shifted a portion of those communications into the fiscal fourth quarter. Mutual fund/ETF position growth was (1)%.
Data-driven fund solutions rose 4% and 4%, respectively, driven primarily by growth in our retirement and workplace products.
Issuer rose 3% and 3%, respectively, driven by growth in disclosure solutions.
Customer communications rose 1% and 1%, respectively, as growth in digital communications was partially offset by slower growth in print revenues.
Event-driven revenues increased $15 million, or 29%, to $67 million, driven by equity proxy contests in the quarter.
Distribution revenues increased $21 million, or 4%, to $533 million, driven by the postage rate increase of approximately $30 million offset by lower communication volumes.
Earnings before income taxes increased by $15 million, or 6%, to $270 million, primarily from higher Event-driven and Recurring revenue. Operating expenses rose 3%, or $29 million, to $1,031 million primarily driven by higher distribution and other segment expenses. Pre-tax margins increased to 20.8% from 20.3% in the prior period.
Global Technology and Operations (“GTO”)
Recurring revenues were $425 million, an increase of $37 million, or 9%. Recurring revenue growth constant currency (Non-GAAP) was 9%, all organic, driven by Internal Growth and Net New Business.
By product line, Recurring revenue growth and the corresponding Recurring revenue growth constant currency (Non-GAAP) were as follows:
Capital Markets rose 8% and 8%, respectively, driven by Net New Business and Internal Growth. Internal Growth was driven primarily by software term license revenue and higher trading volumes.
Wealth and Investment Management rose 12% and 11%, respectively, driven primarily by Internal Growth from software term license revenue. Net New Business was flat as strong sales were offset by client losses.
Earnings before income taxes were $53 million, an increase of $6 million, or 12%. Pre-tax margins increased to 12.5% from 12.3% as higher revenues more than offset higher expenses, including an increase in amortization and depreciation expenses of $16 million.
Other
Loss before income tax increased to $57 million from $53 million in the prior year period, primarily due to a Litigation Settlement Charge of $8 million partially offset by lower compensation and other selling, general and administrative expenses and the absence of Russia-Related Exit Costs of $1 million.
Financial Results for the Nine Months Fiscal Year 2024 compared to the Nine Months Fiscal Year 2023
Total revenues increased 8% to $4,563 million from $4,222 million.
Recurring revenues increased $168 million, or 6%, to $2,896 million. Recurring revenue growth constant currency (Non-GAAP) was 6%, all organic, driven by Net New Business and Internal Growth.
Event-driven revenues increased $57 million, or 38%, to $209 million, driven by higher mutual fund proxy, equity proxy contests, and corporate action activity.
Distribution revenues increased $116 million, or 9%, to $1,457 million, driven by the postage rate increase of approximately $85 million as well as higher event-driven mailings.
Operating income was $576 million, an increase of $93 million, or 19%. Operating income margin increased to 12.6%, compared to 11.4% for the prior year period, primarily due to higher Recurring revenues and higher event-driven revenues.
Adjusted Operating income was $743 million, an increase of $75 million, or 11%. Adjusted Operating income margin was 16.3% compared to 15.8% for the prior year period. The combination of higher distribution revenue and higher float income had a net benefit of 50 basis points.
Interest expense, net was $105 million, an increase of $6 million, primarily due to an increase in interest expense from higher borrowing costs, partially offset by a decrease in average borrowings.
The effective tax rate was 19.8% compared to 18.8% in the prior year period. The effective tax rate for the nine months ended March 31, 2024 was driven by an increase in pre-tax income relative to total discrete tax benefits. The higher excess tax benefit related to equity compensation was offset by a decrease in other discrete tax benefits.
Net earnings increased 22% to $375 million and Adjusted Net earnings increased 12% to $506 million.
Diluted earnings per share increased 22% to $3.14, compared to $2.58 in the prior year period, and
Adjusted earnings per share increased 11% to $4.24, compared to $3.81 in the prior year period.
Segment and Other Results for the Nine Months Fiscal Year 2024 compared to the Nine Months Fiscal Year 2023
Investor Communication Solutions
Total revenues were $3,330 million, an increase of $232 million, or 8%.
Recurring revenues increased $60 million or 4%, to $1,663 million. Recurring revenue growth constant currency (Non-GAAP) was 4%, all organic, driven primarily by Net New Business and Internal Growth. Internal Growth was negatively impacted by the timing of equity proxy communications.
By product line, Recurring revenue growth and Recurring revenue growth constant currency (Non-GAAP) were as follows:
Regulatory rose 3% and 3%, respectively. The positive impact of equity position growth of 6% was offset by a delay in proxy communications, which shifted a portion of those communications into the fiscal fourth quarter. Mutual fund/ETF position growth was 2%.
Data-driven fund solutions rose 8% and 7%, respectively, driven by growth in our retirement and workplace products.
Issuer rose 10% and 10%, respectively, driven by growth in our registered shareholder solutions and disclosure solutions.
Customer communications rose 1% and 1%, respectively, driven by growth in digital communications, partially offset by a modest decline in print revenue.
Event-driven revenues increased $57 million, or 38%, to $209 million, driven by higher mutual fund proxy, equity proxy contests, and corporate action activity.
Distribution revenues increased $116 million, or 9%, to $1,457 million, driven by the postage rate increase of approximately $85 million as well as higher event-driven mailings.
Earnings before income taxes increased by $101 million, or 27%, to $481 million, primarily from higher Recurring revenue and higher event-driven revenue. Operating expenses rose 5%, or $131 million, to $2,848 million primarily driven by higher distribution expenses. Pre-tax margins increased to 14.5% from 12.3% in the prior period.
Global Technology and Operations
Recurring revenues were $1,233 million, an increase of $108 million, or 10%. Recurring revenue growth constant currency (Non-GAAP) was 9%, all organic, driven by 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 10% and 9%, respectively, driven by Net New Business and Internal Growth, which benefited from higher trading volumes.
Wealth and Investment Management rose 9% and 10%, respectively, driven primarily by Net New Business and Internal Growth.
Earnings before income taxes were $126 million, a decrease of $6 million, or 4%. Pre-tax margins decreased to 10.2% from 11.7% as higher revenues were more than offset by higher expenses, including an increase in amortization and depreciation expenses of $46 million.
Other
Loss before income taxes increased to $140 million from $135 million in the prior year period, primarily due to a Litigation Settlement Charge of $8 million, an increase in Interest expense, net of $6 million, partially offset by the absence of Russia-Related Exit Costs of $11 million.
Earnings Conference Call
An analyst conference call will be held today, May 8, 2024 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 15, 2024, 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 9347187 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) Russia-Related Exit Costs, (iv) Litigation Settlement Charge, and (v) Restructuring and Other Related 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. 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. Litigation Settlement Charge represents the reserve established during the third quarter of 2024 related to the settlement of a claim. Restructuring and Other Related Costs represent costs associated with the Company’s Corporate Restructuring Initiative to exit and/or realign some of our businesses, streamline the Company’s management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas.
We exclude Acquisition and Integration Costs, Russia-Related Exit Costs, Litigation Settlement Charge, and Restructuring and Other Related 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 2024 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, 2023 (the “2023 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 2023 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;
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.
There may be other factors that may cause our actual results to differ materially from the forward-looking statements. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition.
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 $6 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. $10 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[email protected]
Media[email protected]
|
Condensed Consolidated Statements of Earnings |
||||||||
|
(Unaudited) |
||||||||
|
In millions, except per share amounts |
Three Months Ended |
Nine Months Ended |
||||||
|
2024 |
2023 |
2024 |
2023 |
|||||
|
Revenues |
$ 1,726.5 |
$ 1,645.7 |
$ 4,562.5 |
$ 4,221.9 |
||||
|
Operating expenses: |
||||||||
|
Cost of revenues |
1,187.3 |
1,137.7 |
3,319.8 |
3,116.4 |
||||
|
Selling, general and administrative expenses |
236.2 |
221.2 |
667.0 |
623.3 |
||||
|
Total operating expenses |
1,423.6 |
1,358.9 |
3,986.8 |
3,739.7 |
||||
|
Operating income |
302.9 |
286.8 |
575.7 |
482.2 |
||||
|
Interest expense, net |
(35.3) |
(38.5) |
(105.1) |
(99.5) |
||||
|
Other non-operating income (expenses), net |
(0.9) |
1.8 |
(3.5) |
(5.3) |
||||
|
Earnings before income taxes |
266.7 |
250.1 |
467.2 |
377.4 |
||||
|
Provision for income taxes |
52.9 |
51.6 |
92.3 |
70.9 |
||||
|
Net earnings |
$ 213.7 |
$ 198.5 |
$ 374.9 |
$ 306.5 |
||||
|
Basic earnings per share |
$ 1.81 |
$ 1.69 |
$ 3.18 |
$ 2.61 |
||||
|
Diluted earnings per share |
$ 1.79 |
$ 1.67 |
$ 3.14 |
$ 2.58 |
||||
|
Weighted-average shares outstanding: |
||||||||
|
Basic |
117.8 |
117.7 |
117.8 |
117.6 |
||||
|
Diluted |
119.4 |
119.1 |
119.2 |
118.9 |
||||
|
Amounts may not sum due to rounding. |
|
Condensed Consolidated Balance Sheets |
|||||
|
(Unaudited) |
|||||
|
In millions, except per share amounts |
March 31, |
June 30, |
|||
|
Assets |
|||||
|
Current assets: |
|||||
|
Cash and cash equivalents |
$ 235.6 |
$ 252.3 |
|||
|
Accounts receivable, net of allowance for doubtful accounts of |
1,165.1 |
974.0 |
|||
|
Other current assets |
164.3 |
166.2 |
|||
|
Total current assets |
1,565.1 |
1,392.5 |
|||
|
Property, plant and equipment, net |
155.0 |
145.7 |
|||
|
Goodwill |
3,451.9 |
3,461.6 |
|||
|
Intangible assets, net |
1,317.2 |
1,467.2 |
|||
|
Deferred client conversion and start-up costs |
905.2 |
937.0 |
|||
|
Other non-current assets |
821.0 |
829.2 |
|||
|
Total assets |
$ 8,215.4 |
$ 8,233.2 |
|||
|
Liabilities and Stockholders’ Equity |
|||||
|
Current liabilities: |
|||||
|
Current portion of long-term debt |
$ — |
$ 1,178.5 |
|||
|
Payables and accrued expenses |
893.5 |
1,019.5 |
|||
|
Contract liabilities |
229.0 |
199.8 |
|||
|
Total current liabilities |
1,122.4 |
2,397.8 |
|||
|
Long-term debt |
3,513.9 |
2,234.7 |
|||
|
Deferred taxes |
329.5 |
391.3 |
|||
|
Contract liabilities |
483.9 |
492.8 |
|||
|
Other non-current liabilities |
498.4 |
476.0 |
|||
|
Total liabilities |
5,948.2 |
5,992.6 |
|||
|
Stockholders’ equity: |
|||||
|
Preferred stock: Authorized, 25.0 shares; issued and outstanding, |
— |
— |
|||
|
Common stock, $0.01 par value: Authorized, 650.0 shares; issued, |
1.6 |
1.6 |
|||
|
Additional paid-in capital |
1,545.2 |
1,436.8 |
|||
|
Retained earnings |
3,205.3 |
3,113.0 |
|||
|
Treasury stock, at cost: 36.5 and 36.4 shares, respectively |
(2,171.1) |
(2,026.1) |
|||
|
Accumulated other comprehensive income (loss) |
(313.6) |
(284.7) |
|||
|
Total stockholders’ equity |
2,267.2 |
2,240.6 |
|||
|
Total liabilities and stockholders’ equity |
$ 8,215.4 |
$ 8,233.2 |
|||
|
Amounts may not sum due to rounding. |
|
Condensed Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
In millions |
Nine Months Ended March 31, |
||
|
2024 |
2023 |
||
|
Cash Flows From Operating Activities |
|||
|
Net earnings |
$ 374.9 |
$ 306.5 |
|
|
Adjustments to reconcile net earnings to net cash flows from operating activities: |
|||
|
Depreciation and amortization |
89.6 |
63.7 |
|
|
Amortization of acquired intangibles and purchased intellectual property |
151.4 |
162.8 |
|
|
Amortization of other assets |
116.8 |
95.3 |
|
|
Write-down of long-lived assets and related charges |
14.9 |
2.7 |
|
|
Stock-based compensation expense |
57.1 |
57.4 |
|
|
Deferred income taxes |
(62.9) |
(49.5) |
|
|
Other |
(29.5) |
(16.5) |
|
|
Changes in operating assets and liabilities, net of assets and liabilities acquired: |
|||
|
Current assets and liabilities: |
|||
|
Accounts receivable, net |
(145.9) |
(112.2) |
|
|
Other current assets |
6.1 |
15.6 |
|
|
Payables and accrued expenses |
(153.2) |
(180.2) |
|
|
Contract liabilities |
30.6 |
15.2 |
|
|
Non-current assets and liabilities: |
|||
|
Other non-current assets |
(175.7) |
(405.7) |
|
|
Other non-current liabilities |
60.8 |
139.1 |
|
|
Net cash flows from operating activities |
335.2 |
94.1 |
|
|
Cash Flows From Investing Activities |
|||
|
Capital expenditures |
(39.6) |
(21.4) |
|
|
Software purchases and capitalized internal use software |
(37.0) |
(25.4) |
|
|
Other investing activities |
— |
(2.3) |
|
|
Net cash flows from investing activities |
(76.6) |
(49.1) |
|
|
Cash Flows From Financing Activities |
|||
|
Debt proceeds |
722.7 |
750.0 |
|
|
Debt repayments |
(622.7) |
(470.0) |
|
|
Dividends paid |
(273.9) |
(245.7) |
|
|
Purchases of Treasury stock |
(161.8) |
(3.7) |
|
|
Proceeds from exercise of stock options |
70.5 |
35.1 |
|
|
Other financing activities |
(10.0) |
(2.5) |
|
|
Net cash flows from financing activities |
(275.1) |
63.3 |
|
|
Effect of exchange rate changes on Cash and cash equivalents |
(0.2) |
(1.4) |
|
|
Net change in Cash and cash equivalents |
(16.7) |
106.9 |
|
|
Cash and cash equivalents, beginning of period |
252.3 |
224.7 |
|
|
Cash and cash equivalents, end of period |
$ 235.6 |
$ 331.6 |
|
|
Amounts may not sum due to rounding. |
|
Segment Results |
|||||||
|
(Unaudited) |
|||||||
|
In millions |
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Revenues |
|||||||
|
Investor Communication Solutions |
$ 1,301.4 |
$ 1,257.2 |
$ 3,329.6 |
$ 3,097.2 |
|||
|
Global Technology and Operations |
425.1 |
388.5 |
1,233.0 |
1,124.6 |
|||
|
Total |
$ 1,726.5 |
$ 1,645.7 |
$ 4,562.5 |
$ 4,221.9 |
|||
|
Earnings before Income Taxes |
|||||||
|
Investor Communication Solutions |
$ 270.3 |
$ 255.5 |
$ 481.4 |
$ 380.4 |
|||
|
Global Technology and Operations |
53.2 |
47.6 |
126.2 |
131.9 |
|||
|
Other |
(56.9) |
(53.1) |
(140.4) |
(134.9) |
|||
|
Total |
$ 266.7 |
$ 250.1 |
$ 467.2 |
$ 377.4 |
|||
|
Pre-tax margins: |
|||||||
|
Investor Communication Solutions |
20.8 % |
20.3 % |
14.5 % |
12.3 % |
|||
|
Global Technology and Operations |
12.5 % |
12.3 % |
10.2 % |
11.7 % |
|||
|
Amortization of acquired intangibles and purchased intellectual property |
|||||||
|
Investor Communication Solutions |
$ 11.4 |
$ 13.3 |
$ 34.2 |
$ 43.7 |
|||
|
Global Technology and Operations |
39.2 |
39.9 |
117.1 |
119.1 |
|||
|
Total |
$ 50.6 |
$ 53.3 |
$ 151.4 |
$ 162.8 |
|||
|
Amounts may not sum due to rounding. |
|
Supplemental Reporting Detail – Additional Product Line Reporting |
|||||||||||
|
(Unaudited) |
|||||||||||
|
In millions |
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||
|
2024 |
2023 |
% Change |
2024 |
2023 |
Change |
||||||
|
Investor Communication Solutions |
|||||||||||
|
Regulatory |
$ 344.6 |
$ 345.7 |
— % |
$ 718.7 |
$ 697.1 |
3 % |
|||||
|
Data-driven fund solutions |
106.2 |
102.0 |
4 % |
313.3 |
290.9 |
8 % |
|||||
|
Issuer |
59.6 |
57.7 |
3 % |
118.7 |
108.2 |
10 % |
|||||
|
Customer communications |
190.8 |
188.0 |
1 % |
512.5 |
507.3 |
1 % |
|||||
|
Total ICS Recurring revenues |
701.1 |
693.5 |
1 % |
1,663.2 |
1,603.5 |
4 % |
|||||
|
Equity and other |
46.0 |
29.2 |
58 % |
108.9 |
83.9 |
30 % |
|||||
|
Mutual funds |
21.1 |
22.6 |
(7 %) |
100.3 |
68.2 |
47 % |
|||||
|
Total ICS Event-driven revenues |
67.0 |
51.8 |
29 % |
209.2 |
152.1 |
38 % |
|||||
|
Distribution revenues |
533.3 |
511.9 |
4 % |
1,457.2 |
1,341.6 |
9 % |
|||||
|
Total ICS Revenues |
$ 1,301.4 |
$ 1,257.2 |
4 % |
$ 3,329.6 |
$ 3,097.2 |
8 % |
|||||
|
Global Technology and Operations |
|||||||||||
|
Capital markets |
$ 265.8 |
$ 245.8 |
8 % |
$ 776.7 |
$ 707.8 |
10 % |
|||||
|
Wealth and investment management |
159.3 |
142.7 |
12 % |
456.3 |
416.9 |
9 % |
|||||
|
Total GTO Recurring revenues |
425.1 |
388.5 |
9 % |
1,233.0 |
1,124.6 |
10 % |
|||||
|
Total Revenues |
$ 1,726.5 |
$ 1,645.7 |
5 % |
$ 4,562.5 |
$ 4,221.9 |
8 % |
|||||
|
Revenues by Type |
|||||||||||
|
Recurring revenues |
$ 1,126.2 |
$ 1,082.0 |
4 % |
$ 2,896.2 |
$ 2,728.2 |
6 % |
|||||
|
Event-driven revenues |
67.0 |
51.8 |
29 % |
209.2 |
152.1 |
38 % |
|||||
|
Distribution revenues |
533.3 |
511.9 |
4 % |
1,457.2 |
1,341.6 |
9 % |
|||||
|
Total Revenues |
$ 1,726.5 |
$ 1,645.7 |
5 % |
$ 4,562.5 |
$ 4,221.9 |
8 % |
|||||
|
Amounts may not sum due to rounding. |
|
Select Operating Metrics |
|||||||||||
|
(Unaudited) |
|||||||||||
|
In millions |
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||
|
2024 |
2023 |
Change |
2024 |
2023 |
Change |
||||||
|
Closed sales (a) |
$ 79.6 |
$ 61.6 |
29 % |
$ 185.2 |
$ 156.0 |
19 % |
|||||
|
Record Growth (b) |
|||||||||||
|
Equity positions (Stock records) |
5 % |
10 % |
6 % |
10 % |
|||||||
|
Mutual fund/ETF positions (Interim records) |
(1) % |
6 % |
2 % |
8 % |
|||||||
|
Internal Trade Growth (c) |
11 % |
1 % |
13 % |
4 % |
|||||||
|
Amounts may not sum due to rounding. |
|||||||||||
|
(a) |
Refer to the “Results of Operations” section of Broadridge’s Form 10-Q for a description of Closed sales and its calculation. |
|
(b) |
Record Growth is comprised of stock record growth and interim record growth. Stock 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. |
|
(c) |
Represents 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 March 31, |
Nine Months Ended |
|||||
|
2024 |
2023 |
2024 |
2023 |
||||
|
Reconciliation of Adjusted Operating Income |
|||||||
|
Operating income (GAAP) |
$ 302.9 |
$ 286.8 |
$ 575.7 |
$ 482.2 |
|||
|
Adjustments: |
|||||||
|
Amortization of Acquired Intangibles and Purchased |
50.6 |
53.3 |
151.4 |
162.8 |
|||
|
Acquisition and Integration Costs |
0.8 |
3.3 |
1.0 |
11.0 |
|||
|
Russia-Related Exit Costs (a) |
— |
1.5 |
— |
12.0 |
|||
|
Litigation Settlement Charge |
8.2 |
— |
8.2 |
— |
|||
|
Restructuring and Other Related Costs (b) |
7.0 |
— |
7.0 |
— |
|||
|
Adjusted Operating income (Non-GAAP) |
$ 369.5 |
$ 344.8 |
$ 743.3 |
$ 668.0 |
|||
|
Operating income margin (GAAP) |
17.5 % |
17.4 % |
12.6 % |
11.4 % |
|||
|
Adjusted Operating income margin (Non-GAAP) |
21.4 % |
21.0 % |
16.3 % |
15.8 % |
|||
|
Reconciliation of Adjusted Net earnings |
|||||||
|
Net earnings (GAAP) |
$ 213.7 |
$ 198.5 |
$ 374.9 |
$ 306.5 |
|||
|
Adjustments: |
|||||||
|
Amortization of Acquired Intangibles and Purchased |
50.6 |
53.3 |
151.4 |
162.8 |
|||
|
Acquisition and Integration Costs |
0.8 |
3.3 |
1.0 |
11.0 |
|||
|
Russia-Related Exit Costs (a) |
— |
1.5 |
— |
10.8 |
|||
|
Litigation Settlement Charge |
8.2 |
— |
8.2 |
— |
|||
|
Restructuring and Other Related Costs (b) |
7.0 |
— |
7.0 |
— |
|||
|
Subtotal of adjustments |
66.6 |
58.0 |
167.6 |
184.6 |
|||
|
Tax impact of adjustments (c) |
(13.5) |
(12.0) |
(36.5) |
(38.4) |
|||
|
Adjusted Net earnings (Non-GAAP) |
$ 266.8 |
$ 244.5 |
$ 506.0 |
$ 452.7 |
|||
|
Reconciliation of Adjusted EPS |
|||||||
|
Diluted earnings per share (GAAP) |
$ 1.79 |
$ 1.67 |
$ 3.14 |
$ 2.58 |
|||
|
Adjustments: |
|||||||
|
Amortization of Acquired Intangibles and Purchased |
0.42 |
0.45 |
1.27 |
1.37 |
|||
|
Acquisition and Integration Costs |
0.01 |
0.03 |
0.01 |
0.09 |
|||
|
Russia-Related Exit Costs |
— |
0.01 |
— |
0.09 |
|||
|
Litigation Settlement Charge |
0.07 |
— |
0.07 |
— |
|||
|
Restructuring and Other Related Costs (b) |
0.06 |
— |
0.06 |
— |
|||
|
Subtotal of adjustments |
0.56 |
0.49 |
1.41 |
1.55 |
|||
|
Tax impact of adjustments (c) |
(0.11) |
(0.10) |
(0.31) |
(0.32) |
|||
|
Adjusted earnings per share (Non-GAAP) |
$ 2.23 |
$ 2.05 |
$ 4.24 |
$ 3.81 |
|||
|
(a) |
Russia-Related Exit Costs were $1.5 million for the three months ended March 31, 2023. For the nine months ended March 31, 2023, Russia-Related Exit Costs were $10.8 million, comprised of $12.0 million of operating expenses, offset by a gain of $1.2 million in non-operating income. |
|
(b) |
During the third quarter of fiscal year 2024, the Company exited a business resulting in a $7.0 million asset impairment charge in connection with the Corporate Restructuring Initiative. |
|
(c) |
Calculated using the GAAP effective tax rate, adjusted to exclude $3.2 million and $9.5 million of excess tax benefits associated with stock-based compensation for the three and nine months ended March 31, 2024, respectively, and $0.3 million and $7.5 million of excess tax benefits associated with stock-based compensation for the three and nine months ended March 31, 2023, respectively. For purposes of calculating the Adjusted earnings per share, the same adjustments were made on a per share basis. |
|
Nine Months Ended |
|||
|
2024 |
2023 |
||
|
Reconciliation of Free cash flow |
|||
|
Net cash flows from operating activities (GAAP) |
$ 335.2 |
$ 94.1 |
|
|
Capital expenditures and Software purchases and capitalized internal use software |
(76.6) |
(46.8) |
|
|
Free cash flow (Non-GAAP) |
$ 258.6 |
$ 47.3 |
|
|
Reconciliation of Recurring Revenue Growth Constant Currency |
|||||||||
|
Three Months Ended March 31, 2024 |
|||||||||
|
Investor Communication Solutions |
Regulatory |
Data- |
Issuer |
Customer |
Total |
||||
|
Recurring revenue growth (GAAP) |
— % |
4 % |
3 % |
1 % |
1 % |
||||
|
Impact of foreign currency exchange |
— % |
— % |
— % |
— % |
— % |
||||
|
Recurring revenue growth constant |
— % |
4 % |
3 % |
1 % |
1 % |
||||
|
Three Months Ended March 31, 2024 |
|||||
|
Global Technology and Operations |
Capital Markets |
Wealth and |
Total |
||
|
Recurring revenue growth (GAAP) |
8 % |
12 % |
9 % |
||
|
Impact of foreign currency exchange |
1 % |
— % |
— % |
||
|
Recurring revenue growth constant |
8 % |
11 % |
9 % |
||
|
Three Months Ended |
|
|
Consolidated |
Total |
|
Recurring revenue growth (GAAP) |
4 % |
|
Impact of foreign currency exchange |
— % |
|
Recurring revenue growth constant |
4 % |
|
Nine Months Ended March 31, 2024 |
|||||||||
|
Investor Communication Solutions |
Regulatory |
Data- |
Issuer |
Customer |
Total |
||||
|
Recurring revenue growth (GAAP) |
3 % |
8 % |
10 % |
1 % |
4 % |
||||
|
Impact of foreign currency exchange |
— % |
(1 %) |
— % |
— % |
— % |
||||
|
Recurring revenue growth constant |
3 % |
7 % |
10 % |
1 % |
4 % |
||||
|
Nine Months Ended March 31, 2024 |
|||||
|
Global Technology and Operations |
Capital Markets |
Wealth and |
Total |
||
|
Recurring revenue growth (GAAP) |
10 % |
9 % |
10 % |
||
|
Impact of foreign currency exchange |
(1 %) |
— % |
(1 %) |
||
|
Recurring revenue growth constant |
9 % |
10 % |
9 % |
||
|
Nine Months Ended |
|
|
Consolidated |
Total |
|
Recurring revenue growth (GAAP) |
6 % |
|
Impact of foreign currency exchange |
— % |
|
Recurring revenue growth constant |
6 % |
|
Amounts may not sum due to rounding. |
|
Fiscal Year 2024 Guidance |
||
|
Reconciliation of Non-GAAP to GAAP Measures |
||
|
Adjusted Earnings Per Share Growth and Adjusted Operating Income Margin |
||
|
(Unaudited) |
||
|
FY24 Recurring revenue growth |
||
|
Impact of foreign currency exchange (a) |
0 – 0.5% |
|
|
Recurring revenue growth constant currency (Non-GAAP) |
6 – 9% |
|
|
FY24 Adjusted Operating income margin (b) |
||
|
Operating income margin % (GAAP) |
~16% |
|
|
Adjusted Operating income margin % (Non-GAAP) |
~20% |
|
|
FY24 Adjusted earnings per share growth rate (c) |
||
|
Diluted earnings per share (GAAP) |
9 – 15% growth |
|
|
Adjusted earnings per share (Non-GAAP) |
8 – 12% growth |
|
|
(a) |
Based on forward rates as of March 2024. |
|
(b) |
Adjusted Operating income margin guidance (Non-GAAP) is adjusted to exclude the approximately $270 million impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, Litigation Settlement Charge, Restructuring and Other Related Costs. |
|
(c) |
Adjusted earnings per share growth guidance (Non-GAAP) is adjusted to exclude the approximately $1.80 per share impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, Litigation Settlement Charge, Restructuring and Other Related Costs, and Acquisition and Integration Costs, and is calculated using diluted shares outstanding. |
SOURCE Broadridge Financial Solutions, Inc.
