FactSet Research Systems Inc. (NYSE:FDS) (Nasdaq:FDS), a leading provider of integrated financial information and analytical applications to the global investment community, today announced its results for the fourth quarter of fiscal 2013.
For the quarter ended August 31, 2013, revenues increased to $219.3 million, up 6% over the prior year. Operating income was $70.5 million compared to $70.6 million in the year ago quarter. Net income was $51.0 million versus $48.5 million a year ago. Diluted earnings per share was $1.16 compared to $1.08 in the same period of fiscal 2012.
Adjusted operating income for the quarter was $73.2 million, up 4% over the prior year. Adjusted operating income excludes a non-cash pre-tax charge of $2.6 million for stock-based compensation primarily related to vesting of performance-based options granted in connection with the acquisition of StreetAccount in June 2012.
Adjusted net income increased 9% to $52.8 million, while adjusted diluted EPS grew 11% to $1.20. Adjusted net income and diluted EPS both exclude the after-tax stock-based compensation charge of $1.9 million or $0.04 per diluted share.
A reconciliation between GAAP and adjusted financial measures is presented on page 8 of this press release.
(Condensed and Unaudited)
Three Months Ended August 31,
(In thousands, except per share data) 2013 2012 Change
Revenues $219,332 $207,663 6%
Adjusted operating income $73,173 $70,627 4%
Adjusted net income $52,840 $48,539 9%
Adjusted diluted earnings per share $1.20 $1.08 11%
Diluted weighted average shares 44,043 45,152
"We are excited to report fourth quarter results that include ASV growth of $25 million and adjusted EPS growth of 11%. FactSet accelerated from growth in all geographies and across each user vertical," said Philip Hadley, Chairman and CEO. "We continue to expand the depth and breadth of our product suites and invest to capture an attractive forward opportunity, as evidenced by our employee growth this quarter."
Annual Subscription Value ("ASV")
ASV advanced $25 million or 6% excluding currency and totaled $888 million at August 31, 2013. Of this total, 81.6% is derived from buy-side clients and the remainder is from the sell-side firms who perform M&A advisory work and equity research (refer to the supplementary schedule on page 8 of this press release for the percentage split of ASV between client type on a historical basis). ASV at any given point in time represents the forward-looking revenues for the next 12 months from all services currently being supplied to clients.
Financial Highlights — Fourth Quarter of Fiscal 2013
• ASV from U.S. operations was $606 million and $282 million was related to international operations.
• U.S. revenues were $149.9 million, up 6% from the year ago quarter.
• Non-U.S. revenues rose 5% to $69.4 million as compared to the same period in fiscal 2012. Excluding the impact from foreign currency, the international growth rate was 6%.
• GAAP operating margin was 32.2%. Adjusted operating margin was 33.4%, compared to 34.0% a year ago.
• The effective tax rate for the fourth quarter was 28.1%, down from 31.7% a year ago. Excluding income tax benefits recorded during the second quarter of fiscal 2013 primarily from the reenactment of the U.S. Federal R&D credit, the annual effective tax rate was 28.9%.
• Quarterly free cash flow was $71 million, up 38% over the year ago quarter. For the full fiscal 2013 year, FactSet generated $251 million in free cash flow which is 20% higher than a year ago.
Operational Highlights — Fourth Quarter of Fiscal 2013
• Client count was 2,500 at August 31st, a net increase of 60 clients, the largest quarterly growth since 2006.
• Annual client retention was greater than 95% of ASV and 92% when expressed as a percentage of clients.
• Users increased by 1,409 over the past three months and totaled 50,925 professionals at August 31st. The user count gain was the highest quarterly increase since 2011.
• Employee count was 6,258 at August 31st, an increase of 358 employees during the quarter.
• Capital expenditures were $5.2 million.
• A regular quarterly dividend of $15.2 million or $0.35 per share was paid on September 17, 2013 to common stockholders of recorded as of August 30, 2013.
• The Company repurchased 1,397,351 shares for $144 million during the fourth quarter. At August 31st, $62 million remains authorized for future repurchases.
• Common shares outstanding were 43.3 million at August 31, 2013.
• On September 9th, FactSet relocated its California office from San Mateo to San Francisco.
Revere Data Acquisition
On September 5, 2013, FactSet announced it had acquired the assets of Revere Data, LLC for $15.4 million. Over the last decade, Revere has built an industry taxonomy that offers investors a unique way to classify companies and analyze how they fit in the global economy. Revere also offers a robust database of supply chain relationships that helps investors identify companies' interrelationships and mutual dependencies. At the time of acquisition, Revere had annual subscriptions of $4.9 million and is expected to reduce the Company's first quarter operating margin by 30 basis points and earnings by $0.01 per share. For the full year fiscal 2014, Revere is expected to dilute earnings per share by $0.02.
The following forward-looking statements reflect FactSet's expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. The Company does not intend to update its forward-looking statements until its next quarterly results announcement, other than in publicly available statements.
First Quarter Fiscal 2014 Expectations
• Revenues are expected to range between $222 million and $225 million.
• Operating margin is expected to range between 33.0% and 34.0%, which includes a 30 basis point reduction from Revere.
• The annual effective tax rate is expected to range between 28.5% and 29.5% and assumes the U.S. Federal R&D tax credit will be re-enacted by the end of the first quarter of fiscal 2014.
• GAAP diluted EPS should range between $1.21 and $1.24, the midpoint of the range represents 10% growth over last year's first quarter. GAAP diluted EPS assumes the U.S. Federal R&D tax credit will be re-enacted. If the U.S. Federal R&D tax credit is not re-enacted, first quarter's GAAP diluted EPS will be reduced by $0.03.