Broadridge reports revenue growth of 9%

Source: Broadridge

Broadridge Financial Solutions, Inc. (BR) today reported financial results for the fourth quarter of its fiscal year 2016.

Results for the three and twelve months ended June 30, 2016 compared with the same period last year were as follows:

Fourth Quarter Fiscal Year 2016 Results: 

  • Recurring fee revenues increased 7% to $649 million 
  • Total revenues increased 5% to $975 million 
  • Operating income increased 3% to $270 million 
  • Adjusted Operating income increased 3% to $279 million 
  • Net earnings increased 3% to $170 million 
  • Adjusted Net earnings increased 2% to $176 million 
  • Diluted earnings per share increased 4% to $1.40 
  • Adjusted Diluted earnings per share increased 4% to $1.45 
  • Closed sales increased 46% to $57 million 

Fiscal Year 2016 Results:

  • Recurring fee revenues increased 9% to $1.895 billion
  • Total revenues increased 8% to $2.897 billion
  • Operating income increased 7% to $500 million
  • Adjusted Operating income increased 8% to $537 million
  • Net earnings increased 7% to $307 million
  • Adjusted Net earnings increased 8% to $332 million
  • Diluted earnings per share increased 9% to $2.53
  • Adjusted Diluted earnings per share increased 11% to $2.73
  • Closed sales increased 3% to $151 million

Richard J. Daly, President and Chief Executive Officer commented, “Broadridge reported record results for fiscal year 2016. Revenues rose 8% to $2.9 billion, led by 9% growth in recurring fee revenues, and Adjusted EPS increased 11% to $2.73. I am especially pleased by the strong demand we saw for our products and services, as evidenced by $151 million of closed sales, an all-time high for Broadridge. We also continued to deploy capital to strengthen and grow our business, including the acquisition of DST’s North American Customer Communications business in July, which we expect will deliver significant strategic and financial benefits over a multi-year period.”

Mr. Daly added, “As a result of these strong results and our confidence in the strength of our business, the Board of Directors approved a 10% increase in our annual dividend amount to $1.32 per share. I am proud to note that Broadridge has raised its dividend every year since becoming a public company in 2007.”

“Looking forward to fiscal year 2017, Broadridge is very well positioned to achieve the three year financial objectives we set out at the beginning of fiscal year 2015. Our guidance for 2017 includes recurring fee revenue growth in the range of 29% to 31%, Adjusted EPS growth of 12% to 17%, and closed sales in the range of $140 million to $180 million,” Mr. Daly concluded.

Financial Results for Fourth Quarter Fiscal Year 2016

Revenues and Sales

Revenues for the fourth quarter of fiscal year 2016 increased 5% to $975 million, compared to $930 million for the prior year period. The $45 million increase was driven by: (i) higher recurring fee revenues of $43 million, or 7%; (ii) higher distribution revenues of $4 million, or 1%; and (iii) higher event-driven fee revenues of $3 million, or 6%. The positive contribution from recurring fee revenues reflected gains from Net New Business (3 pts), contributions from acquisitions (2 pts), and internal growth (2 pts). The Company defines Net New Business as recurring revenue from closed sales less recurring revenue from client losses.

Closed sales for the fourth quarter of fiscal year 2016 increased 46% to $57 million, compared to $39 million for the prior year period.

Operating Income

For the fourth quarter of fiscal year 2016:

  • Operating income was $270 million, an increase of $9 million, or 3%, compared to $262 million for the prior year period.
  • Operating income margin decreased to 27.7%, compared to 28.2% for the prior year period.
  • Adjusted Operating income was $279 million, an increase of $9 million, or 3%, compared to $270 million for the prior year period.
  • Adjusted Operating income margin decreased to 28.6%, compared to 29.1% for the prior year period.

The increase in Operating income and Adjusted Operating income was due to revenue growth. The 50 basis points decline in Operating income margin and Adjusted Operating income margin was primarily the result of higher corporate operating expenses, including severance costs and professional service fees, partially offset by higher segment pre-tax margins compared to the prior year period.

Net Earnings and Earnings Per Share

For the fourth quarter of fiscal year 2016:

  • Net earnings increased 3% to $170 million, compared to $166 million for the prior year period.
  • Adjusted Net earnings increased 2% to $176 million, compared to $172 million for the prior year period.
  • Diluted earnings per share increased 4% to $1.40, compared to $1.35 for the prior year period.
  • Adjusted Diluted earnings per share increased 4% to $1.45 from $1.40 for the prior year period

Diluted earnings per share and Adjusted Diluted earnings per share amounts in the current year period were positively impacted $0.01 per share and $0.02 per share, respectively, by a 1% decline in the number of weighted-average diluted shares outstanding to 121 million from 123 million for the prior year period.

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