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Dun & Bradstreet (DNB) Beats on Q2 Earnings & Revenues
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Dun & Bradstreet Corp. (DNB - Free Report) reported second-quarter 2016 results wherein adjusted earnings of $1.37 per share and revenues of $398.8 million easily beat the Zacks Consensus Estimate of $1.18 and $394.5 million, respectively. On a year-over-year basis, the metrics increased a respective 9.6% and 6.2%.
The company also announced the divestiture of its Latin American and Benelux region operations to two of its Worldwide Network (WWN) partners – CB Alliance and Altares, respectively. As per the company, “these developments are in support of Dun & Bradstreet's global data strategy and customer-centric approach built on having the best data in every market, whether by Dun & Bradstreet direct ownership or through a WWN partner.”
The total value of deals including fees is over $200 million and the company expects to record a one-time non GAAP loss of $88 million, due to currency translation, upon completion of the transactions. The transactions are expected to close by Sep 2016. The divestments will be accretive to operating income and earnings per share in 2016 and 2017. However, revenues will decrease by nearly $6 million for the current year. Annual revenues going forward would decrease nearly $33 million due to the recurring nature of some part of revenues generated from the divested operations.
Quarter Details
On an adjusted basis and after including forex effect, total revenue came in at $399.3 million, up 5% year over year. Revenues from the company’s Americas segment grew 7% year over year to $329.6 million while that from Non-Americas declined 4% to $69.7 million owing to adverse currency translations.
On an adjusted basis and after including forex effect, Risk Management Solutions revenues from Americas increased 3% year over year to $184.4 million. Sales & Marketing Solutions revenues from the region grew 12% from the year-ago quarter to $145.2 million.
In Non-Americas, adjusted Risk Management Solutions revenues declined 2% year over year to $58.1 million. Sales & Marketing Solutions Non-Americas fell 3% from the year-ago quarter to $11.6 million.
Margins
On an adjusted basis, total operating costs were down 4% to $312.4 million. Total operating income was $86.9 million, up 8.4% year over year.
Dun & Bradstreet ended the quarter with $379.1 million in cash and cash equivalents and long-term debt of $1.7 billion. The company’s net debt position as of Jun 30, 2016 was $1.4 billion.
For the first half of the year, cash flow from operating activities was $180.9 million while free cash flow was $148.0 million, down 19.1% year over year due to higher payments related to restructuring activities, capex and interest expense.
Guidance
For 2016, the company continues to expect adjusted revenues to grow in a band of 4% to 6%. However, adjusted operating income is now expected to grow in the range of 1% to 5% compared with flat to up 4% projected earlier. Adjusted EPS is expected to be down 2% to up 3% compared with the earlier projection of down 3% to up 2%. Free cash flow (excluding legacy tax matters and probable regulatory fines related to China operations, if any) is expected to be around $255 million to $285 million.
Our Take
We believe that Dun & Bradstreet’s high-margin business model, strategic investments, partnerships, accretive cloud-based acquisitions and aggressive share buyback will drive growth.
Also, the company will be able to provide a wide range of products given its partnerships with the likes of Salesforce.com (CRM - Free Report) , Oracle Corp., SugarCRM, Salesforce Wave analytics platform and Lattice Engines, which in turn will drive its top line.
However, increasing competition from companies such as FactSet Research Systems Inc. (FDS - Free Report) and Nielsen N.V. will continue to hurt revenues and profitability in the near term. Moreover, a high debt level remains a concern.
Currently, Dun & Bradstreet has a Zacks Rank #4 (Sell).
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Dun & Bradstreet (DNB) Beats on Q2 Earnings & Revenues
Dun & Bradstreet Corp. (DNB - Free Report) reported second-quarter 2016 results wherein adjusted earnings of $1.37 per share and revenues of $398.8 million easily beat the Zacks Consensus Estimate of $1.18 and $394.5 million, respectively. On a year-over-year basis, the metrics increased a respective 9.6% and 6.2%.
The company also announced the divestiture of its Latin American and Benelux region operations to two of its Worldwide Network (WWN) partners – CB Alliance and Altares, respectively. As per the company, “these developments are in support of Dun & Bradstreet's global data strategy and customer-centric approach built on having the best data in every market, whether by Dun & Bradstreet direct ownership or through a WWN partner.”
The total value of deals including fees is over $200 million and the company expects to record a one-time non GAAP loss of $88 million, due to currency translation, upon completion of the transactions. The transactions are expected to close by Sep 2016. The divestments will be accretive to operating income and earnings per share in 2016 and 2017. However, revenues will decrease by nearly $6 million for the current year. Annual revenues going forward would decrease nearly $33 million due to the recurring nature of some part of revenues generated from the divested operations.
Quarter Details
On an adjusted basis and after including forex effect, total revenue came in at $399.3 million, up 5% year over year. Revenues from the company’s Americas segment grew 7% year over year to $329.6 million while that from Non-Americas declined 4% to $69.7 million owing to adverse currency translations.
On an adjusted basis and after including forex effect, Risk Management Solutions revenues from Americas increased 3% year over year to $184.4 million. Sales & Marketing Solutions revenues from the region grew 12% from the year-ago quarter to $145.2 million.
In Non-Americas, adjusted Risk Management Solutions revenues declined 2% year over year to $58.1 million. Sales & Marketing Solutions Non-Americas fell 3% from the year-ago quarter to $11.6 million.
Margins
On an adjusted basis, total operating costs were down 4% to $312.4 million. Total operating income was $86.9 million, up 8.4% year over year.
DUN &BRADST-NEW Price, Consensus and EPS Surprise
DUN &BRADST-NEW Price, Consensus and EPS Surprise | DUN &BRADST-NEW Quote
Balance Sheet & Cash Flow
Dun & Bradstreet ended the quarter with $379.1 million in cash and cash equivalents and long-term debt of $1.7 billion. The company’s net debt position as of Jun 30, 2016 was $1.4 billion.
For the first half of the year, cash flow from operating activities was $180.9 million while free cash flow was $148.0 million, down 19.1% year over year due to higher payments related to restructuring activities, capex and interest expense.
Guidance
For 2016, the company continues to expect adjusted revenues to grow in a band of 4% to 6%. However, adjusted operating income is now expected to grow in the range of 1% to 5% compared with flat to up 4% projected earlier. Adjusted EPS is expected to be down 2% to up 3% compared with the earlier projection of down 3% to up 2%. Free cash flow (excluding legacy tax matters and probable regulatory fines related to China operations, if any) is expected to be around $255 million to $285 million.
Our Take
We believe that Dun & Bradstreet’s high-margin business model, strategic investments, partnerships, accretive cloud-based acquisitions and aggressive share buyback will drive growth.
Also, the company will be able to provide a wide range of products given its partnerships with the likes of Salesforce.com (CRM - Free Report) , Oracle Corp., SugarCRM, Salesforce Wave analytics platform and Lattice Engines, which in turn will drive its top line.
However, increasing competition from companies such as FactSet Research Systems Inc. (FDS - Free Report) and Nielsen N.V. will continue to hurt revenues and profitability in the near term. Moreover, a high debt level remains a concern.
Currently, Dun & Bradstreet has a Zacks Rank #4 (Sell).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>