Broadridge Financial Solutions, Inc. (BR - Free Report) reported disappointing second-quarter fiscal 2019 results, with earnings and revenues lagging the Zacks Consensus Estimate.
Adjusted earnings of 56 cents per share missed the consensus mark by 15 cents and declined 29% on a year-over-year basis. Total revenues of $953 million lagged the consensus mark by $17 million and fell 6% year over year.
So far this year, shares of Broadridge have gained 13% compared with the 14.5% rise of the industry.
Let’s check out the numbers in detail.
Revenues by Segment
Revenues in the Investor Communication Solutions segment fell 8% from the year-ago quarter’s level to $738 million. The decrease was due to fall in event-driven and distribution revenues, partially offset by increase in recurring fee revenues.
Global Technology and Operations segment revenues came in at $237 million, up 4% from the year-ago quarter’s tally. The figure was driven by internal growth from higher trade levels and net new business from closed sales.
Revenues by Type
Recurring fee revenues of $604 million rose 7% from the year-ago quarter’s level and were driven by organic growth, recent acquisitions and impact of revenue accounting change. Event-driven fee revenues of $48 million plunged 51% year over year, mainly due to lower mutual fund proxy revenues and equity proxy contests.
Distribution revenues were down 13% year over year to $323 million. Changes in foreign currency rates negatively impacted revenues by $4 million compared with the prior-year quarter’s period.
Broadridge Financial Solutions, Inc. Revenue (TTM)
Operating Results
Adjusted operating income of $101 million fell 27% year over year. Adjusted operating income margin decreased to 10.6% from 13.7% in the prior-year quarter. Decline in event-driven fee revenues, higher selling expenses and increased spending on technology initiatives led to margin contraction.
Balance Sheet and Cash Flow
Broadridge exited second-quarter fiscal 2019 with cash and cash equivalents of $249.8 million compared with $204.7 million at the end of prior quarter. Long-term debt was $1.19 billion compared with $1.14 billion at the end of the prior quarter.
The company generated $177.6 million of cash from operating activities and spent $12.3 million on capex in the quarter. Non-GAAP free cash flow was $162.8 million. Broadridge paid $56.5 million in dividends in the reported quarter.
Fiscal Third Quarter Guidance
Management expects total revenues in the range of $1,195-$1,245 million, higher than the Zacks Consensus Estimate of $1,280 million. Recurring fee revenue growth is anticipated between $755 million and $780 million. Adjusted EPS are expected in the range of $1.40-$1.56 per share. The Zacks Consensus Estimate is pegged at $1.56.
Fiscal 2019 Guidance
Broadridge reaffirmed guidance for fiscal 2019. Total revenues are expected to grow in the range of 3-5%. Recurring fee revenue growth is anticipated in the 5-7% range. Adjusted EPS are expected to register 9-13% growth.
Adjusted operating income margin is estimated to register approximately 16.5% growth. Non-GAAP free cash flow is projected in the range of $565-$615 million.
Zacks Rank & Stocks to Consider
Broadridge currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2018 earnings reports of key players like IQVIA Holdings (IQV - Free Report) , Waste Management (WM - Free Report) and TransUnion (TRU - Free Report) . These companies are scheduled to release results on Feb 14, before market opens. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2019
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Broadridge Financial Solutions, Inc. (BR - Free Report) reported disappointing second-quarter fiscal 2019 results, with earnings and revenues lagging the Zacks Consensus Estimate.
Adjusted earnings of 56 cents per share missed the consensus mark by 15 cents and declined 29% on a year-over-year basis. Total revenues of $953 million lagged the consensus mark by $17 million and fell 6% year over year.
So far this year, shares of Broadridge have gained 13% compared with the 14.5% rise of the industry.
Let’s check out the numbers in detail.
Revenues by Segment
Revenues in the Investor Communication Solutions segment fell 8% from the year-ago quarter’s level to $738 million. The decrease was due to fall in event-driven and distribution revenues, partially offset by increase in recurring fee revenues.
Global Technology and Operations segment revenues came in at $237 million, up 4% from the year-ago quarter’s tally. The figure was driven by internal growth from higher trade levels and net new business from closed sales.
Revenues by Type
Recurring fee revenues of $604 million rose 7% from the year-ago quarter’s level and were driven by organic growth, recent acquisitions and impact of revenue accounting change. Event-driven fee revenues of $48 million plunged 51% year over year, mainly due to lower mutual fund proxy revenues and equity proxy contests.
Distribution revenues were down 13% year over year to $323 million. Changes in foreign currency rates negatively impacted revenues by $4 million compared with the prior-year quarter’s period.
Broadridge Financial Solutions, Inc. Revenue (TTM)
Operating Results
Adjusted operating income of $101 million fell 27% year over year. Adjusted operating income margin decreased to 10.6% from 13.7% in the prior-year quarter. Decline in event-driven fee revenues, higher selling expenses and increased spending on technology initiatives led to margin contraction.
Balance Sheet and Cash Flow
Broadridge exited second-quarter fiscal 2019 with cash and cash equivalents of $249.8 million compared with $204.7 million at the end of prior quarter. Long-term debt was $1.19 billion compared with $1.14 billion at the end of the prior quarter.
The company generated $177.6 million of cash from operating activities and spent $12.3 million on capex in the quarter. Non-GAAP free cash flow was $162.8 million. Broadridge paid $56.5 million in dividends in the reported quarter.
Fiscal Third Quarter Guidance
Management expects total revenues in the range of $1,195-$1,245 million, higher than the Zacks Consensus Estimate of $1,280 million. Recurring fee revenue growth is anticipated between $755 million and $780 million. Adjusted EPS are expected in the range of $1.40-$1.56 per share. The Zacks Consensus Estimate is pegged at $1.56.
Fiscal 2019 Guidance
Broadridge reaffirmed guidance for fiscal 2019. Total revenues are expected to grow in the range of 3-5%. Recurring fee revenue growth is anticipated in the 5-7% range. Adjusted EPS are expected to register 9-13% growth.
Adjusted operating income margin is estimated to register approximately 16.5% growth. Non-GAAP free cash flow is projected in the range of $565-$615 million.
Zacks Rank & Stocks to Consider
Broadridge currently carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Business Services sector are keenly awaiting fourth-quarter 2018 earnings reports of key players like IQVIA Holdings (IQV - Free Report) , Waste Management (WM - Free Report) and TransUnion (TRU - Free Report) . These companies are scheduled to release results on Feb 14, before market opens. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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