01—Abstract
Summary
Summary of the 10-K filed August 11, 2009. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. (BR) reported net revenues of $2,149.3 milliona for the fiscal year ended June 30, 2009, a decrease of $58.2 million, or 3%, from $2,207.5 million in fiscal 2008.
Net earnings rose 16% to $223.3 millionb, or $1.58 diluted EPS, from $192.2 million, or $1.36 in fiscal 2008. The earnings increase came from lower total expenses, a lower effective tax rate of 35.5% versus 41.0%, and a $8.4 million gain from repurchasing $125.0 million of its 6.125% Senior Notes. Investor Communication Solutions, the largest segment at $1,531.0 million of net revenues, saw revenues fall 3% on lower distribution revenues, while Securities Processing Solutions grew 4% to $533.8 million.
The filing highlights several risks. One of the 15 largest clients of the Securities Processing Solutions segment has acquired a financial institution that performs the services in-house and has notified the company it will terminate them; those services generated $23.0 millionc of revenue in fiscal 2009. Contract renewal price concessions are estimated at about 5% of Securities Processing Solutions revenues, compared with a historical average of 3%.
The company derives approximately 27% of revenues from its five largest clients, and its data center operations depend on ADP under an agreement expiring June 30, 2012. On August 11, 2009, the board raised the quarterly dividend by $0.07 per share to $0.14d and authorized a repurchase of up to 10 million shares.
Total stockholders' equity increased to $909.0 million from $745.8 million, and long-term debt declined to $324.1 million from $447.9 million. The company also disclosed a $75.0 million revolving credit facility for its clearing subsidiary Ridge Clearing, entered into August 5, 2009.
02—Key points
Key Highlights
- Net revenues of $2,149.3 million, down $58.2 million or 3% from fiscal 2008
- Net earnings up 16% to $223.3 million; diluted EPS of $1.58 versus $1.36
- Effective tax rate fell to 35.5% from 41.0%, partly due to a state tax credit program
- Securities Processing Solutions net revenues rose 4% to $533.8 million; Investor Communication Solutions fell 3% to $1,531.0 million
- A top-15 Securities Processing client will terminate services it now performs in-house, representing $23.0 million of fiscal 2009 revenue
- Long-term debt reduced to $324.1 million after repurchasing $125.0 million of Senior Notes, producing an $8.4 million gain
- Quarterly dividend increased to $0.14 per share and a repurchase plan of up to 10 million shares was authorized on August 11, 2009
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Broadridge Financial Solutions kept $0.11.
- Revenue$2.07B100.0%
- Cost of revenue−$1.51B72.8%
- Gross profit$562.9M27.2%
- Operating costs−$216.9M10.5%
- Operating income$346.0M16.7%
- Interest, other & tax−$122.7M5.9%
- Net income$223.3M10.8%
Where FY2009 revenue went
$2.07B- Cost of revenue: $1.51B, 73% of revenue
- Net income: $223.3M, 11% of revenue
- SG&A: $212.9M, 10% of revenue
- Interest, other & tax: $122.7M, 5.9% of revenue
Kept 11% as net incomeNet income $223.3M · 11%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed August 11, 2009Financial Statements
| Revenue | $2.07B |
| Cost of Revenue | $1.51B |
| Gross Profit | $562.90M |
| SG&A Expenses | $212.90M |
| Operating Expenses | $1.73B |
| Operating Income | $346.00M |
| Net Income | $223.30M |
| EPS (Basic) | $1.60 |
| EPS (Diluted) | $1.58 |
| Shares Outstanding (Basic) | 140.00M |
| Shares Outstanding (Diluted) | 141.60M |
05—Questions
Frequently Asked Questions
How did Broadridge perform financially in fiscal 2009?
Net revenues declined 3% to $2,149.3 million, but net earnings rose 16% to $223.3 million and diluted EPS increased to $1.58 from $1.36. Lower total expenses and a lower effective tax rate of 35.5% drove the earnings improvement.
What are the main customer concentration risks?
Approximately 27% of fiscal 2009 revenues came from the five largest clients, and the largest single client accounted for between 6% and 7% of revenues. About 70% of Securities Processing Solutions revenues came from its 15 largest clients. One such client has begun terminating services it now performs in-house.
How is Broadridge's debt position?
Total debt outstanding was $324.1 million at June 30, 2009, consisting of a $200.0 million term loan and $124.1 million of 6.125% Senior Notes due 2017. The company repurchased $125.0 million of Senior Notes during the year for $116.3 million. It also had $500.0 million of undrawn revolving credit capacity.
What shareholder returns were announced?
On August 11, 2009, the board increased the quarterly cash dividend by $0.07 to $0.14 per share, and authorized repurchases of up to 10 million shares to offset dilution from equity compensation plans and for opportunistic purchases.
What is the relationship with ADP?
Broadridge was spun off from Automatic Data Processing on March 30, 2007. ADP hosts a significant portion of Broadridge's data center operations under an outsourcing agreement expiring June 30, 2012, with commitments of $273.7 million through fiscal 2012.
06—Continue