01—Abstract
Summary
Summary of the 10-K filed August 7, 2015. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. reported fiscal 2015 (year ended June 30, 2015) revenues of $2,694.2 milliona, up $136.2 million, or 5%, from $2,558.0 million in fiscal 2014.
Net earnings rose $24.1 millionb, or 9%, to $287.1 million, and diluted earnings per share were $2.32, compared with $2.12. Pre-tax margin improved to 16.3% from 15.5%. Growth was driven by recurring fee revenues, which increased $98.9 million or 6%, and by acquisitions, while foreign currency fluctuations reduced revenues by $24.8 million.
Investor Communication Solutions, the larger segment at $2,030.2 millionc of revenues, grew 8%, while Global Technology and Operations grew 2% to $692.5 million. The company completed six acquisitions in fiscal 2015, including Direxxis, the trade processing business of the Wilmington Trust Retirement and Institutional Services unit of M&T Bank Corporation, Fiduciary Services and Competitive Intelligence unit of Thomson Reuters' Lipper division, and TwoFour Systems. Net cash flows from operating activities increased to $431.4 million, and free cash flows were $365.4 million.
Long-term debt rose to $689.4 milliond from $524.1 million, largely due to a $165.0 million revolving credit borrowing, and the company repurchased 5.2 million shares under its program during the year. Subsequent to year end, on August 6, 2015, the Board raised the quarterly dividend to $0.30 per share and authorized repurchase of up to an additional 5.3 million shares. The filing identifies client concentration as a key risk: approximately 25% of consolidated revenues came from five clients, and the largest single client accounted for approximately 6%.
Other risks include dependence on securities market activity, reliance on IBM for data center services, cybersecurity exposure, and regulatory change affecting clients. Management concluded that internal control over financial reporting was effective as of June 30, 2015, and Deloitte & Touche LLP issued an unqualified opinion.
02—Key points
Key Highlights
- Revenues were $2,694.2 million in fiscal 2015, up $136.2 million, or 5%, from $2,558.0 million.
- Net earnings were $287.1 million, up 9%, with diluted EPS of $2.32 versus $2.12 a year earlier.
- Pre-tax margin improved to 16.3% from 15.5%, and free cash flows reached $365.4 million.
- Investor Communication Solutions revenues rose 8% to $2,030.2 million; Global Technology and Operations rose 2% to $692.5 million.
- Six acquisitions were completed in fiscal 2015, and total goodwill increased to $970.5 million.
- About 25% of consolidated revenues came from five clients, and the largest single client accounted for about 6%.
- The quarterly dividend was raised to $0.30 per share on August 6, 2015, and about 10.0 million shares were available for repurchase.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Broadridge Financial Solutions kept $0.11.
- Revenue$2.69B100.0%
- Cost of revenue−$1.83B67.9%
- Gross profit$866.0M32.1%
- Operating costs−$427.1M15.9%
- Operating income$438.9M16.3%
- Interest, other & tax−$151.8M5.6%
- Net income$287.1M10.7%
Where FY2015 revenue went
$2.69B- Cost of revenue: $1.83B, 68% of revenue
- SG&A: $399.1M, 15% of revenue
- Net income: $287.1M, 11% of revenue
- Other operating costs: $28.0M, 1.0% of revenue
- Interest, other & tax: $151.8M, 5.6% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed August 7, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $2.69B$2.56B | +5.3% |
| Cost of Revenue | $1.83B$1.76B | +3.8% |
| Gross Profit | $866.00M$796.60M | +8.7% |
| SG&A Expenses | $399.10M$378.40M | +5.5% |
| Operating Expenses | $2.23B$2.14B | +4.1% |
| Operating Income | $438.90M$395.50M | +11.0% |
| Interest Expense | $25.40M— | — |
| Net Income | $287.10M$263.00M | +9.2% |
| EPS (Basic) | $2.39$2.20 | +8.6% |
| EPS (Diluted) | $2.32$2.12 | +9.4% |
| Shares Outstanding (Basic) | 119.90M119.60M | +0.3% |
| Shares Outstanding (Diluted) | 124.00M124.10M | −0.1% |
05—Questions
Frequently Asked Questions
How did Broadridge's revenue and earnings change in fiscal 2015?
Revenues increased $136.2 million, or 5%, to $2,694.2 million. Net earnings increased $24.1 million, or 9%, to $287.1 million, and diluted EPS rose $0.20, or 9%, to $2.32. The filing attributes the revenue growth to recurring fee revenues up $98.9 million or 6%, distribution revenues up $44.9 million or 6%, and event-driven fee revenues up $17.2 million or 11%, partly offset by an unfavorable $24.8 million foreign currency impact.
How concentrated is Broadridge's client base?
In fiscal 2015, approximately 25% of consolidated revenues came from five clients, and the largest single client accounted for approximately 6% of consolidated revenues. The filing also states that approximately 61% of Global Technology and Operations segment revenues came from its 15 largest clients.
What acquisitions did Broadridge make and what did they cost?
In fiscal 2015 Broadridge acquired Direxxis for an aggregate purchase price of $34.5 million, the WTRIS trade processing business for $73.2 million, the FSCI unit from Thomson Reuters' Lipper division for $77.0 million, and TwoFour Systems for $32.7 million. The filing also notes that three additional Investor Communication Solutions and Global Technology and Operations acquisitions were completed during the year, and that the acquisitions were not material on a pro forma basis.
What did the company do with capital in fiscal 2015?
The company paid dividends of $122.3 million and purchased treasury stock for $301.7 million, repurchasing 5.2 million shares under its program. Long-term debt increased to $689.4 million, including a $165.0 million revolving credit borrowing. After year end, the Board increased the quarterly dividend to $0.30 per share and authorized repurchase of up to an additional 5.3 million shares.
What are the main risks identified in the filing?
The filing highlights reliance on a small number of clients, changes in laws and regulations affecting clients, declines in securities market participation and activity, cybersecurity and data security breaches, dependence on IBM for data center services, and the possibility of system failures. It also cites competition, acquisition integration, and the ability to retain key personnel.
06—Continue