01—Abstract
Summary
Summary of the 10-K filed August 9, 2016. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. (BR) reported fiscal year 2016 (ended June 30, 2016) revenues of $2,897.0 milliona, up $202.8 million, or 8%, from $2,694.2 million in fiscal 2015.
Operating income rose $33.4 millionb, or 7%, to $500.3 million, with the operating margin unchanged at 17.3%. Net earnings increased $20.4 million, or 7%, to $307.5 million, and diluted earnings per share rose to $2.53 from $2.32. Growth was driven by recurring fee revenues of $154.7 million, distribution revenues of $54.4 million and event-driven fee revenues of $26.6 million, partially offset by a $32.9 million unfavorable foreign currency impact on revenues.
The Investor Communication Solutions segment generated $2,220.4 millionc of revenues (up 9%) and $409.1 million of pre-tax earnings, while Global Technology and Operations generated $738.0 million of revenues (up 7%) and $135.4 million of pre-tax earnings. Cash and cash equivalents increased to $727.7 million from $324.1 million, and operating cash flow was $437.7 million, yielding free cash flows of $362.2 million. Total debt rose to $1,022.5 million carrying value, including a $500.0 million senior note issued in June 2016.
Subsequent to year end, in July 2016, the company completed the acquisition of the North American Customer Communications business of DST Systems, Inc. for $410.0 milliond in cash. On August 8, 2016, the Board increased the quarterly cash dividend by $0.03 per share to $0.33, raising the annual dividend from $1.20 to $1.32 per share.
02—Key points
Key Highlights
- Revenues of $2,897.0 million rose 8% from $2,694.2 million, with recurring fee revenues up $154.7 million and distribution revenues up $54.4 million.
- Operating income increased 7% to $500.3 million, with operating margin unchanged at 17.3%.
- Net earnings of $307.5 million grew 7%, and diluted EPS rose to $2.53 from $2.32.
- Investor Communication Solutions revenues reached $2,220.4 million (up 9%), and Global Technology and Operations revenues reached $738.0 million (up 7%).
- Free cash flows were $362.2 million, and cash and cash equivalents rose to $727.7 million at June 30, 2016.
- The company completed the $410.0 million cash acquisition of the NACC business of DST Systems, Inc. in July 2016, and raised the annual dividend to $1.32 per share.
- Approximately 25% of consolidated revenues came from five clients, and the largest single client accounted for approximately 7%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Broadridge Financial Solutions kept $0.11.
- Revenue$2.90B100.0%
- Cost of revenue−$1.98B68.2%
- Gross profit$921.2M31.8%
- Operating costs−$420.9M14.5%
- Operating income$500.3M17.3%
- Interest, other & tax−$192.8M6.7%
- Net income$307.5M10.6%
Where FY2016 revenue went
$2.90B- Cost of revenue: $1.98B, 68% of revenue
- SG&A: $420.9M, 15% of revenue
- Net income: $307.5M, 11% of revenue
- Interest, other & tax: $192.8M, 6.7% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed August 9, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $2.90B$2.69B | +7.5% |
| Cost of Revenue | $1.98B$1.83B | +8.1% |
| Gross Profit | $921.20M$866.00M | +6.4% |
| SG&A Expenses | $420.90M$399.10M | +5.5% |
| Operating Expenses | $2.40B$2.23B | +7.6% |
| Operating Income | $500.30M$438.90M | +14.0% |
| Interest Expense | $28.40M$25.40M | +11.8% |
| Net Income | $307.50M$287.10M | +7.1% |
| EPS (Basic) | $2.60$2.39 | +8.8% |
| EPS (Diluted) | $2.53$2.32 | +9.1% |
| Shares Outstanding (Basic) | 118.30M119.90M | −1.3% |
| Shares Outstanding (Diluted) | 121.60M124.00M | −1.9% |
05—Questions
Frequently Asked Questions
How did Broadridge perform financially in fiscal 2016?
Revenues increased $202.8 million, or 8%, to $2,897.0 million, operating income rose $33.4 million, or 7%, to $500.3 million, and net earnings increased $20.4 million, or 7%, to $307.5 million. Diluted EPS was $2.53, compared with $2.32 in fiscal 2015.
What drove the revenue growth?
Recurring fee revenues increased $154.7 million, or 9%, distribution revenues increased $54.4 million, or 7%, and event-driven fee revenues increased $26.6 million, or 15%. Foreign currency fluctuations negatively impacted revenues by $32.9 million.
How concentrated is the client base?
In fiscal 2016, approximately 25% of consolidated revenues came from the five largest clients, and the largest single client accounted for approximately 7% of consolidated revenues. Approximately 59% of Global Technology and Operations segment revenues came from its 15 largest clients.
What acquisitions and capital commitments did the company make?
During fiscal 2016 Broadridge acquired QED Financial Systems for $15.5 million and 4sight Financial Software for $38.3 million. After year end, it completed the NACC business acquisition from DST Systems for $410.0 million in cash, and it issued $500.0 million of 3.40% senior notes due 2026 in June 2016.
What is the dividend policy after this filing?
On August 8, 2016, the Board increased the quarterly cash dividend by $0.03 per share to $0.33, raising the annual dividend from $1.20 to $1.32 per share. Future dividends remain at the Board's discretion.
06—Continue