01—Abstract
Summary
Summary of the 10-K filed August 6, 2019. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. (BR) reported fiscal 2019 (year ended June 30, 2019) revenues of $4,362.2 milliona, up $32.3 million, or 1%, from $4,329.9 million, and net earnings of $482.1 million, up $54.1 million, or 13%, from $427.9 million.
Diluted EPS rose to $4.06b from $3.56. Operating income increased to $652.7 million, with operating margin of 15.0% versus 13.8% a year earlier. Recurring fee revenues grew 6% to $2,759.3 million, while event-driven fee revenues declined 14% to $244.5 million and distribution revenues fell 3% to $1,460.8 million.
Investor Communication Solutions produced about 80% of revenues and Global Technology and Operations about 22%, with foreign currency exchange reducing revenue by $102.4 millionc. The company's balance sheet expanded through acquisitions, including Rockall, RPM and the TD Ameritrade retirement plan custody and trust assets, which together contributed $406.4 million in aggregate purchase price. Total assets rose to $3,880.7 million from $3,304.7 million, and long-term debt increased to $1,470.4 million from $1,053.4 million, largely reflecting $575.7 million of borrowings under the Fiscal 2019 Revolving Credit Facility.
Cash flow from operations declined to $617.0 milliond from $693.6 million, and free cash flow was $544.4 million, against share repurchases of $397.8 million and dividends paid of $211.2 million. Concentration and operational risk remain notable: five clients accounted for about 22% of consolidated revenues, and the largest single client about 6%.
Goodwill totaled $1,500.0 million, about 39% of total assets. On July 31, 2019, the Board raised the quarterly dividend to $0.54 per share, implying an expected annual dividend of $2.16, and authorized the addition of 5,448,478 shares to the repurchase program, bringing availability to 10.0 million shares.
02—Key points
Key Highlights
- Revenues of $4,362.2 million, up 1% from $4,329.9 million; recurring fee revenues rose 6% to $2,759.3 million.
- Net earnings of $482.1 million, up 13% from $427.9 million; diluted EPS of $4.06 versus $3.56.
- Operating margin improved to 15.0% from 13.8%; operating income reached $652.7 million.
- Event-driven fee revenues fell 14% to $244.5 million, mainly due to lower equity proxy contest and mutual fund proxy activity.
- Long-term debt rose to $1,470.4 million from $1,053.4 million, reflecting acquisitions and $575.7 million drawn on the revolving credit facility.
- Operating cash flow fell to $617.0 million from $693.6 million; free cash flow was $544.4 million (Non-GAAP).
- Quarterly dividend increased to $0.54 per share on July 31, 2019; 10.0 million shares now available for repurchase.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Broadridge Financial Solutions kept $0.11.
- Revenue$4.36B100.0%
- Cost of revenue−$3.13B71.8%
- Gross profit$1.23B28.2%
- Operating costs−$577.5M13.2%
- Operating income$652.7M15.0%
- Interest, other & tax−$170.6M3.9%
- Net income$482.1M11.1%
Where FY2019 revenue went
$4.36B- Cost of revenue: $3.13B, 72% of revenue
- SG&A: $577.5M, 13% of revenue
- Net income: $482.1M, 11% of revenue
- Interest, other & tax: $170.6M, 3.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed August 6, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $4.36B$4.33B | +0.7% |
| Cost of Revenue | $3.13B$3.17B | −1.1% |
| Gross Profit | $1.23B$1.16B | +5.8% |
| SG&A Expenses | $577.50M$564.50M | +2.3% |
| Operating Expenses | $3.71B$3.73B | −0.6% |
| Operating Income | $652.70M$598.10M | +9.1% |
| Interest Expense | $45.90M$42.40M | +8.3% |
| Net Income | $482.10M$427.90M | +12.7% |
| EPS (Basic) | $4.16$3.66 | +13.7% |
| EPS (Diluted) | $4.06$3.56 | +14.0% |
| Shares Outstanding (Basic) | 115.90M116.80M | −0.8% |
| Shares Outstanding (Diluted) | 118.80M120.40M | −1.3% |
05—Questions
Frequently Asked Questions
How did Broadridge perform financially in fiscal 2019?
Revenues were $4,362.2 million, up $32.3 million, or 1%, and net earnings were $482.1 million, up $54.1 million, or 13%. Diluted EPS was $4.06 compared with $3.56 in fiscal 2018. Operating margin was 15.0% versus 13.8%.
What drove the growth in recurring revenue, and what weighed on results?
Recurring fee revenues increased 6% to $2,759.3 million, supported by net new business and acquisitions. Event-driven fee revenues decreased 14% to $244.5 million, and distribution revenues declined 3% to $1,460.8 million. Foreign currency exchange reduced revenues by $102.4 million.
How concentrated is Broadridge's client base?
In fiscal 2019, approximately 22% of consolidated revenues came from the five largest clients, and the largest single client accounted for approximately 6%. Within Global Technology and Operations, about 55% of segment revenues came from the 15 largest clients.
What did the company acquire, and how is it funded?
Fiscal 2019 acquisitions included Rockall, RPM and the TD Ameritrade retirement plan custody and trust assets, with an aggregate purchase price of $406.4 million. Cash payments of $354.7 million were funded in part by borrowings, as long-term debt increased to $1,470.4 million at June 30, 2019.
What capital return actions were announced?
Dividends paid were $211.2 million in fiscal 2019. On July 31, 2019, the Board raised the quarterly dividend by $0.055 to $0.54 per share, and authorized 5,448,478 additional shares for repurchase, bringing availability to 10.0 million shares. Fiscal 2019 share repurchases totaled $397.8 million.
06—Continue