01—Abstract
Summary
Summary of the 10-K filed August 11, 2020. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. (BR) reported fiscal 2020 (year ended June 30, 2020) revenues of $4,529.0 milliona, up from $4,362.2 million, and net earnings of $462.5 million, down from $482.1 million.
Diluted EPS was $3.95b versus $4.06 in fiscal 2019. Operating income declined to $624.9 million from $652.7 million, with the operating margin falling to 13.8% from 15.0%. Management attributes the margin decline partly to a $32.0 million IBM Private Cloud Charge, including a $30.4 million non-cash write-down of hardware being transferred to IBM.
On a non-GAAP basis, Adjusted Operating income rose to $794.8 million and Adjusted diluted EPS to $5.03c from $4.66. Recurring fee revenues grew to $3,036.3 million, driven largely by acquisitions, while event-driven fee revenues fell 27% to $178.0 million on lower mutual fund proxy, equity special meeting and contest activity. The Global Technology and Operations segment grew revenue 18% to $1,174.2 million, while the Investor Communication Solutions segment grew 1% to $3,491.3 million, with pre-tax earnings there down 8%.
The company completed several acquisitions during the year, including Shadow Financial, Fi360, ClearStructure and FundsLibrary, and issued $750.0 milliond of 2.90% senior notes due 2029. Total debt stood at $1,799.8 million at June 30, 2020, against cash of $476.6 million. The filing states that Covid-19 had no material impact on consolidated revenues and pre-tax income to date, though management cautions that the pandemic's future effects remain highly uncertain.
Operating cash flow was $598.2 million and free cash flow was $499.5 million. On August 10, 2020, the Board raised the quarterly dividend to $0.575 per share, from an expected annual dividend of $2.16 to $2.30.
02—Key points
Key Highlights
- Revenues rose 4% to $4,529.0 million, while net earnings fell 4% to $462.5 million and diluted EPS declined to $3.95 from $4.06.
- Operating margin fell to 13.8% from 15.0%, partly due to IBM Private Cloud Charges of $32.0 million; Adjusted Operating income margin rose to 17.5% from 17.1%.
- Global Technology and Operations recurring fee revenues grew 18% to $1,174.2 million, driven by acquisitions and higher trading volumes from market volatility.
- Event-driven fee revenues fell 27% to $178.0 million, mainly from lower mutual fund proxy, equity special meeting and contest activity.
- Operating cash flow was $598.2 million and free cash flow was $499.5 million; the company issued $750.0 million of 2.90% senior notes due 2029.
- Four fiscal 2020 acquisitions (Shadow Financial, Fi360, ClearStructure, FundsLibrary) had an aggregate purchase price of $296.3 million.
- Board increased the quarterly dividend to $0.575 per share on August 10, 2020, raising the expected annual dividend to $2.30 from $2.16.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Broadridge Financial Solutions kept $0.10.
- Revenue$4.53B100.0%
- Cost of revenue−$3.27B72.1%
- Gross profit$1.26B27.9%
- Operating costs−$639.0M14.1%
- Operating income$624.9M13.8%
- Interest, other & tax−$162.4M3.6%
- Net income$462.5M10.2%
Where FY2020 revenue went
$4.53B- Cost of revenue: $3.27B, 72% of revenue
- SG&A: $639.0M, 14% of revenue
- Net income: $462.5M, 10% of revenue
- Interest, other & tax: $162.4M, 3.6% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed August 11, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $4.53B$4.36B | +3.8% |
| Cost of Revenue | $3.27B$3.13B | +4.3% |
| Gross Profit | $1.26B$1.23B | +2.7% |
| SG&A Expenses | $639.00M$577.50M | +10.6% |
| Operating Expenses | $3.90B$3.71B | +5.2% |
| Operating Income | $624.90M$652.70M | −4.3% |
| Interest Expense | $62.50M$45.90M | +36.2% |
| Net Income | $462.50M$482.10M | −4.1% |
| EPS (Basic) | $4.03$4.16 | −3.1% |
| EPS (Diluted) | $3.95$4.06 | −2.7% |
| Shares Outstanding (Basic) | 114.70M115.90M | −1.0% |
| Shares Outstanding (Diluted) | 117.00M118.80M | −1.5% |
05—Questions
Frequently Asked Questions
How did Broadridge perform financially in fiscal 2020?
Revenues increased 4% to $4,529.0 million, but net earnings decreased 4% to $462.5 million and diluted EPS fell to $3.95 from $4.06. Operating income declined to $624.9 million, partly due to IBM Private Cloud Charges. Non-GAAP Adjusted diluted EPS rose to $5.03 from $4.66.
What drove revenue growth and what held it back?
Recurring fee revenues rose $275.9 million to $3,036.3 million, mostly from acquisitions and 4 points of organic Net New Business growth. Event-driven fee revenues fell $66.5 million, or 27%, and foreign currency exchange reduced revenues by $136.4 million.
How has Covid-19 affected the business according to the filing?
The filing states there has not been a material impact on consolidated revenues and pre-tax income to date, and that all production facilities remain operational. Management says the future impact is highly uncertain and could affect client demand and results.
What are the company's dividend and capital return plans?
On August 10, 2020, the Board increased the quarterly cash dividend by $0.035 to $0.575 per share, lifting the expected annual dividend to $2.30. The company repurchased only about 0.4 million shares in fiscal 2020 under its program and had 9,586,545 shares remaining available for repurchase at June 30, 2020.
06—Continue