01—Abstract
Summary
Summary of the 10-K filed August 12, 2021. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. (BR) reported fiscal 2021 (year ended June 30, 2021) revenues of $4,993.7 milliona, up 10% from $4,529.0 million, with operating income of $678.7 million and net earnings of $547.5 million, or $4.65 per diluted share, compared with $3.95 in fiscal 2020.
Adjusted operating income margin was 18.1%, up 60 bps, and Free cash flow was $557.3 millionb, compared with $499.5 million. Growth was driven by recurring fee revenues of $3,332.9 million (up 10%), with 5 points from Net New Business, 3 points from internal growth and 2 points from acquisitions. Event-driven fee revenues rose 33% to $237.3 million.
Closed sales were $242.5 millionc. The company's major event of the year was the May 2021 acquisition of Itiviti Holding AB for a purchase price of $2,580.4 million, funded by new debt. Total debt rose to $3,914.4 million at June 30, 2021, from $1,787.5 million a year earlier, and total assets increased to $8,119.8 million from $4,889.8 million.
Goodwill reached $3,720.1 milliond, and the filing discloses that goodwill represented approximately 46% of total assets. The company's Investor Communication Solutions segment generated revenues of $3,867.5 million and pre-tax earnings of $605.6 million, while Global Technology and Operations generated revenues of $1,258.1 million and pre-tax earnings of $223.3 million, down from $245.0 million. The filing identifies key risks including reliance on a small number of large clients (the largest accounted for approximately 6% of consolidated revenues), dependence on securities market activity, cybersecurity exposure, and the leverage incurred for the Itiviti acquisition.
The company said the Covid-19 pandemic had no material impact on consolidated revenues and pre-tax income in fiscal 2021. On August 11, 2021, the Board raised the quarterly dividend by $0.065 per share to $0.64, which implies an expected annual dividend of $2.56 per share.
02—Key points
Key Highlights
- Revenues rose 10% to $4,993.7 million, and operating income rose 9% to $678.7 million.
- Diluted EPS was $4.65, up from $3.95, and net earnings were $547.5 million, up from $462.5 million.
- Adjusted operating income margin was 18.1%, up 60 bps, and Free cash flow was $557.3 million, up from $499.5 million.
- Total debt rose to $3,914.4 million from $1,787.5 million after financing the $2,580.4 million Itiviti acquisition, and the revolver had $1,385.6 million of unused capacity.
- Investor Communication Solutions revenues rose 11% to $3,867.5 million and pre-tax earnings rose 30% to $605.6 million, while Global Technology and Operations pre-tax earnings fell 9% to $223.3 million.
- Goodwill of $3,720.1 million accounted for approximately 46% of total assets, and the company reported no goodwill impairment.
- The Board increased the quarterly cash dividend to $0.64 per share on August 11, 2021, implying an expected annual dividend of $2.56 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Broadridge Financial Solutions kept $0.11.
- Revenue$4.99B100.0%
- Cost of revenue−$3.57B71.5%
- Gross profit$1.42B28.5%
- Operating costs−$744.3M14.9%
- Operating income$678.7M13.6%
- Interest, other & tax−$131.2M2.6%
- Net income$547.5M11.0%
Where FY2021 revenue went
$4.99B- Cost of revenue: $3.57B, 72% of revenue
- SG&A: $744.3M, 15% of revenue
- Net income: $547.5M, 11% of revenue
- Interest, other & tax: $131.2M, 2.6% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed August 12, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $4.99B$4.53B | +10.3% |
| Cost of Revenue | $3.57B$3.27B | +9.4% |
| Gross Profit | $1.42B$1.26B | +12.6% |
| SG&A Expenses | $744.30M$639.00M | +16.5% |
| Operating Expenses | $4.32B$3.90B | +10.5% |
| Operating Income | $678.70M$624.90M | +8.6% |
| Interest Expense | $57.50M$62.50M | −8.0% |
| Net Income | $547.50M$462.50M | +18.4% |
| EPS (Basic) | $4.73$4.03 | +17.4% |
| EPS (Diluted) | $4.65$3.95 | +17.7% |
| Shares Outstanding (Basic) | 115.70M114.70M | +0.9% |
| Shares Outstanding (Diluted) | 117.80M117.00M | +0.7% |
05—Questions
Frequently Asked Questions
What drove revenue growth in fiscal 2021?
Revenues increased $464.7 million, or 10%, to $4,993.7 million. Recurring fee revenues grew $296.7 million, driven by 5 points of Net New Business, 3 points of internal growth and 2 points from acquisitions. Event-driven fee revenues rose $59.3 million, or 33%, and distribution revenues rose $104.1 million.
How did the Itiviti acquisition affect the balance sheet?
Broadridge paid $2,580.4 million net of cash acquired for Itiviti Holding AB in May 2021, recording goodwill of $1,932.4 million and intangible assets of $904.6 million. Long-term debt rose to $3,887.6 million from $1,387.6 million, and total stockholders' equity increased to $1,809.1 million from $1,346.5 million.
How concentrated is the company's client base?
In fiscal 2021, the 15 largest clients generated approximately 51% of Global Technology and Operations segment revenues, and the largest single client accounted for approximately 6% of consolidated revenues. Losing a large client could have a material adverse effect on revenues.
What is the outlook for capital returns to shareholders?
Dividends paid were $261.7 million in fiscal 2021. The Board raised the quarterly dividend to $0.64 per share on August 11, 2021, and the expected annual dividend rose to $2.56 from $2.30. No shares were repurchased under the share repurchase program during the fourth quarter, leaving 9,586,545 shares available.
06—Continue