01—Abstract
Summary
Summary of the 10-K filed August 8, 2023. Cited figures are marked; the original filing is the authoritative source.
Broadridge Financial Solutions, Inc. (BR), a Delaware corporation and part of the S&P 500 Index, reported fiscal year 2023 (ended June 30, 2023) revenues of $6,060.9 milliona, up 6% from $5,709.1 million, with net earnings of $630.6 million, up 17% from $539.1 million, and diluted earnings per share of $5.30 versus $4.55.
Recurring revenues rose 7% to $3,986.7 millionb, while event-driven revenues fell 22% to $211.0 million, mainly on lower mutual fund proxy volume. Distribution revenues rose 9% to $1,863.1 million, driven by $120.8 million of postage rate increases. Operating income reached $936.4 million, a 15.4% margin versus 13.3% a year earlier.
Interest expense, net rose to $135.5 millionc from $84.7 million on higher borrowing costs. Non-GAAP Adjusted Earnings per share was $7.01 versus $6.46. The company generated net cash flows from operating activities of $823.3 million, against $443.5 million in the prior year, and free cash flow (Non-GAAP) of $748.2 million, against $370.4 million.
Total debt was $3,413.3 milliond at June 30, 2023, including $1,178.5 million of Fiscal 2021 Term Loans that mature in May 2024. Goodwill was $3,461.6 million, and the company reported no goodwill impairment. Stockholders' equity increased to $2,240.6 million from $1,919.1 million.
The company reports two segments: Investor Communication Solutions, with revenues of $4,535.6 million, and Global Technology and Operations, with revenues of $1,525.2 million. In August 2023 the Board raised the quarterly dividend to $0.80 per share, implying an expected annual dividend of $3.20 per share.
The filing also flags a restructuring initiative with $20.4 million of severance charges, and a estimated $30 million reduction in annual recurring revenues from a new SEC rule on tailored shareholder reports, phasing in over fiscal years 2025 and 2026. Its largest client accounted for approximately 7% of consolidated revenues.
02—Key points
Key Highlights
- Revenues rose 6% to $6,060.9 million; recurring revenues grew 7% to $3,986.7 million, with recurring revenue growth constant currency (Non-GAAP) at 9%, all organic.
- Net earnings rose 17% to $630.6 million; diluted EPS was $5.30, up from $4.55, and Adjusted EPS (Non-GAAP) was $7.01, up from $6.46.
- Operating income increased 23% to $936.4 million, lifting the operating margin to 15.4% from 13.3%.
- Operating cash flow was $823.3 million versus $443.5 million, and free cash flow (Non-GAAP) was $748.2 million versus $370.4 million.
- Interest expense, net increased to $135.5 million from $84.7 million, and total debt stood at $3,413.3 million, with $1,178.5 million of term loans due May 2024.
- Event-driven revenues fell 22% to $211.0 million, primarily due to lower mutual fund proxy volume; distribution revenues rose 9% on $120.8 million of postage rate increases.
- The Board increased the quarterly cash dividend to $0.80 per share (annual expected $3.20), and a restructuring initiative recorded $20.4 million of severance costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Broadridge Financial Solutions kept $0.10.
- Revenue$6.06B100.0%
- Cost of revenue−$4.28B70.5%
- Gross profit$1.79B29.5%
- Operating costs−$849.0M14.0%
- Operating income$936.4M15.4%
- Interest, other & tax−$305.8M5.0%
- Net income$630.6M10.4%
Where FY2023 revenue went
$6.06B- Cost of revenue: $4.28B, 71% of revenue
- SG&A: $849.0M, 14% of revenue
- Net income: $630.6M, 10% of revenue
- Interest, other & tax: $305.8M, 5.0% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed August 8, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $6.06B$5.71B | +6.2% |
| Cost of Revenue | $4.28B$4.12B | +3.9% |
| Gross Profit | $1.79B$1.59B | +12.1% |
| SG&A Expenses | $849.00M$832.30M | +2.0% |
| Operating Expenses | $5.12B$4.95B | +3.5% |
| Operating Income | $936.40M$759.90M | +23.2% |
| Interest Expense | $143.70M$87.70M | +63.9% |
| Net Income | $630.60M$539.10M | +17.0% |
| EPS (Basic) | $5.36$4.62 | +16.0% |
| EPS (Diluted) | $5.30$4.55 | +16.5% |
| Shares Outstanding (Basic) | 117.70M116.70M | +0.9% |
| Shares Outstanding (Diluted) | 119.00M118.50M | +0.4% |
05—Questions
Frequently Asked Questions
What drove Broadridge's revenue growth in fiscal 2023?
Revenues increased $351.8 million, or 6%, to $6,060.9 million. Recurring revenues rose $264.0 million, or 7%, driven by Net New Business and Internal Growth in both segments. Distribution revenues rose $146.2 million, or 9%, largely from $120.8 million of postage rate increases, while event-driven revenues fell $58.3 million, or 22%.
How did profitability change compared with the prior year?
Operating income rose $176.5 million, or 23%, to $936.4 million, and the operating margin increased to 15.4% from 13.3%. Net earnings increased to $630.6 million from $539.1 million, and diluted EPS increased to $5.30 from $4.55. The effective tax rate was 20.7%, compared with 19.8% in the prior year.
What is the company's debt and liquidity position?
Total debt was $3,413.3 million at June 30, 2023, and cash and cash equivalents were $252.3 million. The $1,500.0 million revolving credit facility had $1,500.0 million of unused capacity at year end. The Fiscal 2021 Term Loans, with a carrying value of $1,178.5 million, are classified as current and mature in May 2024. Operating cash flow was $823.3 million.
What risks or headwinds does the filing identify for future results?
The filing estimates a reduction in annual Recurring revenues of approximately $30 million from the SEC's new rule on tailored shareholder reports, phasing in over fiscal years 2025 and 2026, assuming no offset from new services. Event-driven revenues remain volatile and difficult to forecast. The largest client accounted for approximately 7% of consolidated revenues, and goodwill and intangibles were a significant share of total assets.
What is the dividend policy and how has it changed?
On August 7, 2023, the Board increased the quarterly cash dividend by $0.075 per share to $0.80 per share, raising the expected annual dividend from $2.90 to $3.20 per share. Dividends paid in fiscal 2023 totaled $331.0 million. Future dividends remain at the Board's discretion.
06—Continue