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Broadridge Financial Solutions, Inc. (BR - Free Report) reported mixed third-quarter fiscal 2020 results. While earnings missed the Zacks Consensus Estimate, revenues beat the same.
Adjusted earnings of $1.67 per share missed the consensus estimate by 4% but improved 5% year over year. Total revenues of $1.25 billion marginally beat the consensus mark and were up 2% year over year. The company generated closed sales of $44 million in the quarter, up 20% year over year.
Shares of Broadridge have gained 0.7%, over the past year, as against the 13.1% decline of the industry it belongs to.
Revenues by Segment
Revenues in the Investor Communication Solutions segment declined 3% from the year-ago quarter level to $980 million.
The segment’s recurring fee revenues were up 2% to $529 million driven by net new business and acquisitions. Internal growth was negatively impacted by a shift of proxy communications into the fourth quarter as a result of the coronavirus pandemic. Event-driven fee revenues plummeted 43% to $39 million on lower mutual fund proxy activity and equity proxy contests. Distribution revenues decreased 1% to $412 million on lower event-driven activity.
Global Technology and Operations segment recurring fee revenues came in at $305 million, up 23% year over year. This improvement was driven by acquisitions and organic growth. Higher trading volumes resulting from the pandemic-related market uncertainty benefited the segment’s internal growth.
Operating Results
Adjusted operating income of $262 million improved 3% year over year. Adjusted operating income margin increased to 21% from 20.9% in the prior-year quarter.
Balance Sheet and Cash Flow
Broadridge exited the fiscal third quarter with cash and cash equivalents of $4.2 million compared with the $234 million witnessed at the end of the prior quarter. Long-term debt was $1.68 billion compared with the $1.45 billion recorded at the end of the previous quarter.
The company generated $144.1 million of cash in operating activities and capex was $16.9 million in the quarter. Broadridge paid out $62 million in dividends in the reported quarter.
Guidance
Broadridge reduced its fiscal-year 2020 guidance for adjusted EPS to 5-7% from the 8-12% expected previously. The company expects revenue growth at the lower end of the previously-guided range of 3% to 6%.
Broadridge continues to anticipate recurring fee revenue growth of 8-10%. Adjusted operating income margin is estimated to be approximately 18%. Closed sales are anticipated to be between $190 million and $230 million.
The Interpublic Group (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat year over year.
Equifax (EFX - Free Report) delivered first-quarter 2020 adjusted earnings of $1.40 per share, which outpaced the consensus mark by 8.5% and improved 16% on a year-over-year basis.
ManpowerGroup (MAN - Free Report) recorded first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
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Broadridge (BR) Q3 Earnings Miss, Revenues Beat Estimates
Broadridge Financial Solutions, Inc. (BR - Free Report) reported mixed third-quarter fiscal 2020 results. While earnings missed the Zacks Consensus Estimate, revenues beat the same.
Adjusted earnings of $1.67 per share missed the consensus estimate by 4% but improved 5% year over year. Total revenues of $1.25 billion marginally beat the consensus mark and were up 2% year over year. The company generated closed sales of $44 million in the quarter, up 20% year over year.
Shares of Broadridge have gained 0.7%, over the past year, as against the 13.1% decline of the industry it belongs to.
Revenues by Segment
Revenues in the Investor Communication Solutions segment declined 3% from the year-ago quarter level to $980 million.
The segment’s recurring fee revenues were up 2% to $529 million driven by net new business and acquisitions. Internal growth was negatively impacted by a shift of proxy communications into the fourth quarter as a result of the coronavirus pandemic. Event-driven fee revenues plummeted 43% to $39 million on lower mutual fund proxy activity and equity proxy contests. Distribution revenues decreased 1% to $412 million on lower event-driven activity.
Global Technology and Operations segment recurring fee revenues came in at $305 million, up 23% year over year. This improvement was driven by acquisitions and organic growth. Higher trading volumes resulting from the pandemic-related market uncertainty benefited the segment’s internal growth.
Operating Results
Adjusted operating income of $262 million improved 3% year over year. Adjusted operating income margin increased to 21% from 20.9% in the prior-year quarter.
Balance Sheet and Cash Flow
Broadridge exited the fiscal third quarter with cash and cash equivalents of $4.2 million compared with the $234 million witnessed at the end of the prior quarter. Long-term debt was $1.68 billion compared with the $1.45 billion recorded at the end of the previous quarter.
The company generated $144.1 million of cash in operating activities and capex was $16.9 million in the quarter. Broadridge paid out $62 million in dividends in the reported quarter.
Guidance
Broadridge reduced its fiscal-year 2020 guidance for adjusted EPS to 5-7% from the 8-12% expected previously. The company expects revenue growth at the lower end of the previously-guided range of 3% to 6%.
Broadridge continues to anticipate recurring fee revenue growth of 8-10%. Adjusted operating income margin is estimated to be approximately 18%. Closed sales are anticipated to be between $190 million and $230 million.
Broadridge currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
The Interpublic Group (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat year over year.
Equifax (EFX - Free Report) delivered first-quarter 2020 adjusted earnings of $1.40 per share, which outpaced the consensus mark by 8.5% and improved 16% on a year-over-year basis.
ManpowerGroup (MAN - Free Report) recorded first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>