Broadridge (BR) Beats on Q3 Earnings, Raises 2020 EPS Outlook

Broadridge Financial Solutions, Inc. BR reported better-than-expected third-quarter fiscal 2021 results.

Adjusted earnings (excluded 36 cents from non-recurring items) of $1.76 per share, surpassed the Zacks Consensus Estimate by 5.4% and increased 5% on a year-over-year basis.

Total revenues of $1.39 billion also beat the consensus mark by 8.3% and rose 11% year over year. Recurring fee revenues increased 8% on a year-over-year basis to $900 million. The company generated closed sales of $46 million in the quarter, up 3% year over year.

Broadridge Financial Solutions, Inc. Price, Consensus and EPS Surprise

Broadridge Financial Solutions, Inc. Price, Consensus and EPS Surprise

Broadridge Financial Solutions, Inc. price-consensus-eps-surprise-chart | Broadridge Financial Solutions, Inc. Quote

Revenues by Segment

Revenues in the Investor Communication Solutions segment increased 13.2% from the year-ago quarter's level to $1,109.3 million. The segment’s recurring fee revenues were up 11% to $586 million. Event-driven fee revenues increased 89% to $74 million. Distribution revenues increased 9% to $449 million.

Global Technology and Operations segment's recurring fee revenues came in at $314 million, up 3% year over year. This improvement was driven by net new business. Internal growth was impacted by higher equity trading volumes.

Operating Results

Adjusted operating income of $284 million rose 8% year over year. Adjusted operating income margin decreased to 20.4% from 21% in the prior-year quarter.

Balance Sheet and Cash Flow

Broadridge exited the quarter with cash and cash equivalents of $355.8 million compared with the $365.6 million witnessed at the end of the prior quarter. Long-term debt was $1.74 billion compared with $1.8 billion in the previous quarter.

The company generated $106.2 million of cash in operating activities and capex was $11.4 million in the quarter. Broadridge paid out $66.6 million in dividends in the reported quarter.

Riased Fiscal 2021 Guidance

Broadridge expects total revenue growth in the range of 8-10% (previous guidance: 1-4%).

Recurring revenue growth of 8-10% (previous guidance: 3-6%).

Adjusted EPS growth is expected to be 11% to 13% (previous guidance: 6% to 10%).

Adjusted operating income margin is estimated to be up by around 18% (kept unchanged from previous guidance). Closed sales are anticipated to be between $190 million and $235 million (kept unchanged from previous guidance).

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

Equifax’s EFX first-quarter 2021 adjusted earnings of $1.97 per share beat the Zacks Consensus Estimate by 29.6% and increased on a year-over-year basis. Revenues of $1.21 billion outpaced the consensus mark by 7.9% and rose 26.6% year over year on a reported basis as well as on a local-currency basis.

Robert Half’s RHI first-quarter 2021 earnings of 98 cents per share beat the consensus mark by 22.5% and were up 24.1% year over year. Revenues of $1.4 billion surpassed the consensus mark by 3.3% but declined 7.2% year over year on a reported basis and 7.6% on an adjusted basis.

Omnicom’s OMC first-quarter 2021 adjusted earnings of $1.33 per share beat the consensus mark by 16.7% and increased 11.8% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 3.6% and increased marginally year over year.

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