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Broadridge (BR) Posts in Line Q4 Earnings, Hikes Dividend

Broadridge Financial Solutions, Inc. BR reported fourth-quarter fiscal 2021 adjusted earnings (excluding a penny from non-recurring items) of $2.19 per share, which matched the Zacks Consensus Estimate and increased 1.9% on a year-over-year basis.

Total revenues of $1.53 billion beat the consensus mark by 4.1% and rose 12.5% year over year. Recurring fee revenues increased 15% on a year-over-year basis to $1,065 million. The company generated closed sales of $118 million in the quarter, up 6% year over year.

Revenues by Segment

Revenues in the Investor Communication Solutions segment increased 12% from the year-ago quarter's level to $1,222 million. The segment’s recurring fee revenues were up 17% to $719 million. The upside was driven by net new business and internal growth. Internal growth benefited from higher volume of equity proxy, mutual fund and exchange-traded fund communications. Event-driven fee revenues increased 8% to $73 million (due to increased equity contests, capital markets and other communications). Distribution revenues increased 5% to $429 million (due to increase in volume of customer communications).

Global Technology and Operations segment's recurring fee revenues came in at $346 million, up 10% year over year. This improvement was driven by recurring fee revenue growth from the Itiviti acquisition.

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

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

Q4 Acquisitions

During fiscal fourth quarter, Broadridge completed two acquisitions (Itiviti and AdvisorStream) with an aggregate purchase price of $2.6 billion.

Operating Results

Adjusted operating income of $349 million rose 4% year over year. The uptick was driven by higher recurring and event-driven revenues.

Adjusted operating income margin declined to 22.8% from 24.6% in the prior-year quarter, due to higher spend on growth initiatives.

Balance Sheet and Cash Flow

Broadridge exited fourth-quarter fiscal 2021 with cash and cash equivalents of $274.5 million compared with $355.8 million reported at the end of the prior quarter. Long-term debt was $3.89 billion compared with $1.74 billion in the previous quarter.

The company generated $450.6 million of cash in operating activities and capex was $10.4 million in the quarter. Broadridge paid out $66.6 million in dividends in the reported quarter.

Dividend Hike

Broadridge's board of directors declared an increase in the annual dividend amount by 11% to $2.56 per share. With this, the company's annual dividend has increased for the 15th consecutive year. The dividend will be payable to shareholders on Oct 5, 2021 as of record date Sep 15.

Fiscal 2022 Guidance

Broadridge expects recurring revenue growth of 12-15%.

Adjusted earnings per share (EPS) growth is expected to be 11-15%.

Adjusted operating income margin is estimated to be up by around 19%.

Closed sales are anticipated between $240 million and $280 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 Some Other Business Services Companies

Equifax EFX reported better-than-expected second-quarter 2021 results. Adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and increased 23.8% on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and increased 25.6% year over year.

IHS Markit’s INFO second-quarter fiscal 2021 adjusted EPS of 81 cents beat the consensus mark by 1.3% and increased 17.4% on a year-over-year basis. Total revenues came in at $1.2 billion, surpassing the consensus mark by 3.8% and increasing 15% from the year-ago quarter’s levels.

Omnicom OMC reported second-quarter 2021 adjusted earnings of $1.46 per share that beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.

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