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Broadridge (BR) Q4 Earnings Meet Estimates, Revenues Lag

Zacks Equity Research

Broadridge Financial Solutions, Inc.’s BR fourth-quarter fiscal 2019 earnings came in line with the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings came in at $1.72 cents per share, down 8% year over year. Total revenues of $1.21 billion lagged the consensus mark by $13 million and were down 8% year over year.

Shares of the company have gained 32.1% year to date, outperforming the 28.8% rally of the industry it belongs to.

Let’s check out the numbers in detail.

Revenues by Segment

Revenues in the Investor Communication Solutions segment declined 11% from the year-ago quarter’s level to $990 million. Global Technology and Operations segment revenues came in at $253 million, up 8% from the year-ago quarter’s figure. The improvement was driven by acquisitions, internal growth and higher net new business from closed sales.

Revenues by Type

Recurring fee revenues of $813 million declined 6% from the year-ago quarter’s level. Event-driven fee revenues of $51 million decreased 16% year over year, mainly due to lower mutual fund proxy activity. Distribution revenues were down 11% year over year to $378 million, due to lower transactional print volumes, decline in Event-driven fee activity, and the impact of the ASC 606 revenue accounting change.

Operating Results

Adjusted operating income of $267 million declined 8% year over year due to decrease in recurring fee revenues. Adjusted operating income margin increased to 22.1% from 22% in the prior-year quarter.

Balance Sheet and Cash Flow

Broadridge exited the fiscal fourth quarter with cash and cash equivalents of $273.2 million compared with $292.1 million at the end of the prior quarter. Long-term debt was $1.47 billion compared with $1.17 billion at the end of the prior quarter.

The company generated $399.1 million of cash from operating activities and capex was $19.7 million in the quarter. Non-GAAP free cash flow was $372.8 million. Broadridge paid out $56.1 million in dividends in the reported quarter.

Fiscal 2020 Guidance

Total revenues are expected to grow 3%-6%. Recurring fee revenue growth is anticipated in the range 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. Adjusted EPS are expected to register 8-12% growth.

Zacks Rank & Upcoming Releases

Currently, Broadridge carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting second-quarter 2019 earnings of key players like Genpact G, Green Dot GDOT and Navigant Consulting NCI. While Genpact and Green Dot are slated to report on Aug 7, Navigant Consulting is scheduled to release results on Aug 8.

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