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

Zacks Equity Research
·4-min read

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 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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