Broadridge (BR) Misses Earnings and Revenue Estimates in Q1

Broadridge Financial Solutions, Inc. BR reported dismal first-quarter fiscal 2020 results missing the Zacks Consensus Estimate on both earnings and revenues.

Adjusted earnings of 68 cents per share missed the consensus estimate by 4 cents and were down 14% year over year. Total revenues of $949 million lagged the consensus mark by around $32 million and were down 2% year over year. The company generated closed sales of $38 million in the quarter, up 103% year over year.

Shares of the company have gained 29.9% year to date, outperforming the 24.6% 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 7% from the year-ago quarter’s level to $703 million. Global Technology and Operations segment revenues came in at $274 million, up 15% from the year-ago quarter’s figure. The improvement was driven by acquisitions and organic growth.

Revenues by Type

Recurring fee revenues of $623 million increased 8% from the year-ago quarter’s level. Event-driven fee revenues of $40 million decreased 48% year over year. Distribution revenues were down 8% year over year to $313 million.

Operating Results

Adjusted operating income of $104 million declined 16% year over year. Adjusted operating income margin declined to 10.9% from 12.6% in the prior-year quarter.

Balance Sheet and Cash Flow

Broadridge exited the first quarter with cash and cash equivalents of $358.3 million compared with $273.2 million at the end of the prior quarter. Long-term debt was $1.37 billion compared with $1.47 billion at the end of the prior quarter.

The company used $86.4 million of cash in operating activities and capex was $20.2 million in the quarter. Non-GAAP free cash flow was $106.7 million. Broadridge paid out $55.4 million in dividends in the reported quarter.

Guidance

Broadridge reiterated fiscal year 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 approximately 18%. Closed sales are anticipated between $190 million and $230 million. Adjusted EPS are expected to register 8-12% growth.

Zacks Rank & Upcoming Releases

Broadridge currently carries a Zacks Rank #4 (Sell).

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 third-quarter 2019 earnings of key players like Genpact G, Green Dot GDOT and Envestnet ENV, each scheduled to release results on Nov 7.

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