FactSet Research Systems Inc. (NYSE:FDS) (NASDAQ:FDS), a leading
provider of integrated financial information and analytical
applications, today announced its results for the first quarter of
fiscal 2017.
For the quarter ended November 30, 2016, revenues
grew to $288.1 million. Operating income rose to $90.3 million
compared to $87.3 million in the prior year period. Net income was
$66.6 million versus $60.0 million in the year ago first quarter.
Diluted earnings per share were $1.66 compared to $1.43 in the same
period of fiscal 2016. Additionally, in the first quarter of fiscal
2017, FactSet completed the acquisitions of Vermilion Software
Limited (“Vermilion”) and CYMBA Technologies Limited (“CYMBA”), for
cash consideration of $67 million and $8 million, respectively.
Organic revenues grew 8.4% during the first quarter
of fiscal 2017. Adjusted operating income for the first quarter,
which excludes $3.8 million of intangible asset amortization and
$1.0 million of non-recurring acquisition costs, was $95.0 million,
up 4.5% over the prior year quarter. Adjusted net income increased
12.2% over the prior year and excludes $2.8 million (after-tax)
from intangible asset amortization and $0.7 million (after-tax)
from non-recurring acquisition costs. Adjusted diluted EPS rose
18.2% to $1.75 and excludes the net effect of intangible asset
amortization and non-recurring acquisition costs.
Organic revenues exclude the effects of
acquisitions and dispositions completed in the last 12 months and
foreign currency in all periods presented. Adjusted operating
income and margin, adjusted net income and adjusted diluted
earnings per share exclude both intangible asset amortization and
non-recurring items, including acquisition costs. The Company
believes that these adjusted financial measures better reflect the
underlying economic performance of FactSet. A supplementary
schedule reconciling financial results in accordance with U.S.
generally accepted accounting principles (“GAAP”) to these adjusted
financial measures is presented on page 10 of this earnings
release.
(Condensed and Unaudited) |
|
Three Months Ended November 30, |
|
|
|
(In thousands, except
per share data) |
|
2016 |
|
2015 |
|
Change |
Revenues |
$ |
288,063 |
$ |
270,504 |
|
6.5 |
% |
Adjusted operating
income |
$ |
95,029 |
$ |
90,920 |
|
4.5 |
% |
Adjusted net
income |
$ |
70,073 |
$ |
62,443 |
|
12.2 |
% |
GAAP diluted earnings
per share |
$ |
1.66 |
$ |
1.43 |
|
16.1 |
% |
Adjusted diluted
earnings per share |
$ |
1.75 |
$ |
1.48 |
|
18.2 |
% |
Diluted weighted
average shares |
|
40,100 |
|
42,063 |
|
|
|
|
|
|
|
|
|
“We delivered another solid quarter of revenue and
earnings growth in a climate that remains challenging for some
segments of the market. FactSet’s resilient business model and
partnership with our clients continues to be a winning formula. Our
advances in technology and product are opening up more enterprise
discussions with our clients and the breadth of solutions we can
provide them,” said Phil Snow, FactSet CEO.
Annual Subscription Value (“ASV”)
ASV was $1.17 billion at November 30, 2016, up 7.9%
organically from the prior year. Organic ASV, which excludes the
effects of acquisitions, dispositions and foreign currency,
increased $7.9 million over the last three months. ASV at any given
point in time represents the forward-looking revenues for the next
12 months from all services currently being supplied to
clients.
Buy-side and sell-side ASV growth rates for the
first quarter of fiscal 2017 were 8.3% and 6.3%, respectively.
Buy-side clients account for 83.0% of ASV while the remainder is
derived from sell-side firms that perform mergers and acquisitions
advisory work, capital markets services and equity research.
Supplementary tables covering organic buy-side and sell-side ASV
growth rates are presented on page 12 of this earnings release.
Financial Highlights – First Quarter of Fiscal
2017
- ASV from U.S. operations was $765.3 million, increasing 7.1%
organically over the prior year. U.S. revenues were $190.6 million.
Excluding the effects of acquisitions and dispositions completed in
the last 12 months, the U.S. growth rate was
7.1%.
- ASV from international operations grew 9.3% organically to
$405.1 million and now represents 34.6% of total ASV, up from 32.6%
a year ago. International revenues rose to $97.5 million. Excluding
the impact of foreign currency and acquisitions and dispositions
completed in the last 12 months, the international revenue growth
rate was 11.0%.
- The Company’s effective tax rate for the first quarter was
25.9%, a decrease from 31.4% a year ago, primarily due to FactSet’s
global operational realignment effective September 1,
2016.
- Quarterly free cash flow was $38.6 million.
Operational Highlights – First Quarter of Fiscal
2017
- Client count as of November 30, 2016 was 3,116, a net increase
of 24 clients in the past three months driven by client additions
from the Vermilion and CYMBA acquisitions.
- User count grew 1,308 to 66,963.
- Annual client retention was greater than 95% of ASV. When
expressed as a percentage of clients, annual retention was
93%.
- Employee count was 8,713 at November 30, 2016, up 780 people in
the past 12 months. Excluding the acquired Vermilion and CYMBA
workforces and employees of the sold Market Metrics business,
headcount increased 10.7% from a year ago.
- Capital expenditures were $12.5 million primarily related to
the build out of office space and purchases of computer-related
equipment.
- On July 1, 2016 FactSet entered into an accelerated share
repurchase agreement (the “ASR Agreement”) to repurchase $120.0
million of FactSet common stock. The final settlement of the ASR
Agreement occurred in the first quarter of fiscal 2017. The Company
repurchased 698,523 shares of its common stock under the ASR
Agreement.
- In addition, FactSet repurchased 505,000 shares for $79.3
million during the first quarter under the Company’s existing share
repurchase program. As of November 30, 2016, $117.7 million
remained authorized for further repurchases. Over the last 12
months, $473.4 million has been returned to stockholders in the
form of share repurchases and dividends, funded by cash generated
from operations and the sale of the Market Metrics business.
- Common shares outstanding were 39.7 million at November 30,
2016.
- In November 2016, FactSet held its 2016 Investment Process
Symposium in Southampton, Bermuda, with 228 industry professionals
from 105 firms and 70 cities in attendance.
- FactSet was named “Best Index Data Provider” at the 2016 Data
Management Review Awards in November 2016.
First Quarter Fiscal 2017 Acquisitions
In November 2016, FactSet acquired Vermilion, a
premier global provider of client reporting and communications
software and services to the financial services industry, for cash
consideration of $67 million. Client reporting is a rapidly growing
area of the market as regulatory requirements rise and investors
grow increasingly sophisticated. The Vermilion Reporting Suite
(VRS) creates a workflow around all elements of the client
reporting process. At the time of acquisition, Vermilion employed
59 individuals across offices located in the U.K., U.S. and
Singapore.
In September 2016, FactSet completed the
acquisition of CYMBA, a fast-growing provider of high-performance
multi-asset class investment management solutions, for cash
consideration of $8 million. A U.K.-based company, CYMBA has a
solid foundation of core order management system functionality
through its product. CYMBA has 11 employees based in its London
office.
“CYMBA and Vermilion are outstanding additions as
FactSet strives to more holistically address the portfolio life
cycle through both innovation and acquisition,” explained Phil
Snow. “Operating alone, each company has developed compelling
functionality to meet critical needs of the investment management
community; in combination with FactSet’s core strengths and global
commercial footprint, we believe we will better meet client needs
going forward.”
The Vermilion and CYMBA acquisitions added $15
million in acquired ASV during the quarter. Following the closing
of the Vermilion acquisition, FactSet carries $365 million in total
debt under its amended revolving credit facility with Bank of
America at an interest rate of one-month LIBOR plus 0.75%. The
credit facility has a three-year term and may be expanded up to a
total of $400 million. Vermilion and CYMBA’s operations did not
have an impact on FactSet’s first quarter adjusted diluted earnings
per share. For the second quarter of fiscal 2017, these two
acquisitions combined are expected to reduce adjusted diluted EPS
by $0.01 and reduce GAAP diluted EPS by $0.02. FactSet forecasts
that the acquisitions will be breakeven to both adjusted and GAAP
diluted EPS by the fourth quarter of fiscal 2017.
FactSet Operational Realignment
Effective September 1, 2016, FactSet realigned
certain aspects of its global operations from FactSet Research
Systems Inc., its U.S. parent company, to FactSet UK Limited, a
U.K. operating company, to better position the Company to serve its
growing client base outside the U.S. This realignment allows the
Company to further implement strategic corporate objectives and
helps achieve operational and financial efficiencies, while
complementing FactSet’s increasing global growth and reach. As a
result of the realignment, the Company’s effective tax rate
declined from 28.3% in the fourth quarter of 2016 to 25.9% in the
first quarter of 2017.
Business Outlook
The following forward-looking statements reflect
FactSet’s expectations as of today’s date. Given the risk factors,
uncertainties and assumptions discussed below, actual results may
differ materially. FactSet does not intend to update its
forward-looking statements until its next quarterly results
announcement, other than in publicly available statements.
Second Quarter Fiscal 2017 Expectations:
- Revenues are expected to range between $293 million and $298
million.
- GAAP operating margin is expected to range between 31% and 32%.
Adjusted operating margin is expected to range between 32.5% and
33.5%.
- The annual effective tax rate is expected to range between
25.5% and 26.5%.
- GAAP diluted EPS is expected to range between $1.70 and $1.74.
Adjusted EPS is expected to range between $1.78 and $1.82. The
midpoint of the adjusted EPS range represents 13.2% growth over the
prior year.
Conference Call
The Company will host a conference call today,
December 20, 2016 at 11:00 a.m. Eastern Time to review the first
quarter earnings release. To listen, please visit the “Audiocasts”
section on FactSet's Investor Relations website at
http://investor.factset.com.
Forward-looking Statements
This news release contains forward-looking
statements based on management's current expectations, estimates
and projections. All statements that address expectations or
projections about the future, including statements about the
Company's strategy for growth, product development, market
position, subscriptions, expected expenditures and financial
results are forward-looking statements. Forward-looking statements
may be identified by words like "expects," "anticipates," "plans,"
"intends," "projects," "should," "indicates," "continues,"
"subscriptions" and similar expressions. These statements are not
guarantees of future performance and involve a number of risks,
uncertainties and assumptions. Many factors, including those
discussed more fully elsewhere in this release and in FactSet's
filings with the Securities and Exchange Commission, particularly
its latest annual report on Form 10-K and quarterly reports on Form
10-Q, as well as others, could cause results to differ materially
from those stated. These factors include, but are not limited to:
the current status of the global economy; the ability to integrate
newly acquired companies and businesses; the stability of global
securities markets; the ability to hire qualified personnel; the
maintenance of the Company's leading technological position and
reputation; the impact of global market trends on the Company's
revenue growth rate and future results of operations; the
negotiation of contract terms with corporate vendors, data
suppliers and potential landlords; the retention of key clients;
the continued employment of key personnel; the absence of U.S. or
foreign governmental regulation restricting international business;
and the sustainability of historical levels of profitability and
growth rates in cash flow generation.
About Adjusted Financial Measures
Financial measures in accordance with U.S. GAAP
including operating income and margin, net income and diluted
earnings per share have been adjusted. Adjusted operating income
during the just completed first quarter excludes $3.8 million of
intangible asset amortization and $1.0 million of non-recurring
acquisition costs. Adjusted net income excludes the after-tax
charges of $2.8 million from intangible asset amortization and $0.7
million from non-recurring acquisition costs. Adjusted diluted EPS
of $1.75 excludes the net effect of intangible asset amortization
and non-recurring acquisition costs.
FactSet uses these adjusted financial measures,
both in presenting its results to stockholders and the investment
community, and in its internal evaluation and management of the
business. The Company believes that these adjusted financial
measures and the information they provide are useful to investors
because they permit investors to view the Company’s performance
using the same tools that management uses to gauge progress in
achieving its goals. Investors may benefit from referring to these
adjusted financial measures in assessing the Company’s performance
and when planning, forecasting and analyzing future periods and may
also facilitate comparisons to its historical performance. The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP.
About Non-GAAP Free Cash Flow
The GAAP financial measure, cash flows provided by
operating activities, has been adjusted to report non-GAAP free
cash flow that includes the cash cost for taxes and changes in
working capital, less capital expenditures. Included in the
recently completed first quarter was $51.1 million of net cash
provided by operations and $12.5 million of capital expenditures.
The presentation of free cash flow is not intended to be considered
in isolation or as a substitute for the financial information
prepared and presented in accordance with GAAP. FactSet uses this
financial measure, both in presenting its results to stockholders
and the investment community, and in the Company’s internal
evaluation and management of the business. Management believes that
this financial measure is useful to investors because it permits
investors to view the Company’s performance using the same metric
that management uses to gauge progress in achieving its goals and
is an indication of cash flow that may be available to fund further
investments in future growth initiatives.
About FactSet
FactSet delivers the world's best insight and
information to investment professionals through superior analytics,
service, content, and technology. More than 65,000 users make
smarter investment decisions with FactSet's desktop analytics,
mobile applications, and comprehensive data feeds. FactSet is also
an honoree of Fortune's 100 Best Companies to Work For and a Best
Workplace Award recipient in the United Kingdom and France. FactSet
is listed on the New York Stock Exchange and NASDAQ (NYSE:FDS |
NASDAQ:FDS).
Consolidated Statements
of Income – Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended November 30, |
(In thousands, except
per share data) |
|
|
|
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
$ |
288,063 |
|
|
$ |
270,504 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Cost of
services |
|
|
|
|
|
127,250 |
|
|
|
114,736 |
|
Selling,
general and administrative |
|
|
|
|
|
70,494 |
|
|
|
68,460 |
|
Total
operating expenses |
|
|
|
|
|
197,744 |
|
|
|
183,196 |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
|
|
90,319 |
|
|
|
87,308 |
|
|
|
|
|
|
|
|
|
Other (expense)
income |
|
|
|
|
|
|
|
Interest
(expense), net of interest income |
|
|
|
|
|
(499 |
) |
|
|
93 |
|
Total
other (expense) income |
|
|
|
|
|
(499 |
) |
|
|
93 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
|
|
|
89,820 |
|
|
|
87,401 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
|
|
|
23,237 |
|
|
|
27,436 |
|
Net
income |
|
|
|
|
$ |
66,583 |
|
|
$ |
59,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
|
|
|
|
$ |
1.66 |
|
|
$ |
1.43 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares |
|
|
|
|
|
40,100 |
|
|
|
42,063 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements
of Comprehensive Income – Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedNovember 30, |
(In thousands) |
|
|
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
$ |
66,583 |
|
|
$ |
59,965 |
|
|
|
|
|
|
|
|
|
Other comprehensive
loss, net of tax |
|
|
|
|
|
|
|
Net
unrealized gain (loss) on cash flow hedges* |
|
|
|
|
|
447 |
|
|
|
(416 |
) |
Foreign
currency translation adjustments |
|
|
|
|
|
(11,497 |
) |
|
|
(6,386 |
) |
Other
comprehensive loss |
|
|
|
|
|
(11,050 |
) |
|
|
(6,802 |
) |
Comprehensive
income |
|
|
|
|
$ |
55,533 |
|
|
$ |
53,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*For the three months ended November 30, 2016, the
unrealized gain on cash flow hedges was net of tax expense of
$261. For the three months ended November 30, 2015, the
unrealized loss on cash flow hedges was net of tax benefits of
$244.
Consolidated Balance Sheets - Unaudited |
|
|
|
|
|
|
|
|
|
November 30, |
|
|
August 31, |
|
|
(In
thousands) |
|
|
2016 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
173,288 |
|
|
$ |
228,407 |
|
|
Investments |
|
20,951 |
|
|
|
24,217 |
|
|
Accounts receivable, net of reserves |
|
109,680 |
|
|
|
97,797 |
|
|
Deferred taxes |
|
|
2,695 |
|
|
|
3,158 |
|
|
Prepaid expenses and other current assets |
|
|
18,045 |
|
|
|
15,697 |
|
|
|
Total current assets |
|
|
324,659 |
|
|
|
369,276 |
|
|
Property, equipment, and leasehold improvements, net |
|
90,438 |
|
|
|
84,622 |
|
|
Goodwill |
|
|
|
507,656 |
|
|
|
452,915 |
|
|
Intangible assets, net |
|
|
|
109,032 |
|
|
|
93,161 |
|
|
Deferred taxes |
|
|
|
7,314 |
|
|
|
13,406 |
|
|
Other assets |
|
|
|
7,066 |
|
|
|
5,781 |
|
|
|
Total Assets |
|
|
$ |
1,046,165 |
|
|
$ |
1,019,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Accounts payable and accrued expenses |
$ |
50,526 |
|
|
$ |
45,836 |
|
|
Accrued compensation |
|
|
16,670 |
|
|
|
51,036 |
|
|
Deferred fees |
|
|
32,940 |
|
|
|
33,247 |
|
|
Taxes payable |
|
|
15,815 |
|
|
|
7,781 |
|
|
Deferred taxes |
|
|
413 |
|
|
|
291 |
|
|
Dividends payable |
|
|
19,852 |
|
|
|
20,019 |
|
|
|
Total current liabilities |
|
|
136,216 |
|
|
|
158,210 |
|
|
Deferred taxes |
|
|
|
2,766 |
|
|
|
1,708 |
|
|
Taxes payable |
|
|
|
9,395 |
|
|
|
8,782 |
|
|
Long-term debt |
|
365,000 |
|
|
|
300,000 |
|
|
Deferred rent and other non-current liabilities |
|
36,005 |
|
|
|
33,080 |
|
|
|
Total Liabilities |
|
$ |
549,382 |
|
|
$ |
501,780 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Common stock |
|
$ |
515 |
|
|
$ |
512 |
|
|
Additional paid-in capital |
|
675,773 |
|
|
|
623,195 |
|
|
Treasury stock, at cost |
|
|
(1,430,560 |
) |
|
|
(1,321,700 |
) |
|
Retained earnings |
|
|
1,330,658 |
|
|
|
1,283,927 |
|
|
Accumulated other comprehensive loss |
|
|
|
(79,603 |
) |
|
|
(68,553 |
) |
|
Total Stockholders’ Equity |
|
|
496,783 |
|
|
|
517,381 |
|
|
|
Total Liabilities And Stockholders’ Equity |
$ |
1,046,165 |
|
|
$ |
1,019,161 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows – Unaudited |
|
(In
thousands) |
Three Months EndedNovember 30, |
|
|
|
2016 |
|
|
|
|
2015 |
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Net
income |
|
$ |
66,583 |
|
|
$ |
59,965 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities |
|
|
|
|
Depreciation and amortization |
|
10,016 |
|
|
|
8,437 |
|
|
Stock-based compensation expense |
|
6,385 |
|
|
|
6,462 |
|
|
Deferred income taxes |
|
4,907 |
|
|
|
2,388 |
|
|
Tax benefits from share-based payment arrangements |
|
(5,511 |
) |
|
|
(9,083 |
) |
|
Changes in assets and liabilities, net of effects of
acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net of reserves |
|
|
|
(9,985 |
) |
|
|
1,599 |
|
|
Accounts payable and accrued expenses |
|
|
|
2,043 |
|
|
|
1,056 |
|
|
Accrued compensation |
|
(34,261 |
) |
|
|
(23,073 |
) |
|
Deferred fees |
|
(3,118 |
) |
|
|
(2,588 |
) |
|
Taxes payable, net of prepaid taxes |
|
13,786 |
|
|
|
20,561 |
|
|
Prepaid expenses and other assets |
|
(2,805 |
) |
|
|
3,998 |
|
|
Deferred rent and other non-current liabilities |
|
3,225 |
|
|
|
1,255 |
|
|
Other working capital accounts, net |
|
(152 |
) |
|
|
110 |
|
|
Net cash provided by operating activities |
|
|
51,113 |
|
|
|
71,087 |
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
|
Acquisition of
businesses, net of cash acquired |
|
|
|
|
|
|
|
|
|
|
(71,689 |
) |
|
|
(264,087 |
) |
|
Purchases of
investments |
|
|
|
|
|
|
|
|
|
|
(16,700 |
) |
|
|
(12,131 |
) |
|
Proceeds from sales of
investments |
|
|
|
|
|
|
|
|
|
|
19,501 |
|
|
|
12,423 |
|
|
Purchases of property,
equipment and leasehold improvements, net of proceeds from
dispositions |
|
|
|
|
|
|
|
|
|
|
(12,537 |
) |
|
|
(14,385 |
) |
|
Net cash
used in investing activities |
|
|
|
|
|
|
|
|
|
|
(81,425 |
) |
|
|
(278,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payments |
|
|
|
|
|
|
|
|
|
|
(19,867 |
) |
|
|
(18,053 |
) |
|
Repurchase of common
stock |
|
|
|
|
|
|
|
|
|
|
(84,860 |
) |
|
|
(44,339 |
) |
|
Proceeds from debt |
|
|
|
|
|
|
|
|
|
|
65,000 |
|
|
|
265,000 |
|
|
Debt issuance
costs |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
(12 |
) |
|
Proceeds from employee
stock plans |
|
|
|
|
|
|
|
|
|
|
16,685 |
|
|
|
20,025 |
|
|
Tax benefits from
share-based payment arrangements |
|
|
|
|
|
|
|
|
|
|
5,511 |
|
|
|
9,083 |
|
|
Net cash
(used in) provided by financing activities |
|
|
|
|
|
|
|
|
|
|
(17,531 |
) |
|
|
231,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
(7,276 |
) |
|
|
(3,377 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
(55,119 |
) |
|
|
|
21,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
|
|
|
|
|
|
|
|
|
228,407 |
|
|
|
158,914 |
|
|
Cash and cash
equivalents at end of period |
|
|
|
|
|
|
|
|
|
$ |
173,288 |
|
|
$ |
180,148 |
|
|
|
|
Reconciliation of U.S. GAAP Results to Adjusted
Financial Measures
Financial measures in accordance with U.S. GAAP
including operating income and margin, net income and diluted
earnings per share have been adjusted below. FactSet uses these
adjusted financial measures, both in presenting its results to
stockholders and the investment community, and in its internal
evaluation and management of the business. The Company believes
that these adjusted financial measures and the information they
provide are useful to investors because they permit investors to
view the Company’s performance using the same tools that management
uses to gauge progress in achieving its goals. Adjusted measures
may also facilitate comparisons to FactSet’s historical
performance.
(Unaudited) |
|
Three Months EndedNovember 30, |
|
|
(In thousands, except
per share data) |
|
|
2016 |
|
|
2015 |
|
Change |
GAAP Operating
income |
|
$ |
90,319 |
|
$ |
87,308 |
|
|
|
Intangible asset
amortization (a) |
|
|
3,756 |
|
|
2,922 |
|
|
|
Non-recurring
acquisition costs (b) |
|
|
954 |
|
|
690 |
|
|
|
|
|
|
|
|
|
Adjusted
operating income |
|
$ |
95,029 |
|
$ |
90,920 |
|
4.5 |
% |
Adjusted operating margin |
|
|
33.0 |
% |
|
33.6 |
% |
|
|
|
|
|
|
|
|
GAAP Net income |
|
$ |
66,583 |
|
$ |
59,965 |
|
|
|
Intangible asset
amortization (a)(c) |
|
|
2,783 |
|
|
2,004 |
|
|
|
Non-recurring
acquisition costs (b)(c) |
|
|
707 |
|
|
474 |
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
70,073 |
|
$ |
62,443 |
|
12.2 |
% |
|
|
|
|
|
|
Adjusted Diluted
earnings per common share (d) |
|
$ |
1.75 |
|
$ |
1.48 |
|
18.2 |
% |
Weighted
average common shares (Diluted) |
|
|
40,100 |
|
|
42,063 |
|
|
|
(a) GAAP operating income in the first
quarter of fiscal 2017 was adjusted to exclude $3.8 million of
pre-tax intangible asset amortization, which reduced net income by
$2.8 million and diluted earnings per share by $0.07. GAAP
operating income in the first quarter of fiscal 2016 was adjusted
to exclude $2.9 million of pre-tax intangible asset amortization,
which reduced net income by $2.0 million and diluted earnings per
share by $0.05.
(b) GAAP operating income in the first
quarter of fiscal 2017 was adjusted to exclude $1.0 million of
pre-tax non-recurring acquisition costs related to the Vermilion
and CYMBA acquisitions, which reduced net income by $0.7 million
and diluted earnings per share by $0.02. GAAP operating income in
the first quarter of fiscal 2016 was adjusted to exclude $0.7
million of pre-tax non-recurring acquisition costs related
primarily to the Portware acquisition, which reduced net income by
$0.5 million and diluted earnings per share by $0.01.
(c) For the purposes of calculating adjusted
net income and adjusted diluted earnings per share, intangible
asset amortization and non-recurring acquisition costs were taxed
at the effective tax rates of 25.9% for fiscal 2017 and 31.4% for
fiscal 2016.
(d) The sum of the non-GAAP diluted earnings
per share may not equal the totals above due to rounding.
Supplementary Schedule of Historical Adjusted
Financial Measures
The following table presents adjusted operating
income and margin, adjusted net income and adjusted diluted
earnings per share, and may be useful to facilitate historical
comparisons.
(Unaudited) (In thousands, except per share data) |
|
Q1’17 |
Q4’16 |
Q3’16 |
Q2’16 |
Q1’16 |
GAAP Operating
income |
|
$ |
90,319 |
|
$ |
87,734 |
|
$ |
89,290 |
|
$ |
85,344 |
|
$ |
87,308 |
|
Intangible asset
amortization |
|
|
3,756 |
|
|
3,732 |
|
|
4,085 |
|
|
4,078 |
|
|
2,922 |
|
Non-recurring
items |
|
|
954 |
|
|
4,632 |
|
|
1,394 |
|
|
3,838 |
|
|
690 |
|
Adjusted
operating income |
|
$ |
95,029 |
|
$ |
96,098 |
|
$ |
94,769 |
|
$ |
93,260 |
|
$ |
90,920 |
|
Adjusted
operating margin |
|
|
33.0 |
% |
|
33.4 |
% |
|
33.0 |
% |
|
33.1 |
% |
|
33.6 |
% |
|
|
|
|
|
|
|
GAAP Net income |
|
$ |
66,583 |
|
$ |
144,306 |
|
$ |
66,781 |
|
$ |
67,763 |
|
$ |
59,965 |
|
Intangible asset
amortization |
|
|
2,783 |
|
|
2,675 |
|
|
2,925 |
|
|
2,903 |
|
|
2,004 |
|
Non-recurring
items |
|
|
707 |
|
|
(78,374 |
) |
|
(2,161 |
) |
|
(4,585 |
) |
|
474 |
|
Adjusted
net income |
|
$ |
70,073 |
|
$ |
68,607 |
|
$ |
67,545 |
|
$ |
66,081 |
|
$ |
62,443 |
|
|
|
|
|
|
|
|
Adjusted Diluted
earnings per common share |
|
$ |
1.75 |
|
$ |
1.69 |
|
$ |
1.64 |
|
$ |
1.59 |
|
$ |
1.48 |
|
Weighted average common
shares (Diluted) |
|
|
40,100 |
|
|
40,673 |
|
|
41,189 |
|
|
41,536 |
|
|
42,063 |
|
Supplementary Schedules of Historical ASV by Client
Type
The following table presents the percentages and
growth rates of organic ASV by client type, excluding currency, and
may be useful to facilitate historical comparisons. Organic ASV
excludes acquisitions and dispositions completed within the last 12
months and the effects of foreign currency.
|
|
|
Q1’17 |
Q4’16 |
Q3’16 |
Q2’16 |
Q1’16 |
%
of ASV from buy-side clients |
|
|
83.0 |
% |
82.6 |
% |
83.0 |
% |
82.8 |
% |
82.4 |
% |
%
of ASV from sell-side clients |
|
|
17.0 |
% |
17.4 |
% |
17.0 |
% |
17.2 |
% |
17.6 |
% |
|
|
|
|
|
|
|
|
ASV
Growth rate from buy-side clients |
|
|
8.3 |
% |
9.0 |
% |
10.3 |
% |
9.9 |
% |
9.5 |
% |
ASV
Growth rate from sell-side clients |
|
|
6.3 |
% |
7.6 |
% |
8.1 |
% |
10.0 |
% |
10.3 |
% |
Total
Organic ASV Growth Rate |
|
|
7.9 |
% |
8.8 |
% |
9.9 |
% |
9.9 |
% |
9.7 |
% |
The following table presents the calculation of the
above-mentioned ASV growth rates from all clients.
(In millions) |
Q1’17 |
Q4’16 |
Q3’16 |
Q2’16 |
Q1’16 |
|
As reported ASV |
$ |
1,170.4 |
|
$ |
1,149.9 |
|
$ |
1,156.3 |
|
$ |
1,139.2 |
|
$ |
1,108.7 |
|
|
Less acquired ASV (a) |
|
(14.7 |
) |
|
(39.3 |
) |
|
(39.3 |
) |
|
(39.7 |
) |
|
(49.0 |
) |
|
Less Market Metrics ASV |
|
- |
|
|
- |
|
|
(36.8 |
) |
|
(38.2 |
) |
|
(38.7 |
) |
|
Less Currency impact (b) |
|
2.1 |
|
|
(2.2 |
) |
|
(0.6 |
) |
|
0.8 |
|
|
1.8 |
|
|
Organic ASV total |
$ |
1,157.8 |
|
$ |
1,108.4 |
|
$ |
1,079.6 |
|
$ |
1,062.1 |
|
$ |
1,022.8 |
|
|
Total Organic ASV Growth Rate |
|
7.9 |
% |
|
8.8 |
% |
|
9.9 |
% |
|
9.9 |
% |
|
9.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Acquired ASV from acquisitions completed within the last 12
months. |
|
|
|
|
|
|
|
|
|
(b)
The impact from foreign currency movements over the past 12
months was excluded above to calculate total organic ASV |
|
|
|
|
|
|
|
|
|
Contact:
Rachel Stern
FactSet Research Systems Inc.
203.810.1000
FactSet Research Systems (NYSE:FDS)
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