- ASV grew to $970 million, up 8.5% organically
- Adjusted EPS rose to $1.32, up 11.9%
- Free cash flow was $66 million, up 25.9% over the prior
year
FactSet Research Systems Inc. (NYSE:FDS) (Nasdaq:FDS), a leading
provider of integrated global financial information and analytical
applications to the investment community, today announced its
results for the first quarter of fiscal 2015.
For the quarter ended November 30, 2014, revenues advanced
to $242.7 million, up 8.8% over the prior year. Included in this
total was $2.5 million related to an acquisition completed less
than a year ago. Operating income was $80.3 million compared to
$74.7 million in the year ago quarter. Net income was $55.9 million
versus $52.2 million a year ago. Diluted earnings per share were
$1.32 compared to $1.19 in the same period of fiscal 2014.
Adjusted diluted EPS grew 11.9% as prior year EPS was adjusted
to exclude income tax benefits of $0.01 per share from the U.S.
Federal R&D tax credit.
A reconciliation between GAAP and adjusted financial
measures is presented on page 8 of this press release.
Consolidated Statements of Income |
(Condensed and Unaudited)
|
|
Three Months Ended
November 30, |
|
(In thousands, except per share data) |
2014 |
2013 |
Change |
Revenues |
$242,676 |
$222,975 |
8.8% |
Operating income |
$80,260 |
$74,740 |
7.4% |
Net income |
$55,860 |
$52,178 |
7.1% |
Adjusted diluted earnings per share |
$1.32 |
$1.18 |
11.9% |
Diluted weighted average shares |
42,340 |
43,773 |
|
|
|
|
|
"Our first quarter performance was a strong start to the
fiscal year," said Philip Hadley, Chairman and CEO. "The underlying
growth rate of our business continues to expand and translated into
double digit EPS growth for the 18th consecutive quarter. I was
pleased that our growth was broad based across our products and
derived from each geographic region. We also added 997 net new
users, our best first quarter user addition in 7 years. This
healthy performance pushed our user growth rate to 9.0% over the
last 12 months."
Annual Subscription Value ("ASV")
ASV totaled $970.2 million at November 30, 2014, up 8.5%
organically over the prior year. Excluding the impact from foreign
currency, ASV increased $9.2 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 clients account for 82.5% of ASV and
the remainder from sell-side firms that perform Mergers &
Acquisitions ("M&A") advisory work, capital markets services
and equity research. The buy-side and sell-side ASV growth rates
accelerated to 8.9% and 6.7%, respectively. Supplementary tables
covering buy-side and sell-side ASV growth rates are presented on
page 8 of this press release.
Financial Highlights – First Quarter of Fiscal
2015
- ASV from U.S. operations was $654 million and $316 million was
related to international operations.
- U.S. revenues were $163.7 million, up 7.0% from the year ago
first quarter.
- Non-U.S. revenues rose to $79.0 million. Excluding incremental
revenue from the acquisition of Matrix and the impact of foreign
currency, the international growth rate was 9.8%.
- Operating margin was 33.1%.
- Quarterly free cash flow was $66.4 million, an increase of
25.9% over prior year.
- The effective tax rate for the first quarter was 30.8%, as
compared to 30.5% a year ago.
Operational Highlights – First Quarter of Fiscal
2015
- Annual client retention was greater than 95% of ASV and 93% of
clients, up from 92% a year ago.
- Client count rose by 19 and totaled 2,762 at November 30,
2014.
- Users of the FactSet workstation grew 9.0% and totaled 55,593
professionals at November 30, 2014.
- Employee count was 6,887 at November 30, 2014, up 7.6% over
last year.
- Capital expenditures were $4.8 million.
- A regular quarterly dividend of $16.2 million or $0.39 per
share was paid on December 16, 2014 to common stockholders of
record as of November 28, 2014.
- Common shares outstanding were 41.6 million at November 30,
2014.
- FactSet was named as one of the "20 Great Workplaces in
Technology" for the first time by Great Place to Work.
- FactSet opened a new office in Toronto, Canada to meet the
needs of its growing Canadian client base.
U.S. Federal R&D Tax Credit
The U.S. Federal R&D tax credit expired on December 31, 2013
and was not extended as of November 30, 2014, the end of FactSet's
first quarter. Although a bill including the renewal of the R&D
tax credit for calendar year 2014 has been approved by the U.S.
House of Representatives, it has not been signed into law.
Accordingly, FactSet did not recognize any income tax benefits from
the Federal R&D tax credit during the just completed first
quarter.
The impact of the Federal R&D tax credit to FactSet is
estimated to be $8.1 million per year or $0.19 per share. It is
important to note that the U.S. Federal R&D tax credit was
never made a permanent credit, resulting in 9 expirations and 15
extensions since 1981. Only once in its 33-year history was the tax
credit not retroactively re-enacted (from July 1, 1995 through June
30, 1996). However, the timing of FactSet's ability to recognize
the Federal R&D tax credit has been volatile due to the number
of lapses and retroactive re-enactments. If FactSet had been able
to recognize the full value of income tax benefits from the U.S.
Federal R&D tax credit, adjusted EPS would have increased by
$0.05 and $0.03 in the first quarter of fiscal 2015 and 2014,
respectively, and the effective tax rate would have declined to 29%
in both periods.
Share Repurchase Program and Authorization
FactSet repurchased 379,854 shares for $48.4 million during the
first quarter. On December 15, 2014, the Board of Directors of
FactSet approved a $300 million expansion of the existing share
repurchase program. Including this expansion, $338.7 million is now
available for future share repurchases. In the past 12 months,
FactSet has returned $270 million to stockholders in the form of
share repurchases, funded entirely by cash generated from
operations.
Business Outlook
The following forward-looking statements reflect FactSet's
expectations as of today's date. Given the number of 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 2015 Expectations
- Revenues are expected to range between $244 million and $248
million.
- Operating margin is expected to range between 32.8% and
33.8%.
- The annual effective tax rate is expected to range between
31.0% and 32.0% and assumes that the U.S. Federal R&D tax
credit will not be re-enacted by the end of the second quarter of
fiscal 2015.
- Diluted EPS should range between $1.35 and $1.37. The midpoint
of this range represents 12.4% growth over the prior year.
Conference Call
The Company will host a conference call today, December 16,
2014, at 11:00 a.m. (Eastern Time) to review the first quarter
fiscal 2015 earnings release. To listen, please visit the investor
relations section of the Company's website at www.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; 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 successful resolution of ongoing
audits by tax authorities; 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 Diluted Earnings per Share
The generally accepted accounting principles ("GAAP")
financial measure, diluted earnings per share, has been adjusted
because the U.S. Federal R&D tax credit expired on December 31,
2013 and was not extended as of November 30, 2014, the end of
FactSet's first quarter of fiscal 2015. Diluted EPS of $1.19 in the
year ago quarter was lowered by $0.01 per share to $1.18 to exclude
income tax benefits from the U.S. Federal R&D tax credit.
FactSet uses this adjusted financial measure, 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 adjusted diluted EPS is useful to investors because
it permits 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 adjusted diluted EPS
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
adjusted diluted EPS 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 just completed
first quarter was $71.2 million of net cash provided by operations
and $4.8 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, a leading provider of financial information and
analytics, helps the world's best investment professionals
outperform. More than 50,000 users stay ahead of global market
trends, access extensive company and industry intelligence, and
monitor performance with FactSet's desktop analytics, mobile
applications, and comprehensive data feeds. The Company has been
included in FORTUNE's Top 100 Best Companies to Work For, the
United Kingdom's Great Places to Work and France's Best Workplaces.
FactSet is listed on the New York Stock Exchange and NASDAQ
(NYSE:FDS) (Nasdaq:FDS). Learn more at www.factset.com, and follow
us on Twitter: www.twitter.com/factset.
FactSet Research Systems
Inc. |
Consolidated Statements of Income
– Unaudited |
|
|
|
|
Three Months Ended
November 30, |
(In thousands, except per share data) |
2014 |
2013 |
|
|
|
Revenues |
$242,676 |
$222,975 |
|
|
|
Operating expenses |
|
|
Cost of services |
97,543 |
83,250 |
Selling, general and
administrative |
64,873 |
64,985 |
Total operating expenses |
162,416 |
148,235 |
|
|
|
Operating income |
80,260 |
74,740 |
|
|
|
Other income |
430 |
341 |
Income before income taxes |
80,690 |
75,081 |
|
|
|
Provision for income taxes |
24,830 |
22,903 |
Net income |
$55,860 |
$52,178 |
|
|
|
Diluted earnings per common share |
$1.32 |
$1.19 |
|
|
|
Diluted weighted average common shares |
42,340 |
43,773 |
|
FactSet Research Systems
Inc. |
Consolidated Statements of
Comprehensive Income – Unaudited |
|
|
|
|
Three Months Ended
November 30, |
(In thousands) |
2014 |
2013 |
|
|
|
Net income |
$55,860 |
$52,178 |
|
|
|
Other comprehensive income (loss), net of
tax |
|
|
Net unrealized (loss) gain on
cash flow hedges* |
(112) |
2,647 |
Foreign currency translation
adjustments |
(13,555) |
8,148 |
Other comprehensive (loss)
income |
(13,667) |
10,795 |
Comprehensive income |
$42,193 |
$62,973 |
|
|
|
* For the three
months ended November 30, 2014, the unrealized loss on cash flow
hedges was net tax benefits of $67. The unrealized gain on cash
flow hedges disclosed above for the three months ended November 30,
2013, was net tax expense of $1,980. |
|
FactSet Research Systems
Inc. |
Consolidated Balance Sheets -
Unaudited |
|
|
|
|
November 30, |
August 31, |
(In thousands) |
2014 |
2014 |
|
|
|
ASSETS |
|
|
Cash and cash equivalents |
$115,235 |
$116,378 |
Investments |
24,727 |
20,008 |
Accounts receivable, net of
reserves |
88,453 |
90,354 |
Prepaid taxes |
-- |
6,532 |
Deferred taxes |
1,985 |
1,841 |
Prepaid expenses and other
current assets |
15,332 |
14,662 |
Total current assets |
245,732 |
249,775 |
Property, equipment, and
leasehold improvements, net |
55,908 |
57,641 |
Goodwill |
279,421 |
285,608 |
Intangible assets, net |
38,075 |
41,855 |
Deferred taxes |
21,714 |
22,377 |
Other assets |
5,629 |
5,956 |
TOTAL ASSETS |
$646,479 |
$663,212 |
|
|
|
LIABILITIES |
|
|
Accounts payable and accrued
expenses |
$30,996 |
$26,971 |
Accrued compensation |
18,989 |
42,481 |
Deferred fees |
34,529 |
36,504 |
Taxes payable |
19,627 |
5,036 |
Deferred taxes |
210 |
-- |
Dividends payable |
16,216 |
16,299 |
Total current
liabilities |
120,567 |
127,291 |
Deferred taxes |
2,533 |
2,921 |
Taxes payable |
5,845 |
5,501 |
Deferred rent and other
non-current liabilities |
15,901 |
16,417 |
TOTAL LIABILITIES |
$144,846 |
$152,130 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
Common stock |
$493 |
$491 |
Additional paid-in capital |
428,865 |
413,754 |
Treasury stock, at cost |
(785,286) |
(734,746) |
Retained earnings |
889,149 |
849,504 |
Accumulated other comprehensive
loss |
(31,588) |
(17,921) |
TOTAL STOCKHOLDERS' EQUITY |
501,633 |
511,082 |
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
$646,479 |
$663,212 |
|
FactSet Research Systems
Inc. |
Consolidated Statements of Cash
Flows - Unaudited |
|
|
Three Months Ended
November 30, |
(In thousands) |
2014 |
2013 |
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
Net income |
$55,860 |
$52,178 |
Adjustments to reconcile net income to net
cash provided by operating activities |
|
|
Depreciation and
amortization |
8,216 |
8,763 |
Stock-based compensation
expense |
5,277 |
5,116 |
Deferred income taxes |
341 |
(679) |
Loss (gain) on sale of
assets |
24 |
(23) |
Tax benefits from share-based
payment arrangements |
(2,458) |
(2,144) |
Changes in assets and
liabilities, net of effects of acquisition |
|
|
Accounts receivable, net of
reserves |
1,627 |
(2,612) |
Accounts payable and accrued
expenses |
4,548 |
(316) |
Accrued compensation |
(23,061) |
(21,213) |
Deferred fees |
(1,696) |
(94) |
Taxes payable, net of prepaid
taxes |
23,667 |
19,108 |
Prepaid expenses and other
assets |
(1,011) |
3,036 |
Deferred rent and other
non-current liabilities |
(166) |
(3,280) |
Other working capital accounts,
net |
-- |
299 |
Net cash provided by operating
activities |
71,168 |
58,139 |
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
Acquisition of business, net of cash
acquired |
-- |
(15,288) |
Purchases of investments |
(12,437) |
(7,172) |
Proceeds from sales of investments |
7,535 |
6,871 |
Purchases of property, equipment and
leasehold improvements, net of proceeds from dispositions |
(4,814) |
(5,438) |
Net cash used in investing activities |
(9,716) |
(21,027) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
Dividend payments |
(16,184) |
(15,064) |
Repurchase of common stock |
(50,539) |
(60,062) |
Proceeds from employee stock plans |
7,381 |
9,484 |
Tax benefits from share-based payment
arrangements |
2,458 |
2,144 |
Net cash used in financing activities |
(56,884) |
(63,498) |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
(5,711) |
3,780 |
|
|
|
Net decrease in cash and cash
equivalents |
(1,143) |
(22,606) |
|
|
|
Cash and cash equivalents at beginning of
period |
116,378 |
196,627 |
Cash and cash equivalents at end of
period |
$115,235 |
$174,021 |
Reconciliation of GAAP to Adjusted Financial
Measures
The U.S. GAAP financial measure, diluted EPS, has been adjusted
below. FactSet uses this adjusted financial measure, 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 adjusted diluted EPS is useful
to investors because it permits 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 adjusted diluted EPS in assessing the Company's
performance and when planning, forecasting and analyzing future
periods and may also facilitate comparisons to its historical
performance.
|
(Unaudited) |
Three Months Ended
November 30, |
|
|
2014 |
2013 |
|
GAAP Diluted EPS |
$1.32 |
$1.19 |
|
U.S. Federal R&D income tax benefit
(a) |
-- |
(0.01) |
|
Adjusted Diluted EPS |
$1.32 |
$1.18 |
11.9% |
|
(a) GAAP diluted EPS in the
year ago first quarter was adjusted to exclude income tax benefits
of $0.01 per share as the U.S. Federal R&D tax credit was not
re-enacted as of November 30, 2014, the end of FactSet's first
quarter of fiscal 2015. |
Supplementary Schedules of Historical ASV by Client
Type
The following table presents the percentages and growth rates of
ASV by client type, excluding currency, and can be useful to
facilitate historical comparisons.
|
Q1'15 |
Q4'14 |
Q3'14 |
Q2'14 |
Q1'14 |
Q4'13 |
Q3'13 |
% of ASV from buy-side clients |
82.5% |
82.6% |
83.1% |
82.7% |
82.2% |
81.6% |
82.0% |
% of ASV from sell-side clients |
17.5% |
17.4% |
16.9% |
17.3% |
17.8% |
18.4% |
18.0% |
|
|
|
|
|
|
|
|
ASV Growth rate from buy-side clients |
8.9% |
8.5% |
8.0% |
6.4% |
6.2% |
6.4% |
7.1% |
ASV Growth rate from sell-side clients |
6.7% |
1.6% |
0.0% |
(0.5%) |
(2.7%) |
0.7% |
(3.5%) |
The following table presents the calculation of the
above-mentioned growth rates by client type for the first quarter
of fiscal 2015.
(In thousands) |
November 30, |
Q1 2015 |
|
2014 |
2013 |
ASV Growth Rate |
As reported ASV |
$970.2 |
$890.1 |
|
Less acquired ASV* |
(7.3) |
-- |
|
Less currency impact** |
2.6 |
-- |
|
Organic ASV total |
$965.5 |
$890.1 |
8.5% |
Buy-side |
$796.5 |
$731.7 |
8.9% |
Sell-side |
$169.0 |
$158.4 |
6.7% |
* Acquired ASV from Matrix
Data Limited on December 10, 2013 |
** Primarily from ASV billed
in Japanese Yen, which was negatively impacted by a decline in the
Yen vs. the U.S. dollar |
Reconciliation of Non-GAAP Financial
Measures
Financial measures in accordance with U.S. GAAP including
operating income, net income and diluted earnings per share have
been adjusted below.
Three Months Ended November 30,
2014 |
|
|
(Condensed and Unaudited) In thousands,
except per share data |
GAAP |
Stock-Based Compensation |
Amortization of Intangible
Assets |
Non-GAAP |
Operating Income |
$80,260 |
$5,277 |
$2,101 |
$87,638 |
Net Income (a) |
$55,860 |
$3,652 |
$1,454 |
$60,966 |
Diluted EPS (a) |
$1.32 |
$0.09 |
$0.03 |
$1.44 |
Weighted Average Shares |
42,340 |
|
|
42,340 |
(a) For the
purposes of calculating non-GAAP net income and non-GAAP diluted
EPS, stock-based compensation expense and amortization of
intangible assets were taxed at the current year annual effective
tax rate of 30.8%. |
CONTACT: Rachel Stern
FactSet Research Systems Inc.
203.810.1000
FactSet Research Systems (NYSE:FDS)
Historical Stock Chart
From Mar 2024 to Apr 2024
FactSet Research Systems (NYSE:FDS)
Historical Stock Chart
From Apr 2023 to Apr 2024