FactSet Research Systems Inc. (NYSE:FDS) (NASDAQ:FDS), a leading
provider of integrated financial information and analytical
applications, today announced its results for the third quarter of
fiscal 2016.
For the quarter ended May 31, 2016, revenues grew to $287.5
million. Operating income was $89.3 million compared to $85.4
million in the prior year period. Net income was $66.8 million
versus $61.4 million a year ago. Diluted earnings per share were
$1.62 compared to $1.45 in the same period of fiscal 2015.
Adjusted operating income and margin, adjusted net income and
adjusted diluted earnings per share exclude both deal-related
amortization and non-recurring items. The Company believes that
these adjusted financial measures better reflect the underlying
economic performance of FactSet. A supplementary schedule
reconciling GAAP results to these adjusted financial measures is
presented on page 10 of this earnings release.
Excluding revenues acquired from acquisitions completed within
the last 12 months and the effects of foreign currency, organic
revenues grew 9.0%. Adjusted operating income for the quarter,
which excludes $4.1 million of deal-related amortization and $1.4
million of professional fees primarily related to the sale of the
Company’s Market Metrics business, was $94.8 million, up 8.1% over
the prior year. Adjusted net income increased 9.7% over the year
ago third quarter and excludes the after-tax charge of $2.9 million
from deal-related amortization, the after-tax charge of $1.0
million from professional fees and $3.2 million in income tax
benefits from finalizing prior years’ tax returns and other
discrete items. Adjusted diluted EPS rose 12.3% to $1.64 and
excludes the net effect of deal-related amortization, incremental
professional fees and income tax benefits.
Consolidated Statements of Income
|
|
|
|
(Condensed and
Unaudited) |
|
Three Months Ended May 31, |
|
(In thousands, except per
share data) |
|
2016 |
|
2015 |
Change |
|
|
|
|
|
|
|
Revenues |
$ |
287,501 |
$ |
254,522 |
13.0 |
% |
Adjusted operating
income |
$ |
94,769 |
$ |
87,640 |
8.1 |
% |
Adjusted net income |
$ |
67,545 |
$ |
61,598 |
9.7 |
% |
Adjusted diluted earnings
per share |
$ |
1.64 |
$ |
1.46 |
12.3 |
% |
GAAP diluted earnings per
share |
$ |
1.62 |
$ |
1.45 |
11.7 |
% |
Diluted weighted average
shares |
|
41,189 |
|
42,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“We had another strong quarter, amidst an uncertain market. This
reaffirms the strength of the FactSet business model and the appeal
of our products and solutions,” said Phil Snow, FactSet’s CEO.
Annual Subscription Value (“ASV”)
ASV was $1.156 billion at May 31, 2016, up 9.3% organically from
the prior year. Over the last three months organic ASV increased
$16.3 million, which excludes the effects of foreign currency. 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 third quarter of
fiscal 2016 were 9.6% and 8.1%, respectively. Buy-side clients
account for 83.6% of ASV and the remainder is derived from
sell-side firms that perform mergers and acquisitions advisory
work, capital markets services and equity research. Supplementary
tables covering buy-side and sell-side ASV growth rates are
presented on page 12 of this earnings release.
Financial Highlights – Third Quarter of Fiscal
2016
- ASV from U.S. operations was $775.6 million, increasing 9.0%
organically over the prior year. U.S. revenues were $193.2 million.
Excluding revenues from acquisitions completed within the past 12
months, the U.S. growth rate was 8.5%.
- ASV from non-U.S. operations grew 10.1% organically to $380.7
million and now represents 32.9% of total ASV, up from 32.6% a year
ago. Non-U.S. revenues rose to $94.3 million. Excluding the impact
of foreign currency and acquisitions completed within the past 12
months, the international revenue growth rate was 10.1%.
- Adjusted operating margin was 33.0%, compared to 34.4% in the
year ago third quarter. Portware’s operations reduced FactSet’s
just completed third quarter operating margin by 130 basis points
and diluted earnings per share by $0.01. Excluding deal-related
amortization, the Portware acquisition was $0.03 accretive to the
third quarter of fiscal 2016.
- The Company’s effective tax rate for the third quarter was
24.8%, as compared to 28.5% a year ago. Excluding income tax
benefits from both periods, the current year annual effective tax
rate was 28.4% compared to 30.1% in the prior period.
- Quarterly free cash flow was $88.6 million. Free cash flow in
the last 12 months grew 9.9% and totaled $299.7 million.
Operational Highlights – Third Quarter of Fiscal
2016
- Client count rose by 18 and totaled 3,075 at May 31, 2016.
- User count grew 7.7% to 63,535.
- Annual client retention was greater than 95% of ASV. When
expressed as a percentage of clients, annual retention was 94%,
consistent with the prior year third quarter.
- Employee count was 8,100 at May 31, 2016, up 1,149 people in
the past 12 months. Excluding the acquired Portware workforce,
headcount increased 14.1% from a year ago.
- Capital expenditures were $8.2 million.
- The regular quarterly dividend was increased 13.6% from $0.44
to $0.50 per share, beginning with the Company’s dividend payment
on June 21, 2016.
- FactSet repurchased 505,000 shares for $76.3 million during the
third quarter. On May 19, 2016, the Company’s Board of Directors
approved a $165 million expansion of the existing share repurchase
program. Including this expansion, $360 million remained authorized
for further repurchases as of May 31, 2016. Over the last 12
months, $344 million has been returned to stockholders in the form
of share repurchases and dividends, funded entirely by cash
generated from operations.
- Common shares outstanding were 40.7 million at May 31,
2016.
- FactSet was ranked #89 on Fortune’s “100 Best Companies to Work
For,” marking the Company’s eighth appearance on the list in the
last nine years.
- FactSet was recently recognized as one of the UK’s “Best
Workplaces” by the Great Place to Work® Institute UK for the eighth
consecutive year.
- In May 2016, FactSet was awarded “Best Overall Provider,” "Best
Research Provider" and "Best Data Analytics Provider" by Inside
Market Data. FactSet was previously awarded Acquisition of the Year
in 2014, Best Research Provider in 2014 and 2012, and Best
Analytics Provider in 2008, 2009 and 2011.
Sale of the Market Metrics Business
On May 21, 2016 FactSet entered into a definitive agreement to
sell its market research business focused on advisor-sold
investments and insurance, consisting of Market Metrics LLC and
Matrix Data Limited, to Asset International, a portfolio company of
Genstar Capital. The total purchase price is approximately $165
million, subject to certain working capital adjustments, with an
additional earn-out of $10 million based on the achievement of
certain growth targets over the next two years. The transaction is
expected to close in FactSet’s fourth quarter of fiscal 2016, with
the proceeds from the sale being primarily used for share
repurchases under the Company’s existing program. The sale is not
expected to have a material impact on FactSet’s fourth quarter of
fiscal 2016 or full-year fiscal 2017 results.
Election of two new Directors, Sheila Jordan and Malcolm
Frank
On June 27, 2016, the Board of Directors of FactSet elected two
new directors, Sheila B. Jordan and Malcolm Frank. In conjunction
with their election to the Board, Ms. Jordan was appointed to serve
as a member of the Company’s Audit Committee and Mr. Frank will
serve on FactSet’s Compensation Committee. Both will stand for
election by a vote of stockholders at the Company’s 2016 Annual
Meeting of Stockholders in December 2016.
Philip Hadley, Executive Chairman of FactSet, said, “We are
pleased to welcome the additions of Sheila Jordan and Malcolm Frank
to FactSet’s Board of Directors. We look forward to leveraging
their global technology expertise as we deliver leading insight and
information to investment professionals around the world.”
Ms. Jordan, age 51, currently serves as Senior Vice President,
Chief Information Officer at Symantec Corporation, a global leader
in cybersecurity. Ms. Jordan has served in this role since February
2014 and is responsible for driving Symantec's information
technology strategy and operations with a focus on building and
supporting the global information technology effort. She serves as
global executive sponsor for the Symantec Women’s Action Network, a
networking forum to help support and encourage female employees to
achieve their potential. Prior to joining Symantec, Ms. Jordan
spent nine years at Cisco Systems Inc., where she served as Senior
Vice President of IT, Communication and Collaboration. Previously,
Ms. Jordan held leadership roles at Grand Circle Corporation, as
Chief Information Officer and Executive Vice President, and at The
Walt Disney Company, where she was a Senior Vice President for
Destination Disney and Vice President of Marketing and Sales
Finance. She was also a senior financial analyst at Martin
Marietta, a construction supplies aggregate company. Ms. Jordan
serves on the customer advisory board of Sutter Hill Ventures, a
venture capital firm. She received her Bachelor’s degree from the
University of Central Florida and an M.B.A. from the Florida
Institute of Technology.
Mr. Frank, age 50, currently serves as Executive Vice President,
Strategy & Marketing at Cognizant Technology Solutions Corp., a
provider of custom information technology, consulting and business
process outsourcing services. Mr. Frank joined Cognizant in 2005
and has more than two decades of experience in the information
technology industry. Prior to joining Cognizant, he was co-founder,
President and CEO of CXO systems, an independent software vendor
providing dashboard solutions for senior managers. In addition, he
was the founder, President, Chief Executive Officer and chairman of
Nervewire Inc., a leading management consulting and systems
integration firm. Prior to founding Nervewire, Mr. Frank was a
co-founder, executive officer and Senior Vice President at
Cambridge Technology Partners, where he ran Worldwide Marketing,
Business Development and several business units. Mr. Frank is a
recognized industry thought leader and is a frequent speaker on key
issues of IT management. He has been profiled by Forbes magazine
and ABC’s 20/20 and is the subject of a Harvard Business School
case study on Leadership and Management. Mr. Frank is a graduate of
Yale University with a degree in Economics.
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.
Fourth Quarter Fiscal 2016 Expectations (the expectations below
include the Market Metrics business for the full quarter):
- Revenues are expected to range between $292 million and $298
million.
- GAAP operating margin is expected to range between 31.0% and
32.0%. Adjusted operating margin is expected to range between 32.5%
and 33.5%.
- The annual effective tax rate is expected to range between
28.0% and 29.0%.
- GAAP diluted EPS should range between $1.61 and $1.65. Adjusted
EPS is expected to range between $1.68 and $1.72. The midpoint of
the adjusted EPS range represents 12.6% growth over the prior
year.
- The Market Metrics transaction is expected to close in
FactSet’s fourth quarter of fiscal 2016, at which time updated
guidance for the fourth quarter of fiscal 2016 will be
provided.
Conference Call
The Company will host a conference call today, June 28, 2016 at
11:00 a.m. Eastern Time to review the third 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; 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 Financial Measures
Financial measures in accordance with U.S. generally accepted
accounting principles (“GAAP”) including operating income,
operating margin, net income and diluted earnings per share have
been adjusted. Adjusted operating income during the just completed
third quarter excludes $4.1 million of deal-related amortization
and $1.4 million of professional fees primarily related to the sale
of FactSet’s Market Metrics business. Adjusted net income excludes
the after-tax charge of $2.9 million from deal-related
amortization, the after-tax charge of $1.0 million from incremental
professional fees and $3.2 million in income tax benefits from
finalizing prior years’ tax returns and other discrete items.
Adjusted diluted EPS of $1.64 excludes the net effect of the $0.08
in income tax benefits, a $0.07 detriment from deal-related
amortization and a $0.02 detriment from professional fees.
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 third quarter was $96.8 million of net cash provided by
operations and $8.2 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 63,000 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 May 31, |
|
Nine Months Ended May 31, |
(In thousands, except
per share data) |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
287,501 |
|
|
$ |
254,522 |
|
|
$ |
839,801 |
|
|
$ |
744,990 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Cost of
services |
|
124,602 |
|
|
|
100,686 |
|
|
|
363,249 |
|
|
|
297,745 |
|
Selling,
general and administrative |
|
73,609 |
|
|
|
68,480 |
|
|
|
214,610 |
|
|
|
200,980 |
|
Total operating
expenses |
|
198,211 |
|
|
|
169,166 |
|
|
|
577,859 |
|
|
|
498,725 |
|
|
|
|
|
|
|
|
|
Operating income |
|
89,290 |
|
|
|
85,356 |
|
|
|
261,942 |
|
|
|
246,265 |
|
|
|
|
|
|
|
|
|
Other (expense) income,
net |
|
(433 |
) |
|
|
482 |
|
|
|
(765 |
) |
|
|
1,445 |
|
Income before income
taxes |
|
88,857 |
|
|
|
85,838 |
|
|
|
261,177 |
|
|
|
247,710 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
22,076 |
|
|
|
24,429 |
|
|
|
66,669 |
|
|
|
68,843 |
|
Net income |
$ |
66,781 |
|
|
$ |
61,409 |
|
|
$ |
194,508 |
|
|
$ |
178,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
1.62 |
|
|
$ |
1.45 |
|
|
$ |
4.68 |
|
|
$ |
4.23 |
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares |
|
41,189 |
|
|
|
42,297 |
|
|
|
41,596 |
|
|
|
42,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income –
Unaudited
|
Three Months EndedMay 31, |
|
Nine Months EndedMay 31, |
(In thousands) |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
66,781 |
|
|
$ |
61,409 |
|
|
$ |
194,508 |
|
|
$ |
178,867 |
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss), net of tax |
|
|
|
|
|
|
|
Net unrealized gain (loss) on cash
flow hedges* |
|
2,464 |
|
|
|
(1,020 |
) |
|
|
229 |
|
|
|
(289 |
) |
Foreign currency translation
adjustments |
|
8,883 |
|
|
|
(4,187 |
) |
|
|
(7,867 |
) |
|
|
(25,753 |
) |
Other comprehensive income
(loss) |
|
11,347 |
|
|
|
(5,207 |
) |
|
|
(7,638 |
) |
|
|
(26,042 |
) |
Comprehensive income |
$ |
78,128 |
|
|
$ |
56,202 |
|
|
$ |
186,870 |
|
|
$ |
152,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* For the
three and nine months ended May 31, 2016, the unrealized gain on
cash flow hedges was net of tax expense of $1,448 and $135,
respectively. The unrealized loss on cash flow hedges disclosed
above for the three and nine months ended May 31, 2015, was net of
tax benefits of $606 and $172, respectively. |
|
Consolidated Balance Sheets - Unaudited
|
|
May 31, |
|
August 31, |
|
(In
thousands) |
|
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
187,436 |
|
|
$ |
158,914 |
|
|
Investments |
|
23,720 |
|
|
|
23,497 |
|
|
Accounts receivable, net of reserves |
|
104,666 |
|
|
|
95,064 |
|
|
Prepaid taxes |
|
|
|
-- |
|
|
|
4,808 |
|
|
Deferred taxes |
|
|
2,521 |
|
|
|
2,105 |
|
|
Prepaid expenses and other current assets |
|
|
15,736 |
|
|
|
19,786 |
|
|
Assets held for sale |
|
|
48,940 |
|
|
|
|
-- |
|
|
|
Total current assets |
|
|
383,019 |
|
|
|
304,174 |
|
|
|
|
|
|
|
|
|
|
|
Property, equipment, and leasehold improvements, net |
|
78,082 |
|
|
|
59,264 |
|
|
Goodwill |
|
|
|
460,393 |
|
|
|
308,287 |
|
|
Intangible assets, net |
|
|
|
97,978 |
|
|
|
40,052 |
|
|
Deferred taxes |
|
|
|
14,257 |
|
|
|
20,599 |
|
|
Other assets |
|
|
|
5,246 |
|
|
|
4,295 |
|
|
|
TOTAL ASSETS |
|
|
$ |
1,038,975 |
|
|
$ |
736,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Accounts payable and
accrued expenses |
$ |
38,033 |
|
|
$ |
33,880 |
|
|
Accrued
compensation |
|
|
43,393 |
|
|
|
44,916 |
|
|
Deferred fees |
|
|
34,076 |
|
|
|
38,488 |
|
|
Taxes payable |
|
|
4,333 |
|
|
|
3,755 |
|
|
Deferred taxes |
|
|
425 |
|
|
|
562 |
|
|
Dividends payable |
|
|
20,328 |
|
|
|
18,179 |
|
|
Liabilities held for
sale |
|
|
14,110 |
|
|
|
|
-- |
|
|
|
Total current
liabilities |
|
|
154,698 |
|
|
|
139,780 |
|
|
Deferred taxes |
|
|
|
1,543 |
|
|
|
1,697 |
|
|
Taxes payable |
|
|
|
8,200 |
|
|
|
6,776 |
|
|
Long-term debt |
|
300,000 |
|
|
|
35,000 |
|
|
Deferred rent and
other non-current liabilities |
|
30,877 |
|
|
|
21,834 |
|
|
|
TOTAL LIABILITIES |
|
$ |
495,318 |
|
|
$ |
205,087 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
Common
stock |
|
$ |
509 |
|
|
$ |
503 |
|
|
|
Additional
paid-in capital |
|
616,954 |
|
|
|
542,355 |
|
|
|
Treasury
stock, at cost |
|
|
(1,181,695 |
) |
|
|
(988,873 |
) |
|
|
Retained
earnings |
|
|
1,159,579 |
|
|
|
1,021,651 |
|
|
|
Accumulated
other comprehensive loss |
|
|
|
(51,690 |
) |
|
|
(44,052 |
) |
|
|
TOTAL STOCKHOLDERS’
EQUITY |
|
|
543,657 |
|
|
|
531,584 |
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
1,038,975 |
|
|
$ |
736,671 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows –
Unaudited
(In
thousands) |
Nine Months EndedMay 31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Net
income |
|
$ |
194,508 |
|
|
$ |
178,867 |
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities |
|
|
|
|
Depreciation and
amortization |
|
28,222 |
|
|
|
24,229 |
|
|
Stock-based
compensation expense |
|
22,433 |
|
|
|
17,112 |
|
|
Deferred income
taxes |
|
3,015 |
|
|
|
3,041 |
|
|
Loss (gain) on sale of
assets |
|
2 |
|
|
|
(17 |
) |
|
Tax benefits from
share-based payment arrangements |
|
(13,327 |
) |
|
|
(23,926 |
) |
|
Changes in assets and
liabilities, net of effects of acquisitions |
|
|
|
|
Accounts receivable,
net of reserves |
|
|
|
(11,316 |
) |
|
|
(1,159 |
) |
|
Accounts payable and
accrued expenses |
|
|
|
3,474 |
|
|
|
5,973 |
|
|
Accrued
compensation |
|
(1,809 |
) |
|
|
(5,496 |
) |
|
Deferred fees |
|
3,696 |
|
|
|
5,951 |
|
|
Taxes payable, net of
prepaid taxes |
|
20,313 |
|
|
|
16,213 |
|
|
Prepaid expenses and
other assets |
|
1,250 |
|
|
|
78 |
|
|
Deferred rent and
other non-current liabilities |
|
10,812 |
|
|
|
1,873 |
|
|
Other working capital
accounts, net |
|
(169 |
) |
|
|
103 |
|
|
Net cash
provided by operating activities |
|
|
261,104 |
|
|
|
222,842 |
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
|
Acquisition of
businesses, net of cash acquired |
|
|
(264,087 |
) |
|
|
(33,556 |
) |
|
Purchases of
investments |
|
|
(12,934 |
) |
|
|
(12,437 |
) |
|
Proceeds from
sales of investments |
|
|
12,423 |
|
|
|
7,535 |
|
|
Purchases of
property, equipment and leasehold improvements, net of proceeds
from dispositions |
|
|
(34,671 |
) |
|
|
(15,391 |
) |
|
Net cash used
in investing activities |
|
|
(299,269 |
) |
|
|
(53,849 |
) |
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
|
|
|
Dividend
payments |
|
|
(54,042 |
) |
|
|
(48,404 |
) |
|
Repurchase of
common stock |
|
|
(192,823 |
) |
|
|
(177,556 |
) |
|
Proceeds from
debt |
|
|
|
265,000 |
|
|
|
35,000 |
|
|
Debt issuance
costs |
|
|
|
(12 |
) |
|
|
(32 |
) |
|
Proceeds from
employee stock plans |
|
|
|
38,845 |
|
|
|
51,852 |
|
|
Tax benefits
from share-based payment arrangements |
|
|
|
13,327 |
|
|
|
23,926 |
|
|
Net cash
provided by (used in) financing activities |
|
|
|
70,295 |
|
|
|
(115,214 |
) |
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
(3,608 |
) |
|
|
(12,262 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
in cash and cash equivalents |
|
|
|
28,522 |
|
|
|
41,517 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
|
|
158,914 |
|
|
|
116,378 |
|
|
Cash and cash
equivalents at end of period |
|
|
$ |
187,436 |
|
|
$ |
157,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Results to Adjusted Financial
Measures
Financial measures in accordance with U.S. GAAP including
operating income, operating 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 EndedMay 31, |
|
(In thousands, except
per share data) |
|
2016 |
|
|
2015 |
|
Change |
|
|
|
|
GAAP Operating income |
$ |
89,290 |
|
$ |
85,356 |
|
|
|
Deal-related amortization
(a) |
|
4,085 |
|
|
2,284 |
|
|
|
Incremental professional
fees (b) |
|
1,394 |
|
|
-- |
|
|
|
Adjusted
operating income |
$ |
94,769 |
|
$ |
87,640 |
|
8.1 |
% |
Adjusted operating margin |
|
33.0 |
% |
|
34.4 |
% |
|
|
|
|
|
|
|
GAAP Net income |
$ |
66,781 |
|
$ |
61,409 |
|
|
|
Deal-related amortization
(a)(c) |
|
2,925 |
|
|
1,597 |
|
|
|
Incremental professional
fees (b)(c) |
|
998 |
|
|
-- |
|
|
|
Income tax benefits
(d) |
|
|
|
(3,159 |
) |
|
(1,408 |
) |
|
|
Adjusted net income |
$ |
67,545 |
|
$ |
61,598 |
|
9.7 |
% |
|
|
|
|
|
Adjusted Diluted earnings
per common share (e) |
$ |
1.64 |
|
$ |
1.46 |
|
12.3 |
% |
Weighted average common shares (Diluted) |
|
41,189 |
|
|
42,297 |
|
|
|
(a) GAAP operating income
in the third quarter of fiscal 2016 was adjusted to exclude $4.1
million of pre-tax deal-related amortization, which reduced diluted
earnings per share by $0.07. GAAP operating income in the third
quarter of fiscal 2015 was adjusted to exclude $2.3 million of
deal-related amortization, which reduced diluted earnings per share
by $0.04. |
|
(b) GAAP operating income
in the third quarter of fiscal 2016 was adjusted to exclude $1.4
million of pre-tax professional fees primarily related to the sale
of FactSet’s Market Metrics business. The incremental professional
fees reduced diluted earnings per share by $0.02 in the just
completed third quarter. |
|
(c) For the purposes of
calculating adjusted net income and adjusted diluted earnings per
share, deal-related amortization and non-recurring items were taxed
at the effective tax rates of 28.4% for fiscal 2016 and 30.1% for
fiscal 2015. |
|
(d) Current year GAAP net
income was adjusted to exclude $3.2 million of income tax benefits
related to finalizing prior years’ tax returns and other discrete
items. GAAP diluted EPS was adjusted to exclude $0.08 from these
same income tax benefits. GAAP net income in the year ago third
quarter was adjusted to exclude $1.4 million of income tax benefits
while GAAP diluted EPS was adjusted to exclude $0.03 from these
same income tax benefits. |
|
(e) 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, adjusted
operating 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) |
Q3’16 |
Q2’16 |
Q1’16 |
Q4’15 |
Q3’15 |
Q2‘15 |
Q1‘15 |
GAAP Operating income |
$ |
89,290 |
|
$ |
85,344 |
|
$ |
87,308 |
|
$ |
85,653 |
|
$ |
85,356 |
|
$ |
80,648 |
|
$ |
80,260 |
|
Deal-related amortization |
|
4,085 |
|
|
4,078 |
|
|
2,922 |
|
|
1,787 |
|
|
2,284 |
|
|
2,048 |
|
|
2,101 |
|
Non-recurring items |
|
1,394 |
|
|
3,838 |
|
|
690 |
|
|
3,010 |
|
|
-- |
|
|
3,154 |
|
|
-- |
|
Adjusted operating income |
$ |
94,769 |
|
$ |
93,260 |
|
$ |
90,920 |
|
$ |
90,450 |
|
$ |
87,640 |
|
$ |
85,850 |
|
$ |
82,361 |
|
Adjusted operating margin |
|
33.0 |
% |
|
33.1 |
% |
|
33.6 |
% |
|
34.6 |
% |
|
34.4 |
% |
|
34.6 |
% |
|
33.9 |
% |
|
|
|
|
|
|
|
|
GAAP Net income |
$ |
66,781 |
|
$ |
67,763 |
|
$ |
59,965 |
|
$ |
62,184 |
|
$ |
61,409 |
|
$ |
61,598 |
|
$ |
55,860 |
|
Deal-related amortization |
|
2,925 |
|
|
2,903 |
|
|
2,004 |
|
|
1,246 |
|
|
1,597 |
|
|
1,425 |
|
|
1,454 |
|
Non-recurring items |
|
(2,161 |
) |
|
(4,585 |
) |
|
474 |
|
|
(183 |
) |
|
(1,408 |
) |
|
(2,883 |
) |
|
-- |
|
Adjusted net income |
$ |
67,545 |
|
$ |
66,081 |
|
$ |
62,443 |
|
$ |
63,247 |
|
$ |
61,598 |
|
$ |
60,140 |
|
$ |
57,314 |
|
|
|
|
|
|
|
|
|
Adjusted Diluted earnings per common share |
$ |
1.64 |
|
$ |
1.59 |
|
$ |
1.48 |
|
$ |
1.51 |
|
$ |
1.46 |
|
$ |
1.42 |
|
$ |
1.35 |
|
Weighted average common shares (Diluted) |
|
41,189 |
|
|
41,536 |
|
|
42,063 |
|
|
41,995 |
|
|
42,297 |
|
|
42,306 |
|
|
42,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 may be useful to
facilitate historical comparisons.
|
Q3’16 |
Q2’16 |
Q1’16 |
Q4’15 |
Q3’15 |
Q2‘15 |
Q1‘15 |
%
of ASV from buy-side clients |
|
83.6 |
% |
|
83.4 |
% |
|
83.2 |
% |
|
82.5 |
% |
|
82.8 |
% |
|
82.8 |
% |
|
82.5 |
% |
%
of ASV from sell-side clients |
|
16.4 |
% |
|
16.6 |
% |
|
16.8 |
% |
|
17.5 |
% |
|
17.2 |
% |
|
17.2 |
% |
|
17.5 |
% |
|
|
|
|
|
|
|
|
ASV
Growth rate from buy-side clients |
|
9.6 |
% |
|
9.5 |
% |
|
9.3 |
% |
|
9.0 |
% |
|
8.5 |
% |
|
8.7 |
% |
|
8.9 |
% |
ASV
Growth rate from sell-side clients |
|
8.1 |
% |
|
9.5 |
% |
|
10.0 |
% |
|
9.8 |
% |
|
10.9 |
% |
|
7.9 |
% |
|
6.7 |
% |
ASV
Growth rate from all clients |
|
9.3 |
% |
|
9.5 |
% |
|
9.4 |
% |
|
9.2 |
% |
|
8.9 |
% |
|
8.5 |
% |
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the calculation of the
above-mentioned growth rates by client type for the third quarter
of fiscal 2016.
(In millions) |
May 31,2016 |
May 31, 2015 |
Q3’16 ASV Growth Rate |
|
As
reported ASV |
$ |
1,156.3 |
|
$ |
1,021.2 |
|
|
|
Less acquired ASV (a) |
|
(39.3 |
) |
|
-- |
|
|
|
Currency impact (b) |
|
(0.6 |
) |
|
-- |
|
|
|
Organic ASV total |
$ |
1,116.4 |
|
$ |
1,021.2 |
|
|
9.3 |
% |
|
Buy-side |
|
926.6 |
|
|
845.6 |
|
|
9.6 |
% |
|
Sell-side |
|
189.8 |
|
|
175.6 |
|
|
8.1 |
% |
|
|
(a) Acquired ASV from acquisitions completed
within the last 12 months. |
|
(b) The negative impact from foreign currency
movements over the past 12 months was added back in order to
calculate total organic ASV. |
Contact:
Rachel Stern
FactSet Research Systems Inc.
203.810.1000
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