- Adjusted EPS was $1.15, up 10%
- Revenues increased 6% to $215 million
- Free cash flow was $92 million, up 32%
FactSet Research Systems Inc. (NYSE:FDS) (Nasdaq:FDS), a leading
provider of integrated financial information and analytical
applications to the global investment community, today announced
its results for the third quarter of fiscal 2013.
For the quarter ended May 31, 2013 revenues increased to
$214.6 million, up 6% over the prior year. Included in this total
was $2.9 million of acquired revenues from StreetAccount. Operating
income was $71.6 million compared to $68.5 million in the third
quarter of fiscal 2012. Net income was $53.4 million versus $48.0
million a year ago. Diluted earnings per share was $1.20 compared
to $1.05 in the same period of fiscal 2012.
Adjusted net income increased 6% to $51.1 million, while
adjusted diluted EPS grew 10% to $1.15. Adjusted net income and
diluted EPS both exclude income tax benefits of $2.3 million or
$0.05 per diluted share related to finalizing prior years' tax
returns.
A reconciliation between GAAP and adjusted financial measures is
presented on page 8 of this press release.
|
(Condensed and Unaudited) |
Three Months Ended May
31, |
(In thousands, except per share
data) |
2013 |
2012 |
Change |
Revenues |
$214,613 |
$202,311 |
6% |
Operating income |
$71,637 |
$68,494 |
5% |
Adjusted net income |
$51,097 |
$47,980 |
6% |
Adjusted diluted earnings per share |
$1.15 |
$1.05 |
10% |
Diluted weighted average shares |
44,485 |
45,736 |
|
|
"We again delivered double-digit diluted EPS growth and our free
cash flow reached an all-time high of $92 million during the third
quarter of fiscal 2013. Off-market conditions, especially on the
sell-side, continue to interrupt client buying patterns and limited
our ASV growth this quarter as expected," said Philip A. Hadley,
Chairman and CEO. "We continue to return capital to shareholders as
evidenced by a 13% increase in our dividend and a $200 million
expansion to our share repurchase program during the quarter."
Annual Subscription Value ("ASV")
ASV advanced $2 million excluding the impact from foreign
currency during the quarter and totaled $864 million at May 31,
2013. Of this total, 83% is derived from buy-side clients and the
remainder is from the sell-side firms who perform M&A advisory
work and equity research. 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.
Financial Highlights – Third Quarter of Fiscal
2013
- ASV from U.S. operations was $590 million and $274 million was
related to international operations.
- U.S. revenues, including $2.9 million from StreetAccount, were
$147 million, up 6% from the year ago quarter.
- Non-U.S. revenues rose 6% to $68 million as compared to the
same period in fiscal 2012. Excluding the impact from foreign
currency, the international growth rate was 7%.
- Operating margin was 33.4%, compared to 33.9% a year ago.
- The effective tax rate for the third quarter was 25.9%, down
from 30.4% a year ago. Excluding income tax benefits from
finalizing prior years' tax returns, the annual effective tax rate
was 29.0%.
- Quarterly free cash flow was a record high $92 million, up 32%
over the year ago quarter.
- Accounts receivable decreased $17 million over the last three
months, reflecting an improvement in DSO from 36 to 29 days, the
lowest DSO on record for FactSet.
Operational Highlights – Third Quarter of Fiscal
2013
- Client count was 2,440 at May 31st, a net increase of 4
clients.
- Annual client retention was greater than 95% of ASV and 92%
when expressed as a percentage of clients.
- Users increased by 61 over the past three months and totaled
49,516 professionals at May 31st. New users from buy-side clients
were partially offset by declines on the sell-side.
- Employee count was 5,900 at May 31st, up 8% over last
year.
- Capital expenditures were $4.2 million.
- The regular quarterly dividend increased 13% from $0.31 to
$0.35 per share, beginning with the Company's dividend payment on
June 18, 2013 to holders of record of FactSet common stock on May
31st.
- On May 14, 2013, the Board of Directors approved a $200 million
expansion to the existing share repurchase program. The Company
repurchased 536,383 shares for $49.0 million during the third
quarter. Including the recently approved $200 million expansion to
the program, at May 31st, $206.5 million remains authorized for
future repurchases.
- Common shares outstanding were 44.0 million at May 31,
2013.
- FactSet released a new Instant Messaging platform — FactSet IM,
an open collaboration platform purposely designed to enhance the
workflow needs of global financial professionals.
- The Wall Street Journal published the results of the first
annual "Europe's Best Analysts Survey" in conjunction with FactSet
as the data provider on May 22, 2013. FactSet also provided the
data for the WSJ's U.S. and Asia "Best Analysts" surveys.
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. The Company does not intend to update its
forward-looking statements until its next quarterly results
announcement, other than in publicly available statements.
Fourth Quarter Fiscal 2013 Expectations
- Revenues are expected to range between $218 million and $221
million.
- Operating margin is expected to range between 33.0% and
34.0%.
- The annual effective tax rate is expected to range between
28.5% and 29.5%.
- GAAP diluted EPS should range between $1.18 and $1.21, the
midpoint of the range represents 11% growth over last year's fourth
quarter.
Conference Call
The Company will host a conference call today, June 18, 2013, at
11:00 a.m. (EDT) to review the third quarter fiscal 2013 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 "expected," "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 net income and diluted
earnings per share have been adjusted. These adjusted financial
measures exclude $2.3 million of income tax benefits related to
finalizing prior years' tax returns. The income tax benefits, which
reduced the Company's effective tax rate from 29.0% to 25.9%,
increased GAAP net income by $2.3 million and GAAP diluted EPS by
$0.05 per share in the third quarter of fiscal 2013. 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 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 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. For more information on these adjusted
financial measures, please see page 8 of this release.
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
third quarter was $96.6 million of net cash provided by operations
and $4.2 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, a leading provider of financial information and
analytics, helps the world's best investment professionals
outperform. More than 49,000 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 |
Nine Months Ended |
|
May 31, |
May 31, |
(In thousands, except per share data) |
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Revenues |
$214,613 |
$202,311 |
$638,779 |
$598,130 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Cost of services |
76,721 |
68,878 |
226,148 |
203,243 |
Selling, general and
administrative |
66,255 |
64,939 |
213,746 |
192,524 |
Total operating expenses |
142,976 |
133,817 |
439,894 |
395,767 |
|
|
|
|
|
Operating income |
71,637 |
68,494 |
198,885 |
202,363 |
|
|
|
|
|
Other income |
361 |
483 |
1,146 |
1,256 |
Income before income taxes |
71,998 |
68,977 |
200,031 |
203,619 |
|
|
|
|
|
Provision for income taxes |
18,631 |
20,997 |
52,357 |
63,349 |
Net income |
$53,367 |
$47,980 |
$147,674 |
$140,270 |
|
|
|
|
|
Diluted earnings per common share |
$1.20 |
$1.05 |
$3.30 |
$3.05 |
|
|
|
|
|
Diluted weighted average common shares |
44,485 |
45,736 |
44,784 |
45,971 |
|
|
|
|
|
|
|
|
|
|
FactSet Research Systems Inc. |
|
|
|
|
Consolidated Statements of Comprehensive
Income – Unaudited |
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
May 31, |
May 31, |
(In thousands) |
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Net income |
$53,367 |
$47,980 |
$147,674 |
$140,270 |
|
|
|
|
|
Other comprehensive income (loss), net of
tax |
|
|
|
|
Net unrealized (loss) gain on
cash flow hedges* |
(549) |
(1,815) |
822 |
(2,921) |
Foreign currency translation
adjustments |
(2,478) |
(12,742) |
(4,135) |
(21,555) |
Other comprehensive loss |
(3,027) |
(14,557) |
(3,313) |
(24,476) |
Comprehensive income |
$50,340 |
$33,423 |
$144,361 |
$115,794 |
|
* The unrealized
(loss) gain on cash flow hedges disclosed above was net of tax
benefit (expense) of $328 and $(494) for the three and nine months
ended May 31, 2013, respectively, and $1,085 and $1,752 for the
corresponding periods of fiscal 2012, respectively. |
|
|
|
|
|
|
FactSet Research Systems Inc. |
|
|
Consolidated Balance Sheets - Unaudited |
|
|
|
May 31, |
August 31, |
(In thousands) |
2013 |
2012 |
|
|
|
ASSETS |
|
|
Cash and cash equivalents |
$242,839 |
$189,044 |
Investments |
14,579 |
13,919 |
Accounts receivable, net of
reserves |
69,143 |
74,251 |
Prepaid taxes |
16,303 |
2,485 |
Deferred taxes |
3,153 |
5,085 |
Prepaid expenses and other
current assets |
14,071 |
14,341 |
Total current assets |
360,088 |
299,125 |
|
|
|
Property, equipment, and
leasehold improvements, net |
67,707 |
76,530 |
Goodwill |
243,080 |
245,791 |
Intangible assets, net |
37,371 |
43,371 |
Deferred taxes |
22,858 |
23,113 |
Other assets |
4,226 |
6,213 |
TOTAL ASSETS |
$735,330 |
$694,143 |
|
|
|
LIABILITIES |
|
|
Accounts payable and accrued
expenses |
$26,892 |
$27,680 |
Accrued compensation |
29,519 |
41,274 |
Deferred fees |
33,322 |
30,495 |
Dividends payable |
15,413 |
13,727 |
Total current liabilities |
105,146 |
113,176 |
Deferred taxes |
2,431 |
2,593 |
Taxes payable |
4,985 |
5,464 |
Deferred rent and other
non-current liabilities |
19,479 |
20,646 |
TOTAL LIABILITIES |
$132,041 |
$141,879 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
Common stock |
$474 |
$456 |
Additional paid-in capital |
274,950 |
137,569 |
Treasury stock, at cost |
(310,815) |
(122,749) |
Retained earnings |
664,719 |
559,714 |
Accumulated other comprehensive
loss |
(26,039) |
(22,726) |
TOTAL STOCKHOLDERS' EQUITY |
603,289 |
552,264 |
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
$735,330 |
$694,143 |
|
|
|
|
|
|
FactSet Research Systems Inc. |
|
|
Consolidated Statements of Cash Flows -
Unaudited |
|
|
|
|
|
|
Nine Months Ended |
(In thousands) |
May 31, |
|
2013 |
2012 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
Net income |
$147,674 |
$140,270 |
Adjustments to reconcile net income to net
cash provided by operating activities |
|
|
Depreciation and
amortization |
26,941 |
25,046 |
Stock-based compensation
expense |
31,813 |
17,074 |
Deferred income taxes |
2,025 |
(3,149) |
Gain on sale of assets |
(7) |
(1) |
Tax benefits from share-based
payment arrangements |
(14,858) |
(10,441) |
Changes in assets and
liabilities, net of effects of acquisition |
|
|
Accounts receivable, net of
reserves |
5,006 |
8,331 |
Accounts payable and accrued
expenses |
2,276 |
939 |
Accrued compensation |
(11,514) |
(6,587) |
Deferred fees |
2,882 |
1,680 |
Taxes payable, net of prepaid
taxes |
(368) |
3,093 |
Prepaid expenses and other
assets |
1,253 |
439 |
Deferred rent and other
non-current liabilities |
(927) |
(1,180) |
Other working capital accounts,
net |
1,431 |
(618) |
Net cash provided by operating
activities |
193,627 |
174,896 |
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
Acquisition of business, net of cash and cash
equivalents acquired |
(705) |
-- |
Purchases of investments |
(8,406) |
(15,000) |
Proceeds from sales of investments |
7,500 |
-- |
Purchases of property, equipment and
leasehold improvements, net of proceeds from dispositions |
(13,288) |
(16,863) |
Net cash used in investing activities |
(14,899) |
(31,863) |
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
Dividend payments |
(40,693) |
(36,183) |
Repurchase of common stock |
(188,066) |
(87,112) |
Proceeds from employee stock plans |
91,011 |
27,476 |
Tax benefits from share-based payment
arrangements |
14,858 |
10,441 |
Net cash used in financing activities |
(122,890) |
(85,378) |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
(2,043) |
(10,810) |
|
|
|
Net increase in cash and cash
equivalents |
53,795 |
46,845 |
|
|
|
Cash and cash equivalents at beginning of
period |
189,044 |
181,685 |
Cash and cash equivalents at end of
period |
$242,839 |
$228,530 |
Reconciliation of Adjusted and 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. 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 it permits 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.
Three Months Ended May 31, 2013
|
|
(Condensed and Unaudited) |
GAAP |
Q3 2013 Income Tax Benefits (a) |
Adjusted |
YoY % Change |
Stock-Based Compensation |
Amortization of Intangible
Assets |
Non-GAAP |
Operating Income |
$ 71,637 |
|
$ 71,637 |
4.6% |
$ 5,440 |
$ 1,683 |
$ 78,760 |
Operating Margin |
33.4% |
|
33.4% |
-- |
-- |
-- |
-- |
Net Income (b) |
$ 53,367 |
$ (2,270) |
$ 51,097 |
6.5% |
$ 3,862 |
$ 1,195 |
$ 56,154 |
Diluted EPS (c) |
$ 1.20 |
$ (0.05) |
$ 1.15 |
9.5% |
$ 0.09 |
$ 0.03 |
$ 1.26 |
Weighted Average Shares |
44,485 |
|
44,485 |
|
|
|
44,485 |
|
(a) GAAP net income was
adjusted to exclude $2.3 million of income tax benefits related to
finalizing prior years' tax returns. GAAP diluted EPS was adjusted
to exclude $0.05 from these same income tax benefits. |
(b) For the purposes of
calculating non-GAAP net income and non-GAAP diluted EPS,
stock-based compensation expense and the amortization of intangible
assets were taxed at the annual effective tax rate of 29.0%. |
(c) The sum of the non-GAAP
diluted earnings per share may not equal the totals above due to
rounding. |
CONTACT: Rachel Stern
FactSet Research Systems Inc.
203.810.1000
FactSet Research Systems (NYSE:FDS)
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