FactSet (the “Company”) (NYSE:FDS) (NASDAQ:FDS), a global provider
of integrated financial information, analytical applications, and
industry-leading service, today announced its results for the
second quarter ended February 28, 2017.
Second Quarter 2017 Highlights
- Revenues increased 4.5% or $12.6 million to $294.4 million
compared with $281.8 million for the same period in 2016. The
second quarter of 2016 includes revenues from the Market Metrics
business, which was sold in FactSet’s fourth quarter of 2016.
Organic revenues grew 7.0% to $291.5 million during the second
quarter of 2017 from the prior year period.
- Operating income increased 7.5% or $6.4 million to $91.7
million compared with $85.3 million in the prior year period.
Adjusted operating income for the second quarter increased 4.5% or
$4.2 million to $97.4 million compared with the prior year
period.
- Operating margin increased to 31.2% compared to 30.3% in the
prior year period. Adjusted operating margin remained consistent
year over year at 33.1%.
- Net income decreased 1.6% or $1.1 million to $66.7 million
compared with $67.8 million for the second quarter of 2016.
Adjusted net income increased 8.7% or $5.8 million to $71.8 million
for the second quarter compared with the prior year period.
- Diluted earnings per share (“EPS”) increased 3.1% to $1.68
compared with $1.63 for the same period in 2016. Adjusted diluted
EPS for the second quarter rose 13.8% to $1.81 compared with the
second quarter of 2016.
- Annual Subscription Value (“ASV”) increased to $1.19 billion at
February 28, 2017 compared with prior year ASV of $1.14 billion.
Organic ASV, which excludes the effects of acquisitions,
dispositions and foreign currency increased 6.5%.
- The Company’s effective tax rate for the second quarter was
25.5%, a decrease from 28.8% a year ago, primarily due to FactSet’s
global operational realignment effective September 1,
2016.
- FactSet announced two transactions recently. FactSet completed
the acquisition of BISAM Technologies S.A. (“BISAM”) for cash
consideration of $205.2 million on March 17, 2017. The transaction
is expected be accretive by $0.02 to adjusted diluted EPS and
dilutive by $0.06 to GAAP diluted EPS for the remainder of fiscal
2017. Additionally, FactSet agreed to acquire Interactive Data
Managed Solutions (“IDMS”) on January 26, and the acquisition is
expected to close in the Company’s third quarter of fiscal 2017.
The acquisition of IDMS is expected to have an immaterial impact to
GAAP diluted EPS and adjusted diluted EPS for FactSet’s fiscal
2017.
- FactSet entered into a new credit agreement on March 17, 2017
with PNC Bank National Association (“PNC”) and borrowed $575
million to fund the BISAM transaction and retire its existing
outstanding debt.
“FactSet continues to be a leading technology
partner for the investment community delivering another quarter of
growth in a market that remains challenging for the financial
industry. Through product innovation and acquisition, we believe we
are well positioned to offer a broad suite of solutions across the
enterprise for our clients critical workflows,” said Phil Snow,
FactSet CEO.
Non-GAAP
Measures |
|
|
|
(Condensed and Unaudited) |
|
Three Months Ended |
|
(In thousands, except
per share data) |
|
February
28, 2017 |
|
|
February
29, 2016 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Organic revenues |
$ |
291,514 |
|
$ |
272,561 |
|
|
7.0 |
% |
Adjusted operating
income |
$ |
97,420 |
|
$ |
93,260 |
|
|
4.5 |
% |
Adjusted operating
margin |
|
33.1 |
% |
|
33.1 |
% |
|
― |
|
Adjusted net
income |
$ |
71,844 |
|
$ |
66,081 |
|
|
8.7 |
% |
Adjusted diluted
EPS |
$ |
1.81 |
|
$ |
1.59 |
|
|
13.8 |
% |
|
|
|
|
|
|
|
Maurizio Nicolelli, FactSet CFO added, “In the
second quarter, we continued to grow ASV by deepening our
relationships with our clients and delivered double-digit growth
for adjusted diluted EPS at the high end of our guidance. In a
market that remains challenging in certain segments, we believe
that we will be able to grow ASV and maintain cost discipline as
evidenced by our steady operating margins.”
Annual Subscription Value (ASV) and Segment
Revenue
ASV was $1.19 billion at February 28, 2017, up
6.5% or $71.1 million organically from prior year. Organic ASV,
which excludes the effects of acquisitions, dispositions and
foreign currency, increased $16.3 million over the last three
months. ASV at any given point in time represents the
forward-looking revenues for the next twelve months from all
subscription services currently supplied to clients.
Buy-side and sell-side ASV growth rates for the
second quarter of fiscal 2017 were 6.8% and 4.9%, respectively.
Buy-side clients account for 83.2% 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 may be found on page 12 of this earnings release.
ASV from U.S. operations was $773.7 million,
increasing 0.9% over prior year of $766.4 million and 5.4%
organically. U.S. revenues were $191.6 million compared with $189.7
million. Excluding the effects of acquisitions and dispositions
completed in the last 12 months, the U.S. revenue growth rate was
5.9%. ASV from international operations was $413.2 million,
increasing 10.8% over prior year of $372.8 million and 8.4%
organically. International ASV now represents 34.8% of total ASV,
an increase of 2.1% over prior year. International revenues rose to
$102.7 million compared with $92.1 million from the second quarter
of 2016. Excluding the effects of acquisitions and dispositions
completed in the last 12 months and foreign currency, the
international revenue growth rate was 8.9%.
Operational Highlights
- Client count as of February 28, 2017 was 4,404, a net increase
of 143 clients in the past three months. As of the second quarter,
FactSet changed its client count definition to capture clients with
ASV greater than $10,000 versus the previous threshold of ASV
greater than $24,000. Please see page 12 of this press release for
historical data based on the new definition.
- User count grew 1,503 to 85,788 in the past three months. As of
the second quarter, FactSet also changed its user count definition
to account for users from workstations previously not captured due
to certain product bundling, and additionally, users of the
StreetAccount web product. Please see page 12 of this press
release for historical data based on the new definition.
- Annual client retention was greater than 95% of ASV. When
expressed as a percentage of clients, annual retention was
93%.
- Employee count was 8,592 at February 28, 2017, up 499 people in
the past 12 months. Excluding the acquired Vermilion and CYMBA
workforces and employees of the sold Market Metrics business,
headcount increased 7.0% from a year ago.
- Quarterly free cash flow was $71.4 million compared with $81.1
million for the second quarter of 2016. Operating cash flow for the
second quarter was $76.9 million compared with $93.1 million for
the second quarter of 2016.
- Capital expenditures decreased to $5.5 million, compared with
$12.1 million a year ago primarily from the build out of office
space last year.
- A regular quarterly dividend of $19.7 million, or $0.50 per
share, was paid on March 21, 2017, to common stockholders of record
as of February 28, 2017.
- FactSet launched the Global FinTech Index, which provides a
benchmark to track the performance of companies engaged in
financial technologies, particularly in the areas of software and
consulting, data and analytics, digital payment processing and
transfer, and payment-related hardware. The Global FinTech Index
has been licensed to Nikko Asset Management as the benchmark for
the Global Fintech Equity Fund.
- The Company strengthened its existing relationship with Axioma,
a leading provider of enterprise risk management, portfolio
construction and risk and regulatory reporting solutions, to expand
its strong fixed income and multi-asset class analytics,
performance, and risk offerings. The enhanced offerings include
making Axioma’s linear fixed income and multi-asset class model
available on FactSet and expand the multi-asset class risk models
already available through FactSet.
- Earlier this month, FactSet unveiled its new brand campaign,
See the Advantage, which identifies the Company as a premier
partner, helping clients see and seize new opportunities every day.
This new brand statement is a fresh articulation of FactSet’s
nearly four-decade mission to solve its clients’ greatest
challenges with the power of collaboration.
Share Repurchase Program
FactSet repurchased 479,822 shares for $81.1
million during the second quarter under the Company’s existing
share repurchase program. Over the last 12 months, FactSet has
returned $485.2 million to stockholders in the form of share
repurchases and dividends, funded by cash generated from operations
and the sale of the Market Metrics business. On March 27,
2017, the Board of Directors of FactSet approved a $300 million
expansion to the existing share repurchase program. Including this
expansion, $336.5 million is currently available for future share
repurchases.
Recent Transactions
On January 26, 2017, FactSet announced that it
had entered into an agreement to acquire IDMS from Intercontinental
Exchange (NYSE:ICE). With a client base of large financial
institutions across Europe and the U.S., IDMS is a leading managed
solutions and portal provider for the global wealth management
industry. IDMS supports the wealth management marketplace across a
variety of workflows and functions, from advisors to their clients.
IDMS offers real-time market data desktops, customizable web-based
portals, and a broad range of mobile solutions. The transaction is
expected to close in the Company’s third quarter of fiscal 2017 and
have an immaterial impact to GAAP diluted EPS and adjusted diluted
EPS for FactSet’s fiscal 2017. FactSet considers wealth management
an area of strong growth for the Company and this acquisition adds
significant scale to its already growing wealth management
business.
On March 17, 2017, the Company completed the
acquisition of BISAM for cash consideration of $205.2 million. With
more than 160 employees worldwide, BISAM is a leading provider of
portfolio performance and attribution, multi-asset risk, GIPS
composites management and reporting. B-One, BISAM’s award-winning,
market-leading cross-asset solution, is an outstanding complement
to both FactSet’s portfolio analytics suite and client reporting
solutions. Simultaneously, its Cognity (or Finanalytica) product
enhances FactSet’s risk analysis for derivatives and quantitative
portfolio construction. BISAM’s annual revenues as of December 31,
2016 were over $28 million.
FactSet borrowed $575 million under a new
revolving credit facility with PNC on March 17, 2017 to fund the
BISAM transaction and retire its existing outstanding debt. BISAM
is expected to be accretive by $0.02 to adjusted diluted EPS and
dilutive by $0.06 to GAAP diluted EPS for FactSet’s fiscal
2017.
Business Outlook
The following forward-looking statements reflect
FactSet’s expectations as of today’s date and includes the recently
completed BISAM acquisition. 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.
Third Quarter Fiscal 2017
Expectations:
- GAAP Revenues are expected to be in the range of $301 million
and $307 million. BISAM is expected to add approximately $6
million in third quarter revenues.
- GAAP operating margin is expected to be in the range of 30.0%
and 31.0%, which includes a 90 basis point reduction from BISAM.
Adjusted operating margin is expected to be in the range of 32.0%
and 33.0%, which includes a 30 basis point reduction from
BISAM.
- The annual effective tax rate is expected to be in the range of
25.0% and 26.0%.
- GAAP diluted EPS is expected to be in the range of $1.68 and
$1.74. Adjusted diluted EPS is expected to be in the range of $1.80
and $1.86. The midpoint of the adjusted EPS range represents 12%
growth over the prior year.
Conference Call
The Company will host a conference call today,
March 28, 2017 at 11:00 a.m. Eastern Time to discuss the second
quarter results with its investors. The call will be webcast live
at http://investor.factset.com/investors/audiocasts. The
following information is provided for investors who would like to
participate:
U.S. Participants: |
877.201.0168 |
International
Participants: |
647.788.4901 |
Passcode: |
77870058 |
Moderator: |
Rima Hyder, Vice
President, Investor Relations |
An archived webcast with the accompanying slides
will be available at investor.factset.com for one year after the
conclusion of the live event. The earnings call transcript will
also be available via FactSet CallStreet. An audio replay of this
conference will also be available until April 4, 2017 via the
following telephone numbers: 800.585.8367 in the U.S. and
416.621.4642 internationally using passcode 77870058.
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 Non-GAAP Financial Measures
Financial measures in accordance with U.S. GAAP
including revenue, operating income and margin, net income, diluted
earnings per share and cash provided by operating activities have
been adjusted.
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.
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.
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. 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 (NYSE:FDS) (NASDAQ:FDS) delivers
superior analytics, service, content, and technology to help more
than 85,000 users see and seize opportunity sooner. We are
committed to giving investment professionals the edge to
outperform, with fresh perspectives, informed insights, and the
industry-leading support of our dedicated specialists. We're proud
to have been recognized with multiple awards for our analytical and
data-driven solutions and repeatedly ranked as one of Fortune's 100
Best Companies to Work For and a Best Workplace in the United
Kingdom and France. Subscribe to our thought leadership blog
to get fresh insight delivered daily at insight.factset.com. Learn
more at www.factset.com and follow on
Twitter: www.twitter.com/factset.
|
Consolidated Statements of Income – Unaudited |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
(In thousands, except
per share data) |
February 28,2017 |
|
February 29,2016 |
|
February 28,2017 |
|
February 29,2016 |
|
|
|
|
|
|
|
|
Revenues |
$ |
294,354 |
|
|
$ |
281,796 |
|
|
$ |
582,417 |
|
|
$ |
552,300 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Cost of
services |
|
131,635 |
|
|
|
123,911 |
|
|
|
258,885 |
|
|
|
238,647 |
|
Selling,
general and administrative |
|
70,973 |
|
|
|
72,541 |
|
|
|
141,467 |
|
|
|
141,001 |
|
Total
operating expenses |
|
202,608 |
|
|
|
196,452 |
|
|
|
400,352 |
|
|
|
379,648 |
|
|
|
|
|
|
|
|
|
Operating income |
|
91,746 |
|
|
|
85,344 |
|
|
|
182,065 |
|
|
|
172,652 |
|
|
|
|
|
|
|
|
|
Other expense |
|
|
|
|
|
|
|
Loss on
sale of business |
|
(1,208 |
) |
|
|
- |
|
|
|
(1,223 |
) |
|
|
- |
|
Interest
(expense), net of interest income |
|
(1,048 |
) |
|
|
(424 |
) |
|
|
(1,532 |
) |
|
|
(331 |
) |
Total
other expense |
|
(2,256 |
) |
|
|
(424 |
) |
|
|
(2,755 |
) |
|
|
(331 |
) |
|
|
|
|
|
|
|
|
Income before income
taxes |
|
89,490 |
|
|
|
84,920 |
|
|
|
179,310 |
|
|
|
172,321 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
22,780 |
|
|
|
17,157 |
|
|
|
46,017 |
|
|
|
44,594 |
|
Net
income |
$ |
66,710 |
|
|
$ |
67,763 |
|
|
$ |
133,293 |
|
|
$ |
127,727 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
1.68 |
|
|
$ |
1.63 |
|
|
$ |
3.34 |
|
|
$ |
3.06 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares |
|
39,700 |
|
|
|
41,536 |
|
|
|
39,900 |
|
|
|
41,799 |
|
Consolidated Statements of Comprehensive Income –
Unaudited |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
(In thousands) |
February 28,2017 |
|
February 29,2016 |
|
February 28,2017 |
|
February 29,2016 |
|
|
|
|
|
|
|
|
Net income |
$ |
66,710 |
|
$ |
67,763 |
|
|
$ |
133,293 |
|
|
$ |
127,727 |
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of tax |
|
|
|
|
|
|
|
Net
unrealized gain (loss) on cash flow hedges* |
|
1,401 |
|
|
(1,819 |
) |
|
|
1,848 |
|
|
|
(2,236 |
) |
Foreign
currency translation adjustments |
|
861 |
|
|
(10,364 |
) |
|
|
(10,636 |
) |
|
|
(16,750 |
) |
Other
comprehensive income (loss) |
|
2,262 |
|
|
(12,183 |
) |
|
|
(8,788 |
) |
|
|
(18,986 |
) |
Comprehensive
income |
$ |
68,972 |
|
$ |
55,580 |
|
|
$ |
124,505 |
|
|
$ |
108,741 |
|
|
|
|
|
|
|
|
|
*For the three and six months ended February 28, 2017, the
unrealized gain on cash flow hedges was net of tax expense of $817
and $1,078, respectively. For the three and six months ended
February 29, 2016, the unrealized loss on cash flow hedges was net
of tax benefits of $1,068 and $1,311 respectively.
|
Consolidated Balance Sheets - Unaudited |
|
|
|
|
February 28, |
|
|
|
August 31, |
|
|
(In
thousands) |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
155,351 |
|
|
$ |
228,407 |
|
|
Investments |
|
30,003 |
|
|
|
24,217 |
|
|
Accounts receivable, net of reserves |
|
130,825 |
|
|
|
97,797 |
|
|
Prepaid taxes |
|
|
4,760 |
|
|
|
― |
|
|
Deferred taxes |
|
|
2,693 |
|
|
|
3,158 |
|
|
Prepaid expenses and other current assets |
|
|
20,408 |
|
|
|
15,697 |
|
|
Total current assets |
|
|
344,040 |
|
|
|
369,276 |
|
|
|
|
|
|
|
|
|
|
|
Property, equipment, and leasehold improvements, net |
|
89,450 |
|
|
|
84,622 |
|
|
Goodwill |
|
|
|
506,832 |
|
|
|
452,915 |
|
|
Intangible assets, net |
|
|
|
104,695 |
|
|
|
93,161 |
|
|
Deferred taxes |
|
|
|
8,862 |
|
|
|
13,406 |
|
|
Other assets |
|
|
|
7,950 |
|
|
|
5,781 |
|
|
Total Assets |
|
|
$ |
1,061,829 |
|
|
$ |
1,019,161 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Accounts payable and accrued expenses |
$ |
51,121 |
|
|
$ |
45,836 |
|
|
Accrued compensation |
|
|
33,183 |
|
|
|
51,036 |
|
|
Deferred fees |
|
|
37,252 |
|
|
|
33,247 |
|
|
Taxes payable |
|
|
13,056 |
|
|
|
7,781 |
|
|
Deferred taxes |
|
|
767 |
|
|
|
291 |
|
|
Dividends payable |
|
|
19,709 |
|
|
|
20,019 |
|
|
Total current liabilities |
|
|
155,088 |
|
|
|
158,210 |
|
|
Deferred taxes |
|
|
|
2,947 |
|
|
|
1,708 |
|
|
Taxes payable |
|
|
|
10,029 |
|
|
|
8,782 |
|
|
Long-term debt |
|
365,000 |
|
|
|
300,000 |
|
|
Deferred rent and other non-current liabilities |
|
35,535 |
|
|
|
33,080 |
|
|
Total Liabilities |
|
$ |
568,599 |
|
|
$ |
501,780 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Common stock |
|
$ |
517 |
|
|
$ |
512 |
|
|
Additional paid-in capital |
|
704,522 |
|
|
|
623,195 |
|
|
Treasury stock, at cost |
|
|
(1,512,127 |
) |
|
|
(1,321,700 |
) |
|
Retained earnings |
|
|
1,377,659 |
|
|
|
1,283,927 |
|
|
Accumulated other comprehensive loss |
|
|
|
(77,341 |
) |
|
|
(68,553 |
) |
|
Total Stockholders’ Equity |
|
|
493,230 |
|
|
|
517,381 |
|
|
Total Liabilities And Stockholders’ Equity |
$ |
1,061,829 |
|
|
$ |
1,019,161 |
|
|
Consolidated Statements of Cash Flows – Unaudited |
|
|
(In
thousands) |
Six Months Ended |
|
February 28,2017 |
|
February 29,2016 |
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
Net
income |
$ |
133,293 |
|
|
$ |
127,727 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities |
|
|
|
|
|
|
Depreciation and amortization |
|
20,649 |
|
|
|
18,260 |
|
|
Stock-based compensation expense |
|
13,611 |
|
|
|
15,027 |
|
|
Loss on sale of business |
|
1,223 |
|
|
|
― |
|
|
Deferred income taxes |
|
3,032 |
|
|
|
732 |
|
|
Loss on sale of assets |
|
142 |
|
|
|
― |
|
|
Tax benefits from share-based payment arrangements |
|
(8,995 |
) |
|
|
(10,804 |
) |
|
Changes in assets and liabilities, net of effects of
acquisitions |
|
|
|
|
|
|
Accounts receivable, net of reserves |
|
(30,998 |
) |
|
|
(5,683 |
) |
|
Accounts payable and accrued expenses |
|
3,352 |
|
|
|
1,930 |
|
|
Accrued compensation |
|
(17,699 |
) |
|
|
(10,180 |
) |
|
Deferred fees |
|
1,152 |
|
|
|
913 |
|
|
Taxes payable, net of prepaid taxes |
|
10,561 |
|
|
|
15,138 |
|
|
Prepaid expenses and other assets |
|
(3,982 |
) |
|
|
1,816 |
|
|
Deferred rent and other non-current liabilities |
|
2,774 |
|
|
|
9,372 |
|
|
Other working capital accounts, net |
|
(57 |
) |
|
|
(22 |
) |
|
Net cash provided by operating activities |
|
128,058 |
|
|
|
164,226 |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired |
|
(71,689 |
) |
|
|
(264,087 |
) |
|
|
Purchases
of investments |
|
(25,149 |
) |
|
|
(12,530 |
) |
|
|
Proceeds
from sales of investments |
|
19,501 |
|
|
|
12,423 |
|
|
|
Purchases
of property, equipment and leasehold improvements, net of proceeds
from dispositions |
|
(18,046 |
) |
|
|
(26,438 |
) |
|
|
Net cash used in investing activities |
|
(95,383 |
) |
|
|
(290,632 |
) |
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
Dividend
payments |
|
(39,568 |
) |
|
|
(36,132 |
) |
|
Repurchase
of common stock |
|
(166,427 |
) |
|
|
(115,695 |
) |
|
Proceeds
from debt |
|
65,000 |
|
|
|
265,000 |
|
|
Sale of
business |
|
(1,223 |
) |
|
|
― |
|
|
Debt
issuance costs |
|
― |
|
|
|
(12 |
) |
|
Proceeds
from employee stock plans |
|
34,725 |
|
|
|
26,848 |
|
|
Tax
benefits from share-based payment arrangements |
|
8,995 |
|
|
|
10,804 |
|
|
Net cash (used in) provided by financing activities |
|
(98,498 |
) |
|
|
150,813 |
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(7,233 |
) |
|
|
(8,151 |
) |
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
(73,056 |
) |
|
|
16,256 |
|
|
|
|
|
|
|
|
Cash and
cash equivalents at beginning of period |
|
228,407 |
|
|
|
158,914 |
|
|
Cash and
cash equivalents at end of period |
$ |
155,351 |
|
|
$ |
175,170 |
|
|
Reconciliation of U.S. GAAP Results to Adjusted Financial
Measures
Financial measures in accordance with U.S. GAAP
including revenues, operating income and margin, net income,
diluted EPS and cash provided by operating activities 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.
Revenues
(Unaudited) |
|
Three Months Ended |
|
(In thousands) |
|
|
February 28, 2017 |
|
|
|
February
29, 2016 |
|
|
Change |
|
GAAP Revenues |
|
$ |
294,354 |
|
|
$ |
281,796 |
|
|
4.5 |
% |
Less acquired revenues
(a) |
|
|
(3,067 |
) |
|
|
― |
|
|
Less Market Metrics
revenues |
|
|
― |
|
|
|
(9,235 |
) |
|
Less Currency impact
(b) |
|
|
227 |
|
|
|
― |
|
|
Organic
revenues |
|
$ |
291,514 |
|
|
$ |
272,561 |
|
|
7.0 |
% |
(a) Acquired revenues from acquisitions completed within the
last 12 months.
(b) The impact from foreign currency movements over the past 12
months was excluded to calculate total organic revenues.
Operating Income, Margin, Net Income and Diluted
EPS
(Unaudited) |
|
Three Months Ended |
|
|
(In thousands, except
per share data) |
|
|
February
28, 2017 |
|
|
|
February
29, 2016 |
|
|
Change |
|
GAAP Operating
income |
|
$ |
91,746 |
|
|
$ |
85,344 |
|
|
7.5 |
% |
|
Intangible asset
amortization (a) |
|
|
4,230 |
|
|
|
4,078 |
|
|
|
|
Other
non-recurring items (b) |
|
|
1,444 |
|
|
|
3,838 |
|
|
|
|
Adjusted
operating income |
|
$ |
97,420 |
|
|
$ |
93,260 |
|
|
4.5 |
% |
|
Adjusted operating margin |
|
|
33.1 |
% |
|
|
33.1 |
% |
|
|
|
|
|
|
|
|
|
GAAP Net income |
|
$ |
66,710 |
|
|
$ |
67,763 |
|
|
(1.6 |
)% |
|
Intangible asset
amortization (a)(e) |
|
|
3,156 |
|
|
|
2,903 |
|
|
|
|
Other
non-recurring items (b)(c)(e) |
|
|
1,978 |
|
|
|
2,732 |
|
|
|
|
Income tax benefits
(d) |
|
|
─ |
|
|
|
(7,317 |
) |
|
|
|
Adjusted net income |
|
$ |
71,844 |
|
|
$ |
66,081 |
|
|
8.7 |
% |
|
|
|
|
|
|
|
GAAP Diluted earnings
per common share |
|
$ |
1.68 |
|
|
$ |
1.63 |
|
|
|
|
Intangible asset
amortization (a)(e) |
|
|
0.08 |
|
|
|
0.07 |
|
|
|
|
Other
non-recurring items (b)(e) |
|
|
0.05 |
|
|
|
0.06 |
|
|
|
|
Income tax benefits
(d) |
|
|
─ |
|
|
|
(0.17 |
) |
|
|
|
Adjusted
Diluted earnings per common share |
|
$ |
1.81 |
|
|
$ |
1.59 |
|
|
13.8 |
% |
|
Weighted
average common shares (Diluted) |
|
|
39,700 |
|
|
|
41,536 |
|
|
|
|
(a) GAAP operating income in the second quarter
of fiscal 2017 was adjusted to exclude $4.2 million of pre-tax
intangible asset amortization, which reduced net income by $3.2
million and diluted earnings per share by $0.08. GAAP operating
income in the second quarter of fiscal 2016 was adjusted to exclude
$4.1 million of pre-tax intangible asset amortization, which
reduced net income by $2.9 million and diluted earnings per share
by $0.07.
(b) GAAP operating income in the second quarter
of fiscal 2017 was adjusted to exclude $1.4 million of pre-tax
non-recurring acquisition costs related to the IDMS and BISAM
acquisitions, which reduced net income by $1.1 million and diluted
earnings per share by $0.03. GAAP operating income in the second
quarter of fiscal 2016 was adjusted to exclude a pre-tax charge of
$2.4 million from restructuring actions initiated by the Company
and $1.4 million of pre-tax expense related to a change in the
vesting of performance-based stock options, which collectively
reduced net income by $2.7 million and diluted earnings per share
by $0.06.
(c) GAAP net income in the second quarter of
fiscal 2017 was adjusted to exclude an after-tax loss of $0.9
million from the final working capital adjustment related to sale
of FactSet’s Market Metrics business in the fourth quarter of
fiscal 2016. This adjustment reduced diluted earnings per
share by $0.02.
(d) The U.S. Federal R&D tax credit, which
had previously expired on December 31, 2014, was permanently
reenacted and retroactive to January 1, 2015. The reenactment
resulted in discrete income tax benefits of $7.3 million or $0.17
per diluted share during the second quarter of fiscal 2016.
(e) 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
annual effective tax rates of 25.4% for fiscal 2017 and 28.8% for
fiscal 2016.
Free Cash Flow
(Unaudited) |
|
Three Months Ended |
|
(In thousands) |
|
|
February
28, 2017 |
|
|
|
February
29, 2016 |
|
|
Change |
|
Net cash provided by
operating activities |
|
$ |
76,945 |
|
|
$ |
93,139 |
|
|
Capital
expenditures |
|
|
(5,509 |
) |
|
|
(12,053 |
) |
|
Free cash
flow |
|
$ |
71,436 |
|
|
$ |
81,086 |
|
|
(11.9 |
)% |
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.
|
Q2’17 |
Q1’17 |
Q4’16 |
Q3’16 |
Q2’16 |
Q1’16 |
% of ASV from buy-side clients |
83.2 |
% |
83.0 |
% |
82.6 |
% |
83.0 |
% |
82.8 |
% |
82.4 |
% |
% of ASV from sell-side clients |
16.8 |
% |
17.0 |
% |
17.4 |
% |
17.0 |
% |
17.2 |
% |
17.6 |
% |
|
|
|
|
|
|
|
ASV Growth rate from buy-side clients |
6.8 |
% |
8.3 |
% |
9.0 |
% |
10.3 |
% |
9.9 |
% |
9.5 |
% |
ASV Growth rate from sell-side clients |
4.9 |
% |
6.3 |
% |
7.6 |
% |
8.1 |
% |
10.0 |
% |
10.3 |
% |
Total Organic ASV Growth Rate |
6.5 |
% |
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) |
Q2’17 |
Q2’16 |
As reported ASV |
$ |
1,186.9 |
|
$ |
1,139.2 |
|
Less acquired ASV (a) |
|
(14.7 |
) |
|
― |
|
Less Market Metrics ASV (b) |
|
― |
|
|
(38.2 |
) |
Less Currency impact (c) |
|
(0.1 |
) |
|
― |
|
Organic ASV total |
$ |
1,172.1 |
|
$ |
1,101.0 |
|
Total Organic ASV Growth Rate |
|
6.5 |
% |
|
(a) Acquired ASV from acquisitions completed within the last 12
months.
(b) Adjustment to remove ASV related to sale of the Market
Metrics business in the fourth quarter of fiscal 2016.
(c) The impact from foreign currency movements over the past 12
months was excluded above to calculate total organic ASV.
Supplementary Schedules of Historical Client and User Count
The following table presents the current and
historical client and user count under the new definition adopted
by FactSet as of its second quarter of 2017. FactSet changed its
client count definition to capture clients with ASV greater than
$10,000 versus the previous metric of clients with ASV greater than
$24,000. FactSet changed its user count definition to account for
users from workstations previously not captured due to certain
product bundling, and additionally, users of the StreetAccount web
product.
|
Q2’17 |
Q1’17 |
Q4’16 |
Q3’16 |
Q2’16 |
Q1’16 |
Q4’15 |
Q3’15 |
Clients |
4,404 |
4,261 |
4,205 |
4,041 |
3,954 |
3,812 |
3,712 |
3,552 |
Users |
85,788 |
84,285 |
83,936 |
81,314 |
81,301 |
81,067 |
80,145 |
76,229 |
The following table presents the historical
client and user count under the previous definition of clients and
users.
|
Q1’17 |
Q4’16 |
Q3’16 |
Q2’16 |
Q1’16 |
Q4’15 |
Q3’15 |
Clients |
3,116 |
3,092 |
3,075 |
3,057 |
3,006 |
2,976 |
2,915 |
Users |
66,963 |
65,655 |
63,535 |
63,500 |
63,169 |
62,205 |
58,995 |
Contact:
Rima Hyder
FactSet
857.265.7523
FactSet Research Systems (NYSE:FDS)
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