Broadridge Financial Solutions, Inc 10-Q for FY2020 Q3

Broadridge Financial Solutions, Inc. (BR)

10-Q 2020-05-08 For: 2020-03-31

Added on April 04, 2026

About this 10-Q

Broadridge Financial Solutions, Inc filed this 10-Q on May 8, 2020, covering the quarter ended March 31, 2020 (FY2020 Q3).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.25B; up 2.0% from $1.22B a year earlier
Net income: $166.8M; down 3.1% from net income of $172.2M a year earlier
Diluted EPS: $1.43; down 1.4% from $1.45 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware			33-1151291
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

5 Dakota Drive			11042
Lake Success
New York
(Address of principal executive offices)			(Zip Code)


ITEM		PAGE
NOTE ABOUT FORWARD-LOOKING STATEMENTS			3
PART I.	FINANCIAL INFORMATION	4
Item 1.	FINANCIAL STATEMENTS	4
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	50
Item 4.	CONTROLS AND PROCEDURES	50
PART II.	OTHER INFORMATION	51
Item 1.	LEGAL PROCEEDINGS	51
Item 1A.	RISK FACTORS	51
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	52
Item 6.	EXHIBITS	53


		Three Months Ended March 31,						Nine Months Ended March 31,
		2020		2019		2020		2019
Revenues	(Note 3)	$	1,249.9	$	1,224.8	$	3,167.1	$	3,151.0
Operating expenses:
Cost of revenues		872.5		847.3		2,380.9		2,320.3
Selling, general and administrative expenses		151.1		143.9		460.1		418.7
Total operating expenses		1,023.7		991.2		2,841.0		2,739.1
Operating income		226.3		233.6		326.1		411.9
Interest expense, net	(Note 5)	(16.2)		(10.0)		(43.2)		(30.4)
Other non-operating income (expenses), net		0.4		—		1.8		(4.3)
Earnings before income taxes		210.5		223.6		284.8		377.2
Provision for income taxes	(Note 14)	43.6		51.4		52.0		78.4
Net earnings		$	166.8	$	172.2	$	232.8	$	298.8

Basic earnings per share		$	1.46	$	1.49	$	2.03	$	2.57
Diluted earnings per share		$	1.43	$	1.45	$	1.99	$	2.51

Weighted-average shares outstanding:
Basic	(Note 4)	114.6		115.7		114.6		116.1
Diluted	(Note 4)	117.0		118.5		117.1		119.1


	Three Months Ended March 31,						Nine Months Ended March 31,
	2020		2019		2020		2019
Net earnings	$	166.8	$	172.2	$	232.8	$	298.8
Other comprehensive income (loss), net:
Foreign currency translation adjustments	0.1		4.9		2.9		(11.2)
Pension and post-retirement liability adjustment, net of taxes of $(0.1) and $(0.1) for the three months ended March 31, 2020 and 2019, respectively; and $(0.3) and $(0.2) for the nine months ended March 31, 2020 and 2019, respectively	0.4		0.2		1.1		0.6
Total other comprehensive income (loss), net	0.5		5.1		4.0		(10.7)
Comprehensive income	$	167.3	$	177.2	$	236.8	$	288.1


		March 31, 2020		June 30, 2019
Assets
Current assets:
Cash and cash equivalents		$	402.1	$	273.2
Accounts receivable, net of allowance for doubtful accounts of $3.8 and $2.6, respectively		814.7		664.0
Other current assets		144.2		105.2
Total current assets		1,361.0		1,042.3
Property, plant and equipment, net		153.9		189.0
Goodwill		1,704.5		1,500.0
Intangible assets, net		611.4		556.2
Other non-current assets	(Note 9)	1,082.6		593.1
Total assets		$	4,913.5	$	3,880.7
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	(Note 11)	$	399.8	$	—
Payables and accrued expenses	(Note 10)	737.2		711.7
Contract liabilities		118.0		90.9
Total current liabilities		1,255.0		802.6
Long-term debt	(Note 11)	1,679.9		1,470.4
Deferred taxes		112.8		86.7
Contract liabilities		159.7		160.7
Other non-current liabilities	(Note 12)	503.6		232.8
Total liabilities		3,710.9		2,753.2
Commitments and contingencies	(Note 15)
Stockholders’ equity:
Preferred stock: Authorized, 25.0 shares; issued and outstanding, none		—		—
Common stock, $0.01 par value: 650.0 shares authorized; 154.5 and 154.5 shares issued, respectively; and 114.5 and 114.3 shares outstanding, respectively		1.6		1.6
Additional paid-in capital		1,169.3		1,109.3
Retained earnings		2,135.1		2,087.7
Treasury stock, at cost: 40.0 and 40.2 shares, respectively		(2,036.2)		(1,999.8)
Accumulated other comprehensive loss	(Note 16)	(67.2)		(71.2)
Total stockholders’ equity		1,202.5		1,127.5
Total liabilities and stockholders’ equity		$	4,913.5	$	3,880.7


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31, 2020
	Common Stock					Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balances, December 31, 2019	154.5	$	1.6	$	1,150.1	$	2,030.1	$	(1,988.7)	$	(67.7)	$	1,125.4
Comprehensive income (loss)	—	—		—		166.8		—		0.5		167.3
Stock option exercises	—	—		4.8		—		—		—		4.8
Stock-based compensation	—	—		17.3		—		—		—		17.3
Treasury stock acquired (0.4 shares)	—	—		—		—		(50.5)		—		(50.5)
Treasury stock reissued (0.1 shares)	—	—		(2.9)		—		2.9		—		—
Common stock dividends ($0.54 per share)	—	—		—		(61.8)		—		—		(61.8)
Balances, March 31, 2020	154.5	$	1.6	$	1,169.3	$	2,135.1	$	(2,036.2)	$	(67.2)	$	1,202.5


	Nine Months Ended March 31, 2020
	Common Stock					Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balances, June 30, 2019	154.5	$	1.6	$	1,109.3	$	2,087.7	$	(1,999.8)	$	(71.2)	$	1,127.5
Comprehensive income (loss)	—	—		—		232.8		—		4.0		236.8
Cumulative effect of changes in accounting principles (a)	—	—		—		0.2		—		—		0.2
Stock option exercises	—	—		26.7		—		—		—		26.7
Stock-based compensation	—	—		47.4		—		—		—		47.4
Treasury stock acquired (0.4 shares)	—	—		—		—		(50.5)		—		(50.5)
Treasury stock reissued (0.6 shares)	—	—		(14.0)		—		14.0		—		—
Common stock dividends ($1.62 per share)	—	—		—		(185.6)		—		—		(185.6)
Balances, March 31, 2020	154.5	$	1.6	$	1,169.3	$	2,135.1	$	(2,036.2)	$	(67.2)	$	1,202.5


	Three Months Ended March 31, 2019
	Common Stock					Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balances, December 31, 2018	154.5	$	1.6	$	1,087.8	$	1,843.8	$	(1,741.4)	$	(69.2)	$	1,122.6
Comprehensive income (loss)	—	—		—		172.2		—		5.1		177.2
Stock option exercises	—	—		4.6		—		—		—		4.6
Stock-based compensation	—	—		17.3		—		—		—		17.3
Treasury stock acquired (less than 0.1 shares)	—	—		—		—		—		—		—
Treasury stock reissued (0.1 shares)	—	—		(2.2)		—		2.2		—		—
Common stock dividends ($0.485 per share)	—	—		—		(56.1)		—		—		(56.1)
Balances, March 31, 2019	154.5	$	1.6	$	1,107.6	$	1,959.9	$	(1,739.2)	$	(64.1)	$	1,265.6


	Nine Months Ended March 31, 2019
	Common Stock					Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balances, June 30, 2018	154.5	$	1.6	$	1,048.5	$	1,727.0	$	(1,630.8)	$	(51.9)	$	1,094.3
Comprehensive income (loss)	—	—		—		298.8		—		(10.7)		288.1
Cumulative effect of changes in accounting principles (b)	—	—		—		102.8		—		(1.5)		101.3
Stock option exercises	—	—		24.2		—		—		—		24.2
Stock-based compensation	—	—		46.8		—		—		—		46.8
Treasury stock acquired (1.1 shares)	—	—		—		—		(120.3)		—		(120.3)
Treasury stock reissued (0.6 shares)	—	—		(11.8)		—		11.8		—		—
Common stock dividends ($1.455 per share)	—	—		—		(168.7)		—		—		(168.7)
Balances, March 31, 2019	154.5	$	1.6	$	1,107.6	$	1,959.9	$	(1,739.2)	$	(64.1)	$	1,265.6


	March 31, 2020		June 30, 2019
	(In millions)
Contract assets	$	77.5	$	47.5
Contract liabilities	$	277.7	$	251.6


	Shadow Financial		Fi360		Clear-Structure		Funds Library		Total
	(In millions)
Cash payments, net of cash acquired	$	35.7	$	116.1	$	59.5	$	69.6	$	280.9
Deferred payments, net	2.9		3.5		2.0		—		8.4
Contingent consideration liability	—		—		7.0		—		7.0
Aggregate purchase price	$	38.6	$	119.6	$	68.5	$	69.6	$	296.3

Net tangible assets acquired / (liabilities assumed)	$	(0.1)	$	(8.7)	$	0.4	$	(2.4)	$	(10.8)
Goodwill	17.6		86.8		44.2		44.9		193.6
Intangible assets	21.1		41.5		23.9		27.1		113.6
Aggregate purchase price	$	38.6	$	119.6	$	68.5	$	69.6	$	296.3


	Rockall		RPM		TD Ameritrade*		Total
	(In millions)
Cash payments, net of cash acquired	$	34.9	$	258.3	$	61.5	$	354.7
Deferred payments, net	0.5		45.0		—		45.5
Contingent consideration liability	7.0		0.8		—		7.9
Aggregate purchase price	$	42.4	$	304.1	$	61.5	$	408.0

Net tangible assets acquired / (liabilities assumed)	$	(2.5)	$	10.8	$	—	$	8.3
Goodwill	30.7		181.6		27.1		239.4
Intangible assets	14.2		111.7		34.4		160.3
Aggregate purchase price	$	42.4	$	304.1	$	61.5	$	408.0


	March 31, 2020
	Level 1		Level 2		Level 3		Total
	(In millions)
Assets:
Cash and cash equivalents:
Money market funds (a)	$	69.9	$	—	$	—	$	69.9
Other current assets:
Securities	0.5		—		—		0.5
Other non-current assets:
Securities	95.3		—		—		95.3
Total assets as of March 31, 2020	$	165.8	$	—	$	—	$	165.8
Liabilities:
Contingent consideration obligations	—		—		32.7		32.7
Total liabilities as of March 31, 2020	$	—	$	—	$	32.7	$	32.7


	Nine Months Ended March 31,
	2020		2019
Cash Flows From Operating Activities
Net earnings	$	232.8	$	298.8
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation and amortization	56.5		63.7
Amortization of acquired intangibles and purchased intellectual property	90.9		64.3
Amortization of other assets	76.0		66.8
Write-down of long-lived assets	32.1		—
Stock-based compensation expense	47.6		46.8
Deferred income taxes	9.7		17.4
Other	(16.0)		(27.2)
Changes in operating assets and liabilities, net of assets and liabilities acquired:
Current assets and liabilities:
Increase in Accounts receivable, net	(142.7)		(174.0)
Increase in Other current assets	(21.7)		(13.3)
Decrease in Payables and accrued expenses	(22.7)		(55.1)
Increase in Contract liabilities	18.2		18.6
Non-current assets and liabilities:
Increase in Other non-current assets	(244.7)		(140.9)
Increase in Other non-current liabilities	39.6		51.9
Net cash flows provided by operating activities	155.6		217.9
Cash Flows From Investing Activities
Capital expenditures	(48.5)		(30.9)
Software purchases and capitalized internal use software	(25.0)		(15.5)
Acquisitions, net of cash acquired	(339.1)		—
Other investing activities	(15.3)		(2.8)
Net cash flows used in investing activities	(427.9)		(49.1)
Cash Flows From Financing Activities
Debt proceeds	1,575.3		370.0
Debt repayments	(960.6)		(250.0)
Dividends paid	(179.2)		(155.1)
Purchases of Treasury stock	(50.5)		(120.3)
Proceeds from exercise of stock options	26.4		23.6
Other financing activities	(9.8)		(7.1)
Net cash flows provided by (used in) financing activities	401.6		(138.8)
Effect of exchange rate changes on Cash and cash equivalents	(0.4)		(1.9)
Net change in Cash and cash equivalents	128.9		28.2
Cash and cash equivalents, beginning of period	273.2		263.9


	Three Months Ended March 31,						Nine Months Ended March 31,

	2020		2019		2020		2019
	(In millions)						(In millions)
Investor Communication Solutions
Equity proxy	$	136.4	$	152.9	$	208.4	$	225.6
Mutual fund and exchange traded funds (“ETF”) interims	87.2		82.1		217.7		200.6
Customer communications and fulfillment	208.0		201.1		555.5		558.6
Other ICS	97.4		83.5		264.2		228.8
Total ICS Recurring fee revenues	529.0		519.6		1,245.8		1,213.6

Equity and other	22.1		35.4		54.9		79.0
Mutual funds	17.0		33.1		55.3		114.5
Total ICS Event-driven fee revenues	39.1		68.4		110.3		193.5

Distribution revenues	412.1		417.9		1,042.4		1,081.6

Total ICS Revenues	$	980.2	$	1,005.9	$	2,398.4	$	2,488.7

Global Technology and Operations
Equities and other	$	259.4	$	206.7	$	727.4	$	612.0
Fixed income	46.1		41.1		132.9		121.2
Total GTO Recurring fee revenues	305.5		247.8		860.3		733.2

Foreign currency exchange	(35.8)		(28.9)		(91.6)		(70.9)

Total Revenues	$	1,249.9	$	1,224.8	$	3,167.1	$	3,151.0

Revenues by Type
Recurring fee revenues	$	834.5	$	767.4	$	2,106.1	$	1,946.8
Event-driven fee revenues	39.1		68.4		110.3		193.5
Distribution revenues	412.1		417.9		1,042.4		1,081.6
Foreign currency exchange	(35.8)		(28.9)		(91.6)		(70.9)
Total Revenues	$	1,249.9	$	1,224.8	$	3,167.1	$	3,151.0


	Operating Leases
Years Ending June 30,	(In millions)
2020	$	10.4
2021	44.0
2022	40.6
2023	38.5
2024	36.4
Thereafter	214.3
Total lease payments	384.2
Less: Discount Amount	57.2
Present value of operating lease liabilities	$	326.9


Years Ending June 30,	(In millions)
2020	$	46.8
2021	45.2
2022	39.5
2023	35.9
2024	34.7
Thereafter	204.4
Total lease payments	$	406.5


	Three Months Ended March 31,						Nine Months Ended March 31,
	2020		2019		2020		2019
	(In millions)
Beginning balance	$	33.0	$	17.4	$	28.4	$	18.6
Additional contingent consideration incurred	—		—		7.0		—
Net increase (decrease) in contingent consideration liability	—		(0.1)		—		(0.1)
Foreign currency impact on contingent consideration liability	(0.1)		0.2		(0.4)		(0.4)
Payments	(0.2)		(0.4)		(2.3)		(1.0)
Ending balance	$	32.7	$	17.1	$	32.7	$	17.1


	Nine Months Ended March 31, 2020
	(In millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases	$	19.5
ROU assets obtained in exchange for operating lease liabilities	$	84.2


	Expiration Date	Principal amount outstanding at March 31, 2020		Carrying value at March 31, 2020		Carrying value at June 30, 2019		Unused Available Capacity		Fair Value at March 31, 2020
				(In millions)
Current portion of long-term debt
Fiscal 2014 Senior Notes (a)	September 2020	$	400.0	$	399.8	$	—	$	—	$	398.9
Total		$	400.0	$	399.8	$	—	$	—	$	398.9

Long-term debt, excluding current portion
Fiscal 2019 Revolving Credit Facility:
U.S. dollar tranche	March 2024	$	250.0	$	250.0	$	360.0	$	850.0	$	250.0
Multicurrency tranche	March 2024	192.5		192.5		215.7		207.5		192.5
Total Revolving Credit Facility		442.5		442.5		575.7		1,057.5		442.5

Fiscal 2014 Senior Notes (a)	September 2020	—		—		399.2		—		—
Fiscal 2016 Senior Notes	June 2026	500.0		495.9		495.5		—		505.3
Fiscal 2020 Senior Notes	December 2029	750.0		741.5		—		—		674.3
Total Senior Notes		1,250.0		1,237.4		894.7		—		1,179.6

Total long-term debt		$	1,692.5	$	1,679.9	$	1,470.4	$	1,057.5	$	1,622.1

Total debt		$	2,092.5	$	2,079.7	$	1,470.4	$	1,057.5	$	2,021.0


	Stock Options				Time-based Restricted Stock Units					Performance-based Restricted Stock Units
	Number of Options	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Grant Date Fair Value		Number of Shares	Weighted- Average Grant Date Fair Value
Balances at January 1, 2020	3,724,992	$	66.43	1,088,978	$	100.14	419,728	$	103.13
Granted	478,981	117.34		16,228	110.82		—	—
Exercise of stock options (a)	(118,970)	40.49		—	—		—	—
Vesting of restricted stock units	—	—		(10,246)	96.40		—	—
Expired/forfeited	(1,973)	93.88		(12,295)	107.36		(197)	119.61
Balances at March 31, 2020 (b),(c)	4,083,030	$	73.14	1,082,665	$	100.25	419,531	$	103.12


	Foreign Currency Translation		Pension and Post- Retirement Liabilities		Total
	(In millions)
Balances at January 1, 2020	$	(55.5)	$	(12.2)	$	(67.7)
Other comprehensive income/(loss) before reclassifications	0.1		—		0.1
Amounts reclassified from accumulated other comprehensive income/(loss)	—		0.4		0.4
Balances at March 31, 2020	$	(55.4)	$	(11.9)	$	(67.2)


	Earnings (Loss) before Income Taxes
	Three Months Ended March 31,						Nine Months Ended March 31,
	2020		2019		2020		2019
	(In millions)
Investor Communication Solutions	$	159.2	$	192.9	$	204.3	$	288.5
Global Technology and Operations	67.4		53.4		172.9		147.5
Other	(17.8)		(25.2)		(107.1)		(76.3)
Foreign currency exchange	1.6		2.5		14.6		17.5
Total	$	210.5	$	223.6	$	284.8	$	377.2


	Three Months Ended March 31,
							Change
	2020			2019			$		%
	(In millions, except per share amounts)
Revenues	$	1,249.9		$	1,224.8		$	25.1	2
Cost of revenues	872.5			847.3			25.2		3
Selling, general and administrative expenses	151.1			143.9			7.3		5
Total operating expenses	1,023.7			991.2			32.5		3

Operating income	226.3			233.6			(7.3)		(3)
Margin	18.1		%	19.1		%
Interest expense, net	(16.2)			(10.0)			(6.2)		62
Other non-operating income (expenses), net	0.4			—			0.4		NM
Earnings before income taxes	210.5			223.6			(13.1)		(6)
Provision for income taxes	43.6			51.4			(7.8)		(15)
Effective tax rate	20.7		%	23.0		%
Net earnings	$	166.8		$	172.2		$	(5.3)	(3)
Basic earnings per share	$	1.46		$	1.49		$	(0.03)	(2)
Diluted earnings per share	$	1.43		$	1.45		$	(0.02)	(1)

Weighted average shares outstanding:
Basic	114.6			115.7
Diluted	117.0			118.5


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2020 - January 31, 2020	—	$	—	—	10,000,000
February 1, 2020 - February 29, 2020	417,254	120.94		413,455	9,586,545
March 1, 2020 - March 31, 2020	—	—		—	9,586,545
Total	417,254	$	120.94	413,455



31.1						Certification of the Chief Executive Officer of Broadridge Financial Solutions, Inc., pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of the Chief Financial Officer of Broadridge Financial Solutions, Inc., pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following financial statements from the Broadridge Financial Solutions, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in eXtensible Business Reporting Language (XBRL): (i) condensed consolidated statements of earnings for the three and nine months ended March 31, 2020 and 2019, (ii) condensed consolidated statements of comprehensive income for the three and nine months ended March 31, 2020 and 2019, (iii) condensed consolidated balance sheets as of March 31, 2020 and June 30, 2019, (iv) condensed consolidated statements of cash flows for the nine months ended March 31, 2020 and 2019, (v) condensed consolidated statements of stockholders’ equity for the three and nine months ended March 31, 2020 and 2019, and (vi) the notes to the condensed consolidated financial statements. XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104						Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)



			/s/ James M. Young
			James M. Young
			Senior Vice President, Chief Financial Officer