FactSet Research Systems Inc. (NYSE:FDS) (NASDAQ:FDS), a leading
provider of integrated financial information and analytical
applications, today announced its results for the second quarter of
fiscal 2016.
For the quarter ended February 29, 2016, revenues
grew to $281.8 million. Operating income was $85.3 million compared
to $80.6 million in the prior year period. Net income was $67.8
million versus $61.6 million a year ago. Diluted earnings per share
were $1.63 compared to $1.46 in the same period of fiscal 2015.
Beginning in the second quarter of fiscal 2016, the
Company changed its non-GAAP reporting by adjusting for
deal-related amortization. Adjusted operating income and
margin, adjusted net income and adjusted earnings per share exclude
both deal-related amortization and non-recurring items. The Company
believes that this change to its reported adjusted financial
measures better reflects the underlying economic performance of
FactSet. A supplementary schedule reconciling GAAP results to
these adjusted financial measures is presented beginning on page 9
of this earnings release.
Excluding revenues acquired from acquisitions
completed within the last 12 months and the effects of foreign
currency, organic revenues grew 9.5%. Adjusted operating income for
the quarter was $93.3 million, up 8.6% over the prior year.
Adjusted operating income during the just completed second quarter
excludes $4.1 million of deal-related amortization and $3.8 million
of incremental expense from restructuring actions and stock-based
compensation related to a change in the vesting of
performance-based stock options. Adjusted net income advanced 9.9%
over the prior year and excludes the after-tax charge of $2.9
million from deal-related amortization, the after-tax charge of
$2.7 million from restructuring actions and incremental stock-based
compensation expense and $7.3 million in income tax benefits from
the permanent reenactment of the U.S. Federal R&D tax credit,
retroactive to January 1, 2015. Adjusted diluted EPS was up 12.0%
to $1.59 and excludes the net effect of the $0.17 benefit from the
permanent reenactment of the U.S. Federal R&D tax credit, a
$0.07 detriment from deal-related amortization and a $0.06
detriment from restructuring actions and incremental stock-based
compensation expense.
Consolidated Statements of Income
(Condensed and Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
|
|
|
|
|
|
|
|
February 29, |
|
|
|
|
February 28, |
|
|
|
|
|
|
|
(In thousands, except per
share data) |
|
|
|
|
2016 |
|
|
|
|
2015 |
|
|
|
Change |
|
|
|
|
|
Revenues |
|
|
|
$ |
281,796 |
|
|
|
$ |
247,792 |
|
|
|
13.7 |
% |
|
|
|
|
Adjusted operating
income |
|
|
|
$ |
93,260 |
|
|
|
$ |
85,850 |
|
|
|
8.6 |
% |
|
|
|
|
Adjusted net income |
|
|
|
$ |
66,081 |
|
|
|
$ |
60,140 |
|
|
|
9.9 |
% |
|
|
|
|
Adjusted diluted earnings
per share |
|
|
|
$ |
1.59 |
|
|
|
$ |
1.42 |
|
|
|
12.0 |
% |
|
|
|
|
GAAP diluted earnings per
share |
|
|
|
$ |
1.63 |
|
|
|
$ |
1.46 |
|
|
|
11.6 |
% |
|
|
|
|
Diluted weighted average
shares |
|
|
|
|
41,536 |
|
|
|
|
42,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“FactSet continues to perform well and with our
unique content, superior workflow and analytical
solutions, and unmatched client support, we will continue to
partner with our clients to grow their businesses,” said Phil Snow,
FactSet’s CEO.
Annual Subscription Value
(“ASV”)
ASV was $1.139 billion at February 29, 2016, up
9.5% organically from the prior year. Over the last three months
organic ASV increased $29.8 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 were both
9.5% for the second fiscal quarter of 2016. Buy-side clients
account for 83.4% 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 11 of this earnings release.
Financial Highlights – Second Quarter of
Fiscal 2016
- ASV from U.S. operations was $766 million and $373 million was
related to non-U.S. operations.
- U.S. revenues were $189.7 million. Excluding revenues from
acquisitions completed within the past 12 months, the U.S. growth
rate was 9.4%.
- Non-U.S. revenues rose to $92.1 million. Excluding the impact
of foreign currency and acquisitions completed within the past 12
months, the international growth rate was 9.6%.
- Adjusted operating margin was 33.1%, compared to 34.6% in the
year ago second quarter. Portware’s operations reduced FactSet’s
just completed second quarter operating margin by 130 basis points
and diluted earnings per share by $0.02. Excluding deal-related
amortization, the Portware acquisition was $0.02 accretive in the
just completed second quarter.
- The U.S. Federal R&D tax credit, which had previously
expired on December 31, 2014, was reinstated during the second
quarter of fiscal 2016. The R&D tax credit was retroactive to
January 1, 2015, and by providing for a permanent R&D tax
credit, the yearly uncertainty surrounding the extension of the
credit has been removed. The reenactment resulted in income tax
benefits of $7.3 million, or $0.17 per diluted share, reducing the
Company’s annual effective tax rate to 28.8%.
- Quarterly free cash flow of $81.1 million represents the
highest reported second quarter free cash flow in Company
history.
Operational Highlights – Second Quarter of
Fiscal 2016
- Client count rose by 51 and totaled 3,057 at February 29,
2016.
- User count grew 10.6% to 63,500, reflecting 331 net new
users.
- Annual client retention was greater than 95% of ASV. When
expressed as a percentage of clients, annual retention increased to
95%, up from 93% in the prior year second quarter.
- Employee count was 8,093 at February 29, 2016, up 160 people in
the past three months. Excluding the acquired Portware workforce,
headcount increased 13.6% from a year ago.
- Capital expenditures were $12.1 million, of which $5.7 million
related to the buildout of the Company’s New York office.
- Common shares outstanding were 41.0 million at February 29,
2016.
- A regular quarterly dividend of $18.0 million, or $0.44 per
share, was paid on March 15, 2016, to common stockholders of record
as of February 29, 2016.
- The Company repurchased 465,100 shares for $71.4 million during
the quarter. At February 29, 2016, $270.9 million remained
authorized for further repurchases. Over the last 12 months, $336
million has been returned to stockholders in the form of share
repurchases and dividends, funded entirely by cash generated from
operations.
- FactSet was recently recognized for the eighth time on
Fortune’s 100 Best Companies to Work For®, the only
Connecticut-based company to make the list.
- The SPDR FactSet Innovative Technology ETF began trading on the
NYSE Arca in January 2016. This FactSet index leverages the
Company’s U.S. sector classification system to uniquely identify
technology-related companies in new, rapidly evolving areas, such
as mobile devices, cyber security and cloud computing.
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.
Third Quarter Fiscal 2016 Expectations
- Revenues are expected to range between $286 million and $289
million.
- GAAP operating margin is expected to range between 31.0% and
32.0% which includes a 120 basis point reduction from the
operations of Portware. Adjusted operating margin is expected to
range between 32.5% and 33.5%.
- The annual effective tax rate is expected to range between
28.5% and 29.5%.
- GAAP diluted EPS should range between $1.54 and $1.58. Adjusted
EPS is expected to range between $1.60 and $1.64. The midpoint of
the adjusted EPS range represents 11.0% growth over the prior
year.
Conference
Call
The Company will host a conference call today,
March 15, 2016 at 11:00 a.m. Eastern Time to review the second
quarter fiscal 2016 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 second quarter excludes $4.1 million of deal-related
amortization and $3.8 million of restructuring actions and
incremental stock-based compensation expense. Adjusted net income
excludes an after-tax charge of $2.9 million from deal-related
amortization, the after-tax charge of $2.7 million from
restructuring actions and incremental stock-based compensation
expense and $7.3 million in income tax benefits from the permanent
reenactment of the U.S. Federal R&D tax credit. Adjusted
diluted EPS of $1.59 excludes the net effect of a $0.17 benefit
from the reenactment of the U.S. Federal R&D tax credit, a
$0.07 detriment from deal-related amortization and a $0.06
detriment from restructuring actions and incremental stock-based
compensation expense. 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 second quarter was $93.2 million of net cash
provided by operations and $12.1 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 is a leading provider of integrated
financial information and analytical applications. More than 63,000
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 on Twitter: www.twitter.com/factset.
FactSet Research Systems
Inc. |
|
|
|
|
Consolidated Statements of
Income – Unaudited |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
February 29, |
|
|
|
February 28, |
|
|
|
February 29, |
|
|
|
February 28, |
|
(In thousands, except per
share data) |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
281,796 |
|
|
$ |
247,792 |
|
|
$ |
552,300 |
|
|
$ |
490,468 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Cost of services |
|
123,911 |
|
|
|
99,516 |
|
|
|
238,647 |
|
|
|
197,059 |
|
Selling, general and
administrative |
|
72,541 |
|
|
|
67,628 |
|
|
|
141,001 |
|
|
|
132,501 |
|
Total operating
expenses |
|
196,452 |
|
|
|
167,144 |
|
|
|
379,648 |
|
|
|
329,560 |
|
|
|
|
|
|
|
|
|
Operating income |
|
85,344 |
|
|
|
80,648 |
|
|
|
172,652 |
|
|
|
160,908 |
|
|
|
|
|
|
|
|
|
Other (expense) income,
net |
|
(424 |
) |
|
|
534 |
|
|
|
(331 |
) |
|
|
964 |
|
Income before income
taxes |
|
84,920 |
|
|
|
81,182 |
|
|
|
172,321 |
|
|
|
161,872 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
17,157 |
|
|
|
19,584 |
|
|
|
44,594 |
|
|
|
44,414 |
|
Net income |
$ |
67,763 |
|
|
$ |
61,598 |
|
|
$ |
127,727 |
|
|
$ |
117,458 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
1.63 |
|
|
$ |
1.46 |
|
|
$ |
3.06 |
|
|
$ |
2.78 |
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares |
|
41,536 |
|
|
|
42,306 |
|
|
|
41,799 |
|
|
|
42,324 |
|
FactSet
Research Systems Inc. |
|
Consolidated
Statements of Comprehensive Income – Unaudited |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
(In thousands) |
|
February 29, |
|
|
|
February 28, |
|
|
|
February 29, |
|
|
|
February 28, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Net income |
$ |
67,763 |
|
|
$ |
61,598 |
|
|
$ |
127,727 |
|
|
$ |
117,458 |
|
|
|
|
|
|
|
|
|
Other comprehensive loss,
net of tax |
|
|
|
|
|
|
|
Net unrealized (loss) gain on cash
flow hedges* |
|
(1,819 |
) |
|
|
843 |
|
|
|
(2,236 |
) |
|
|
731 |
|
Foreign currency translation
adjustments |
|
(10,364 |
) |
|
|
(8,011 |
) |
|
|
(16,750 |
) |
|
|
(21,566 |
) |
Other comprehensive loss |
|
(12,183 |
) |
|
|
(7,168 |
) |
|
|
(18,986 |
) |
|
|
(20,835 |
) |
Comprehensive income |
$ |
55,580 |
|
|
$ |
54,430 |
|
|
$ |
108,741 |
|
|
$ |
96,623 |
|
|
|
|
|
|
|
|
|
* 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 $1,312
respectively. The unrealized gain on cash flow hedges disclosed
above for the three and six months ended February 28, 2015, was net
of tax expense of $501 and $434, respectively. |
FactSet
Research Systems Inc. |
|
|
|
Consolidated
Balance Sheets - Unaudited |
|
|
|
|
|
|
February 29, |
|
|
|
August 31, |
|
|
(In
thousands) |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
175,170 |
|
|
$ |
158,914 |
|
|
Investments |
|
22,931 |
|
|
|
23,497 |
|
|
Accounts receivable,
net of reserves |
|
105,928 |
|
|
|
95,064 |
|
|
Prepaid taxes |
|
|
2,107 |
|
|
|
4,808 |
|
|
Deferred taxes |
|
|
3,397 |
|
|
|
2,105 |
|
|
Prepaid expenses and
other current assets |
|
|
17,808 |
|
|
|
19,786 |
|
|
|
Total current
assets |
|
|
327,341 |
|
|
|
304,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, equipment,
and leasehold improvements, net |
|
75,667 |
|
|
|
59,264 |
|
|
Goodwill |
|
|
|
489,340 |
|
|
|
308,287 |
|
|
Intangible assets,
net |
|
|
|
106,753 |
|
|
|
40,052 |
|
|
Deferred taxes |
|
|
|
17,744 |
|
|
|
20,599 |
|
|
Other assets |
|
|
|
4,860 |
|
|
|
4,295 |
|
|
|
TOTAL ASSETS |
|
|
$ |
1,021,705 |
|
|
$ |
736,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Accounts payable and
accrued expenses |
$ |
39,210 |
|
|
$ |
33,880 |
|
|
Accrued
compensation |
|
|
35,079 |
|
|
|
44,916 |
|
|
Deferred fees |
|
|
44,038 |
|
|
|
38,488 |
|
|
Taxes payable |
|
|
3,345 |
|
|
|
3,755 |
|
|
Deferred taxes |
|
|
321 |
|
|
|
562 |
|
|
Dividends payable |
|
|
18,044 |
|
|
|
18,179 |
|
|
|
Total current
liabilities |
|
|
140,037 |
|
|
|
139,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes |
|
|
|
1,469 |
|
|
|
1,697 |
|
|
Taxes payable |
|
|
|
8,488 |
|
|
|
6,776 |
|
|
Long-term debt |
|
300,000 |
|
|
|
35,000 |
|
|
Deferred rent and
other non-current liabilities |
|
30,653 |
|
|
|
21,834 |
|
|
|
TOTAL LIABILITIES |
|
$ |
480,647 |
|
|
$ |
205,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
Common stock |
|
$ |
507 |
|
|
$ |
503 |
|
|
Additional paid-in
capital |
|
595,030 |
|
|
|
542,355 |
|
|
Treasury stock, at
cost |
|
|
(1,104,567 |
) |
|
|
(988,873 |
) |
|
Retained earnings |
|
|
1,113,126 |
|
|
|
1,021,651 |
|
|
Accumulated other
comprehensive loss |
|
|
|
(63,038 |
) |
|
|
(44,052 |
) |
|
|
TOTAL STOCKHOLDERS’
EQUITY |
|
|
541,058 |
|
|
|
531,584 |
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
1,021,705 |
|
|
$ |
736,671 |
|
|
FactSet
Research Systems Inc. |
|
|
|
|
Consolidated
Statements of Cash Flows - Unaudited |
|
|
|
(In
thousands) |
Six Months Ended |
|
|
|
|
|
|
|
|
|
|
February 29, |
|
|
|
February 28, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
|
|
|
|
$ |
|
127,727 |
|
|
$ |
117,458 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities |
|
|
|
|
Depreciation and
amortization |
|
18,260 |
|
|
|
16,222 |
|
|
Stock-based
compensation expense |
|
15,027 |
|
|
|
11,037 |
|
|
Deferred income
taxes |
|
732 |
|
|
|
2,697 |
|
|
Gain on sale of
assets |
|
— |
|
|
|
(4 |
) |
|
Tax benefits from
share-based payment arrangements |
|
(10,804 |
) |
|
|
(11,743 |
) |
|
Changes in assets and
liabilities, net of effects of acquisitions |
|
|
|
|
|
|
Accounts receivable,
net of reserves |
|
|
|
(5,683 |
) |
|
|
(9,280 |
) |
|
Accounts payable and
accrued expenses |
|
|
|
1,930 |
|
|
|
4,206 |
|
|
Accrued
compensation |
|
(10,180 |
) |
|
|
(12,753 |
) |
|
Deferred fees |
|
913 |
|
|
|
2,624 |
|
|
Taxes payable, net of
prepaid taxes |
|
15,138 |
|
|
|
3,139 |
|
|
Prepaid expenses and
other assets |
|
1,816 |
|
|
|
(1,664 |
) |
|
Deferred rent and other
non-current liabilities |
|
9,372 |
|
|
|
(1,172 |
) |
|
Other working capital
accounts, net |
|
|
|
|
|
|
|
(22 |
) |
|
|
(27 |
) |
|
Net cash
provided by operating activities |
|
|
164,226 |
|
|
|
120,740 |
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
|
Acquisition
of businesses, net of cash acquired |
|
|
(264,087 |
) |
|
|
(30,133 |
) |
|
|
Purchases of
investments |
|
|
(12,530 |
) |
|
|
(12,437 |
) |
|
|
Proceeds from
sales of investments |
|
|
12,423 |
|
|
|
7,535 |
|
|
|
Purchases of property,
equipment and leasehold improvements, net of proceeds from
dispositions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,438 |
) |
|
|
(11,764 |
) |
|
|
Net cash used
in investing activities |
|
|
(290,632 |
) |
|
|
(46,799 |
) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
|
|
|
Dividend
payments |
|
|
(36,132 |
) |
|
|
(32,286 |
) |
|
Repurchase of
common stock |
|
|
(115,695 |
) |
|
|
(106,317 |
) |
|
Proceeds from
debt |
|
|
|
265,000 |
|
|
|
35,000 |
|
|
Debt issuance
costs |
|
|
|
(12 |
) |
|
|
(32 |
) |
|
Proceeds from
employee stock plans |
|
|
|
26,848 |
|
|
|
34,393 |
|
|
Tax benefits
from share-based payment arrangements |
|
|
|
|
|
|
10,804 |
|
|
|
11,743 |
|
|
Net cash
provided by (used in) financing activities |
|
|
|
150,813 |
|
|
|
(57,499 |
) |
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
(8,151 |
) |
|
|
(10,750 |
) |
|
|
|
|
|
|
|
|
Net increase
in cash and cash equivalents |
|
|
|
16,256 |
|
|
|
5,692 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
|
|
|
|
|
158,914 |
|
|
|
116,378 |
|
|
Cash and cash
equivalents at end of period |
|
|
$ |
|
|
|
175,170 |
|
|
$ |
122,070 |
|
|
|
|
|
|
|
|
|
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 Ended |
|
|
|
|
|
February 29, |
|
February 28, |
|
(In thousands, except per share
data) |
2016 |
|
2015 |
|
Change |
|
|
|
|
|
|
|
|
GAAP Operating income |
$ |
85,344 |
|
|
$ |
80,648 |
|
|
|
|
|
Deal-related amortization
(a) |
|
4,078 |
|
|
|
2,048 |
|
|
|
|
|
Restructuring actions
(b) |
|
2,430 |
|
|
|
3,154 |
|
|
|
|
|
Vesting performance-based
stock options (c) |
|
1,408 |
|
|
|
— |
|
|
|
|
|
Adjusted operating income |
$ |
93,260 |
|
|
$ |
85,850 |
|
|
|
8.6 |
% |
Adjusted operating
margin |
|
33.1 |
% |
|
|
34.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP Net income |
$ |
67,763 |
|
|
$ |
61,598 |
|
|
|
|
|
Deal-related amortization
(a)(d) |
|
2,903 |
|
|
|
1,425 |
|
|
|
|
|
Restructuring actions
(b)(d) |
|
1,730 |
|
|
|
2,196 |
|
|
|
|
|
Vesting performance-based
stock options (c)(d) |
|
1,002 |
|
|
|
— |
|
|
|
|
|
Income tax benefits from
reenactment of the U.S. Federal R&D tax credit (e)(f) |
|
|
|
(7,317 |
) |
|
|
(5,079 |
) |
|
|
|
|
Adjusted net
income |
$ |
66,081 |
|
|
$ |
60,140 |
|
|
|
9.9 |
% |
|
|
|
|
|
|
|
Adjusted Diluted earnings
per common share |
$ |
1.59 |
|
|
$ |
1.42 |
|
|
|
12.0 |
% |
Weighted average common shares (Diluted) |
|
41,536 |
|
|
|
42,306 |
|
|
|
|
|
(a) |
GAAP operating income in the second 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 second quarter of fiscal
2015 was adjusted to exclude $2.0 million of deal-related
amortization, which reduced diluted earnings per share by
$0.03. |
|
|
(b) |
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. The
restructuring actions reduced diluted earnings per share by $0.04
in the just completed second quarter. GAAP operating income for
fiscal 2015 was adjusted to exclude a pre-tax charge of $3.2
million primarily from changes in the senior leadership responsible
for the Company’s salesforce. This incremental expense reduced
diluted earnings per share by $0.05 in the year ago second
quarter. |
|
|
(c) |
GAAP operating income in the second quarter of
fiscal 2016 was adjusted to exclude $1.4 million of pre-tax expense
related to a change in the vesting of performance-based stock
options. The incremental expense reduced diluted EPS by $0.02. |
|
|
(d) |
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 28.8% for fiscal 2016 and 30.4% for fiscal 2015. |
|
|
(e) |
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. |
|
|
(f) |
In the year ago second quarter, the U.S. Federal
R&D tax credit was reinstated, retroactive to January 1, 2014
and extended through the end of the 2014 calendar year. The
reenactment resulted in discrete income tax benefits of $5.1
million or $0.12 per diluted share during the second quarter of
fiscal 2015. |
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) |
Q2’16 |
Q1’16 |
Q4’15 |
Q3’15 |
Q2‘15 |
Q1‘15 |
GAAP Operating income |
$ |
85,344 |
|
$ |
87,308 |
|
$ |
85,653 |
|
$ |
85,356 |
|
$ |
80,648 |
|
$ |
80,260 |
|
Deal-related amortization |
|
4,078 |
|
|
2,922 |
|
|
1,787 |
|
|
2,284 |
|
|
2,048 |
|
|
2,101 |
|
Non-recurring items |
|
3,838 |
|
|
690 |
|
|
3,010 |
|
|
— |
|
|
3,154 |
|
|
— |
|
Adjusted operating income |
$ |
93,260 |
|
$ |
90,920 |
|
$ |
90,450 |
|
$ |
87,640 |
|
$ |
85,850 |
|
$ |
82,361 |
|
Adjusted operating margin |
|
33.1 |
% |
|
33.6 |
% |
|
34.6 |
% |
|
34.4 |
% |
|
34.6 |
% |
|
33.9 |
% |
|
|
|
|
|
|
|
GAAP Net income |
$ |
67,763 |
|
$ |
59,965 |
|
$ |
62,184 |
|
$ |
61,409 |
|
$ |
61,598 |
|
$ |
55,860 |
|
Deal-related amortization |
|
2,903 |
|
|
2,004 |
|
|
1,246 |
|
|
1,597 |
|
|
1,425 |
|
|
1,454 |
|
Non-recurring items |
|
(4,585 |
) |
|
474 |
|
|
(183 |
) |
|
(1,408 |
) |
|
(2,883 |
) |
|
— |
|
Adjusted net income |
$ |
66,081 |
|
$ |
62,443 |
|
$ |
63,247 |
|
$ |
61,598 |
|
$ |
60,140 |
|
$ |
57,314 |
|
|
|
|
|
|
|
|
Adjusted Diluted earnings per common share |
$ |
1.59 |
|
$ |
1.48 |
|
$ |
1.51 |
|
$ |
1.46 |
|
$ |
1.42 |
|
$ |
1.35 |
|
Weighted average common shares (Diluted) |
|
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.
|
Q2’16 |
Q1’16 |
Q4’15 |
Q3’15 |
Q2‘15 |
Q1‘15 |
%
of ASV from buy-side clients |
|
83.4 |
% |
|
83.2 |
% |
|
82.5 |
% |
|
82.8 |
% |
|
82.8 |
% |
|
82.5 |
% |
%
of ASV from sell-side clients |
|
16.6 |
% |
|
16.8 |
% |
|
17.5 |
% |
|
17.2 |
% |
|
17.2 |
% |
|
17.5 |
% |
|
|
|
|
|
|
|
ASV
Growth rate from buy-side clients |
|
9.5 |
% |
|
9.3 |
% |
|
9.0 |
% |
|
8.5 |
% |
|
8.7 |
% |
|
8.9 |
% |
ASV
Growth rate from sell-side clients |
|
9.5 |
% |
|
10.0 |
% |
|
9.8 |
% |
|
10.9 |
% |
|
7.9 |
% |
|
6.7 |
% |
ASV
Growth rate from all clients |
|
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 second quarter
of fiscal 2016.
(In millions) |
Feb 29, 2016 |
Feb 28, 2015 |
Q2 2016 ASV Growth Rate |
|
|
As
reported ASV |
$ |
1,139.2 |
|
$ |
1,004.6 |
|
|
|
|
Less acquired ASV (a) |
|
(39.7 |
) |
|
— |
|
|
|
|
Currency impact (b) |
|
0.8 |
|
|
— |
|
|
|
|
|
|
Organic ASV total |
$ |
1,100.3 |
|
$ |
1,004.6 |
|
|
9.5 |
% |
|
|
Buy-side |
|
911.0 |
|
|
831.8 |
|
|
9.5 |
% |
|
|
Sell-side |
|
189.3 |
|
|
172.8 |
|
|
9.5 |
% |
|
|
(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
FactSet Research Systems (NYSE:FDS)
Historical Stock Chart
From Apr 2024 to May 2024
FactSet Research Systems (NYSE:FDS)
Historical Stock Chart
From May 2023 to May 2024