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Press release from GlobeNewswire (a Nasdaq OMX company)

FactSet Research Systems Reports Results for the Fourth Quarter of Fiscal 2012

Tuesday, September 25, 2012

FactSet Research Systems Reports Results for the Fourth Quarter of Fiscal 201204:00 EDT Tuesday, September 25, 2012 ASV advanced $31.9 million. Excluding the StreetAccount acquisition, ASV increased $20.4 million. Diluted EPS was $1.08, up 13% when excluding a stock-based compensation charge recorded in the year ago quarter Excluding StreetAccount, client count rose by 57, the largest quarterly growth since 2006 Free cash flow was $51 million during the fourth quarter and $209 million for the full fiscal 2012 year, up 18% over last year NORWALK, Conn., Sept. 25, 2012 (GLOBE NEWSWIRE) -- 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 fourth quarter of fiscal 2012.GAAP Results For the quarter ended August 31, 2012 revenues increased to $207.7 million, up 8% compared to the prior year. Included in this total was $1.8 million from the acquisition of StreetAccount on June 29, 2012. Operating income for the fourth quarter rose to $70.6 million from $59.0 million in the same period of fiscal 2011. Net income advanced to $48.5 million compared to $40.9 million a year ago. Diluted earnings per share increased to $1.08, up from $0.88 in the same period of fiscal 2011. The year ago fourth quarter results include a pre-tax stock-based compensation charge of $5.4 million or $0.08 per diluted share. The acquisition of StreetAccount did not have an impact on FactSet's fiscal 2012 fourth quarter diluted earnings per share.Consolidated Statements of Income   (Condensed and Unaudited)   Three Months Ended August 31, Twelve Months Ended August 31,  (In thousands, except per share data) 2012 2011 Change 2012 2011 Change Revenues $207,663 $191,939 8.2 % $805,793 $726,510 10.9 % Operating income 70,627 58,990 19.7 % 272,990 238,335 14.5 % Provision for income taxes 22,547 18,304 23.2 % 85,896 67,912 26.5 % Net income $48,539 $40,880 18.7 % $188,809 $171,046 10.4 % Diluted earnings per share $1.08 $0.88 22.7 % $4.12 $3.61 14.1 % Diluted weighted average shares 45,152 46,595     45,810 47,355       "FactSet continues to generate shareholder value as illustrated by our double-digit EPS growth in the quarter," says Philip Hadley, Chairman and CEO. "Investments in our products have helped us expand market share. We added 57 net new clients and 1,100 new users in the past three months. We were also pleased to acquire StreetAccount in June 2012, a leader in timely and informative news summaries for the investment community."Annual Subscription Value ("ASV") ASV advanced $20.4 million organically during the quarter. Including $11.4 million from the acquisition of StreetAccount, ASV increased $31.9 million over the last three months. ASV totaled $843 million at August 31, 2012, up 7% organically over the prior year. Of this total, 81% 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 – Fourth Quarter of Fiscal 2012 ASV from U.S. operations was $572 million and $271 million was related to international operations. U.S. revenues were $141.4 million, up 7% from the year ago quarter.   Non-U.S. revenues rose 10% to $66.3 million as compared to the same period in fiscal 2011. Operating margin was 34.0% for the quarter. Quarterly free cash flow was $51 million. Cash and investments were $203 million at August 31, 2012. The effective tax rate was 31.7% as compared to 30.9% a year ago.Operational Highlights – Fourth Quarter of Fiscal 2012 Client count was 2,392 at August 31, a net increase of 57 clients during the quarter, excluding StreetAccount. This net client increase represents the largest quarterly organic growth since the fourth quarter of fiscal 2006. Annual client retention was greater than 95% of ASV and 92% when expressed as a percentage of clients. Over the past three months, users increased by 1,100 to 49,500, excluding StreetAccount. Employee count was 5,735 at August 31, an increase of 280 employees during the quarter. Capital expenditures were $5.7 million. A regular quarterly dividend of $13.7 million or $0.31 per share was paid on September 18, 2012 to common stockholders of recorded as of August 31, 2012. The Company repurchased 710,000 shares for $65.8 million during the fourth quarter. At August 31, 2012, $190 million remains authorized for future repurchases. Common shares outstanding were 44.3 million at August 31, 2012.Fiscal 2012 Highlights Revenues increased 11% to $806 million. Diluted earnings per share rose 14% to $4.12. Free cash flow generated over the last twelve months was $209 million, up 18%. Accounts receivable decreased $1 million over the last twelve months while organic ASV is up $53 million over the same period, reflecting an improvement in DSO from 35 to 32 days. Users of FactSet advanced by 1,400 professionals since August 31, 2011. A net increase of 155 clients over the last twelve months compared to 127 last year. Employee count rose 9% to 5,735, up 484 employees from a year ago. FactSet increased its quarterly dividend 15% from $0.27 to $0.31 per share in May 2012. This is the 7th consecutive year that FactSet's annual dividend has been increased by more than 10%, resulting in a five year dividend growth rate of 21%.StreetAccount Acquisition On June 29, 2012, FactSet acquired StreetAccount LLC ("SA") to complement the Company's news offering with distilled and crucial market moving information for buy-side and sell-side institutions. Founded in 2003, SA is known for its timely and informative news summaries and provides investment professionals with an efficient method for managing news flow. The StreetAccount service includes real-time company updates, portfolio and sector filtering, email alerts, and market summaries. Content is written by financial professionals and can be customized for portfolio, index, sector, market, time of day (i.e., Overnight Summaries), and category (i.e., Top Stories, Market Summaries, Economic, M&A). At the time of acquisition, SA had annual subscriptions of $11.4 million. The acquisition of SA did not have an impact on FactSet's fourth quarter diluted earnings per share and is not expected to have a material impact on the Company's fiscal 2013 diluted earnings per share.Business Outlook The following forward-looking statements reflect FactSet's expectations as of September 25, 2012. 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. First Quarter Fiscal 2013 Expectations Revenues are expected to range between $210 million and $213 million. Operating margin is expected to range between 33.5% and 34.0%. The effective tax rate is expected to range between 31.5% and 32.5%. GAAP diluted EPS should range between $1.10 and $1.12, which represents year over year growth of 11% and 13% at each end of the range. Full Year Fiscal 2013 The full year fiscal 2013 guidance for capital expenditures, net of landlord contributions, is $20 million to $28 million. The annual effective tax rate is expected to range between 31.5% and 32.5%.Conference Call The Company will host a conference call today, September 25, 2012, at 11:00 a.m. (EDT) to review the fourth quarter fiscal 2012 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 Non-GAAP Financial Measures Financial measures in accordance with generally accepted accounting principles ("GAAP") including diluted earnings per share have been adjusted to report non-GAAP financial measures. These measures exclude stock-based compensation expense and amortization of intangible assets. FactSet uses these non-GAAP financial measures, both in presenting its results to stockholders and the investment community, and in its internal evaluation and management of the businesses. The Company believes that these 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 non-GAAP 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 non-GAAP financial measures, please see page 7 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 fourth quarter was $57 million of net cash provided by operations and $5.7 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 businesses. 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 was named the 2012 Best Research Provider at the Inside Market Data and Inside Reference Data Awards and 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 Twelve Months Ended   August 31, August 31, (In thousands, except per share data) 2012 2011 2012 2011           Revenues  $207,663  $191,939  $805,793  $726,510           Operating expenses         Cost of services 72,295 65,477 275,537 244,623 Selling, general and administrative  64,741 67,472 257,266 243,552 Total operating expenses 137,036 132,949 532,803 488,175           Operating income 70,627 58,990 272,990 238,335 Other income 459 194 1,715 623 Income before income taxes  71,086 59,184 274,705 238,958           Provision for income taxes 22,547 18,304 85,896 67,912 Net income   $ 48,539  $ 40,880  $188,809  $171,046           Diluted earnings per common share  $ 1.08  $ 0.88  $ 4.12  $ 3.61           Diluted weighted average common shares 45,152 46,595 45,810 47,355     FactSet Research Systems Inc. Consolidated Statements of Financial Condition - Unaudited         August 31, August 31, (In thousands) 2012 2011       ASSETS     Cash and cash equivalents  $189,044  $181,685 Investments 13,919 -- Accounts receivable, net of reserves 74,251 75,004 Prepaid taxes 2,485 -- Deferred taxes 5,085 4,008 Prepaid expenses and other current assets 14,341 12,473Total current assets 299,125 273,170       Property, equipment, and leasehold improvements, net 76,530 81,620 Goodwill 245,791 228,265 Intangible assets, net 43,371 46,310 Deferred taxes 23,113 20,166 Other assets 6,213 7,909 TOTAL ASSETS  $694,143  $657,440       LIABILITIES     Accounts payable and accrued expenses  $ 27,680  $ 24,603 Accrued compensation  41,274 41,536 Deferred fees  30,495 28,252 Taxes payable  -- 2,867 Dividends payable 13,727 12,165Total current liabilities 113,176 109,423 Deferred taxes  2,593 3,712 Taxes payable 5,464 7,204 Deferred rent and other non-current liabilities 20,646 21,913 TOTAL LIABILITIES  $141,879  $142,252       STOCKHOLDERS' EQUITY     Common stock  $ 456  $ 614 Additional paid-in capital 137,569 432,538 Treasury stock, at cost  (122,749)  (824,382) Retained earnings 559,714 912,078 Accumulated other comprehensive loss  (22,726)  (5,660) TOTAL STOCKHOLDERS' EQUITY 552,264 515,188 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $694,143 $657,440     FactSet Research Systems Inc. Consolidated Statements of Cash Flows - Unaudited       (In thousands)  Twelve Months Ended    August 31,   2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES     Net income  $188,809  $171,046 Adjustments to reconcile net income to net cash provided by operating activities     Depreciation and amortization 33,779 36,847 Stock-based compensation expense 21,982 25,773 Deferred income taxes  (3,760)  (1,806) Gain on sale of assets  --   (22) Tax benefits from share-based payment arrangements  (11,159)  (18,331) Changes in assets and liabilities, net of effects of acquisition     Accounts receivable, net of reserves  2,083  (15,311) Accounts payable and accrued expenses  9  715 Accrued compensation  519  (7,882) Deferred fees  (2,573)  3,219 Taxes payable, net of prepaid taxes  4,209  20,387 Prepaid expenses and other assets  (445)  (6,579) Deferred rent and other non-current liabilities  (905)  (483) Other working capital accounts, net  (583)  (437) Net cash provided by operating activities 231,965 207,136       CASH FLOWS FROM INVESTING ACTIVITIES     Acquisition of business, net of cash acquired  (21,329)  --  Purchases of investments  (15,000)  --  Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions  (22,520)  (29,343) Net cash used in investing activities  (58,849)  (29,343)       CASH FLOWS FROM FINANCING ACTIVITIES     Dividend payments  (49,983)  (43,949) Repurchase of common stock  (153,641)  (216,584) Proceeds from employee stock plans  33,747  43,079 Tax benefits from share-based payment arrangements   11,159  18,331 Net cash used in financing activities  (158,718)  (199,123)       Effect of exchange rate changes on cash and cash equivalents  (7,039)  7,274       Net increase (decrease) in cash and cash equivalents  7,359  (14,056)       Cash and cash equivalents at beginning of period 181,685 195,741 Cash and cash equivalents at end of period  $189,044  $181,685    Non-GAAP Financial Measures Financial measures in accordance with GAAP including diluted earnings per share have been adjusted to report non-GAAP financial measures. FactSet uses these non-GAAP financial measures, both in presenting its results to stockholders and the investment community, and in its internal evaluation and Company believes that these 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. Non-GAAP measures may also facilitate comparisons to FactSet's historical performance.          (Unaudited) Three Months Ended     August 31,    (In thousands, except per share data) 2012 2011 Change         GAAP Diluted earnings per common share  $ 1.08  $ 0.88   Incremental stock-based compensation, net of tax (a)  -- 0.08  Sub-total  $ 1.08  $ 0.96 13% Stock-based compensation, net of tax (b) 0.07 0.07   Amortization of intangible assets from acquisitions, net of tax  0.03 0.03   Non-GAAP diluted earnings per share   $ 1.18  $ 1.06 11%         For the purposes of calculating the non-GAAP measures above, stock-based compensation expense and amortization of intangible assets are taxed at the effective tax rates. For the three months ended August 31, 2012, the effective tax rate was 31.7%. For the three months ended August 31, 2011, the effective tax rate was 30.9%.         (a)  To add-back a stock-based compensation charge of $0.08 per diluted share related to an increase in the estimated number of performance-based options that will vest. The revised estimate reflected a higher performance level than previously estimated and accordingly, increased the number of performance-based options that will vest and be expensed.         (b)  Stock-based compensation, net of tax, during each quarterly period when excluding non-recurring charges. CONTACT: Rachel Stern FactSet Research Systems Inc. 203.810.1000