FactSet Research Systems EPS Up 14% for the Third Quarter of Fiscal 2012

Norwalk, CN - 12 June 2012

  • ASV grew to $811 million, up 9%
  • Revenues rose 10% to $202 million
  • Diluted EPS grew 14% to $1.05
  • Quarterly free cash flow was $70 million, an increase of 23%

FactSet Research Systems Inc. (NYSE:FDS) (Nasdaq:FDS), a leading provider of integrated financial information and analytical applications to the global investment community, today announced its results for the third quarter of fiscal 2012.

GAAP Results

For the quarter ended May 31, 2012 revenues increased to $202.3 million, up 10% compared to the prior year. Operating income for the third quarter rose to $68.5 million from $61.8 million in the same period of fiscal 2011. Net income advanced to $48.0 million compared to $43.3 million a year ago. Diluted earnings per share increased to $1.05, up from $0.92 in the same period of fiscal 2011.

Non-GAAP Results

Non-GAAP net income advanced 9% to $52.8 million and non-GAAP diluted earnings per share increased 13% to $1.15. Quarterly free cash flow was $70.2 million during the third quarter of fiscal 2012 as compared to $57.1 million a year ago.

GAAP financial measures including net income and diluted earnings per share have been adjusted to exclude stock-based compensation expense and amortization of intangible assets. A reconciliation between GAAP and non-GAAP financial measures is presented on page 8 of this press release.

Consolidated Statements of Income

(Condensed and Unaudited)

Three Months Ended
May 31,

Nine Months Ended
May 31,

(In thousands, except per share data)

2012

2011

Change

2012

2011

Change

Revenues

$202,311

$183,647

10.2

%

$598,130

$534,571

11.9

%

Operating income

68,494

61,823

10.8

%

202,363

179,345

12.8

%

Provision for income taxes

20,997

18,684

12.4

%

63,349

49,608

27.7

%

Net income

$47,980

$43,311

10.8

%

$140,270

$130,166

7.8

%

Diluted earnings per share

$1.05

$0.92

14.1

%

$3.05

$2.75

10.9

%

Diluted weighted average shares

45,736

47,154

45,971

47,418

Non-GAAP net income

$52,823

$48,248

9.5

%

Non-GAAP diluted earnings per share

$1.15

$1.02

12.7

%

"While the economy remains volatile, results indicate our philosophy of consistently investing for the future is paying off. Today we announced EPS growth of 14% and record free cash flow of $70 million generated in just the past three months," says Philip Hadley, Chairman and CEO. "In addition, our third quarter results mark yet another milestone for the Company as we surpassed $200 million in quarterly revenues."

Annual Subscription Value ("ASV")

ASV was $811 million at May 31, 2012, up 9% over the prior year. Of this total, 80% 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 advanced $8 million during the third quarter. Over the past three months, users increased by 1,100 to 48,400, primarily from additions at sell-side firms. ASV at any given point in time represents the forward-looking revenues for the next 12 months from all services currently being supplied to clients.

Financial Highlights —Third Quarter of Fiscal 2012

  • ASV from U.S. operations was $549 million and $262 million was related to international operations.
  • U.S. revenues were $138.2 million, up 10% from the year ago quarter.
  • Non-U.S. revenues also rose 11% to $64.1 million as compared to the same period in fiscal 2011.
  • Operating margins were 33.9% for the quarter, up from 33.7% a year ago.
  • Free cash flow generated over the last twelve months was $222 million, up 25% compared to the same period a year ago. Quarterly free cash flow was $70.2 million, up from $57.1 million a year ago.
  • Cash and investments were $242 million at May 31, 2012.
  • Accounts receivable decreased $1.0 million over the last twelve months while ASV is up $70 million over the same period, reflecting an improvement in DSO from 33 to 30 days.
  • The effective tax rate was 30.4% as compared to 30.1% a year ago.
  • The U.S. Federal R&D tax credit expired on December 31, 2011. The expiration increased the annual effective tax rate by 1.3% and reduced third quarter diluted EPS by $0.02.

Operational Highlights — Third Quarter of Fiscal 2012

  • Client count was 2,335 at May 31, a net increase of 11 clients during the quarter.
  • Annual client retention was greater than 95% of ASV, consistent with last year. As a percentage of clients, the annual retention rate remained at 92% at May 31, consistent with the year ago quarter.
  • Employee count was 5,455 at May 31, up 14% from last year.
  • Capital expenditures were $6.2 million.
  • The regular quarterly dividend increased 15% from $0.27 to $0.31 per share, beginning with the Company's dividend payment on June 19, 2012.
  • On May 8, 2012, the Board of Directors approved a $200 million expansion to the existing share repurchase program. The Company repurchased 276,000 shares for $27.3 million during the third quarter. At May 31, 2012, $256 million remains authorized for future repurchases.
  • Common shares outstanding were 44.8 million at May 31, 2012.
  • The Wall Street Journal released its results of the annual Best on the Street Analysts Survey on May 10, 2012, which marked FactSet's fourth consecutive year as the data provider.
  • On June 4, 2012, FactSet announced the integration of bank loan data from Markit to enhance its Fixed Income Portfolio Analysis service. Under the agreement, FactSet will carry Markit's terms and conditions data on bank loans as well as loan market performance data from both of Markit's iBoxx USD Leveraged Loan's Indexes.
  • FactSet held its U.S. and European symposiums during the third quarter of fiscal 2012, with over 320 industry professionals in attendance from around the world, including 270 FactSet clients.

Business Outlook

The following forward-looking statements reflect FactSet's expectations as of June 12, 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.

Fourth Quarter Fiscal 2012 Expectations

  • Revenues are expected to range between $204 million and $208 million.
  • Operating margin is expected to range between 33.5% and 34.0%.
  • The effective tax rate is expected to range between 31.0% and 32.0%.
  • GAAP diluted EPS should range between $1.06 and $1.08.
  • Non-GAAP diluted EPS should range between $1.15 and $1.17.
  • Both GAAP diluted EPS and non-GAAP diluted EPS include a $0.02 reduction to reflect the expiration of the U.S. Federal R&D tax credit on December 31, 2011.

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