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 second quarter of fiscal 2013.
For the quarter ended February 28, 2013 revenues increased to $213.1 million, up 7% over the prior year. Included in this total was $2.7 million of acquired revenues from StreetAccount. Operating income was $56.2 million compared to $67.1 million in the second quarter of fiscal 2012. Net income was $44.5 million versus $46.7 million a year ago. Diluted earnings per share was $1.00 compared to $1.02 in the same period of fiscal 2012.
Adjusted operating income for the quarter was $71.9 million, up 7% over the prior year. Adjusted operating income excludes a non-cash pre-tax charge of $15.7 million for stock-based compensation related to the performance-based options granted in connection with the acquisition of Market Metrics in June 2010. These options vested in the second quarter of fiscal 2013 when the Market Metrics business accelerated to achieve stretch revenue growth targets.
Adjusted net income advanced 8% to $50.6 million. Adjusted net income excludes the after-tax charge of $11.0 million related to the Market Metrics performance-based stock options and $4.9 million in income tax benefits from the reenactment of the U.S. Federal R&D credit. This tax law change was retroactive to January 1, 2012 and resulted in cumulative income tax benefits of $4.9 million in the second quarter of fiscal 2013.
Adjusted diluted EPS rose 12% to $1.14. Adjusted diluted EPS excludes the net effect of a $0.25 decrease for the vesting of performance-based options partially offset by an $0.11 increase in diluted EPS from the reenactment of the U.S. Federal R&D credit.
A reconciliation between GAAP and adjusted financial measures is presented on page 8 of this press release.
(Condensed and Unaudited)
(In thousands, except per share data)
Feb 28, 2013
Feb 29, 2012
Adjusted operating income
Adjusted net income
Adjusted diluted earnings per share
Diluted weighted average shares
"While we were pleased to achieve ASV growth of $17.3 million in the quarter, we continue to operate in a challenging sell-side environment" said Philip A. Hadley, Chairman and CEO. "Our second quarter results include growing adjusted EPS by 12% and free cash flow by 11%. I am also proud to share that FactSet was recently named one of FORTUNE's 100 Best Companies to Work For, marking our fifth appearance on that list in the last six years."
Annual Subscription Value ("ASV")
ASV advanced $17.3 million excluding the impact from foreign currency during the quarter and totaled $863.2 million at February 28, 2013. Of this total, 82% 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. The increase in ASV during the past three months was from buy-side clients, while sell-side client ASV contracted from a continuing volatile environment.
Financial Highlights — Second Quarter of Fiscal 2013
- ASV from U.S. operations was $592.6 million and $270.6 million was related to international operations.
- U.S. revenues, including $2.7 million from StreetAccount, were $146.0 million, up 7% from the year ago quarter.
- Non-U.S. revenues also rose 7% to $67.1 million as compared to the same period in fiscal 2012.
- GAAP operating margin was 26.4%. Adjusted operating margin was 33.7%, consistent with a year ago.
- The effective tax rate for the second quarter was 21.2% as compared to 30.9% a year ago. Excluding income tax benefits from the reenactment of the U.S. Federal R&D credit, the annual effective tax rate was 29.9%.
- Quarterly free cash flow was $43.4 million, up 11% over the year ago quarter.
- Accounts receivable increased $14 million over the last 12 months while ASV is up $60 million.
Operational Highlights — Second Quarter of Fiscal 2013
- Client count was 2,436 at February 28th, a net increase of 35 clients and the 13th consecutive quarter of net client growth.
- Annual client retention was greater than 95% of ASV and 93% when expressed as a percentage of clients.
- Users declined by 150 over the past three months and totaled 49,455 professionals at February 28th. Additions from buy-side clients were offset by user declines on the sell-side.
- Employee count was 6,048 at February 28th, up 10% over last year and a net increase of 28 in the past three months.
- Capital expenditures were $3.0 million.
- A regular quarterly dividend of $13.5 million or $0.31 per share was paid on March 19, 2013 to common stockholders of record as of February 28, 2013.
- The Company repurchased 1.2 million shares for $109 million during the second quarter under the share repurchase program. At February 28th, $55.5 million remains authorized for future repurchases.
- Common shares outstanding were 43.6 million at February 28, 2013.
- The integration of BlackRock Inc.'s iShares® Fixed Income Exchange Traded Funds on the FactSet platform was completed.
- FactSet was named one of FORTUNE's "100 Best Companies to Work For," marking our fifth appearance on this list in the last six years.
The following forward-looking statements reflect FactSet's expectations as of February 28, 2013. 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.
Third Quarter Fiscal 2013 Expectations
- Revenues are expected to range between $213 million and $216 million.
- Operating margin is expected to range between 33% and 34%.
- The annual effective tax rate is expected to range between 29.5% and 30.5%.
GAAP diluted EPS should range between $1.14 and $1.16, the midpoint of the range represents 10% growth over last year's third quarter.