September 24, 2020
Fourth Quarter Fiscal 2020 Highlights
“We executed well on our second-half pipeline to end our fiscal year in a strong position," said
Key Financial Measures*
(Condensed and Unaudited) | Three Months Ended | Twelve Months Ended | Latest | |||||||||||||||
FY 2020 | ||||||||||||||||||
(In thousands, except per share data) | 2020 | 2019 | Change | 2020 | 2019 | Change | Guidance | |||||||||||
GAAP revenues | $ | 383,590 | $ | 364,283 | 5.3 | % | $ | 1,494,111 | $ | 1,435,351 | 4.1 | % | ||||||
Organic revenues | $ | 383,373 | $ | 365,545 | 4.9 | % | $ | 1,497,598 | $ | 1,440,536 | 4.0 | % | ||||||
Operating income | $ | 98,577 | $ | 111,568 | (11.6) | % | $ | 439,660 | $ | 438,035 | 0.4 | % | ||||||
Adjusted operating income | $ | 127,379 | $ | 123,881 | 2.8 | % | $ | 503,403 | $ | 476,185 | 5.7 | % | ||||||
Operating margin | 25.7 | % | 30.6 | % | 29.4 | % | 30.5 | % | 30.0% - 30.5% | |||||||||
Adjusted operating margin | 33.2 | % | 33.9 | % | 33.6 | % | 33.2 | % | 33.0% - 33.5% | |||||||||
Net income | $ | 89,079 | $ | 91,527 | (2.7) | % | $ | 372,938 | $ | 352,790 | 5.7 | % | ||||||
Adjusted net income | $ | 112,034 | $ | 101,892 | 10.0 | % | $ | 420,122 | $ | 388,856 | 8.0 | % | ||||||
Diluted EPS | $ | 2.29 | $ | 2.34 | (2.1) | % | $ | 9.65 | $ | 9.08 | 6.3 | % | ||||||
Adjusted diluted EPS | $ | 2.88 | $ | 2.61 | 10.3 | % | $ | 10.87 | $ | 10.00 | 8.7 | % |
* See reconciliation of
“Our financial results reflect the high value we provide clients, the strength of our business model, and the benefits of our operational discipline," said
ASV + Professional Services and Segment Revenue
ASV at any given point in time represents the forward-looking revenues for the next twelve months from all subscription services currently supplied to clients and excludes professional services fees billed in the last 12 months that are not subscription-based. Professional services are revenues derived from project-based consulting and implementation.
ASV plus professional services was
Buy-side and sell-side ASV growth rates for the fourth quarter of fiscal 2020 were 5.4% and 4.6%, respectively. Buy-side clients accounted for approximately 84% of organic ASV while the remainder is derived from sell-side firms that perform mergers and acquisitions advisory work, capital markets services, and equity research. Supplementary tables covering organic buy-side and sell-side ASV growth rates may be found on the last page of this press release.
ASV from the
ASV from the EMEA region was
ASV from the
Organic ASV plus professional services from FactSet’s workflow solutions at
Operational Highlights – Fourth Quarter Fiscal 2020
Full Year 2020 Highlights
Share Repurchase Program
FactSet repurchased 81,948 shares of its common stock for
Annual Business Outlook
FactSet is providing its outlook for fiscal 2021. 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, particularly with the ongoing uncertainty surrounding the duration, magnitude, and impact of the novel coronavirus pandemic. FactSet does not intend to update its forward-looking statements prior to its next quarterly results announcement.
Fiscal 2021 Expectations
Both GAAP operating margin and GAAP diluted EPS guidance do not include certain effects of any non-recurring benefits or charges that may arise in fiscal 2021. Please see the back of this press release for a reconciliation of GAAP to adjusted metrics.
Conference Call
The Company will host a conference call today,
833.726.6487 | |
International Participants: | +1.830.213.7677 |
Passcode: | 9560287 |
An archived webcast with the accompanying slides will be available at FactSet Investor Relations for one year after the conclusion of the live event. The earnings call transcript will also be available via the FactSet workstation or web. An audio replay of this conference will also be available until
Forward-looking Statements
This news release contains forward-looking statements based on management's current expectations, estimates, forecasts and projections about industries in which FactSet operates and the beliefs and assumptions of management. All statements that address expectations, guidance, outlook or projections about the future, including statements about the Company's strategy for growth, product development, revenues, future financial results, anticipated growth, market position, subscriptions, expected expenditures, trends in FactSet’s business and financial results, are forward-looking statements. Forward-looking statements may be identified by words like "expects," "believes, " "anticipates," "plans," "intends, " "estimates, " "projects," "should," "indicates," "continues," "may" 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
About Non-GAAP Financial Measures
Financial measures in accordance with
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.
Organic revenues exclude the effects of acquisitions and dispositions completed in the last 12 months and foreign currency movements in all periods presented. Adjusted operating income and margin, adjusted net income and adjusted diluted earnings per share exclude both intangible asset amortization and non-recurring items. The Company believes that these adjusted financial measures better reflect the underlying economic performance of FactSet.
The GAAP financial measure, cash flows provided by operating activities, has been adjusted for capital expenditures to report non-GAAP free cash flow. 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
Media & Investor Relations Contact:
Rima Hyder
+1.857.265.7523
rima.hyder@factset.com
Consolidated Statements of Income (Unaudited) | ||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||
(In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||
Revenues | $ | 383,590 | $ | 364,283 | $ | 1,494,111 | $ | 1,435,351 | ||||||
Operating expenses | ||||||||||||||
Cost of services | 183,568 | 167,730 | 695,446 | 663,446 | ||||||||||
Selling, general and administrative | 101,445 | 84,985 | 359,005 | 333,870 | ||||||||||
Total operating expenses | 285,013 | 252,715 | 1,054,451 | 997,316 | ||||||||||
Operating income | 98,577 | 111,568 | 439,660 | 438,035 | ||||||||||
Other expense | ||||||||||||||
Interest expense, net | (1,826 | ) | (4,980 | ) | (9,829 | ) | (16,624 | ) | ||||||
Other (expense) income, net | (607 | ) | 1,701 | (2,697 | ) | 554 | ||||||||
Total other (expense) income | (2,433 | ) | (3,279 | ) | (12,526 | ) | (16,070 | ) | ||||||
Income before income taxes | 96,144 | 108,289 | 427,134 | 421,965 | ||||||||||
Provision for income taxes | 7,065 | 16,762 | 54,196 | 69,175 | ||||||||||
Net income | $ | 89,079 | $ | 91,527 | $ | 372,938 | $ | 352,790 | ||||||
Diluted earnings per common share | $ | 2.29 | $ | 2.34 | $ | 9.65 | $ | 9.08 | ||||||
Diluted weighted average common shares | 38,940 | 39,056 | 38,646 | 38,873 |
Consolidated Balance Sheets (Unaudited) |
||||||
(In thousands) | 2020 | 2019 | ||||
ASSETS | ||||||
Cash and cash equivalents | $ | 585,605 | $ | 359,799 | ||
Investments | 19,572 | 25,813 | ||||
Accounts receivable, net of reserves | 155,011 | 146,309 | ||||
Prepaid taxes | 38,067 | 15,033 | ||||
Prepaid expenses and other current assets | 43,675 | 36,858 | ||||
Total current assets | 841,930 | 583,812 | ||||
Property, equipment, and leasehold improvements, net | 133,102 | 119,384 | ||||
709,703 | 685,729 | |||||
Intangible assets, net | 121,095 | 133,691 | ||||
Deferred taxes | — | 7,571 | ||||
Lease right-of-use assets, net | 248,929 | — | ||||
Other assets | 28,629 | 29,943 | ||||
TOTAL ASSETS | $ | 2,083,388 | $ | 1,560,130 | ||
LIABILITIES | ||||||
Accounts payable and accrued expenses | $ | 82,094 | $ | 79,620 | ||
Current lease liabilities | 29,056 | — | ||||
Accrued compensation | 81,873 | 64,202 | ||||
Deferred fees | 53,987 | 47,656 | ||||
Dividends payable | 29,283 | 27,445 | ||||
Total current liabilities | 276,293 | 218,923 | ||||
Long-term debt | 574,354 | 574,174 | ||||
Deferred taxes | 17,917 | 16,391 | ||||
Deferred fees | 9,319 | 10,088 | ||||
Taxes payable | 27,739 | 26,292 | ||||
Lease liabilities | 272,269 | — | ||||
Deferred rent and other non-current liabilities | 7,326 | 42,006 | ||||
TOTAL LIABILITIES | $ | 1,185,217 | $ | 887,874 | ||
STOCKHOLDERS’ EQUITY | ||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 898,171 | $ | 672,256 | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,083,388 | $ | 1,560,130 |
Consolidated Statements of Cash Flows (Unaudited) | |||||||
Twelve Months Ended | |||||||
(In thousands) | 2020 | 2019 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 372,938 | $ | 352,790 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 57,614 | 60,463 | |||||
Stock-based compensation expense | 36,579 | 32,400 | |||||
Deferred income taxes | 10,626 | (2,278 | ) | ||||
Loss on sale of assets | 171 | 196 | |||||
Changes in assets and liabilities, net of effects of acquisitions | |||||||
Accounts receivable, net of reserves | (8,608 | ) | 10,205 | ||||
Accounts payable and accrued expenses | 12,127 | (2,290 | ) | ||||
Accrued compensation | 16,446 | (1,743 | ) | ||||
Deferred fees | 5,571 | 458 | |||||
Taxes payable, net of prepaid taxes | (24,224 | ) | (19,238 | ) | |||
Other, net | 26,600 | (3,827 | ) | ||||
Net cash provided by operating activities | 505,840 | 427,136 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchases of property, equipment, leasehold improvements and intangible assets, net of proceeds from dispositions | (77,641 | ) | (59,370 | ) | |||
Purchases of investments | (2,736 | ) | (11,135 | ) | |||
Proceeds from maturity or sale of investments | 6,745 | 14,405 | |||||
Net cash used in investing activities | (73,632 | ) | (56,100 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Repurchases of common stock | (199,625 | ) | (220,372 | ) | |||
Dividend payments | (110,439 | ) | (100,052 | ) | |||
Proceeds from employee stock plans | 95,520 | 107,051 | |||||
Repayment of debt | — | (575,000 | ) | ||||
Proceeds from debt | — | 575,000 | |||||
Other financing, net | (3,532 | ) | (901 | ) | |||
Net cash used in financing activities | (218,075 | ) | (214,274 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 11,673 | (5,586 | ) | ||||
Net increase in cash and cash equivalents | 225,806 | 151,176 | |||||
Cash and cash equivalents at beginning of period | 359,799 | 208,623 | |||||
Cash and cash equivalents at end of period | $ | 585,605 | $ | 359,799 |
Reconciliation of
Financial measures in accordance with
Revenues
(Unaudited) | Three Months Ended | ||||||||
(In thousands) | 2020 | 2019 | Change | ||||||
GAAP revenues | $ | 383,590 | $ | 364,283 | 5.3 | % | |||
Deferred revenue fair value adjustment (a) | 619 | 1,262 | |||||||
Currency impact (b) | (836 | ) | — | ||||||
Organic revenues | $ | 383,373 | $ | 365,545 | 4.9 | % |
(a) The adjustment relates to deferred revenue fair value adjustments from purchase accounting.
(b) The impact from foreign currency movements over the past 12 months.
(Unaudited) | Twelve Months Ended | ||||||||
(In thousands) | 2020 | 2019 | Change | ||||||
GAAP revenues | $ | 1,494,111 | $ | 1,435,351 | 4.1 | % | |||
Deferred revenue fair value adjustment (a) | 4,192 | 5,185 | |||||||
Currency impact (b) | (705 | ) | — | ||||||
Organic revenues | $ | 1,497,598 | $ | 1,440,536 | 4.0 | % |
(a) The adjustment relates to deferred revenue fair value adjustments from purchase accounting.
(b) The impact from foreign currency movements over the past 12 months.
Operating Income, Margin, Net Income and Diluted EPS
(Unaudited) | Three Months Ended | |||||||
(In thousands, except per share data) | 2020 | 2019 | Change | |||||
GAAP Operating income | $ | 98,577 | $ | 111,568 | (11.6)% | |||
Intangible asset amortization | 6,867 | 7,260 | ||||||
Deferred revenue fair value adjustment | 619 | 1,262 | ||||||
Impairment of investment (a) | 16,500 | — | ||||||
Other non-recurring items (b) | 4,816 | 3,791 | ||||||
Adjusted operating income | $ | 127,379 | $ | 123,881 | 2.8% | |||
Adjusted operating margin (c) | 33.2 | % | 33.9 | % | ||||
GAAP Net income | $ | 89,079 | $ | 91,527 | (2.7)% | |||
Intangible asset amortization (d) | 5,205 | 5,931 | ||||||
Deferred revenue fair value adjustment (d) | 469 | 1,031 | ||||||
Impairment of investment (a) | 16,500 | — | ||||||
Other non-recurring items (b)(d) | 3,651 | 3,097 | ||||||
Income tax (expenses) / benefits (e) | (2,870 | ) | 306 | |||||
Adjusted net income | $ | 112,034 | $ | 101,892 | 10.0% | |||
GAAP Diluted earnings per common share | $ | 2.29 | $ | 2.34 | (2.1)% | |||
Intangible asset amortization | 0.13 | 0.15 | ||||||
Deferred revenue fair value adjustment (d) | 0.01 | 0.03 | ||||||
Impairment of investment (a) | 0.42 | — | ||||||
Other non-recurring items (b) | 0.09 | 0.08 | ||||||
Income tax (expenses) / benefits (e) | (0.06 | ) | 0.01 | |||||
Adjusted diluted earnings per common share | $ | 2.88 | $ | 2.61 | 10.3% | |||
Weighted average common shares (Diluted) | 38,940 | 39,056 |
(a) During the fourth quarter of fiscal 2020, an impairment charge was recorded to reflect the estimated fair value of an investment in a company which reduced net income by
(b) GAAP operating income in the fourth quarter of fiscal 2020 was adjusted to exclude
(c) Adjusted operating margin is calculated as adjusted operating income divided by GAAP revenues plus the deferred revenue fair value adjustment.
(d) For purposes of calculating adjusted net income and adjusted diluted earnings per share, intangible asset amortization, deferred revenue fair value adjustments and other non-recurring items were taxed at the annual effective tax rates of 17.7% for fiscal 2020 and 18.3% for fiscal 2019.
(e) GAAP net income in the fourth quarter of fiscal 2020 was adjusted by
Operating Income, Margin, Net Income and Diluted EPS
(Unaudited) | Twelve Months Ended | ||||||||
(In thousands, except per share data) | 2020 | 2019 | Change | ||||||
GAAP Operating income | $ | 439,660 | $ | 438,035 | 0.4 | % | |||
Intangible asset amortization | 22,269 | 24,920 | |||||||
Deferred revenue fair value adjustment | 4,192 | 5,185 | |||||||
Impairment of investment (a) | 16,500 | — | |||||||
Other non-recurring items (b) | 20,782 | 8,045 | |||||||
Adjusted operating income | $ | 503,403 | $ | 476,185 | 5.7 | % | |||
Adjusted operating margin (c) | 33.6 | % | 33.2 | % | |||||
GAAP Net income | $ | 372,938 | $ | 352,790 | 5.7 | % | |||
Intangible asset amortization (d) | 17,773 | 20,262 | |||||||
Deferred revenue fair value adjustment (d) | 3,385 | 4,215 | |||||||
Impairment of investment (a) | 16,500 | — | |||||||
Other non-recurring items (b)(d) | 16,611 | 6,315 | |||||||
Income tax (expenses) / benefits (e) | (7,085 | ) | 5,274 | ||||||
Adjusted net income | $ | 420,122 | $ | 388,856 | 8.0 | % | |||
GAAP Diluted earnings per common share | $ | 9.65 | $ | 9.08 | 6.3 | % | |||
Intangible asset amortization | 0.46 | 0.52 | |||||||
Deferred revenue fair value adjustment | 0.10 | 0.11 | |||||||
Impairment of investment (a) | 0.42 | — | |||||||
Other non-recurring items (b) | 0.42 | 0.15 | |||||||
Income tax (expenses) / benefits (e) | (0.18 | ) | 0.14 | ||||||
Adjusted diluted earnings per common share | $ | 10.87 | $ | 10.00 | 8.7 | % | |||
Weighted average common shares (Diluted) | 38,646 | 38,873 |
(a) During the fourth quarter of fiscal 2020, an impairment charge was recorded to reflect the estimated fair value of an investment in a company which reduced net income by
(b) GAAP operating income in fiscal 2020 was adjusted to exclude
(c) Adjusted operating margin is calculated as adjusted operating income divided by GAAP revenues plus the deferred revenue fair value adjustment.
(d) For purposes of calculating adjusted net income and adjusted diluted earnings per share, intangible asset amortization, deferred revenue fair value adjustments and other non-recurring items were taxed at the annual effective tax rates of 17.7% for fiscal 2020 and 18.3% for fiscal 2019.
(e) GAAP net income in fiscal 2020 was adjusted by
Business Outlook Operating Margin, Net Income and Diluted EPS
(Unaudited) | ||||||
Annual Fiscal 2021 Guidance | ||||||
(In millions, except per share data) | Low end of range | High end of range | ||||
GAAP Operating Income | $ | 468 | $ | 479 | ||
GAAP Operating margin | 29.5 | % | 30.5 | % | ||
Intangible asset amortization (a) | 25 | 25 | ||||
Other non-recurring items (b) | 14 | 14 | ||||
Adjusted Operating Income | $ | 507 | $ | 518 | ||
Adjusted operating margin | 32.0 | % | 33.0 | % | ||
GAAP Net income | $ | 386 | $ | 402 | ||
Intangible asset amortization (a) | 21 | 21 | ||||
Other non-recurring items (b) | 12 | 12 | ||||
Discrete tax items | (5 | ) | (5 | ) | ||
Adjusted net income | $ | 415 | $ | 430 | ||
GAAP Diluted earnings per common share | $ | 10.05 | $ | 10.45 | ||
Intangible asset amortization | 0.55 | 0.55 | ||||
Other non-recurring items | 0.30 | 0.30 | ||||
Discrete tax items | (0.15 | ) | (0.15 | ) | ||
Adjusted diluted earnings per common share | $ | 10.75 | $ | 11.15 | ||
(a) The income tax effect related to intangible asset amortization is
(b) GAAP operating income for the full fiscal 2021 year is adjusted to exclude
Free Cash Flow
(Unaudited) | Three Months Ended | |||||||
(In thousands) | 2020 | 2019 | Change | |||||
Net cash provided by operating activities | $ | 159,427 | $ | 121,811 | ||||
Capital expenditures | (14,732 | ) | (26,464 | ) | ||||
Free cash flow | $ | 144,695 | $ | 95,347 | 51.8 | % |
(Unaudited) | Twelve Months Ended | |||||||
(In thousands) | 2020 | 2019 | Change | |||||
Net cash provided by operating activities | $ | 505,840 | $ | 427,136 | ||||
Capital expenditures | (77,641 | ) | (59,370 | ) | ||||
Free cash flow | $ | 428,199 | $ | 367,766 | 16.4 | % |
Supplementary Schedules of Historical ASV by Client Type
The following table presents the percentages and growth rates of organic ASV by client type, excluding the impact of currency movements, and may be useful to facilitate historical comparisons. Organic ASV excludes acquisitions and dispositions completed within the last 12 months and the effects of foreign currency movements. The numbers below do not include professional services.
Q4'20 | Q3'20 | Q2'20 | Q1'20 | Q4'19 | Q3'19 | Q2'19 | Q1'19 | |||||||||
% of ASV from buy-side clients | 83.8 | % | 84.1 | % | 84.1 | % | 83.9 | % | 83.7 | % | 84.2 | % | 83.9 | % | 83.9 | % |
% of ASV from sell-side clients | 16.2 | % | 15.9 | % | 15.9 | % | 16.1 | % | 16.3 | % | 15.8 | % | 16.1 | % | 16.1 | % |
ASV Growth rate from buy-side clients | 5.4 | % | 4.8 | % | 4.5 | % | 4.0 | % | 4.8 | % | 5.2 | % | 5.3 | % | 5.9 | % |
ASV Growth rate from sell-side clients | 4.6 | % | 5.6 | % | 2.9 | % | 4.0 | % | 6.3 | % | 6.8 | % | 9.2 | % | 8.6 | % |
Total Organic ASV Growth Rate | 5.2 | % | 5.0 | % | 4.2 | % | 4.0 | % | 5.0 | % | 5.4 | % | 5.9 | % | 6.3 | % |
The following table presents the calculation of the above-mentioned ASV growth rates from all clients.
(Details may not sum to total due to rounding)
(In millions) | Q4'20 | Q4'19 | ||||
As reported ASV (a) | $ | 1,539.2 | $ | 1,458.0 | ||
Currency impact (b) | (4.5 | ) | — | |||
Organic ASV total | $ | 1,534.6 | $ | 1,458.0 | ||
Total Organic ASV Growth Rate | 5.2 | % |
(a) ASV excludes
(b) The impact from foreign currency movements was excluded above to calculate total organic ASV.