Broadridge Financial Wraps Up Senior Notes Transaction

Broadridge Financial Solutions Inc. BR recently closed its senior notes offering announced on Jun 21, 2016. The company had priced $500 million aggregate principal amount of 3.400% senior notes, due to mature in 2026.

As declared earlier, the net proceeds will enable Broadridge to finance its acquisitions related expenses and general corporate expenses. Also, the proceeds from the offering shall be used to repay a part of the company’s outstanding debt. We believe these notes will provide the company financial flexibility to drive long-term growth.

Book-running managers currently acting for this notes offering are J.P. Morgan Securities LLC, Morgan Stanley, MUFG, Wells Fargo Securities, BNP Paribas, TD Securities and US Bancorp.

Broadridge posted third-quarter fiscal 2016 adjusted earnings of 58 cents per share (excluding acquisition and amortization related expenses), which surpassed the Zacks Consensus Estimate of 49 cents. Also, earnings were up from 47 cents reported in the year-ago quarter. Though Broadridge’s third-quarter revenues of $688.8 million increased 8.6% year over year, it lagged the Zacks Consensus Estimate of $695 million.

Broadridge exited the quarter with cash and cash equivalents of $354.4 million compared with $305.1 million in the previous quarter. Long-term debt on the balance sheet totaled $819.5 million.

Cash flow provided by operating activities during nine months ended Mar 31, 2016 was $161.1 million. Free cash flow came in at $105 million.

AXIR Consulting

Amid a stringent regulatory landscape, this offering is expected to further enhance the company’s balance sheet as well as support its future growth. Additionally, it will assist the company to bring down its cost of capital.

We remain optimistic about Broadridge’s strategic acquisitions, product launches, share repurchase program and dividend paying initiatives. We also believe that the company’s close association with Accenture ACN will be beneficial over the long term. However, competition from DST Systems Inc. DST and pricing pressure remain headwinds.

Currently, Broadridge has a Zacks Rank #3 (Hold). A better-ranked stock worth considering is Insperity, Inc. NSP, sporting a Zacks Rank #1 (Strong Buy).

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