FactSet Research Systems Earns $1.20 per Share

This morning, FactSet Research Systems ($FDS) reported fiscal fourth-quarter earnings of $1.20 per share. The stock is down today because technically, that counts as an “earnings miss.” The Street was at $1.21 per share but that’s just traders being traders. Three months ago, FactSet gave us a range of $1.18 to $1.21 per share so the company is hitting its own targets. FactSet’s revenues rose 6% to $219.3 million, and net income was $51 million.

The big metric for FactSet is ASV or annual subscription value. For the quarter, ASV rose by 6% to $888 million. That’s a good number and it points towards strong revenue over the next year.

For fiscal Q1, which ends in November, FactSet expects revenues between $222 and $225 million. They also see earnings coming in between $1.21 and $1.24 per share. Wall Street had been expecting $1.23 per share. The bottom line is that business continues to go well for FactSet. The company earned $1.11 per share in last year’s Q1.

From the earnings report, here are some financial highlights from Q4:

ASV from U.S. operations was $606 million and $282 million was related to international operations.

U.S. revenues were $149.9 million, up 6% from the year ago quarter.

Non-U.S. revenues rose 5% to $69.4 million as compared to the same period in fiscal 2012. Excluding the impact from foreign currency, the international growth rate was 6%.

GAAP operating margin was 32.2%. Adjusted operating margin was 33.4%, compared to 34.0% a year ago.

The effective tax rate for the fourth quarter was 28.1%, down from 31.7% a year ago. Excluding income tax benefits recorded during the second quarter of fiscal 2013 primarily from the reenactment of the U.S. Federal R&D credit, the annual effective tax rate was 28.9%.

Quarterly free cash flow was $71 million, up 38% over the year ago quarter. For the full fiscal 2013 year, FactSet generated $251 million in free cash flow which is 20% higher than a year ago.

Here are their expectations for Q1:

Revenues are expected to range between $222 million and $225 million.

Operating margin is expected to range between 33.0% and 34.0%, which includes a 30 basis point reduction from Revere.

The annual effective tax rate is expected to range between 28.5% and 29.5% and assumes the U.S. Federal R&D tax credit will be re-enacted by the end of the first quarter of fiscal 2014.

GAAP diluted EPS should range between $1.21 and $1.24, the midpoint of the range represents 10% growth over last year’s first quarter. GAAP diluted EPS assumes the U.S. Federal R&D tax credit will be re-enacted. If the U.S. Federal R&D tax credit is not re-enacted, first quarter’s GAAP diluted EPS will be reduced by $0.03.

Yesterday, the shares hit an all-time high of $113.05. Today they’re down to $108-$109.

Posted by Eddy Elfenbein on September 17th, 2013 at 10:49 am

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