|From: JakeStraw||6/21/2005 8:06:07 AM|
|FactSet Research Sys net income up 33% |
By Steve Gelsi
NEW YORK (MarketWatch) -- FactSet Research Systems (FDS) on Tuesday reported third-quarter net income of $19.6 million, or 39 cents a share, up 33% from $14.7 million, or 30 cents a share, last year. Revenue rose to $79 million from $63.6 million. The latest quarter's earnings figure includes 4 cents a share in tax benefits. A survey of analysts by Thomson First Call forecasted earnings of 34 cents a share and revenue of $78.6 million. The Norwalk, Conn. financial information supplier forecasted fourth-quarter revenue of $80-$82 million, in line with the $81 million Wall Street.
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|From: JakeStraw||1/4/2006 3:08:02 PM|
|Plenty of Room for FactSet|
Tuesday December 20, 10:09 am ET
By Stephen D. Simpson, CFA
Funny thing about FactSet (NYSE: FDS) - as much as I like the service, I find myself forgetting just how small this company really is. After all, take this quarter's revenue, multiply it by four, and you get about $360 million in annualized revenue -- tiny compared with the likes of Bloomberg, Reuters (Nasdaq: RTRSY), and Thomson (NYSE: TOC).
"So what?" you may ask. Well, it means that although this company has already been a tremendous winner in the stock market (trading in the low single digits just six or seven years ago), there is no reason to think it's close to hitting a wall with respect to growth.
In fact, results for its fiscal first quarter look like more of the same steady and sustainable growth we've seen from this company in recent quarters. Revenue rose than 21%, and while operating income according to generally accepted accounting principles was up only 6% because of stock compensation expenses and some tax matters, net income climbed 17%. Operating cash flow was flat for the quarter, but as I've said in the past, quarter-by-quarter cash flow analysis can be more misleading than it is informative.
So what could propel this still-small company even higher? First of all, the company has considerable potential to grow its overseas business, as less than a third of its subscription revenue comes from outside the United States.
What's more, the company has quite modest capabilities right now in fixed income. As much as we at The Motley Fool talk about equities, fixed income is an enormous worldwide market, and many of your leading investment banks, such as Lehman Brothers (NYSE: LEH), Citigroup (NYSE: C), or Goldman Sachs (NYSE: GS), get a large amount of their trading revenue from their fixed-income desks. And that's also true for currencies, commodities, derivatives, and other sorts of financial instruments - areas where FactSet doesn't yet have a considerable footprint.
Put simply, investment professionals and traders consume ever-larger amounts of information on a day-to-day basis to do their business. Accordingly, it seems pretty safe to say that the demand for information services, like those provided by FactSet, will continue to be in ever-higher demand, barring a total market meltdown. Although these shares aren't exactly cheap by conventional measures, this is a well-run, high-potential company with plenty of room yet to run.
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|From: JakeStraw||3/21/2006 12:54:47 PM|
|FactSet Research Systems Reports Earnings per Share of $0.38 for the Second Quarter of Fiscal Year 2006|
Tuesday March 21, 7:00 am ET
NORWALK, Conn.--(BUSINESS WIRE)--March 21, 2006--FactSet Research Systems Inc. (NYSE: FDS), a major supplier of computer-based financial and economic data to the investment community, today announced its results for the second quarter of fiscal 2006.
For the quarter ended February 28, 2006, revenues increased to $93.7 million, up 22.5% compared to the prior year period. GAAP operating income for the second quarter rose to $29.6 million from $27.0 million in the same period of fiscal 2005. GAAP net income advanced to $19.2 million. This compares to GAAP net income of $17.2 million a year ago. GAAP diluted earnings per share increased to $0.38, up from $0.34 in the same period of fiscal 2005.
GAAP financial measures including operating income, net income, and diluted earnings per share have been adjusted to exclude charges related to stock-based compensation and incremental expenses incurred in the UK real estate consolidation. Non-GAAP operating income for the quarter was $31.9 million, up 17.9%. Non-GAAP net income advanced 21.5% to $20.9 million and non-GAAP diluted earnings per share increased 20.6% to $0.41. 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 Six Months Ended
February 28, February 28,
(In thousands, except
per share data) 2006 2005 Change 2006 2005 Change
------- ------- ------ -------- -------- ------
Revenues $93,665 $76,472 22.5 % $183,319 $150,535 21.8 %
expenses 64,021 49,440 29.5 126,272 97,658 29.3
Income from operations 29,644 27,032 9.7 57,047 52,877 7.9
Net income 19,242 17,170 12.1 38,437 33,567 14.5
Diluted earnings per
common share $0.38 $0.34 11.8 $0.76 $0.67 13.4
average common shares 50,767 50,397 50,308 50,213
"FactSet continued to prosper in the second quarter," said Philip A. Hadley, Chairman and CEO. "Broad-based growth is the underlying factor behind our performance. We've continued to invest in the development of a wide range of products to meet the needs of a global client base. The success of this strategy is reflected in our results."
Second Quarter Financial Highlights
Subscriptions increased $18.4 million during the quarter and totaled $380.3 million at quarter end. On a constant currency basis and excluding the acquisition of europrospectus.com Limited, the subscription increase was $15.0 million. Of this total, subscriptions from FactSet's domestic operations were $270.2 million, while overseas operations were $110.1 million. Clients totaled 1,666, including those acquired from europrospectus. Excluding europrospectus, client count was 1,646 at February 28, a net increase of 32 clients for the quarter. Users rose to 27,700 professionals. FactSet's client retention rate continued to be above 95%. "Subscriptions" at any given point in time represent the forward-looking revenues for the next 12 months from all subscription services currently being supplied to clients.
Other operational highlights of the second quarter of fiscal 2006 include:
Revenues from FactSet's European and Pacific Rim operations were $21.6 million and $4.9 million, up 28.0% and 32.1% respectively, from the same period a year ago.
Demand for FactSet's PA Workstation application continued to rise, with 446 clients consisting of 3,600 users, subscribing to this service as of February 28, 2006.
On January 5, 2006, the executors of the estate of Howard E. Wille sold effectively all of its position in the company's common stock. Mr. Wille, a founder of FactSet, passed away on September 6, 2005. At that date, he owned approximately 11% of FactSet common stock.
Year-to-Date Results of Operations
For the six months ended February 28, 2006, revenues increased 21.8% to $183.3 million and GAAP operating income rose 7.9% to $57.0 million. GAAP net income grew 14.5% to $38.4 million while GAAP diluted earnings per share increased 13.4% to $0.76.
For the six months ended February 28, 2006, non-GAAP operating income advanced 16.9% to $61.8 million and non-GAAP net income increased 19.6% to $40.1 million. Non-GAAP diluted earnings per share increased 17.9% to $0.79 during the first half of fiscal 2006 as compared to the same period a year ago. A reconciliation between GAAP and non-GAAP financial measures is presented on page 9 of this press release.
Recent Events and Business Outlook
The following forward-looking statements reflect FactSet's expectations as of March 21, 2006. 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.
On February 17, 2006, FactSet acquired all the outstanding share capital of europrospectus.com Limited for $7.5 million in cash. europrospectus provides access to equity, fixed income and derivatives prospectuses. The impact from this acquisition on the financial results for the second quarter was immaterial in all respects. The company is headquartered in England and supported by approximately 25 employees. The acquisition increased subscriptions at February 28 by $3.2 million and is expected to reduce diluted earnings per common share by $0.01 over the next 12 months.
On January 19, 2006, FactSet announced that FactSet Europe Limited agreed to lease space to serve as the new headquarters for FactSet's London-based operations. The new location will be governed by a 15-year lease with an option to extend for an additional 10 years. FactSet will consolidate its four London-based offices into one, new location. FactSet continues to occupy its existing leased office space until the new facility is ready for occupancy in the summer of 2006. As a result, incremental expenses primarily representing a significant short-term redundancy of leased office space will be incurred. Incremental expenses from this action were $0.3 million during the second quarter and are expected to range between $1.7 million and $1.9 million over the remaining six months of the fiscal year. Approximately $0.6 million of the remaining incremental expenses should be incurred during the third fiscal quarter and approximately $1.2 million incurred during the fourth quarter.
Third Quarter Fiscal 2006 Expectations
Revenues are expected to range between $95.0 million and $97.0 million.
Operating margins are expected to range between 31% and 33%, including the impact from SFAS 123®. Excluding stock-based compensation expense between $1.8 million and $2.1 million and redundant London occupancy costs of $0.6 million, operating margins would be between 33% and 35%.
The effective tax rate is expected to range between 36.3% and 36.8%.
Full Year Fiscal 2006
Capital expenditures should total approximately $18 million to $22 million and includes the build out of the new headquarters for FactSet's London-based operations.
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|From: JakeStraw||5/11/2006 2:02:17 PM|
|"We gave FactSet a passing mention in a January 2003 search for companies with high returns on equity. Since then the stock has gained 146%. The company collects financial data from 200 sources, sorts it and resells it to analysts, money managers and media companies. It also provides software to help clients analyze data. The company has offered a stock screening product, for example, since 1984. FactSet clients (SmartMoney.com isn't one of them) get access to Lipper fund information, Thomson First Call earnings estimates, Compustat historical stock fundamentals, Edgar securities filings, real-time quotes from many of the world's stock exchanges and much more in one place." |
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|From: JakeStraw||5/19/2006 10:47:50 AM|
|Street's Mood Swings Aren't A Downer To Supplier Of Research Data|
Investor's Business Daily
Friday May 12, 7:00 pm ET
It's not like FactSet Research Systems needs a bustling Wall Street to succeed.
After all, the provider of financial data to investment firms has grown annual sales and earnings in double digits throughout the 2000s -- even when the stock market flopped.
"That's remarkable, given the head-count reductions on Wall Street during that time," said Neil Godsey, analyst at Freedman, Billings, Ramsey & Co.
Still, it doesn't hurt that current markets are operating at multiyear highs, or that the Dow Jones industrials are near an all-time high.
FactSet (NYSE:FDS - News) provides data and news to money managers and other investment pros through its desktop terminals. The firm has nearly 1,700 clients. More than 27,000 users subscribe to its services.
Current trends are working in FactSet's favor. Money is flowing into mutual funds, and investment banking activity -- mergers and acquisitions, and initial and secondary stock offerings -- is booming.
The upshot? Those firms are hiring more people -- and spending more on research products like those offered by FactSet.
"That's definitely been a tail wind," Godsey said.
FactSet also has gotten a boost from an increase in overseas business. Foreign sales contributed 28% of FactSet's total revenue the past two quarters. That's up from 20% two years ago.
"They still view the international opportunity as unusually large," Godsey said. "I think you'll see the growth rate there exceed its growth rate in the U.S."
The ratio of foreign sales to domestic sales could reach 50-50 in the next few years, says Steve Biggs, analyst at Zacks Investment Research.
Some recent additions in Europe have made a big difference. FactSet just completed deals with the major foreign exchanges in the past year, so it can now offer its real-time news and quotes service overseas.
The company also has forged alliances with key content providers overseas, such as Reuters and Standard & Poor's.
In addition, FactSet started making some acquisitions two years ago after previously shying away from buyouts.
In September 2004, it bought a Paris company, JCF Group, which compiles brokerage firms' earnings estimates in Europe. FactSet also has acquired a pair of British outfits over the past eight months.
FactSet executives were not available to comment. In a recent conference call, Chief Executive Philip Hadley said his firm's product "(has) continued to become more global."
Biggs expects the buying to continue. He says FactSet wants to add content -- especially overseas, where its product offerings aren't as complete as they are in the U.S.
"A lot of that goes to being the one-stop provider for analysts and money managers," Biggs said.
FactSet should have little trouble doing more deals, Godsey says. He views the company as an attractive owner for small firms, thanks to its strong management team.
He also praises FactSet's ability to grow sales and earnings no matter what the market environment.
"The consistency of FactSet's growth story is remarkable," he said.
This year is no different. Sales during the fiscal second quarter ended in February rose 22% from the prior year to $93.7 million. Earnings gained 12% to 38 cents per share.
Analysts polled by First Call expect full-year profit to climb 11% to $1.54, then move up 16% to $1.78 in fiscal 2007.
Time Is On Their Side
One of FactSet's strengths is that its products are designed to help save clients time, Godsey says.
"That enables (FactSet) to grow even in a tough market," he said. "The scarcest resource their customers have is their time."
About 75% of FactSet's sales comes from money managers. The rest comes from brokerage firms, split evenly between research analysts and investment bankers.
FactSet's willingness to nurture clients also helps it in tough times. It builds strong relationships that foster loyalty when customers are cutting costs.
Half of the company's growth comes from its existing client base. It typically renews more than 95% of its clients each year.
"They're gaining market share within the accounts they already have," Biggs said.
FactSet still has plenty of room to grow. It serves only a small fraction of potential clients.
"I view us as a tiny, tiny player in a huge industry at this point," CEO Hadley said during the conference call. "The opportunity is so large that I don't even see the wall yet."
Still, his firm could hit a few bumps. A stock market slump and slower merger and acquisition activity would hurt its results, Godsey says. FactSet also battles larger rivals, including Bloomberg, Thomson, Reuters and Standard & Poor's.
"Those companies have tremendous resources," Godsey said. "They have a lot they can bring to bear on the market."
Another wild card is a move by the Securities and Exchange Commission to crack down on "soft dollars." These dollars let money managers get research from brokerage firms in return for bringing trades to the brokerages.
The SEC's new policy could throw a monkey wrench into FactSet's plans because it might crimp clients' budgets, Biggs says.
"It makes the environment tougher," he said.
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