Broadridge Financial SolutionsBR

Key highlights

• Strong recurring revenue growth: Recurring revenue, which is the predictable income from long term contracts, grew 8% to $4.88 billion for the full year. This performance met the top end of the company's previous targets as more financial firms signed on for its digital governance and technology platforms.
• New business sales record: Closed sales rose 6% to $305 million for the year, which is a key indicator of future revenue. The company saw a big finish to the year with $158 million in new sales during the fourth quarter alone, a 39% increase from the same time last year.
• Investor communication fuels gains: Revenue from the investor communications segment grew 9% to $5.56 billion, driven by a 14% jump in regulatory work. This growth happened as the number of equity positions, or the individual stock holdings the company must track for regulatory mailings, rose 12% for the year.
• Dividend and buybacks rising: The company increased its annual dividend by 12% to $4.36 per share and authorized a new $1.5 billion program to buy back its own stock. These moves are supported by free cash flow conversion of 110%, meaning the company turned more than all of its adjusted profit into actual cash.
• Steady growth outlook provided: Management expects recurring revenue to grow between 6% and 8% and adjusted profit to rise by 8% to 12% for the upcoming fiscal year. They also forecast that new business sales will land between $290 million and $330 million as they continue to digitize financial communications.

Our take: This was a very strong finish to the fiscal year, marked by hitting the high end of growth targets and setting a record for new sales. The 12% dividend hike and massive new buyback plan show management is confident that their essential role in financial markets will keep generating plenty of cash. This result solidifies the long term case for the stock.