D&B (NYSE: DNB), the leading provider of global business information,
tools and commercial insight, today reported results for the first
quarter ended March 31, 2007.
?We feel good about our first quarter results
and our outlook for 2007,? said Steve Alesio,
chairman and CEO of D&B. ?We're
making early progress against our strategic growth plan and we remain
confident in the sustainability of our performance and our ability to
drive total shareholder return in the future.?
First Quarter 2007 Results
Diluted earnings per share before non-core gains and charges for
the quarter ended March 31, 2007, were $0.98, up 21 percent from $0.81
in the prior year period. On a GAAP basis, diluted earnings per share
were $0.87, up 16 percent from $0.75 in the prior year period.
See attached Schedule 3 for a reconciliation of diluted earnings per
share before non-core gains and charges to earnings per share on a GAAP
basis, as well as the definitions of the non-GAAP financial measures
that the Company uses to evaluate the business.
Core and total revenue for the first quarter of 2007 was $392.3
million, up 5 percent before the effect of foreign exchange (up 7
percent after the effect of foreign exchange) compared with the prior
year quarter.
Core and total revenue results for the first quarter of 2007 reflect the
following by solution set:
Risk Management Solutions revenue of $254.7 million, up 2 percent
before the effect of foreign exchange (up 4 percent after the effect
of foreign exchange);
Sales & Marketing Solutions revenue of $103.8 million, up 8 percent
before the effect of foreign exchange (up 9 percent after the effect
of foreign exchange);
E-Business Solutions revenue of $24.7 million, up 19 percent (both
before and after the effect of foreign exchange); and
Supply Management Solutions revenue of $9.1 million, up 20 percent
before the effect of foreign exchange (up 21 percent after the effect
of foreign exchange).
See attached Schedules 4 and 5 for additional detail.
Operating income before non-core gains and charges for the first
quarter of 2007 was $101.0 million, up 9 percent from the prior year
period. On a GAAP basis, operating income was $85.4 million, down 1
percent from the prior year period. During the first quarter of 2007,
the Company also incurred transition costs of $2.9 million compared with
$4.5 million in the prior year period.
Net income before non-core gains and charges for the first
quarter of 2007 was $59.6 million, up 7 percent from $55.7 million in
the prior year period. On a GAAP basis, net income for the quarter was
$52.7 million, up 3 percent from $51.5 million in the prior year period.
See attached Schedule 3 for additional detail.
Free cash flow for the first quarter of 2007, excluding the
impact of legacy tax matters, was $104.6 million, up 49 percent from the
first quarter of 2006.
The Company defines free cash flow as net cash provided by operating
activities less capital expenditures and additions to computer software
and other intangibles. Net cash provided by operating activities,
excluding the impact of legacy tax matters, was $119.6 million, up 57
percent from the first quarter of 2006. On a GAAP basis, net cash
provided by operating activities was $119.6 million, compared to $36.2
million in the prior year period.
See attached Schedule 4 for additional detail.
Share repurchases during the first quarter of 2007, under the
Company's current one-year program commenced
in the fourth quarter of 2006 totaled $68.7 million, with $143.7 million
repurchased since inception. This amount is in addition to the Company's
existing repurchase program to offset the dilutive effect of shares
issued under employee benefit plans, which totaled $36.9 million in the
first quarter of 2007.
The Company ended the quarter with $139.6 million of cash and cash
equivalents.
First Quarter 2007 Segment Results
United States
Core and total revenue for the first quarter of 2007 was $302.5
million, up 6 percent from $286.0 million in the prior year quarter.
U.S. core and total revenue results for the first quarter of 2007
reflect the following:
Risk Management Solutions revenue of $181.6 million, up 3 percent;
Sales & Marketing Solutions revenue of $89.6 million, up 7 percent;
E-Business Solutions revenue of $22.9 million, up 17 percent; and
Supply Management Solutions revenue of $8.4 million, up 26 percent.
See attached Schedules 4 and 5 for additional detail.
Operating income for the quarter was $109.1 million, up 5 percent
from the prior year quarter. The increase was primarily due to improved
revenue in the U.S. segment, partially offset by costs associated with
investments to enhance the Company's strategic
capabilities.
International
Core and total revenue for the first quarter of 2007 was $89.8
million, up 3 percent before the effect of foreign exchange (up 11
percent after the effect of foreign exchange) from $81.2 million in the
prior year period. During the first quarter of 2007, the Italian Real
Estate Data business had a negative 4 point impact on International
revenue results, primarily due to the impact of ongoing legislative
changes in Italy. All of this impact is reflected in the Risk Management
Solutions results.
International core and total revenue results for the first quarter of
2007 reflect the following:
Risk Management Solutions revenue of $73.1 million, flat with the
prior year period before the effect of foreign exchange (up 8 percent
after the effect of foreign exchange);
Sales & Marketing Solutions revenue of $14.2 million, up 16 percent
before the effect of foreign exchange (up 24 percent after the effect
of foreign exchange);
E-Business Solutions revenue of $1.8 million, up 51 percent before the
effect of foreign exchange (up 63 percent after the effect of foreign
exchange); and
Supply Management Solutions revenue of $0.7 million, down 26 percent
before the effect of foreign exchange (down 20 percent after the
effect of foreign exchange).
See attached Schedules 4 and 5 for additional detail.
Operating income before non-core gains and charges for the first
quarter of 2007 was $11.6 million, an increase of 33 percent from the
prior year quarter. This increase was primarily driven by the benefit of
our prior year reengineering efforts. On a GAAP basis, operating income
was $10.8 million, up 24 percent from the prior year quarter.
Non-Core Gains and Charges
During the first quarter of 2007, the Company recorded a net pre-tax,
non-core charge of $14.8 million related to its financial flexibility
initiatives. In addition, the Company recorded a pre-tax, non-core gain
of $5.8 million associated with the Huaxia D&B China joint venture and a
pre-tax charge of $0.8 million associated with the settlement of an
International payroll tax matter related to a divested entity.
During the first quarter of 2006, the Company recorded a net pre-tax,
non-core charge of $6.4 million related to its financial flexibility
initiatives.
See attached Schedule 3 for additional detail.
D&B's restructuring charges may be viewed
as recurringas they are part of its Financial Flexibility
initiatives. In addition to reporting GAAP results, the Company reports
results before restructuring charges and other non-core gains and
charges because they are not a component of its ongoing income or
expenses and may have a disproportionate positive or negative impact on
the results of its ongoing underlying business operations. For
additional information, see the section titled ?Use
of Non-GAAP Financial Measures? below.
Dividend Declared
D&B announced today that its Board of Directors has declared a quarterly
cash dividend of $0.25 per share. This quarterly cash dividend is
payable on June 15, 2007, to shareholders of record at the close of
business on May 31, 2007.
New $200 Million One-Year Share Repurchase Program
The Company announced today that its Board of Directors has authorized a
new $200 million one-year share repurchase program. The new program will
commence after completion of the current $200 million program, which has
$56.3 million remaining. The Company anticipates that the new $200
million program will be completed within 12 months after its initiation.
Full Year 2007 Outlook Confirmed
The Company confirmed the following full year guidance for 2007:
Core revenue growth of 6 percent to 8 percent, before the effect of
foreign exchange, all of which will be organic;
Operating income growth before non-core gains and charges of 8 percent
to 10 percent;
Diluted EPS growth of 13 percent to 16 percent before non-core gains
and charges;
Free cash flow of $310 million to $325 million. As a reminder, the
Company's free cash flow outlook excludes the impact of any payments
made in connection with the Company's legacy tax matters; and
Tax rate before non-core gains and charges of approximately 37 percent
to 38 percent.
D&B does not provide guidance on a GAAP basis because D&B is unable to
predict, with reasonable certainty, the future movement of foreign
exchange rates or the future impact of non-core gains and charges, such
as restructuring charges and legacy tax matters, which are a component
of the most comparable financial measures calculated in accordance with
GAAP. Non-core gains and charges are uncertain and will depend on
several factors, including industry conditions, and could be material to
D&B's results computed in accordance with GAAP.
Use of Non-GAAP Financial Measures
D&B reports non-GAAP financial measures in this press release and the
schedules attached. D&B reports core revenue and core revenue growth
before the effects of foreign exchange. Additionally, the Company
reports organic core revenue growth and each of operating income,
operating margin, net income, diluted earnings per share and tax rate
(defined as Provision for Income Taxes divided by Income before
Provision for Income Taxes) before non-core gains and charges, and free
cash flow. See ?Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations ?
How We Manage Our Business? in the Company's
Annual Report on Form 10-K for the year ending December 31, 2006, filed
February 28, 2007 with the SEC, for a discussion of how the Company
defines these measures, why it uses them and why it believes they
provide useful information to investors. These measures are defined in
Schedule 3 attached to this earnings release.
First Quarter Teleconference
As previously announced, D&B will review its first quarter 2007
financial results in a conference call with the investment community on
Friday, May 4, 2007, at 10 a.m. ET. Live audio, as well as a replay of
the conference call and other related information, will be accessible on
D&B's Investor Relations Web site at http://investor.dnb.com.
About D&B
D&B (NYSE:DNB) is the world's leading
source of commercial information and insight on businesses, enabling
companies to Decide with Confidence®for over 165 years. D&B's global
commercial database contains more than 110 million business records. The
database is enhanced by D&B's proprietary
DUNSRight® Quality
Process, which provides our customers with quality business information.
This quality information is the foundation of our global solutions that
customers rely on to make critical business decisions.
D&B provides customers with four solution sets, which meet a diverse set
of customer needs globally. Customers use D&B Risk Management SolutionsTM
to mitigate credit risk, increase cash flow and drive increased
profitability; D&B Sales & Marketing SolutionsTM
to increase revenue from new and existing customers; D&B E-Business
SolutionsTM to convert prospects into clients
faster by enabling business professionals to research companies,
executives and industries; and D&B Supply Management SolutionsTM
to increase cash by generating ongoing savings from our customers'
suppliers and by protecting our customers from serious financial,
operational and regulatory risk. For more information, please visit www.dnb.com.
Forward-Looking and Cautionary Statements
This press release, including, in particular, the section titled ?Full-Year
2007 Outlook Confirmed,? contains projections
of future results and other forward-looking statements that involve a
number of trends, risks and uncertainties, and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995.
The following important factors could cause actual results to differ
materially from those projected in such forward-looking statements.
D&B relies significantly on third parties to support critical
components of its business model in a continuous and high-quality
manner, including third-party data providers, strategic partners in
its Worldwide Network, and outsourcing partners.
Demand for D&B's products is subject to
intense competition, changes in customer preferences and, to a lesser
extent, economic conditions which impact customer behavior.
The profitability of D&B's
International segment depends on its ability to identify and execute
on various initiatives, such as the implementation of subscription
plan pricing and successfully managing its Worldwide Network, and its
ability to identify and contend with various challenges present in
foreign markets, such as local competition and the availability of
public records at no cost.
D&B's ability to renew large contracts,
the related revenue recognition and the timing thereof may impact its
results of operations from period to period.
D&B's results are subject to the
effects of foreign economies, exchange rate fluctuations, legislative
or regulatory requirements, such as the adoption of new or changes in
accounting policies and practices, including pronouncements by the
Financial Accounting Standards Board or other standard-setting bodies,
and the implementation or modification of fees or taxes that we must
pay to acquire, use, and/or redistribute data. In particular, D&B's
results have been, and may continue to be, significantly impacted by
legislative changes affecting the fees charged by the Italian
government to acquire and/or re-use data.
D&B's solutions and brand image are
dependent upon the integrity of its global database and the continued
availability thereof through the Internet and by other means, as well
as our ability to protect key assets, such as data center capacity.
D&B is involved in various tax matters and legal proceedings, the
outcomes of which are unknown and uncertain with respect to the impact
on D&B's cash flow and profitability.
See the Company's most recent Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q and notes to the
financial statements included therewith, for a more detailed
description of these matters.
D&B's ability to successfully implement
its Blueprint for Growth Strategy requires that it successfully reduce
its expense base through its Financial Flexibility initiatives, and
reallocate certain of the expense-base reductions into initiatives
that produce desired revenue growth.
D&B's future success requires that it
attract and retain qualified personnel in regions throughout the world.
D&B's ability to repurchase shares is
subject to market conditions, including trading volume in its stock,
and its ability to repurchase shares in accordance with applicable
securities laws.
D&B's ability to acquire and
successfully integrate other complementary businesses, products and
technologies into its existing business, without significant
disruption to its existing business or to its financial results.
D&B's projection for free cash flow in
2007 is dependent upon its ability to generate revenue, its collection
processes, customer payment patterns, the timing and volume of stock
option exercises and the amount and timing of payments related to the
tax and other matters and legal proceedings in which it is involved,
as referenced above and as more fully described in the Company's
filings with the SEC, including its most recent Annual Report on Form
10-K and Quarterly Reports on Form 10-Q and notes to the financial
statements included therewith.
For a more detailed discussion of the trends, risks and uncertainties
that may affect D&B's operating and
financial results and its ability to achieve the financial objectives
discussed in this press release, readers should review the Company's
most recent filings with the SEC, including the Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. Copies of the Company's
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q are
available on its Web site at www.dnb.com
and on the SEC's web site at www.sec.gov.
D&B cautions that the foregoing list of important factors is not
complete and except as otherwise required by federal securities laws
does not undertake any obligation to update any forward-looking
statements.
Schedule 1
The Dun & Bradstreet Corporation
Consolidated Statement of Operations (unaudited) - As
Reported
Quarter Ended
March 31,
Amounts in millions, except per share data
2007
2006
AFX
% Change
Fav/(Unfav)
Effects of Foreign Exchange Fav/(Unfav)
BFX
% Change
Fav/(Unfav)
Revenue:
U.S.
$
302.5
$
286.0
6%
0%
6%
International
89.8
81.2
11%
8%
3%
Core and Total Revenue
$
392.3
$
367.2
7%
2%
5%
Operating Income (Loss):
U.S.
$
109.1
$
103.7
5%
International (1)
10.8
8.7
24%
Total Divisions
119.9
112.4
7%
Corporate and Other (2)
(34.5)
(26.4)
(31)%
Operating Income
85.4
86.0
(1)%
Interest Income
1.5
2.7
(45)%
Interest Expense
(6.4)
(5.4)
(18)%
Other Income (Expense) - Net (3)
5.9
(0.5)
N/M
Non-Operating Income (Expense) - Net
1.0
(3.2)
N/M
Income before Provision for Income Taxes
86.4
82.8
4%
Provision for Income Taxes
33.8
31.3
(8)%
Minority Interest Income (Expense)
-
(0.1)
N/M
Equity in Net Income (Loss) of Affiliates
0.1
0.1
N/M
Net Income (4)
$
52.7
$
51.5
3%
Basic Earnings Per Share of Common Stock
$
0.89
$
0.77
16%
Diluted Earnings Per Share of Common Stock (5)
$
0.87
$
0.75
16%
Weighted Average Number of Shares Outstanding:
Basic
59.4
66.4
11%
Diluted
60.9
68.4
11%
AFX - After Effects of Foreign Exchange
BFX - Before Effects of Foreign Exchange
N/M - Not Meaningful
See Schedule 3 (Notes to Schedules), which is an integral part
of the consolidated statement of operations.
This financial information should be read in conjunction with
the consolidated financial statements and related notes of The Dun
& Bradstreet Corporation contained in filings with the Securities
and Exchange Commission.
Schedule 2
The Dun & Bradstreet Corporation
Consolidated Statement of Operations (unaudited) - Before
Non-Core Gains and Charges
Recommend:
