Dun & Bradstreet Corp. DNB reported second-quarter 2015 adjusted earnings of $1.25 per share, which missed the Zacks Consensus Estimate of $1.29. Quarterly earnings declined 11% from $1.41 per share reported in the prior-year quarter.
Revenues
Quarterly revenues increased 2% on a year-over-year basis to $375.4 million, lagging the Zacks Consensus Estimate of $402 million.
Revenues from the company’s Americas segment grew 5% year over year to $302.9 million while that from Non-Americas declined 10% to $72.5 million owing to adverse currency translations.
Risk Management Solutions revenues from Americas decreased 5% year over year to $174.4 million while Sales & Marketing Solutions revenues from the region dipped 0.2% from the year-ago quarter to $128.5 million.
Risk Management Solutions Non-Americas revenues declined 11% year over year to $59.2 million. Sales & Marketing Solutions Non-Americas declined 7% from the year-ago quarter to $13.3 million.
Margins
Total operating costs were down 8% to $301.4 million. Total operating income was $80.2 million, down from $89.4 million in the year ago quarter.
Balance Sheet & Cash Flow
Dun & Bradstreet ended the quarter with $137.8 million in cash and cash equivalents, down from $355.2 million in the previous quarter. Long-term debt was $1.5 billion compared with $1.4 billion at the end of the preceding quarter. The company’s net debt position was $1.7 billion.
Guidance
For 2015, D&B expects revenues to increase 6% to 9%, before the effect of foreign exchange. However, operating income is expected to be flat to up 4%.
Earnings per share are expected to be down 3% to up 1%. Free cash flow is expected to be in the range of $255 million to $285 million for the full year.
Our Take
We believe that DNB’s high-margin business model, strong international growth potential, strategic investments, partnerships, accretive cloud-based acquisitions and aggressive share buyback will drive growth.
Also, the company will be able to provide a wide range of products given its partnerships with the likes of Salesforce.com CRM, Oracle Corp., SugarCRM, Salesforce Wave analytics platform and Lattice Engines, which in turn will drive top-line growth.
In Jan 2015, the company acquired NetProspex, a leading B2B professional contact data and data management services provider. This acquisition is likely to drive growth going forward.
However, increasing competition from companies such as Equifax Inc. EFX and Nielsen N.V. NLSN will continue to hurt revenues and profitability in the near term. Moreover, a higher debt level remains a concern.
Currently, D&B has a Zacks Rank #2 (Buy).
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