Dun & Bradstreet Corp.
) reported first quarter 2013 earnings of $1.36 per share, which
beat the Zacks Consensus Estimate by 3 cents. Earnings per share
increased modestly from the year-ago quarter but declined 42.9%
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Core revenues declined a modest 0.9% year over year but plunged
17.7% sequentially to $381.0 million in the first quarter.
Including $18.4 million from divested operations in the year-ago
quarter, revenues declined 5.4% year over year and 17.7%
sequentially and missed the Zacks Consensus Estimate of $387.0
The weak year-over-year result was primarily due to sluggish
performance from Risk Management Solutions (down 1.9%), which
fully offset growth (up 1.1%) in the Sales & Marketing
Solutions segment. Sequentially, revenues were negatively
impacted by a 17.8% plunge in Sales & Marketing Solutions
segment and 9.0% decline in Risk Management Solutions.
D&B recorded a 0.8% year-over-year decline in revenues from
North America. International revenues decreased 1.1% from the
year-ago quarter, primarily due to weak results from Europe and
other international markets (down 1.7%). Asia-Pacific remained
almost flat in the first quarter.
Revenues from North America plunged 19.7% sequentially.
International decreased 11.3% from the previous quarter,
primarily due to a 14.7% decline in Europe and other
international markets and a 6.3% decline in the Asia-Pacific
Operating margin was 24.1% compared with 27.6% in the year-ago
quarter and 37.2% in the previous quarter. This was primarily due
to lower revenue base.
Operating costs as a percentage of revenues declined to 75.9%
from 77.2% in the year-ago quarter but were up from 65.7% in the
previous quarter. Operating expense, selling & administration
expense and depreciation & amortization expenses, as a
percentage of revenues improved significantly, primarily
reflecting stringent cost control and improving efficiency.
Net income as a percentage of revenues was 14.6% compared with
17.0% in the year-ago quarter and 22.4% in the previous quarter.
D&B ended the quarter with $172.8 million in cash and cash
equivalents, up from $149.1 million in the previous quarter.
Total debt was $1.30 billion versus $1.29 billion at the end of
the preceding quarter.
D&B expects core revenues to remain flat to up 3.0%, before
the effect of foreign exchange. Operating income is expected to
decrease in the range of 6.0% to 3.0%. Earnings are expected to
grow in the 8.0% to 11.0% range, before non-core gains and
charges. D&B expects free cash flow between $270.0 million
and $300.0 million.
We believe that D&B's high-margin business model, strong
international growth potential, emerging market growth
opportunities, strategic investments, incremental cost savings
and new product pipeline will drive growth over the long term.
However, we believe that the 2013 outlook reflects a sluggish
macroeconomic environment in its operating markets. Moreover, we
believe that increasing competition from companies including
) will also hurt profitability going forward.
Currently, D&B has a Zacks Rank #3 (Hold).