Dun & Bradstreet Corp. (
reported third quarter 2013 earnings of $2.01 per share, which
handily beat the Zacks Consensus Estimate by 13 cents. Earnings
per share rose 14.2% from the year-ago quarter and 31.4%
Core revenues increased a modest 0.5% year over year and 6.4%
sequentially to $411.1 million, which however lagged the Zacks
Consensus Estimate of $414.0 million.
The modest year-over-year growth was primarily due to weak
performance from Risk Management Solutions (down 0.9%). Sales
& Marketing Solutions revenues remained almost flat year over
Sequentially, revenues were positively impacted by a 16.1% rise
in Sales & Marketing Solutions and a 1.6% increase in Risk
Management Solutions revenues.
D&B recorded a year-over-year decline in revenues from North
America. International revenues increased 0.5% from the year-ago
quarter, primarily due to strong results from Europe and other
International markets (up 1.3%). Asia-Pacific revenues dropped
0.7% in the third quarter.
Revenues from North America increased 9.7% sequentially. However,
international revenues decreased 2.2% from the previous quarter,
primarily due to a 9.9% fall in revenues from the Asia-Pacific
region. Europe and other international markets climbed 4.3% from
the previous quarter.
Operating margin remained almost flat year over year but expanded
520 basis points (bps) sequentially to 31.0%. The sequential
expansion was primarily due to positive impact of the
Total operating costs as a percentage of revenues decreased 10
bps from the year-ago quarter, driven by significantly lower
depreciation & amortization expense (down 60 bps) and selling
& administration expense (down 330 bps), which fully offset
higher operating expense (up 380 bps).
Sequentially, operating cost declined 520 bps due to a sharp
decrease in selling & administration expense (down 330 bps)
and lower depreciation & amortization expense (down 40 bps)
and operating expense (down 160 bps).
Net income margin declined 20 bps from the year-ago quarter but
increased 320 bps from the previous quarter to 19.0%.
D&B ended the quarter with $214.3 million in cash and cash
equivalents, up from $196.5 million in the previous quarter.
Total debt was $1.46 billion versus $1.41 billion at the end of
the preceding quarter.
For fiscal 2013, D&B continues to expect core revenues to
increase in the range of 0% to 3.0%, before the effect of foreign
exchange. Operating income is expected to decrease in the range
of 3.0% to 6.0%. 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. Further, a
sequential decline in revenues in the Asia-Pacific market will
remain a concern in the near term.
Moreover, we believe that increasing competition from companies
Equifax Inc. (
Moody's Corp (
will hurt profitability going forward.
Currently, D&B has a Zacks Rank #4 (Sell).
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