Dun & Bradstreet Corp. (
reported second quarter 2013 earnings of $1.53 per share, which
beat the Zacks Consensus Estimate by 3 cents. Earnings per share
climbed 2.0% from the year-ago quarter but jumped 12.5%
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Core revenues increased a modest 0.7% year over year and 1.4%
sequentially to $386.4 million, which beat the Zacks Consensus
Estimate by $2.4 million.
The modest year-over-year growth was primarily due to
better-than-expected performance from Risk Management Solutions
(up 1.0%). Sales & Marketing Solutions revenues remained
almost flat year over year.
Sequentially, revenues were negatively impacted by a 4.5% decline
in Sales & Marketing Solutions, which was fully offset by a
4.6% increase in Risk Management Solutions.
D&B recorded flattish year-over-year growth in revenues from
North America. International revenues increased 2.9% from the
year-ago quarter, primarily due to strong results from
Asia-Pacific (up 6.3%). Europe and other International markets
remained almost flat in the second quarter.
Revenues from North America decreased 1.6% sequentially.
International increased 10.1% from the previous quarter,
primarily due to a 19.1% jump in revenues from Asia-Pacific
region. Europe and other international markets climbed 3.5% from
the previous quarter.
Operating margin contracted 390 basis points ("bps) from the
year-ago quarter but expanded 170 bps sequentially to 25.8%. The
year-over-year contraction was primarily due to higher operating
costs, which fully offset the improvement in revenue base.
Operating costs as a percentage of revenues jumped 390 bps from
the year-ago quarter, driven by significantly higher operating
(up 370 bps) and selling & administration expense (up 70
bps), partially offset by lower depreciation & amortization
expense (down 50 bps) from the year-ago quarter.
Sequentially, operating cost declined 170 bps due to a sharp
decrease in selling & administration expense (down 210 bps)
and lower depreciation & amortization expense (down 20 bps),
which fully offset higher operating expense (up 60 bps).
Net income margin plunged 260 bps from the year-ago quarter but
increased 120 bps from the previous quarter to 15.8%.
D&B ended the quarter with $196.5 million in cash and cash
equivalents, up from $172.8 million in the previous quarter.
Total debt was $1.41 billion versus $1.30 billion at the end of
the preceding quarter.
For fiscal 2013, D&B expects 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 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
Equifax Inc. (
Moody's Corp (
will also hurt profitability going forward.
Currently, D&B has a Zacks Rank #4 (Sell).