Dun & Bradstreet (DNB) Q1 Earnings & Revenues Top Estimates

The Dun & Bradstreet Corporation (NYSE:DNB) reported first-quarter 2017 results wherein adjusted earnings of 95 cents per share and revenues of $381.5 million easily beat the Zacks Consensus Estimate of 89 cents and $378.4 million, respectively.

On a year-over-year basis, adjusted earnings fell 19.5% but revenues grew 1.7%.

Quarter Details

On an adjusted basis and after including forex effect, total revenue came in at $383.8 million, up 2% year over year. Adjusted deferred revenues were up 1% after including forex effect.

Organic revenues came in at $370.7 million, almost flat year over year.

Region wise, adjusted revenues from the company’s Americas segment were up 2% year over year to $316.3 million whereas that from Non-Americas declined 1% to $67.5 million.

Segment wise, on an adjusted basis and after including forex effect, Risk Management Solutions revenues from Americas were up 1% year over year to $182 million. Sales & Marketing Solutions revenues from the region grew 4% from the year-ago quarter to $134.3 million.

In Non-Americas, adjusted Risk Management Solutions revenues declined 4% year over year to $54.4 million. Sales & Marketing Solutions Non-Americas grew 15% from the year-ago quarter to $13.1 million.

Margins

On an adjusted basis, total operating costs were down 4% to $316.6 million. Adjusted total operating income was $67.2 million, down 9% year over year.

Balance Sheet & Cash Flow

Dun & Bradstreet ended the quarter with $375.4 million in cash and cash equivalents and long-term debt of $1.685 billion. The company’s net debt position as of Mar 31, 2017 was $1.332 billion.

For the quarter, cash flow from operating activities was $123.8 million while free cash flow was $108.3 million, down 6% year over year.

Outlook

For 2017, management expects adjusted earnings per share to be down in the range of 4% to 9%. Revenues are expected to increase in the band of 3% to 5% (before forex effect).

Organic revenues are likely to increase in the band of 1% to 3% (before forex effect). Adjusted operating income is projected to be in the range of negative 2% to positive 2%.

Free cash flow will be in a bracket of $215 million to $245 million (excluding any regulatory fines impact from China operations)

Our Take

Dun & Bradstreet is expected to benefit from its high-margin business model and strong product portfolio. Its partnerships with big players have also helped it bring many more customers into the fold. Plus, the company is also well-positioned to gain from its strategic acquisitions and alliances. The company’s focus on expanding analytics capabilities is another positive.

Though Dun & Bradstreet’s Americas business remains strong, the international business continues to be a drag on financials. A weak DNBi business and a high debt are the other areas of concerns. Plus, increasing competition from companies such as S&P Global, Inc. (NYSE:SPGI) , FactSet Research Systems Inc. (NYSE:FDS) and Nielsen N.V. (NYSE:NLSN) and a high debt level remain major concerns.

Shares of Dun & Bradstreet have underperformed the Zacks Business Information Service industry in the last one year. The company’s shares have decreased 0.61% compared with the industry’s gain of 2.58% during the period.

Currently, Dun & Bradstreet has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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