D&B Quarterly Summary Q4 2013AFor the full year of 2013 core revenue was up 1% year-over-year, both before and after the effect of foreign exchange. Total revenue was flat year over year before the effect of foreign exchange and down 1% after the effect of foreign exchange  Operating income before non-core gains and charges, was down 6% year over year; GAAP operating income was up 1%.  Free cash flow for the full year 2013 was $278.2 million; Net cash provided by operating activities for the full year 2013 was $333.3 million.

D&B Full Yaer 2013Full Year 2013 Segment Results

North America:  Core and total revenue were $1,233.9 million, up 1%, year over year, both before and after the effect of foreign exchange.  Operating income before non-core gains and charges was $438.7 million, down 9%, year over year. On a GAAP basis, operating income was $407.4 million, down 15%.

  • Risk Management Solutions:  US$ 693.2m (-1%)
  • Sales & Marketing Solutions:  US$ 540.7m (3%)

Asia Pacific: Core revenue was $179.3 million, up 5%, year over year, before the effect of foreign exchange (up 2% after the effect of foreign exchange). Total revenue was $179.3 million, down 5%, year over year, before the effect of foreign exchange (down 8% after the effect of foreign exchange).  Operating income before non-core gains and charges was $21.0 million, up 6%, year over year. On a GAAP basis, operating income was $19.0 million, compared to $4.7 million from the prior year similar period.

  • Risk Management Solutions:   US$ 154.5m (5%)
  • Sales & Marketing Solutions:   US$   24.8m (-15%)

Europe & Other International Markets:  Core and total revenue were $242.0 million, flat, year over year, both before and after the effect of foreign exchange.  Operating income was $72.9 million, up 6%, year over year.

  • Risk Management Solutions:  US$ 198.3m (-1%)
  • Sales & Marketing Solutions:  US$   43.7m (3%)

Leadership Changes: D&B announced a simplified global organizational structure which eliminates the previous regional structure.  The respective leaders for North America and D&B International have left or will leave D&B shortly.  Josh Peirez, President, Global Product, Marketing and Innovation was promoted to Chief Operating Officer.  D&B has brought in new leadership talent in the area of sales (from Thomson Reuters), marketing (from Dell) and human resources (from AOL).

D&B Strategy:  The five key components to D&B’s strategy are to invest in content; modernizing delivery; globalizing the business; modernizing the brands and creating a forward leaning outside in culture.

Bob Carrigan outlined his strategy in a recent conference call with investors. To describe this strategy in a nutshell D&B is to become one global company delivering indispensable content through modern channels to serve new customer needs.

  1. Investing in content which is the marriage of data, analytics and insights to increase value for customers.  There are three parts to this:
    1. Improving the quality and consistency of D&B’s data around the globe. Not all of its markets are at the same level as the U’S
    2. Developing new analytic tools and scores which are vastly improving the predictiveness of content
    3. Cultivating new proprietary data sources and combining them with our existing data
  2. To modernize delivery by liberating content – make it more useful for customers.  In essence changing from predetermined products to allowing customer to decide how they are going to use D&B’s content.
  3. To globalize the business:  With only 25% of revenue originating from outside the US there is an imperative to grow the business globally. To make it happen all six senior executives have global responsibilities.   In terms of revenues from outside the US not much progress had been made during the past 10 years, thus this would be a welcome priority for clients who do business outside the US.  It would mean migrating US capabilities to markets outside the US and to persuade the D&B network partners to create better insights of data originating from the developing world.
  4. To modernize the brand:  According to Corrigan D&B’s brand should be understood for what it is becoming and not what it has been.  For this task D&B has hired Rishi Dave who previously ran digital marketing for Dell’s B2B business.
  5. To create an outside in forward leaning culture.  The goal is to create an organization which is externally focused, active in social media, plugged into the market to identify new needs.   To make it happen D&B has hired a new Chief People Officer, John Reid-Dodick, who is a best-in-class leader in cultural transformation, most recently at AOL.

In reference to content Bob Corrigan stressed the imperative of keeping data secure.  Cyber-attacks on data are becoming a daily occurrence.  D&B had been targeted as well.  D&B is committed to protecting its data sources around the world and is to invest significantly to upgrading its security.

Shedding non-performing assets:  In connection with a recent review of its business, D&B determined that the new data supply chain (MaxCV) was not a necessary component of our go forward strategy to grow the business, and that our prior MaxCV goals to reduce the cost of operations to drive sustainability can be largely met without deployment of the new data supply chain.

Source:  D&B Press Release and Seeking Alpha Earnings Call Transcript