D&B Q4 2012 ResultsCore revenue for the full year 2012 was $1,644.3 million, up 1% before the effect of foreign exchange (flat after the effect of foreign exchange), as compared to the prior year similar period.

Core revenue results for the full year 2012 reflect the following by solution set:

  • Risk Management Solutions revenue of $1,047.6 million, down 2% before the effect of foreign exchange (down 3% after the effect of foreign exchange), as compared to the prior year similar period;
  • Sales & Marketing Solutions revenue of $478.5 million, up 6% both before and after the effect of foreign exchange, as compared to the prior year similar period; and
  • Internet Solutions revenue of $118.2 million, down 1% both before and after the effect of foreign exchange, as compared to the prior year similar period.

D&B 2012 Full Year Results by Service SegmentTotal revenue for the full year 2012 was $1,663.0 million, down 5% both before and after the effect of foreign exchange, as compared to the prior year similar period. Total revenue for the full year 2012 and the full year 2011 include the results from businesses that were divested or shut down.

Operating income before non-core gains and charges for the full year 2012 was $520.3 million, up 4% from the prior year similar
period. On a GAAP basis, operating income for the full year 2012 was $432.1 million, up 2% from the prior year similar period.

Free cash flow for the full year 2012, excluding the impact of legacy tax matters, was $283.4 million, including approximately $46 million related to MaxCV, compared to $251.9 million and $55 million, respectively, in the prior year similar period.

Share repurchases during the full year 2012 under the Company’s discretionary repurchase program totaled$480.1 million (approximately 6.5 million shares), while repurchases made to offset the dilutive effect of shares issued under employee benefit plans totaled an additional $27.9 million (approximately 0.4 million shares).

Repurchases during the fourth quarter 2012 under the Company’s discretionary repurchase program totaled $244.1 million (approximately 3.1 million shares), while repurchases made to offset the dilutive effect of shares issued under employee benefit plans totaled an additional $23.9 million (approximately 0.3 million shares).

The Company ended 2012 with $149.1 million of cash and cash equivalents and total gross debt of $1,290.9 million.

D&B 2012 Full Year Results GeoMaxCV

In February 2010, D&B announced a Strategic Technology Investment program aimed at strengthening its leading position in commercial data and improving its current technology platform to meet the emerging needs of customers. We refer to this program as “MaxCV.”

In the fourth quarter of 2012, the Company incurred $4.7 million of total pre-tax expenses (or $0.06 per diluted share) on MaxCV, which is included in the Non-Core Gains and Charges noted below, and $5.8 million of capital expenditures and additions to computer software and other intangibles related to MaxCV.

For the full year 2012, D&B incurred $30.3 million of total pre-tax expenses (or $0.45 per diluted share) on MaxCV, which was included in the Non-Core Gains and Charges, and $28.2 million of capital expenditures and additions to computer software and other intangibles related to MaxCV.

During 2013, it expects to spend between $25 million to $30 million for the deployment of the Company’s new data supply chain (built as part of our MaxCV program) to other markets. These costs will be absorbed in our core operating expenses.

D&B’s management stated that its new data supply chain system is in place and it is now concentrating on analytics to derive additional insight from data which it is collecting.

Full Year 2013 Guidance

D&B provided the following financial guidance for the full year 2013:

  • Core revenue growth of 0% to 3%, before the effect of foreign exchange;
  • Operating income decline of 6% to 3%, before non-core gains and charges, including $25 million to $30 million in costs related to the deployment of our new data supply chain;
  • Diluted EPS growth of 8% to 11%, before non-core gains and charges; and
  • Free cash flow of $270 million to $300 million, which excludes the impact of legacy tax matters and any potential regulatory fines associated with our China operations.

Full Year 2012 Segment Results

North America

Core revenue for the full year 2012 was $1,225.6 million, down 1% both before and after the effect of foreign exchange, as compared to the prior year similar.

North America core revenue results for the full year 2012 reflect the following:

  • Risk Management Solutions revenue of $700.6 million, down 4% both before and after the effect of foreign exchange, as compared to the prior year similar period;
  • Sales & Marketing Solutions revenue of $410.2 million, up 5% both before and after the effect of foreign exchange, as compared to the prior year similar period; and
  • Internet Solutions revenue of $114.8 million, down 1% both before and after the effect of foreign exchange, as compared to the prior year similar period.

Total revenue for the full year 2012 was $1,225.6 million, down 2% both before and after the effect of foreign exchange, as compared to the prior year similar period. Total revenue for the full year 2011 included the results of Allbusiness, Purisma and a small supply management company, that were all divested.

Operating income before non-core gains and charges for the full year 2012 was $480.9 million, down 1% from the prior year similar period. On a GAAP basis, operating income for the full year 2012 was $480.9 million, flat compared to the prior year similar period.

Asia Pacific

Core revenue for the full year 2012 was $176.8 million, up 9% before the effect of foreign exchange (up 7% after the effect of foreign exchange), as compared to the prior year similar period.

Asia Pacific core revenue results for the full year 2012 reflect the following:

  • Risk Management Solutions revenue of $147.5 million, up 3% before the effect of foreign exchange (up 2% after the effect of foreign exchange), as compared to the prior year similar period;
  • Sales & Marketing Solutions revenue of $28.5 million, up 55% before the effect of foreign exchange (up 47% after the effect of foreign exchange), as compared to the prior year similar period; and
  • Internet Solutions revenue of $0.8 million, flat before the effect of foreign exchange (down 10% after the effect of foreign exchange), as compared to the prior year similar period.

Total revenue for the full year 2012 was $195.5 million, down 27% both before and after the effect of foreign exchange, as compared to the prior year similar period. Total revenue for the full year 2012 and the full year 2011 include the results from businesses that were divested or shut down.

Operating income before non-core gains and charges for the full year 2012 was $19.7 million, up 17% from the prior year similar period.

On a GAAP basis, operating income for the full year 2012 was $4.7 million, down 72% from the prior year similar period, primarily due to impairment charges in the current year related to the shut down of our Roadway operations inChina.

Europe & Other International Markets

Core and total revenue for the full year 2012 was $241.9 million, up 3% before the effect of foreign exchange (down 1% after the effect of foreign exchange), as compared to the prior year similar period.

Europe & Other International Markets core and total revenue results for the full year 2012 reflect the following:

  • Risk Management Solutions revenue of $199.5 million, up 4% before the effect of foreign exchange (flat after the effect of foreign exchange), as compared to the prior year similar period;
  • Sales & Marketing Solutions revenue of $39.8 million, flat before the effect of foreign exchange (down 3% after the effect of foreign exchange), as compared to the prior year similar period; and
  • Internet Solutions revenue of $2.6 million, up 18% before the effect of foreign exchange (up 16% after the effect of foreign exchange), as compared to the prior year similar period.

Operating income for the full year 2012 was $68.8 million, up 25% from the prior year similar period.

2013 Financial Flexibility

D&B continues to create financial flexibility through several reengineering initiatives aimed at greater efficiency and effectiveness, including the following:

  • redesigning and optimizing enabling functions;
  • creating global utilities/shared services;
  • rationalizing and consolidating vendors; and
  • eliminating spend on low ROI activities.

D&B expects its ongoing financial flexibility initiatives to create $70 million to $80 million of financial flexibility in 2013, before any restructuring charges and before any reallocation of savings generated by the initiatives. The Company expects to incur pre-tax restructuring charges totaling $17 million to $22 million associated with its ongoing reengineering initiatives.

Source:  D&B Earnings Release