Nov 1, 2018

Dun & Bradstreet Reports Third Quarter 2018 Results

SHORT HILLS, N.J.--(BUSINESS WIRE)--Nov. 1, 2018-- Dun & Bradstreet (NYSE: DNB) today reported results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights

  • Revenue:
    • GAAP revenue of $407.3 million, down 5% year over year both after and before the effect of foreign exchange.
    • As Adjusted revenue of $416.7 million, down 3% year over year both after and before the effect of foreign exchange.
    • Organic revenue decreased 3% year over year.
  • Operating Income:
    • GAAP operating income of $82.2 million, down 14% year over year.
    • As Adjusted operating income of $105.8 million, down 7% year over year.
  • Diluted Earnings per Share (“EPS”):
    • GAAP diluted EPS of $1.35, down 7% year over year.
    • As Adjusted diluted EPS of $1.85, up 3% year over year.

GAAP results are based on Accounting Standards Codification ASC 606, Revenue from Contracts with Customers (“ASC 606”) basis for 2018 and on Accounting Standards Codification ASC 605, Revenue Recognition (“ASC 605”) basis for 2017. As Adjusted and organic numbers are on ASC 605 basis for both periods.

See attached Schedules 4 and 5 for a reconciliation of As Adjusted metrics to GAAP results, as well as the definitions of the non-GAAP financial measures that the Company uses to evaluate the business.

Deferred revenue for the Company as of September 30, 2018 was $528.9 million (based on ASC 606 standards). Under ASC 605 standards, deferred revenue as of September 30, 2018 was $615.3 million, up 1% year over year; Americas was $543.4 million, up 1% year over year and Non-Americas was $71.9 million, down 1% year over year. After adjusting for the effect of foreign exchange and acquisitions and dispositions, total Company deferred revenue (based on ASC 605 standards) was up 1%, Americas was up 1% and Non-Americas was flat, each as compared to September 30, 2017.

Third Quarter 2018 Segment Results

Americas

  • GAAP revenue of $336.3 million was down 4% year over year both after and before the effect of foreign exchange; As Adjusted revenue of $342.8 million was down 3% year over year both after and before the effect of foreign exchange;
  • GAAP operating income of $96.2 million was down 4% year over year; As Adjusted operating income of $106.0 million was down 6% year over year.

Non-Americas

  • GAAP revenue of $71.0 million was down 7% year over year after the effect of foreign exchange (down 5% before the effect of foreign exchange); As Adjusted revenue of $73.9 million was down 3% year over year after the effect of foreign exchange (down 2% before the effect of foreign exchange);
  • GAAP operating income of $18.8 million was down 18% year over year; As Adjusted operating income of $21.7 million was down 6% year over year.

See attached Schedules 4 and 5 for additional detail. Additional financial information can be found within the Company’s posted financial model, available at http://investor.dnb.com/financial-information/financial-model.

Use of Non-GAAP Financial Measures

In addition to reporting generally accepted accounting principles in the United States of America (“GAAP”) results, the Company evaluates performance and reports on a total company basis and on a business segment level basis its results (such as revenue, operating income, operating income growth, operating margin, net income, tax rate and diluted earnings per share) on an “As Adjusted” basis. The term “As Adjusted” refers to the following: the elimination of the impact of ASC 606; the elimination of the effect on revenue due to purchase accounting fair value adjustments to deferred revenue; restructuring charges; other non-core gains and charges that are not in the normal course of our business (such as gains and losses on sales of businesses, impairment charges, effect of significant changes in tax laws and material tax and legal settlements); acquisition and divestiture-related fees (such as costs for bankers, legal fees, diligence costs, retention payments, and contingent consideration adjustments); and acquisition-related intangible amortization expense. A recurring component excluded from our “As Adjusted” results is our restructuring charges, which we believe do not reflect our underlying business performance. Such charges are variable from period to period based upon actions identified and taken during each period. Additionally, our “As Adjusted” results exclude the results of Discontinued Operations.

We also isolate the effects of changes in foreign exchange rates on our revenue growth because we believe it is useful for investors to be able to compare revenue from one period to another, both after and before the effects of foreign exchange. The change in our operating performance attributable to foreign currency rates is determined by converting both our prior and current periods by a constant rate. As a result, we monitor our “As Adjusted” revenue growth both after and before the effects of foreign exchange.

We also analyze “As Adjusted” revenue growth on an organic basis because management believes this information provides important insight into the underlying/ongoing performance of the business. Organic revenue excludes the estimated revenue contribution from acquired businesses for one year from the date of the acquisition and net divested revenue which we define as the historical revenues from the divested businesses net of the annual ongoing future revenue streams resulting from the commercial arrangements entered into in connection with such divestitures.

We may from time to time use the term sales, which we define as the annual value of committed customer contracts. This term is often referred to as bookings or commitments by other companies.

We also monitor free cash flow as a measure of our business. We define free cash flow as net cash provided by operating activities minus capital expenditures and additions to computer software and other intangibles. Free cash flow measures our available cash flow for potential debt repayment, acquisitions, share repurchases, dividend payments and additions to cash, cash equivalents and short-term investments. We believe free cash flow to be relevant and useful to our investors as this measure is used by our management in evaluating the funding available after supporting our ongoing business operations and our portfolio of investments.

We also monitor deferred revenue after adjusting for the effect of foreign exchange, dispositions, acquisitions and the impacts of the write-down of deferred revenue due to purchase accounting.

We believe that the use of our non-GAAP financial measures provides useful supplemental information to our investors. Non-GAAP results are presented only as a supplement to the financial statements presented in accordance with GAAP. The non-GAAP financial information is provided to enhance the reader’s understanding of our underlying financial performance. These non-GAAP financial measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as an alternative measure of revenue, operating income, operating margin, net income, diluted EPS or net cash provided by operating activities as determined in accordance with GAAP.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes are presented and defined in Schedules 4 and 5 attached to this press release.

Cancellation of Conference Calls

In light of the proposed merger contemplated by that certain Agreement and Plan of Merger entered into by the Company on August 8, 2018 (the “Merger”), the Company has discontinued its practice of holding quarterly earnings conference calls.

About Dun & Bradstreet

Dun & Bradstreet, the global leader in commercial data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet’s Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk, and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity.

Forward-Looking and Cautionary Statements

We may from time-to-time make written or oral “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements contained in filings with the Securities and Exchange Commission, in reports to shareholders and in press releases and investor Web casts. These forward-looking statements include, without limitation, any statements related to financial guidance or strategic goals. These forward-looking statements can also be identified by the use of words like “anticipates,” “aspirations,” “believes,” “commits,” “continues,” “estimates,” “expects,” “goals,” “guidance,” “intends,” “plans,” “projects,” “strategy,” “targets,” “will” and other words of similar meaning. They can also be identified by the fact that they do not relate strictly to historical or current facts.

We cannot guarantee that any forward-looking statement will be realized. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements and whether to invest in, or remain invested in, our securities.

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying the following important factors that, individually or in the aggregate, could cause actual results to differ materially from those contained in any forward-looking statements made by us; any such statement is qualified by reference to the following cautionary factors: (i) risks and uncertainties related to the Merger, including, but not limited to, the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; the failure of the parties to satisfy conditions to completion of the proposed Merger, including the failure of the Company’s stockholders to approve the proposed Merger or the failure of the parties to obtain required regulatory approvals; and the risk that regulatory or other approvals are delayed or are subject to terms and conditions that are not anticipated; (ii) reliance on third parties to support critical components of our business model; (iii) our ability to protect our information technology infrastructure against cyber attack and unauthorized access; (iv) risks associated with potential violations of the Foreign Corrupt Practices Act and similar laws; (v) customer demand for our products; (vi) risks associated with recent changes in our executive management team and Board of Directors; (vii) the integrity and security of our global databases and data centers; (viii) our ability to maintain the integrity of our brand and reputation; (ix) our ability to renew large contracts and the related revenue recognition and timing thereof; (x) the impact of macro-economic challenges on our customers and vendors; (xi) future laws or regulations with respect to the collection, compilation, storage, use, cross-border transfer, publication and/or sale of information and adverse publicity or litigation concerning the commercial use of such information; (xii) our ability to acquire and successfully integrate other businesses, products and technologies; (xiii) adherence by third-party members of our Dun & Bradstreet Worldwide Network, or other third parties who license and sell under the Dun & Bradstreet name, to our quality standards and to the renewal of their agreements with Dun & Bradstreet; (xiv) the effects of foreign and evolving economies, exchange rate fluctuations, legislative or regulatory requirements and the implementation or modification of fees or taxes to collect, compile, store, use, transfer cross-border, publish and/or sell data; (xv) the impact of the announcement of, or failure to complete, the proposed merger on our relationships with employees, customers, suppliers, vendors and other business partners; and potential or actual litigation; and (xvi) the other factors described under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Legal Proceedings” and elsewhere in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and the Company’s other reports or documents filed or furnished with the Securities and Exchange Commission.

It should be understood that it is not possible to predict or identify all risk factors. Consequently, the above list of important factors and the Risk Factors discussed in Item 1A. of our Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q should not be considered to be a complete discussion of all of our potential trends, risks and uncertainties. Except as otherwise required by federal securities laws, we do not undertake any obligation to update any forward-looking statement we may make from time-to-time.

Additional Information and Where to Find It

We filed with the SEC and mailed to our stockholders a proxy statement in connection with the proposed Merger. We urge investors and security holders to read the proxy statement because it contains important information regarding the proposed Merger. You may obtain a free copy of the proxy statement and other related documents filed by the Company with the SEC at the SEC’s website at www.sec.gov. You also may obtain the proxy statement and other documents filed by us with the SEC relating to the proposed Merger for free by accessing our website at www.dnb.com by clicking on the link for “Investor Relations”, then clicking on the link for “Financial Information” and selecting “Annual Reports and Proxies.”

Participants in the Solicitation

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the proposed Merger. Information regarding the interests of these directors and executive officers in the proposed Merger is included in the Company’s definitive proxy statement filed with the SEC on October 2, 2018. You can obtain free copies of these documents from the Company using the contact information above.

             
The Dun & Bradstreet Corporation Schedule 1
Consolidated Statement of Operations (unaudited) - GAAP Results (ASC 606)          
 
Effects of Effects of
Quarter Ended AFX Foreign BFX Year-To-Date AFX Foreign BFX
September 30, % Change Exchange % Change September 30, % Change Exchange % Change
Dollar amounts in millions, except per share data 2018 2017 Fav (Unfav) Fav (Unfav) Fav (Unfav) 2018 2017 Fav (Unfav) Fav (Unfav) Fav (Unfav)
 
Revenue:
Americas (1) $ 336.3 $ 352.0 (4 )% (0.1 )% (4 )% $ 1,049.9 $ 1,000.1 5 % 0.0 % 5 %
Non-Americas (2)   71.0     76.3   (7 )% (1.4 )% (5 )%   215.2     215.4   0 % 2.8 % (3 )%
Total Revenue (3) $ 407.3   $ 428.3   (5 )% (0.3 )% (5 )% $ 1,265.1   $ 1,215.5   4 % 0.5 % 4 %
 
Operating Income (Loss):
Americas (4) $ 96.2 $ 100.6 (4 )% $ 328.9 $ 236.0 39 %
Non-Americas (5) 18.8 22.8 (18 )% 57.6 61.2 (6 )%
Corporate and Other (6)   (32.8 )   (27.4 ) (20 )%   (97.4 )   (83.2 ) (17 )%
Total Operating Income (7) 82.2 96.0 (14 )% 289.1 214.0 35 %
Interest Income 0.4 0.4 (8 )% 1.5 1.2 31 %
Interest Expense (13.6 ) (15.2 ) 11 % (40.9 ) (44.9 ) 9 %
Other Income (Expense) - Net (10)   (1.9 )   (1.7 ) (13 )%   (1.2 )   (2.4 ) 49 %
Non-Operating Income (Expense) - Net (11)   (15.1 )   (16.5 ) 9 %   (40.6 )   (46.1 ) 12 %
Income (Loss) Before Provision for Income Taxes 67.1 79.5 (16 )% 248.5 167.9 48 %
Less: Provision for Income Taxes (12) 16.1 24.2 34 % 38.3 51.1 25 %
Equity in Net Income (Loss) of Affiliates   0.7     0.5   32 %   1.8     3.2   (46 )%
Net Income (Loss) From Continuing Operations 51.7 55.8 (7 )% 212.0 120.0 77 %
Less: Net (Income) Loss Attributable to the Noncontrolling Interest   (1.5 )   (1.7 ) 14 %   (4.9 )   (4.5 ) (9 )%
Net Income (Loss) From Continuing Operations Attributable to Dun & Bradstreet 50.2 54.1 (7 )% 207.1 115.5 79 %
Loss on Disposal of Business, Net of Tax Impact   -     -   N/M   -     (0.8 ) N/M
Income (Loss) from Discontinued Operations, Net of Income Taxes   -     -   N/M   -     (0.8 ) N/M
Net Income (Loss) Attributable to Dun & Bradstreet (8) $ 50.2   $ 54.1   (7 )% $ 207.1   $ 114.7   81 %
 
Basic Earnings (Loss) Per Share:
From Continuing Operations $ 1.35 $ 1.46 (8 )% $ 5.58 $ 3.13 78 %
From Discontinued Operations - - N/M - (0.02 ) N/M
Basic Earnings (Loss) Per Share of Common Stock

Attributable to Dun & Bradstreet Common Shareholders

$ 1.35   $ 1.46   (8 )% $ 5.58   $ 3.11   79 %
Diluted Earnings (Loss) Per Share:
From Continuing Operations $ 1.35 $ 1.45 (7 )% $ 5.55 $ 3.11 78 %
From Discontinued Operations - - N/M - (0.02 ) N/M
Diluted Earnings (Loss) Per Share of Common Stock

Attributable to Dun & Bradstreet Common Shareholders (9)

$ 1.35   $ 1.45   (7 )% $ 5.55   $ 3.09   80 %
         
Weighted Average Number of Shares Outstanding:
Basic   37.1     37.0   0 %   37.1     36.9   0 %
Diluted   37.3     37.2   0 %   37.3     37.1   0 %
 
Operating Margins (Calculated on Total Revenue)
 
Americas 28.6 % 28.6 % 31.3 % 23.6 %
Non-Americas 26.4 % 29.8 % 26.8 % 28.4 %
Total Company   20.2 %   22.4 %   22.9 %   17.6 %
Effective Tax Rate   23.9 %   30.5 %   15.4 %   30.5 %
 
 

AFX - After Effects of Foreign Exchange                   BFX - Before Effects of Foreign Exchange                     N/M - Not Meaningful

 
* The Company has adopted Accounting Standards Codification ASC 606, Revenue from Contracts with Customers (“ASC 606”) for 2018 using
the modified retrospective transition method. As required by the new standard, the Company will report its financial results under both ASC 606
and the previous standard ASC 605, Revenue Recognition (“ASC 605”) for the 2018 transition year. As such 2018 GAAP results are presented
on an ASC 606 basis and 2017 is presented on an ASC 605 basis.
   
This financial information should be read in conjunction with the consolidated financial statements and related notes of
The Dun & Bradstreet Corporation contained in filings with the Securities and Exchange Commission.
 
   
The Dun & Bradstreet Corporation Schedule 2

Certain Selected As Adjusted Metrics (unaudited) - (ASC 605)

         
         
Effects of Effects of
Quarter Ended AFX Foreign BFX Year-To-Date AFX Foreign BFX
September 30, % Change Exchange % Change September 30, % Change Exchange % Change
Dollar amounts in millions, except per share data 2018 2017 Fav (Unfav) Fav (Unfav) Fav (Unfav) 2018 2017 Fav (Unfav) Fav (Unfav) Fav (Unfav)
Revenue:
Americas (1) $ 342.8 $ 353.7 (3 )% (0.1 )% (3 )% $ 975.2 $ 1,006.8 (3 )% 0.0 % (3 )%
Non-Americas (2)   73.9   76.3   (3 )% (1.2 )% (2 )%   220.6     215.4   2 % 3.0 % (1 )%
Total Revenue (3) $ 416.7   $ 430.0   (3 )% (0.3 )% (3 )% $ 1,195.8   $ 1,222.2   (2 )% 0.5 % (3 )%
 
Organic Revenue:
Total Revenue $ 416.7 $ 430.0 (3 )% $ 1,195.8 $ 1,222.2 (3 )%
Less:
Net Divested   -     1.4   N/M   -     3.4   N/M
Organic Revenue $ 416.7   $ 428.6   (3 )% $ 1,195.8   $ 1,218.8   (2 )%
 
Operating Income (Loss):
Americas (4) $ 106.0 $ 112.3 (6 )% $ 258.3 $ 274.1 (6 )%
Non-Americas (5) 21.7 23.1 (6 )% 63.6 62.0 2 %
Corporate and Other (6)   (21.9 )   (21.4 ) (2 )%   (63.8 )   (64.0 ) 0 %
Total Operating Income (7) $ 105.8   $ 114.0   (7 )% $ 258.1   $ 272.1   (5 )%
Net Income Attributable to Dun & Bradstreet (8) $ 69.0   $ 66.6   4 % $ 167.1   $ 153.7   9 %
Basic Earnings Per Share of Common Stock

Attributable to Dun & Bradstreet Common Shareholders

  $ 1.86   $ 1.80   3 % $ 4.50   $ 4.17   8 %
Diluted Earnings Per Share of Common Stock

Attributable to Dun & Bradstreet Common Shareholders (9)

  $ 1.85   $ 1.79   3 % $ 4.48   $ 4.14   8 %
Weighted Average Number of Shares Outstanding:
Basic   37.1     37.0   0 %   37.1     36.9   0 %
Diluted   37.3     37.2   0 %   37.3     37.1   0 %
 
Other Information:
Interest Income $ 0.4 $ 0.4 (8 )% $ 1.5 $ 1.2 31 %
Interest Expense (13.6 ) (15.2 ) 11 % (40.9 ) (44.9 ) 9 %
Other Income (Expense) - Net (10) (1.9) (1.7 ) (18 )% (1.2 ) (1.7 ) 26 %
Non-Operating Income (Expense) - Net (11) $ (15.1 ) $ (16.5 ) 8 % $ (40.6 ) $ (45.4 ) 11 %
Provision for Income Taxes (12) $ 20.9   $ 29.7   30 % $ 47.3   $ 71.7   34 %
Equity in Net Income (Loss) of Affiliates $ 0.7   $ 0.5   32 % $ 1.8   $ 3.2   (46 )%
Net (Income) Loss Attributable to the Noncontrolling Interest $ (1.5 ) $ (1.7 ) 14 % $ (4.9 ) $ (4.5 ) (9 )%
 
Operating Margins (Calculated on Total Revenue)
Americas 30.9 % 31.7 % 26.5 % 27.2 %
Non-Americas 29.3 % 30.3 % 28.8 % 28.8 %
Total Company   25.4 %   26.5 %   21.6 %   22.3 %
 
Effective Tax Rate   23.1 %   30.5 %   21.8 %   31.6 %
 
 

AFX - After Effects of Foreign Exchange              BFX - Before Effects of Foreign Exchange               N/M - Not Meaningful

 
This financial information should be read in conjunction with the consolidated financial statements and related notes of
The Dun & Bradstreet Corporation contained in filings with the Securities and Exchange Commission.
 
See Schedule 5 (Notes to Schedules) for a reconciliation of each of these As Adjusted metrics to the corresponding GAAP metrics
and the relevant definitions.
 
     
The Dun & Bradstreet Corporation Schedule 3

Supplemental Revenue Detail (unaudited) - As Adjusted (ASC605)

     
               
 
 
Quarter Ended Effects of Year-To-Date Effects of
September 30, AFX Foreign BFX September 30, AFX Foreign BFX
% Change Exchange % Change % Change Exchange % Change
Amounts in millions 2018 2017 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav) 2018 2017 Fav/(Unfav) Fav/(Unfav) Fav/(Unfav)
 
Geographic and Customer Solution Set Revenue:
Americas:
Risk Management Solutions
Trade Credit $ 126.6 $ 126.6 0 % (0.1 )% 0 % $ 366.2 $ 372.8 (2 )% 0.1 % (2 )%
Other Enterprise Risk Management   76.3   76.0 0 % (0.1 )% 0 %   195.0   195.1 0 % 0.0 % 0 %
Total Americas Risk Management Solutions 202.9 202.6 0 % (0.1 )% 0 % 561.2 567.9 (1 )% 0.0 % (1 )%
 
Sales and Marketing Solutions
Sales Acceleration $ 68.4 $ 70.4 (3 )% (0.1 )% (3 )% $ 204.2 $ 210.8 (3 )% 0.0 % (3 )%
Advanced Marketing Solutions   71.5   80.7 (11 )% (0.1 )% (11 )%   209.8   228.1 (8 )% 0.0 % (8 )%
Total Americas Sales and Marketing Solutions 139.9 151.1 (7 )% (0.1 )% (7 )% 414.0 438.9 (6 )% 0.0 % (6 )%
       
Total Americas Revenue (1) $ 342.8 $ 353.7 (3 )% (0.1 )% (3 )% $ 975.2 $ 1,006.8 (3 )% 0.0 % (3 )%
 
Non-Americas:
Risk Management Solutions
Trade Credit $ 44.2 $ 44.3 0 % (1.5 )% 1 % $ 125.8 $ 126.7 (1 )% 2.8 % (3 )%
Other Enterprise Risk Management   17.7   15.9 11 % 0.4 % 11 %   55.3   45.2 22 % 4.0 % 18 %
Total Non-Americas Risk Management Solutions 61.9 60.2 3 % (1.0 )% 4 % 181.1 171.9 5 % 3.1 % 2 %
 
Sales and Marketing Solutions
Sales Acceleration $ 4.4 $ 6.9 (35 )% (1.1 )% (33 )% $ 17.0 $ 20.2 (16 )% 3.4 % (19 )%
Advanced Marketing Solutions   7.6   9.2 (18 )% (1.9 )% (16 )%   22.5   23.3 (4 )% 1.5 % (5 )%
Total Non-Americas Sales and Marketing Solutions 12.0 16.1 (25 )% (1.5 )% (24 )% 39.5 43.5 (9 )% 2.5 % (12 )%
       
Total Non-Americas Revenue (2) $ 73.9 $ 76.3 (3 )% (1.2 )% (2 )% $ 220.6 $ 215.4 2 % 3.0 % (1 )%
 
Total Corporation:
Risk Management Solutions
Trade Credit $ 170.8 $ 170.9 0 % (0.5 )% 0 % $ 492.0 $ 499.5 (1 )% 0.8 % (2 )%
Other Enterprise Risk Management   94.0   91.9 2 % 0.0 % 2 %   250.3   240.3 4 % 0.7 % 3 %
Total Risk Management Solutions 264.8 262.8 1 % (0.3 )% 1 % 742.3 739.8 0 % 0.7 % 0 %
 
Sales and Marketing Solutions
Sales Acceleration $ 72.8 $ 77.3 (6 )% (0.2 )% (6 )% $ 221.2 $ 231.0 (4 )% 0.3 % (5 )%
Advanced Marketing Solutions   79.1   89.9 (12 )% (0.3 )% (12 )%   232.3   251.4 (8 )% 0.1 % (8 )%
Total Sales and Marketing Solutions 151.9 167.2 (9 )% (0.2 )% (9 )% 453.5 482.4 (6 )% 0.2 % (6 )%
       
Total Revenue (3) $ 416.7 $ 430.0 (3 )% (0.3 )% (3 )% $ 1,195.8 $ 1,222.2 (2 )% 0.5 % (3 )%
 
Trade Credit Revenue:
Americas:
D&B Credit Suite $ 94.2 $ 93.8 0 % (0.2 )% 1 % $ 280.6 $ 281.1 0 % 0.1 % 0 %
Other Trade Credit   32.4   32.8 (1 )% (0.1 )% (1 )%   85.6   91.7 (7 )% 0.1 % (7 )%
Total Americas Trade Credit Revenue 126.6 126.6 0 % (0.1 )% 0 % 366.2 372.8 (2 )% 0.1 % (2 )%
 
Non-Americas:
D&B Credit Suite $ 7.9 $ 6.2 27 % 2.7 % 24 % $ 21.4 $ 14.3 50 % 7.2 % 43 %
Other Trade Credit   36.3   38.1 (5 )% (2.1 )% (3 )%   104.4   112.4 (7 )% 2.2 % (9 )%
Total Non-Americas Trade Credit Revenue 44.2 44.3 0 % (1.5 )% 1 % 125.8 126.7 (1 )% 2.8 % (3 )%
 
Total Corporation:
D&B Credit Suite $ 102.1 $ 100.0 2 % 0.0 % 2 % $ 302.0 $ 295.4 2 % 0.4 % 2 %
Other Trade Credit   68.7   70.9 (3 )% (1.2 )% (2 )%   190.0   204.1 (7 )% 1.2 % (8 )%
Total Trade Credit Revenue $ 170.8 $ 170.9 0 % (0.5 )% 0 % $ 492.0 $ 499.5 (1 )% 0.8 % (2 )%
 
D&B Hoovers Suite
Americas $ 39.6 $ 43.3 (9 )% (0.1 )% (9 )% $ 121.4 $ 129.6 (6 )% 0.0 % (6 )%
Non-Americas   3.1   4.1 (22 )% 0.0 % (22 )%   11.1   10.7 4 % 6.0 % (2 )%
Total Corporation $ 42.7 $ 47.4 (10 )% (0.1 )% (10 )% $ 132.5 $ 140.3 (6 )% 0.5 % (6 )%
 
 
This financial information should be read in conjunction with the consolidated financial statements and related notes of
The Dun & Bradstreet Corporation contained in filings with the Securities and Exchange Commission.
 
See Schedule 5 (Notes to Schedules) for a reconciliation of the total segment As Adjusted metrics to the corresponding GAAP metrics.
 
                     
The Dun & Bradstreet Corporation Schedule 4
Supplemental Financial Data (unaudited)
Quarter Ended Year-To-Date
September 30, AFX September 30, AFX
% Change % Change
Amounts in millions 2018 2017 Fav/(Unfav) 2018 2017 Fav/(Unfav)
 
Operating Costs GAAP (ASC 606)
Operating Expenses $ 142.2 $ 142.3 0 % $ 420.4 $ 423.3 1 %
Selling and Administrative Expenses 158.2 164.1 4 % 465.6 497.5 6 %
Depreciation and Amortization 22.6 20.1 (13 )% 66.4 58.4 (14 )%
Restructuring Expense   2.1     5.8   64 %   23.6     22.3   (6 )%
 
Total Operating Costs (GAAP) $ 325.1   $ 332.3   2 % $ 976.0   $ 1,001.5   3 %
 
Capital Expenditures (GAAP) $ 1.4   $ 0.9   (73 )% $ 3.2   $ 6.7   52 %
 
Additions to Computer Software & Other Intangibles (GAAP) $ 13.1   $ 14.7   11 % $ 40.5   $ 42.2   4 %
 
 
Quarter Ended Year-To-Date
September 30, AFX September 30, AFX
% Change % Change
Amounts in millions 2018 2017 Fav/(Unfav) 2018 2017 Fav/(Unfav)
 
Operating Costs As Adjusted (ASC 605)
Operating Expenses $ 142.2 $ 142.3 0 % $ 420.4 $ 423.3 1 %
Selling and Administrative Expenses 153.9 161.6 5 % 474.3 492.1 4 %
Depreciation and Amortization 14.8 12.1 (23 )% 43.0 34.7 (24 )%
Restructuring Expense   -     -   N/M   -     -   N/M
 
Total Operating Costs (As Adjusted) $ 310.9   $ 316.0   2 % $ 937.7   $ 950.1   1 %
 
 
 
 
Quarter Ended Year-To-Date
September 30, September 30,
Reconciliation of GAAP to As Adjusted (ASC 605)
 
Amounts in millions 2018 2017 2018 2017
 
Operating Expenses (GAAP): $ 142.2 $ 142.3 $ 420.4 $ 423.3
None - - - -
       
Operating Expenses (As Adjusted) $ 142.2   $ 142.3   $ 420.4   $ 423.3  
 
Selling and Admin (GAAP) $ 158.2 $ 164.1 $ 465.6 $ 497.5
Impact of ASC 606 4.7 - 19.9 -
Legal and Other Professional Fees and Shut-Down

(Costs) Recoveries Related to Matters In China

0.3 - (0.4 ) (0.1 )
Acquisition/Divestiture Related Costs (7.2 ) (2.5 ) (8.7 ) (13.3 )
(Increase) Decrease of Accrual for Legal Matters (2.1 ) - (2.1 ) 8.0
       
Selling and Admin (As Adjusted) $ 153.9   $ 161.6   $ 474.3   $ 492.1  
 
Depreciation and Amortization (GAAP) $ 22.6 $ 20.1 $ 66.4 $ 58.4
Amortization of Acquisition Related Intangibles (7.8 ) (8.0 ) (23.4 ) (23.7 )
       
Depreciation and Amortization (As Adjusted) $ 14.8   $ 12.1   $ 43.0   $ 34.7  
 
Restructuring (GAAP) $ 2.1 $ 5.8 $ 23.6 $ 22.3
Restructuring (2.1 ) (5.8 ) (23.6 ) (22.3 )
       
Restructuring (As Adjusted) $ -   $ -   $ -   $ -  
 
Supplemental Financial Data (unaudited) - (ASC 606)
 
Quarter Ended
 
Amounts in millions Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017
 
Net Debt Position:
Cash and Cash Equivalents $ 228.2 $ 199.5 $ 188.1 $ 442.4 $ 431.0 $ 400.2 $ 375.4
Short-Term Debt (18.5 ) (26.3 ) (35.0 ) (32.5 ) (30.0 ) (27.5 ) (22.5 )
Long-Term Debt   (1,314.0 )   (1,310.5 )   (1,293.9 )   (1,645.6 )   (1,651.6 )   (1,673.0 )   (1,684.7 )
 
Net Debt $ (1,104.3 ) $ (1,137.3 ) $ (1,140.8 ) $ (1,235.7 ) $ (1,250.6 ) $ (1,300.3 ) $ (1,331.8 )
 
 
Year-To-Date
 
Amounts in millions         Sep 30, 2018 Sep 30, 2017 % Change Fav/

(Unfav)

 
Free Cash Flow:
Net Cash Provided By Operating Activities - Continuing Operations (GAAP) $ 246.0 $ 252.3 (2 )%
Less:
Capital Expenditures (GAAP) 3.2 6.7 52 %
Additions to Computer Software & Other Intangibles (GAAP) 40.5 42.2 4 %
   
Free Cash Flow $ 202.3   $ 203.4   (1 )%
 
 

This financial information should be read in conjunction with the consolidated financial statements and related notes of The Dun & Bradstreet Corporation contained in filings with the Securities and Exchange Commission.

 

See Schedule 5 (Notes to Schedules) for a reconciliation of each of these As Adjusted metrics to the corresponding GAAP metrics and the relevant definitions.
 
The Dun & Bradstreet Corporation   Schedule 5
Notes to Schedules 1, 2, 3, and 4 (unaudited) and Definitions of Non-GAAP Measures  
               
(1 ) The following table reconciles Americas Total Revenue included in Schedules 1, 2, and 3:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Americas Total Revenue (GAAP) (Schedule 1) $ 336.3 $ 352.0 $ 1,049.9 $ 1,000.1
Impact of ASC 606 (6.5 ) - 74.7 -
Acquisition Related Deferred Revenue Fair Value Adjustment   -     (1.7 )   -     (6.7 )
Americas Total Revenue (As Adjusted) (Schedules 2 and 3) $ 342.8   $ 353.7   $ 975.2   $ 1,006.8  
 
(2 ) The following table reconciles Non-Americas Total Revenue included in Schedules 1, 2 and 3:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Non-Americas Total Revenue (GAAP) (Schedule 1) $ 71.0 $ 76.3 $ 215.2 $ 215.4
Impact of ASC 606 (2.9 ) - (5.4 ) -
Acquisition Related Deferred Revenue Fair Value Adjustment   -     -     -     -  
Non-Americas Total Revenue (As Adjusted) (Schedules 2 and 3) $ 73.9   $ 76.3   $ 220.6   $ 215.4  
 
(3 ) The following table reconciles Total Revenue included in Schedules 1, 2, and 3:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Total Revenue (GAAP) (Schedule 1) $ 407.3 $ 428.3 $ 1,265.1 $ 1,215.5
Impact of ASC 606 (9.4 ) - 69.3 -
Acquisition Related Deferred Revenue Fair Value Adjustment   -     (1.7 )   -     (6.7 )
Total Revenue (As Adjusted) (Schedules 2 and 3) $ 416.7   $ 430.0   $ 1,195.8   $ 1,222.2  
 
(4 ) The following table reconciles Americas Operating Income included in Schedule 1 and Schedule 2:
 
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Americas Operating Income (GAAP) (Schedule 1) $ 96.2 $ 100.6 $ 328.9 $ 236.0
 
Impact of ASC 606 (2.2 ) - 94.3 -
Acquisition/Divestiture Related Costs (0.1 ) (2.3 ) (1.1 ) (8.3 )
Amortization of Acquisition Related Intangibles (7.5 ) (7.7 ) (22.6 ) (23.1 )
Acquisition Related Deferred Revenue Fair Value Adjustment   -     (1.7 )   -   (6.7 )
Americas Operating Income (As Adjusted) (Schedule 2) $ 106.0   $ 112.3   $ 258.3   $ 274.1  
 
(5 ) The following table reconciles Non-Americas Operating Income included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Non-Americas Operating Income (GAAP) (Schedule 1) $ 18.8 $ 22.8 $ 57.6 $ 61.2
 
Impact of ASC 606 (2.5 ) - (5.1 ) -
Acquisition/Divestiture Related Costs (0.1 ) - (0.1 ) (0.2 )
Amortization of Acquisition Related Intangibles   (0.3 )   (0.3 )   (0.8 )   (0.6 )
Non-Americas Operating Income (As Adjusted) (Schedule 2) $ 21.7   $ 23.1   $ 63.6   $ 62.0  
 
(6 ) The following table reconciles Corporate and Other expenses included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Corporate and Other (GAAP) (Schedule 1) $ (32.8 ) $ (27.4 ) $ (97.4 ) $ (83.2 )
 
Restructuring Charges (2.1 ) (5.8 ) (23.6 ) (22.3 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China 0.3 - (0.4 ) (0.1 )
(Increase) Decrease of Accrual for Legal Matters (2.1 ) - (2.1 ) 8.0
Acquisition/Divestiture Related Costs   (7.0 )   (0.2 )   (7.5 )   (4.8 )
 
Corporate and Other (As Adjusted) (Schedule 2) $ (21.9 ) $ (21.4 ) $ (63.8 ) $ (64.0 )
 
(7 ) The following table reconciles Total Operating Income included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Total Operating Income (GAAP) (Schedule 1) $ 82.2 $ 96.0 $ 289.1 $ 214.0
 
Impact of ASC 606 (4.7 ) - 89.2 -
Restructuring Charges (2.1 ) (5.8 ) (23.6 ) (22.3 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China 0.3 - (0.4 ) (0.1 )
(Increase) Decrease of Accrual for Legal Matters (2.1 ) - (2.1 ) 8.0
Acquisition/Divestiture Related Costs (7.2 ) (2.5 ) (8.7 ) (13.3 )
Amortization of Acquisition Related Intangibles (7.8 ) (8.0 ) (23.4 ) (23.7 )
Acquisition Related Deferred Revenue Fair Value Adjustment   -     (1.7 )   -     (6.7 )
Total Operating Income (As Adjusted) (Schedule 2) $ 105.8   $ 114.0   $ 258.1   $ 272.1  
 
(8 ) The following table reconciles Net Income Attributable to Dun & Bradstreet included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Net Income (Loss) Attributable to Dun & Bradstreet (GAAP) (Schedule 1) $ 50.2 $ 54.1 $ 207.1 $ 114.7
 
Impact of ASC 606 (3.5 ) - 69.2 -
Restructuring Charges (1.6 ) (3.8 ) (17.9 ) (14.5 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China 0.3 - (0.3 ) -
(Increase) Decrease of Accrual for Legal Matters (1.6 ) - (1.6 ) 7.9
Acquisition/Divestiture Related Costs (6.0 ) (2.5 ) (7.1 ) (11.4 )
Amortization of Acquisition Related Intangibles (5.9 ) (5.0 ) (17.7 ) (15.0 )
Acquisition Related Deferred Revenue Fair Value Adjustment - (1.2 ) - (4.6 )
Gain (Loss) on Sale of Businesses - - - (0.6 )
Impact of the 2017 Tax Cuts and Jobs Act - - 2.4 -
Impact of Accounting Method Change   (0.5 )   -     13.0     -  
After-Tax Impact (18.8 ) (12.5 ) 40.0 (38.2 )
 
Income (Loss) From Discontinued Operations, Net of Income Taxes   -     -     -     (0.8 )
Net Income Attributable to Dun & Bradstreet (As Adjusted) (Schedule 2) $ 69.0   $ 66.6   $ 167.1   $ 153.7  
 
(9 ) The following table reconciles Diluted Earnings Per Share Of Common Stock included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
      2018     2017     2018     2017  
 
Diluted EPS Attributable to Dun & Bradstreet Common Shareholders (GAAP) (Schedule 1) $ 1.35 $ 1.45 $ 5.55 $ 3.09
 
Impact of ASC 606 (0.09 ) - 1.85 -
Restructuring Charges (0.04 ) (0.10 ) (0.48 ) (0.39 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China - - (0.01 ) -
(Increase) Decrease of Accrual for Legal Matters (0.04 ) - (0.04 ) 0.21
Acquisition/Divestiture Related Costs (0.16 ) (0.07 ) (0.19 ) (0.31 )
Amortization of Acquisition Related Intangibles (0.16 ) (0.14 ) (0.47 ) (0.40 )
Acquisition Related Deferred Revenue Fair Value Adjustment - (0.03 ) - (0.12 )
Gain (Loss) on Sale of Businesses - - - (0.02 )
Impact of the 2017 Tax Cuts and Jobs Act - - 0.06 -
Impact of Accounting Method Change (0.01 ) - 0.35 -
Discontinued Operations   -     -     -     (0.02 )
Diluted EPS Attributable to Dun & Bradstreet Common Shareholders (As Adjusted) (Schedule 2) $ 1.85   $ 1.79   $ 4.48   $ 4.14  
 
 
(10 ) The following table reconciles Other Income (Expense)-Net included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Other Income (Expense)-Net (GAAP) (Schedule 1) $ (1.9 ) $ (1.7 ) $ (1.2 ) $ (2.4 )
Gain (Loss) on Sale of Businesses   -     -     -     (0.7 )
Other Income (Expense)-Net (As Adjusted) (Schedule 2) $ (1.9 ) $ (1.7 ) $ (1.2 ) $ (1.7 )
 
 
(11 ) The following table reconciles Non-Operating Income (Expense)-Net included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Non-Operating Income (Expense) - Net (GAAP) (Schedule 1) $ (15.1 ) $ (16.5 ) $ (40.6 ) $ (46.1 )
Gain (Loss) on Sale of Businesses   -     -     -     (0.7 )
Non-Operating Income (Expense) - Net (As Adjusted) (Schedule 2) $ (15.1 ) $ (16.5 ) $ (40.6 ) $ (45.4 )
 
(12 ) The following table reconciles Provision for Income Taxes included in Schedule 1 and Schedule 2:
Quarter Ended Year-To-Date
September 30, September 30,
Amounts in millions   2018     2017     2018     2017  
 
Provision for Income Taxes (GAAP) (Schedule 1) $ 16.1 $ 24.2 $ 38.3 $ 51.1
 
Impact of ASC 606 (1.2 ) - 20.0 -
Restructuring Charges (0.5 ) (2.0 ) (5.7 ) (7.8 )
Legal and Other Professional Fees and Shut-Down (Costs) Recoveries Related to Matters In China - - (0.1 ) (0.1 )
(Increase) Decrease of Accrual for Legal Matters (0.5 ) - (0.5 ) 0.1
Acquisition/Divestiture Related Costs (1.2 ) - (1.6 ) (1.9 )
Amortization of Acquisition Related Intangibles (1.9 ) (3.0 ) (5.7 ) (8.7 )
Acquisition Related Deferred Revenue Fair Value Adjustment - (0.5 ) - (2.1 )
Gain (Loss) on Sale of Businesses - - - (0.1 )
Impact of the 2017 Tax Cuts and Jobs Act - - (2.4 ) -
Impact of Accounting Method Change   0.5     -     (13.0 )   -  
Provision for Income Taxes (As Adjusted) (Schedule 2) $ 20.9   $ 29.7   $ 47.3   $ 71.7  
 
The Dun & Bradstreet Corporation                   Schedule 5
Notes to Schedules 1, 2, 3, and 4 (unaudited) and Definitions of Non-GAAP Measures
   
 
N/M - Not Meaningful
 
The following defines the non-GAAP measures used to evaluate performance:
 

     In addition to reporting generally accepted accounting principles in the United States of America (“GAAP”) results, the Company evaluates performance and reports on a total company basis and on a business segment level basis its results (such as revenue, operating income, operating income growth, operating margin, net income, tax rate and diluted earnings per share) on an “As Adjusted” basis. The term “As Adjusted” refers to the following:

the elimination of the impact of ASC 606; the elimination of the effect on revenue due to purchase accounting fair value adjustments to deferred revenue; restructuring charges; other non-core gains and charges that are not in the normal course of our business (such as gains and losses on sales of businesses, impairment charges, effect of significant changes in tax laws, and material tax and legal settlements); acquisition and divestiture-related fees (such as costs for bankers, legal, due diligence, retention payments, and contingent consideration adjustments); and acquisition-related intangible amortization expense. A recurring component excluded from our “As Adjusted” results is our restructuring charges, which we believe do not reflect our underlying business performance. Such charges are variable from period to period based upon actions identified and taken during each period. Additionally, our “As Adjusted” results exclude the results of Discontinued Operations. Management reviews operating results on an “As Adjusted” basis on a monthly basis and establishes internal budgets and forecasts based upon such measures. Management further establishes annual and long-term compensation such as salaries, target cash bonuses and target equity compensation amounts based on performance on an “As Adjusted” basis and a significant percentage weight is placed upon performance on an “As Adjusted” basis in determining whether performance objectives have been achieved. Management believes that by reflecting these adjustments to our GAAP financial measures, business leaders are provided incentives to recommend and execute actions that support our long-term growth strategy rather than being influenced by the potential impact one of these items can have in a particular period on their compensation. The Company adjusts for these items because they do not reflect the Company’s underlying business performance and they may have a disproportionate positive or negative impact on the results of its ongoing business operations. We believe that the use of our non-GAAP financial measures provides useful supplemental information to our investors.

 

     We also isolate the effects of changes in foreign exchange rates on our revenue growth because we believe it is useful for investors to be able to compare revenue from one period to another, both after and before the effects of foreign exchange. The change in our operating performance attributable to foreign currency rates is determined by converting both our prior and current periods by a constant rate. As a result, we monitor our “As Adjusted” revenue growth both after and before the effects of foreign exchange.

 

     We also analyze “As Adjusted” revenue growth on an organic basis because management believes this information provides important insight into the underlying/ongoing performance of the business.  Organic revenue excludes the estimated revenue contribution from acquired businesses for one year from the date of the acquisition and net divested revenue which we define as the historical revenues from the divested businesses net of the annual ongoing future revenue streams resulting from the commercial arrangements entered into in connection with such divestitures.

 

     We may from time to time use the term “sales”, which we define as the annual value of committed customer contracts. This term is often referred to as “bookings” or “commitments” by other companies.

 

     We monitor free cash flow as a measure of our business. We define free cash flow as net cash provided by operating activities minus capital expenditures and additions to computer software and other intangibles. Free cash flow measures our available cash flow for potential debt repayment, acquisitions, stock repurchases, dividend payments and additions to cash, cash equivalents and short-term investments. We believe free cash flow to be relevant and useful to our investors as this measure is used by our management in evaluating the funding available after supporting our ongoing business operations and our portfolio of investments.

 

     Free cash flow should not be considered as a substitute measure for, or superior to, net cash flows provided by operating activities, investing activities or financing activities. Therefore, we believe it is important to view free cash flow as a complement to the consolidated statements of cash flows.

 

     We also monitor deferred revenue after adjusting for the effect of foreign exchange, dispositions, acquisitions and the impacts of the write-down of deferred revenue due to purchase accounting.

 
This financial information should be read in conjunction with the consolidated financial statements and related notes of The Dun & Bradstreet Corporation
contained in filings with the Securities and Exchange Commission.

Source: Dun & Bradstreet

Dun & Bradstreet
Media
Emile Lee, 973-921-5525
LeeE@dnb.com
or
Investors/Analysts
Kathy Guinnessey, 973-921-5892
Kathy.Guinnessey@dnb.com