Morningstar, Inc. Reports Fourth-Quarter, Full-Year 2017 Financial Results

Fourth-quarter operating income was $42.6 million, a decrease of 14.6% compared with the fourth quarter of 2016. Fourth-quarter operating margin was 17.5%, compared with 23.5% in the fourth quarter of 2016. The decline in operating income this quarter was the result of a 23.5% increase in operating expenses, which were primarily due to higher compensation expenses (salaries, bonuses, and commissions) and higher depreciation expense.

Operating expenses were impacted by several factors in the fourth quarter. Sales performance exceeded our targets, with the value of new sales contracts increasing significantly versus the fourth quarter of 2016 on strength in our core licensing business (Data, Direct, PitchBook, and Research). Sales in Managed Portfolios and Indexes also surpassed our expectations. This performance led to higher-than-anticipated commission expense, which increased by $3.0 million relative to the run-rate through the first three quarters of 2017. Our compensation expense also increased as we adjusted our expected bonus payout due to stronger financial performance relative to our annual targets. This expense was $3.8 million higher versus the accrued funding rate through the first three quarters of the year. Operating expenses were also negatively impacted by a $4.1 million impairment charge, recorded in depreciation expense, for certain software licenses that are no longer needed due to the shift to our cloud-based strategy. Excluding the negative 13.6 percentage point impact of increased bonus and commission expense, and the negative 8.2 percentage point impact from the impairment, operating income increased by 7.2% in the fourth quarter.

For the year, operating income was $169.8 million, a decrease of 6.0% compared with $180.8 million in 2016. Full-year operating margin was 18.6%, compared with 22.6% in 2016. Excluding PitchBook, operating income decreased 1.1% and operating margin declined by 1.7 percentage points to 21.5%. This decline is primarily due to an increase in compensation expenses (salaries, bonuses, and commissions) and depreciation expense, which includes the impairment charge.

Net income in the fourth quarter was $38.9 million, or $0.91 per diluted share, compared with $70.3 million, or $1.63 per diluted share in the fourth quarter of 2016. The decline in fourth-quarter 2017 net income and net income per share reflects a $37.1 million holding gain, or 86 cents per share, related to our acquisition of PitchBook in the fourth quarter of 2016. For the year ended Dec. 31, 2017, net income was $136.9 million, or $3.18 per diluted share, compared with $161.0 million, or $3.72 per diluted share, in 2016. Net income for 2017 included a non-cash after-tax gain of $17.9 million, or 42 cents per share, in connection with the sale of HelloWallet.

Income tax expense was $2.7 million and $42.9 million for the fourth quarter and full year 2017, respectively. This includes a net one-time benefit of $10.6 million related to the impact of Tax Reform recorded in the fourth quarter. The net benefit included a positive impact from the revaluation of deferred tax liabilities at the now lower statutory corporate rate, offset by charges related to the deemed repatriation and withholding tax of our previously undistributed foreign earnings. The recorded net benefit for Tax Reform is a provisional amount that reflects our best estimate at this time, and is subject to adjustment during a measurement period not to exceed one year from enactment in accordance with guidance from the Securities and Exchange Commission. 

Our effective tax rate for the full year 2017 was 23.9%, versus 28.3% in 2016. This decline is primarily due to the impact of Tax Reform. Based on our current level of taxable income in the U.S., we estimate that the change in the corporate tax rate will result in approximately $15 million of incremental annual free cash flow. We are currently evaluating opportunities to reinvest a portion of this tax benefit back into the business.

Balance Sheet and Capital Allocation
As of Dec. 31, 2017, the company had cash, cash equivalents, and investments totaling $353.3 million and $180.0 million of long-term debt, compared with cash, cash equivalents, and investments of $304.0 million and $250.0 million of long-term debt as of Dec. 31, 2016.

Cash provided by operating activities was $250.1 million for the full year 2017, compared to $213.7 in the prior year. Free cash flow was $183.5 million for the full year 2017, compared to $150.9 million in the prior year. In 2017, the company repurchased 0.5 million shares of common stock for $41.9 million and paid $39.3 million in dividends. In December, the company announced a new $500 million share repurchase authorization, effective Jan. 1, 2018.

Update on Key Investment Areas
The highlights below summarize key operating metrics in our five major areas of focus for investment for the full year ended Dec. 31, 2017.

• Revenue for Morningstar Data was up 7.2% to $162.9 million.
• Morningstar Direct revenue increased 12.6% to $124.4 million and licenses for Direct increased 11.1% to 13,884 for the year. Licenses for the PitchBook platform rose 43% for the year.
• Total assets under management and advisement for Workplace Solutions rose 22.7% to $128.1 billion.
• Assets under management and advisement in Managed Portfolios increased 31.8% to $39.8 billion.
• Morningstar Credit Ratings completed 97 new-issue ratings versus 70 in 2016, representing a 27% increase in asset value to $39.0 billion in 2017.

Comparability of Year-Over-Year Results
Certain items affected the comparability of fourth-quarter and full-year 2017 results versus the same periods in 2016.

• Organic revenue growth of 9.0% in the fourth quarter includes one month of contribution from PitchBook, because the acquisition closed on December 1, 2016. It also excludes the impact of the HelloWallet divestiture.
• Fourth-quarter results included $12.4 million in revenue and approximately $13.2 million of incremental operating expense from acquisitions (primarily PitchBook).
• For the full year, acquired companies (primarily PitchBook) contributed revenue of $57.5 million and incremental operating expense of $68.8 million.
• Foreign currency translation reduced operating income by $0.3 million during the fourth quarter, increasing revenue by $3.0 million and operating expense by $3.3 million. For the year, foreign currency translation increased operating income by $0.6 million and reduced operating expense by $0.6 million. Foreign currency translation had an immaterial impact on revenue for the full year.
• Fourth-quarter operating expenses include a $4.1 million impairment charge for certain software licenses due to the shift to our cloud-based strategy, which impacted operating margin by 1.7 percentage points in the quarter and 0.4 percentage points for the year.
• Fourth-quarter net income includes a provisional net benefit of $10.6 million to account for the estimated impact of Tax Reform, which increased net income per share by 25 cents.
• Net income for 2017 includes a non-cash after-tax gain of $17.9 million, or 42 cents per share, in connection with the sale of HelloWallet.

Use of Non-GAAP Financial Measures 
The tables at the end of this press release include a reconciliation of the non-GAAP financial measures used by the company to comparable GAAP measures and an explanation of why the company uses them.

Investor Communication 
Morningstar encourages all interested parties—including securities analysts, current shareholders, potential shareholders, and others—to submit questions in writing. Investors and others may send questions about Morningstar's business to investors@morningstar.com. Morningstar will make written responses to selected inquiries available to all investors at the same time in Form 8-Ks furnished to the Securities and Exchange Commission, generally on the first Friday of every month.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $195 billion in assets under advisement and management as of Dec. 31, 2017. The company has operations in 27 countries.

Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future financial performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "prospects," or "continue." These statements involve known and unknown risks and uncertainties that may cause the events we discuss not to occur or to differ significantly from what we expect. For us, these risks and uncertainties include, among others, liability for any losses that result from an actual or claimed breach of our fiduciary duties; failing to maintain and protect our brand, independence, and reputation; failing to differentiate our products and continuously create innovative, proprietary research tools; failing to respond to technological change, keep pace with new technology developments, or adopt a successful technology strategy; trends in the asset management industry, including the increasing popularity of passively managed investment vehicles; liability related to the storage of personal information related to individuals as well as portfolio and account-level information; liability relating to the acquisition or redistribution of data or information we acquire or errors included therein; compliance failures, regulatory action, or changes in laws applicable to our investment advisory or credit rating operations; the failure of acquisitions and other investments to produce the results we anticipate; downturns in the financial sector, global financial markets, and global economy; the effect of market volatility on revenue from asset-based fees; a prolonged outage of our database, technology-based products and services, or network facilities; and challenges faced by our non-U.S. operations, including the concentration of data and development work at our offshore facilities in China and India. A more complete description of these risks and uncertainties can be found in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2016. If any of these risks and uncertainties materialize, our actual future results may vary significantly from what we expected. We do not undertake to update our forward-looking statements as a result of new information or future events.

©2018 Morningstar, Inc. All Rights Reserved.

MORN-E

Morningstar, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income
			Three months ended December 31						Year ended December 31
(in millions, except per share amounts)			2017		2016		change		2017		2016		change
Revenue			$    243.1		$  212.2		14.5%		$    911.7		$  798.6		14.2%
Operating expense:
	Cost of revenue		103.4		88.0		17.6%		386.6		344.3		12.3%
	Sales and marketing		34.1		26.5		28.4%		134.3		97.6		37.6%
	General and administrative		36.6		29.1		25.4%		129.8		105.2		23.3%
	Depreciation and amortization		26.4		18.7		41.2%		91.2		70.7		28.9%
	Total operating expense		200.5		162.3		23.5%		741.9		617.8		20.1%
Operating income			42.6		49.9		(14.6%)		169.8		180.8		(6.0%)
Operating margin			17.5%		23.5%		(6.0)pp		18.6%		22.6%		(4.0)pp
Non-operating income (expense):
	Interest income (expense), net		(1.0)		-		NMF		(3.6)		0.3 Werbung Mehr Nachrichten zur Morningstar Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 09:50 - PR Newswire Datang Intnl Pwr Gen - CHANGE OF JOINT COMPANY SECRETARY ANNOUNCEMENT 08:28 - PR Newswire Samson Rock Capital LLP - Form 8.3 - Gresham Technologies Plc 08:27 - PR Newswire Samson Rock Capital LLP - Form 8.3 - Network International Holdings Plc Sehen Sie sich dieses Unternehmen an:    Foto: andreas160578 - Pixabay Rasanter Aufstieg, Branchenrevolution und Jahresumsatz von 50 Mio. $ weiterlesen» Anzeige wo-site-teaser-box-16764_site-teaser-box_2024-04-26_09%253A00%253A00_2024-04-27_09%253A00%253A59