DST Systems Inc. DST posted first-quarter 2015 non-GAAP earnings of $1.40 per share, beating the Zacks Consensus Estimate of $1.26. On a year-over-year basis, earnings per share improved 25% aided by higher revenues and higher client additions.
DST Systems Inc. - Earnings Surprise | FindTheCompany
Quarter Details
Total revenue in the first-quarter was $702.3 million, up 2.7% from the year-ago quarter. Excluding out-of-the-pocket reimbursements, consolidated operating revenues decreased 1.9% year over year to $495.7 million and also missed the Zacks Consensus Estimate of $508 million.
Financial Services operating revenues (excluding out-of-the-pocket reimbursements) decreased 3.2% year over year to $250.5 million, primarily due to the sale of Global Solutions in the fourth quarter. Moreover, unfavorable foreign currency fluctuations impacted segmental revenues
Healthcare Services operating revenues were approximately flat on a year over year basis and came in at $92 million. Lower pharmacy claims were offset by the expansion of existing clients. Notably, an increase in Medicare and Medicaid members, expansion of existing and new clients coupled with higher business process outsourcing were positives in the quarter.
Customer Communications (previously Output Solutions) operating revenues increased a modest 0.2% year over year to $152.6 million. Contribution from North America remained strong due to client wins.
Apart from this, Investments and Other Segment operating revenues decreased 65% year over year to $0.7 million. The year-over-year decrease was primarily due to lower occupancy revenues.
Cost and expenses were up 1.7% from the year-ago quarter to $593.8 million, primarily due to increased investments for new business expansion. Operating margin was up 96 bps on a year over year basis to 15.4%. However, as a percentage of revenues, costs and expenses were up 425 basis points (bps) on a year-over-year basis.
DST reported non-GAAP net income of $52.6 million or $1.40 per share compared with $47.50 million or $1.12 per share reported in the year-ago quarter.
Balance Sheet, Share Repurchases & Dividend
DST Systems’ balance sheet appears highly leveraged. The company exited the quarter with $111.7 million in cash and equivalents compared with $87.5 million in the previous quarter. Long-term debt (including current portion) was $512.5 million compared with $612.1 million in the previous quarter.
During the first quarter, DST Systems repurchased 0.8 million shares worth $75 million and paid a dividend of 30 cents per share.