Dun & Bradstreet(DNB) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for Q1 2023, covering operations, balance sheets, cash flows, equity, and detailed notes Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (Unaudited) Q1 2023 reported a net loss of $32.8 million, with revenue up 0.8% to $540.4 million, and operating income down 51.8% Statement of Operations and Comprehensive Income (Loss) | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Revenue | 540.4 | 536.0 | 4.4 | 0.8% | | Operating Income (Loss) | 7.9 | 16.4 | (8.5) | (51.8%) | | Net Income (Loss) | (32.8) | (29.8) | (3.0) | (10.1%) | | Net Income (Loss) Attributable to D&B | (33.7) | (31.3) | (2.4) | (7.7%) | | Basic EPS | (0.08) | (0.07) | (0.01) | (14.3%) | | Diluted EPS | (0.08) | (0.07) | (0.01) | (14.3%) | Condensed Consolidated Balance Sheets (Unaudited) As of March 31, 2023, total assets decreased 1.8% to $9,303.3 million, liabilities 2.0% to $5,842.4 million, and equity 1.4% Condensed Consolidated Balance Sheets | Metric | March 31, 2023 (Millions USD) | December 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------- | :-------------------- | :--------- | | Total Assets | 9,303.3 | 9,471.9 | (168.6) | (1.8%) | | Total Liabilities | 5,842.4 | 5,963.5 | (121.1) | (2.0%) | | Total Equity | 3,460.9 | 3,508.4 | (47.5) | (1.4%) | | Cash and Cash Equivalents | 204.1 | 208.4 | (4.3) | (2.1%) | | Accounts Receivable, net | 181.4 | 271.6 | (90.2) | (33.2%) | | Deferred Revenue (Current) | 624.9 | 563.1 | 61.8 | 11.0% | Condensed Consolidated Statements of Cash Flows (Unaudited) Q1 2023 operating cash flow increased 12.2% to $155.7 million, investing decreased 19.8%, and financing increased 139.6% to $122.2 million Condensed Consolidated Statements of Cash Flows | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Cash from Operating Activities | 155.7 | 138.8 | 16.9 | 12.2% | | Net Cash from Investing Activities | (39.6) | (49.4) | 9.8 | (19.8%) | | Net Cash from Financing Activities | (122.2) | (51.0) | (71.2) | 139.6% | | Cash and Cash Equivalents, End of Period | 204.1 | 215.8 | (11.7) | (5.4%) | Condensed Consolidated Statements of Stockholder Equity (Unaudited) Total stockholder equity decreased 1.4% to $3,450.8 million by March 31, 2023, due to a $33.7 million net loss and $21.8 million in dividends Condensed Consolidated Statements of Stockholder Equity | Metric | Balance, January 1, 2023 (Millions USD) | Balance, March 31, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :----------------------------------- | :-------------------------------------- | :------------------------------------- | :-------------------- | :--------- | | Total Stockholder Equity | 3,499.3 | 3,450.8 | (48.5) | (1.4%) | | Net Income (Loss) | (33.7) | N/A | (33.7) | N/A | | Equity-based Compensation Plans | 14.5 | N/A | 14.5 | N/A | | Dividends Declared | (21.8) | N/A | (21.8) | N/A | Notes to Condensed Consolidated Financial Statements (Unaudited) Detailed notes for condensed consolidated financial statements, covering accounting policies, revenue, debt, financial instruments, and segment information Note 1 -- Basis of Presentation Interim unaudited financial statements conform to GAAP, reflecting management's estimates, with the company operating through North America and International segments - The company operates through two segments: North America (Finance & Risk, Sales & Marketing in US and Canada) and International (Finance & Risk, Sales & Marketing in UK, Ireland, Nordics, DACH, CE, Greater China, India, and WWN alliances)[28] Note 2 -- Recent Accounting Pronouncements The company adopted ASU No. 2020-04 (Reference Rate Reform) in Q4 2022 with no material impact, and its transition date was extended to December 31, 2024 - Adopted ASU No. 2020-04 (Reference Rate Reform) in Q4 2022, with no material impact. The transition date was extended to December 31, 2024[27] Note 3 -- Revenue Q1 2023 total revenue was $540.4 million, with deferred revenue increasing $75.7 million and accounts receivable decreasing $90.2 million due to securitization Accounts Receivable and Deferred Revenue | Metric | March 31, 2023 (Millions USD) | December 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------- | :-------------------- | :--------- | | Accounts Receivable, net | 181.4 | 271.6 | (90.2) | (33.2%) | | Short-term Deferred Revenue | 624.9 | 563.1 | 61.8 | 11.0% | | Long-term Deferred Revenue | 27.8 | 13.9 | 13.9 | 100.0% | Revenue Recognition Timing | Revenue Recognition Timing | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | | :------------------------- | :------------------------------------------ | :------------------------------------------ | | At a point in time | 215.6 | 208.8 | | Over time | 324.8 | 327.2 | | Total Revenue | 540.4 | 536.0 | Note 4 -- Restructuring Charges Restructuring charges for Q1 2023 totaled $4.2 million, a decrease from $5.3 million in Q1 2022, primarily for severance and contract termination costs Restructuring Charges by Component | Restructuring Component | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | | Severance and termination | 3.1 | 2.5 | | Contract termination & other exit costs | 1.1 | 2.8 | | Total Restructuring Charges | 4.2 | 5.3 | Note 5 -- Notes Payable and Indebtedness Total debt as of March 31, 2023, was $3,585.7 million, with the company in compliance with all non-financial debt covenants and using interest rate swaps Debt Structure and Interest Rates | Debt Type | Maturity | Principal Amount (March 31, 2023, Millions USD) | Carrying Value (March 31, 2023, Millions USD) | Interest Rate (March 31, 2023) | | :-------------------------- | :--------------- | :---------------------------------------------- | :-------------------------------------------- | :----------------------------- | | 2026 Term loan (short-term) | Feb 8, 2026 | 28.1 | 28.1 | 8.095% | | 2029 Term loan (short-term) | Jan 18, 2029 | 4.6 | 4.6 | 8.042% | | 2026 Term loan (long-term) | Feb 8, 2026 | 2,644.7 | 2,599.2 | 8.095% | | 2029 Term loan (long-term) | Jan 18, 2029 | 450.8 | 444.6 | 8.042% | | Revolving facility | Sep 11, 2025 | 55.0 | 55.0 | 7.828% | | 5.000% Senior unsecured notes | Dec 15, 2029 | 460.0 | 454.2 | 5.000% | | Total Debt | N/A | 3,643.2 | 3,585.7 | N/A | - The company was in compliance with all non-financial debt covenants at March 31, 2023, and December 31, 2022[42] Note 6 -- Accounts Receivable Securitization Facility The company derecognized $256.6 million of accounts receivable in Q1 2023 through a securitization facility, incurring $3.1 million in fees - The company derecognized $256.6 million of accounts receivable through a securitization facility in Q1 2023[53] - Fees for the securitization facility were $3.1 million for Q1 2023, recorded in non-operating income (expense) – net[54] Note 7 -- Other Assets and Liabilities Other accrued and current liabilities significantly decreased by 35.6% to $203.9 million, primarily due to an $85.9 million payment for non-controlling interest Other Assets and Liabilities | Metric | March 31, 2023 (Millions USD) | December 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------ | :------------------------------- | :-------------------- | :--------- | | Other Non-Current Assets | 121.3 | 128.2 | (6.9) | (5.4%) | | Other Accrued and Current Liabilities | 203.9 | 316.8 | (112.9) | (35.6%) | | Accrued liability for NCI purchase | 10.4 | 93.7 | (83.3) | (88.9%) | | Other Non-Current Liabilities | 139.5 | 126.8 | 12.7 | 10.0% | - A payment of $85.9 million was made in February 2023 for the purchase of non-controlling interest, resulting in a foreign exchange loss of $2.6 million[56] Note 8 -- Contingencies The company is involved in class action lawsuits but management believes these will not materially affect its financial condition, with no loss reserves established - The company is facing two class action lawsuits (DeBose v. Dun & Bradstreet Holdings, Inc. and Batis v. Dun & Bradstreet Holdings, Inc.) alleging unauthorized use of names/personas for product promotion[63][65] - Management does not believe current legal proceedings will materially adversely affect financial condition; no loss reserves have been established as outcomes are not probable or estimable[61][64][66] Note 9 -- Income Taxes The effective tax rate for Q1 2023 was 26.0% (tax benefit of $11.8 million on a pre-tax loss of $45.4 million), up from 23.4% in Q1 2022 Income Tax Metrics | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Effective Tax Rate | 26.0% | 23.4% | | Pre-tax Loss (Millions USD) | (45.4) | (39.8) | | Tax Benefit (Millions USD) | (11.8) | (9.3) | Note 10 -- Pension and Postretirement Benefits Net periodic pension cost for Q1 2023 was a benefit of $4.1 million, an increase from a benefit of $10.4 million in Q1 2022, due to higher interest cost and lower expected return on assets Net Periodic Pension and Postretirement Cost (Income) | Component of Net Periodic Cost (Income) | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | | :-------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Service cost | 0.4 | 0.8 | | Interest cost | 16.0 | 8.8 | | Expected return on plan assets | (19.9) | (20.0) | | Amortization of prior service cost (credit) | — | — | | Amortization of actuarial loss (gain) | (0.6) | — | | Net periodic cost (income) (Pension plans) | (4.1) | (10.4) | | Net periodic cost (income) (Postretirement) | (0.1) | (0.1) | Note 11 -- Stock Based Compensation Total stock-based compensation expense increased 91.6% to $20.5 million in Q1 2023, driven by higher restricted stock and unit grants Stock-Based Compensation Expense | Stock-Based Compensation Expense | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Restricted stock and units | 15.8 | 7.4 | 8.4 | 113.5% | | Stock options | 4.7 | 1.0 | 3.7 | 370.0% | | Incentive units | — | 2.3 | (2.3) | (100.0%) | | Total Compensation Expense | 20.5 | 10.7 | 9.8 | 91.6% | - Unrecognized compensation cost for stock options was $16.9 million (expected over 2.1 years) and for restricted stock/units was $107.1 million (expected over 2.4 years) as of March 31, 2023[73][75] Note 12 -- Earnings (Loss) Per Share Basic and diluted EPS were a loss of $0.08 for Q1 2023, with 429.6 million weighted average shares outstanding, and a $0.05 quarterly dividend declared Earnings (Loss) Per Share Metrics | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | | Net Income (Loss) Attributable to D&B (Millions USD) | (33.7) | (31.3) | | Basic EPS | (0.08) | (0.07) | | Diluted EPS | (0.08) | (0.07) | | Weighted Average Shares Outstanding - Basic (Millions) | 429.6 | 428.8 | | Weighted Average Shares Outstanding - Diluted (Millions) | 429.6 | 428.8 | - A quarterly cash dividend of $0.05 per share was declared on February 9, 2023, payable on March 16, 2023[81] Note 13 -- Financial Instruments The company uses derivatives like interest rate swaps ($2,750 million notional) and cross-currency interest rate swaps ($375 million notional) to manage market risks - The company uses interest rate swaps and cross-currency interest rate swaps to manage interest rate and foreign currency risks, with notional amounts of $2,750 million and $375 million respectively as of March 31, 2023[51][87][94] Derivative Financial Instruments | Derivative Type | March 31, 2023 (Millions USD) | December 31, 2022 (Millions USD) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Total Asset Derivatives | 53.7 | 69.2 | | Total Liability Derivatives | 22.0 | 17.4 | Note 14 -- Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive loss increased to $187.5 million at March 31, 2023, primarily due to negative impacts from cash flow hedge derivatives and pension plans Accumulated Other Comprehensive Income (Loss) | Component | Balance, January 1, 2023 (Millions USD) | Balance, March 31, 2023 (Millions USD) | Change (Millions USD) | | :-------------------------------- | :-------------------------------------- | :------------------------------------- | :-------------------- | | Foreign currency translation adjustments | (172.3) | (166.0) | 6.3 | | Net investment hedge derivative | 2.0 | (0.4) | (2.4) | | Defined benefit pension plans | (58.1) | (58.8) | (0.7) | | Cash flow hedge derivative | 48.4 | 37.7 | (10.7) | | Total Accumulated OCI (Loss) | (180.0) | (187.5) | (7.5) | Note 15 -- Goodwill and Intangible Assets Goodwill increased slightly to $3,435.7 million, while other intangibles decreased 2.3% to $4,218.6 million, both primarily due to foreign currency fluctuations Goodwill and Intangible Assets | Asset Type | January 1, 2023 (Millions USD) | March 31, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------- | :----------------------------- | :---------------------------- | :-------------------- | :--------- | | Computer Software | 631.8 | 642.8 | 11.0 | 1.7% | | Goodwill | 3,431.3 | 3,435.7 | 4.4 | 0.1% | | Other Intangibles | 4,320.1 | 4,218.6 | (101.5) | (2.3%) | - Changes in goodwill and other intangibles were primarily influenced by foreign currency fluctuations[108] Note 16 -- Segment Information North America revenue increased 2.0% to $374.7 million, while International revenue decreased 1.8% to $165.7 million, resulting in consolidated total revenue of $540.4 million for Q1 2023 Segment Revenue | Segment Revenue | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | North America | 374.7 | 367.3 | 7.4 | 2.0% | | International | 165.7 | 168.7 | (3.0) | (1.8%) | | Consolidated Total | 540.4 | 536.0 | 4.4 | 0.8% | Segment Adjusted EBITDA | Segment Adjusted EBITDA | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | North America | 150.5 | 153.3 | (2.8) | (1.8%) | | International | 55.6 | 55.1 | 0.5 | 1.0% | | Corporate and other | (16.1) | (18.3) | 2.2 | 12.0% | | Consolidated Total | 190.0 | 190.1 | (0.1) | (0.1%) | Note 17 -- Related Parties The Investor Consortium maintains significant voting influence, and the company has ongoing agreements with related parties Black Knight and Paysafe - The Investor Consortium (Bilcar, THL, Cannae Holdings, Black Knight, CC Capital) retains significant voting influence over the company[118] - The company has a five-year agreement with Black Knight (data license fees of $24M, services from Black Knight of $34M) and a 10-year agreement with Paysafe (data license and risk management services)[121] Related Party Transactions | Related Party Transaction | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | | Operating expenses with Black Knight | 0.5 | 0.5 | | Revenue from Paysafe | 1.7 | 0.9 | Note 18 -- Subsequent Event On April 26, 2023, the Board of Directors declared a quarterly cash dividend of $0.05 per share, payable on June 15, 2023 - A quarterly cash dividend of $0.05 per share was declared on April 26, 2023, payable on June 15, 2023[122] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Management's discussion and analysis of Q1 2023 financial condition and results, including business overview, recent developments, key performance components, and liquidity Business Overview Dun & Bradstreet is a leading global provider of business decisioning data and analytics, offering Finance & Risk and Sales & Marketing solutions to over 240,000 clients - Dun & Bradstreet is a leading global provider of business decisioning data and analytics, with a mission to deliver a global network of trust[126] - The company's solutions include Finance & Risk (commercial credit decisioning, supply chain risk, collections) and Sales & Marketing (CRM data cleansing, prospect targeting)[127][128] - As of December 31, 2022, the company had over 240,000 global clients across various industries and geographies, characterized by highly recurring revenue, strong operating leverage, and low capital requirements[129][130] Segments The company manages its financial results through two primary segments: North America (US and Canada) and International (UK, Europe, Greater China, India, and Worldwide Network alliances) - The company's two reporting segments are North America (US and Canada) and International (UK, Ireland, Nordics, DACH, CE, Greater China, India, and WWN alliances)[132] Recent Developments Recent developments include a new accounts receivable securitization facility, the purchase of non-controlling interest in China operations, and ongoing macroeconomic impacts - The company received a net cash benefit of $31.9 million from its accounts receivable securitization facility in Q1 2023[132] - A payment of $85.9 million was made in February 2023 to purchase the non-controlling equity interest in China operations[133] - Macroeconomic conditions (inflation, rising interest rates, foreign currency fluctuations) and the Russia/Ukraine conflict negatively impacted reported revenue in Q1 2023, particularly due to a strengthening U.S. dollar[134][135] Key Components of Results of Operations Revenue is primarily subscription-based for data and analytics, with key expenses including cost of services, selling and administrative, depreciation and amortization, and non-operating items - Revenue is primarily subscription-based, offering Finance & Risk and Sales & Marketing solutions[138][139][140] - Key expense categories include Cost of Services (data acquisition, technology), Selling and Administrative (sales, corporate, professional services), Depreciation and Amortization (PP&E, software, intangibles), and Non-Operating Income/Expense (interest, debt costs, derivatives)[141][142][143][144] Key Metrics The company uses non-GAAP financial measures like organic revenue, adjusted EBITDA, and adjusted net income to assess performance, adjusting for specific items to reflect underlying operations - Non-GAAP metrics include organic revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted net earnings per diluted share[146] - Adjustments typically exclude acquisition/divestiture costs, restructuring charges, equity-based compensation, and incremental amortization from purchase accounting to better reflect ongoing operating performance[150][151] Results of Operations For Q1 2023, total revenue increased 0.8% to $540.4 million, but operating income decreased 51.5% to $7.9 million, while adjusted EBITDA remained flat at $190.0 million Key Financial Results | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Total Revenue | 540.4 | 536.0 | 4.4 | 0.8% | | Operating Income (Loss) | 7.9 | 16.4 | (8.5) | (51.5%) | | Net Income (Loss) Attributable to D&B | (33.7) | (31.3) | (2.4) | (7.7%) | | Adjusted EBITDA | 190.0 | 190.1 | (0.1) | (0.1%) | | Adjusted EBITDA Margin | 35.2% | 35.5% | (0.3%) | (30 bps) | | Adjusted Net Income | 80.5 | 94.1 | (13.6) | (14.5%) | | Adjusted EPS | 0.19 | 0.22 | (0.03) | (13.6%) | Revenue Total revenue increased 0.8% to $540.4 million (3.2% organic growth), with North America revenue up 2.0% and International revenue down 1.8% Segment and Solution Revenue | Segment/Solution Revenue | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | North America Total | 374.7 | 367.3 | 7.4 | 2.0% | | North America Finance & Risk | 201.2 | 202.2 | (1.0) | (0.5%) | | North America Sales & Marketing | 173.5 | 165.1 | 8.4 | 5.1% | | International Total | 165.7 | 168.7 | (3.0) | (1.8%) | | International Finance & Risk | 110.8 | 109.0 | 1.8 | 1.6% | | International Sales & Marketing | 54.9 | 59.7 | (4.8) | (8.0%) | | Total Revenue | 540.4 | 536.0 | 4.4 | 0.8% | - Organic revenue increased by 3.2%, excluding a $1.3 million divestiture impact and a $10.7 million negative foreign exchange impact[161] - North America Finance & Risk revenue decreased due to a government contract expiration and FTC Consent Order impact on Small Business solutions, partially offset by Third-Party and Supply Chain Risk solutions[164] Expenses Cost of services increased 10.8% to $195.9 million, while selling and administrative expenses decreased 0.6% to $187.0 million, and restructuring charges decreased 19.7% to $4.2 million Operating Expenses | Expense Category | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Cost of services (excl. D&A) | 195.9 | 176.7 | 19.2 | 10.8% | | Selling and administrative expenses | 187.0 | 188.2 | (1.2) | (0.6%) | | Depreciation and amortization | 145.4 | 149.4 | (4.0) | (2.7%) | | Restructuring charges | 4.2 | 5.3 | (1.1) | (19.7%) | | Total Operating Costs | 532.5 | 519.6 | 12.9 | 2.5% | - Cost of services increased primarily due to $24 million higher data and data processing costs, partially offset by lower net personnel costs and favorable foreign exchange impact[170] - Selling and administrative expenses decreased due to lower data processing costs, partially offset by higher net personnel costs driven by equity-based compensation[171] Operating Income (Loss) Consolidated operating income decreased 51.5% to $7.9 million for Q1 2023, primarily due to higher data and data processing costs Operating Income | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Operating Income | 7.9 | 16.4 | (8.5) | (51.5%) | Adjusted EBITDA and adjusted EBITDA margin by segment Consolidated adjusted EBITDA was $190.0 million, a slight decrease of 0.1%, with adjusted EBITDA margin at 35.2% (down 30 bps) Segment Adjusted EBITDA | Segment Adjusted EBITDA | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | North America | 150.5 | 153.3 | (2.8) | (1.8%) | | International | 55.6 | 55.1 | 0.5 | 1.0% | | Corporate and other | (16.1) | (18.3) | 2.2 | 11.6% | | Consolidated Total | 190.0 | 190.1 | (0.1) | (0.1%) | Segment Adjusted EBITDA Margin | Segment Adjusted EBITDA Margin | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | Change (bps) | | :----------------------------- | :---------------------------- | :---------------------------- | :----------- | | North America | 40.2% | 41.7% | (150) | | International | 33.6% | 32.6% | 100 | | Consolidated Total | 35.2% | 35.5% | (30) | Interest Income (Expense) — Net Net interest expense increased 14.9% to $53.9 million for Q1 2023 due to higher interest rates, while interest income significantly increased 366.7% to $1.4 million Interest Income (Expense) – Net | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Interest income | 1.4 | 0.3 | 1.1 | 366.7% | | Interest expense | (55.3) | (47.2) | (8.1) | (17.2%) | | Interest income (expense) – net | (53.9) | (46.9) | (7.0) | (14.9%) | Other Income (Expense) — Net Other income (expense) – net shifted from a $9.3 million expense in Q1 2022 to a $0.6 million income in Q1 2023, primarily due to the absence of a prior-year debt redemption premium Other Income (Expense) – Net | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Non-operating pension-related income | 4.6 | 11.3 | (6.7) | (59.3%) | | Early debt redemption premium | — | (16.3) | 16.3 | NA | | Miscellaneous other income (expense) – net | (4.0) | (4.3) | 0.3 | 7.0% | | Other income (expense) – net | 0.6 | (9.3) | 9.9 | 106.5% | Provision for Income Taxes The effective tax rate for Q1 2023 was 26.0% (tax benefit of $11.8 million on a pre-tax loss of $45.4 million), compared to 23.4% in Q1 2022 Income Tax Provision | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Effective Tax Rate | 26.0% | 23.4% | | Pre-tax Loss (Millions USD) | (45.4) | (39.8) | | Tax Benefit (Millions USD) | (11.8) | (9.3) | Net Income (Loss) Net loss attributable to Dun & Bradstreet Holdings, Inc. increased by $2.4 million to $33.7 million for Q1 2023, resulting in a loss per share of $0.08 Net Income (Loss) Attributable to D&B | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Income (Loss) Attributable to D&B | (33.7) | (31.3) | (2.4) | (7.7%) | | Loss Per Share | (0.08) | (0.07) | (0.01) | (14.3%) | Adjusted Net Income and Adjusted Diluted Earnings Per Share Adjusted net income decreased by $13.6 million to $80.5 million, and adjusted diluted EPS decreased by $0.03 to $0.19 for Q1 2023, primarily due to higher interest expense and depreciation Adjusted Net Income and Adjusted Diluted EPS | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2023 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Adjusted Net Income | 80.5 | 94.1 | (13.6) | (14.5%) | | Adjusted Diluted EPS | 0.19 | 0.22 | (0.03) | (13.6%) | Liquidity and Capital Resources The company's liquidity, supported by operating cash flows, cash on hand, and short-term borrowings, is sufficient for short-term needs, with active management of market risks Overview Primary liquidity sources are operating cash flows, cash, and short-term borrowings, used for working capital, investments, and debt service, deemed sufficient for short-term needs - Primary liquidity sources are operating cash flows, cash and cash equivalents, and short-term borrowings from the senior secured credit facility[189] - Liquidity is used for working capital, capital investments, debt service, business acquisitions, and general corporate purposes[189] - Management believes current liquidity is sufficient for short-term needs, actively managing interest rate exposure through debt reduction and interest rate swaps[190][191][197] Cash Flow Overview As of March 31, 2023, cash and cash equivalents totaled $204.1 million, with $188.1 million held by foreign operations, and a $31.9 million net cash benefit from securitization Cash and Cash Equivalents | Metric | March 31, 2023 (Millions USD) | | :-------------------------- | :---------------------------- | | Cash and Cash Equivalents | 204.1 | | Cash held by foreign operations | 188.1 | | Cash held in China and India | 42.8 | - A net cash benefit of $31.9 million was received from the accounts receivable securitization facility in Q1 2023[194] Cash Provided by (Used in) Operating Activities Net cash provided by operating activities increased 12.2% to $155.7 million in Q1 2023, driven by securitization benefits and lower tax payments, partially offset by higher interest payments Net Cash from Operating Activities | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Cash from Operating Activities | 155.7 | 138.8 | 16.9 | 12.2% | - Operating cash flow increase was driven by a $31.9 million net cash benefit from the accounts receivable securitization facility and $17 million lower net tax payments, partially offset by $4 million higher interest payments[196] Cash Provided by (Used in) Investing Activities Net cash used in investing activities decreased 19.8% to $39.6 million in Q1 2023, mainly due to higher foreign currency contract settlements and lower capital expenditures Net Cash from Investing Activities | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Cash from Investing Activities | (39.6) | (49.4) | 9.8 | (19.8%) | - Investing cash flow improvement was due to $7.8 million higher net cash proceeds from foreign currency contract settlements and $1.8 million lower capital expenditures and software development[198] - Expected capital expenditures for 2023 are in the range of $160 million to $180 million[198] Cash Provided by (Used in) Financing Activities Net cash used in financing activities significantly increased 139.6% to $122.2 million in Q1 2023, primarily due to prior-year debt issuance proceeds, non-controlling interest payment, and dividend payments Net Cash from Financing Activities | Metric | 3 Months Ended March 31, 2023 (Millions USD) | 3 Months Ended March 31, 2022 (Millions USD) | Change (Millions USD) | Change (%) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :--------- | | Net Cash from Financing Activities | (122.2) | (51.0) | (71.2) | 139.6% | - Key drivers for increased cash used in financing activities include $452.6 million higher net debt issuance proceeds in prior year, $85.9 million payment for non-controlling interest, and $21.5 million dividend payment in current year[199] Capital Resources and Debt Total debt as of March 31, 2023, was $3,585.7 million, with $32.7 million classified as short-term, comprising various term loans, a revolving facility, and senior unsecured notes Total Debt Structure | Debt Type | Maturity | Principal Amount (March 31, 2023, Millions USD) | Carrying Value (March 31, 2023, Millions USD) | | :-------------------------- | :--------------- | :---------------------------------------------- | :-------------------------------------------- | | Total short-term debt | N/A | 32.7 | 32.7 | | Total long-term debt | N/A | 3,610.5 | 3,553.0 | | Total debt | N/A | 3,643.2 | 3,585.7 | Contractual Obligations Information regarding the company's operating leases, pension obligations, and vendor commitments is incorporated by reference from the 2022 Annual Report on Form 10-K - Details on operating leases, pension obligations, and vendor commitments are available in the 2022 Annual Report on Form 10-K[202] Off-Balance Sheet Arrangements The company has no off-balance sheet arrangements other than foreign exchange forward contracts, interest rate swaps, and cross-currency swaps, as detailed in Note 13 - The company has no off-balance sheet arrangements other than foreign exchange forward contracts, interest rate swaps, and cross-currency swaps[203] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risks primarily involve currency exchange rates, investment market values, and interest rates, with no material changes reported as of March 31, 2023 - Primary market risks include foreign exchange rates, investment market values, and interest rates on borrowing costs[204] - No material changes in market risks were reported as of March 31, 2023, compared to the 2022 Annual Report on Form 10-K[204] Item 4. Controls and Procedures As of March 31, 2023, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2023[208] - No material changes in internal control over financial reporting occurred during Q1 2023[209] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding the company's legal proceedings is incorporated by reference from Note 8 – Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q - Legal proceedings information is incorporated by reference from Note 8 – Contingencies[210] Item 1A. Risk Factors No material changes to risk factors were reported since the 2022 Annual Report on Form 10-K, except for an update on governmental regulations, including a new FTC inquiry - No material changes to risk factors, except for an update on governmental regulations[211] - The company is subject to various governmental regulations, including a 20-year FTC Consent Order and new state privacy laws (CPRA, CDPA)[212][213][216] - A recent FTC 6(b) Order initiated an inquiry into the small business credit reporting industry, which could potentially lead to new FTC rules or actions impacting the business[214][215] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds were reported[218] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[218] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable[218] Item 5. Other Information No other information was reported for the period - No other information was reported[218] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including various agreements, certifications (CEO, CFO), and XBRL data - The exhibits include various agreements (e.g., restricted stock awards), CEO and CFO certifications (Sarbanes-Oxley Act), and XBRL financial data[219]