Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q3 2024 Earnings Presentation
31 slides from Broadridge Financial Solutions's earnings presentation, May 8, 2024
Slide 1: Powering and transforming financial markets
Powering and transforming financial markets Earnings Conference Call Fiscal Third Quarter 2024 May 8, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and other written or oral statements made from time to time by representatives of Broadridge Financial Solutions, Inc. ("Broadridge" or the "Company") contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act
Slide 3: Use of Non-GAAP financial measures, KPIs and foreign exchange rates
Use of Non-GAAP financial measures, KPIs and foreign exchange rates Use of Non-GAAP Financial Measures This presentation includes certain Non-GAAP financial measures including Adjusted Operating income, Adjusted Operating income margin, Adjusted Net earnings, Adjusted earnings per share (“EPS”), Fre
Slide 4: Key messages
Key messages Broadridge’s Recurring revenue grew 4% and Adjusted EPS grew 9% in a quarter modestly impacted 1 by the timing of annual meetings Broadridge continues its strong execution across Governance, Capital Markets, and Wealth and 2 Investment Management, supported by long-term trends including
Slide 5: Broadridge is executing across Governance, Capital Markets, and Wealth & Investment Management
Broadridge is executing across Governance, Capital Markets, and Wealth & Investment Management Governance Q3’24 Highlights • Equity position growth of 5% partially offset by (1%) Mutual Fund and ETF position growth $701M +1% YoY • Disney contest highlights Broadridge’s commitment to digitization and
Slide 6: Broadridge remains well-positioned for long-term growth
Broadridge remains well-positioned for long-term growth Broadridge is poised to deliver another year of mid-single digit organic Recurring revenue growth 1 and double-digit earnings growth Long-term trends are driving strong Closed sales and mid-single digit position growth 2 Broadridge is executing
Slide 7: Summary financial results
Summary financial results THIRD QUARTER $ in millions, except per share data 2024 2023 Inc./(Dec.) Recurring revenues $1,126 $1,082 4% Constant currency growth (Non-GAAP) 4% Total revenues 1,726 1,646 5% Operating income 303 287 6% Adjusted Operating income (Non-GAAP) 370 345 7% Adjusted Operating i
Slide 8: Third quarter 2024 Recurring revenues
Third quarter 2024 Recurring revenues $ in millions; growth in constant currency FISCAL YEAR RECURRING REVENUE GROWTH Q3 RECURRING REVENUES +4% 16% $1,126 10% 9% Low end of 6-9% FY'21 FY'22 FY'23 FY'24 Guidance Q3'23 Q3'24 Information about our use of Non-GAAP measures and reconciliations to GAAP me
Slide 9: Third quarter 2024 segment Recurring revenues
Third quarter 2024 segment Recurring revenues $ in millions; growth in constant currency ICS RECURRING REVENUES GTO RECURRING REVENUES +1% +9% $701 $425 $345 0% Regulatory $266 8% Capital Markets Data-Driven $106 4% Fund Solutions Issuer $60 3% Wealth & Investment Customer Management $159 11% $191 1
Slide 10: Key volume drivers: position and trade growth
Key volume drivers: position and trade growth EQUITY & MUTUAL FUND/ETF POSITION GROWTH FY’22 FY’23 10Y Avg. 1,2 18% 9% 11% 2 8% 14% 8% ITG 3 1% 4% 6% 10% 8% 8% 6% 5% 6% 6% 5% 3% (1%) Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 INTERNAL TRADE 1% 3% 15% 12% 11% GROWTH 1. Q3’23 equity position growth represented 32%
Slide 11: Third quarter 2024 Recurring revenue growth drivers
Third quarter 2024 Recurring revenue growth drivers $ in millions. Pts contribution to growth RECURRING REVENUE GROWTH CONSTANT CURRENCY WAS 4% Organic Growth: 4 pts 6 pts 1 pt 0 pts 4% 0 pts 4% (3) pts $1,126 $1,082 Q3'23 Recurring Closed Sales Client Losses Internal Growth Acquisitions Q3'24 Rec.
Slide 12: Third quarter 2024 Total revenue growth drivers
Third quarter 2024 Total revenue growth drivers $ in millions. Pts contribution to growth THIRD QUARTER 2024 TOTAL REVENUE GROWTH DRIVERS 1 pt 5% 3 pts 1 pt 0 pts $1,726 $1,646 Q3'23 Total Revenues Recurring Event-Driven Distribution FX Q3'24 Total Revenues QUARTERLY EVENT-DRIVEN REVENUES $87 $67 $5
Slide 13: Operating income margin and Adjusted Operating income margin
Operating income margin and Adjusted Operating income margin OPERATING INCOME MARGIN OPERATING 13.6% 13.3% 15.4% 17.4% 17.5% INCOME MARGIN ~20% 21.4% 19.8% 21.0% ADJUSTED OPERATING 18.7% INCOME MARGIN (NON- 18.1% GAAP) +60 +60 +110 bps bps bps FY'21 FY'22 FY'23 FY'24 Guidance Q3'23 Q3'24 Information
Slide 14: Closed sales
Closed sales $ in millions CLOSED SALES $280 – $320 $280 $185 $156 $246 $231 FY'21 FY'22 FY'23 FY'24 Guidance YTD'23 YTD'24 13
Slide 15: Free cash flow conversion
Free cash flow conversion FREE CASH FLOW CONVERSION (LTM) 1,2 110% 108% 103% 90% 63% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 1. Last twelve months (LTM) Free cash flow conversion equals Free cash flow for the most recent four quarters divided by Adjusted Net earnings for the same four quarters 2. Information
Slide 16: Capital allocation
Capital allocation $ in millions, except per share data SELECT USES OF CASH YTD’24 TOTAL CAPITAL RETURNS4 YTD Net Share Repurchases YTD Dividends Paid CapEx and Software 1 $77 $312 $700- $91 $269 $253 $800 $248 Client Platform Investments 2 $33 $274 M&A 3 $0 FY'20 FY'21 FY'22 FY'23 FY'24 (E) 6 DIVID
Slide 17: Fiscal year 2024 guidance
Fiscal year 2024 guidance FY’24 GUIDANCE UPDATES Recurring revenue growth constant currency 6 - 9% Low end of range (Non-GAAP) Adjusted Operating income margin ~20% No Change (Non-GAAP) Adjusted earnings per share growth 8 - 12% Middle of range (Non-GAAP) Closed sales $280M - $320M No Change 16
Slide 18: Appendix
Appendix Broadridge:
Slide 19: Supplemental reporting detail - product line reporting
Supplemental reporting detail ‒ product line reporting (Unaudited) 2022 2023 2024 Q3% Dollars in millions FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Growth Investor Communication Solutions ("ICS") Regulatory Solutions $1,075 $171 $181 $ 346 $ 444 $1,141 $179 $195 $345 —% Data-Driven Fund Solutions 364 93 96 102 113
Slide 20: FY'24 - FY'26 long-term growth objectives
FY’24 – FY’26 long-term growth objectives FY’24 – FY’26 (CAGR) Organic Recurring revenue growth 5-8% Recurring revenue growth constant currency 7-9% (Non-GAAP) Adjusted Operating Income Margin expansion (bps/year) 50+ (Non-GAAP) Adjusted Earnings per Share Growth 8-12% (Non-GAAP) Note: AOI margin ex
Slide 21: Explanation of non-GAAP measures and reconciliation of GAAP to non-GAAP measures
Explanation of non-GAAP measures and reconciliation of GAAP to non- GAAP measures
Slide 22: Non-GAAP measures
Non-GAAP measures Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial Measures The Company’s results in this presentation are presented in accordance with U.S. generally accepted accounting principles ("GAAP") except where otherwise noted. In certain circumstances, results have
Slide 23: Non-GAAP measures
Non-GAAP measures We exclude Acquisition and Integration Costs, Real Estate Realignment and Covid-19 Related Expenses, Investment Gains, Russia-Related Exit Costs, Litigation Settlement Charge, and Restructuring and Other Related Costs from our Adjusted Operating income (as applicable) and other adj
Slide 24: Reconciliation of GAAP to Non-GAAP measures
Reconciliation of GAAP to Non-GAAP measures (Unaudited) Three Months Ended March 31, 2024 Data-Driven Fund Investor Communication Solutions Regulatory Issuer Customer Comms. Total Solutions Recurring revenue growth (GAAP) —% 4% 3% 1% 1% Impact of foreign currency exchange —% —% —% —% —% Recurring re
Slide 25: Reconciliation of GAAP to Non-GAAP measures
Reconciliation of GAAP to Non-GAAP measures (Unaudited) Nine Months Ended March 31, 2024 Data-Driven Fund Investor Communication Solutions Regulatory Issuer Customer Comms. Total Solutions Recurring revenue growth (GAAP) 3% 8% 10% 1% 4% Impact of foreign currency exchange —% (1)% —% —% —% Recurring
Slide 26: Reconciliation of GAAP to Non-GAAP measures
Reconciliation of GAAP to Non-GAAP measures (Unaudited) Three Months Ended Mar. 31, Nine Months Ended Mar. 31, Dollars in millions 2024 2023 2024 2023 Operating income (GAAP) $302.9 $286.8 $575.7 $482.2 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 50.6 53.3 1
Slide 27: Reconciliation of GAAP to Non-GAAP measures
Reconciliation of GAAP to Non-GAAP measures (Unaudited) Three Months Ended Mar. 31, Nine Months Ended Mar. 31, Dollars in millions 2024 2023 2024 2023 Net earnings (GAAP) $213.7 $198.5 $374.9 $306.5 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 50.6 53.3 151.4
Slide 28: Reconciliation of GAAP to Non-GAAP measures
Reconciliation of GAAP to Non-GAAP measures (Unaudited) Three Months Ended Mar. 31, Nine Months Ended Mar. 31, Dollars in millions, except per share amounts 2024 2023 2024 2023 Diluted earnings per share (GAAP) $1.79 $1.67 $3.14 $2.58 Adjustments: Amortization of Acquired Intangibles and Purchased I
Slide 29: Reconciliation of GAAP to Non-GAAP measures
Reconciliation of GAAP to Non-GAAP measures (Unaudited) FY 2022 FY 2023 FY 2024 Dollars in millions Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net cash flows (used in) provided by operating activities (GAAP) $ 457.4 $ (204.5) $ 123.1 $ 175.6 $ 729.2 $ (62.0) $ 189.8 $ 207.4 Capital expenditures and Software purchases
Slide 30: Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2024 guidance
Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2024 guidance (Unaudited) Fiscal Year 2024 FY24 Recurring revenue growth Impact of foreign currency exchange (a) 0 - 0.5% Recurring revenue growth constant currency (Non-GAAP) 6-9% FY24 Adjusted Operating income margin (b) Operating income mar
Slide 31: Broadridge Fiscal Third Quarter 2024 Earnings Conference Call
Broadridge Fiscal Third Quarter 2024 Earnings Conference Call Contacts Replay Options W. Edings Thibault Online replay available at broadridge-ir.com Sean Silva Telephone replay available through May 15, 2024 broadridgeir@broadridge.com Domestic Dial-In: 1-877-344-7529 Live Call Information Date: Ma
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