35 slides from Broadridge Financial Solutions's investor presentation, May 17, 2010
Slide 1: Investor Presentation
Exhibit 99.1 Broadridge Financial Solutions, Inc. Investor Presentation Richard J. Daly Chief Executive Officer May 2010
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 may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature,
Slide 3: Use of Material Contained Herein
Use of Material Contained Herein The information contained in this presentation is being provided for your convenience and information only. This information is accurate as of the date of its initial presentation. If you plan to use this information for any purpose, verification of its continued acc
Slide 4: Agenda
Agenda Broadridge Overview and Summary Business Overview Business Expansion Strategy Overview Financial Overview Conclusion 4
Slide 5: Broadridge: Investment Thesis
Broadridge: Investment Thesis Market leader with high Dependable mid-single-digit client retention rates revenue growth business driven by product innovation (5% CAGR since 2002) Generate Scalable business model Approximately 80% very strong and with core business generating margin expansion in recu
Slide 6: Broadridge: Free Cash Flow & Capital Allocation
Broadridge: Free Cash Flow & Capital Allocation •Doubled annual dividend Free Cash Flow (1) (Non-GAAP) Dividends from $0.28 to $0.56 per share for FY10, or ($ in millions) approximately 35% payout of FY09 GAAP net earnings $290 High: $270 •Authorized repurchase of Stock up to 10 million shares, or R
Slide 7: Broadridge Mission
Broadridge Mission • Enable the financial services industry to achieve higher levels of performance by allowing firms to focus on their core business Increase • Help clients manage their regulatory compliance risk by Partner with Performance improving clients’ processing, Financial Institutions comm
Slide 8: Integrated Solutions Spanning the Investment Lifecycle
Integrated Solutions Spanning the Investment Lifecycle Across the Investment Trade Processing Asset investment Decision & Servicing lifecycle... (Pre-Trade) Books and Records (Post-Trade) ...Broadridge Welcome Kits New Accounts Processing Confirms Reporting Archival Proxy Statements Fulfillment touc
Slide 9: Resilient and Predictable Business Model
Resilient and Predictable Business Model A Market Leader Revenue Drivers with Recurring Revenue High Retention Rates Shareholder Positions Investor Communication Solutions Images and Pieces Processed Processing Fees (Trades Per Day) Securities Processing Solutions # of Accounts High Client Satisfact
Slide 10: Business is Resilient in Changing Markets
Business is Resilient in Changing Markets Internet Bubble Impact Financial Crisis Decimalization Stock Market of Trades Rebounds Our revenue growth has been resilient through various economic and market cycles th Note: Fiscal year is based on June 30 year end 10
Slide 11: Revenue Growth Drivers
Revenue Growth Drivers FY02 - FY09 (%) Average historical growth of 5%, which included two severe Average Revenue down market cycles (1) Growth From: In high growth economic cycles revenue growth averages 10- Sales 12% and flat to negative 3% in severe down markets 4% Historical sales growth compone
Slide 12: Business Expansion Focus
Business Expansion Focus Closed Sales Closed •Strong and growing pipeline with large opportunities in all segments (Fee Only $ in millions) Sales Event-Driven (ED) Recurring (RC) •Winning a meaningful percentage of each year’s market-driven sales activity High: $205 •Growth in recurring closed sales
Slide 13: This is Broadridge
This is Broadridge FY10 Forecast Segment Revenues (1) FY10 Forecast Segment Margins •We are a market leader in processing and distributing shareholder communications, and provider of choice for mission-critical Securities Securities securities processing solutions Processing Processing $531-533M •Ov
Slide 14: ICS Unique Business Systems Processing Model
ICS Unique Business Systems Processing Model PROXY & INTERIMS PROCESSING OVERVIEW "THE PLUMBING" Equity and Mutual Fund Shareholders Street-side Processing Registered Processing BROADRIDGE Broker/Bank 1 Proxy Processing System Issuer 1 / Fund 1 Over 8 million lines of code and approximately 500,000
Slide 15: ICS Product and Client Revenue Overview
ICS Product and Client Revenue Overview: We have a strong and diverse product …and we have deep and longstanding offering… client relationships ICS FY09 Product Revenues ICS FY09 Client Revenues Proxy $350M (23%) Bank/Broker- Distribution Dealer $757M (49%) $1,383M Interims (90%) $136M (9%) Primaril
Slide 16: ICS Market Share Overview by Products and Markets
ICS Market Share Overview by Products and Markets We have deep penetration in our core business and clients, yet large potential to grow market share Product depth and relationships with Bank/Broker-Dealers provide high client retention with large potential upside 16
Slide 17: Securities Processing & Outsourcing – Target Market Landscape
Securities Processing & Outsourcing – Target Market Landscape How Firms Clear Trades Self-Clearing Broker-Dealer Firms Trade Clearing Method #1 (Firms that clear trades directly through the DTC) Type of Self-Clearing Firms Traditional B/D Firms Clearing B/D Firms •Primarily clear trades for accounts
Slide 18: Broadridge - Revenue Summary for Penson Transaction
Broadridge - Revenue Summary for Penson Transaction Broadridge Broadridge Clearing & Outsourcing Before Penson Transaction Penson Clearing & Outsourcing After Penson Transaction Signs 10-Year BR Sells clearing Acquired Revenue - ~ $75M Outsourcing Contract Clearing Related Revenue client contracts 1
Slide 19: Securities Processing Market Share Overview
Securities Processing Market Share Overview (2) Equity Processing High client retention rates (>95%) We service 8 of the top 10 largest financial institutions by # of Firms with growth opportunity coming with a strong potential to increase market share(1) (191 total) from firms that perform processi
Slide 20: Securities Processing Solutions Top Clients
Securities Processing Solutions Top 15 Clients Equity Processing Fixed Broadridge has faired well Top during the recent industry Income Clients consolidations and financial Retail Institutional Processing crisis Alliance Bernstein The top 15 SPS clients generate Bank of America/Merrill Lynch* approx
Slide 21: Business Expansion Strategy
Business Expansion Strategy Focused on core processing and communication businesses and making investments in business that leverage these strong industry positions Be Indispensable! Vision We enable the financial services industry to achieve superior levels of performance through our passion to del
Slide 22: Financial Performance is Driven by Recurring Revenues
Financial Performance is Driven by Recurring Revenues Net Revenues Earnings Before Interest andTaxes - as adjusted (1)(2) ($ in Millions) ($ in Millions) $2,149 $371 $347 $352 $483 $423 $487 $1,717 $368 $304 $324 $275 ` $1,651 $1,724 $1,726 $1,565 $1,393 FY05 FY06 FY07 FY08 FY09 FY05 FY06 FY07 FY08
Slide 23: Broadridge FY10 Guidance from Continuing Operations
Broadridge FY10 Guidance from Continuing Operations Revenue ($ in millions) EBIT FY09 FY10 Range FY09 FY10 Range Actual Low High Actual Low High $1,531 $1,671 $1,688 ICS $249 $279 $285 -3% 9% 10% Growth % / Margin % 16.3% 16.7% 16.9% $559 $531 $533 SPS $134 $87 $94 5% -5% -5% Growth % / Margin % 23.
Slide 24: Focused on Capital Stewardship and Long-Term Shareholder Value
Focused on Capital Stewardship and Long-Term Shareholder Value • Capitalize on fundamentals driving long-term market growth Mid-single-digit • Invest in and drive new sales of existing solutions organic revenue growth • Rollout new solutions to enable client efficiencies and facilitate client growth
Slide 25: Summary
Summary Broadridge is a dependable mid-single-digit revenue grower with a scalable business model providing opportunity for margin expansion We expect to continue to invest in our existing businesses and execute strategic acquisitions to generate mid to high single- digit average revenue growth We e
Slide 26: Appendix
I Appendix Appendix Ba Broadridge ns
Slide 27: Penson Update
Penson Update Evolution of the Penson Deal FY09 Actual results to Continuing Operations GAAP FY09 GAAP Continuing Operations to Fully Converted Penson Phases 1 & 2 (1) (2) (3) (4) (5) (6) (7) Pre-Penson Transaction - Discontinued Operations = Continuing Operations + Penson Phase 1 = FY10 Proforma +
Slide 28: Broadridge's Simplified Securities Processing Model
Broadridge’s Simplified Securities Processing Model Outsourcing Securities Processing Self-Clearing with Ops. Clearing Third Party Clearing Self-Clearing with Outsourcing & Service Fully-Disclosed Clearing Clients Service Bureau Bureau Technology & Provided by Provided by Outsourced to Data Center B
Slide 29: Free Cash Flow (Non-GAAP) – YTD and FY10 Forecast
Free Cash Flow (Non-GAAP) – YTD and FY10 Forecast Unaudited (In millions) Nine Months Ended FY10 Range (a) March 2010 Low High Cash Flow - Continuing Operations Net earnings from continuing operations (GAAP) $ 109 $ 220 $ 228 Depreciation and amortization (includes other LT assets) 43 60 58 Stock-ba
Slide 30: Historical Free Cash Flow Non-GAAP to GAAP Reconciliation
Historical Free Cash Flow Non-GAAP to GAAP Reconciliation Reconciliation of Non-GAAP to GAAP Measures Free Cash Flow ($ in millions) (Unaudited) FY06 FY07 FY08 FY09 Actual Actual Actual Actual Net cash flow provided by operating activities (GAAP) $ 426 $ 161 $ 482 $ 359 (a) Securities clearing activ
Slide 31: Reconciliation of Non-GAAP to GAAP Measures
Reconciliation of Non-GAAP to GAAP Measures EBIT Reconciliation FY09 FY10 Range ($ in millions) Actual Low High EBIT (Non-GAAP) * $352 $348 $361 Margin % 17.0% 15.8% 16.2% Interest & Other ($6) ($11) ($11) Total EBT (GAAP) $346 $337 $350 Margin % 16.7% 15.3% 15.7% EPS Reconciliation Low High Diluted
Slide 32: Closed Sales-To-Revenue Overview
Closed Sales-To-Revenue Overview General Conversion Time Frames Closed Sales-to-Revenue Conversion Segment Sales Categories General Time Frames Investor Communication Solutions Registered Mutual Fund Sales 1 to 6 Months Registered Equity Sales Issuer's Next Annual Meeting Transaction Reporting(1) an
Slide 33: Broadridge ICS Key Statistics
Broadridge ICS Key Statistics $ in millions FY07 FY08 FY09 Type RC= Recurring Fee Revenues (1) ED= Event-Driven Proxy Equities $ 227.0 $ 256.0 $ 268.4 RC Stock Record Position Growth 0% 2% -2% Pieces 289.9 297.8 288.0 Mutual Funds $ 78.8 $ 92.1 $ 55.0 ED Pieces 127.3 176.6 73.5 Contests/Specials $ 2
Slide 34: Broadridge SPS Key Statistics
Broadridge SPS Key Statistics $ in millions RC= Recurring FY07 FY08 FY09 Type ED= Event-Driven Equity Transaction-Based Equity Trades $ 262.9 $ 261.5 $ 260.4 RC (1)(2) Trade Volume (Average Trades per Day in '000) 1,454 1,559 1,648 Non-Transaction Other Equity Services $ 172.9 $ 177.2 $ 191.7 RC Tot
Slide 35: Broadridge ICS Definitions
Broadridge ICS Definitions Proxy Equities – Refers to the proxy services we provide in connection with annual stockholder meetings for publicly traded corporate issuers. Annual meetings of public companies include shares held in "street name" (meaning that they are held of record by brokers or banks