Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q1 FY2020 Earnings Presentation
31 slides from Broadridge Financial Solutions's earnings presentation, Nov 19, 2019
Slide 1: Investor Presentation Fiscal Second Quarter 2020
INVESTOR PRESENTATION FISCAL SECOND QUARTER 2020
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”) may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial MeasuresThe Company’s results in this presentation are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) except where otherwise noted. In certain circumstanc
Slide 4: The Broadridge Story
The Broadridge Story Strong market position across Governance, Capital Markets, and Wealth Management Platform-based business model creates unique value for our clients Significant growth opportunity supported by long-term trends of mutualization, digitization, and data & analytics Strong business m
Slide 5: Broadridge Focused on Capturing Opportunity
Broadridge Focused on Capturing Opportunity Achieved FY2019 Guidance including 6% Recurring fee revenue growth and double-digit EPS growthRecord Closed sales in FY2019 FY2020 Guidance positions Broadridge to meet high-end of three-year EPS objectiveBalanced execution against capital allocation prior
Slide 6: The Industry's Leading Choice
The Industry’s Leading Choice GOVERNANCE CAPITAL MARKETS WEALTH MANAGEMENT Process 80% of outstanding shares in the United States, 50%+ for rest of worldDistribute 90%+ of broker regulatory communications to 140M individual accounts Serve most brokers, funds, and public companies in North AmericaRea
Slide 7: Broadridge Platform-based Business Model Creates Unique Value
Broadridge Platform-based Business Model Creates Unique Value Network value Deep financial services knowledge Multi-client managed services approach Domain expertiseTrusted Unique CapabilityData & Analytics Scale leadershipSignificant IP
Slide 8: Broadridge's Directly Addressable Market is $25-40B
Broadridge’s Directly Addressable Market is $25-40B Key Market Trends GOVERNANCE & COMMUNICATIONS WEALTH MANAGEMENT CAPITAL MARKETS 100% = $25-40B DATA & ANALYTICS DIGITIZATION MUTUALIZATION Large Growth Opportunity
Slide 9: Growth Opportunity: Extend Governance
Growth Opportunity: Extend Governance 140M+RETAIL SHAREHOLDER ACCOUNTS 150,000+INSTITUTIONAL SHAREHOLDERS 27,000+ MUTUAL FUNDS AND ETFs 1,100+ BANKS and BROKER-DEALERS 5,000+CORPORATE ISSUERS EXTEND GOVERNANCEFee Revenue = $1.7B BUILD WEALTH MANAGEMENT DRIVE CAPITAL MARKETS Driving Next-gen Regulato
Slide 10: ICS Record Growth and FY19 Revenues
ICS Record Growth and FY19 Revenues 1 Stock record growth and interim record growth measure the annual change in total positions eligible for equity proxies and mutual fund & ETF interims, respectively, for equities and mutual fund position data reported to Broadridge in both the current and prior y
Slide 11: Growth Opportunity: Drive Capital Markets
Growth Opportunity: Drive Capital Markets Serve 19 of the 24 US Fixed Income primary dealersProcess Equities for 7 of the top 10 global investment banksClear and settle in over 90 markets globally Strong market position Support 40+ clients for both technology and operations including 7 of 27 US Fixe
Slide 12: Growth Opportunity: Build Wealth Management
Growth Opportunity: Build Wealth Management Advisors Investors Wealth management tools Targeted marketing Wealth mobile portal Educational content Enriched, digital communicationsTrading and account servicing Clearance & settlement Client and regulatory reportingBusiness process automation & workflo
Slide 13: Record Sales Building Revenue Backlog
Record Sales Building Revenue Backlog Annual Closed Sales Performance Recurring Revenue Backlog as of June 30 2,3 (1) FY20 Closed sales Guidance Range as of August 1st, 2019 Earnings Call.(2) Recurring Revenue Backlog as of August 1st, 2019 Earnings Call and are Broadridge estimates and subject to r
Slide 14: Broadridge Business Model is Strong
Broadridge Business Model is Strong Sustainable Growth Large, recurring revenue base with good visibility aided by $330 million revenue backlogOrganic strength driven by large addressable market Steady Margin Expansion Continued scale and operational leverageFocus on operational efficiencies Strong
Slide 15: Extend Governance, Drive Capital Markets, Build Wealth Management progress
Driving next-gen regulatory communicationsStrengthening digital products to enhance regulatory and other communicationsRule 30e-3 and Enhanced Content opportunitiesBlockchain proxy capability for North American market Growing data & analytics suiteBroadening corporate issuer solution setBuilding omn
Slide 16: Fiscal Year 2020 Guidance
Fiscal Year 2020 Guidance – As of November 6, 2019 Recurring fee revenue growth 8 - 10% Total revenue growth 3 - 6% Operating income margin - GAAP ~15% Adjusted Operating income margin - Non-GAAP ~18% Diluted earnings per share growth1 5 - 9% Adjusted earnings per share growth1 - Non-GAAP 8 - 12% Cl
Slide 17: Three Year Growth Objectives
Organic Recurring Fee Revenue Growth 5-7% Recurring Fee Revenue Growth 7-9% Adjusted Op Income Margin Expansion ~50bps/yr Adjusted EPS Growth 14-18% Winning formula for top quartile TSR FY17 - FY20 Three Year Growth Objectives Note: FY17 - FY20 three year Adjusted EPS growth objective updated Februa
Slide 18: Regulatory Update
Regulatory Update June 2018SEC Approves Rule 30e-3“Notice-and-access” Allows mutual funds to opt-in their shareholders to receive “notice-and-access” beginning in 2021Working with 130+ fund familiesFinancial impact: higher recurring fee revenues, lower distribution revenues, modestly net positive im
Slide 19: Fiscal First Quarter Year 2020 Financial Summary
Fiscal First Quarter Year 2020 Financial Summary as of November 6th, 2019 Earnings Call:
Slide 20: Highlights
Highlights Solid first quarter 2020 financial resultsRecurring fee revenues rose 8% Event-driven revenues declined 48%Diluted EPS of $0.48 and Adjusted EPS of $0.68Record Closed sales of $38 million, up 103% Continued investments in new products and M&A to strengthen and grow our business$179 millio
Slide 21: First Quarter 2020 Operating Review
First Quarter 2020 Operating ReviewICS: continued growth in recurring fee revenuesRecurring fee revenue growth of 10% (organic growth of 6%) excluding Customer CommunicationsContinued strong, double-digit growth in data and analytics productsCustomer Communications revenues declined 2%Event-driven r
Slide 22: Tuck-in M&A Tightly Linked to Growth Strategy
Tuck-in M&A Tightly Linked to Growth Strategy Nearly $700 million invested across 13 acquisitions since end of FY2017M&A aligned with strategic priorities:Governance ($307 million): includes TD Ameritrade retirement assets, Fi360 and Summit Financial Wealth ($347 million): includes RPMCapital Market
Slide 23: 1Q 2020 Segment Revenue Growth and Drivers
1Q 2020 Segment Revenue Growth and Drivers 1Q 2019 2020 Growth Investor Communication Solutions Revenues1 Recurring Fee Revenues $ 337 $ 349 4 % Event-Driven Fee Revenues 77 40 (48 )% Distribution Revenues 341 313 (8 )% Total ICS Revenues $ 755 $ 703 (7 )% Global Technology and Operations Revenues1
Slide 24: First Quarter 2020 Operating Income and EPS
First Quarter 2020 Operating Income and EPS Dollars in millions, except per share amounts Year-over-Year Change in Operating Income and Adjusted Operating Income Year-over-Year Change in EPS and Adjusted EPS (16)% (27)% (14)% (25)%
Slide 25: Capital Allocation and Summary Balance Sheet
Capital Allocation and Summary Balance Sheet Select Uses of Cash Year to Date Dollars in millions Summary Balance Sheetas of September 30, 2019 Assets Cash and cash equivalents $ 358 Other assets 3,862 Total assets $ 4,220 Liabilities and Stockholders’ Equity Current portion of long-term debt $ 399
Slide 26: Supplemental Reporting Detail - Product Line Reporting
Supplemental Reporting Detail - Product Line Reporting1 2019 1Q 2020 Dollars in millions 1Q 2Q 3Q 4Q FY 1Q % Growth Investor Communication Solutions (“ICS”) Equity proxy $ 31.0 $ 41.7 $ 152.9 $ 211.4 $ 437.0 $ 29.8 (4 )% Mutual fund and ETF interims 57.8 60.7 82.1 65.3 265.9 65.3 13 % Customer commu
Slide 27: GAAP Reconciliations
GAAP Reconciliations Bg Broadridge ©2019 | 7
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Note: Amounts may not sum due to rounding. Dollars in millions Three Months Ended September 30, 2019 2018 Operating income (GAAP) $ 73.1 $ 100.1 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 28.1 21.9 Acquisition and
Slide 29: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Note: Amounts may not sum due to rounding. Dollars in millions, except per share amounts Three Months Ended September 30, 2019 2018 Diluted earnings per share (GAAP) $ 0.48 $ 0.64 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual
Slide 30: FY20 Adjusted Earnings Per Share Growth Rate
FY20 Adjusted Earnings Per Share Growth Rate (a) Diluted earnings per share growth (GAAP) 5% - 9% Adjusted earnings per share growth (Non-GAAP) 8% - 12% FY20 Adjusted Operating Income Margin (b) Operating income margin % (GAAP) ~15% Adjusted Operating income margin % (Non-GAAP) ~18% (a) Adjusted ear
Slide 31: Broadridge Investor Relations
Broadridge Investor Relations W. Edings Thibault Tel: 516-472-5129 Email: edings.thibault@broadridge.com
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