Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (May 2018)
32 slides from Broadridge Financial Solutions's investor presentation, May 15, 2018
Slide 1: Investor Presentation May 2018
EXHIBIT 99.1 INVESTOR PRESENTATION MAY 2018
Slide 2: Forward-Looking Statements
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 Se
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 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 circumstan
Slide 4: Broadridge is Ready For Next
Broadridge is Ready For Next Market dynamics driving strong growth for Broadridge’s technology-driven solutions Proven strategy and experienced management team to drive sustainable growth Uniquely positioned to deliver network value and capture additional, large market opportunities Successful track
Slide 5: The industry's leading choice
The industry’s leading choice GOVERNANCE CAPITAL MARKETS WEALTH MANAGEMENT • Process 80% of outstanding • Clear and settle over $5T • Support 50M+ accounts shares in the United States, per day through our technology 50%+ for rest of world platform • Serve 18 of 23 US primary • Distribute 90%+ of bro
Slide 6: Broadridge platform-based business model creates unique value
Broadridge platform-based business model creates unique value Deep financial services knowledge • Domain expertise • Trusted Multi-client Network managed value • Unique Capability • Scale leadership services • Data & Analytics • Significant IP approach © 2018 | 6
Slide 7: Broadridge's directly addressable market is $25-40B
Broadridge’s directly addressable market is $25-40B Large Growth Opportunity Key Market Trends CAPITAL GOVERNANCE & MARKETS COMMUNICATIONS MUTUALIZATION $10-15B $9-13B DIGITIZATION $6-12B DATA & ANALYTICS WEALTH MANAGEMENT 100% = $25-40B © 2018 | 7
Slide 8: Three key opportunities: Extend, Drive, Build
Broadridge is focused on three key opportunities, two of which are already strong franchises EXTEND DRIVE BUILD GOVERNANCE CAPITAL MARKETS WEALTH MANAGEMENT Address critical industry needs by utilizing our unique network and industry-leading platform capabilities Well-positioned to drive Internation
Slide 9: Extend Governance
Extend Governance 5,000+ 150,000+ CORPORATE ISSUERS INSTITUTIONAL SHAREHOLDERS Key Opportunities • Transform regulatory communications • Develop omni-channel communications 24,000+ 140M+ • Expand issuer services MUTUAL FUNDS RETAIL SHAREHOLDER and continue to bring 1,100+ ACCOUNTS transparency to BA
Slide 10: Strong track record of digital transformation
Broadridge has a strong track record of digital transformation SUCCESSFULLY FIRST USE TODAY DIGITIZED Investor Mailbox Proxy & Other E-Delivery Enhanced Broker Internet Platform Mobile Proxy Voting 1 Suppression Regulatory Data & Analytics Summary Prospectus 64% Algorithms Customer E-Delivery Presen
Slide 11: Drive Capital Markets
Drive Capital Markets Asset Class and Function Coverage Equities Fixed Trade & Foreign Exchange Exchange Income Position & Money Traded Financing Markets Derivatives Drive global technology platform SOLUTION COMPONENTS Managed Services Options Extend with additional Unified Portal solutions Core Com
Slide 12: Build Wealth Management
Build Wealth Management • Educational content • Enriched, digital communications • Clearance & settlement • Trading and account • Client and regulatory servicing • Wealth management reporting Drive winning targeted tools • Business process solutions • Targeted marketing automation & workflows • Weal
Slide 13: Broadridge business model is strong
Broadridge business model is strong • Large, recurring revenue base with good visibility Sustainable Growth • Organic strength driven by large addressable market opportunity Steady Margin • Continued scale and operational leverage Expansion • Focus on operational efficiencies • 100+% free cash flow
Slide 14: High quality revenue stream
High quality revenue stream Recurring Fee (59%) Event-Driven Fee (5%) 14% 6 yrs ~$200M CAGR (FY14-17) Average Contract Annual Average Length $0.2B (FY15-FY17) $2.5B 5% 98% $1.6B Organic CAGR Revenue (FY14-17) Retention Rate Distribution (38%) <10% Gross Margin $4.1B Total FY17 Revenues Note: Revenue
Slide 15: New sales drive organic recurring revenue growth
New sales drive organic recurring revenue growth FY17- FY20 FY14- FY17 (CAGR) Objective (CAGR) 4% 4% 3% 4% Net New Business 5-6% FY15 FY16 FY17 2% 1% 1% Internal Growth 2% 0-1% FY15 FY16 FY17 6% 6% 4% Total Organic Growth 5% 5-7% FY15 FY16 FY17 24% Acquisitions 2% 3% 10% ~2% FY15 FY16 FY17 Total Rec
Slide 16: Two strong and growing segments
Two strong and growing segments INVESTOR COMMUNICATION SOLUTIONS GLOBAL TECHNOLOGY & OPERATIONS $3.4B Total Revenue $0.8B Total Revenue Recurring Fee Revenue $1.6B $1.6B Event-Driven $0.8B Revenue Distribution $0.2B Recurring Fee Revenue Revenue 6% 12.3% 6% 21.1% Organic Growth Margin Organic Growth
Slide 17: Capital allocation priorities
Capital allocation priorities • Target ~45% payout ratio1 Strong Returned to shareholders • Top quartile payout ratio compared to Dividend during FY15 – FY17 S&P 500 and leads peer group $0.4B • Compelling returns Disciplined Invested in M&A • Accretive to EPS within first 12-18 months M&A $0.8B dur
Slide 18: Achieved multi-year objectives and demonstrated strong growth performance
Achieved multi-year objectives and demonstrated strong growth performance 2014 Investor Day FY14 - FY17 Compound annual growth rates (CAGRs), except margin Excluding NACC 3-Year Objectives Actuals Recurring Fee Revenue 7% - 10% 14% 7 % Total Revenue 5% - 7% 17% 6% 1 Adjusted Op Income Margin % 18.6%
Slide 19: CEO scorecard
CEO scorecard EXISTING BUSINESSES SALES PIPELINE NEW OPPORTUNITIES Strength of our Governance Market demand, pipeline Positioned to go after real and Capital Markets and quality of client opportunities based on franchises with growing dialogues are strong and existing capabilities, breadth of produc
Slide 20: FY17-FY20 three year growth objectives
FY17 - FY20 three year growth objectives Winning formula for top quartile TSR Recurring Fee Revenue Growth 7-9% Total Revenue Growth 5-7% Adjusted Op Income Margin Expansion ~50bps/yr Adjusted EPS Growth 14-18% Note: Compound annual growth rates (CAGRs), except margin. Three year Adjusted EPS Growth
Slide 21: Appendix: Third Quarter Fiscal Year 2018 Highlights
Appendix: Broadridge Third Quarter Fiscal Year 2018 Highlights as of 5/8/2018 Earnings Call © 2018 | 21
Slide 22: Third Quarter 2018 Revenue Growth Drivers
Third Quarter 2018 Revenue Growth Drivers ▪ Third Quarter 2018 Total revenues grew 6% to $1.1 billion +1% 0% +6% +1% +5% $1,072 M $1,009M ▪ Third Quarter 2018 Recurring fee revenues grew 8% to $639 million Organic Growth: 7% +1% +8% +6% +4% -3% $639 M $592M Note: Amounts may not sum due to rounding
Slide 23: Third Quarter 2018 GAAP and Adjusted Operating Income and Adjusted EPS
Third Quarter 2018 GAAP and Adjusted Operating Income and Adjusted EPS $ in millions, except per share amounts Year-over-Year Change in Operating Income Year-over-Year Change in EPS and and Adjusted Operating Income Adjusted EPS +13% +45% +43% +19% © 2018 | 23
Slide 24: Segment Results
Segment Results ($ in millions) Investor Communication Solutions ("ICS") 3Q 9 Month YTD 2017 2018 Change 2017 2018 Change Recurring fee revenues $ 383 $ 403 5 % $ 1,036 $ 1,071 3% Event-driven fee revenues 61 67 9 % 128 223 74% Distribution revenues 376 385 2 % 1,078 1,090 1% Total revenues $ 820 $
Slide 25: Fiscal Year 2018 Guidance
Fiscal Year 2018 Guidance3 Prior1 Current Recurring fee revenue growth 4 - 6% 4 - 6% Total revenue growth 2 - 4% 2 - 4% Operating income margin - GAAP ~14% ~14% Adjusted Operating income margin - Non-GAAP ~16% ~16% Diluted earnings per share growth2 22 - 26% 28 - 33% Adjusted earnings per share grow
Slide 26: Supplemental Reporting Detail
Supplemental Reporting Detail © 2018 | 26
Slide 27: Tax Act Impact to Broadridge
Tax Act Impact to Broadridge 2017 2018 2019 FY 3Q YTD 3Q FY FY $ in millions Outlook Indicative Effective Tax Rate (GAAP) 33.1% 12.9% 27.0% ~25% Effective Tax Rate (GAAP) 33.1% 12.9% 27.0% ~25% Net Tax Charges1 - - ($16) ($16) Tax Rate Excluding Non-Recurring Gains & Charges2 33.7% 12.9% 21.7% ~22%
Slide 28: GAAP Reconciliations
GAAP Reconciliations © 2018 |
Slide 29: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited - Note: Amounts may not sum due to rounding) $ in millions, except per share amounts Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Operating income (GAAP) $ 130.0 $ 109.7 $ 329.5 $ 234.6 Adjustments: Amortization o
Slide 30: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited - Note: Amounts may not sum due to rounding) Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Diluted earnings per share (GAAP) $ 0.90 $ 0.63 $ 1.84 $ 1.15 Adjustments: Amortization of Acquired Intangibles and Purchas
Slide 31: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures (Unaudited - dollars in millions, except per share amounts) Fiscal Years Ended June 30, 2017 2016 2015 2014 Operating income (GAAP) $ 531.6 $ 500.3 $ 466.9 $ 418.2 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 72.6 3
Slide 32: Reconciliation of GAAP to Non-GAAP Measures - FY18 Guidance
Reconciliation of GAAP to Non-GAAP Measures - FY18 Guidance (Unaudited) Adjusted Earnings Per Share Growth Rate (1) (2) Diluted earnings per share (GAAP) 28% - 33% Adjusted earnings per share (Non-GAAP) 31% - 35% Adjusted Operating Income Margin (3) Operating income margin % (GAAP) ~14% Adjusted Ope
Broadridge Financial Solutions — Investor Presentation (May 2018) on 6ix