Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Day (December 2014)
112 slides from Broadridge Financial Solutions's investor day presentation, Dec 11, 2014
Slide 1: 2014 Investor & Analyst Day
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. December 11, 2014
Slide 2: Introduction
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. David Ng Head of Investor Relations Introduction
Slide 3: Agenda for Investor Day
2 © 2014 | 2 Broadridge Financial Solutions: Agenda for Investor Day Introduction David Ng Managing Director, Investor Relations 9:00–09:05 Opening Remarks Richard J. Daly President and Chief Executive Officer 9:05–09:25 Strategy and Business Overview Timothy C. Gokey Chief Operating Officer 9:25–09
Slide 4: Forward-Looking Statements
3 © 2014 | 3 Forward-Looking Statements The Broadridge 2014 Investor & Analyst Day presentations 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
Slide 5: Explanation of the Company's Use of Non-GAAP Financial Measures
4 © 2014 | 4 Explanation of the Company’s Use of Non-GAAP Financial Measures In certain circumstances, results have been presented that are not generally accepted accounting principles measures (“Non-GAAP”) and should be viewed in addition to, and not as a substitute for, the Company’s reported resu
Slide 6: Opening Remarks
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Richard J. Daly President and Chief Executive Officer Opening Remarks
Slide 7: Broadridge Has a Unique Franchise and Ubiquitous Presence in Financial Services
6 © 2014 | 6 Broadridge Has a Unique Franchise and Ubiquitous Presence in Financial Services 1. Top 10 global banks based on total revenues in equity, FICC and IBD per Coalition Research, 1Q’14 | Note: All Broadridge results and statistics are for FY14 unless otherwise stated of outstanding shares i
Slide 8: Broadridge Has Generated Top Quartile TSR of 13% Since Becoming Public
7 © 2014 | 7 Broadridge Has Generated Top Quartile TSR of 13% Since Becoming Public 0 50 100 150 200 250 300 2007 2008 2009 2010 2011 2012 2013 2014 Broadridge share price performance vs. S&P 5001 Broadridge S&P 500 TSR CAGR1 1. March 2007-June 2014 | Source: S&P Dow Jones Indices; S&P Capital IQ; B
Slide 9: Broadridge Has Demonstrated Strong Capital Stewardship Since Becoming Public
8 © 2014 | 8 Broadridge Has Demonstrated Strong Capital Stewardship Since Becoming Public Our powerful business model has allowed us to generate strong and steady cash flow Free cash flows $2.2B 1. March 2007-June 2014 | Note: Share repurchases amount reflects share repurchases under our stock repur
Slide 10: Broadridge Has Demonstrated Strong Capital Stewardship Since Becoming Public
9 © 2014 | 9 Broadridge Has Demonstrated Strong Capital Stewardship Since Becoming Public Acquisitions $0.6B Cash returned to shareholders $1.4B Share repurchases $0.9B Dividends $0.5B Free cash flows $2.2B Our powerful business model has allowed us to generate strong and steady free cash flows 1. M
Slide 11: Our Capital Stewardship Priorities Over the Next 3 Years
10 © 2014 | 10 Pr io ri ty Our Capital Stewardship Priorities Over the Next 3 Years Committed to a strong dividend Targeting minimum 45% of net earnings Continual tuck-in acquisitions to drive growth Selectively targeting about $400- 600M Share repurchases Increase targeted levels of share repurchas
Slide 12: Three Key Features That Enable Greater Control of Destiny
11 © 2014 | 11 Broadridge’s Business Has Three Key Features That Enable Greater Control of Destiny 98% client revenue retention rate Consistently high retention rate reflects the strength of our client relationships Expanding portfolio of growth products Growth products contributed ~25% of recurring
Slide 13: Our Industry Is Undergoing Significant Evolution
12 © 2014 | 12 Our Industry Is Undergoing Significant Evolution We are uniquely positioned to take advantage of new opportunities created by secular trends Regulatory environment driving mutualization of non-differentiating costs and capabilities Mutualization 1 Digital technologies reducing print c
Slide 14: Our Strategic Focus
13 © 2014 | 13 Today, we have strong positions in large and attractive markets We will grow our portfolio through a combination of internal product development and acquisitions We have a large, balanced and resilient portfolio We are uniquely positioned to capitalize on new opportunities created by
Slide 15: Executing on Growth - Strategy and Business Overview
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Timothy C. Gokey Chief Operating Officer Executing on Growth - Strategy and Business Overview
Slide 16: Today's Discussion
15 © 2014 | Today’s Discussion • The Market Opportunity for Broadridge • Our Evolving Product Portfolio • Executing on Growth • Our Continued Track Record 15
Slide 17: We Have a $24B Market Opportunity
16 © 2014 | Data & Analytics Network and data assets that enable clients to create unique value Mutualization Strong drive to standardize duplicative, non-differentiating industry capabilities Digitization Digital technologies that enable lower cost, higher touch interactions Key Market Trends We Ha
Slide 18: Regulatory Pressure is Driving Our Clients to Mutualize Capabilities
17 © 2014 | Regulatory Pressure is Driving Our Clients to Mutualize Capabilities 17
Slide 19: Regulatory Pressure and Return on Equity
18 © 2014 | 0 5 10 15 Effect of Recent and Future Regulation on Return on Equity (Pre-regulation to 2020) Regulatory Pressure is Driving Our Clients to Mutualize Capabilities Sources: BCG Global Risk report, Nov 2013; BCG Capital Markets report, Apr 2013 & May 2014; McKinsey Capital Markets report,
Slide 20: Regulatory Pressure and Return on Equity
19 © 2014 | 0 5 10 15 Effect of Recent and Future Regulation on Return on Equity (Pre-regulation to 2020) Regulatory Pressure is Driving Our Clients to Mutualize Capabilities Future RoE Upcoming regulations Sources: BCG Global Risk report, Nov 2013; BCG Capital Markets report, Apr 2013 & May 2014; M
Slide 21: Regulatory Pressure and Return on Equity
20 © 2014 | 0 5 10 15 Effect of Recent and Future Regulation on Return on Equity (Pre-regulation to 2020) Regulatory Pressure is Driving Our Clients to Mutualize Capabilities Sources: BCG Global Risk report, Nov 2013; BCG Capital Markets report, Apr 2013 & May 2014; McKinsey Capital Markets report,
Slide 22: Broadridge is a Leader in Driving Digitization
21 © 2014 | Broadridge is a Leader in Driving Digitization Enhanced Brokers’ Internet Platform (EBIP) to cover 55% accounts by January 2016, up from 26% in FY13 Fluent SM/InletTM - We are investing in transformative options that meet a broad range of client needs Proxy material e-delivered for 43% o
Slide 23: Significant Opportunity in Data & Analytics
22 © 2014 | • Financial Services spends ~$12B annually on Data & Analytics in the U.S. • Broadridge has unique data assets to add value to clients, holding data on every beneficial equity position of every investor in the market • FY14 $46M recurring fee revenue from existing Data & Analytics busine
Slide 24: Our Product Portfolio has Evolved to Target the Market Opportunity
23 © 2014 | Our Product Portfolio has Evolved to Target the Market Opportunity 23
Slide 25: Our Product Portfolio has Evolved to Target the Market Opportunity
24 © 2014 | FY14 Recurring Revenue Closed Sales Our Product Portfolio has Evolved to Target the Market Opportunity Heritage Acquired Launched after Acquired New Since2007 5% 56 22% 17% 100%=$127M Mature Growth 40% 60% 100%=$127M 60% 40% 24
Slide 26: Investment in Growth Businesses is Shifting Revenue Mix
25 © 2014 | Percent of Recurring Fee Revenue Investment in Growth Businesses is Shifting Revenue Mix 10% 25% 35% 90% 75% 65% FY10 FY14 FY17F Mature Growth FY10-17F CAGR 25% 3% 25
Slide 27: Multiple Factors Driving Stronger Margins
26 © 2014 | Illustrative Annual Change in EBIT Margin FY14-17F Multiple Factors Driving Stronger Margins Revenue Mix Operating Leverage Productivity Net of Investments Total 10-20 bps 30-40 bps 5-15 bps 45-75 bps FY11-14 Annual change 15 bps 35 bps 60 bps 110 bps Note: EBIT Margin (Non-GAAP) 26
Slide 28: Most Balanced Business: Banks, Broker-Dealers and Issuers
27 © 2014 | Most Balanced Business Banks, Broker-Dealers and Issuers • Manage regulatory issues on behalf of our clients • Enhance product differentiation • Win transition to digital Support & Extend The Core • Advisor Solutions • Tax Managed Services • Securities Class Actions Drive Growth Business
Slide 29: Strongest Growth Engine: Mutual Fund and Retirement Solutions
28 © 2014 | Strongest Growth Engine Mutual Fund and Retirement Solutions • Leverage mutual fund and ETF database • Expand data capabilities to penetrate mutual funds • Offer revenue and expense solutions to asset management and capital markets firms Grow Data & Analytics • Grow trade processing sale
Slide 30: Turnaround Evolving into Growth: Global Technology and Operations
29 © 2014 | Turnaround Evolving into Growth Global Technology and Operations • Right-size key businesses • Align pricing and productivity • Improve technology Drive Productivity & Investment • Wealth Management • Capital Markets (e.g. Financing and Liquidity) • Global (e.g. Accenture Post-Trade Proc
Slide 31: Investing in Four Key Differentiating Capabilities
30 © 2014 | We are Investing in Four Key Differentiating Capabilities • World-Class Technology organization • We invest ~$400M+ annually • Strong investments in new Products and Platforms, Resiliency, and Cybersecurity Technology 30
Slide 32: Investing in Four Key Differentiating Capabilities
31 © 2014 | We are Investing in Four Key Differentiating Capabilities • World-Class Technology organization • We invest ~$400M+ annually • Strong investments in new Products and Platforms, Resiliency, and Cybersecurity Technology Brand • Increased Sales & Marketing investment 35% in last 2 years • “
Slide 33: Investing in Four Key Differentiating Capabilities
32 © 2014 | We are Investing in Four Key Differentiating Capabilities • Strong track record of success, with 20%+ portfolio IRR • Expect to invest about $400-600M over the next 3 years • Strong pipeline of acquisition targets Acquisitions • World-Class Technology organization • We invest ~$400M+ ann
Slide 34: Investing in Four Key Differentiating Capabilities
33 © 2014 | We are Investing in Four Key Differentiating Capabilities • Strong track record of success, with 20%+ portfolio IRR • Expect to invest about $400-600M over the next 3 years • Strong pipeline of acquisition targets Acquisitions India • 1,800+ Associates grown over 15 years • Innovation hu
Slide 35: Strong Performance Provides Platform for Growth
34 © 2014 | FY11 FY14 FY11-FY14 CAGR Total Revenue $2.2B $2.6B 5.7% Recurring Fee Revenue $1.3B $1.6B 7.7% EBIT $285M $420M 13.9% EBIT Margin 13.1% 16.4% 110 bps p.a. Recurring Revenue Closed Sales $113M $127M 3.8% Strong Performance Provides Platform for Growth Note: EBIT and EBIT Margin (Non-GAAP)
Slide 36: Executing on Growth Key Takeaways
35 © 2014 | Executing on Growth Key Takeaways Large market opportunity aligned with powerful industry trends Business Unit strategies closely align with industry trends Proven results support continued growth Product mix driving higher growth Secular opportunity for stronger margins 35
Slide 37: Banks, Broker-Dealers and Issuers
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Robert Schifellite President, Investor Communication Solutions Banks, Broker-Dealers and Issuers
Slide 38: We Connect Capital Markets Participants
37 © 2014 | 37 We Connect Capital Markets Participants 140,000,000 Individual Accounts (Globally) 240+ Retirement Service Providers ~800 Mutual Fund Families ~10,000 Corporate Issuers USA & Canada ~36,000 Global Corporate Issuers 1,100+ Banks & Brokers 6,700+ Institutional Investors 80,000+ Financia
Slide 39: A Great Business Model
38 © 2014 | 38 A Great Business Model Strong Core Business Portfolio of Growth Businesses + The core portfolio includes a diversified mix of proxy, post-sale, customer & marketing communications businesses Growth products represented ~30% of ICS recurring fee revenue in FY14 Acquisitions generated $
Slide 40: BBDI Success Aligned with Three Key Broadridge Themes
39 © 2014 | 39 Banks, Broker-Dealers and Issuers (BBDI) success aligned with three key Broadridge themes Strategic Focus Leverage our central position in the market, the trust of regulators and our clients Key Products: • Proxy and Regulatory Communications • Tax Managed Services • Transfer Agency S
Slide 41: BBDI: Targeting a $5B Addressable Market
40 © 2014 | 40 $0 $1 $2 $3 $4 $5 Total Mutualization Digitization Data & Analytics Advisor Institutional Issuer Broker Billions With solutions that meet critical industry needs BBDI: Targeting a $5B Addressable Market $5B Cybersecurity Increased Corporate Governance Scrutiny Broker Cost Pressures De
Slide 42: Extending into New Products and Services
41 © 2014 | 41 And extending into new products and services Supporting the Core Business Driving Transformation to Digital and Data • Fluent℠ & Inlet™ • Investor Mailbox • Shareholder Data Services • Wealth Insight Solutions • Tax Managed Services • Advisor Solutions Extending to Build New Businesse
Slide 43: Key Products and Services Driving Growth
42 © 2014 | 42 Key Products and Services Driving Growth FY11 Recurring Sales ~30% From Growth Products FY14 Recurring Sales ~40% From Growth Products A significant portion of our market runway is coming from growth product portfolio Securities Class Actions Fluent/Inlet Canada Smart Data Tax Advisor
Slide 44: Accelerating Financial Advisor Success
43 © 2014 | 43 Overview • Technology and tools for financial advisors ̶ Build customized websites ̶ Expand their reach and enhance the customer experience ̶ Acquire assets across multiple generations of investors as a result of the $30 Trillion wealth shift from baby boomers to their heirs • Rapid G
Slide 45: Tax Center of Excellence
44 © 2014 | 44 Tax Center of Excellence Overview • Building a Tax Managed Service (TMS) business through sophisticated tools and data • One of only two industry providers and the only proven BPO provider in the brokerage tax space • Rapid client growth: Expand their reach and enhance the customer ex
Slide 46: Driving Transformation in Digital
45 © 2014 | 45 Driving Transformation in Digital Overview • Inlet, our partnership with Pitney Bowes: ̶ Is built on the Fluent technology platform ̶ Captures consumer preferences and consents ̶ Provides more interactive, user-friendly content ̶ Lets consumers access that content through the online c
Slide 47: Proprietary Data Provides Unique Insights
46 © 2014 | 46 Proprietary Data Provides Unique Insights Stage: Introduction Buy/Build: Organic Strategy: Data Industry Need: • Corporate Governance Scrutiny • Growth of Wealth Mgmt. Shareholder Data Services (SDS) • Launched Shareholder Data Services in March 2014 • SDS provides new capabilities fo
Slide 48: ICS Strong Financial Performance
47 © 2014 | 47 99% Client Revenue Retention Rate ICS Strong Financial Performance FY11 FY14 CAGR Recurring Fee $ 725 $ 961 10% Event-Driven $ 135 $ 156 5% Total Fee $ 860 $ 1,117 9% Distribution Revenue $ 704 $ 764 3% Total Revenue $ 1,564 $ 1,881 6% EBIT $ 209 $ 336 17% Contributed ~50% of ICS recu
Slide 49: Focus Over the Next 3 Years
48 © 2014 | 48 Transformation to Digital and Data Extending to Build New Businesses Support & Extend the Core Focus Over the Next 3 Years Core
Slide 50: Mutual Fund and Retirement Solutions (ICS)
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Gerard F. Scavelli President, Mutual Fund and Retirement Solutions Mutual Fund and Retirement Solutions (ICS)
Slide 51: Mutual Fund & Retirement Solutions Overview
50 © 2014 | 50 Mutual Fund & Retirement Solutions Overview Data & Analytics Processing Communications • Data Aggregation, Analytics and Insights • Revenue & Expense Management • Mutual Fund and ETF Trade Processing • Participant & Regulatory Communications Provide a suite of data-driven technology s
Slide 52: Mutual Fund & Retirement Solutions Overview
51 © 2014 | 51 Mutual Fund & Retirement Solutions Overview Illustrative Mutual Fund Client: Global Asset Penetration Illustrative Mutual Fund Client: Asset Distribution by Broker
Slide 53: Mutual Fund & Retirement Solutions Overview
52 © 2014 | 52 Mutual Fund & Retirement Solutions Overview Plan 1 Trade Processing Engine Plan 2 Plan 3 Plan 4 Plan 50,000 Fund 1 Fund 2 Fund 3 Fund 4 Fund 550
Slide 54: Mutual Fund & Retirement Solutions Overview
53 © 2014 | 53 401(k) Plan Marketing Campaign Enrollment Conversion Disclosures Rollover Retirement Plan Participant Communications Lifecycle Mutual Fund & Retirement Solutions Overview
Slide 55: ~$3B Total Addressable Market
54 © 2014 | 54 ~$3B total addressable market across our three major offerings supported by several key trends Data & Analytics • Demand for data and analytics to drive sales, meet regulations, manage expense • Adoption of automated revenue and expense management tools by asset managers and brokers P
Slide 56: Data Aggregation, Analytics & Insights Strategy
55 © 2014 | 55 Leverage our mutual fund and ETF database to provide advanced analytics and decision-making solutions to fund companies and intermediaries Improve data capabilities • Data quality and efficiency • New asset classes Expand addressable markets • Small funds (<$2.5B AUM) • Retirement Dat
Slide 57: Revenue & Expense Management Strategy
56 © 2014 | 56 Further penetrate the Asset Management market and leverage our core offering with global investment banks and brokers (i.e., Capital Markets) • Asset Management – Continue penetrating core market – Expand into smaller (< $10B AUM) firms with SaaS offering – Expand globally Revenue & E
Slide 58: Processing Growth Strategy
57 © 2014 | 57 Increase Assets Under Administration (AUA) processed for third party retirement plan administrators (TPAs), banks and trust companies • Grow trade processing sales – Enhance trading platform – Broaden TPA client relationships to attract additional plan assets • Attract AUA by serving
Slide 59: Communications Growth Strategy
58 © 2014 | 58 Enable Defined Contribution retirement plan providers to effectively communicate with plan sponsors and participants • Expand Communications Footprint – Lifecycle solutions for bundled providers – Turnkey products/strategic alliances for small- and mid-sized providers Communications G
Slide 60: Review of 3-Year Performance
59 © 2014 | 59 Notable Key Performance Indicators (FY11-14) • Over $100M in aggregate recurring revenue closed sales • 23% compounded annual growth in total revenue • 21% compounded annual growth in trade processing AUA • Four-fold increase in data under management Review of 3-Year Performance
Slide 61: Focus Areas for Next Three Years
60 © 2014 | 60 • Capitalize on complexity of the manufacturer–distributor– investor ecosystem with our big data capabilities • Expand our trading and communications capabilities to more broadly serve the DC retirement market • Increase penetration of existing clients and win new accounts with greate
Slide 62: Break
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Break
Slide 63: Global Technology and Operations (GTO)
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Charles J. Marchesani President, Global Technology and Operations Global Technology and Operations (GTO)
Slide 64: Business Overview
63 © 2014 | 63 Global leader in technology and business process solutions that enable efficient operation of global Investment Banks, Broker-dealers, Wealth Managers and Investment Managers Business Overview Sources: Internal Analysis Nov 2014. Top 10 global banks based on total revenues in equity,
Slide 65: Integral Part of Financial Markets Ecosystem
64 © 2014 | 64 Our solutions enable smooth and seamless functioning of core capital market activities Integral Part of Financial Markets Ecosystem Sell-Side Buy-Side Back Office Middle Office Front Office Financing & Liquidity Clearance/Settlement Portfolio Management Investor Portal Reference Data
Slide 66: Significant Progress Positioning for Growth
65 © 2014 | 65 Significant Progress Positioning for Growth To meet market trends while leveraging our existing leadership positions, we have executed a significant business transformation in the past 18 months One Client Facing Approach Operating Optimization Product Strategy Talent Investment • Rig
Slide 67: Aligned Against $16B Addressable Market
66 © 2014 | 66 Aligned Against $16B Addressable Market MARKET TREND CLIENT STRATEGIES • Regulation impacting RoE • Market Structure Changes • Globalization • Disruptive business models • Fee pressure • Capability Mutualization • Vendor optimization • Global multi-asset solutions • Liquidity Manageme
Slide 68: Leveraging Our Leadership Position in North America
67 © 2014 | 67 Leveraging Our Leadership Position in North America • Embedded market leadership with leading financial institutions • Competition, regulatory changes impacting clients’ RoE • Focus on cost efficiencies, regulatory investments, differentiation Overview • Create significant cost saving
Slide 69: Growth Opportunity: Global Trade Processing
68 © 2014 | 68 Growth Opportunity: Global Trade Processing • Mutualization opportunities for horizontal and vertical solutions • Leverage Accenture partnership to penetrate Eurasian Tier 1/2 banks • Continue to gain share in Asia Pacific Strategy • Challenges created by regulation and changes in mar
Slide 70: Growth Opportunity: Buy-Side
69 © 2014 | 69 Growth Opportunity: Buy-Side • Deliver multi-asset capabilities while mutualizing costs • Expand Buy-Side integration with other Broadridge solutions ̶ Reconciliations, Fee Management, Managed Services • Leverage Reference Data capabilities to serve Sell-Side Strategy • Repositioned P
Slide 71: FY14 CAGR and Key Performance Indicators
70 © 2014 | 70 98% Client Revenue Retention Rate FY14 CAGR and Key Performance Indicators Margin Expansion ~200 bps from operating leverage from FY11-FY14 Contributed ~55% of recurring revenue growth from FY11-FY14 Growth Products Sales ~45% of recurring revenue closed sales in FY14 from growth prod
Slide 72: Market Trends Give Confidence to Three-Year Growth Strategy
71 © 2014 | 71 Growth Strategy balanced across: Market Trends Give Confidence to Three- Year Growth Strategy • Support and Extend by continuing to drive operating efficiencies while investing in platform differentiation • Expand and Penetrate into high growth product and market adjacencies • Innovat
Slide 73: Global Sales and Marketing
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Christopher J. Perry President, Global Sales, Marketing and Client Solutions Global Sales and Marketing
Slide 74: It Is an Exciting Time to Be at Broadridge
73 © 2014 | 73 It Is an Exciting Time to Be at Broadridge • Unparalleled position in financial services • Enables financial services firms to stay competitive • Expertise our clients rely on • Clear and executable strategy to drive growth
Slide 75: Broadridge Has a Well Defined Sales Strategy
74 © 2014 | 74 Broadridge Has a Well Defined Sales Strategy 1 2 3 4 Increase sales penetration at largest clients Enhance innovative and acquired product sales Investments in sales organization and infrastructure Accelerate and leverage marketing drivers
Slide 76: Now is Our Time!
75 © 2014 | 75 Now is Our Time! • Dynamic industry landscape • Clients in transformation and need right partner • We have proven solutions with solid track record • Unified and energized go to market organization
Slide 77: Acquisitions Overview
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Vijay Mayadas SVP, Strategy, Mergers & Acquisitions Acquisitions Overview
Slide 78: Overview
77 © 2014 | 77 Overview Broadridge’s acquisition track record Acquisitions as a driver of growth and innovation Acquisition criteria
Slide 79: Broadridge's Track Record Is Strong
78 © 2014 | 78 Broadridge’s Track Record Is Strong Note: Investment amounts reflect cash paid for acquisitions (net of cash acquired) Our acquisitions portfolio is creating significant value for shareholders • Portfolio IRR tracking to 20%+ • Contributed ~$220M recurring fee revenue and ~$75M EBITDA
Slide 80: 25% of Our Acquisition Portfolio Revenue Is Now Organic
79 © 2014 | 79 25% of Our Acquisition Portfolio Revenue Is Now Organic 25% Note: Shows acquisitions since becoming a public company; 1) defined as incremental revenue over revenue during first year of acquisition FY14 Total Portfolio Recurring Fee Revenue FY14 Recurring Fee Revenue Generated Since A
Slide 81: Acquisitions Enhance Our Growth and Innovation Capabilities
80 © 2014 | 80 Acquisitions Enhance Our Growth and Innovation Capabilities Mutualization Paladyne FY12 10% NewRiver FY11 13% Matrix FY11 15% StockTrans FY10 59% City Networks FY10 10% Transaction Processing/License Broadridge’s Acquisition Portfolio Since Becoming a Public Company (Acquisition Year,
Slide 82: Bonaire Acquisition Demonstrates Tuck-in Strategy
81 © 2014 | 81 Bonaire Acquisition Demonstrates Broadridge’s Tuck-in Strategy First SaaS Contract Signed March 2014 Trained Sales Team Fall 2013 Pipeline >$40M June 2014 Acquisition Closed July 2013 FY 14 Surpassed FY14 Financial Plan Sales: +50% vs. Plan Pipeline <$15M Jan 2014 Signed 6th SaaS Clie
Slide 83: Activity in Fintech Is Driving a Robust Pipeline
82 © 2014 | 82 0 2 4 6 8 2005 2010 2015 2020 $B Activity in Fintech Is Driving a Robust Pipeline Global fintech investment expected to more than double by 2018 Disruptive industry environment driving innovation in Fintech Over past 4 years VC investment in Fintech has grown 4x faster than VC investi
Slide 84: We Have Clear Criteria For Acquisitions
83 © 2014 | 83 We Have Clear Criteria For Acquisitions Tightly linked to Broadridge’s strategic priorities Accretive to growth, margins and earnings >20% IRR in conservative business case Primary focus on "tuck-in" sized businesses High confidence in our ability to execute
Slide 85: Moving Forward, We Will Maintain Our Disciplined Approach
84 © 2014 | 84 Strong pipeline of opportunities driven by disruptive trends in Fintech Aspiration to invest about $400–600M over next 3 years Investing in additional capabilities to ensure we continue to maintain our disciplined criteria as we explore more opportunities Moving Forward, We Will Maint
Slide 86: In Conclusion
85 © 2014 | 85 1) Our acquisition track record is strong 2) There is significant opportunity to drive growth and innovation through acquisitions 3) We will continue to maintain our disciplined approach In Conclusion
Slide 87: Financial Overview
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. James M. Young Chief Financial Officer Financial Overview
Slide 88: Targeting Top Quartile Total Shareholder Return
87 © 2014 | 87 Targeting Top Quartile Total Shareholder Return (TSR) • Drive organic growth in current markets • Exploit adjacencies 7–10% Recurring Fee 3-Year CAGR (FY14–FY17F) Sustainable Growth • Realize efficiencies • Increase operational leverage Margin Expansion from 16% to ~18% (ending FY17F)
Slide 89: Broadridge Has Delivered Top Quartile TSR
88 © 2014 | 88 Components of TSR Performance3 Total Shareholder Return (FY11–FY14)1,2 16.6% 22.6% 23.4% S&P 500 Mean S&P 500 Top Quartile Broadridge FY11–FY14 Revenue Growth 6% Margin Growth 8% Net Earnings Growth 14% Dividends and Share Repurchases 5% Multiple Change 4% Total TSR 23% Broadridge Has
Slide 90: Overview of Revenue Drivers
89 © 2014 | 89 Overview of Revenue Drivers % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Registered Proxy and Interims 19% Acquired 9% Other Investor Communications 9% Total Recurring Fee Revenue 64% Event-Driven 6% Distribution2 30% Total Revenue
Slide 91: Overview of Revenue Drivers
90 © 2014 | 90 % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Registered Proxy and Interims 19% Acquired 9% Other Investor Communications 9% Total Recurring Fee Revenue 64% Event-Driven 6% Distribution2 30% Total Revenue 100% Drivers • Net New Busi
Slide 92: Overview of Revenue Drivers
91 © 2014 | 91 Overview of Revenue Drivers Drivers • Internal Growth – stock record and interim positions • Client Retention Attributes • More predictable growth • Scalable • International potential % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Re
Slide 93: Overview of Revenue Drivers
92 © 2014 | 92 Overview of Revenue Drivers Drivers • New Sales Attributes • Embedded in or adjacent to existing portfolio • Growing faster than rest of portfolio • Higher margin % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Registered Proxy and In
Slide 94: Overview of Revenue Drivers
93 © 2014 | 93 Overview of Revenue Drivers Drivers • Net New Business Attributes • Core to digital strategy • Lower margin opportunity set for non-digital % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Registered Proxy and Interims 19% Acquired 9%
Slide 95: Overview of Revenue Drivers
94 © 2014 | 94 Overview of Revenue Drivers Drivers • Mutual Fund Proxy and Supplements, Equity Specials and Contests Attributes • Recent history is flat growth, MF Proxy has fluctuated % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Registered Proxy
Slide 96: Overview of Revenue Drivers
95 © 2014 | 95 Overview of Revenue Drivers Drivers • Volume of mailed pieces Attributes • Lower margin • Mainly recurring in nature % of Revenue1 Equity and Fixed Income Trade Processing and Trading Support Activity 27% Beneficial/Registered Proxy and Interims 19% Acquired 9% Other Investor Communic
Slide 97: Revenue Growth History And Objectives
96 © 2014 | 96 FY11–FY14 Recurring Fee Revenue Net New Business 5% Internal Growth 1% Acquisitions 2% 8% Total Revenue Recurring Fee 5% Event-Driven 0% Distribution/Other 1% 6% FY14–FY17F Recurring Fee Revenue Net New Business 5%–7% Internal Growth 0%–1% Acquisitions ~2% 7%–10% Total Revenue Recurri
Slide 98: EBIT Margin Expansion to Continue
97 © 2014 | 97 13.1% 16.4% FY11 FY14 FY17F ~18% EBIT Margin Expansion to Continue Note: EBIT Margin (Non-GAAP)
Slide 99: Improved Scale and Continued Growth Lead to Consistent Double Digit Earnings Growth
98 © 2014 | 98 FY17F $188M $279M FY11 FY14 Improved Scale and Continued Growth Lead to Consistent Double Digit Earnings Growth Note: Adjusted Net Earnings (Non-GAAP)
Slide 100: Capital Stewardship Priorities
99 © 2014 | 99 Capital Stewardship Priorities 2. Adjusted Debt/EBITDAR ratio calculated as (Debt + 8x Rent Expense)/(EBITDA + Rent Expense) Maintain minimum 45% dividend payout ratio1 Fund tuck-in acquisitions aspiration of about $400M–600M through FY17 In order to support priorities, anticipate usi
Slide 101: Strong Free Cash Flows Enabled Us to Increase the Dividend
10 0 © 2014 | 100 $0.60 $0.64 $0.72 $0.84 $1.08 FY11 FY12 FY13 FY14 FY15F Dividends Per Share Strong Free Cash Flows Enabled Us to Increase the Dividend to a 45% Payout Ratio in FY15F $143 $244 $220 $334 FY11 FY12 FY13 FY14 Free Cash Flows (in millions except for dividends per share)
Slide 102: Continued Strong Free Cash Flows and Greater Use of Balance Sheet
10 1 © 2014 | 101 $0.4B $0.6B $0.3B $1.1B $0.4B FY15 Beginning Cash Free Cash Flows Dividend @45% Regulatory and Int'l Cash Capacity for div>45%, tuck-ins, share repurchases Continued Strong Free Cash Flows and Greater Use of Balance Sheet Enable Us to Meet Capital Stewardship Commitments And Provid
Slide 103: Continued Strong Free Cash Flows and Greater Use of Balance Sheet
10 2 © 2014 | 102 $0.4B $0.6B $0.3B $1.1B $0.4B FY15 Beginning Cash Free Cash Flows Dividend @45% Regulatory and Int'l Cash Capacity for div>45%, tuck-ins, share repurchases $0.6B $1.2B Lever to 2X1 1. Additional capital from moving Adjusted Debt/EBITDAR to 2:1 Continued Strong Free Cash Flows and G
Slide 104: Performance Objectives
10 3 © 2014 | 103 Performance Objectives Target Top Quartile TSR FY14 – FY17F Recurring revenue growth 7%–10% Total revenue growth 5%–7% Earnings growth 9%–11% Dividend yield and share repurchases 3%–4% Target TSR Top quartile1 BCG study of likely top quartile performance for the same time period No
Slide 105: Closing Remarks
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Richard J. Daly President and Chief Executive Officer Closing Remarks
Slide 106: Broadridge's Investment Thesis
10 5 © 2014 | 105 Broadridge’s Investment Thesis Resilient business model Proven track record delivering top quartile TSR Large market opportunity aligned with powerful industry trends Experienced management and highly engaged associate team focused on delivering strong TSR Track record driving grow
Slide 107: Q&A
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Q&A
Slide 108: Supplemental Materials
2014 Investor & Analyst Day • Broadridge Financial Solutions, Inc. Supplemental Materials
Slide 109: Definitions
10 8 © 2014 | 108 Definitions The following terms are used in the 2014 Investor & Analyst Day Presentations: Acquisition Amortization and Other Costs represent amortization charges associated with intangible asset values as well as other deal costs associated with the Company’s acquisitions. Adjuste
Slide 110: Non-GAAP to GAAP Reconciliations: Free Cash Flows FY11-FY14
10 9 © 2014 | 109 Non-GAAP to GAAP Reconciliations Free Cash Flows FY11-FY14 Broadridge Financial Solutions Reconciliation of Non-GAAP to GAAP Measures Free Cash Flows Reconciliation FY2011 to FY2014 (in $ millions) FY2011 FY2012 FY2013 FY2014 Net cash flows provided by continuing operating activiti
Slide 111: Non-GAAP to GAAP Reconciliations: Free Cash Flows Since Becoming a Public Company
11 0 © 2014 | 110 Non-GAAP to GAAP Reconciliations Free Cash Flows Since Becoming a Public Company Broadridge Financial Solutions Reconciliation of Non-GAAP to GAAP Measures Free Cash Flows Reconciliation Q42007 to FY2014 (in $ millions) Q42007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Total
Slide 112: Non-GAAP to GAAP Reconciliations: EBIT, EBIT Margins and Earnings
11 1 © 2014 | 111 Non-GAAP to GAAP Reconciliations EBIT, EBIT Margins and Earnings Broadridge Financial Solutions, Inc. Reconciliation of Non-GAAP to GAAP Measures EBIT, EBIT Margins and Earnings Reconciliation (in $ millions) FY2011 FY2014 EBIT from continuing operations (Non-GAAP) 285 420 Acquisit
Broadridge Financial Solutions — Investor Day (December 2014) on 6ix