Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q2 FY2020 Earnings Presentation
32 slides from Broadridge Financial Solutions's earnings presentation, Feb 25, 2020
Slide 1: Investor Presentation Third Quarter Fiscal Year 2020
EXHIBIT 99.1 INVESTOR PRESENTATION THIRD QUARTER FISCAL YEAR 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 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: The Broadridge Story
The Broadridge Story $2.8B 7-9% Strong market position across Governance, FY19 Recurring Fee 3-Year Total Capital Markets, and Wealth Management Revenue Recurring Revenue Growth Objective (1) (2) Platform-based business model creates 98% 8-12% unique value for our clients Recurring fee FY 20 Adjuste
Slide 5: Executing Against Investor Day Themes
Executing Against Investor Day Themes Extend Governance Drive Capital Markets Build Wealth Management • Driving next-gen regulatory • Extending global post trade • On track to deliver front to communications technology platform back wealth management ✓ Strengthening digital ✓ Continued progress plat
Slide 6: The Industry's Leading Choice
The Industry’s Leading Choice GOVERNANCE CAPITAL MARKETS WEALTH MANAGEMENT • Process 80% of outstanding • Clear and settle over $7T • Support 50M+ accounts shares in the United States, per day through our technology process in over 120 platform international markets • Serve 19 of 24 US primary deale
Slide 7: 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 © 2020 | 7
Slide 8: 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 © 2020 | 8
Slide 9: Growth Opportunity: Extend Governance
Growth Opportunity: Extend Governance 5,000+ 150,000+ CORPORATE ISSUERS INSTITUTIONAL SHAREHOLDERS 27,000+ 140M+ MUTUAL FUNDS AND RETAIL SHAREHOLDER ACCOUNTS ETFs 1,100+ BANKS and BROKER-DEALERS EXTEND GOVERNANCE DRIVE CAPITAL MARKETS BUILD WEALTH MANAGEMENT Fee Revenue = $1.7B Drive Next-gen Grow s
Slide 10: ICS Record Growth and FY19 Revenues
ICS Record Growth and FY19 Revenues FY19 ICS Total Revenues2 (Dollars in millions) FY08-19 Record Growth1 $1,460 ICS Recurring fee revenues 42% $1,764 Event-driven fee Revenue 51% 12% 11% 11% 11% $244 Distribution revenues 10% 7% 10% 9% 9% 9% 9% 8% 8% 8% 8% 7% 6% 6% 6% 2 4% 4% FY19 ICS Recurring Rev
Slide 11: Event-Driven Revenue: Near Historic Low
Event-Driven Revenue: Near Historic Low Q2 Dollars in millions Note: Significant mutual fund proxy events were noted in FY17 Q4, FY18 Q2, and FY19 Q1. Note: Amounts may not sum due to rounding. © 2020 | 11
Slide 12: Regulatory Update
Regulatory Update • The SEC continues to look into a range of Governance issues that touch on our business. • Thematically, the SEC is clearly engaged and trying to understand how it can (1) strengthen our corporate governance system, and (2) utilize technology to (a) help drive down costs and (b) i
Slide 13: Growth Opportunity: Drive Capital Markets
Growth Opportunity: Drive Capital Markets Strong Unique managed Emerging Global market market position services model capabilities momentum • Serve 19 of the 24 US • Support 40+ clients for • Securities Financing & Fixed Income primary both technology and Collateral dealers operations including 7 Ma
Slide 14: Growth Opportunity: Build Wealth Management
Growth Opportunity: Build Wealth Management • Educational content • Enriched, digital communications • Trading and account servicing • Wealth management • Clearance & settlement tools • Client and regulatory • Targeted marketing reporting • Wealth mobile portal • Business process automation & workfl
Slide 15: Record Sales Building Revenue Backlog
Record Sales Building Revenue Backlog Dollars in millions Recurring Revenue Backlog as of Annual Closed Sales Performance June 30 3,4 $250 FY’14 – 19 $230 CAGR – 13% $200 $190 $150 $233 $215 $100 $188 $146 $151 $127 $50 (2) $83 $0 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (1) Closed Sales FY 20 Closed Sale
Slide 16: Broadridge Business Model is Strong
Broadridge Business Model is Strong • Large, recurring revenue base with good visibility aided Sustainable Growth by $330 million revenue backlog • Organic strength driven by large addressable market Steady Margin • Continued scale and operational leverage Expansion • Focus on operational efficienci
Slide 17: FY17 - FY20 Three Year Growth Objectives
FY17 - FY20 Three Year Growth Objectives Winning formula for top quartile TSR Organic Recurring Fee Revenue Growth1 5-7% Recurring Fee Revenue Growth1 7-9% Adjusted Op Income Margin Expansion ~50bps/yr Adjusted EPS Growth2 14-18% 1) Three Year objectives presented at 2017 Investor Day. Revenue growt
Slide 18: Second Quarter Fiscal Year 2020 Financial Summary
Second Quarter Fiscal Year 2020 Financial Summary © 2020 | 18
Slide 19: Fiscal Year 2020 Guidance
Fiscal Year 2020 Guidance – As of January 31, 2020 Recurring fee revenue growth 8-10% Total revenue growth 3-6% Operating income margin – GAAP ~14% Adjusted Operating income margin – Non-GAAP ~18% Diluted earnings per share growth (4) – 0% Adjusted earnings per share growth – Non-GAAP 8-12%(1) Close
Slide 20: Second Quarter Highlights
Second Quarter Highlights ▪ 7% Recurring fee revenue growth driven by strong contribution from recent acquisitions ▪ Event-Driven Revenue down 36% to near historic low drove lower EPS • Adjusted EPS down 5% to $0.53 in seasonally small quarter • GAAP EPS down 79% to $0.09 driven by charges associate
Slide 21: Second Quarter 2020 Operating Review
Second Quarter 2020 Operating Review ▪ ICS Recurring revenues: continued growth • Recurring fee revenue growth of 9% (organic growth of 4%) excluding Customer Communications in quarter • Customer Communications revenues declined 3% driven by lower mutual funds communications in quarter ▪ Event-drive
Slide 22: Business Update: Focused on Long-term Growth
Business Update: Focused on Long-term Growth ▪ Regulatory update ▪ Recent acquisitions strengthen core businesses • Wealth: ClearStructure • Governance: FundsLibrary ▪ Broadridge Private Cloud an important step forward in our cloud strategy enabling improved time-to-market, increased resilience, and
Slide 23: Second Quarter 2020 Revenue Growth Drivers
Second Quarter 2020 Revenue Growth Drivers ▪ Second Quarter 2020 Recurring fee revenues grew 7% to $648 million Organic Growth: 1.5% $623M +6 pts. +6 pts. +7% $576M $648M (2) pts. (3) pts. $604M ▪ Second Quarter 2020 Total revenues grew 2% to $969 million +5 pts. +2% (2) pts. (1) pt. (1) pt. $969M $
Slide 24: Second Quarter 2020 Segment Revenue Growth and Drivers
Second Quarter 2020 Segment Revenue Growth and Drivers (1) FY2019 revenues have been revised to reflect the Broadridge Advisor Solutions organizational change. This change had the effect of transferring revenues previously reported in the ICS segment to the GTO segment. In aggregate, the Total reven
Slide 25: Second Quarter 2020 Operating Income and EPS
Second Quarter 2020 Operating Income and EPS Dollars in millions, except per share amounts Year-over-Year Change in Operating Income Year-over-Year Change in Diluted EPS and and Adjusted Operating Income Adjusted EPS (5)% (7)% (66)% (79)% © 2020 | 25
Slide 26: Capital Allocation and Summary Balance Sheet
Capital Allocation and Summary Balance Sheet Dollars in millions Notes: (a) Includes deferred acquisition payments of $41M related to Q4 2019 acquisitions. Note: Amounts may not sum due to rounding. © 2020 | 26
Slide 27: Supplemental Reporting Detail - Product Line Reporting
Supplemental Reporting Detail - Product Line Reporting1 © 2020 | 27
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non- GAAP Measures © 2020 | 28
Slide 29: Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $2.2 million and $7.9 million of excess tax benefits associated with stock-based compensation for the three and six months ended December 31, 2019, and $0.8 million and $7.9
Slide 30: Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $2.2 million and $7.9 million of excess tax benefits associated with stock-based compensation for the three and six months ended December 31, 2019, and $0.8 million and $7.9
Slide 31: Reconciliation of GAAP to Non-GAAP Measures - FY20 Guidance
Reconciliation of GAAP to Non-GAAP Measures - FY20 Guidance (Unaudited) FY20 Adjusted Earnings Per Share Growth Rate (a) Diluted earnings per share growth (GAAP) (4) - 0% Adjusted earnings per share growth (Non-GAAP) 8% - 12% FY20 Adjusted Operating Income Margin (b) Operating income margin % (GAAP)
Slide 32: Broadridge Investor Relations Contact
Broadridge Investor Relations Contact W. Edings Thibault Tel: 516-472-5129 Email: edings.thibault@broadridge.com © 2020 | 32
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