Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (February 2024)
62 slides from Broadridge Financial Solutions's investor presentation, Feb 29, 2024
Slide 1: Powering and transforming financial markets
Powering and transforming financial markets Investor Presentation February 2024 EXHIBIT 99.1
Slide 2: Forward-Looking Statements
2 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") contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform A
Slide 3: Use of Non-GAAP financial measures, KPIs and foreign exchange rates
3 Use of Non-GAAP financial measures, KPIs and foreign exchange rates Use of Non-GAAP Financial Measures This presentation includes certain Non-GAAP financial measures including Adjusted Operating income, Adjusted Operating income margin, Adjusted Net earnings, Adjusted earnings per share (“EPS”), F
Slide 4: Broadridge is powering and transforming financial services
4 Broadridge is powering and transforming financial services Unique network and business model with a clear growth strategy across our three franchises Platform-based model with recurring revenue structure creates unique value for clients and investors Steady and consistent earnings growth and capit
Slide 5: Long track record of delivering growth and shareholder value
5 Broadridge has a long track record of delivering growth and shareholder value $2.6 $2.7 $2.9 $4.1 $4.3 $4.4 $4.5 $5.0 $5.7 $6.1 $2.25 $2.47 $2.73 $3.13 $4.19 $4.66 $5.03 $5.66 $6.46 $7.01 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 Adjusted EPS Total Revenue ($B) 10% Recurring Reve
Slide 6: We have a unique network and business model
6 We have a unique network and business model Regulatory Bodies & Trade Associations Broker-dealers & Wealth Managers Investors Public Companies & Funds 10,000+ Corporate issuers 1,000+ Banks and broker-dealers 30,000+ Mutual funds and ETFs 200,000+ Financial advisors 150,000+ Institutional sharehol
Slide 7: Powering a scale business at the intersection of financial services
7 Powering a scale business at the intersection of financial services Wealth Managers 30,000+ Mutual funds and ETFs 120,000+ Institutional shareholders 170M+ Retail shareholder accounts Capital Markets Firms Asset Managers Corporate Issuers • 14 of 15 largest U.S. wealth providers • 30% U.S. advisor
Slide 8: We serve a $225B addressable market of which $60B+ is vended
8 We serve a $225B addressable market of which $60B+ is vended Source: McKinsey & Co. Governance Capital Markets Wealth & IM $25B $24B Broadridge Vended Addressable Market 27%73% Total Addressable Market $12B $225B $60BBR Vended
Slide 9: Our growth is underpinned by secular demand drivers
9 Our growth is underpinned by secular demand drivers Digitization of communications Acceleration of trading Democratization of investing Data and artificial intelligence Regulation Governance Capital Markets Wealth & IM
Slide 10: We have aligned our business around these long-term drivers
10 We have aligned our business around these long-term drivers Extend Governance ▪ Scaled to enable doubling of equity and fund positions ▪ Crossed $100M threshold in digital revenues ▪ Expanded data & analytics with European fund data, board reporting ▪ Extended our capabilities across the entire t
Slide 11: We have a clear plan for long-term growth
11 Driving Democratization and Digitization in Governance ✓ Drive democratization in regulatory communications ✓ Digitize communications ✓ Leverage data for asset management ✓ Simplify corporate governance Simplifying Trading in Capital Markets ✓ Optimize trading and connectivity ✓ Simplify post-tra
Slide 12: Investor Communication Solutions (ICS)
Investor Communication Solutions (“ICS”)
Slide 13: We continue to extend our strong and growing Governance franchise
13 We continue to extend our strong and growing Governance franchise $0.7B $0.2B $0.4B $1.1B FY'19 FY'20 FY'21 FY'22 FY'23 $2.5B ICS Recurring Revenue Avg. annual growth 9% 12% Regulatory Data-Driven Fund Solutions Issuer Customer Communications 10% 16% 03% Note: Growth in constant currency. Informa
Slide 14: We have a unique network and business model…
14 We have a unique network and business model… Regulatory Bodies & Trade Associations Broker-dealers & Wealth Managers Investors Public Companies & Funds 10,000+ Corporate issuers 1,000+ Banks and broker-dealers 30,000+ Mutual funds and ETFs 200,000+ Financial advisors 150,000+ Institutional shareh
Slide 15: Sustainable fundamentals underscore consistent position growth
15 Sustainable fundamentals underscore consistent position growth Position Growth (~9%) More Positions per Investor (5-7%) More Investors (2-4%) Investing Population Growth Market Participation Growth Population growth brings new investors An increasing portion of the population invests Demographics
Slide 16: Driving democratization and digitization in Governance
16 Enable democratization via next-gen Regulatory Deliver Data-Driven Fund Solutions Simplify governance for Issuers Transform omni-channel Customer Communications GROWTH OPPORTUNITIES • Continued equity, mutual fund, and ETF position growth • Constant need for innovative compliance solutions • Glob
Slide 17: Global Technology & Operations (GTO)
Global Technology & Operations (“GTO”)
Slide 18: Broadridge is a leading technology provider for capital markets and wealth management
18 $965 $560 FY'19 FY'20 FY'21 FY'22 FY'23 Broadridge is a leading technology provider for capital markets and wealth management $1.5BGTO Recurring Revenue Avg. annual growth 10% 10% Capital Markets Wealth & Inv. Mgmt. 14% Note: Growth in constant currency. Information about our use of Non-GAAP meas
Slide 19: Capital Markets: Broadridge technology powers the entire trade lifecycle
19 Capital Markets: Broadridge technology powers the entire trade lifecycle Initiate order Buy-side Sell-side Middle-office Lifecycle Events • Trade Confirmation • Allocation of Trade to Sub-accounts • Trade Validation Middle-office Matching and Allocation Market Participants Back-office Lifecycle E
Slide 20: Component based ecosystem that redefines wealth management technology
20 Component based ecosystem with open architecture that redefines wealth management technology Flexible, scalable platform designed to help firms drive innovation and perform more efficiently Delivers digital, modernized advisor capabilities with easy integration through published APIs Integrated t
Slide 21: We are executing a clear growth strategy across Capital Markets and Wealth Management
21 GROWTH OPPORTUNITIES We are executing a clear growth strategy across Capital Markets and Wealth Management • Personalizing the investor experience • Optimizing advisor productivity • Digitizing operations • Optimizing trading and connectivity • Simplifying post-trade • Delivering transformation a
Slide 22: A financial model powering sustainable long-term growth with high returns
A financial model powering sustainable long-term growth with high returns
Slide 23: Strong business and financial model positioned to drive sustainable, long-term growth
23 Broadridge’s strong business and financial model is positioned to drive sustainable, long-term growth Recurring Revenue Balanced Capital Allocation TSR Adjusted EPS 100% Free cash flow conversion and mid-to-high teen ROIC 7-9% Sustainable growth 8-12% Steady and consistent growth Top-Quartile TSR
Slide 24: Steady earnings growth and capital return has resulted in a compounding TSR
24 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 S&P500 BR Our steady and consistent earnings growth and capital return has resulted in a compounding TSR business… $0.72 $2.90 FY'13 FY'23 $1.88 $7.01 FY'13 FY'23 14% 10-year CAGR EARNINGS PER SHARE DIVIDENDS PER SHARE A
Slide 25: Consistently delivered on three-year objectives over multiple cycles
25 …that has consistently delivered on its three-year objectives over multiple cycles CAGR FY’14 – FY’17 FY’17 – FY’20 FY’20 – FY’23 Organic Recurring revenue growth1 5% 5% 8% Recurring revenue growth 7%2 7% 11%3 Adj. Operating income margin expansion (bps/yr) (Non-GAAP)3 532 80 77 Adj. earnings per
Slide 26: Recurring revenue growth in line with or above objectives for 10 years
26 The model begins with Recurring revenue growth which has grown in line with or above our three-year objectives for the last 10 years RECURRING REVENUE GROWTH 66% 9% 6% 9% 7% 6% 6% 10% 10% 16% 9% FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 RECURRING DISTRIBUTION EVENT-DRIVEN $6B FY
Slide 27: Converting Closed sales to revenue contributes 6pts to Recurring revenue growth
27 The biggest driver has been converting Closed sales to revenue – which has consistently contributed 6pts to Recurring revenue growth Note: In FY’17, Recurring revenue growth excludes $424MM from the acquisition of NACC. As reported in FY’17, recurring revenue rose 29% SALES CONTRIBUTION TO RECURR
Slide 28: Organic Recurring revenue growth of 5-8% for FY'24-FY'26
28 The demand for our products and secular tailwinds supports organic Recurring revenue growth of 5-8% for FY’24-FY’26 RECURRING REVENUE GROWTH RECURRING REVENUE GROWTH DRIVERS Beginning Recurring revenue Closed Sales Client Losses Internal Growth Acquisitions Ending Recurring revenue 5-7pts (2)pts
Slide 29: Investments are a key part of our financial model
29 Investments are a key part of our financial model. We invest in high return opportunities that enable us to sustain a high level of Recurring revenue growth RECURRING REVENUE GROWTH CAPEX Client Platform Investment OPEX Medium Term Long Term Product Enhancement Digital (e.g. InFocus) DLR Sales &
Slide 30: Long history of being able to expand margins
30 160 120 10 40 80 120 40 60 60 110 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 19.8% FY'14 FY'23 AOI MARGIN EXPANSION HISTORY (bps; NON-GAAP) 50 bps Avg Annual Expansion Target 10 Year average Annual AOI margin expansion 80 bps Broadridge has a long history of being able to expand
Slide 31: Operating leverage allows growth investments while delivering margin expansion
31 Broadridge generates operating leverage through scale, higher- margin digital growth and cost efficiency, allowing us to fund growth investments while delivering margin expansion RECURRING REVENUE GROWTH EARNINGS GROWTH BALANCED CAPITAL ALLOCATION Scale Digital Expense Mgt & Efficiency Investment
Slide 32: Committed to strong and balanced capital stewardship
32 We are committed to strong and balanced capital stewardship… M&A Internal Investment Dividend Share repurchase Maintain investment grade Drive ~100% FCF conversion, monetize recent investments, return ROIC to mid-high teens Capital Allocation Priorities ✓ Fund high return internal investments ✓ G
Slide 33: Committed to a strong dividend growing in line with earnings
33 …and are committed to a strong dividend growing in line with earnings… RECURRING REVENUE GROWTH EARNINGS GROWTH BALANCED CAPITAL ALLOCATION 17% 29% 11% 10% 11% 33% 11% 6% 11% 13% 10% GROWTH IN ANNUAL DIVIDEND 45% Target dividend payout ratio 11 Out of 12 years with double-digit dividend increase
Slide 34: Balance investment for growth with capital return to shareholders
34 …and balance investment for growth with capital return to shareholders RECURRING REVENUE GROWTH EARNINGS GROWTH BALANCED CAPITAL ALLOCATION 55% 45% 20% 80% FY'09-FY'19 FY'20-FY'23 FY'24-FY'26 Dividends and Share Repurchases Organic and M&A BALANCED CAPITAL ALLOCATION ELEVATED INVESTMENT PERIOD GO
Slide 35: FY'24 – FY'26 long-term growth objectives
35 FY’24 – FY’26 long-term growth objectives Investor Day 2023 FY’24 – FY’26 Objectives (CAGR) Organic Recurring revenue growth 5-8% Recurring revenue growth constant currency (Non-GAAP) 7-9% Adjusted Operating Income Margin expansion (bps/year) (Non-GAAP) 50+ Adjusted Earnings per Share Growth (Non
Slide 36: Q2'24 results
Q2’24 results Broadridge
Slide 37: Key messages as of February 1, 2024 earnings call
37 Key messages as of February 1, 2024 earnings call Broadridge’s second quarter results, powered by 6% Recurring revenue growth constant currency, mark another step forward towards our long-term growth objectives Our growth continues to be driven by long-term trends, including equity position growt
Slide 38: Summary financial results
38 Summary financial results SECOND QUARTER $ in millions, except per share data 2024 2023 Inc./(Dec.) Recurring revenues $899 $840 7% Total revenues 1,405 1,293 9% Operating income 124 108 15% Adjusted Operating income (Non-GAAP) 174 173 1% Diluted earnings per share $0.59 $0.48 23% Adjusted earnin
Slide 39: Second quarter 2024 Recurring revenues
39 FY'21 FY'22 FY'23 FY'24 Guidance Second quarter 2024 Recurring revenues Q2'23 Q2'24 $89916% 10% 9% FISCAL YEAR RECURRING REVENUE GROWTH Q2 RECURRING REVENUES 6-9% +6% $ in millions; growth in constant currency Information about our use of Non-GAAP measures and reconciliations to GAAP measures may
Slide 40: Second quarter 2024 segment Recurring revenues
40 Second quarter 2024 segment Recurring revenues $163 $31 $105 $195 Q2'23 Q2'24 Regulatory Customer Comms. Data-Driven Fund Solutions Issuer 15% 0% 9% 8% ICS RECURRING REVENUES GTO RECURRING REVENUES $493 $143 $262 Q2'23 Q2'24 Capital Markets Wealth & Investment Management 10% 4% $405 $ in millions
Slide 41: Key volume drivers: position and trade growth
41 9% 10% 6% 8% 6% 6% 6% 8% 3% 5% Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Key volume drivers: position and trade growth 5% 1% 3% 15% 12% INTERNAL TRADE GROWTH EQUITY & MUTUAL FUND/ETF POSITION GROWTH 1. Q2’23 equity position growth represented 9% of total fiscal year 2023 positions. Q1’23: 6% | Q3’23: 32% | Q
Slide 42: Second quarter 2024 Recurring revenue growth drivers
42 Q2'23 Recurring revenues Closed Sales Client Losses Internal Growth Acquisitions Q2'24 Rec. Rev. Constant Currency FX Q2'24 Recurring revenues RECURRING REVENUE GROWTH CONSTANT CURRENCY WAS 6% Second quarter 2024 Recurring revenue growth drivers ICS $467M 6 pts (2) pts 2 pts 0 pts 6% 0 pts $493M
Slide 43: Second quarter 2024 Total revenue growth drivers
43 SECOND QUARTER 2024 TOTAL REVENUE GROWTH DRIVERS $38 $52 $59 $55 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 $59M FY’17-FY’23 QUARTERLY AVERAGE Second quarter 2024 Total revenue growth drivers $1,293 Q2'23 Total Revenues Recurring Event-Driven Distribution FX Q2'24 Total Revenues QUARTERLY EVENT-DRIVEN REVENUE
Slide 44: Operating income margin and Adjusted Operating income margin
44 Operating income margin and Adjusted Operating income margin OPERATING INCOME MARGIN 18.1% 18.7% 19.8% FY'21 FY'22 FY'23 FY'24 Guidance 13.6% 13.3% 15.4% 8.9%8.3% Q2'23 Q2'24 +60 bps +60 bps OPERATING INCOME MARGIN ADJUSTED OPERATING INCOME MARGIN (NON- GAAP) 12.4% +110 bps ~20% 13.4% Information
Slide 45: Closed sales
45 FY'21 FY'22 FY'23 FY'24 Guidance Closed sales CLOSED SALES $ in millions $280 H1'23 H1'24 $94 $106 $280 – $320 $246 $231
Slide 46: Free cash flow conversion
46 Free cash flow conversion FREE CASH FLOW CONVERSION (LTM) 1,2 1. Last twelve months (LTM) Free cash flow conversion equals Free cash flow for the most recent four quarters divided by Adjusted Net earnings for the same four quarters 2. Information about our use of Non-GAAP measures and reconciliat
Slide 47: Capital allocation
47 SELECT USES OF CASH YTD’24 TOTAL CAPITAL RETURNS Capital allocation $ in millions, except per share data $2.16 $2.30 $2.56 $2.90 $3.20 11% 6% 11% 13% 10% DIVIDENDS PER SHARE M&A Client Platform Investments CapEx and Software 2 1. Includes Software purchases and capitalized internal use software 2
Slide 48: Explanation of non-GAAP measures and reconciliation of GAAP to non-GAAP measures
Explanation of non-GAAP measures and reconciliation of GAAP to non-GAAP measures
Slide 49: Non-GAAP measures
49 Non-GAAP 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 circumstances, results h
Slide 50: Non-GAAP measures
50 Non-GAAP measures We exclude Acquisition and Integration Costs, IBM Private Cloud Charges, Real Estate Realignment and Covid-19 Related Expenses, Investment Gains, Russia-Related Exit Costs, the Software Charge, Loss (Gain) on Acquisition-Related Financial Instrument, the Gain on Sale of a Joint
Slide 51: Reconciliation of GAAP to Non-GAAP Measures
51 Reconciliation of GAAP to Non-GAAP Measures Year ended June 30, Dollars in millions 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Operating Income (GAAP) $936.4 $759.9 $678.7 $624.9 $652.7 $598.1 $534.0 $502.3 $468.5 $418.3 $337.1 Adjustments: Amortization of Acquired Intangibles and Pur
Slide 52: Reconciliation of GAAP to Non-GAAP Measures
52 Reconciliation of GAAP to Non-GAAP Measures (a) Real Estate Realignment Expenses were $23.0 million, $29.6 million, and $0.0 million for the years ended June 30, 2022, 2021, and 2020, respectively. Covid-19 Related Expenses were $7.5 million, $15.7 million, and $2.4 million for the years ended Ju
Slide 53: Reconciliation of diluted earnings per share
53 Year ended June 30, Dollars in millions, except per share amounts 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Diluted earnings per share (GAAP) $5.30 $4.55 $4.65 $3.95 $4.06 $3.56 $2.70 $2.53 $2.32 $2.12 $1.69 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual
Slide 54: Reconciliation of GAAP to Non-GAAP Measures: fiscal year 2023
54 Fiscal Year Ended June 30, 2023 Investor Communication Solutions Regulatory Data-Driven Fund Solutions Issuer Customer Comms. Total Recurring revenue growth (GAAP) 6% 11% 12% 9% 8% Impact of foreign currency exchange —% 1% —% —% —% Recurring revenue growth constant currency (Non-GAAP) 7% 12% 13%
Slide 55: Reconciliation of GAAP to Non-GAAP measures: three months ended December 31, 2023
55 Three Months Ended December 31, 2023 Investor Communication Solutions Regulatory Data-Driven Fund Solutions Issuer Customer Comms. Total Recurring revenue growth (GAAP) 8% 9% 15% —% 6% Impact of foreign currency exchange —% (1)% —% —% —% Recurring revenue growth constant currency (Non-GAAP) 8% 9%
Slide 56: Free cash flow reconciliation
56 Year ended June 30, Dollars in millions 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Net cash flows from operating activities (GAAP) $823.3 $443.5 $640.1 $598.2 $617.0 $693.6 $515.9 $437.7 $431.4 $387.7 Capital expenditures and Software purchases and capitalized internal use software (75.2)
Slide 57: Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2024 guidance
57 Reconciliation of GAAP to Non-GAAP measures: Fiscal year 2024 guidance Fiscal Year 2024 FY24 Recurring revenue growth Impact of foreign currency exchange (a) 0 - 0.5% Recurring revenue growth constant currency (Non-GAAP) 6-9% FY24 Adjusted Operating income margin (b) Operating income margin % (GA
Slide 58: Reconciliation of GAAP to Non-GAAP measures
58 Reconciliation of GAAP to Non-GAAP measures (Unaudited) Three Months Ended Dec. 31, Six Months Ended Dec.31, Dollars in millions 2023 2022 2023 2022 Operating income (GAAP) $124.4 $107.9 $272.8 $195.4 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 49.9 53.7
Slide 59: Reconciliation of GAAP to Non-GAAP measures
59 Reconciliation of GAAP to Non-GAAP measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $1.2 million and $6.2 million of excess tax benefits associated with stock-based compensation for the three and six months ended December 31, 2023, respectively, and $0.5
Slide 60: Quarterly free cash flow and net earnings reconciliation
60 QQ FY 2022 FY 2023 FY 2024 Dollars in millions Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Net cash flows from operating activities (GAAP) $ 80.7 $ 457.4 $ (204.5) $ 123.1 $ 175.6 $ 729.2 $ (62.0) $ 189.8 Capital expenditures and Software purchases and capitalized internal use software (25.2) (18.7) (13.6) (19.5) (1
Slide 61: Reconciliation of GAAP to Non-GAAP measures
61 Reconciliation of GAAP to Non-GAAP measures (Unaudited) (a) Real Estate Realignment Expenses were $0.0 million, $23.0 million, and $29.6 million, for the fiscal years ended June 30, 2023, 2022 and 2021, respectively. Covid-19 Related Expenses were $0.0 million, $7.5 million, and $15.7 million for
Slide 62: Contact Investor Relations
Contact Investor Relations broadridgeir@broadridge.com
Broadridge Financial Solutions — Investor Presentation (February 2024) on 6ix