Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (May 2020)
43 slides from Broadridge Financial Solutions's investor presentation, May 12, 2020
Slide 1: Investor Presentation as of May 8, 2020
EXHIBIT 99.1 INVESTOR PRESENTATION AS OF MAY 8, 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: Broadridge and Covid
Broadridge and Covid ▪1 The Covid-19 crisis has reinforced the essential nature of Broadridge’s work – what we do matters ▪2 The health and safety of our associates is our top priority ▪3 We have delivered strong operational performance ▪4 As a result, we are seeing continued growth and solid financ
Slide 5: 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% 14-18% unique value for our clients Recurring fee 3-Year Adjus
Slide 6: 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 14-18% (post 2018 Tax Act) / Adjusted EPS Growth2 9-13% (pre 2018 Tax Act) (1) Three Year objectiv
Slide 7: 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 8: 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 | 8
Slide 9: 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 | 9
Slide 10: 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 11: 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 12: Fiscal Year 2020 Guidance – As of May 8, 2020
Fiscal Year 2020 Guidance – As of May 8, 2020 Guidance - Updated Change / Update(1) Recurring fee revenue growth 8 – 10% No Change Total revenue growth Expected to be at low 3 – 6% end of range Operating income margin – GAAP ~14% No Change Adjusted Operating income ~18% No Change margin – Non-GAAP D
Slide 13: 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 14: ICS Stock and Interim Record Growth and FY19 Revenues
ICS Stock and Interim 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
Slide 15: Event-Driven Revenue: lowest Q3 since FY'14
Event-Driven Revenue: lowest Q3 since FY’14 Dollars in millions Q3 FY14-19 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Average Equity & Other 16 16 17 18 40 35 22 24 Mutual Fund 22 32 32 43 27 33 17 31 Total 38 48 48 61 67 68 39 55 Year to Date FY14-19 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Average Equity & Othe
Slide 16: 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 17: 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 18: FY19 Record Sales Building Revenue Backlog
FY19 Record Sales Building Revenue Backlog Dollars in millions Recurring Revenue Backlog as of Annual Closed Sales Performance June 30, 2019 3,4 $250 FY’14 – 19 $230 CAGR – 13% $200 $190 $150 $233 $215 $100 $188 $146 $151 (2) $127 $127 $50 $83 $0 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (1) Closed Sales F
Slide 19: Recurring Revenue in 2008/09 Global Financial Crisis
Recurring Revenue in 2008/09 Global Financial Crisis Total Recurring Fee Revenue Growth1 Organic Revenue Growth 12% Revenue Growth from Acquisitions 8% 5% 4% 1% 4% FY08 FY09 FY10 FY11 (1) Total recurring fee revenue growth %s, as reported © 2020 | 19
Slide 20: Early Thinking on FY'21
Early Thinking on FY’21 ▪ Our preliminary planning contemplates a prolonged recession ▪ Resilient business model supported by secular growth drivers . . . • Strong $330M+ backlog • Single digit position growth: Total equity / mutual fund position growth remained positive through Global Financial Cri
Slide 21: Strong Balance Sheet
Strong Balance Sheet BBB+ (S&P, Fitch) Investment-Grade Credit Ratings Baa1 (Moody’s) March 31, 2020 Cash and cash equivalents $402M Available Borrowing Capacity1 $1.1B Total Liquidity $1.5B Leverage Ratios (Non-GAAP) Net Debt2 1.9x Adjusted Gross Debt3 2.4x Next Maturity $400M in September 2020 (1)
Slide 22: Regulatory Update
Regulatory Update • The proxy working groups are focusing on Covid-19 issues. Covid-19 Update • The SEC provided guidance / relief for issuers regarding annual meetings due to Covid-19 • Broadridge has been in constant contact with our clients, the SEC and other regulatory bodies during this crisis
Slide 23: Third Quarter Fiscal 2020 Results
Third Quarter Fiscal 2020 Results
Slide 24: Covid-19 Has Reinforced the Essential Nature of Broadridge's Work
1 Covid-19 Has Reinforced the Essential Nature of Broadridge’s Work ▪ Supporting dynamic capital markets processing trillions of dollars of trading activity ▪ Providing investors key information about their investments in a time of high volatility and uncertainty ▪ Ensuring strong and timely corpora
Slide 25: Ensuring the Health and Safety of our Associates
2 Ensuring the Health and Safety of our Associates ▪ Importance of the Service-Profit Chain ▪ Moved to 100% work-from-home for non-production associates • Began in January in Asia-Pacific • North America and Europe staff in early March • India staff starting in mid-March ▪ Strong measures to protect
Slide 26: Delivered Strong Operational Performance
3 Delivered Strong Operational Performance ▪ Our resilient and scalable technology successfully supported unprecedented market volumes ▪ Delivering an effective proxy season to support strong corporate governance ▪ Managed very strong spike in transactional communications driven by market volatility
Slide 27: Expecting Continued Growth and Solid Financial Results
4 Expecting Continued Growth and Solid Financial Results ▪ Broadridge reported solid third quarter results • Recurring fee revenue growth of 9% • 20% increase in Closed sales including stronger March ▪ Fiscal Year 2020 guidance calls for continued growth • 8 – 10% Recurring fee revenue growth, inclu
Slide 28: Long-Term Impact Confirms Broadridge Business Model and Supports Future Growth
Long-Term Impact Confirms Broadridge Business Model 5 and Supports Future Growth ▪ Broadridge will continue investing to support future growth ▪ Covid-19 crisis strengthens long-term trends on mutualization, digitization and data driving Broadridge’s growth ▪ New focus on resiliency and enhanced dig
Slide 29: Third Quarter Financial Summary
Third Quarter Financial Summary Third Quarter Financial Highlights 2020 2019 Change 1.1 Solid results: 9% increase in Total revenues $1,250 $1,225 2% Recurring revenues and Adjusted Recurring fee revenues 835 767 9% EPS growth of 5% Event-driven fee revenues $39 $68 (43)% 2.2 Event-driven revenue we
Slide 30: Third Quarter 2020 Revenue Growth Drivers
Third Quarter 2020 Revenue Growth Drivers ▪ Third Quarter 2020 Recurring fee revenues grew 9% to $835 million Organic Growth: 3% $623M +6 pts. +9% $576M +5 pts. $835M (2) pts. 0 pt. $767M ▪ Third Quarter 2020 Total revenues grew 2% to $1,250 million +5 pts. $1,225M +2% (2) pts. 0 pt. (1) pt. $1,250M
Slide 31: Third Quarter Fiscal 2020 ICS Results
Third Quarter Fiscal 2020 ICS Results Total Revenues Recurring Revenues Highlights -3% +2% • Covid-19 related production shifts $1,006 $980 $520 $529 reduced Equity proxy revenues by $15- 20 million, offsetting impact of 7% stock $136 $153 record growth $520 $529 $87 $82 • Higher volumes led by post
Slide 32: Third Quarter Fiscal 2020 GTO Results
Third Quarter Fiscal 2020 GTO Results Total GTO Revenues Highlights • 23% revenue growth, including 11% +23% organic growth and continued benefit $305 from recent acquisitions • Scalable and resilient technology $248 processed record volumes • Client onboarding activity remains on track despite work
Slide 33: Nine Months Fiscal Year 2020 vs. Nine Months Fiscal Year 2019
Nine Months Fiscal Year 2020 vs. Nine Months Fiscal Year 2019 © 2020 | 33
Slide 34: Nine Months 2020 Revenue Growth Drivers
Nine Months 2020 Revenue Growth Drivers ▪ Nine Months Fiscal 2020 Recurring fee revenues grew 8% to $2,106 million Organic Growth: 2% $623M +6 pts. $1,272M+8% $576M +6 pts. $2,106M $1,179M (2) pts. (1) pt. $1,947M ▪ Nine Months Fiscal 2020 Total revenues grew by 1% to $3,167 million $576M +5 pts. +1
Slide 35: Nine Months 2020 Segment Revenue Growth and Drivers
Nine Months 2020 Segment Revenue Growth and Drivers Dollars in millions 9M 2019 2020 Growth Investor Communication Solutions Revenues1 Recurring Fee Revenues $ 1,214 $ 1,246 3 % Event-Driven Fee Revenues 193 110 (43)% Distribution Revenues 1,082 1,042 (4)% Total ICS Revenues $ 2,489 $ 2,398 (4)% Glo
Slide 36: Supplemental Reporting Detail - Product Line Reporting
Supplemental Reporting Detail - Product Line Reporting1 (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 the aggregate, the Total
Slide 37: 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 © 2020 | 37
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Earnings and Adjusted Earnings Per Share, Adjusted EBITDA and EBITDAR Adjusted Operating income, Adjusted Operating income margin, Adjusted Net earnings and Adjusted earnings per share reflect Opera
Slide 39: 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 $1.9 million and $9.9 million of excess tax benefits associated with stock-based compensation for the three and nine months ended March 31, 2020, and $1.3 million and $9.2 mi
Slide 40: 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 $1.9 million and $9.9 million of excess tax benefits associated with stock-based compensation for the three and nine months ended March 31, 2020, and $1.3 million and $9.2 mi
Slide 41: Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Note: Amounts may not sum due to rounding. © 2020 | 41
Slide 42: 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) (7) – (3) % Adjusted earnings per share growth (Non-GAAP) 5 – 7 % FY20 Adjusted Operating Income Margin (b) Operating income margin % (GAA
Slide 43: Broadridge Investor Relations Contacts
Broadridge Investor Relations Contacts W. Edings Thibault Tel: 516-472-5129 Email: edings.thibault@broadridge.com Elsa Ballard Tel: 212-973-6197 Email: elsa.ballard@broadridge.com © 2020 | 43
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