Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q2 FY2019 Earnings Presentation
34 slides from Broadridge Financial Solutions's earnings presentation, Feb 12, 2019
Slide 1: Investor Presentation Fiscal Third Quarter 2019
Exhibit 99.1 INVESTOR PRESENTATION FISCAL THIRD QUARTER 2019
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: Key Stakeholder Messages
Key Stakeholder Messages . Broadridge's role powering the critical infrastructure behind Investing, Governance, and Communications strengthens our clients and enables better financial lives . Broadridge has transformed over the past seven years as demonstrated by recent "Most Admired Company" award
Slide 5: Broadridge is a Fintech Leader
Broadridge is a Fintech Leader 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 br
Slide 6: 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 | 6
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 © 2018 | 7
Slide 8: Executing Against Investor Day Themes
Executing Against Investor Day Themes Extend Governance Drive Capital Markets Build Wealth Management • Driving next-gen • Extending global post • UBS win represents a regulatory communications trade technology platform major milestone in 30e-3 and Enhanced Continued progress creating a Wealth C
Slide 9: UBS Joining Broadridge Wealth Platform
UBS Joining Broadridge Wealth Platform . Signing UBS as anchor client represents a major milestone in creating a Wealth Management franchise • Broadridge Wealth Platform will provide next-gen mission critical infrastructure to wealth managers • Broadridge's platform will bring together capabilities
Slide 10: Business Update
Business Update . 2Q record Closed sales of $106 million in second quarter • Year to date Closed sales of $124 million, up 102% • Strong Closed sales result even excluding UBS sale • Pipeline remains strong . ICS Recurring fee revenues up 10% • 25% Recurring fee revenue growth ex-Customer Communicat
Slide 11: Record Sales Building Revenue Backlog
Record Sales Building Revenue Backlog $ in millions Year-over-Year Closed Sales Recurring Revenue Backlog as of Performance1 June 301,2 Total ~$295 +14% (1) Closed sales and Recurring Revenue Backlog are Broadridge estimates and subject to revision. (2) Recurring Revenue Backlog represents an estima
Slide 12: Fiscal Year 2019 Guidance - Reaffirmed
Fiscal Year 2019 Guidance - Reaffirmed Recurring fee revenue growth 5 - 7% Total revenue growth 3 - 5% Operating income margin - GAAP ~14.5% Adjusted Operating income margin - Non-GAAP ~16.5% Diluted earnings per share growth 12 - 16% Adjusted earnings per share growth - Non-GAAP 9 - 13% Free cash f
Slide 13: 3Q FY2019 Supplemental Guidance
3Q FY2019 Supplemental Guidance Q3 FY19 Growth vs Estimated Range ($'s in millions, except per share amounts) FY18 As Reported FY18 Pro Forma Recurring fee revenues $755 - $780M 18% - 22% 3% - 6% Total revenues $1,195 - $1,245M 11% - 16% (1)% - 3% Diluted earnings per share $1.25 - $1.41 39% - 57% A
Slide 14: FY17 - FY20 three year growth objectives
FY17 - FY20 three year growth objectives Winning formula for top quartile TSR Organic Recurring Fee Revenue Growth 5-7% Recurring Fee Revenue Growth 7-9% Adjusted Op Income Margin Expansion ~50bps/yr Adjusted EPS Growth 14-18% Note: Compound annual growth rates (CAGRs), except margin. Three year Adj
Slide 15: Additional Revenue Information
Additional Revenue Information ADDITIONAL PRODUCT LINE REPORTING Quarter Ended December 31, % Fiscal Year Ended June 30, % $ in millions 2018 2017 Change 2018 2017 Change Investor Communication Solutions ("ICS") Equity proxy $41.7 $33.6 24% $406.8 $382.0 6% Mutual fund & ETF interims 60.7 46.9 29% 2
Slide 16: Broadridge business model is strong
Broadridge business model is strong • Large, recurring revenue base with good visibility aided Sustainable Growth by $295 million revenue backlog • Organic strength driven by large addressable market Steady Margin • Continued scale and operational leverage Expansion • Focus on operational efficienci
Slide 17: Fiscal Year 2018 and Second Quarter 2019 Financial Summary
Fiscal Year 2018 and Second Quarter 2019 Financial Summary: © 2018 | 17
Slide 18: Second Quarter 2019 Revenue Growth Drivers
Second Quarter 2019 Revenue Growth Drivers ▪ Second Quarter 2019 Total revenues declined 6% to $953 million +4% (5)% (6)% $1,013M (5)% (0)% $953M ▪ Second Quarter 2019 Recurring fee revenues grew 7% to $604 million Organic Growth: 6% +7% +6% +3% +1% +1% (3)% $604M $562M Note: Amounts may not sum due
Slide 19: Fiscal Year 2018 Revenue Growth Drivers
Fiscal Year 2018 Revenue Growth Drivers ▪ Fiscal Year 2018 Total revenues grew 5% to $4.3 billion +2% +4% 0% +5% -1% $4,330M $ 4,143M ▪ Fiscal Year 2018 Recurring fee revenues grew 6% to $2.6 billion Organic Growth: 5% +1% +6% +6% -3% +2% $2,610M $2,451M Note: Amounts may not sum due to rounding © 2
Slide 20: Second Quarter 2019 GAAP and Adjusted Operating Income and EPS
Second Quarter 2019 GAAP and Adjusted Operating Income and 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 -27% -29% -33% -19% © 2018 | 20
Slide 21: Second Quarter Cost of Revenues & SG&A Expenses
Second Quarter Cost of Revenues & Selling, General, and Administrative Expenses ($'s in millions) 2Q FY17 2Q FY18 2Q FY19 Cost of Revenues $707.4 $769.3 $734.0 Gross Margin 20.7% 24.0% 23.0% SG&A $125.9 $127.7 $141.2 Growth 21% 1% 11% © 2018 | 21
Slide 22: First Half Contribution to Full Year EPS
First Half Contribution to Full Year EPS Adjusted EPS - Non-GAAP Diluted EPS 32% 29%1 26% 26% 26%1 23% 1 FY19 first half Diluted and Adjusted (Non-GAAP) EPS % of Full Year EPS based on mid-point of full year FY19 Diluted and Adjusted (Non-GAAP) EPS guidance. © 2018 | 22
Slide 23: Fiscal Year 2018 GAAP and Adjusted Operating Income and Adjusted EPS
Fiscal Year 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 +10% +34% +32% +12% © 2018 | 23
Slide 24: Appendix
Appendix ©2018 | 24 BS Broadridge:
Slide 25: Tax Act & ETB Impact
Tax Act & ETB Impact 2018 2019 2018 2019 2018 2019 FY 2Q 2Q 1H 1H FY $ in millions Outlook Earnings before income taxes $103.5 $64.3 $177.8 $153.6 $561.0 Provision for income taxes (Excluding ETB and non-recurring gains & charges) $26.7 $15.2 $52.7 $34.8 $158.6 Net Tax Charges 16.1 — 16.1 — 15.4 — E
Slide 26: Pro Forma Accounting Change Impact to FY 2018 Total Revenues
Pro Forma Accounting Change Impact to FY 2018 Total Revenues 2018 $ in millions Q1 Q2 Q3 Q4 FY Revenues As Reported Recurring Fee Revenues $ 547.8 $ 562.4 $ 638.6 $ 861.5 $ 2,610.4 Event-Driven Fee Revenues 59.3 97.3 66.5 60.7 283.9 Distribution Revenues 334.2 370.4 385.4 422.9 1,512.9 FX (16.5) (17
Slide 27: Pro Forma Accounting Change Impact to FY 2018 Recurring Revenues
Pro Forma Accounting Change Impact to FY 2018 Recurring Revenues 2018 $ in millions Q1 Q2 Q3 Q4 FY Recurring Fee Revenues As Reported ICS $ 332.9 $ 334.4 $ 403.5 $ 628.0 $ 1,698.9 GTO 214.9 228.0 235.2 233.5 911.6 Total Recurring Fee Revenues $ 547.8 $ 562.4 $ 638.6 $ 861.5 $ 2,610.4 % of FY Recurri
Slide 28: Pro Forma Accounting Change Impact to FY 2019 Revenue Growth
Pro Forma Accounting Change Impact to FY 2019 Revenue Growth 2019 Growth Q1 Q2 1H Recurring Fee Revenues: As Reported 5% 7% 6% Pro Forma 6% 7% 6% Total Revenues: As Reported 5% (6)% (1)% Pro Forma (1)% 1% —% Note: For FY18 Pro Forma results refer to page 19 of the presentation © 2018 | 28
Slide 29: GAAP Reconciliations
GAAP Reconciliations © 2018 | 29
Slide 30: Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended December 31, Fiscal Year Ended June 30, 2018 2017 2018 2017 Net earnings (GAAP) $ 49.9 $ 62.1 $ 427.9 $ 326.8 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 21.3 19.7 81.4 72.6 Acquisiti
Slide 31: Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited) $ in millions, except per share amounts Three Months Ended December 31, Fiscal Year Ended June 30, 2018 2017 2018 2017 Operating income (GAAP) $ 78.2 $ 115.9 $ 594.9 $ 531.6 Adjustments: Amortization of Acquired Intangibles and Purchased Intell
Slide 32: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Fiscal Years Ended June 30, 2018 2017 2016 2015 2014 Diluted earnings per share (GAAP) $ 3.56 $ 2.70 $ 2.53 $ 2.32 $ 2.12 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 0.68 0.60 0.26 0.20 0.18 Acquisition and Integra
Slide 33: Reconciliation of GAAP to Non-GAAP Measures - Third Quarter and FY19 Guidance
Reconciliation of GAAP to Non-GAAP Measures - Third Quarter and FY19 Guidance (Unaudited) (Dollars in millions, except per share amounts) Third Quarter FY19 Adjusted Earnings Per Share (1) Diluted earnings per share (GAAP) $1.25 - $1.41 Adjusted earnings per share (Non-GAAP) $1.40 - $1.56 FY19 Adjus
Slide 34: Broadridge Investor Relations
Broadridge Investor Relations W. Edings Thibault Investor Relations Tel: 516-472-5129 Email: edings.thibault@broadridge.com © 2018 | 34
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