Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (December 2011)
40 slides from Broadridge Financial Solutions's investor presentation, Dec 7, 2011
Slide 1: Continued Market Leadership through Execution and Innovation
Exhibit 99.1 Continued Market Leadership through Execution and Innovation Investor Presentation © 2011 Broadridge Financial Solutions, Inc. Broadridge and the Broadridge logo are registered trademarks of Broadridge Financial Solutions, Inc. December 2011
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 may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature,
Slide 3: Broadridge Overview
\Geties Overview ’ ea Broadridge
Slide 4: Broadridge is a strong, resilient business with significant growth potential
Broadridge is a strong, resilient business with significant growth potential History of market leadership – Proven ability to address increasingly complex customer needs through technology – Innovation and thought leader in industry for >40 years Strong position in large and attractive markets – Lea
Slide 5: Our market position is differentiated and sustainable
Our market position is differentiated and sustainable Investor Communication Services Securities Processing Services • Proxy services for >85% of outstanding shares in US • Processed >600 billion shares in 2011 • Used by >4,000 institutional investors Processes Enable Ranked #1 globally >$4 trillion
Slide 6: We are the leader in several markets
We are the leader in several markets Investor Communication Securities Processing Services Services 1 Market Rank Market Rank 1 Bank/Broker-Dealer US Brokerage Regulatory #1 Processing #1 Communications US Fixed Income Broker-Dealer Processing #1 Transactional #1 Communications Canadian Brokerage Pr
Slide 7: Broadridge's investment thesis
Broadridge's investment thesis ICS is a highly defensible, scalable business with new growth opportunities SPS is a market share leader in mission-critical services with high client retention and emerging growth opportunities Industry trends becoming tailwinds instead of headwinds Broadridge is an e
Slide 8: Strategy Overview
7 — d Strategy Overview me i Bg Broadridge
Slide 9: Broadridge Strategy Statement
Broadridge Strategy Statement Our vision is to be the leading provider of Investor Communications and Technology and Operations Solutions to Bank/Broker-Dealers, Mutual Funds, and Corporate Issuers globally – We have strong positions in large and attractive markets with opportunities to grow – We ha
Slide 10: Large and attractive markets – Investor Communications (ICS) is a $10B+ market
Large and attractive markets – Investor Communications (ICS) is a $10B+ market Total addressable market $10B+ fee revenue Bank/Broker-Dealer (BBD)—Core Regulatory communications (proxy, interims, etc.) Mutual Fund—Natural adjacencies Customer communications Transaction reporting (transaction stateme
Slide 11: Technology and Operations (SPS) adds ~$14B to our addressable market
Technology and Operations (SPS) adds ~$14B to our addressable market Securities and investment firms’ overall technology and operations spend is over $100 billion and growing at 5% Total addressable market ~ $14B fee revenue US Brokerage Processing Core equities and fixed income Adjacent markets $1.
Slide 12: Our strategy is to leverage our market role to expand our client relationships
Our strategy is to leverage our market role to expand our client relationships Grow core Reinforce role as the industry thought leader to lead e-transition Bank/Broker-Dealer Drive growth in adjacent markets through new organic or Communications acquired solutions Leverage unique data hub position a
Slide 13: Investor Communication Solutions (ICS)
Investor Communication Solutions (ICS) 12
Slide 14: ICS Unique Business Systems Processing Model
ICS Unique Business Systems Processing Model PROXY & INTERIMS PROCESSING OVERVIEW "THE PLUMBING" Equity and Mutual Fund Shareholders Street - side Processing Registered Processing BROADRIDGE Broker/Bank 1 Proxy Processing System Issuer 1 / Fund 1 Over 8 million lines of code and approximately 500,00
Slide 15: ICS Product and Client Revenue Overview
ICS Product and Client Revenue Overview We have a strong and diverse product …and we have deep and longstanding offering… client relationships FY11 Product Revenues FY11 Client Revenues (Based on who pays BR as agent) Proxy $334M (21%) Mutual Fund (28%) Corporate Interims Distribution Issuer $146M (
Slide 16: ICS-Bank/Broker-Dealer
ICS-Bank/Broker-Dealer What We Do: Competitive Advantages: Indispensible data hub with established Regulatory communications relationships with majority of BBDs – Beneficial proxy and interims for equities – Beneficial mutual fund compliance Strong market position and innovative communications leade
Slide 17: ICS-Mutual Funds
ICS-Mutual Funds What We Do: Competitive Advantages: Long-standing relationships across Mutual Fund trade processing in the industry defined contribution/trust space Serve every mutual fund and majority of (Matrix) bank/broker-dealers Data aggregation and analytics Unique data capabilities (Access D
Slide 18: ICS-Issuers
ICS-Issuers What We Do: Competitive Advantages: Beneficial proxy service Market Position – only full service provider of shareholder communications to all types of shareholders Registered shareholder communications – Registered proxy Unmatched Scale – able to leverage one billion plus – Interim comm
Slide 19: Global Technology and Operations Solutions (SPS)
Global Technology and Operations Solutions (SPS) 18
Slide 20: Securities Processing North America Market Share Overview
Securities Processing North America Market Share Overview Equity Processing Client Volume FY11 Product Revenues Broadridge ~30% Competitors M ~20% A In-house ~50% R K U.S. $ Fixed Income Client Volume E Equity (~75%) T Transactions, $239M Broadridge Non-transactions, $211M Fixed Income (~15%) ~55% T
Slide 21: SPS Top Clients for FY11
SPS Top 15 Clients for FY11 Top Equity Processing Fixed Income Clients Retail Institutional Processing Outsourcing Alliance Bernstein Bank of America/Merrill Lynch Barclays Capital Services BMO Nesbitt Burns CIBC World Markets Deutsche Bank E*Trade Group Edward Jones Jefferies & Company JP Morgan Ch
Slide 22: Broadridge processing behind the scenes
Broadridge processing behind the scenes Front-office Middle-office Back-office Client Transaction Validation & Clearing and Capture/ Asset Servicing Set-up Confirmation Settlement Execution Investor Investor initiates Confirmation of Securities are Dividends/interest is account set order to buy all
Slide 23: Technology and Operations (SPS)
Technology and Operations (SPS) What We Do: Competitive Advantages: Best-of-breed processing solutions Unique global technology platform – Leading global platform provides processing access to over 50 – Broad asset class coverage countries Broad suite of add-on or point solutions – Desk top applicat
Slide 24: Financial Overview
on — ——_ Financial Overview Bg Broadridge 23
Slide 25: We plan to deliver strong Total Shareholder Return (TSR) through FY14
We plan to deliver strong Total Shareholder Return (TSR) through FY14 Total Shareholder Return Operational Portfolio Financial strategy excellence Margin 35% payout 6–9% expansion that currently revenue from 13% to yields 2–3%, growth 17–19% plus buybacks Drive organic growth Leverage economies Gene
Slide 26: Since spin-off, we have focused on the drivers of TSR
Since spin-off, we have focused on the drivers of TSR TSR driver Key actions 1 Portfolio Drive profitable growth Spending >$300M annually on technology Introduced >20 new products since spin-off Made several strategic acquisitions Divested Ridge and pruned underperforming products 2 Operational Impr
Slide 27: Total expected annual growth of 5–8% through FY14 from recurring
Total expected annual growth of 5–8% through FY14 from recurring +~1% =6–9% +1–2% =5–8% +3–4% CAGR +1–2% ~$70M ~$2,600–2,900M ~$70–130M ~$2,500–2,800M ~$200-300M ~$70-130M ~$2,200M Return of mutual fund activity should provide additional opportunity FY11 Market Net new Tuck-in FY14 Event-driven FY14
Slide 28: Total EBIT margin improvement of ~400bps by FY14 before event-driven
Total EBIT margin improvement of ~400bps by FY14 before event-driven +2–3% =11–13% +6% =9–10% CAGR 3–4% 90–150bps 17.6-18.9% 250–280bps 16.7–17.4% 80–180bps 13.9–14.9% 13.1% Return of mutual fund activity should provide additional opportunity FY11 Economies FY14 Key initiatives FY14 Event-driven FY1
Slide 29: By FY14 cash generation planned to expand to $270-315M
By FY14 cash generation planned to expand to $270-315M, plus $20–40M event-driven $20–40M $290-355M $82-127M $270-315M ~$45M ~$143M FY11 Key Core FY14 Event-driven FY14 FCF FCF initiatives and operations FCF estimate estimate (Non- (Non-GAAP) restructuring (recurring (Non-GAAP) GAAP) incl. revenue)
Slide 30: Since spin-off, we have reduced “spin debt” and returned capital
Since spin-off, we have reduced “spin debt” and returned capital Use of cash FY07–11, $M 281 392 1,263 191 1,072 213 395 155 198 Cash flow Capital Free Cash Freed-up Buy- Dividends Tuck-in Debt Change 1 2 from expenditures Flow capital backs acquisi- reduction in cash operations & software (Non-GAAP
Slide 31: Our financial strategy is a key part of our value creation strategy
Our financial strategy is a key part of our value creation strategy 35% dividend payout, but expect no less than 64 cents per share annually subject to Board approval Organic growth with limited financial risk – Avoid significant balance sheet risk – Invest in projects delivering at least 20% IRR Tu
Slide 32: Appendix
Appendix me 31 Big Broadridge
Slide 33: Revenue Growth Drivers
Revenue Growth Drivers (Recurring) (d) (Non-GAAP IBM) 32
Slide 34: Revenues and Closed Sales FY05-FY12 Forecast
Revenues and Closed Sales FY05-FY12 Forecast ($ in millions) FY05-10 Forecast FY11-12 Recurring Fee Revenues FY05 FY06 FY07 FY08 FY09 FY10 CAGR FY11 FY12 Growth Rates ICS $ 444 $ 513 $ 519 $ 558 $ 583 $ 610 7% $ 650 $706-715 9-10% Growth 16% 1% 8% 4% 5% 7% SPS $ 459 $ 458 $ 509 $ 515 $ 537 $ 513 2%
Slide 35: FY12 Guidance from Continuing Operations
FY12 Guidance from Continuing Operations Revenue ($ in millions) Earnings FY11 FY12 Range FY11 FY12 Range Actual Low High Actual Low High $1,559 $1,707 $1,718 ICS $213 $254 $263 -7% 9% 10% Growth % / Margin % 13.7% 14.9% 15.3% $594 $656 $672 SPS $87 $96 $112 11% 10% 13% Growth % / Margin % 14.7% 14.
Slide 36: Cash Flow – FY11 Results and FY12 Forecast
Cash Flow – FY11 Results and FY12 Forecast Unaudited (in millions) Year Ended FY12 Range (a) June 2011 Low High Free Cash Flow (Non-GAAP) : Net earnings from continuing operations (GAAP) $ 172 $ 172 $ 184 Depreciation and amortization (includes other long-term assets) 72 95 100 Stock-based compensat
Slide 37: Reconciliation of Non-GAAP to GAAP Measures
Reconciliation of Non-GAAP to GAAP Measures EBIT Reconciliation FY11 FY12 Range ($ in millions) Actual Low High (a) & (b) EBIT (Non-GAAP / excluding IBM migration costs) $285 $323 $343 Margin % 13.1% 13.6% 14.3% Interest & Other ($8) ($17) ($17) Total EBT (excluding IBM migration costs) $276 $306 $3
Slide 38: ICS Key Segment Revenue Stats
ICS Key Segment Revenue Stats Fee Revenues FY09 FY10 FY11 Type $ in millions Proxy Equities $ 272.5 $ 276.5 $ 279.5 RC RC= Recurring Stock Record Position Growth -2% -1% 0% Pieces 288.0 293.2 283.8 2.50 ED= Event-Driven Mutual Funds $ 55.0 $ 149.7 $ 39.0 ED Pieces 73.5 204.2 51.4 Contests/Specials $
Slide 39: SPS and Outsourcing Key Segment Revenue Stats
SPS and Outsourcing Key Segment Revenue Stats FY09 FY10 FY11 $ in millions Equity All Revenues are Recurring Transaction-Based Equity Trades $ 258.5 $ 237.8 $ 238.8 Internal Trade Growth 6% -2% 3% Trade Volume (Average Trades per Day in '000) 1,602 1,542 1,572 Non-Transaction Other Equity Services $
Slide 40: Broadridge ICS Definitions
Broadridge ICS Definitions Proxy Equities - Refers to the proxy services we provide in connection with annual stockholder meetings for publicly traded corporate issuers. Annual meetings of public companies include shares held in "street name" (meaning that they are held of record by brokers or banks
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