Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (February 2015)
34 slides from Broadridge Financial Solutions's investor presentation, Feb 10, 2015
Slide 1: Investor Presentation • Broadridge Financial Solutions, Inc. February 2015
Investor Presentation • Broadridge Financial Solutions, Inc. February 2015 EEXHIBIT 99.1
Slide 2: Forward-Looking Statements
1 © 2014 | 1 Forward-Looking Statements The Broadridge’s February 2015 Investor 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 199
Slide 3: Broadridge Overview
2 © 2014 | 2 Broadridge Overview
Slide 4: Broadridge Has a Unique Franchise and Ubiquitous Presence in Financial Services
3 © 2014 | 3 Broadridge Has a Unique Franchise and Ubiquitous Presence in Financial Services 1. Top 10 global banks based on total revenues in equity, FICC and IBD per Coalition Research, 1Q’14 | Note: All Broadridge results and statistics are for FY14 unless otherwise stated of outstanding shares i
Slide 5: Broadridge Has Generated Top Quartile TSR of 13% Since Becoming Public
4 © 2014 | 4 Broadridge Has Generated Top Quartile TSR of 13% Since Becoming Public 0 50 100 150 200 250 300 2007 2008 2009 2010 2011 2012 2013 2014 Broadridge share price performance vs. S&P 5001 Broadridge S&P 500 TSR CAGR1 1. March 2007-June 2014 | Source: S&P Dow Jones Indices; S&P Capital IQ; B
Slide 6: We Connect Capital Markets Participants
5 © 2014 | 5 We Connect Capital Markets Participants 140,000,000 Individual Accounts (Globally) 240+ Retirement Service Providers ~800 Mutual Fund Families ~10,000 Corporate Issuers USA & Canada ~36,000 Global Corporate Issuers 1,100+ Banks & Brokers 6,700+ Institutional Investors 80,000+ Financial
Slide 7: Business Overview
Business Overview Bi Broadridge 6
Slide 8: ICS-Investor Communication Solutions
7 © 2014 | 7 ICS-Investor Communication Solutions What We Do: Banks/Broker-Dealers Solutions – Regulatory communications: beneficial proxies and mutual funds, interims and compliance – Customer communications: statements, trade confirmations and other reporting – Emerging and Acquired products: advi
Slide 9: Most Balanced Business
8 © 2014 | 8 Most Balanced Business Banks, Broker-Dealers and Issuers • Manage regulatory issues on behalf of our clients • Enhance product differentiation • Win transition to digital Support & Extend The Core • Advisor Solutions • Tax Managed Services • Securities Class Actions Drive Growth Busines
Slide 10: Strongest Growth Engine: Mutual Fund and Retirement Solutions
9 © 2014 | 9 Strongest Growth Engine Mutual Fund and Retirement Solutions • Leverage mutual fund and ETF database • Expand data capabilities to penetrate mutual funds • Offer revenue and expense solutions to asset management and capital markets firms Grow Data & Analytics • Grow trade processing sal
Slide 11: ICS has a Diversified Revenue Base
10 © 2014 | 10 Increase in electronic distribution reduces postage revenue and increases margins Primarily Postage ICS has a Diversified Revenue Base ICS is highly resilient due to our deep customer relationships with our Bank/Broker-Dealer clients By product1 Broad client base 1 Financial metrics a
Slide 12: GTO-Global Technology and Operations
11 © 2014 | 11 What We Do: Best-of-breed processing solutions – Leading global platform – Broad asset class coverage Broad suite of add-on or point solutions – Desk top applications used by brokers and traders – Workflow and reconciliation applications – Data aggregation and warehousing tools Indust
Slide 13: Turnaround Evolving into Growth: Global Technology and Operations
12 © 2014 | 12 Turnaround Evolving into Growth Global Technology and Operations • Right-size key businesses • Align pricing and productivity • Improve technology Drive Productivity & Investment • Wealth Management • Capital Markets (e.g. Financing and Liquidity) • Global (e.g. Accenture Post-Trade P
Slide 14: GTO Market Overview
13 © 2014 | 13 Fixed Income (~16%) Transaction-Based, $58M Non-transaction, $57M Equity (~84%) Transaction-Based, $133M Non-transaction, $448M GTO Market Overview By product1 Strong Market Position Clears and settles in over 70 countries Processes on average over $5 trillion in equity and fixed in
Slide 15: Business Model and Financial Story
14 © 2014 | 14 Business Model and Financial Story
Slide 16: Targeting Top Quartile Total Shareholder Return (TSR)
15 © 2014 | 15 Targeting Top Quartile Total Shareholder Return (TSR) • Drive organic growth in current markets • Exploit adjacencies 7–10% Recurring Fee 3-Year CAGR (FY14–FY17F) Sustainable Growth • Realize efficiencies • Increase operational leverage Margin Expansion from 16% to ~18% (ending FY17F)
Slide 17: Three Key Features That Enable Greater Control of Destiny
16 © 2014 | 16 Broadridge’s Business Has Three Key Features That Enable Greater Control of Destiny 98% client revenue retention rate Consistently high retention rate reflects the strength of our client relationships Expanding portfolio of growth products Growth products contributed ~25% of recurring
Slide 18: Strong Performance Provides Platform for Growth
17 © 2014 | FY11 FY14 FY11-FY14 CAGR Total Revenue $2.2B $2.6B 6% Recurring Fee Revenue $1.3B $1.6B 8% EBIT $285M $420M 14% EBIT Margin 13.1% 16.4% 110 bps p.a. Recurring Revenue Closed Sales $113M $127M 4% Strong Performance Provides Platform for Growth Note: EBIT and EBIT Margin (Non-GAAP) 17
Slide 19: Revenue Growth History and Objectives
18 © 2014 | 18 FY11–FY14 Recurring Fee Revenue Net New Business 5% Internal Growth 1% Acquisitions 2% 8% Total Revenue Recurring Fee 5% Event-Driven 0% Distribution/Other 1% 6% FY14–FY17F Recurring Fee Revenue Net New Business 5%–7% Internal Growth 0%–1% Acquisitions ~2% 7%–10% Total Revenue Recurri
Slide 20: Improved Scale and Continued Growth Lead to Consistent Double Digit Earnings Growth
19 © 2014 | 19 FY17F $188M $279M FY11 FY14 Improved Scale and Continued Growth Lead to Consistent Double Digit Earnings Growth Note: Adjusted Net Earnings (Non-GAAP)
Slide 21: Our Capital Stewardship Priorities Over the Next 3 Years
20 © 2014 | 20 Pr iorit y Our Capital Stewardship Priorities Over the Next 3 Years Committed to a strong dividend Targeting minimum 45% of net earnings Continual tuck-in acquisitions to drive growth Selectively targeting about $400- 600M Share repurchases Increase targeted levels of share repurchase
Slide 22: Acquisition Track Record Is Strong
21 © 2014 | 21 Acquisition Track Record Is Strong Note: Investment amounts reflect cash paid for acquisitions (net of cash acquired) Our acquisitions portfolio is creating significant value for shareholders • Portfolio IRR tracking to 20%+ • Contributed ~$220M recurring fee revenue and ~$75M EBITDA
Slide 23: Continued Strong Free Cash Flows and Greater Use of Balance Sheet
22 © 2014 | 22 $0.4B $0.6B $0.3B $1.1B $0.4B FY15 Beginning Cash Free Cash Flows Dividend @45% Regulatory and Int'l Cash Capacity for div>45%, tuck-ins, share repurchases $0.6B $1.2B Lever to 2X1 1. Additional capital from moving Adjusted Debt/EBITDAR to 2:1 Continued Strong Free Cash Flows and Grea
Slide 24: Performance Objectives Target Top Quartile TSR
23 © 2014 | 23 Performance Objectives Target Top Quartile TSR FY14 – FY17F Recurring revenue growth 7%–10% Total revenue growth 5%–7% Earnings growth 9%–11% Dividend yield and share repurchases 3%–4% Target TSR Top quartile1 1 Based on BCG study of likely top quartile performance for the same time p
Slide 25: Industry Trends and Market Opportunity
24 © 2014 | 24 Industry Trends and Market Opportunity
Slide 26: We Have a $24B Market Opportunity
25 © 2014 | 25 Data & Analytics Network and data assets that enable clients to create unique value Mutualization Strong drive to standardize duplicative, non-differentiating industry capabilities Digitization Digital technologies that enable lower cost, higher touch interactions Key Market Trends We
Slide 27: Our Industry Is Undergoing Significant Evolution
26 © 2014 | 26 Our Industry Is Undergoing Significant Evolution We are uniquely positioned to take advantage of new opportunities created by secular trends Regulatory environment driving mutualization of non-differentiating costs and capabilities Mutualization 1 Digital technologies reducing print c
Slide 28: Regulatory Pressure is Driving Our Clients to Mutualize Capabilities
27 © 2014 | 27 0 5 10 15 Effect of Recent and Future Regulation on Return on Equity (Pre-regulation to 2020) Regulatory Pressure is Driving Our Clients to Mutualize Capabilities Sources: BCG Global Risk report, Nov 2013; BCG Capital Markets report, Apr 2013 & May 2014; McKinsey Capital Markets repor
Slide 29: Broadridge Investment Thesis
28 © 2014 | 28 Broadridge Investment Thesis
Slide 30: Broadridge's Investment Thesis
29 © 2014 | 29 Broadridge’s Investment Thesis Resilient business model Proven track record delivering top quartile TSR Large market opportunity aligned with powerful industry trends Experienced management and highly engaged associate team focused on delivering strong TSR Track record driving growth
Slide 31: Appendix
Bi Broadridge Appendix
Slide 32: Definitions
31 © 2014 | 31 Definitions Acquisition Amortization and Other Costs represent amortization charges associated with intangible asset values as well as other deal costs associated with the Company’s acquisitions. Adjusted Debt/EBITDAR ratio is calculated as (Debt + 8x Rent Expense) / (EBITDA + Rent Ex
Slide 33: Non-GAAP to GAAP Reconciliations: EBIT, EBIT Margins and Earnings
32 © 2014 | 32 Non-GAAP to GAAP Reconciliations EBIT, EBIT Margins and Earnings Broadridge Financial Solutions, Inc. Reconciliation of Non-GAAP to GAAP Measures EBIT, EBIT Margins and Earnings Reconciliation (in $ millions) FY2011 FY2014 EBIT from continuing operations (Non-GAAP) 285 420 Acquisition
Slide 34: Non-GAAP to GAAP Reconciliations: Free Cash Flows
33 © 2014 | 33 Non-GAAP to GAAP Reconciliations Free Cash Flows Since Becoming a Public Company Broadridge Financial Solutions Reconciliation of Non-GAAP to GAAP Measures Free Cash Flows Reconciliation Q42007 to FY2014 (in $ millions) Q42007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Total Net
Broadridge Financial Solutions — Investor Presentation (February 2015) on 6ix