Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — J.P. Morgan Ultimate Services Conference 2010
32 slides from Broadridge Financial Solutions's conference presentation, Nov 9, 2010
Slide 1: J.P. Morgan Ultimate Services Conference Presentation
Exhibit 99.1 Broadridge Financial Solutions, Inc. J.P. Morgan Ultimate Services Conference Presentation Richard J. Daly Chief Executive Officer November 2010
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: Use of Material Contained Herein
Use of Material Contained Herein The information contained in this presentation is being provided for your convenience and information only. This information is accurate as of the date of its initial presentation. If you plan to use this information for any purpose, verification of its continued acc
Slide 4: Agenda
Agenda Broadridge Overview and Summary Business Overview Business Expansion Strategy Overview Financial Overview Conclusion 4
Slide 5: Broadridge Investment Thesis
Broadridge Investment Thesis Market leader with high Dependable mid-single-digit client retention rates revenue growth business driven by product innovation Generate Approximately 80% very strong and Scalable business model with core business in recurring annual revenues highly predictable generatin
Slide 6: Broadridge Free Cash Flow & Capital Allocation
Broadridge Free Cash Flow & Capital Allocation (1) Free Cash Flow (Non-GAAP) ($ in millions) •Doubled annual dividend $325 amount from $0.28 to $0.56 Dividends per share for FY10, and further increased annual dividend amount 7% to $251 $0.60 per share for FY11 $290 $252 •Repurchased 20.2 million Hig
Slide 7: Broadridge Mission
Broadridge Mission • Enable the financial services industry to achieve higher levels of performance by allowing firms to focus on their core business Increase • Help clients manage their regulatory compliance risk by Partner with Performance improving clients’ processing, Financial Institutions comm
Slide 8: Integrated Solutions Spanning the Investment Lifecycle
Integrated Solutions Spanning the Investment Lifecycle Across the Investment Trade Processing Asset investment Decision & Servicing lifecycle... (Pre-Trade) Books and Records (Post-Trade) ...Broadridge Welcome Kits New Accounts Processing Confirms Reporting Archival Proxy Statements Fulfillment touc
Slide 9: Resilient and Predictable Business Model
Resilient and Predictable Business Model A Market Leader Revenue Drivers with Recurring Revenue High Retention Rates Shareholder Positions Investor Communication Recurring Solutions Revenue Images and Pieces (~80%) Processed Processing Fees Event- (Trades Per Day) Securities Processing Driven Revenu
Slide 10: Business is Resilient in Changing Markets
Business is Resilient in Changing Markets Broadridge Total Revenues Dow Jones Industrial Average 14,000 $2,200 13,000 Internet Bubble $2,000 Impact Financial Crisis 12,000 $1,800 Decimalization Stock Market of Trades Rebounds 11,000 $1,600 10,000 $1,400 9,000 $1,200 8,000 $1,000 FY02 FY03 FY04 FY05
Slide 11: Revenue Growth Drivers
Revenue Growth Drivers Average historical growth of 6%, including a severe down Historical (FY05-FY10) Actual Forecast market cycle CAGR FY10 FY11 In high growth economic cycles revenue growth averages 10-12% and 0-(3)% in severe down markets 6% Total Revenue Growth 7% 1-4% Historical sales growth c
Slide 12: Business Expansion Focus
Business Expansion Focus Closed Sales • Strong and growing pipeline with large (Fee Only, $ in millions) Closed opportunities in all segments Recurring (RC) Event-Driven (ED) Sales • Winning a meaningful percentage of each year’s market-driven sales activity High: $215 • Growth in recurring closed s
Slide 13: This is Broadridge
This is Broadridge FY10 Segment Revenues FY10 Segment Margins We are a market leader in processing and Securities distributing shareholder communications, Securities and provider of choice for mission-critical Processing Processing securities processing solutions $536M EBIT $99M Over 40 years of exp
Slide 14: ICS Unique Business Systems Processing Model
ICS Unique Business Systems Processing Model Proxy and Interim processing system is the “plumbing” supporting the voting process for corporate governance (1) Represents Broadridge’s estimated total number of brokerage firms and banks in the U.S. and international markets (2) Represents Broadridge’s
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 FY10 Product Revenues FY10 Client Revenues Proxy $447M (27%) Distribution Bank/Broker- $781M (47%) Dealer Primarily $1,474M (88%) Interims Mutual Fund Posta
Slide 16: ICS Market Share Overview by Products and Markets
ICS Market Share Overview by Products and Markets We have deep penetration in our core business and clients, yet large potential to grow market share Product depth and relationships with Bank/Broker-Dealers provide high client retention with large potential upside 16
Slide 17: Securities Processing North America Market Share Overview
Securities Processing North America Market Share Overview(1) Equity Processing Client Volume High client retention rates Broadridge Competitors (~98%) with growth opportunity FY10 Product Revenues ~30% ~20% During recent market turmoil, BR continued to close sales with major clients In-house ~50% M
Slide 18: Securities Processing Solutions Top Clients for FY10
Securities Processing Solutions Top 15 Clients for FY10 Broadridge has fared well Equity Processing Fixed during the recent industry Top Income Outsourcing consolidations and financial Clients Retail Institutional Processing crisis Alliance Bernstein The top 15 SPS clients generate Bank of America/M
Slide 19: Business Expansion Strategy
Business Expansion Strategy Focused on core processing and communication businesses and making investments in business that leverage these strong industry positions Be Indispensable! Vision We enable the financial services industry to achieve superior levels of performance through our passion todeli
Slide 20: Financial Performance is Driven by Recurring Revenues
Financial Performance is Driven by Recurring Revenues Net Revenues Earnings Before Interest & Taxes (1) ($ in millions) ($ in millions) Recurring Event-Driven $2,209 $364 $1,869 $521 $352 $352 $479 $418 $483 $347 $365 $310 $1,652 $1,655 $1,688 $1,504 $1,584 % % Revenue Margins 81% 77% 78% 80% 76% 16
Slide 21: Broadridge FY11 Guidance from Continuing Operations
Broadridge FY11 Guidance from Continuing Operations as of November 4, 2010 Revenue ($ in millions) Earnings FY10 FY11 Range FY10 FY11 Range Actual Low High Actual Low High $1,670 $1,641 $1,682 ICS $273 $271 $284 9% -2% 1% Growth % / Margin % 16.3% 16.5% 16.9% $536 $589 $615 SPS $99 $80 $96 -4% 10% 1
Slide 22: Focused on Capital Stewardship and Long-Term Shareholder Value
Focused on Capital Stewardship and Long-Term Shareholder Value • Capitalize on fundamentals driving long-term market growth Mid-single-digit • Invest in and drive new sales of existing solutions organic revenue growth • Rollout new solutions to enable client efficiencies and facilitate client growth
Slide 23: Summary
Summary Broadridge is a dependable mid-single-digit revenue grower with a scalable business model providing opportunity for margin expansion We expect to continue to invest in our existing businesses and execute strategic acquisitions to generate mid to high single- digit average revenue growth We e
Slide 24: Appendix
Ce ee Appendix Appendix Ba Broadridge 24
Slide 25: Regulatory Update
Regulatory Update The Securities and Exchange Commission (“SEC”) issued its Concept Release on the U.S. Proxy System on July 14, 2010 Broadridge submitted comments on the following topics (1): Vote accuracy • Accuracy is critical to the U.S. proxy system • Vote accuracy, process integrityand transpa
Slide 26: Free Cash Flow (Non-GAAP) – FY10 Actual and FY11 Forecast
Free Cash Flow (Non-GAAP) – FY10 Actual and FY11 Forecast as of November 4, 2010 Unaudited (In millions) FY11 Range (a) FY10 Low High Free Cash Flow (Non-GAAP) : Net earnings from continuing operations per GAAP $ 225 $ 201 $ 212 Depreciation and amortization (includes other LT assets) 57 65 75 Stock
Slide 27: Historical Free Cash Flow Non-GAAP to GAAP Reconciliation
Historical Free Cash Flow Non-GAAP to GAAP Reconciliation Reconciliation of Non-GAAP to GAAP Measures Free Cash Flow (Non-GAAP) ($ in millions) (Unaudited) FY07 FY08 FY09 FY10 FY11 Range Actual Actual Actual Actual Low High Net cash flow provided by continuing operating activities (GAAP) 306 308 277
Slide 28: Reconciliation of Non-GAAP to GAAP Measures
Reconciliation of Non-GAAP to GAAP Measures EBIT Reconciliation FY10 FY11 Range (a) ($ in millions) Actual Low High EBIT (Non-GAAP)* $352 $327 $350 Margin % 17.0% 14.6% 15.2% Interest & Other ($0) ($11) ($11) Total EBT (GAAP) $342 $316 $339 Margin % 15.5% 14.1% 14.7% EPS Reconciliation Low High Dilu
Slide 29: Closed Sales to Revenue Contribution
Closed Sales to Revenue Contribution ($ in millions) Forecast Closed Sales Stats: Recurring FY09 FY10 FY11 Recurring ICS $55 $80 $35-50 • Both ICS and SPS trending toward ~ Revenue Contribution Year 1-3 55% 35% 10% 50% 40% 10% 35% 40% 25% longer revenue recognition cycle • Larger strategic deals cou
Slide 30: Broadridge ICS Key Statistics
Broadridge ICS Key Statistics $ in millions RC= Recurring Fee Revenues (1) FY08 FY09 FY10 Type ED= Event-Driven Proxy Equities (2) $ 259.8 $ 272.5 $ 276.5 RC Stock Record Position Growth 2% -2% -1% Pieces 297.8 288.0 293.2 Mutual Funds $ 92.1 $ 55.0 $ 149.7 ED Pieces 176.6 73.5 204.2 Contests/Specia
Slide 31: Broadridge SPS Key Statistics
Broadridge SPS Key Statistics $ in millions FY08 (3) FY09 FY10 Type RC= Recurring ED= Event-Driven Equity Transaction-Based Equity Trades $ 259.8 $ 258.5 $ 237.8 RC Internal Trade Growth 12% 6% -2% (1) (2) Trade Volume (Average Trades per Day in '000) 1,559 1,602 1,542 Non-Transaction Other Equity S
Slide 32: 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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