Broadridge Financial Solutions, Inc. · NYSE:BR

Broadridge Financial Solutions — Investor Presentation (December 2020)

54 slides from Broadridge Financial Solutions's investor presentation, Dec 16, 2020

  1. Slide 1: Q2 FY21 Investor Presentation

    0© 2020 | A s o f D e c e m b e r 1 0 , 2 0 2 0 Q2 FY21 Investor Presentation EXHIBIT 99.1

  2. Slide 2: Forward-looking statements

    1© 2020 | 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 Act of 1995. Stat

  3. Slide 3: Use of Non-GAAP Financial Measures

    2© 2020 | 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 circumstances, results have been pr

  4. Slide 4: Positioned for long-term, sustainable growth and top quartile TSR

    3© 2020 | Broadridge is positioned for long-term, sustainable growth and continued top quartile TSR A global Fintech leader addressing a large and growing market Balanced capital allocation to drive shareholder return Three franchise businesses executing on clear growth strategies

  5. Slide 5: Broadridge is a global Fintech leader

    4© 2020 | Broadridge is a global Fintech leader Managing governance process for more than 80% of U.S. shares Powering $10T per day in fixed income and equity trades Distributing more than 6B critical communications each year 80% SHARES $10 TRILLION 6 BILLION Broadridge powers the critical infrastruc

  6. Slide 6: Strong track record of delivering growth and value

    5© 2020 | We have a strong track record of delivering growth and value $1,642 $1,742 $1,897 $2,452 $2,612 $2,760 $3,036 $2.25 $2.47 $2.73 $3.13 $4.19 $4.66 $5.03 0 1 2 3 4 5 6 0 500 1000 1500 2000 2500 3000 3500 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Recurring revenue Adjusted EPS $M excep

  7. Slide 7: $46 billion and growing market opportunity

    6© 2020 | Technology and operations spend by global banks is over $190 Billion Broadridge has a $46 billion and growing market opportunity $46B CURRENT OPPORTUNITY $19B GOVERNANCE $15B CAPITAL MARKETS $12B WEALTH

  8. Slide 8: Committed to ongoing investment supporting future growth

    7© 2020 | • Building new products like LTX • Enhancing key growth products (e.g. VSM offering), and to meet new regulations (e.g. SRD II solution) • Adding digital capabilities PRODUCT PLATFORM PEOPLE We are committed to ongoing investment that supports future growth • Platform development including

  9. Slide 9: Recurring revenue is broad based and growing

    8© 2020 | $1.9B RECURRING REVENUE $1.2B RECURRING REVENUE Our recurring revenue is broad based and growing across business segments and product categories INVESTOR COMMUNICATION SOLUTIONS GLOBAL TECHNOLOGY & OPERATIONS $0.2B $1.5B $1.9B Regulatory Customer Communications Issuer Wealth & Investment M

  10. Slide 10: Segment Strategy: Investor Communication Solutions

    9© 2020 | Segment Strategy: Investor Communication Solutions

  11. Slide 11: ICS Strategy: Extend our Governance franchise

    10© 2020 | ICS Strategy: We will extend our strong and growing Governance franchise Grow End-to-End Issuer Solutions Build Data-Driven Fund Solutions Drive Next-Gen Regulatory Transform Omni-Channel Communications Leading position at the heart of a powerful governance network Recurring revenues of $

  12. Slide 12: Network linking investors, asset managers and issuers

    11© 2020 | 170M+ Retail shareholder accounts 120,000+ Institutional shareholders 30,000+ Mutual funds and ETFs ISSUERS OF SECURITIES SHAREHOLDERS 200,000+ Financial advisors 9,000+ Corporate issuers REGULATORY BODIES & TRADE ASSOCIATIONS 1,000+ Banks and broker-dealers Our network links investors, a

  13. Slide 13: ICS segment product breakdown

    12© 2020 | Regulatory 8% Data-Driven Fund Solutions 12% Issuer Customer Communications 14% -2% Investor Communication Solutions (“ICS”) Segment product breakdown 6% TOTAL ICS 3YR CAGR $0.2B $1.5B $1.9B Regulatory Customer Communications Issuer Data-Driven Fund Solutions $157 M $792M $573M $339M ICS

  14. Slide 14: Recurring revenue benefits from position growth

    13© 2020 | Recurring revenue benefits from the tailwind in position growth… TOTAL U.S. EQUITY AND U.S. MUTUAL FUND & ETF POSITIONS FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 U.S. Equity Positions U.S. Mutual Fund & ETF Positions 8% 10YR CAGR 6% 10YR CAGR

  15. Slide 15: Event-driven revenue supported by position growth

    14© 2020 | Which $203 $200 $180 $256 $135 $132 $156 $156 $173 $199 $219 $284 $244 $178 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 ($M) Position growth also supports our high quality but more cyclical event-driven revenue FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY07 - FY13 $180M AVERAGE FY14 – FY20 ($M) FY14

  16. Slide 16: Regulatory Update

    15© 2020 | Regulatory Update Rule 30e-3 “Notice-and- Access” • Mutual funds to opt-in shareholders to receive “Notice-and-Access” beginning in January of 2021 • Modestly net positive (higher recurring revenue, lower distribution revenues) • Will be superseded by 498B upon implementation of streamlin

  17. Slide 17: Segment Strategy: Global Technology & Operations

    16© 2020 | Segment Strategy: Global Technology & Operations

  18. Slide 18: GTO Strategy: Grow Capital Markets and Wealth

    17© 2020 | GTO Strategy: Grow Capital Markets franchise and continue building next-gen Wealth & Investment Management franchise 1. In equity and fixed income trades processed on average per day Capital Markets Wealth & Investment Management • Leading provider of back office capabilities • Strong set

  19. Slide 19: GTO segment product breakdown

    18© 2020 | Capital Markets Wealth & Investment Management 8% 14% Global Technology & Operations (“GTO”) Segment product breakdown 11% TOTAL GTO 3YR CAGR Wealth & Investment Management Capital Markets $650M $524M $1.2B RECURRING REVENUE GTO PRODUCT CATEGORIES FY17-FY20 THREE YEAR CAGR All financial m

  20. Slide 20: Broadridge Business Model

    19© 2020 | Broadridge Business Model

  21. Slide 21: Financial model focused on steady revenue growth

    20© 2020 | The Broadridge financial model is focused on driving steady revenue growth and consistent earnings per share growth, generated by: Continued margin expansion from our scale and operational efficiencies Balanced capital allocation leveraging our strong free cash flow businesses Investments

  22. Slide 22: Long runway for growth and high-quality revenue mix

    21© 2020 | $46B ADDRESSABLE MARKET $46B $1B $2B $3B $4B Total Addressable Market Amounts may not sum due to rounding We have a long runway for growth and a high-quality revenue mix… 42% FY17 FY20 REVENUE MIX 65% RECURRING REVENUE $4.5B TOTAL REVENUE $4.1B -3% 7% 58% 65% $3.0B 35% $3B FY20 ■ Recurrin

  23. Slide 23: Long history of expanding margins

    22© 2020 | 80 bps annual FY17-20 average Adjusted Operating Income margin expansion Efficiency Contributions from business reengineering and internal growth Digital Margin expansion due to mix shift toward digital M&A Primarily weighted to early-stage businesses Investment Strategic investment align

  24. Slide 24: Strong free cash flow supports balanced capital allocation

    23© 2020 | 119% 109% 106% 118% 98% 85% FY15 FY16 FY27 FY18 FY19 FY20 1. Calculated as Free Cash Flow / Adjusted Net Earnings 2. FY20 drops below 100% Cash Flow Yield due to significant increases in net Client platform spend, defined as net cash spent on new client conversions, including development

  25. Slide 25: Targeted acquisitions to support growth

    24© 2020 | 4% 50% 42% 3% $802M M&A SPEND1 19% PORTFOLIO IRR3 10% AVERAGE REVENUE GROWTH2 Capital Markets WealthData-Driven Fund Solutions Issuer TARGETED M&A FY18-FY20 …and allows us to make targeted acquisitions to support growth Note: Amounts may not sum due to rounding 1. For acquisitions from FY

  26. Slide 26: Steady earnings resulting in top quartile TSR

    25© 2020 | This simple financial model has produced steady and consistent earnings over time resulting in top quartile TSR growth FY14 - FY17 (CAGR) FY17 - FY20 (CAGR) Organic Recurring revenue growth1 5% 5% Recurring revenue growth 7%2 7% Adj. Operating Income Margin (bps/ year) 532 80 Adj. Earning

  27. Slide 27: New three-year growth objectives FY20-FY23

    26© 2020 | NEW 3yr Growth Objectives (CAGR) FY20 – FY23 Organic Recurring revenue growth 5-7% Recurring revenue growth 7-9% Adj. Operating Income Margin expansion (bps/year) 50+ Adj. Earnings per Share Growth 8-12% We set new three-year growth objectives for FY20 – FY23 at Investor Day 2020. This fi

  28. Slide 28: Guidance reaffirmed FY21

    27© 2020 | Guidance – Reaffirmed FY211 Recurring revenue growth 3-6% Total revenue growth 1-4% Adj. Operating Income Margin expansion (bps) ~100 Closed Sales $190–235M Adj. Earnings per Share Growth 6-10% 1. Fiscal year 2021 Guidance as of December 10, 2020 We reaffirmed our full-year guidance for F

  29. Slide 29: First Quarter Fiscal 2021 Results

    28© 2020 | First Quarter Fiscal 2021 Results

  30. Slide 30: Strong First Quarter Fiscal Year 2021 Results

    29© 2020 | Strong First Quarter Fiscal Year 2021 Results ▪ Strong First Quarter Revenue Growth • 8% recurring revenue growth and total revenue growth of 7% • Event-driven revenues returned to normalized level • Recurring revenue growth driven by onboarding of new sales, stock and interim position gr

  31. Slide 31: First Quarter Fiscal 2021 ICS Results

    30© 2020 | Total Revenues $83 $88 $171 $173 $65 $74 $30 $40 FY20 Equity Proxy FY21 Other ICS MF & ETF Interims Customer Comms. $375 $349 +7% Recurring Revenues $313 $332 $349 $375 $703 $40 FY21FY20 $46 Recurring Distribution Event $753 +7% Highlights • Strong 7% recurring revenue growth driven by Ne

  32. Slide 32: First Quarter Fiscal 2021 GTO Results

    31© 2020 | Highlights • New client onboardings remain key driver of strong 8% recurring revenue growth • Equity trading volumes continue to lap period of lower volatility, which should continue through 2Q • Benefit of trading volumes offset by comparison to significant license sale in first quarter

  33. Slide 33: Strong first quarter increases confidence in outlook

    32© 2020 | ▪ Strong first quarter increases confidence in full year outlook • Benefiting from increased equity, mutual fund, and ETF position growth • Sustained elevated trading volatility in line with expectations • Strong and early execution on planned cost actions • Continued sales momentum ▪ Wel

  34. Slide 34: Financial Highlights

    33© 2020 | ▪ Record first quarter recurring revenue and Adjusted EPS ▪ Event-driven revenues returned to normalized level versus a weaker first quarter fiscal year 2020 ▪ Strong execution on cost alignment initiative coupled with top-line growth helped drive record earnings, and positions us for inc

  35. Slide 35: First Quarter 2021 Revenue Growth Drivers

    34© 2020 | First Quarter 2021 Recurring revenues grew 8% to $671 million First Quarter 2021 Total revenues grew 7% to $1,017 million $576M $623M Note: Amounts may not sum due to rounding. +8%+7 pts +3 pts 0 pt (2) pts $1,211M $623M $1,362M $671M +5 pts +1 pt +2 pts 0 pt +7% $1,017M $949M $949M First

  36. Slide 36: First Quarter 2021 Operating Income and EPS

    35© 2020 | Dollars in millions, except per share amounts Year-over-Year Change in Operating Income and Adjusted Operating Income Year-over-Year Change in EPS and Adjusted EPS Adjusted Operating Income and Adjusted EPS growth driven by strong recurring and event- driven revenue growth and cost realig

  37. Slide 37: New Recurring revenue reporting categories

    36© 2020 | New Recurring revenue reporting categories As of December 10, 2020

  38. Slide 38: New Recurring revenue reporting categories

    37© 2020 | New Recurring revenue reporting categories • Beginning with the second quarter of fiscal year 2021, Broadridge will change its product line reporting for Recurring revenue categories from the current format as disclosed in its 2020 Annual Report in Note 3 “Revenue Recognition” to the Cons

  39. Slide 39: Supplemental Reporting Detail - Product Line Reporting

    38© 2020 | Note: Amounts may not sum due to rounding. Supplemental Reporting Detail - Product Line Reporting

  40. Slide 40: Recurring revenue reporting categories: FY17-FY20

    39© 2020 | Recurring revenue reporting categories: FY17 – FY20 Historical Reporting View RECURRING REVENUE REPORTING CATEGORIES GROWTH FY17 FY18 FY19 FY20 3YR CAGR Equities and other $ 729.8 $ 803.6 $ 831.7 $ 996.2 11% Fixed income $ 139.3 $ 154.3 $ 164.6 $ 178.0 9% Total GTO Recurring fee revenues

  41. Slide 41: Recurring revenue reporting categories: FY20 by quarter

    40© 2020 | Recurring revenue reporting categories: FY20 by quarter, and Q1 FY21 Historical Reporting View RECURRING REVENUE REPORTING CATEGORIES Q1'FY20 Q2'FY20 Q3'FY20 Q4'FY20 FY20 Q1'FY21 Equities and other $ 230.9 $ 237.2 $ 259.4 $ 268.8 $ 996.2 $ 252.4 Fixed income $ 43.1 $ 43.7 $ 46.1 $ 45.1 $

  42. Slide 42: Appendix

    Appendix oe es Broadridge:

  43. Slide 43: Key Performance Indicators

    42© 2020 | Key Performance Indicators

  44. Slide 44: Key Performance Indicators

    43© 2020 | Key Performance Indicators Management focuses on a variety of key indicators to plan, measure and evaluate the Company’s business and financial performance. These performance indicators include Revenue and Recurring fee revenue, as well as Non-GAAP measures of Adjusted Operating income, A

  45. Slide 45: Explanation of Non-GAAP Measures and Reconciliation

    44© 2020 | Explanation of Non-GAAP Measures and Reconciliation of GAAP to Non-GAAP Measures

  46. Slide 46: Non-GAAP Measures

    45© 2020 | Non-GAAP Measures Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Earnings and Adjusted Earnings Per Share These Non-GAAP measures reflect Operating income, Operating income margin, Net earnings, and Diluted earnings per share, each as adjusted to exclude the imp

  47. Slide 47: Reconciliation of GAAP to Non-GAAP Measures

    46© 2020 | Reconciliation of GAAP to Non-GAAP Measures Note: Amounts may not sum due to rounding. Dollars in millions Three Months Ended September 30, 2020 2019 Operating income (GAAP) $ 78.6 $ 73.1 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 32.3 28.1 Acqui

  48. Slide 48: Reconciliation of GAAP to Non-GAAP Measures (continued)

    47© 2020 | Note: Amounts may not sum due to rounding. Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (a) Calculated using the GAAP effective tax rate, adjusted to exclude $9.3 million and $5.7 million of excess tax benefits associated with stock-based compensation for the three months ended

  49. Slide 49: Reconciliation of GAAP to Non-GAAP Measures: Operating Income

    48© 2020 | Reconciliation of GAAP to Non-GAAP Measures FISCAL YEAR Dollars in millions 2020 2019 2018 2017 Operating income (GAAP) $624.9 $652.7 $598.1 $534.0 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 122.9 87.4 81.4 72.6 Acquisition and Integration Costs

  50. Slide 50: Reconciliation of GAAP to Non-GAAP Measures: Net Earnings

    49© 2020 | Reconciliation of GAAP to Non-GAAP Measures FISCAL YEAR Dollars in millions 2020 2019 2018 2017 Net Earnings (GAAP) $462.5 $482.1 $427.9 $326.8 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 122.9 87.4 81.4 72.6 Acquisition and Integration Costs 12.5

  51. Slide 51: Reconciliation of GAAP to Non-GAAP Measures: EPS

    50© 2020 | Reconciliation of GAAP to Non-GAAP Measures FISCAL YEAR Dollars in millions, except per share amounts 2020 2019 2018 2017 Diluted earning per share (GAAP) $3.95 $4.06 $3.56 $2.70 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 1.05 0.74 0.68 0.60 Acqu

  52. Slide 52: Reconciliation of GAAP to Non-GAAP Measures: Free Cash Flow

    51© 2020 | Reconciliation of GAAP to Non-GAAP Measures FISCAL YEAR Dollars in millions 2020 2019 2018 2017 2016 2015 2014 Net cash flows provided by operating activities (GAAP) $598.2 $617.0 $693.6 $515.9 $437.7 $431.4 $387.7 Capital expenditures and Software purchases and capitalized internal use s

  53. Slide 53: Fiscal Year 2021 Guidance Reconciliation

    52© 2020 | FISCAL YEAR 2021 Adjusted Earnings Per Share Growth and Adjusted Operating Income Margin FY21 Adjusted Earnings Per Share Growth Rate (a) Diluted earnings per share - GAAP 5 - 12% growth Adjusted earnings per share - Non-GAAP 6 - 10% growth FY21 Adjusted Operating Income Margin (b) Operat

  54. Slide 54: Broadridge Investor Relations Contacts

    53© 2020 | Elsa Ballard Tel: 212-973-6197 Email: Elsa.Ballard@Broadridge.com W. Edings Thibault Tel: 516-472-5129 Email: Edings.Thibault@Broadridge.com Broadridge Investor Relations Contacts

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