Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Investor Presentation (March 2011)
39 slides from Broadridge Financial Solutions's investor presentation, Mar 22, 2011
Slide 1: Investor Presentation
Exhibit 99.1 Broadridge Financial Solutions, Inc. Investor Presentation © 2011 Broadridge Financial Solutions, Inc. Broadridge and the Broadridge logo are registered trademarks of Broadridge Financial Solutions, Inc. March 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: 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 Free Cash Flow (1) (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 $0.60 per share for FY11 $268 $262 $247 •Repurchased 20.4 million Sto
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 Solutions Recurring Revenue Images and Pieces (~80%) Processed Processing Fees Event (Trades Per Day) Securities Processing Driven Solutio
Slide 10: Business is Resilient in Changing Markets
Business is Resilient in Changing Markets BroadridgeTotal 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 F
Slide 11: 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 12: Revenue Growth Drivers
Revenue Growth Drivers Historical CAGR Actual Forecast (FY05-FY10) FY10 FY11 6% Total Revenue Growth 7% (2)-(1)% 4% Closed Sales (Recurring) 4% 3% (2)% Client Losses (2)% (1)% 2% Net New Business 2% 2% 3% Internal Growth (a) (2)% 0% 0% Acq/FX/Other 2% 5-6% 5% Total Recurring 2% 7-8% 1% Event-Driven
Slide 13: 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 •Growth in recurring closed sales >25% CAGR
Slide 14: Recurring Fee Revenues and Closed Sales FY05-FY11
Recurring Fee Revenues and Closed Sales FY05-FY11 $ in millions Total Recurring Fee Revenues $150 $ in millions Recurring Closed Sales $1,500 +25% +1% $125 +16% $1,284 + 5% +30% $119 $110-150 +5% to $1,301 (32)% Recurring $1,250 +7% Growth +19% Closed Sales +9% $1,133 Acquisitions Rate Growth $1,117
Slide 15: Event-Driven Fee and Distribution Revenues FY05-FY11
Event-Driven Fee and Distribution Revenues FY05-FY11 $ in millions Total Event-Driven Fee Revenues $300 $292 $1,000 $ in millions Total Distribution Revenues $250 $241 $821 $808 $237 $781 $216 $757 $750 $730 Distribution ~$700 $200 $242 $242 Revenues $186 $649 $201 $227 $178 Relatedto: $175 ~ $160 C
Slide 16: 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 17: 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 18: 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 18
Slide 19: Matrix Acquisition
Matrix Acquisition Matrix Processing Model TPA Client #1 Matrix Has Long-Term TPA Client #2 Contractual Relationships with Mutual Fund (MF) Families TPA Client #3 and >130 TPA Clients with $30B Provides Connectivity In Assets Under Admin. (AUA) to >800 ETFs (Exchange Traded Funds) Matrix Provides Mu
Slide 20: Matrix Value Proposition
Matrix Value Proposition Provides Broadridge with an entry into the attractive post-trade mutual fund processing market Post-trade processing is a large and growing market ($600M in 2010 and expected to grow to $1B in 2015) Matrix is competitively well positioned with attractive stand-alone economic
Slide 21: Securities Processing North America Market Share Overview
Securities Processing North America Market Share Overview(1) Equity Processing Client Volume High client retention rates Broadridge Competitors (~98%) with growth opportunity FY10 Product Revenues ~30% ~20% During recent market turmoil, BR continued to close sales with major clients In-house ~50% M
Slide 22: Securities Processing Solutions Top 15 Clients for FY10
Securities Processing Solutions Top 15 Clients for FY10 Broadridge has fared well Equity Processing Fixed during the recent industry Top Income Outsourcing consolidations and financial Clients Retail Institutional Processing crisis Alliance Bernstein The top 15 SPS clients generate Bank of America/M
Slide 23: Business Expansion Strategy
Business Expansion Strategy Focused on core processing and communication businesses and making investments in business that leverage these strong industry positions Be Indispensable! Vision We enable the financial services industry to achieve superior levels of performance through our passion to del
Slide 24: Financial Performance is Driven by Recurring Revenues
Financial Performance is Driven by Recurring Revenues Net Revenues ($ in millions) Earnings Before Interest & Taxes(1) ($ in millions) Recurring Event-Driven $2,209 $364 $1,869 $521 $352 $479 $418 $352 $483 $347 $365 $310 $1,584 $1,652 $1,655 $1,688 $1,504 % % Margins Revenue 81% 77% 78% 80% 76% 16.
Slide 25: Broadridge FY11 Guidance from Continuing Operations
Broadridge FY11 Guidance from Continuing Operations Revenue ($ in millions) Earnings FY10 FY11 Range FY10 FY11 Range Actual Low High Actual Low High $1,670 $1,567 $1,578 ICS $273 $216 $226 9% -6% -6% Growth % / Margin % 16.3% 13.8% 14.3% $536 $589 $599 SPS $99 $80 $88 -4% 10% 12% Growth % / Margin %
Slide 26: 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 27: 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 28: Appendix
Ce ee Appendix Appendix Ba Broadridge 28
Slide 29: 1st Half Results and 2nd Half Guidance Addressing Key Initiatives
1st Half Results and 2 nd Half Guidance Addressing Key Initiatives (see next page for Revenue/EPS reconciliation year/year) 1st half historically represents ~40% of total year revenues and ~30% of total year EBIT due to seasonality of Issuer Equity Proxy activity 1st half EPS down $0.38 primarily du
Slide 30: FY11 Financial Guidance
FY11 Financial Guidance 1st Half FY11 2nd Half FY11 FY11 FY12 FY13 $ in millions, except EPS Actual Mid-Point Guidance Mid-Point Guidance Key Initiatives (A) Key Initiatives (A) Revenues EPS Revenues EPS Revenues EPS Revenues EPS Revenues EPS FY10 (GAAP) $ 968 $ 0.56 $ 1,241 $ 1.06 $ 2,209 $ 1.62 Co
Slide 31: 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 integrity and transp
Slide 32: Cash Flow – 2Q11 Results and FY11 Forecast
Cash Flow – 2Q11 Results and FY11 Forecast Unaudited (In millions) Six Months Ended FY11 Range (a) December 2010 Low High Free Cash Flow (Non-GAAP) : Net earnings from continuing operations (GAAP) $ 24 $ 166 $ 179 Depreciation and amortization (includes other LT assets) 32 65 75 Stock-based compensa
Slide 33: Closed Sales to Revenue Contribution
Closed Sales to Revenue Contribution ($ in millions) Forecast Recurring FY09 FY10 FY11 ICS $55 $80 $35-50 ~ Revenue Contribution Year 1-3 55% 35% 10% 50% 40% 10% 33% 33% 33% SPS $40 $40 $75-100 ~ Revenue Contribution Year 1-3 25% 50% 25% 10% 50% 40% 10% 30% 60% Event-Driven $45 $55 $30-40 ~ Revenue
Slide 34: Revenues and Closed Sales Charts FY05-FY11
Revenues and Closed Sales Charts FY05-FY11 ($ in millions) FY05-10 Forecast Recurring Fee Revenues FY05 FY06 FY07 FY08 FY09 FY10 CAGR FY11 ICS $ 414 $ 480 $ 481 $ 521 $ 547 $ 575 7% $608-615 Growth 16% 0% 8% 5% 5% SPS $ 459 $ 458 $ 509 $ 515 $ 537 $ 513 2% $512-522 Growth 0% 11% 1% 4% -4% Segment Re
Slide 35: Historical Free Cash Flow Non-GAAP to GAAP Reconciliation
Historical Free Cash Flow Non-GAAP to GAAP Reconciliation Reconciliation of Non-GAAP to GAAP Measures Free Cash Flow (Non-GAAP) ($ 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 36: 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 $274 $293 Margin % 15.9% 12.7% 13.4% Interest & Other ($10) ($10) ($10) Total EBT (GAAP) $342 $264 $283 Margin % 15.5% 12.2% 12.9% EPS Reconciliation Low High Dil
Slide 37: Broadridge ICS Key Statistics
Broadridge ICS Key Statistics $ in millions Fee Revenues(1) FY08 FY09 FY10 Type RC= Recurring 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/Specials
Slide 38: 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 39: 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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