Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Q3 2019 Earnings Presentation
35 slides from Broadridge Financial Solutions's earnings presentation, May 8, 2019
Slide 1: Investor Presentation Fiscal Fourth Quarter 2019
INVESTOR PRESENTATION FISCAL FOURTH QUARTER 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements * © 2019 | 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 Litigat
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures * © 2019 | Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial MeasuresThe Company’s results in this presentation are presented in accordance with U.S. generally accepted accounting principles ("GAAP") except where otherwise noted. In certain
Slide 4: The Broadridge Story
The Broadridge Story Strong market position across governance and capital markets and wealth management Platform-based business model creates unique value for our clients Significant growth opportunity supported by long-term trends of mutualization, digitization, and data & analytics Strong business
Slide 5: The industry's leading choice
The industry’s leading choice GOVERNANCE CAPITAL MARKETS WEALTH MANAGEMENT Process 80% of outstanding shares in the United States, 50%+ for rest of worldDistribute 90%+ of broker regulatory communications to 140M individual accountsServe most brokers, funds, and public companies in North AmericaReac
Slide 6: Broadridge platform-based business model creates unique value
Broadridge platform-based business model creates unique value Networkvalue Deep financial servicesknowledge Multi-client managed services approach Domain expertiseTrusted * © 2019 | Unique CapabilityData & Analytics Scale leadershipSignificant IP
Slide 7: Broadridge's directly addressable market is $25-40B
Broadridge’s directly addressable market is $25-40B $9-13B * © 2019 | $6-12B $10-15B GOVERNANCE & COMMUNICATIONS WEALTH MANAGEMENT CAPITAL MARKETS 100% = $25-40B DATA & ANALYTICS DIGITIZATION MUTUALIZATION Large Growth Opportunity Key Market Trends
Slide 8: Growth Opportunity: Extend Governance
Growth Opportunity: Extend Governance 140M+RETAIL SHAREHOLDER ACCOUNTS 150,000+ 27,000+MUTUAL FUNDS AND ETFs 1,100+BANKS and BROKER-DEALERS 5,000+ CORPORATE ISSUERS INSTITUTIONAL SHAREHOLDERS EXTEND GOVERNANCEFee Revenue = $1.7B BUILD WEALTH MANAGEMENT DRIVE CAPITAL MARKETS Driving Next-gen Regulato
Slide 9: Growth Opportunity: Drive Capital Markets
Growth Opportunity: Drive Capital Markets Process for 18 of the 23 US Fixed Income primary dealersProcess Equities for 7 of the top 10 global investment banksClear and settle in over 80 markets globally Strong market position Support 30 clients for both technology and operations including 7 of 23 US
Slide 10: Growth Opportunity: Build Wealth Management
Growth Opportunity: Build Wealth Management Advisors Investors Wealth management toolsTargeted marketingWealth mobile portal Educational contentEnriched, digital communicationsTrading and account servicing Clearance & settlementClient and regulatory reportingBusiness processautomation & workflows EX
Slide 11: UBS Joining Broadridge Wealth Platform
UBS Joining Broadridge Wealth Platform * © 2019 | Signing UBS as anchor client represents a major milestone in creating a Wealth Management franchiseBroadridge Wealth Platform will provide next-gen mission criticalinfrastructure to wealth managersBroadridge's platform will bring together capabilitie
Slide 12: Record Sales Building Revenue Backlog
Record Sales Building Revenue Backlog FY2014 - FY2019 YTD Closed Sales Recurring Revenue Backlog as of FY20182,3 FY19 Closed sales Guidance Range as of May 7th, 2019 Earnings CallRecurring Revenue Backlog as of August 7th, 2018 Earnings Call and are Broadridge estimates and subject to revision.Recur
Slide 13: Broadridge business model is strong
Broadridge business model is strong Sustainable Growth Large, recurring revenue base with good visibility aidedby $295 million revenue backlogOrganic strength driven by large addressable market Steady Margin Expansion Continued scale and operational leverageFocus on operational efficiencies Strong F
Slide 14: Driving next-gen regulatory communications
Driving next-gen regulatory communicationsStrengthening digital products to enhance regulatory and other communications30e-3 and EnhancedContent opportunitiesBlockchain proxy capability for North American marketGrowing data & analyticssuite Broadening corporate issuer solution set Building omni-chan
Slide 15: Winning formula for top quartile TSR
Organic Recurring Fee Revenue Growth 5-7% Recurring Fee Revenue Growth 7-9% Adjusted Op Income Margin Expansion ~50bps/yr Adjusted EPS Growth 14-18% Winning formula for top quartile TSR FY17 - FY20 three year growth objectives * © 2019 | Note: FY17 - FY20 three year Adjusted EPS growth objective upd
Slide 16: Regulatory Update
Regulatory Update June 2018SEC Approves 30e-3 “Notice-and-access” Allows mutual funds to opt-in their shareholders to receive “notice- and-access” beginning in 2021Working with 130+ fund familiesFinancial impact: higher recurring fee revenues, lower distribution revenues, modestly net positive impac
Slide 17: Broadridge focused on capturing opportunity
Deliver on FY2019 guidance and FY2020 growth objectives DELIVER RESULTS Build on current capabilities like culture, product and technology BUILD ON CAPABILITIES Execute against Investor Day growth plans across Governance, Capital Markets and Wealth Management EXECUTE AGAINST STRATEGY Broadridge focu
Slide 18: Fiscal Year 2018 and Third Quarter 2019 Financial Summary
Fiscal Year 2018 and Third Quarter 2019 Financial Summary as of May 7th 2019 Earnings Call: * © 2019 |
Slide 19: Business Update
Business Update * © 2019 | Solid financial resultsInvestor Communication Solutions ("ICS") Recurring fee revenues up 6% excluding the impact of the accounting change - including 14% growth, excluding Customer CommunicationsGlobal Technology and Operations ("GTO") revenues flat compared to very stron
Slide 20: Third Quarter 2019 Revenue Growth Drivers
Third Quarter 2019 Revenue Growth Drivers Third Quarter 2019 Total revenues grew 1% to $1.2 billion Third Quarter 2019 Recurring fee revenues grew 4% to $767 millionOrganic Growth: 3% $1,208M $1,225M 0 pt. (0) pt. (1) pt. +3 pts. +1% $736M +4%$767M +6 pts. * © 2019 | +1 pt. (0) pt. (2) pts. Notes:(1
Slide 21: Fiscal Year 2018 Revenue Growth Drivers
Fiscal Year 2018 Revenue Growth Drivers Fiscal Year 2018 Total revenues grew 5% to $4.3 billion $4,330M +4% +2% -1% 0% $ 4,143M $2,451M $2,610M +6% -3% +2% +1% +6% +5% Note: Amounts may not sum due to rounding Fiscal Year 2018 Recurring fee revenues grew 6% to $2.6 billionOrganic Growth: 5% * © 2019
Slide 22: Third Quarter 2019 GAAP and Adjusted Operating Income and EPS
Third Quarter 2019 GAAP and Adjusted Operating Income and EPS 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 +68% * © 2019 | +79% +59%+61%
Slide 23: Fiscal Year 2018 GAAP and Adjusted Operating Income and Adjusted EPS
Fiscal Year 2018 GAAP and Adjusted Operating Income and Adjusted EPS $ 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 +10% * © 2019 | +12% +34%+32%
Slide 24: Fiscal Year 2019 Guidance - Updated
Fiscal Year 2019 Guidance - Updated * © 2019 | Prior1 Current2 Recurring fee revenue growth 5 - 7% 5 - 7% Expected to be in lower half of range Total revenue growth 3 - 5% ~1% Operating income margin - GAAP ~14.5% ~15.0% Adjusted Operating incomemargin - Non-GAAP ~16.5% ~17.0% Diluted earnings per s
Slide 25: FY2018 Total Revenues: Impact of ASC 606
FY2018 Total Revenues: Impact of ASC 6062018 Dollars in millions Q1 Q2 Q3 Q4 FY Revenues As Reported Recurring Fee Revenues $ 547.8 $ 562.4 $ 638.6 $ 861.5 $ 2,610.4 Event-Driven Fee Revenues 59.3 97.3 66.5 60.7 283.9 Distribution Revenues 334.2 370.4 385.4 422.9 1,512.9 FX (16.5 ) (17.4 ) (18.6 ) (
Slide 26: FY2018 Segment Recurring Fee Revenues: Impact of ASC 606
FY 2018 Segment Recurring Fee Revenues: Impact of ASC 606 Note: Amounts may not sum due to rounding * © 2019 | 2018 Dollars in millions Q1 Q2 Q3 Q4 FY Recurring Fee Revenues As Reported ICS $ 332.9 $ 334.4 $ 403.5 $ 628.0 $ 1,698.9 GTO 214.9 228.0 235.2 233.5 911.6 Total Recurring Fee Revenues $ 547
Slide 27: Supplemental Reporting Detail - Product Line Reporting
Supplemental Reporting Detail - Product Line Reporting Q1FY18 Q2FY18 Q3FY18 Q4FY18 Note: Amounts may not sum due to rounding * © 2019 | FY 2018 Q1FY19 Q2 FY19 Dollars in millions Q3 FY19 YTD FY19 $ $ 30.049.2181.572.2 $ 33.6 $ 45.1 $ 298.146.9 67.0 58.3187.3 210.7 180.666.5 80.7 91.1 $ 406.8221.4760
Slide 28: Appendix
Appendix ae Broadridge’ ©2019 | 28
Slide 29: Tax Act and Excess Tax Benefit Impact
Tax Act and Excess Tax Benefit ("ETB") Impact 3Q 9M Fiscal Year Dollars in millions 2018 2019 2018 2019 2018 2019Outlook Earnings before income taxes $125.2 $223.6 $303.0 $377.2 $561.0 Provision for income taxes (excluding ETB and non-recurring gains and charges) $31.8 $52.8 $84.4 $87.6 $158.6 Net T
Slide 30: GAAP Reconciliations
GAAP Reconciliations * © 2019 |
Slide 31: Operating income and net earnings reconciliation
Dollars in millions Three Months Ended March 31, Nine Months Ended March 31, 2019 2018 2019 2018 Operating income (GAAP) $ 233.6 $ 130.8 $ 411.9 $ 331.9 Adjustments: Amortization of Acquired Intangibles and Purchased IntellectualProperty 21.2 20.2 64.3 59.4 Acquisition and Integration Costs 0.9 1.3
Slide 32: EPS and free cash flow reconciliation
)) * © 2019 | Dollars in millions, except per share amounts Three Months Ended March 31, Nine Months Ended March 31, 2019 2018 2019 2018 Diluted earnings per share (GAAP) $ 1.45 $ 0.90 $ 2.51 $ 1.84 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 0.18 0.17 0.54
Slide 33: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures(Unaudited) * © 2019 | Three Months Ended Nine Months Ended Fiscal Year Dollars in millions Sept. 30, 2017 Dec. 31, 2017 March 31, 2018 June 30 , 2018 March 31, 2018 2018 Total Revenues $ 924.8 $ 1,012.8 $ 1,071.9 $ 1,320.4 $ 3,009.5 $ 4,329.9 ASC 606 Accou
Slide 34: FY19 guidance reconciliation
Dollars in millions, except per share amounts FY19 Adjusted Earnings Per Share Growth Rate (1) Diluted earnings per share (GAAP) 12% - 16% Adjusted earnings per share (Non-GAAP) 9% - 13% FY19 Adjusted Operating Income Margin (2) Operating income margin % (GAAP) ~15.0% Adjusted Operating income margi
Slide 35: Broadridge Investor Relations
Broadridge Investor Relations * © 2019 | W. Edings ThibaultInvestor RelationsTel: 516-472-5129Email: edings.thibault@broadridge.com
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