Broadridge Financial Solutions, Inc. · NYSE:BR

Broadridge Financial Solutions — Investor Presentation (March 2018)

33 slides from Broadridge Financial Solutions's investor presentation, Mar 8, 2018

  1. Slide 1: Investor Presentation March 2018

    INVESTOR PRESENTATION MARCH 2018

  2. Slide 2: Forward-Looking Statements

    2© 2018 | Forward-Looking Statements Forward-Looking Statements This presentation and other written or oral statements made from time to time by representatives of Broadridge Financial Solu tions, Inc. ("Broadridge" or the "Company") may contain “forward-looking statements” within the meaning of the

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

    3© 2018 | Use of Non-GAAP Financial Measures 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

  4. Slide 4: Market dynamics driving strong growth for Broadridge's technology-driven solutions

    4© 2018 | Market dynamics driving strong growth for Broadridge’s technology-driven solutions Broadridge is Ready For Next Proven strategy and experienced management team to drive sustainable growth Uniquely positioned to deliver network value and capture additional, large market opportunities Succes

  5. Slide 5: The industry's leading choice

    5© 2018 | The industry’s leading choice GOVERNANCE CAPI TAL MARKETS WEALTH MANAGEMENT • Process 80% of outstanding shares in the United States, 50%+ for rest of world • Distribute 90%+ of broker regulatory communications to 140M individual accounts • Serve most brokers, funds, and public companies i

  6. Slide 6: Broadridge platform-based business model creates unique value

    6© 2018 | Broadridge platform-based business model creates unique value Network value Deep financial services knowledge Multi-client managed services approach • Domain expertise • Trusted • Unique Capability • Data & Analytics • Scale leadership • Significant IP

  7. Slide 7: Broadridge's directly addressable market is $25-40B

    7© 2018 | Broadridge’s directly addressable market is $25-40B Key Market Trends $9-13B $6-12B $10-15B GOVERNANCE & COMMUNICATIONS WEALTH MANAGEMENT CAPITAL MARKETS 100% = $25-40B DATA & ANALYTICS DIGITIZATION MUTUALIZATION Large Growth Opportunity

  8. Slide 8: Three key opportunities, two already strong franchises

    8© 2018 | Broadridge is focused on three key opportunities, two of which are already strong franchises Address critical industry needs by utilizing our unique network and industry-leading platform capabilities Well-positioned to drive International growth and extend our key franchises by becoming th

  9. Slide 9: Extend Governance

    9© 2018 | Extend Governance Key Opportunities • Transform regulatory communications • Develop omni-channel communications • Expand issuer services and continue to bring transparency to governance 140M+ RETAIL SHAREHOLDER ACCOUNTS 150,000+ INSTITUTIONAL SHAREHOLDERS 24,000+ MUTUAL FUNDS 1,100+ BANKS

  10. Slide 10: Strong track record of digital transformation

    10© 2018 | Broadridge has a strong track record of digital transformation Customer Communications2 Presentment & Payment Notifications Cloud DeliveryE-Delivery Proxy & Other Regulatory1 Data & Analytics Suppression Algorithms Summary Prospectus E-Delivery Investor Mailbox Enhanced Broker Internet Pl

  11. Slide 11: Drive Capital Markets

    11© 2018 | Drive Capital Markets Drive global technology platform Extend with additional solutions Create network value Data Fabric Unified Portal Global Position Manager Global P&L Global Sub-Ledger Managed Services Options Core Components Connectivity Reference Data Netting & Allocation Clearance

  12. Slide 12: Build Wealth Management

    12© 2018 | Build Wealth Management Drive winning targeted solutions Deliver front-to-back global institutional platform of the future Wrap in next-generation digital and data processing capabilities Drive best-of-suite solutions for investment managers Advisors Investors • Wealth management tools •

  13. Slide 13: Broadridge business model is strong

    13© 2018 | Broadridge business model is strong Sustainable Growth • Large, recurring revenue base with good visibility • Organic strength driven by large addressable market opportunity Steady Margin Expansion • Continued scale and operational leverage • Focus on operational efficiencies Strong Free

  14. Slide 14: High quality revenue stream

    14© 2018 | High quality revenue stream $4.1B Total FY17 Revenues Event-Driven Fee (5%) ~$200M Annual Average (FY15-FY17)$0.2B Distribution (38%) <10% Gross Margin $1.6B Recurring Fee (59%) 14% CAGR (FY14-17) 6 yrs Average Contract Length 5% Organic CAGR (FY14-17) 98% Revenue Retention Rate $2.5B Not

  15. Slide 15: New sales drive organic recurring revenue growth

    15© 2018 | New sales drive organic recurring revenue growth Net New Business Internal Growth Total Organic Growth Acquisitions 5-6% FY17- FY20 Objective (CAGR) 0-1% 5-7% ~2% 3% 4% 4% FY15 FY16 FY17 1% 1% 2% FY15 FY16 FY17 4% 6% 6% FY15 FY16 FY17 2% 3% 24% FY15 FY16 FY17 Total Recurring Revenue 7-9%

  16. Slide 16: Two strong and growing segments

    16© 2018 | Recurring Fee Revenue Event-Driven Revenue Distribution Revenue Two strong and growing segments INVESTOR COMMUNICATION SOLUTIONS $3.4B Total Revenue $0.2B 12.3% Margin 6% Organic Growth KEY BUSINESSES KEY BUSINESSES Governance Customer Communications Data Driven Solutions Capital Markets

  17. Slide 17: Capital allocation priorities

    17© 2018 | Capital allocation priorities Strong Dividend • Target ~45% payout ratio1 • Top quartile payout ratio compared to S&P 500 and leads peer group $0.4B Returned to shareholders during FY15 – FY17 Disciplined M&A $0.8B • Compelling returns • Accretive to EPS within first 12-18 months • Focus

  18. Slide 18: Achieved multi-year objectives and demonstrated strong growth performance

    18© 2018 | Achieved multi-year objectives and demonstrated strong growth performance 2014 Investor Day 3-Year Objectives Excluding NACC Actuals Recurring Fee Revenue 7% - 10% 7%14% Total Revenue 5% - 7% 6%17% Adjusted Op Income Margin % 18.6% - 19.5%1 18.9%15.0% Adjusted Net Earnings 9% - 11% 9%11%

  19. Slide 19: CEO scorecard

    19© 2018 | CEO scorecard Strength of our Governance and Capital Markets franchises with growing breadth of products built or acquired EXISTING BUSINESSES Positioned to go after real opportunities based on existing capabilities, supported by investments we have already made NEW OPPORTUNITIES Market d

  20. Slide 20: Winning formula for top quartile TSR

    20© 2018 | Recurring Fee Revenue Growth 7-9% Total Revenue Growth 5-7% Adjusted Op Income Margin Expansion ~50bps/yr Adjusted EPS Growth 14-18% Winning formula for top quartile TSR FY17 - FY20 three year growth objectives Note: Compound annual growth rates (CAGRs), except margin. Three year Adjusted

  21. Slide 21: Track record of growth and value creation

    21© 2018 | Track record of growth and value creation $1.1B $2.5B FY 0 8 FY 0 9 FY 1 0 FY 1 1 FY 1 2 FY 1 3 FY 1 4 FY 1 5 FY 1 6 FY 1 7 $20 $100 4 /1 /0 7 1 /1 /0 8 1 0 /1 /0 8 7 /1 /0 9 4 /1 /1 0 1 /1 /1 1 1 0 /1 /1 1 7 /1 /1 2 4 /1 /1 3 1 /1 /1 4 1 0 /1 /1 4 7 /1 /1 5 4 /1 /1 6 1 /1 /1 7 1 0 /1 /1

  22. Slide 22: Appendix: Broadridge Second Quarter Fiscal Year 2018 Highlights

    22© 2018 | Appendix: Broadridge Second Quarter Fiscal Year 2018 Highlights as of 2/8/2018 Earnings Call

  23. Slide 23: Second Quarter 2018 Revenue Growth Drivers

    © 2018 | Second Quarter 2018 Revenue Growth Drivers ▪ Second Quarter 2018 Recurring fee revenues grew 5% to $562 million ▪ Second Quarter 2018 Total revenues grew 13% to $1.01 billion $1,013 M +3% +8% +3% 0% $893 M $536 M $562 M +6% -3% +1% +1% +5% +13% 23 Note: Amounts may not sum due to rounding O

  24. Slide 24: Tax Act Impact to Broadridge

    © 2018 | Tax Act Impact to Broadridge 2017 2018 2019 $ in millions FY 2Q 1H FY Outlook FY Indicative Effective Tax Rate (GAAP) 33.1% 40.0% 37.0% ~28% Effective Tax Rate (GAAP) 33.1% 40.0% 37.0% ~28% Net Tax Charges1 - ($16) ($16) ($16) Tax Rate Excluding Non-Recurring Gains & Charges2 33.7% 24.3% 28

  25. Slide 25: Second Quarter 2018 GAAP and Adjusted Operating Income and Adjusted EPS

    © 2018 | Second Quarter 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 +63% +96% 25 +103% +108%

  26. Slide 26: Segment Results

    © 2018 | ($ in millions) Investor Communication Solutions ("ICS") 2Q 1H 2017 2018 Change 2017 2018 Change Recurring fee revenues $329 $334 2% $653 $667 2% Event-driven fee revenues 30 97 227% 67 157 133% Distribution revenues 346 370 7% 702 705 0% Total revenues $704 $802 14% $1,422 $1,529 7% Earnin

  27. Slide 27: Fiscal Year 2018 Guidance

    © 2018 | Fiscal Year 2018 Guidance1 Original Revised Recurring fee revenue growth 4 - 6% 4 - 6% Total revenue growth 2 - 3% 2 - 4% Operating income margin - GAAP ~14% ~14% Adjusted Operating income margin - Non-GAAP ~16% ~16% Diluted earnings per share growth* 15 - 19% 22 - 26% Adjusted earnings per

  28. Slide 28: Supplemental Reporting Detail

    © 2018 | Supplemental Reporting Detail 28 FISCAL YEAR 2017 AND SECOND QUARTER AND SIX MONTHS FISCAL YEAR 2018 ADDITIONAL PRODUCT LINE REPORTING Fiscal Year Quarter Ended December 31, % Six Months Ended December 31, % $ in millions 2017 2017 Change 2017 Change Investor Communication Solutions ("ICS")

  29. Slide 29: GAAP Reconciliations

    © 2018 | GAAP Reconciliations

  30. Slide 30: Reconciliation of GAAP to Non-GAAP Measures

    © 2018 | Reconciliation of GAAP to Non-GAAP Measures $ in millions, except per share amounts Three Months Ended December 31, Six Months Ended December 31, 2017 2016 2017 2016 Operating income (GAAP) $ 115.1 $ 58.8 $ 199.5 $ 124.9 Adjustments: Amortization of Acquired Intangibles and Purchased Intell

  31. Slide 31: Reconciliation of GAAP to Non-GAAP Measures

    © 2018 | Reconciliation of GAAP to Non-GAAP Measures Six Months Ended December 31, 2017 2016 Net cash flows provided by (used in) operating activities (GAAP) $ 141.8 $ (5.5) Capital expenditures and Software purchases and capitalized internal use software (52.5) (32.0) Free cash flow (Non-GAAP) $ 89

  32. Slide 32: Reconciliation of GAAP to Non-GAAP Measures

    © 2018 | Reconciliation of GAAP to Non-GAAP Measures 32 Fiscal Years Ended June 30, 2017 2016 2015 2014 Operating income (GAAP) $ 531.6 $ 500.3 $ 466.9 $ 418.2 Adjustments: Amortization of Acquired Intangibles and Purchased Intellectual Property 72.6 31.8 25.3 22.6 Acquisition and Integration Costs

  33. Slide 33: Reconciliation of GAAP to Non-GAAP Measures - Revised FY18 Guidance

    © 2018 | Reconciliation of GAAP to Non-GAAP Measures - Revised FY18 Guidance (Unaudited) Adjusted Earnings Per Share Growth Rate (1) (2) Diluted earnings per share (GAAP) 22% - 26% Adjusted earnings per share (Non-GAAP) 27% - 31% Adjusted Operating Income Margin (3) Operating income margin % (GAAP)

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