BROADRIDGE FINANCIAL SOLUTIONS, INC. - FORM 8-K - EX-99.1 - INVESTOR PRESENTATION

Attached files

file	filename
8-K - FORM 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC.	d233647d8k.htm

September 2011

Continued Market Leadership

through Execution and Innovation

Investor Presentation

2011 Broadridge Financial Solutions, Inc.

Broadridge and the Broadridge logo are registered trademarks of Broadridge Financial Solutions, Inc.

Exhibit 99.1

Forward-looking statements

Use of non-GAAP financial measures

Use of material contained herein

Pre-Spin financial information

This presentation may include certain Non-GAAP (generally accepted accounting principles) financial measures in describing Broadridge’s

performance. Management believes that such Non-GAAP measures, when presented in conjunction with comparable GAAP measures

provide investors a more complete understanding of Broadridge’s underlying operational results. These Non-GAAP measures are

indicators that management uses to provide additional meaningful comparisons between current results and prior reported results, and as a

basis for planning and forecasting for future periods. These measures should be considered in addition to and not a substitute for the

measures of financial performance prepared in accordance with GAAP. The reconciliations of such measures to the comparable GAAP

figures are included in this presentation.

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 accuracy is your

responsibility. Broadridge assumes no duty to update or revise the information contained in this presentation. You may reproduce

information contained in this presentation provided you do not alter, edit, or delete any of the content and provided you identify the source

of the information as Broadridge Financial Solutions, Inc., which owns the copyright.

Financial information presented for periods prior to the March 30, 2007 spin-off of Broadridge from Automatic Data Processing, Inc. (“ADP”)

represents the operations of the brokerage services business which were operated as part of ADP. Broadridge’s financial results for

periods before the spin-off from ADP may not be indicative of our future performance and do not necessarily reflect what our results would

have been had Broadridge operated as a separate, stand-alone entity during the periods presented, including changes in our operations

and capitalization as a result of the spin-off from ADP.

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, and which

may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be” and other words of

similar meaning, are forward-looking statements. In particular, information appearing in the “Fiscal Year 2012 Financial Guidance” section and

statements about our future financial performance are forward-looking statements. These statements are based on management’s expectations

and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. These risks

and uncertainties include those risk factors discussed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year

ended June 30, 2011 (the “2011 Annual Report”), as they may be updated in any future reports filed with the Securities and Exchange

Commission. All forward-looking statements speak only as of the date of this presentation and are expressly qualified in their entirety by

reference to the factors discussed in the 2011 Annual Report. These risks include: the success of Broadridge in retaining and selling additional

services to its existing clients and in obtaining new clients; Broadridge’s reliance on a relatively small number of clients, the continued financial

health of those clients, and the continued use by such clients of Broadridge’s sevices with favorable pricing terms; changes in laws and

regulations affecting the investor communication services provided by Broadridge; declines in participation and activity in the securities markets;

overall market and economic conditions and their impact on the securities markets; any material breach of Broadridge security affecting its

clients’ customer information; the failure of Broadridge’s outsourced data center services provider to provide the anticipated levels of service;

any significant slowdown or failure of Broadridge’s systems or error in the performance of Broadridge’s services; Broadridge’s failure to keep

pace with changes in technology and demands of its clients; Broadridge’s ability to attract and retain key personnel; the impact of new

acquisitions and divestitures; and competitive conditions. Broadridge disclaims any obligation to update or revise forward-looking statements

that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, other

than as required by law.

Broadridge Overview

Broadridge is a strong, resilient business

with significant growth potential

History of market leadership

–

Proven ability to address increasingly complex customer needs

through technology

–

Innovation and thought leader in industry for >40 years

Strong position in large and attractive markets

–

Leader in investor communications and securities processing

–

Resilient through crisis due to mission-critical nature of services

–

Deeply respected by industry and regulators

–

Ample room for expansion into naturally adjacent markets

Excellent team

–

Results-driven and deeply experienced management team aligned

with shareholders

–

Highly engaged associates—one of the best large companies to work for

in NY

1. As recognized by the NY Society of Human Resources in 2008-2011

Consistent shareholder returns through

careful capital stewardship

Strong expected Total Shareholder Return (TSR) over next three

years through a balanced return model with low risk to investors

–

Mid-to-high single-digit revenue growth in current and adjacent markets

–

Mid single-digit margin expansion by leveraging scale

–

Continued commitment to return cash to shareholders

Shareholder-focused use of cash

–

High-return internal investments to maintain our commitment to the

Service Profit Chain

–

Carefully-targeted, tuck-in acquisitions to address emerging

customer needs

–

Decisive, and timely, divestitures when necessary

–

Excess capital routinely returned to shareholders (>$700M since spin)

Delivered TSR greater than S&P 500 since spin-off

We have led the industry in shareholder value

creation through challenging times

DST

Systems

-9.4

SEI Invest-

ments

-6.3

Fidelity

National

-5.4

Computer-

-0.4

Fiserv

3.6

Broad-

ridge

6.2

Jack

Henry

10.4

Annual TSR %, FY 2007–11

S&P 500

1.2%

Broadridge delivered strong shareholder value

through the financial crisis

1. TSR for Computershare is shown in US Dollars. TSR in Australian Dollars over this period was 7.5%

Note:

Peer

group

based

composite

Financial

Processing

Outsourcing

and

Investment

Services,

Software

and

Technology

companies

with

market

capitalization

>$1B

from

BAML

Financial

Technology

Sector

Analysis.

Peer

group

excludes companies that do not compete with Broadridge.

Our market position is differentiated and

sustainable

Revenue growth

Investor Communication Services

2.4

2.0

1.4

2011

2005

Growth through

crisis and recession

•

Proxy services for >85%

of outstanding

shares in US

•

Processed >600 billion shares in 2011

•

Used by >4,000 institutional investors

globally

•

Eliminates >50%

of physical mailings

•

100K

votes through mobile apps in first

two months since launch

New businesses

Tuck-in acquisitions and

partnerships within clear and

strict guardrails

Broadridge is well positioned to accelerate growth

and continue driving significant free cash flow

5% CAGR

Securities Processing Services

Ranked

Brokerage Service

Outsourcing

Provider (2010)

Enable

clients to

process in

>50 countries

Processes

>$4 trillion

in FI trades

per day

Investor Communication

Services

Securities Processing

Services

We are the leader in several markets

Market

Rank

Bank/Broker-Dealer

Regulatory

Communications

Broker-Dealer

Transactional

Communications

Corporate Issuer

Regulatory

Communications

Mutual Fund Proxy

Mail and Tabulation

Market

Rank

US Brokerage

Processing

US Fixed Income

Processing

Canadian Brokerage

Processing

1. Rank by market share

Our vision is clear

Leading provider of investor communications and

technology-driven solutions to broker-dealers,

mutual funds, and corporate issuers globally

We are building a strong future

Small-cap financial services

outsourcing company with a strong

position serving U.S. brokerage

industry

Leading provider of investor

communications and technology-driven

solutions to broker-dealers, mutual

funds, and corporate issuers globally

Indispensible industry communication

and transaction hub expanding

selectively into natural adjacencies

Leading

global

middle-

and

back-office

solutions provider

Great core ICS business

Scalable trade processing business

Shareholder value focus with

commitment to reduce debt

Proven shareholder value focus with

strong return of cash and targeted

growth investments

Our history

Our future

Continued strong financial discipline

Broadridge's investment thesis

ICS is a highly defensible, scalable business with new growth

opportunities

SPS is a market share leader in mission-critical services with high client

retention and emerging growth opportunities

Industry trends becoming tailwinds instead of headwinds

Broadridge is an emerging growth story with mid-to-high single digit

revenue growth and expanding margins over the next several years

Results-driven, deeply-experienced management and associate team

aligned with shareholders and focused on delivering TSR through the

Service Profit Chain

Strong free cash flow generation

Strategy Overview

Mutual Fund—Core

Retirement processing

Data aggregation

Marketing communications

Proxy/solicitation

Large and attractive markets –

Investor

Communications (ICS) is a $10B+ market

BBD—Emerging products

Global proxy and communications

Tax reporting and outsourcing

Security class actions

Advisor services

Bank/Broker-Dealer (BBD)—Core

Regulatory communications

(proxy, interims, etc.)

Customer communications

(transaction statements, etc.)

Total addressable market $10B+ fee revenue

Issuer

Transfer agency

Shareholder analytics

Investor communications

BBD—Natural adjacencies

Enterprise archiving

On-boarding

International tax reclaim

$1.3B

$0.9B

$2.0B

$3.0B

$1.8B

$1.7B

Mutual Fund—Natural adjacencies

Transaction reporting

Imaging and workflow, etc.

Sources: BCG, Bain, Patpatia, Broadridge estimates

Sources: Tower Group, Chartis, Aite, IM2, Broadridge internal estimates

Technology and Operations (SPS) adds

~$14B to our addressable market

Securities and investment firms’

overall technology and operations

spend is over $100 billion and growing at 5%

$1.2B

$2.8B

~$5.0B

Adjacent markets

Middle-office

Buy-side services

Derivatives processing

Fixed Income market

data and analytics

~$5.2B

North American BPO

Middle-

and back-office

Data center services

Select corporate functions

US Brokerage Processing

Core equities and fixed income

Global Processing

Core equities and fixed income

Global BPO

Reconciliations

Total addressable market ~ $14B fee revenue

Favorable macro trends

Industry trends

Implications for Broadridge

Increasingly strict requirements are creating

new demand for our services

Broadridge’s content, connectivity, and unique

channels create new competitive advantages

Will drive higher margins over time

Broadridge participates in markets with strong

underlying growth many times that of GDP

Financial innovation creates new client needs

Similarly, increasing complexity increases need

for our services as clients focus on core

activities

Broadridge’s unique global platform increases

our competitive differentiation and positions us

to meet new client needs

Regulatory change

Move to e-delivery

Asset, trading, and stock

record growth

Increasing complexity

and innovation

Globalization

Our strategy is to leverage our market role

to expand our client relationships

Reinforce role as the industry thought leader to lead e-transition

Drive growth in adjacent markets through new organic or

acquired solutions

Grow core

Bank/Broker-Dealer

Communications

Build leading data-

driven Mutual Fund

Solutions Provider

Leverage unique data hub position and leading role in the

BBD market

Grow retirement trade processing, data aggregation, marketing

communication and proxy/solicitation services

Grow Issuer

Solutions

Capitalize on position in beneficial processing to expand direct

relationship with issuers

Expand registered proxy, transfer agency, and enhanced

Issuer services

Grow Global

Technology and

Operations

Solutions

Leverage market-leading global platform to expand current

relationships and enter new adjacencies

Grow global processing and BPO businesses; selectively

pursue other adjacencies

Multiple ways to win

Investor

Communication

Solutions

(ICS)

ICS Unique Business Systems Processing Model

Proxy

and

Interim

processing

system

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 estimated total number of positions managed by U.S. brokers and banks

(3)

Represents Broadridge’s estimated total number of corporate issuers in the U.S.

(4)

Represents total number of Fund Sponsors in the U.S. who manage over 16,000 funds including Mutual Funds, Closed-end Funds, ETFs and UITs,

according to the Investment Company Institute’s 2009 Investment Company Year Book

ICS Product and Client Revenue Overview

We have a strong and diverse product

offering…

ICS is highly resilient due to our deep customer relationships with our

Bank/Broker-Dealer clients

…and we have deep and longstanding

client relationships

Increase in electronic

distribution reduces postage

revenue and increases profits

FY11 Product Revenues

FY11 Client Revenues

Bank/Broker-

Dealer

$1,310M (84%)

Mutual Fund

$169M (11%)

Corporate

$80M (5%)

Other

$103M (7%)

Fulfillment

$117M (8%)

Transaction

Reporting

$156M (10%)

Interims

$146M (9%)

Proxy

$334M

(21%)

Issuer

Distribution

$704M (45%)

Primarily

Postage

ICS-

Bank/Broker-Dealer Communications

Regulatory communications

–

Beneficial proxy, interims, etc.

for equities

–

Beneficial mutual fund compliance

communications

Customer communications

–

Transaction statements, trade

confirmations and other reporting

Global and emerging products

–

Advisor services

–

Global proxy and communications

–

Tax reporting and outsourcing

–

Securities class actions, etc.

What we do

Communications

sent to >110M

accounts

Over 4,000

institutional

investors use our

platform globally

~182M email

deliveries for proxy

and interims

Process ~85%

shares in US

Clear market leader

in global proxy

Our unique competitive advantage

Strong market position—indispensible data hub connecting Bank and Broker–Dealers

(BBDs) to thousands of issuers/mutual funds and 100+ million shareholders

Thought leadership leading to numerous innovations

–

First/only certified voting results

–

First e-delivery, phone voting, web voting, mobile platform, etc.

Proprietary systems, network and databases

–

ProxyEdge®

–

institutional voting and record keeping platform

–

Preference and consent database

Established relationships with majority of BBDs

Unmatched scale

Proven service quality with highest-level data security (ISO 27001)

High degree of transparency—we have engaged industry community to serve as our

Steering Committee since 1993

ICS-

Mutual Fund Solutions

Mutual Fund trade

processing in the defined

contribution/trust space

(Matrix)

Data aggregation and

analytics (Access Data)

Marketing/Regulatory

communications including

content (NewRiver)

Registered proxy and

solicitation

What we do

Service

relationships with

every mutual fund

Market intelligence

for 90% of ETF

assets

Leading

independent

defined-contribution

trade processor

Leading marketing

communication

provider to 401(k)

administrators

~ 50% share of

Registered Mutual

Fund proxy market

Leading electronic

database for mutual

fund prospectuses

Our unique competitive advantage

Long-standing relationships across industry

Serve every mutual fund and majority of bank/broker-dealers

Unique data capabilities

Proprietary platform to allow mutual funds to understand their clients

Innovative business applications that address unique industry issues such as

compliance and distribution payments

Largest electronic repository for mutual fund compliance data

Industry-leading ICS products with unmatched scale

Leverage to create cost-effective products for mutual funds

Leading positions in several niche markets

Defined contribution trade processing

Data aggregation and analytics

Electronic mutual fund prospectuses

401(k) marketing communications

—

ICS-

Corporate Issuer Solutions

Beneficial proxy service

Registered shareholder

communications

–

Registered proxy

–

Interim communications

Transfer agency (TA)

–

Stock share registry,

ownership transfers,

dividend calculation, etc.

Enhanced issuer solutions

–

Shareholder analytics

–

Virtual shareholder meetings

–

Shareholder forums

–

Global services

What we do

Service

relationships with

>6,000 issuers

Direct relationships

with 45% Fortune

500 companies

Notice & Access

analytics for over

1,500 issuers

Adding one

Transfer Agency

client per week

Over 30

Shareholder Forums/

Virtual Annual

Meetings

Our unique competitive advantage

Market

Position

–

only

full

service

provider

shareholder

communications to all shareholders

Relationships

–

relationships

with

and

connectivity

virtually

every

US broker–dealer create a unique network that facilitates shareholder

communications and intelligence

Unmatched

Scale

–

able

leverage

one

billion

plus

shareholder

communications annually as well as record-keeping, corporate actions

and other shareholder account servicing for about 40

million

brokerage accounts

Unmatched

Data

–

unique

dataset

investors

and

positions

allows

Issuers to most effectively reach their shareholders

Thought

Leadership

–

unmatched

expertise

innovate

the

proxy

process and guide Issuers through a complex regulatory environment

Global Technology and operations

Solutions (SPS)

FY11 Product Revenues

Securities

Processing

North

America

Market

Overview

Equity Processing Client Volume

Broadridge

~30%

Competitors

~20%

In-house

~50%

Broadridge

~6%

Untapped

Market

~94%

(>$1 Billion)

In-house

~43%

Competitors

~2%

Broadridge

~55%

Fixed Income (US$ only) Client Volume

Operations Outsourcing

Equity

(~75%)

Transactions, $239M

Non-transactions, $211M

Fixed Income

(~15%)

Transactions, $56M

Non-transactions, $30M

Outsourcing

(~10%)

$58M

1. All market share information is based on management’s estimates and is part of much larger market. No attempt has

been made to size such market

SPS Top 15 Clients for FY11

SPS client relationships are stable in volatile

market

Note: The above schedule is an alphabetical listing of the top 15 SPS clients based on revenues as of June 30, 2011.

Top

Equity Processing

Fixed Income

Clients

Retail

Institutional

Processing

Outsourcing

Alliance Bernstein

Bank of America/Merrill Lynch

Barclays Capital Services

BMO Nesbitt Burns

CIBC World Markets

Deutsche Bank

E*Trade Group

Edward Jones

Jefferies & Company

JP Morgan Chase

Mizuho Securities USA

Penson

Royal Bank of Canada

Scotia Capital

UBS Securities

Investor

account set

up on system

Investor initiates

order to buy

securities

Confirmation of

all trade details

produced for

investor and

selling broker

Securities are

received in

depository from

selling broker and

paid for

Dividends/interest is

collected from

company and

deposited into

Investors account on

an ongoing basis

Broadridge processing behind the scenes

Front office

Middle office

Back office

Order sent to

proper exchange

Securities are

bought by broker

on exchange and

price is sent back

to investor

Cash is received

from investor

and deposited in

bank account

Statements are

produced and sent

to investor on an

ongoing basis

Back office staff

monitors and

reconciles valuations,

custody of securities,

bank accounts,

dividends and other

corporate actions on

an ongoing basis

Tax reports are sent

to investor and tax

authorities on an

ongoing basis

Broadridge simplifies complex processes

Client

Set-up

Transaction

Capture/

Execution

Validation &

Confirmation

Clearing and

Settlement

Asset Servicing

Best-of-breed securities processing

solutions

–

Leading global platform

–

Broad asset class coverage

Broad suite of add-on or point

solutions

–

Desk top applications used by brokers

and traders

–

Workflow and reconciliation

applications

–

Data aggregation and warehousing

tools

Industry-leading global business

process outsourcing (BPO) solutions

Ongoing record of innovation and

thought leadership

What we do

Industry standard

for fixed income

processing, >$4

trillion trades daily

Unique solution for

global processing

Serve 13 of 20

fixed income US

primary dealers

On average

processing >1.5

million equity

trades per day

Ranked #1 brokerage

processing services

in 2008, 2009 & 2010

Our unique competitive advantage

Unique global technology platform provides processing access

to over 50 countries

Breadth of asset classes on single “platform”

Leading market position and scale

Flexible business model that can be tailored to unique

client needs

Trusted brand

Financial Overview

Total Shareholder Return

6–9%

revenue

growth

Financial strategy

Portfolio

Operational

excellence

Drive organic growth

in current markets

Exploit adjacent

market opportunities

Leverage economies

of scale

Further optimize

infrastructure

Generate strong FCF

enabled by high ROIC

Continue returning

large share of FCF to

shareholders

Margin

expansion

from 13% to

17–19%

We plan to deliver strong Total

Shareholder Return (TSR) through FY14

35% payout

that currently

yields 2–3%,

plus buybacks

Since spin-off, we have focused on the

drivers of TSR

In last four years we have strengthened our position,

restructured our portfolio and returned significant cash

Adjusted

Debt-to-EBITDAR

ratio

calculated

(Debt

Rent

Expense)

(EBITDA

Rent

Expense)

TSR driver

Key actions

Portfolio

Drive profitable growth

Spending >$300M annually on technology

Introduced >20 new products since spin-off

Made several strategic acquisitions

Divested Ridge and pruned underperforming products

Operational

excellence

Improve margins by leveraging scale

Migrating data center from ADP to IBM

Smart-shoring –

20% of associates now in India

Strict financial controls

Financial

strategy

Generate strong cash flow for our shareholders

Paid down debt to 1:1 Adjusted Debt/EBITDAR within 18 months

of spin

Doubled dividend in 2010, increased by further 7% in 2011

(current payout ratio 35%)

Repurchased 24M shares since spin, with additional 8M available

for repurchase

Our future is bright, even assuming weak

market environment continues

Grow revenue by 6–9%

Increase EBIT margins

from ~13% to 17-19%

Continue shareholder-

friendly use of cash

Strong TSR

Well-positioned for high single digit revenue growth

Continue to deliver strong TSR

three

years

(FY11–

FY14)

FY15+

Careful capital stewardship to deliver strong TSR

FY14 estimate

2.6–2.9

1.9-2.1

0.7-0.8

FY11

2.2

1.6

0.6

ICS

SPS

Revenue ($B)

6–9% CAGR

~$200-300M

~$70-130M

~$2,200M

FY11

~$70–130M

FY14

estimate incl.

event-driven

~$2,600–2,900M

Event-driven

FY14

estimate

~$70M

~$2,500–2,800M

Potential upside

+1–2%

=5–8%

+3–4%

+1–2%

CAGR

+~1%

=6–9%

Recurring revenue

Return of

mutual fund

activity

should provide

additional

opportunity

Note: New closed sales offset by increased e-deliveries. Numbers may not add up due to rounding.

Total expected annual growth of

5–8%

through FY14 from recurring

Market

growth

Net new

business

Tuck-in

acquisitions

13.1%

Key initiatives

17.6-18.9%

Event-driven

250–280bps

FY14

estimate

(recurring)

90–150bps

FY14

estimate

(recurring +

key initiatives)

13.9–14.9%

Economies

of scale

(core plus

acquisitions)

80–180bps

FY11

(Non-GAAP)

16.7–17.4%

=9–10%

+6%

+2–3%

3–4%

=11–13%

CAGR

FY14 estimate

(recurring +

key initiatives

+ event-driven)

Total EBIT margin improvement of

~400bps by FY14 before event-driven

Return of

mutual fund

activity

should provide

additional

opportunity

By FY14 cash generation planned to expand

to $270-315M, plus $20–40M event-driven

$290-355M

Event-driven

$20–40M

FY14

FCF estimate

(Non-GAAP)

$270-315M

Core

operations

(recurring

revenue)

$82-127M

Key

initiatives and

restructuring

~$45M

FY11

FCF

(Non-GAAP)

~$143M

FY14 FCF

estimate (Non-

GAAP) incl.

event-driven

Since spin-off, we have reduced “spin debt”

and returned capital

Use of cash FY07–11, $M

Focus on prudent capital stewardship

1. Gross buy-backs of $509 less proceeds from stock option exercises of $115

2. FY11 ending cash of $241 less beginning cash of $43

198

155

395

213

392

281

1,072

191

1,263

Change

in cash

Debt

reduction

Tuck-in

acquisi-

tions

Dividends

Buy-

backs

Freed-up

capital

FCF

(Non-

GAAP)

Capex

Cash flow

from

operations

(GAAP)

Our financial strategy is a key part of our

value creation strategy

35% dividend payout, but expect no less than 64 cents per

Organic growth with limited financial risk

–

Avoid significant balance sheet risk

–

Invest in projects delivering at least 20% IRR

Tuck-in acquisitions with clear growth profile and returns

–

Accretive to growth, margins, and earnings

–

>20% IRR in conservative business case

Long-term investment-grade debt rating

–

Adjusted

Debt/EBITDAR

ratio

target

2:1

Excess cash used opportunistically to offset dilution and

reduce share count through buybacks

1. Adjusted Debt/EBITDAR ratio calculated as (Debt + 5x Rent Expense) / (EBITDA + Rent Expense)

Financial summary

Clear focus on shareholder value

–

Driving

all

TSR

levers

–

growth,

margins

and

FCF

Strong and disciplined capital stewardship

Maintain healthy balance sheet

Appendix

Broadridge's TSR math through FY14

Top-quartile

TSR

17–22%

earnings

growth

2–3%

dividend yield,

plus buybacks

Free

cash flow

1-2%

tuck-in

acquisitions

3-4%

organic

growth

1-2%

market

growth

6-9%

revenue

growth

~1%

event-driven

growth

120-150bps

recurring margin

improvement

(3-4% CAGR)

250-280bps

margin

improvement

from key initiatives

(~6% CAGR)

Tuck-in

acquisitions

Organic investments

90-150bps

event-driven

margin

improvement

(2-3% CAGR)

1. Based on BCG 2011 Investor Survey

8-12% earnings

growth from

recurring revenue

Revenue Growth Drivers

Historical CAGR

Actual

Forecast

(FY05-FY10)

FY11

FY12

Total Revenue Growth

(2)%

8-10%

Closed

Sales

(Recurring)

4-5%

(2)%

Client Losses

(1)%

Net New Business

3-4%

Internal Growth

(a)

0-1%

Acquisitions

~2%

Total Recurring

5-7%

Event-Driven

(b)

(6)%

Distribution

(c)

(4)%

~3%

FX/Other

EBIT Margin

(Non-GAAP IBM)

13.1%

13.8-14.4%

(a) Internal Growth includes SPS Equity & Fixed Income Trades, ICS Equity & Mutual Fund Stock Record Growth, Transaction Reporting and Time & Materials

(b) Event-Driven includes ICS Proxy Contest/Specials, Mutual Fund Proxy and Marketing Communications Fulfillment

Revenues and Closed Sales FY05-FY12

($ in millions)

FY05-10

Forecast

FY11-12

Recurring Fee Revenues

FY05

FY06

FY07

FY08

FY09

FY10

CAGR

FY11

FY12

Growth Rates

ICS

444

513

519

558

583

610

650

$706-715

9-10%

Growth

16%

SPS

459

458

509

515

537

513

522

$543-556

4-6%

Growth

11%

-4%

Segment Recurring Fee Revenues

903

971

1,028

1,073

1,120

1,123

1,172

$1,249-1,271

7-8%

Growth

Acquisitions

NM*

141

~$188

~33%

Total Recurring Fee Revenues

903

988

1,056

1,101

1,153

1,168

1,313

$1,435-1,461

9-11%

12%

Event-Driven

128

153

203

200

180

257

15%

135

~$140

~4%

Growth

20%

33%

-1%

-10%

43%

-47%

Distribution

649

730

821

808

757

781

704

~$765

~9%

Growth

12%

-2%

-6%

-10%

Other/FX

(25)

(19)

(12)

(17)

NM*

~$10

NM*

Total BR Revenues

1,656

1,853

2,068

2,131

2,072

2,209

2,166

$2,347-2,377

8-10%

Growth

12%

-3%

-2%

Recurring Closed Sales

119

113

$110-150

Growth

19%

-32%

30%

16%

25%

-5%

*NM= Not Meaningful

($ in millions)

FY05-10

Forecast

Event-Driven Fee Revenues

(1)

FY05

FY06

FY07

FY08

FY09

FY10

CAGR

FY11

FY12

Mutual Fund Proxy

150

24%

Mutual Fund Supplemental

Contest/ Specials/ Other Communications

Total Event-Driven Fee Revenues

128

153

203

200

180

257

15%

135

140

Growth

20%

33%

-1%

-10%

43%

-47%

Recurring Distribution Revenues

(2)

496

562

593

580

567

564

573

~$615

Growth

13%

-2%

-1%

ED Distribution Revenues

(2)

153

169

228

190

217

131

~$150

Growth

10%

35%

-17%

14%

-39%

Total Distribution Revenues

649

730

821

808

757

781

704

~$765

Growth

12%

-2%

-6%

-10%

(1) Includes reclassification of Pre-sale Fulfillment from event-driven revenues to recurring revenues.

(2) Includes reclassification of Pre-sale Fulfillment related distribution revenues and Matrix pass-through administrative services from event-driven revenues to recurring revenues.

Broadridge FY12 Guidance from Continuing

Operations

($ in millions)

FY11

FY12 Range

FY11

FY12 Range

Actual

Low

High

Actual

Low

High

$1,559

$1,707

$1,718

ICS

$213

$254

$263

-7%

10%

Growth % / Margin %

13.7%

14.9%

15.3%

$594

$631

$647

SPS

$87

$99

$115

11%

Growth % / Margin %

14.7%

15.7%

17.7%

$2,153

$2,338

$2,365

Total Segments

$301

$353

$377

-2%

10%

Growth % / Margin %

14.0%

15.1%

16.0%

Other

(a)

($25)

($36)

($43)

$14

$12

(b)

$2,167

$2,347

$2,377

Total Broadridge (Non-GAAP IBM)

(a)

$285

$323

$343

-2%

10%

Growth % / Margin %

13.1%

13.8%

14.4%

Interest & Other

($8)

($17)

Total EBT (Non-GAAP IBM)

(a)

$276

$306

$326

FY12 Range

Margin %

12.7%

13.0%

13.7%

Segments

Low

High

ICS

$65

$85

Income Taxes

($100)

($113)

($120)

SPS

$45

$65

Tax Rate

36.3%

37.0%

Total

$110

$150

Total Net Earnings (Non-GAAP IBM)

(a)

$176

$193

$205

Margin %

8.1%

8.2%

8.6%

IBM migration costs (net of Taxes)

(a)

($4)

($21)

Total Net Earnings (GAAP)

$172

$184

Margin %

7.9%

7.3%

7.8%

Diluted Shares

128

Diluted EPS (Non-GAAP IBM)

(a)

$1.37

$1.50

$1.60

Diluted EPS (GAAP)

$1.34

$1.44

(a)

FY11 excludes the IBM migration costs of $6M, after-tax $4M, or $0.03 EPS impact. FY12 Range Low & High excludes the estimated IBM migration costs of $33M, after-tax $21M, or $0.16 EPS impact.

(b)

Includes impact of FX P&L Margin and FX Transaction Activity

Recurring Closed Sales

Revenue

Earnings

Cash Flow –

FY11 Results and FY12 Forecast

(a)

Guidance does not take into consideration the effect of any future acquisitions, additional debt and/or share repurchases in excess of the

repurchases needed to achieve our 128 million diluted weighted-average outstanding shares guidance.

(b)

FY12 ranges includes an impact of ~$(73) million due to IBM migration costs. When added back to the FY12 ranges, free cash flow would

be ~$225 million at the mid-point of its expected range.

Unaudited

(In millions)

Year Ended

June 2011

Low

High

Free Cash Flow

(Non-GAAP)

Net earnings from continuing operations per GAAP

172

184

Depreciation and amortization (includes other LT assets)

100

Stock-based compensation expense

Other

(5)

Subtotal

279

293

320

Working capital changes

(51)

(30)

Long-term assets & liabilities changes

Includes IBM Migration costs of $(6) and ~$(33) for FY11 and FY12, respectively

(38)

(55)

(45)

Net cash flow (used in) provided by continuing operating activities

190

208

275

Cash Flows From Investing Activities

IBM / ITO data center investment

(7)

(15)

(10)

Penson

(20)

(15)

Capital expenditures & software purchases

(40)

(65)

(55)

Free cash flow

(b)

143

108

195

Cash Flows From Other Investing and Financing Activities

Acquisitions

(294)

Stock repurchases net of options proceeds

(174)

Proceeds from Short-term borrowing, net

200

Dividends paid

(75)

(78)

Other (includes Disc Ops)

(5)

Net change in cash and cash equivalents

(172)

122

Cash and cash equivalents, at the beginning of year

413

242

Cash and cash equivalents, at the end of period

241

267

364

FY12 Range

(a)

Reconciliation of Non-GAAP to GAAP

Measures

Unaudited

(In millions)

Free Cash Flow Reconciliation

Year Ended

June 2011

Low

High

Free

Cash

Flow

(Non-GAAP):

Net earnings from continuing operations (GAAP)

172

184

Depreciation and amortization (includes other LT assets)

100

Stock-based compensation expense

Other

(5)

Subtotal

279

293

320

Working capital changes

(51)

(30)

Long-term assets & liabilities changes

Includes IBM Migration costs of $(6) and ~$(33) for FY11 and FY12, respectively

(38)

(55)

(45)

Net cash flow (used in) provided by continuing operating activities

190

208

275

Cash Flows From Investing Activities

IBM / ITO data center investment

(7)

(15)

(10)

Penson

(20)

(15)

Capital expenditures & software purchases

(40)

(65)

(55)

Free cash flow

(b)

143

108

195

FY12 Range

(a)

EBIT Reconciliation

4Q10

4Q11

FY10

FY11

FY12 Range

($ in millions)

Actual

Low

High

EBIT

(Non-GAAP

excluding

IBM

migration

costs)

(a) & (b)

$185

$190

$352

$285

$323

$343

Margin %

24.6%

24.4%

15.9%

13.1%

13.8%

14.4%

Interest & Other

($2)

($10)

($8)

($17)

Total EBT (Non-GAAP / excluding IBM migration costs)

$183

$188

$342

$276

$306

$326

Margin %

24.3%

24.2%

15.5%

12.7%

13.0%

13.7%

IBM migration costs

($6)

($33)

Total EBT (GAAP)

$183

$181

$342

$270

$273

$293

Margin %

24.3%

23.3%

15.5%

12.4%

11.6%

12.3%

EPS Reconciliation

4Q10

4Q11

FY10

FY11

FY12 Range

Actual

Low

High

Diluted EPS from continuing operations (GAAP)

$0.84

$0.91

$1.62

$1.34

$1.44

One-time

recognition

deferred

tax

asset

FY10

($0.06)

IBM

migration

costs

FY11

and

FY12

$0.03

$0.16

Diluted EPS before One-Times (Non-GAAP)

$0.84

$0.94

$1.56

$1.37

$1.50

$1.60

(a)

Includes impact of FX Transaction Activity

(b)

4Q11 & FY11 excludes the IBM migration costs of $6M, after-tax $4M, or $0.03 EPS impact. FY12 Range Low & High excludes the IBM migration costs of ~$33M, after-tax ~$21M, or ~$0.16 EPS impact.

(c)

FY10 excludes the 1-Time Tax Credit of $8M, or $0.06 EPS impact.

(a)

Guidance does not take into consideration the effect of any future acquisitions, additional debt and/or share repurchases in excess of the repurchases needed to achieve our 128 million diluted weighted-average outstanding shares guidance.

(b)

FY12 ranges includes an impact of ~$(73) million due to IBM migration costs. When added back to the FY12 ranges, free cash flow would be ~$225 million at the mid-point of its expected range.

ICS Key Segment Revenue Stats

$ in millions

RC= Recurring

ED= Event-Driven

Fee Revenues

FY09

FY10

FY11

Type

Proxy

Equities

272.5

276.5

279.5

Stock Record Position Growth

-2%

-1%

Pieces

288.0

293.2

283.8

2.50

Mutual Funds

55.0

149.7

39.0

Pieces

73.5

204.2

51.4

Contests/Specials

26.9

20.6

15.0

Pieces

30.8

26.0

15.8

Total Proxy

354.4

446.8

333.5

Total Pieces

392.3

523.4

351.0

Notice and Access Opt-in %

50%

54%

58%

Suppression %

50%

52%

53%

Interims

Mutual Funds (Annual/Semi-Annual Reports/Annual Prospectuses)

78.1

88.8

102.1

Position Growth

Pieces

440.5

476.0

525.3

Mutual Funds (Supplemental Prospectuses) & Other

58.0

47.8

44.0

Pieces

349.6

266.2

253.2

Total Interims

136.1

136.6

146.1

Total Pieces

790.1

742.2

778.5

Transaction

Transaction Reporting/Customer Communications

132.0

142.8

155.9

Reporting

Fulfillment

(1)

109.5

116.8

Other

Other -

Recurring

(2)

2.3

15.0

65.9

Communications

Other -

Event-Driven

(3)

39.9

38.3

37.0

Total Other

42.2

53.3

102.9

Total Fee Revenues

774.2

889.0

855.2

Total Distribution Revenues

(4)

756.8

780.6

704.2

Total

Revenues

asreported

GAAP

1,531.0

1,669.6

1,559.4

FY12 Ranges

Low

High

Total RC Fees

594.4

632.6

720.2

804

813

Total ED Fees

179.8

256.4

135.0

140

FY12 Ranges

Low

High

Sales

Losses

-1%

Key

Net New Business

Revenue

Internal growth

Drivers

Recurring (Excluding Acquisitions)

Acquisitions

Total Recurring

Event-Driven

-1%

-7%

Distribution

-3%

-5%

TOTAL

-3%

-7%

10%

(1) Consolidated Pre-sale and Post-sale Fulfillment and reclassified Pre-sale from event-driven to recurring revenues.

(2) Other Recurring Fee Revenue includes Matrix, NewRiver, StockTrans, Access Data, Forefield and Tax Reporting.

(3) Other

event-driven

includes

14.4M

pieces

for

FY09,

10.5M

pieces

for

FY10

and

8.3M

pieces

for

FY11,

primarily

corporate

actions.

(4) Total Distribution revenues primarily include pass-through revenues related to the physical mailing of Proxy and Interims, as well as Matrix administrative services.

Note: Certain prior period amounts have been reclassified to conform with current period presentation

SPS and Outsourcing Key Segment Revenue

Stats

$ in millions

All Revenues are Recurring

FY09

FY10

FY11

Equity

Transaction-Based

Equity Trades

258.5

237.8

238.8

Internal Trade Growth

-2%

Trade Volume (Average Trades per Day in '000)

1,602

1,542

1,572

Non-Transaction

Other Equity Services

193.6

195.4

211.0

Total Equity

452.1

433.3

449.8

Fixed Income

Transaction-Based

Fixed Income Trades

52.3

48.0

56.2

Internal Trade Growth

11%

-6%

13%

Trade Volume (Average Trades per Day in '000)

287

283

324

Non-Transaction

Other Fixed Income Services

29.4

29.5

29.9

Total Fixed Income

81.7

77.5

86.1

Outsourcing

25.1

25.0

57.7

# of Clients

Total

Net

Revenue

reported

GAAP

558.9

535.9

593.6

FY12 Ranges

Low

High

Sales

Losses

-4%

-3%

-2%

Key

Net New Business

Revenue

Transaction & Non-transaction

-2%

Drivers

Concessions

-3%

-4%

-2%

Internal growth

-6%

Acquisitions

TOTAL

-4%

11%

Refers

primarily

information

required

provided

mutual

funds

supplement

information

previously

provided

annual

mutual

fund

prospectus

(e.g.,

change

portfolio

managers,

closing

funds

class

investors,

restating

clarifying

items

the

original

prospectus).

The

events

could

occur

any

time

throughout

the

year.

Refers to the proxy services we provide in connection with stockholder meetings held outside of the normal annual meeting cycle and are primarily driven by special events (e.g., mergers

and

acquisitions

which

the

company

being

acquired

public

company and needs to solicit the approval of its stockholders).

Refers

communications

provided

corporate

issuers

and

investment

companies

investors

including

newsletters,

notices, tax information, marketing materials and other information not

required to be distributed by regulation.

Mutual

Funds

(Supplemental

Prospectuses)

–

Refers to the services we provide investment companies in connection with information they are required by regulation

to distribute periodically to their investors. These reports contain pertinent information such as holdings, fund performance, and other required disclosure.

Refers primarily to the printing and distribution of account statements, trade confirmations and tax reporting documents to account holders, including electronic delivery and

archival services.

Refers

primarily

the

distribution

prospectuses,

offering

documents,

and

required

regulatory disclosure information to investors in connection with purchases of

securities.

Refers to the distribution of marketing literature, welcome kits, enrollment kits, and investor information to prospective investors, existing stockholders and other targeted recipients

on behalf of broker-dealers, mutual fund companies and 401(k) administrators.

Refers to the services we provide in connection with the distribution of communications material not included in the above definitions such as non-objecting beneficial owner (NOBO) lists, and

corporate actions such as mergers, acquisitions, and tender offer transactions.

Refers

the

proxy

services

provide

when

separate

agenda

put

forth

one

stockholders

that

in opposition to the proposals presented by management of

the company which is separately distributed and tabulated from the company’s proxy materials.

Refers to the proxy services we provide for funds, classes or trusts of an investment company. Open-ended mutual funds are not required to have annual

meetings. As a result, mutual fund proxy services provided to open-ended mutual funds are driven by a "triggering event." These triggering events can be a change in

directors, fee structures, investment restrictions, or mergers of funds.

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, which in turn hold the shares on behalf of their clients, the ultimate beneficial owners) and shares

held in "registered name" (shares registered directly in the names of their owners).

Equities

–

Mutual

Funds

–

Contests

–

Specials –

Mutual

Funds

(Annual/Semi-Annual

Reports/Annual

Prospectuses)

–

Transaction Reporting

–

Post-Sale

Fulfillment

–

Pre-Sale

Fulfillment

–

Other

–

Other –

Proxy

Interims

Transaction Reporting

Fulfillment

Other

Communications

Broadridge ICS Definitions

Attached files

Stock widget

Investing forum

BROADRIDGE FINANCIAL SOLUTIONS, INC. Reports