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| 8-K - FORM 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC. | d534176d8k.htm |
 May 2013
Continued Market Leadership
through Execution and Innovation
Investor Presentation
©
2013 Broadridge Financial Solutions, Inc.
Broadridge and the Broadridge logo are registered trademarks of Broadridge
Financial Solutions, Inc. Exhibit 99.1 |
 1
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, 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 2013 Financial
Guidance”
section 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,
2012 (the “2012 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 2012 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 services 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.
Non-GAAP Financial Measures
In certain circumstances, results have been presented that are not generally
accepted accounting principles measures (“Non-GAAP”) and
should be viewed in addition to, and not as a substitute for, the Company’s
reported results. Net earnings, diluted earnings per share and
pre-tax earnings margins excluding Acquisition Amortization and Other Costs and
Restructuring and Impairment Charges are Non-GAAP measures.
These
measures
are
adjusted
to
exclude
costs
incurred
by
the
Company
in
connection
with
amortization
and
other
charges
associated with the Company’s acquisitions, and the termination of the Penson
outsourcing services agreement, as Broadridge believes this information
helps investors understand the effect of these items on reported results and provides a better representation of our actual
performance. Free cash flow is a Non-GAAP measure and is defined as cash
flow from operating activities, less capital expenditures and purchases of
intangibles. Management believes this Non-GAAP measure provides investors with 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.
Accompanying this presentation is a reconciliation of Non-GAAP measures to the
comparable GAAP measures. 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 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.
Broadridge and the Broadridge logo are registered trademarks of Broadridge
Financial Solutions, Inc. |
 2
Broadridge Overview |
 3
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 >50 years
Strong position in large and attractive markets
–
Leader in investor communications and global securities
processing –
Resilient through financial crisis due to mission-critical nature of
services –
Deeply respected by industry and regulators
–
Room for expansion into naturally adjacent markets
Excellent team
–
Results-driven and deeply experienced management team aligned
with long-term interests of shareholders
–
Highly engaged associates -
one of the best large companies to work for in
NY
1
for
6
consecutive
year
1. As recognized by the NY Society of Human Resources in
2008-2013
th |
 4
Broadridge Strategy Statement
Our vision is to be the leading provider of Investor
Communications and Technology and Operations Solutions to
Banks/Broker-Dealers, Mutual Funds, and Corporate Issuers
globally
–
Our mission is to drive the industry we serve to higher levels of efficiency
and compliance; to partner with financial institutions and public companies
to enable their growth; and to provide innovative outsourcing solutions for
mission-critical activities
–
We will grow our businesses by leveraging our unique network, our market
position, and our brand/service reputation
–
We will do so with a combination of organic growth and M&A
–
We anticipate that this approach will drive 6-9% revenue growth and
low-to- mid-teens earnings growth
–
We expect to pay a meaningful dividend and to opportunistically buy back
shares |
 5
Our market position is differentiated
and sustainable
Recurring Fee Revenue
Investor Communication Solutions
$B
1.5
0.5
2012
2007
Growth through difficult
market environment
•
Proxy services for ~85%
of outstanding
shares in US
•
Processed >600 billion shares in 2012
•
Used by >5,500 institutional investors
globally
•
Eliminates >50%
of physical mailings
•
~450K
votes through mobile apps during
2012 proxy season
New businesses
Tuck-in acquisitions
Broadridge is well positioned to accelerate growth
and continue driving strong free cash flow
~7% CAGR
Securities Processing Solutions
Enable clients
to
process
in
>50
countries
Processes >$4.5 trillion
(average) in equity and
fixed income trades per
day
1.0 |
 6
Investor Communication
Solutions
Securities Processing
Solutions
We are the leader in several markets
Market
Rank
1
Bank/Broker-Dealer
Regulatory
Communications
Broker-Dealer
Transactional
Communications
Corporate Issuer
Regulatory
Communications
Mutual Fund Proxy
Mail and Tabulation
Market
Rank
1
US Brokerage
Processing
US Fixed Income
Processing
Canadian Brokerage
Processing
#1
#1
#1
#1
#1
#1
#1
1. Marketshare based on Broadridge estimates |
 7
Investor Communication Solutions (ICS) |
 8
Mutual Fund—Natural adjacencies
Transaction reporting
Imaging and workflow, etc.
Mutual Fund—Core
Retirement processing
Data aggregation
Marketing communications
Proxy/solicitation
Large and attractive markets –
Investor
Communications 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
Sources: BCG, Bain, Patpatia, Broadridge estimates |
 9
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 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 |
 10
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
FY12 Product Revenues
Increase in electronic
distribution reduces postage
revenue and increases profits
Other
$146M (9%)
Fulfillment
$132M (8%)
Transaction
Reporting
$165M (10%)
Interims
$160M (10%)
Proxy
$327M (20%)
FY12 Client Revenues
(Based on who pays BR as agent)
Bank/Broker
-
Dealer
(29%)
Mutual Fund
(41%)
Corporate
Issuer
(30%)
Primarily
Postage
Distribution
$704M
(43%) |
 11
ICS-Bank/Broker-Dealer
What We Do:
Regulatory communications
–
Beneficial proxy and interims 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
Competitive Advantages:
Indispensible data hub with established
relationships with majority of BBDs
Strong market position and innovative
leadership
–
First/only certified voting results
–
First e-delivery, phone, web and mobile voting
platform
Proprietary systems, network and
databases
–
ProxyEdge®
–
institutional voting and record
keeping platform
–
Preference and consent database
Unmatched scale with highest level data
security (ISO 27001) |
 12
What We Do:
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
Competitive Advantages:
Long-standing relationships across
industry
Serve every mutual fund and majority of
banks/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
regulatory data
Industry-leading ICS products with
unmatched scale
Leverage to create cost-effective products for
mutual funds
ICS-Mutual Funds |
 13
What We Do:
Beneficial proxy service
Registered shareholder communications
–
Registered proxy
–
Interim communications
Transfer agency (TA)
–
Stock share registry, ownership
transfers and dividend calculation
Enhanced issuer solutions
–
Shareholder analytics
–
Virtual shareholder meetings
–
Shareholder forums
–
Global proxy services
Competitive Advantages:
Market Position
–
only full service provider of
Unmatched Scale
–
able to leverage one billion plus
Unmatched Data
–
unique dataset of investors and
Thought Leadership
–
unmatched expertise to
ICS-Issuers
shareholder communications to all types of
shareholders
shareholder communications annually as
well as record-keeping, corporate actions
and other shareholder account servicing
positions allows Issuers to more effectively
reach their shareholders
innovate the proxy process and help guide
Issuers through a complex regulatory
environment |
 14
Securities Processing Solutions (SPS) |
 15
Sources: Tower Group, Chartis, Aite, IM2, Broadridge internal estimates
Technology and Operations spend adds
~$14B to our SPS 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 |
 16
Broadridge global processing behind the scenes
Broadridge simplifies complex processes |
 17
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 M
A
R
K
E
T
S
H
A
R
E
FY12 Product Revenues
Outsourcing
(~13%)
$82M
Fixed Income
(~15%)
Transactions, $54M
Non-transactions, $45M
Equity
(~72%)
Transactions, $137M
Non-transactions, $338M
Broadridge
~30%
Competitors
~20%
In-house
~50%
Equity Processing Client Volume
U.S. $ Fixed Income Client Volume
Broadridge
~8%
Untapped
Market
~92%
(>$1 Billion)
Competitors
~2%
In-house
~43%
Broadridge
~55%
Operations Outsourcing
Securities Processing North America Market Share
Overview
1 |
  18
SPS Top 15 Clients for FY12
SPS client relationships are stable in volatile
market
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
Note: The above schedule is an alphabetical listing of the top 15 SPS clients which
represent ~70% of SPS revenues as of June 30, 2012. |
 19
What We Do:
Best-of-breed 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
SPS-Technology and Operations
Competitive Advantages:
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 |
 20
Financial Strategy |
 21
Our financial strategy is a key part of our
value creation strategy
~40% dividend payout, but expect no less than 72 cents
per share annually subject to Board approval
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
1
target is 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) |
 22
Appendix |
 23
Key Financial Drivers and Free Cash Flow
Historical CAGR
3Q
3Q YTD
Actual
Forecast
(FY07-FY12)
FY13
FY13
FY12
FY13
2%
Total Revenue Growth
5%
4%
6%
3-4%
3%
Closed Sales
6%
4%
3%
4-5%
(2%)
Client Losses
(1%)
(1%)
(1%)
(1)%
1%
Net New Business
5%
3%
2%
3-4%
1%
Internal Growth
(a)
(2%)
(1%)
1%
0%
2%
Acquisitions
0%
0%
3%
0%
4%
Total Recurring
3%
2%
6%
3-4%
(1%)
Event-Driven
(b)
0%
0%
0%
0%
(1%)
Distribution
(c)
2%
2%
0%
0%
0%
FX/Other
(0%)
(0%)
0%
0%
EBIT Margin
(Non-GAAP)
13.0%
8.9%
13.9%
14.9 -
15.7%
Tax Rate
35.9%
36.0%
35.6%
37.0%
Free Cash Flow
(d)
(Non-GAAP)
$37M
$244M
$196-249M
(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 (c) Distribution includes pass-through fees from
Matrix (d) Guidance does not take into consideration the effect of any future
acquisitions, additional debt and/or share repurchases (Recurring)
(Non-GAAP) |
 24
Broadridge FY13 Q3 and YTD from Continuing Operations
(a) FY12 Q3 excludes IBM Migration costs of $6M (after tax $4M, or $0.03 EPS impact). FY12 YTD Q3
excludes IBM Migration costs of $13M (after tax $8M, or $0.06 EPS impact).
FY12 Q3 excludes Restructuring and Impairment Charges of $22M (after tax
$14M, or $0.11 EPS impact). FY12 Q3 YTD and excludes Restructuring and Impairment Charges of $32M (after tax $21M, or $0.16 EPS impact).
FY13 Q3 excludes Restructuring Charges of $4M (after tax $2M, or $0.02 EPS
impact). FY13 Q3 YTD excludes Restructuring Charges of $8M (after tax $5M, or $0.04 EPS impact).
(b) Includes impacts of FX P&L and FX transaction activity.
(c) Represents amortization charges associated with intangible asset values as well as other deal
costs associated with the Company’s acquisitions. (d) FY12 Q3 excludes Acquisition
Amortization and Other Costs of $7M (after tax $4M or $0.04 EPS impact), IBM Migration costs of $6M (after tax $4M, or $0.03 EPS impact)
and Restructuring and Impairment Charges of $22M (after tax $14M, or $0.11
EPS impact) FY12 YTD Q3 excludes Acquisition Amortization and Other
Costs of $20M (after tax $13M or $0.10 EPS impact), IBM Migration costs of $13M (after tax $8M, or $0.06 EPS impact)
and Restructuring and Impairment Charges of $32M (after tax $21M, or $0.16
EPS impact). FY13 Q3 excludes Acquisition Amortization and Other Costs
of $6M (after tax $4M or $0.02 EPS impact) and Restructuring Charges of $4M (after tax $2M, or $0.02 EPS impact).
FY13 YTD Q3 excludes Acquisition Amortization and Other Costs of $17M (after
tax $11M or $0.08 EPS impact) and Restructuring Charges of $8M (after tax $5M, or $0.04 EPS impact).
(e) FY13 Q3 and FY13 YTD Q3 represents transition costs related to termination of the Penson agreement
including shutdown costs. FY12 Q3 and FY12 Q3 YTD represents Penson
OTTI charge and note receivable impairment charge. FY12
FY13
FY12
FY13
Q3
Q3
YTD Q3
YTD Q3
$37
$51
$56
$95
9.9%
12.6%
5.6%
8.8%
$25
$29
$73
$58
14.6%
16.9%
14.9%
11.9%
$62
$80
$129
$153
11.4%
13.9%
8.6%
9.8%
($4)
($8)
($17)
($23)
$3
$4
$8
$10
$60
$75
$120
$140
11.1%
13.0%
8.0%
8.9%
($3)
($4)
($10)
($11)
$7
$6
$20
$17
$64
$77
$130
$146
11.7%
13.4%
8.6%
9.3%
($23)
($28)
($47)
($53)
37.2%
35.9%
36.6%
36.0%
$41
$50
$83
$94
7.4%
8.6%
5.5%
6.0%
($4)
($4)
($12)
($11)
($14)
($2)
($21)
($5)
($4)
$0
($8)
$0
($23)
($6)
($41)
($16)
$18
$43
$42
$78
3.3%
7.5%
2.8%
5.0%
128.4
125.0
127.4
125.9
$0.32
$0.39
$0.65
$0.74
$0.14
$0.35
$0.33
$0.62
Earnings
Revenue
FY12
FY13
FY12
FY13
Q3
Q3
YTD Q3
YTD Q3
$374
$404
$1,004
$1,071
1%
8%
7%
7%
$169
$170
$489
$487
10%
0%
11%
0%
$543
$574
$1,493
$1,558
4%
6%
8%
4%
$0
$0
$0
$0
$3
$3
$10
$8
$547
$577
$1,503
$1,566
4%
5%
8%
4%
ICS
Growth % / Margin %
SPS
Growth % / Margin %
Total Segments
Margin %
Other
(a)
FX
(b)
Total Broadridge (Non-GAAP)
(a)
Growth % / Margin %
Interest & Other
Acquisition Amortization and Other Costs
(c)
Total EBT (Non-GAAP)
(d)
Margin %
Income taxes
(a)
Tax Rate
Total Net Earnings (Non-GAAP)
(d)
Margin %
Acquisition Amortization and Other Costs
(c)
Restructuring and Impairment Charges
(e)
IBM Migration costs
Non-GAAP Items (Net of Taxes)
Total Net Earnings (GAAP)
Margin %
Diluted Shares
Diluted EPS (Non-GAAP)
(d)
Diluted EPS (GAAP) |
 25
Broadridge FY13 Guidance from Continuing Operations
Revenue
Earnings
FY12
FY13 Range
FY12
FY13 Range
Actual
Low
High
Actual
Low
High
$1,634
$1,695
$1,707
$243
$291
$299
5%
4%
4%
14.9%
17.2%
17.5%
$655
$658
$683
$91
$79
$102
10%
0%
4%
13.9%
12.0%
15.0%
$2,290
$2,353
$2,390
$334
$370
$401
6%
3%
4%
14.6%
15.7%
16.8%
$0
$0
$0
($28)
($30)
($37)
$13
$13
$13
$14
$13
$13
$2,304
$2,366
$2,403
$319
$353
$377
6%
3%
4%
13.9%
14.9%
15.7%
($13)
($17)
($21)
$25
$22
$22
$331
$358
$378
14.4%
15.1%
15.7%
($118)
($133)
($140)
35.6%
37.0%
37.0%
Segments
$213
$226
$238
ICS
$50
$70
9.3%
9.5%
9.9%
SPS
$60
$80
Total
$110
$150
($15)
($14)
($14)
($58)
($6)
($6)
($15)
$0
$0
($88)
($20)
($20)
$125
$205
$218
5.4%
8.7%
9.1%
128
128
128
$1.67
$1.76
$1.86
$0.98
$1.60
$1.70
(b) Includes impacts of FX P&L and FX Transaction Activity.
* Guidance does not take into consideration the effect of any future acquisitions, additional debt
and/or share repurchases. (a) FY12 excludes IBM Migration costs of $25M (after tax $15M, or
$0.12 EPS impact) and Restructuring and Impairment Charges of $81M (after tax $58M, or $0.45 EPS impact). FY13
guidance excludes Restructuring and Impairment Charges of $10M (after tax $6M, or $0.05 EPS
impact). (c) Represents amortization charges associated with intangible asset values as well as
other deal costs associated with the Company’s acquisitions. (d) FY12 excludes Acquisition
Amortization and Other Costs of $25M (after tax $15M or $0.12 EPS impact), IBM Migration costs of $25M (after tax $15M, or $0.12 EPS impact) and
Restructuring
and
Impairment
Charges
of
$81M
(after
tax
$58M,
or
$0.45
EPS
impact).
FY13
guidance
excludes
Acquisition
Amortization
and
Other
Costs
of
$22M
(after
tax
$14M
or
$0.11
EPS impact) and Restructuring and Impairment Charges of $10M (after tax $6M, or $0.05 EPS
impact). (e) FY12 represents Penson deferred client conversion and startup costs, other than
temporary impairment charges, shutdown costs, cancellation of the note receivable, less the
elimination of the obligation to pay or credit Penson fees. FY13 represents transition costs
related to termination of the Penson agreement including shutdown costs. ($ in millions)
ICS
Growth % / Margin %
SPS
Growth % / Margin %
Total Segments
Margin %
Other
(a)
FX
(b )
Growth % / Margin %
Interest & Other
Acquisition Amortization and Other Costs
(c)
Total EBT (Non-GAAP)
(d)
Margin %
Income taxes
(d)
Tax Rate
Total Net Earnings (Non-GAAP)
(d)
Margin %
Acquisition Amortization and Other Costs
(c)
Restructuring and Impairment Charges
(e)
IBM Migration costs
Non-GAAP Items (Net of Taxes)
Total Net Earnings (GAAP)
Margin %
Diluted Shares
Diluted EPS (Non-GAAP)
(d)
Diluted EPS (GAAP)
Total
Broadridge
(Non-GAAP)
(a)
FY13 Range
Low
High
Recurring Closed Sales |
 26
Cash Flow –
YTD FY13 Results and FY13 Forecast
Nine Months
Ended
March 2013
Low
High
Free Cash Flow
(Non-GAAP)
:
Round
Net earnings from continuing operations (GAAP)
77.5
$
78
$
205
$
218
$
Depreciation and amortization (includes other LT assets)
70.9
71
95
105
Stock-based compensation expense
21.1
21
31
31
Other
3.0
3
(5)
5
Subtotal
172.5
173
326
359
Working capital changes
(41.3)
(41)
(15)
(15)
Long-term assets & liabilities changes
(58.9)
(59)
(60)
(50)
Net cash flow provided by continuing operating activities
72.3
73
251
294
Cash Flows From Investing Activities
Capital expenditures & software purchases
(35.6)
(36)
(55)
(45)
Free cash flow (Non-GAAP)
36.7
$
37
$
196
$
249
$
Cash Flows From Other Investing and Financing Activities
Stock repurchases net of options proceeds
(111.3)
(111)
(111)
(111)
Dividends paid
(64.2)
(64)
(86)
(86)
Other
0.5
-
(5)
5
Net change in cash and cash equivalents
(138.3)
(138)
(6)
57
Cash and cash equivalents, at the beginning of year
320.5
321
321
321
Cash and cash equivalents, at the end of period
182.2
$
182
$
315
$
378
$
(a) Guidance does not take into consideration the effect of any future
acquisitions, additional debt and/or share repurchases. FY13 Range
(a)
($ millions)
Unaudited
Free Cash Flow -
Non-GAAP |
 27
Revenues and Closed Sales FY07-FY13
($ in millions)
Forecast
Recurring Fee Revenues
FY07
FY08
FY09
FY10
FY11
FY12
CAGR
FY13
ICS
529
$
567
$
594
$
632
$
720
$
798
$
9%
$862-874
Growth
3%
7%
5%
6%
14%
11%
8-10%
SPS
527
$
534
$
559
$
536
$
594
$
655
$
4%
$658-683
Growth
11%
1%
5%
-4%
11%
10%
0-4%
Total Recurring Fee Revenues
1,056
$
1,101
$
1,153
$
1,168
$
1,313
$
1,453
$
7%
$1,520-1,557
Growth
7%
4%
5%
1%
12%
11%
4-7%
Event-Driven
203
$
200
$
180
$
257
$
135
$
132
$
-8%
~$129
Growth
33%
-1%
-10%
43%
-47%
-2%
-2%
Distribution
821
$
808
$
757
$
781
$
704
$
704
$
-3%
~$704
Growth
12%
-2%
-6%
3%
-10%
0%
0%
Other/FX
(12)
$
22
$
(17)
$
4
$
14
$
14
$
~$13
Total Revenues
2,068
$
2,131
$
2,072
$
2,209
$
2,167
$
2,304
$
2%
$2,366-2,403
Growth
12%
3%
-3%
7%
-2%
6%
3-4%
Recurring Closed Sales
63
$
82
$
95
$
119
$
113
$
120
$
14%
$110-150
Growth
-32%
30%
16%
25%
-5%
6%
-8-+25%
($ in millions)
Forecast
Event-Driven Fee Revenues
(a)
FY07
FY08
FY09
FY10
FY11
FY12
CAGR
FY13
Mutual Fund Proxy
79
$
92
$
55
$
150
$
39
$
28
$
-19%
$27
Mutual Fund Supplemental
51
$
49
$
58
$
48
$
44
$
47
$
-2%
$46
Contest/ Specials/ Other Communications
73
$
59
$
67
$
59
$
52
$
57
$
-5%
$56
Total Event-Driven Fee Revenues
203
$
200
$
180
$
257
$
135
$
132
$
-8%
$129
Growth
33%
-1%
-10%
43%
-47%
-2%
-2%
Recurring Distribution Revenues
(b)
593
$
580
$
567
$
564
$
573
$
597
$
0%
~$597
Growth
6%
-2%
-2%
-1%
2%
4%
0%
ED Distribution Revenues
(b)
228
$
228
$
190
$
217
$
131
$
107
$
-14%
~$107
Growth
35%
0%
-17%
14%
-39%
-18%
0%
Total Distribution Revenues
821
$
808
$
757
$
781
$
704
$
704
$
-3%
~$704
Growth
12%
-2%
-6%
3%
-10%
0%
0%
(a) Includes reclassification of Pre-sale Fulfillment from event-driven revenues to
recurring revenues. (b) Includes reclassification of Pre-sale Fulfillment
related distribution revenues and Matrix pass-through administrative services from event-driven revenues to recurring revenues. |
 28
Reconciliation of Non-GAAP to GAAP Measures
Reconciliation of EPS Guidance
2Q12
2Q13
YTD12
YTD13
FY10
FY11
FY12
FY13 Range
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Low
High
Guidance Provided in August 2012 - Diluted EPS (Non-GAAP)
$0.12
$0.14
$0.27
$0.29
$1.56
$1.37
$1.55
$1.65
$1.75
Acquisition Amortization and Other Costs
$0.03
$0.03
$0.06
$0.06
$0.04
$0.10
$0.12
0.11
0.11
Current Guidance - Diluted EPS (Non-GAAP)
$0.15
$0.17
$0.33
$0.35
$1.60
$1.47
$1.67
$1.76
$1.86
Acquisition Amortization and Other Costs
($0.03)
($0.03)
($0.06)
($0.06)
($0.04)
($0.10)
($0.12)
(0.11)
(0.11)
Restructuring and Impairment Charges
($0.05)
($0.01)
($0.05)
($0.02)
$0.00
$0.00
($0.45)
(0.05)
(0.05)
IBM Migration costs
($0.02)
$0.00
($0.03)
$0.00
$0.00
($0.03)
($0.12)
0.00
0.00
One-time recognition of deferred tax assets
$0.00
$0.00
$0.00
$0.00
$0.06
$0.00
$0.00
0.00
0.00
Current Guidance - Diluted EPS (GAAP)
$0.05
$0.13
$0.19
$0.27
$1.62
$1.34
$0.98
$1.60
$1.70
Reconciliation of EBT Guidance
(a)
2Q12
2Q13
YTD12
YTD13
FY10
FY11
FY12
FY13 Range
($ in millions)
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Low
High
Guidance Provided in August 2012 - Total EBT (Non-GAAP)
$24
$28
$53
$58
$342
$276
$306
$336
$356
Margin %
5.0%
5.7%
5.6%
5.8%
15.5%
12.7%
13.3%
14.2%
14.8%
Acquisition Amortization and Other Costs
$6
$6
$13
$11
$8
$19
$25
$22
$22
Current Guidance - Total EBT (Non-GAAP)
$30
$34
$66
$69
$350
$295
$331
$358
$378
Margin %
6.3%
6.9%
6.9%
7.0%
15.9%
13.6%
14.4%
15.1%
15.7%
Acquisition Amortization and Other Costs
($6)
($6)
($13)
($11)
($8)
($19)
($25)
($22)
($22)
Restructuring and Impairment Charges
($10)
($4)
($10)
($4)
$0
$0
($81)
($10)
($10)
IBM Migration costs
($4)
$0
($7)
$0
$0
($6)
($25)
$0
$0
Total EBT (GAAP)
$11
$25
$37
$53
$342
$270
$201
$326
$346
Margin %
2.2%
5.0%
3.8%
5.4%
15.5%
12.4%
8.7%
13.8%
14.4%
(a) Details may not sum to totals due to rounding
Six Months Ended
December 2012
Low
High
Free Cash Flow
(Non-GAAP)
:
Round
Net earnings from continuing operations (GAAP)
34.1
34
$
205
218
$
Depreciation and amortization (includes other LT assets)
48.3
48
95
105
Stock-based compensation expense
12.9
13
31
31
Other
-5.4
(5)
(5)
5
Subtotal
89.9
90
326
359
Working capital changes
-1.3
(1)
(15)
(15)
Long-term assets & liabilities changes
-15.1
(15)
(60)
(50)
Net cash flow (used in) provided by continuing operating activities
73.5
74
251
294
Cash Flows From Investing Activities
Capital expenditures & software purchases
-19
(19)
(55)
(45)
Free cash flow (Non-GAAP)
54.5
55
$
196
$
249
$
(a) Guidance does not take into consideration the effect of any future
acquisitions, additional debt and/or share repurchases. Free Cash Flow
- Non-GAAP
FY13 Range
(a)
($ millions)
Unaudited
$ |
 29
ICS Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
Fee Revenues
3Q12
3Q13
YTD FY12
YTD FY13
Type
Proxy
Equities
31.7
$
34.0
$
80.1
$
84.8
$
RC
Stock Record Position Growth
4%
7%
1%
3%
Pieces
24.5
27.1
66.1
68.1
Mutual Funds
5.5
$
7.1
$
19.3
$
22.7
$
ED
Pieces
6.6
13.0
29.6
36.7
Contests/Specials
3.0
$
2.3
$
9.7
$
7.3
$
ED
Pieces
3.0
2.2
10.7
6.7
Total Proxy
40.2
$
43.4
$
109.1
$
114.8
$
Total Pieces
34.2
42.3
106.5
111.5
Notice and Access Opt-in %
69%
70%
66%
64%
Suppression %
58%
59%
56%
60%
Interims
Mutual Funds (Annual/Semi-Annual Reports/Annual Prospectuses)
33.5
$
36.6
$
84.7
$
99.9
$
RC
Position Growth
7%
9%
9%
10%
Pieces
168.8
166.9
438.1
470.8
Mutual Funds (Supplemental Prospectuses) & Other
15.9
$
20.2
$
34.9
$
44.0
$
ED
Pieces
86.8
107.0
191.2
228.6
Total Interims
49.4
$
56.8
$
119.6
$
143.9
$
Total Pieces
255.7
273.9
629.3
699.4
Transaction
Transaction Reporting/Customer Communications
47.7
$
50.9
$
123.9
$
129.4
$
RC
Reporting
Fulfillment
Fulfillment
31.6
$
36.0
$
94.7
$
101.1
$
RC
Other
Other - Recurring (a)
25.8
$
28.5
$
76.8
$
80.8
$
RC
Communications
Other - Event-Driven (b)
12.1
$
8.1
$
27.7
$
23.6
$
ED
Total Other
37.9
$
36.6
$
104.5
$
104.4
$
Total Fee Revenues
206.8
$
223.6
$
551.6
$
593.6
$
Total Distribution Revenues (c)
167.2
$
180.6
$
452.2
$
476.9
$
Total Revenues as reported - GAAP
374.0
$
404.2
$
1,003.8
$
1,070.5
$
FY13 Ranges
Low
High
Total RC Fees
170.3
$
186.0
$
460.0
$
496.0
$
862
$
874
$
% RC Growth
8%
9%
0%
8%
8%
10%
Total ED Fees
36.5
$
37.7
$
91.6
$
97.6
$
129
$
129
$
Low
High
Sales
2%
5%
3%
4%
3%
3%
Losses
-1%
0%
-1%
0%
-1%
-1%
Key
Net New Business
1%
5%
2%
4%
2%
2%
Revenue
Internal growth
2%
-1%
2%
0%
2%
2%
Drivers
Recurring (Excluding Acquisitions)
3%
4%
4%
4%
4%
4%
Acquisitions
0%
0%
3%
0%
0%
0%
Total Recurring
3%
4%
7%
4%
4%
4%
Event-Driven
-1%
1%
-1%
0%
0%
0%
Distribution
-1%
3%
1%
3%
0%
0%
TOTAL
1%
8%
7%
7%
4%
4%
(a) Other Recurring fee revenues include revenues from acquisitions.
(b) Other Event-Driven fee revenues include revenues from corporate actions.
(c) Total Distribution Revenues primarily include pass-through revenues related to the physical
mailing of Proxy, Interims, Transaction Reporting, and Fulfillment as well as Matrix administrative services. |
 30
SPS and Outsourcing Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
3Q12
3Q13
YTD FY12
YTD FY13
Type
Equity
Transaction-Based
Equity Trades
35.5
$
33.8
$
104.7
$
94.9
$
RC
Internal Trade Volume
985
969
970
880
Internal Trade Growth
-11%
-2%
1%
-9%
Trade Volume (Average Trades per Day in '000)
1,005
979
982
888
Non-Transaction
Other Equity Services
87.3
92.3
252.1
$
264.2
$
RC
Total Equity
122.8
$
126.1
$
356.8
$
359.1
$
Fixed Income
Transaction-Based
Fixed Income Trades (a)
13.6
$
14.0
$
40.1
$
41.5
$
RC
Internal Trade Volume
299
298
294
293
Internal Trade Growth
3%
0%
6%
0%
Trade Volume (Average Trades per Day in '000
299
308
294
299
Non-Transaction
Other Fixed Income Services
10.8
$
12.3
$
33.5
$
35.8
$
RC
Total Fixed Income
24.4
$
26.2
$
73.7
$
77.2
$
Outsourcing
Outsourcing
22.1
$
17.3
$
58.4
$
51.0
$
RC
# of Clients
13
18
13
18
Total Net Revenue as reported -
GAAP
169.3
$
169.6
$
488.8
$
487.3
$
FY13 Ranges
Low
High
Sales
5%
7%
5%
5%
6%
8%
Losses
-1%
-2%
-1%
-2%
-2%
-2%
Key
Net New Business
4%
5%
4%
3%
4%
6%
Revenue
Transaction & Non-transaction
0%
-1%
2%
-1%
-1%
1%
Drivers
Concessions
-2%
-4%
-1%
-3%
-4%
-4%
Internal growth
-2%
-5%
1%
-4%
-5%
-3%
Acquisitions
8%
0%
6%
1%
1%
1%
TOTAL
10%
0%
11%
0%
0%
4% |
 31
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,
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).
Mutual
Funds
-
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.
Contests
-
Refers
to
the
proxy
services
we
provide
when
a
separate
agenda
is
put
forth
by
one
or
more
stockholders
that
is
in
opposition
to
the
proposals presented by
management of the company which is separately distributed and tabulated from
the company’s proxy materials. Specials
-
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 in which the company being acquired is a
public company and needs to solicit the approval of its stockholders).
Interims
Mutual
Funds
(Annual/Semi-Annual
Reports/Annual
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.
Mutual
Funds
(Supplemental
Prospectuses)
–
Refers
primarily
to
information
required
to
be
provided
by
mutual
funds
to
supplement
information
previously provided in an
annual
mutual
fund
prospectus
(e.g.,
change
in
portfolio
managers,
closing
funds
or
class
of
shares
to
investors,
or
restating
or
clarifying
items
in
the
original
prospectus).
The
events could occur at any time throughout the year.
Other
–
Refers
to
communications
provided
by
corporate
issuers
and
investment
companies
to
investors
including
newsletters,
notices,
tax
information, marketing materials and
other information not required to be distributed by regulation.
Transaction Reporting
Transaction Reporting
–
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.
Fulfillment
Post-Sale
Fulfillment
–
Refers
primarily
to
the
distribution
of
prospectuses,
offering
documents,
and
required
regulatory
disclosure
information
to
investors
in
connection
with
purchases of securities.
Pre-Sale
Fulfillment
–
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. Other Communications
Other
–
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. |