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| 8-K - FORM 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC. | d597526d8k.htm |
 September 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
such
as
“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 2014 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, 2013 (the “2013 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 2013 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 Broadridge’s clients or the investor communication services provided by Broadridge; declines in
participation
and
activity
in
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; a disaster or other significant
slowdown or failure of Broadridge’s systems or error in the performance of Broadridge’s services; overall market and economic
conditions
and
their
impact
on
the
securities
markets;
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, Restructuring and Impairment Charges, net, and a one-time
tax credit 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 outsourcing services agreement
between the Company and Penson Worldwide, Inc. (“Penson”), 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
th
consecutive year
1. As recognized by the NY Society of Human Resources in
2008-2013 |
 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 recurring revenue and earnings
growth
–
We expect to pay a meaningful dividend and to opportunistically buy back
shares |
 5
Description
Competitive
positioning
Key metrics
Investor Communication Solutions
Securities Processing Solutions
Includes bank, broker-dealer
communications, mutual funds and
retirement solutions and corporate issuer
solutions
Primarily provides processing and
distribution of proxy materials to investors in
equity securities and mutual funds, and
facilitates related vote processing
Includes bank/broker-dealer technology
and operations
Provides a suite of advanced
computerized real-time transaction
processing services that automate the
entire securities transaction lifecycle
Provides business outsourcing services
Processes ~85% of the outstanding proxy
shares in the U.S.
Processes ~72% of the shares voted outside
the U.S.
Leading back-
and middle-office securities
processing platform
Processes ~60% of U.S. fixed income
trades
Revenue: $1,760M
85%
1
recurring revenue
9% event-driven revenue (highly repeatable
every 2-3 years)
Processes ~2bn investor communications
annually
Revenue: $661M
100%
recurring revenue
Processed on average $5tn+ in daily
equity and fixed income trades in 2013
Clearing and settling capabilities in 50+
countries
27% of revenue
73% of revenue
Financial metrics and statistics are for FY13 ended 6/30/13
1
Percentage
of
recurring
revenue
excluding
pass-through
distribution
revenue
(related
to
the
physical
mailing
of
Proxy,
Interims,
Transaction
Reporting,
Fulfillment, and Matrix Administrative Services) and FX related revenue
Our market position is differentiated
and sustainable |
 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 Operates a Unique Business Systems
Processing Model
P R O X Y & I N T E R I M S P R O C E S S I N G O V E R
V I E W " T H E P L U M B I N G "
B r o k e r / B a n k 1
I s s u e r 1 / F u n d 1
B r o k e r / B a n k 2
I s s u e r 2 / F u n d 2
B r o k e r / B a n k 3
I s s u e r 3 / F u n d 3
B r o k e r / B a n k 4
I s s u e r 4 / F u n d 4
B r o k e r / B a n k 5
I s s u e r 5 / F u n d 5
B r o k e r / B a n k 6
I s s u e r 6 / F u n d 6
B r o k e r / B a n k 7
I s s u e r 7 / F u n d 7
B r o k e r / B a n k 8
I s s u e r 8 / F u n d 8
B r o k e r / B a n k 9
I s s u e r 9 / F u n d 9
B r o k e r / B a n k 1 0 +
I s s u e r 1 0 + / F u n d
1 0 +
A n n u a l C o r p o r a t e I s s u e r a n d M u t u a l
F u n d E v e n t s
P r o x y D i s t r i b u t i o n
A c c o u n t s
m a y r e q u i r e
s p e c i a l
p r o c e s s i n g
V o t e P r o c e s s i n g
M a j o r i t y o f a l l s h a r e s
a r e h e l d i n s t r e e t -
s i d e
S h a r e h o l d e r
P r e f e r e n c e s
D a t a b a s e
S h a r e h o l d e r
C o n s e n t
D a t a b a s e
E q u i t y a n d M u t u a l F u n d S h a r e h o l d e r
s I n F Y 1 3 , B r o a d r i d g e
p r o c e s s e d a p p r o x .
8 5 % o f U . S . s h a r e s
o u t s t a n d i n g
E l e c t r o n i c o r
P h y s i c a l V o t e R e t u r n
D a t a H u b a n d P l a t f o r m
E l e c t r o n i c o r
P h y s i c a l D e l i v e r y
S t r e e t-s i d e P r o c e s s i n g
R e g i s t e r e d P r o c e s s i n g
H a r d C o p y M a i l i n g s
M a y B e E l i m i n a t e d v i a
E-
D e l i v e r y a n d
S u p p r e s s i o n s
S h a r e s C a n B e V o t e d
E l e c t r o n i c a l l y
B R O A D R I D G E
P r o x y P r o c e s s i n g S y s t e m
Proxy
and
Interim
processing
system
is
the
“plumbing”
supporting
the
voting
process for corporate governance |
 10
Increase in electronic distribution
reduces postage revenue and
increases profits
Primarily
Postage
ICS has a Diversified Revenue Base
ICS is highly resilient due to our deep customer relationships with our
Bank/Broker-Dealer clients
By product
1
Broad client base
1
Financial metrics and statistics are for FY13 ended 6/30/13
Banks
Broker-Dealers
Mutual Funds
Corporate Issuers
Distribution
$755M
(43%)
Other
$151M
(9%)
Fulfillment
$143M
(8%)
Transaction
Reporting
$165M
(9%)
Interims
$191M
(11%)
Proxy
$356M
(20%) |
 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
shareholder communications to all types of
shareholders
Unmatched Scale
–
able to leverage one billion
plus shareholder communications annually as
well as record-keeping, corporate actions and
other shareholder account servicing
Unmatched Data
–
unique dataset of investors and
positions allows Issuers to more effectively
reach their shareholders
Thought Leadership –
unmatched expertise to
innovate the proxy process and help guide
Issuers through a complex regulatory
environment
ICS-Issuers |
 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%
Total addressable market ~ $14B fee revenue
$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 |
 16
Broadridge global processing behind the scenes
Broadridge simplifies complex processes |
 17
Fixed Income (~16%)
Transactions, $57M
Non-transactions, $50M
Equity
(~74%)
Transactions, $127M
Non-transactions, $359M
Outsourcing
(~10%)
$69M
Securities Processing North America Market Share
Overview
1
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
FY13 Product Revenues
Equity Processing Client Volume
U.S. $ Fixed Income Client Volume
Operations Outsourcing
Broadridge
~30%
Competitors
~20%
In-house
~50%
Broadridge
~7%
Untapped
Market
~93%
(>$1 Billion)
Competitors
~2%
In-house
~43%
Broadridge
~55% |
 18
SPS’s Client Base is Diversified Across
Large Financial Institutions
SPS client relationships are stable in volatile markets
Note:
The
above
schedule
is
an
alphabetical
listing
of
the
top
15
clients
(measured
by
revenue),
which
represented
approximately
60%
of
Securities
Processing
Solutions
revenues
in
FY13
Top
Equity Processing
Fixed Income
Clients
Retail
Institutional
Processing
Apex Clearing
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
Nomura
Royal Bank of Canada
Scotia Capital
Societe Generale
UBS Securities
Outsourcing |
 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
Target paying out 40% of net earnings in dividends, but
expect
no
less
than
84
cents
per
share
annually
(subject
to
quarterly 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 ratio¹
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 + 8x Rent Expense) / (EBITDA +
Rent Expense) |
 22
Appendix |
 23
Key Financial Drivers and Free Cash Flow
Historical CAGR
Actual
FY14
(FY08-FY13)
FY13
Range
3%
Total Revenue Growth
6%
2-4%
3%
Closed Sales
(Recurring)
4%
4-5%
(1%)
Client Losses
(1%)
(2%)
2%
Net New Business
3%
2-3%
0%
Internal Growth
(a)
(0%)
0-1%
2%
Acquisitions
0%
0%
4%
Total Recurring
3%
2-4%
(0%)
Event-Driven
(b)
1%
~0%
(1%)
Distribution
(c)
2%
~0%
(0%)
FX/Other
(0%)
0%
EBIT
Margin
(Non-GAAP)
14.8%
15.8 -
16.4%
Tax Rate (Non-GAAP)
35.7%
36.0%
Free Cash Flow
(d)
$220M
~$250-300M
(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 |
 24
Broadridge FY13 Q4 and FY13 from Continuing Operations
Revenue
FY12
FY13
FY12
FY13
FY12
FY13
FY12
FY13
Q4
Q4
Full Year
Full Year
Q4
Q4
Full Year
Full Year
$630
$690
$1,634
$1,760
ICS
$187
$208
$243
$302
2%
9%
5%
8%
Growth % / Margin %
29.7%
30.1%
14.9%
17.2%
$167
$173
$655
$661
SPS
$18
$27
$91
$85
10%
4%
10%
1%
Growth % / Margin %
11.0%
15.6%
13.9%
12.9%
$797
$863
$2,290
$2,421
Total Segments
$205
$235
$334
$387
4%
8%
6%
6%
Margin %
25.8%
27.2%
14.6%
16.0%
$0
$0
$0
$0
Other
(a)
($11)
($21)
($28)
($44)
$3
$2
$13
$10
FX
(b)
$5
$5
$14
$15
$800
$865
$2,304
$2,431
Total Broadridge (Non-GAAP)
(a)
$200
$219
$319
$359
3%
8%
6%
6%
Growth % / Margin %
24.9%
25.3%
13.9%
14.8%
Interest & Other
($4)
($5)
($13)
($15)
Acquisition
Amortization
and
Other
Costs
(c)
$5
$7
$25
$24
Total EBT (Non-GAAP)
(d)
$201
$221
$331
$367
Margin %
25.1%
25.6%
14.4%
15.1%
Income taxes
($71)
($79)
($118)
($131)
Tax Rate
35.1%
35.6%
35.6%
35.7%
Total Net Earnings (Non-GAAP)
(d)
$131
$142
$213
$236
Margin %
16.3%
16.5%
9.3%
9.7%
Acquisition Amortization and Other Costs
(c)
($3)
($4)
($15)
($15)
Restructuring and Impairment Charges, net
(e)
($37)
($3)
($58)
($9)
IBM Migration costs
($7)
$0
($15)
$0
Non-GAAP Items (Net of Taxes)
($47)
($8)
($88)
($24)
Total Net Earnings (GAAP)
$83
$135
$125
$212
Margin %
10.4%
15.6%
5.4%
8.7%
Diluted Shares
127.6
123.8
127.5
125.4
Diluted EPS (Non-GAAP)
(d)
$1.02
$1.15
$1.67
$1.88
Diluted EPS (GAAP)
$0.65
$1.09
$0.98
$1.69
Earnings
(a)
FY12 Q4 excludes IBM Migration costs of $12M (after tax $7M, or $0.06 EPS impact).
FY12 Full Year excludes IBM Migration costs of $25M (after tax $15M, or $0.12 EPS impact).FY12 Q4 excludes
Restructuring and Impairment Charges, net of $49M (after tax $30M, or $0.23 EPS
impact). FY12 Full Year excludes Restructuring and Impairment Charges, net of $81M (after tax $50M, or $0.39 EPS
impact).
FY13 Q4 excludes Restructuring and Impairment Charges, net of $12M (after tax $8M,
or $0.06 EPS impact). FY13 Full Year excludes Restructuring and Impairment
Charges, net of $20M (after tax $13M, or $0.10 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 Q4 excludes Acquisition Amortization and Other Costs of $5M
(after tax $3M or $0.02 EPS impact), IBM Migration costs of $12M (after tax $7M, or
$0.06 EPS impact), Restructuring and Impairment Charges, net of $49M (after
tax $30M, or $0.23 EPS impact) and a one time tax expense of $7M (or $0.06
EPS impact). FY12 Full Year 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), Restructuring and Impairment Charges, net of $81M (after tax $50M, or $0.39 EPS impact) and a one time tax
expense of $7M (or $0.06 EPS impact) FY13 Q4 excludes Acquisition Amortization and
Other Costs of $7M (after tax $4M or $0.04 EPS impact), Restructuring and Impairment Charges, net of $12M (after tax
$8M, or $0.06 EPS impact) and a one time tax credit of $4M (or $0.04 EPS impact),
FY13 Full Year excludes Acquisition Amortization and Other Costs of $24M (after tax $15M or $0.12 EPS impact),
Restructuring and Impairment Charges, net of $20M (after tax $13M, or $0.10 EPS
impact) and a one time tax credit of $4M ($0.03 EPS impact). (e)
FY13 Q4 and FY13 Full Year represents transition costs related to termination of
the Penson agreement including shutdown costs, a one-time cost to restructure and outsource certain processing related to our
desktop applications and a one-time tax credit. FY12 Q4 and FY12 Full Year
represents Penson deferred client conversion and startup costs, OTTI charges, shutdown costs, less the elimination of the obligation
to pay or credit Penson fees and one time tax expense. FY12 Full
Year also includes the cancellation of the Note Receivable.
|
 25
Revenue
Earnings
FY13
FY14 Range
FY13
FY14 Range
Actual
Low
High
($ in millions)
Actual
Low
High
$1,760
$1,785
$1,812
ICS
$302
$316
$328
8%
1%
3%
Growth % / Margin %
17.2%
17.7%
18.1%
$661
$678
$695
SPS
$85
$100
$117
1%
3%
5%
Growth % / Margin %
12.9%
14.8%
16.8%
$2,421
$2,463
$2,506
Total Segments
$387
$416
$445
6%
2%
4%
Margin %
16.0%
16.9%
17.8%
$0
$0
$0
Other
(a)
($44)
($39)
($47)
$10
$10
$10
FX
(b)
$15
$14
$14
$2,431
$2,473
$2,517
Total Broadridge (Non-GAAP)
(a)
$359
$391
$412
6%
2%
4%
Growth % / Margin %
14.8%
15.8%
16.4%
Interest & Other
($15)
($26)
($28)
Acquisition Amortization and Other Costs
(c)
$24
$22
$22
Total EBT (Non-GAAP)
(d)
$367
$387
$406
Margin %
15.1%
15.6%
16.1%
Income taxes
($131)
($139)
($146)
Recurring Closed Sales
Tax Rate
35.7%
36.0%
36.0%
FY14 Range
Segments
Low
High
Total Net Earnings (Non-GAAP)
(d)
$236
$248
$260
ICS
(<$5M)
$60
$70
Margin %
9.7%
10.0%
10.3%
SPS
(<$5M)
$30
$40
Large Deals (
$5M)
$20
$40
Acquisition Amortization and Other Costs
(c)
($15)
($14)
($14)
Total
$110
$150
Restructuring Charges
(e)
($9)
$0
$0
Non-GAAP Items (Net of Taxes)
($24)
($14)
($14)
Total Net Earnings (GAAP)
$212
$233
$246
Margin %
8.7%
9.4%
9.8%
Diluted Shares
125
124
124
Diluted EPS (Non-GAAP)
(d)
$1.88
$2.00
$2.10
Diluted EPS (GAAP)
$1.69
$1.89
$1.99
(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) FY13 excludes Restructuring and Impairment Charges, net of $20M
(after tax $13M, or $0.10 EPS impact). (c) Represents amortization charges associated with
intangible asset values as well as other deal costs associated with the Company’s acquisitions.
(d) FY13 excludes Acquisition Amortization and Other Costs of $24M (after tax $15M or $0.12 EPS
impact), Restructuring Charges of $20M (after tax $13M, or $0.10 EPS impact) and a one time tax
credit of $4M (or $0.03 EPS impact). FY14 guidance excludes Acquisition Amortization and Other Costs of
$22M (after tax $14M or $0.11 EPS impact).
(e) FY13 represents transition costs related to termination of the Penson agreement including shutdown
costs, a one-time cost to restructure and outsource certain processing related to our
decktop applications and one-time tax credit.
Broadridge FY14 Guidance from Continuing Operations |
 26
Cash Flow –FY13 Results and FY14 Forecast
Year Ended
June 2013
Low
High
Free Cash Flow
(Non-GAAP)
:
Net earnings from continuing operations (GAAP)
212
$
233
$
246
$
Depreciation and amortization (includes other LT assets)
93
100
110
Stock-based compensation expense
27
33
35
Other
21
(5)
5
Subtotal
353
361
396
Working capital changes
(30)
(5)
5
Long-term assets & liabilities changes
(52)
(50)
(40)
Net cash flow (used in) provided by continuing operating activities
271
306
361
Cash Flows From Investing Activities
Capital expenditures and software purchases
(51)
(60)
(55)
Free cash flow (Non-GAAP)
220
$
246
$
306
$
Cash Flows From Other Investing and Financing Activities
Acquisitions
-
-
-
Stock repurchases net of options proceeds
(183)
-
-
Proceeds from borrowing net of debt repayments
-
-
-
Dividends paid
(86)
(96)
(96)
Other
(6)
(5)
5
Net change in cash and cash equivalents
(55)
145
215
Cash and cash equivalents, at the beginning of year
321
266
266
Cash and cash equivalents, at the end of period
266
$
411
$
481
$
(a) Guidance does not take into consideration the effect of any future acquisitions, additional debt
and/or share repurchases. Free Cash Flow - Non-GAAP
FY14 Range (a)
($ millions)
Unaudited |
 27
Revenues and Closed Sales FY07-FY13
($ in millions)
CAGR
Forecast
Recurring Fee Revenues
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY07-FY13
FY14
ICS
529
$
567
$
594
$
632
$
720
$
798
$
850
$
8%
$903-921
Growth
7%
5%
6%
14%
11%
7%
6-8%
SPS
527
$
534
$
559
$
536
$
594
$
655
$
661
$
4%
$678-695
Growth
1%
5%
-4%
11%
10%
1%
3-5%
Total Recurring Fee Revenues
1,056
$
1,101
$
1,153
$
1,168
$
1,313
$
1,453
$
1,511
$
6%
$1,581-1,616
Growth
4%
5%
1%
12%
11%
4%
5-7%
Event-Driven
203
$
200
$
180
$
257
$
135
$
132
$
156
$
-4%
~$146
Growth
-1%
-10%
43%
-47%
-2%
18%
(6)%
Distribution
821
$
808
$
757
$
781
$
704
$
704
$
755
$
-1%
$736-745
Growth
-2%
-6%
3%
-10%
0%
7%
(3)-(1)%
Other/FX
(12)
$
22
$
(17)
$
4
$
14
$
14
$
10
$
~$10
Total Revenues
2,068
$
2,131
$
2,072
$
2,209
$
2,167
$
2,304
$
2,431
$
3%
$2,473-2517
Growth
3%
-3%
7%
-2%
6%
6%
2-4%
Small (<$5M)
63
$
65
$
80
$
66
$
66
$
108
$
103
$
9%
$90-110
Large (=>$5M)
0
$
17
$
15
$
53
$
47
$
12
$
18
$
$20-40
Recurring Closed Sales
63
$
82
$
95
$
119
$
113
$
120
$
121
$
11%
$110-150
Growth
30%
16%
25%
-5%
6%
0%
-9-+24%
ICS Segment
Event-Driven Fee and Distribution Revenue Chart
FY07-FY13
($ in millions)
CAGR
Forecast
Event-Driven Fee Revenues
(a)
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY07-FY13
FY14
Mutual Fund Proxy
79
$
92
$
55
$
150
$
39
$
28
$
43
$
-10%
$39
Mutual Fund Supplemental
51
$
49
$
58
$
48
$
44
$
47
$
58
$
2%
$53
Contest/ Specials/ Other Communications
73
$
59
$
67
$
59
$
52
$
57
$
54
$
-5%
$53
Total Event-Driven Fee Revenues
203
$
200
$
180
$
257
$
135
$
132
$
156
$
-4%
$146
Growth
-1%
-10%
43%
-47%
-2%
18%
-6%
Recurring Distribution Revenues
(b)
593
$
580
$
567
$
564
$
573
$
597
$
629
$
1%
$620-629
Growth
-2%
-2%
-1%
2%
4%
5%
(1)-0%
ED Distribution Revenues
(b)
228
$
228
$
190
$
217
$
131
$
107
$
126
$
-9%
~$115
Growth
0%
-17%
14%
-39%
-18%
17%
(8)%
Total Distribution Revenues
821
$
808
$
757
$
781
$
704
$
704
$
755
$
-1%
~$736-745
Growth
-2%
-6%
3%
-10%
0%
7%
(3) -
(1)%
(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
4Q12
4Q13
FY11
FY12
FY13
FY14 Range
Actual
Actual
Actual
Actual
Actual
Low
High
Diluted EPS (Non-GAAP)
$1.02
$1.15
$1.47
$1.67
$1.88
$2.00
$2.10
Acquisition Amortization and Other Costs
($0.02)
($0.04)
($0.10)
($0.12)
($0.12)
(0.11)
(0.11)
Restructuring and Impairment Charges, net
($0.29)
($0.02)
$0.00
($0.45)
($0.07)
0.00
0.00
IBM Migration costs
($0.06)
$0.00
($0.03)
($0.12)
$0.00
0.00
0.00
Diluted EPS (GAAP)
$0.65
$1.09
$1.34
$0.98
$1.69
$1.89
$1.99
Reconciliation of EBT Guidance (a)
4Q12
4Q13
FY11
FY12
FY13
FY14 Range
($ in millions)
Actual
Actual
Actual
Actual
Actual
Low
High
Total EBT (Non-GAAP)
$201
$221
$295
$331
$367
$387
$406
Margin %
25.1%
25.6%
13.6%
14.4%
15.1%
15.6%
16.1%
Acquisition Amortization and Other Costs
($5)
($7)
($19)
($25)
($24)
($22)
($22)
Restructuring and Impairment Charges, net
($49)
($12)
$0
($81)
($20)
$0
$0
IBM Migration costs
($12)
$0
($6)
($25)
$0
$0
$0
Total EBT (GAAP)
$135
$202
$270
$201
$323
$365
$384
Margin %
16.9%
23.4%
12.4%
8.7%
13.3%
14.8%
15.3%
(a) Details may not sum to totals due to rounding
Year Ended
June 2013
Low
High
Free
Cash
Flow
(Non-GAAP):
Net earnings from continuing operations (GAAP)
212
$
233
$
246
$
Depreciation and amortization (includes other LT assets)
93
100
110
Stock-based compensation expense
27
33
35
Other
21
(5)
5
Subtotal
353
361
396
Working capital changes
(30)
(5)
5
Long-term assets & liabilities changes
(52)
(50)
(40)
Net cash flow (used in) provided by continuing operating activities
271
306
361
Cash Flows From Investing Activities
Capital expenditures and software purchases
(51)
(60)
(55)
Free
cash
flow
(Non-GAAP)
220
$
246
$
306
$
(a) Guidance does not take into consideration the effect of any future
acquisitions, additional debt and/or share repurchases. Free Cash Flow
- Non-GAAP
FY14 Range
(a)
($ millions)
Unaudited |
  29
ICS Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
Fee Revenues
4Q12
4Q13
FY12
FY13
Type
Proxy
Equities
202.7
$
211.8
$
282.8
$
296.6
$
RC
Stock Record Position Growth
1%
2%
1%
2%
Pieces
214.4
219.1
280.5
287.3
Mutual Funds
8.9
$
20.8
$
28.2
$
43.5
$
ED
Pieces
12.0
29.9
41.7
66.6
Contests/Specials
6.0
$
8.1
$
15.7
$
15.4
$
ED
Pieces
6.3
7.7
17.0
14.5
Total Proxy
217.6
$
240.7
$
326.7
$
355.5
$
Total Pieces
232.7
256.7
339.3
368.4
Notice and Access Opt-in %
64%
68%
64%
67%
Suppression %
60%
60%
59%
59%
Interims
Mutual Funds (Annual/Semi-Annual Reports/Annual Prospectuses)
28.3
$
33.7
$
113.0
$
133.6
$
RC
Position Growth
8%
11%
9%
11%
Pieces
145.4
159.4
583.5
630.2
Mutual Funds (Supplemental Prospectuses) & Other
11.9
$
13.6
$
46.8
$
57.6
$
ED
Pieces
59.0
77.9
250.2
306.5
Total Interims
40.2
$
47.3
$
159.8
$
191.2
$
Total Pieces
204.4
237.3
833.7
936.7
Transaction
Transaction Reporting/Customer Communications
40.6
$
35.2
$
164.5
$
164.6
$
RC
Reporting
Fulfillment
Fulfillment
37.5
$
41.9
$
132.1
$
143.0
$
RC
Other
Other - Recurring (a)
28.5
$
31.4
$
105.3
$
112.2
$
RC
Communications
Other - Event-Driven (b)
13.5
$
15.4
$
41.2
$
39.0
$
ED
Total Other
42.0
$
46.8
$
146.5
$
151.2
$
Total Fee Revenues
377.9
$
411.9
$
929.6
$
1,005.5
$
Total Distribution Revenues (c)
252.2
$
277.8
$
704.4
$
754.7
$
Total Revenues as reported - GAAP
630.2
$
689.7
$
1,634.0
$
1,760.2
$
FY14 Ranges
Total RC Fees
337.7
$
354.0
$
797.7
$
850.0
$
Low
High
% RC Growth
5%
5%
11%
7%
903
$
921
$
Total ED Fees
40.3
$
57.9
$
131.9
$
155.5
$
6%
8%
146
$
146
$
Low
High
Sales
3%
2%
3%
3%
2%
3%
Losses
-1%
-1%
-1%
0%
-1%
-1%
Key
Net New Business
2%
1%
2%
3%
1%
2%
Revenue
Internal growth
1%
1%
1%
1%
0%
1%
Drivers
Recurring (Excluding Acquisitions)
3%
2%
3%
4%
1%
3%
Acquisitions
0%
0%
2%
0%
1%
1%
Total Recurring
3%
2%
5%
4%
2%
4%
Event-Driven
1%
3%
0%
1%
-1%
-1%
Distribution
-2%
4%
0%
3%
0%
0%
TOTAL
2%
9%
5%
8%
1%
3%
(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
4Q12
4Q13
FY12
FY13
Type
Equity
Transaction-Based
Equity Trades
32.4
$
31.6
$
137.1
$
126.5
$
RC
Internal Trade Volume
883
936
948
894
Internal Trade Growth
-7%
6%
-1%
-6%
Trade Volume (Average Trades per Day in '000)
908
944
963
903
Non-Transaction
Other Equity Services
85.5
95.1
337.6
$
359.3
$
RC
Total Equity
117.9
$
126.7
$
474.7
$
485.8
$
Fixed Income
Transaction-Based
Fixed Income Trades
13.9
$
15.1
$
54.0
$
56.5
$
RC
Internal Trade Volume
296
305
294
296
Internal Trade Growth
9%
3%
6%
1%
Trade Volume (Average Trades per Day in '000
297
318
294
304
Non-Transaction
Other Fixed Income Services
11.1
$
13.7
$
44.7
$
49.5
$
RC
Total Fixed Income
25.0
$
28.8
$
98.6
$
106.0
$
Outsourcing
Outsourcing
23.8
$
17.7
$
82.2
$
68.7
$
RC
# of Clients
17
18
17
18
Total Net Revenue as reported - GAAP
166.7
$
173.2
$
655.5
$
660.5
$
FY14 Ranges
Low
High
Sales
6%
10%
5%
6%
9%
10%
Losses
-1%
-3%
-1%
-2%
-4%
-4%
Key
Net New Business
5%
7%
4%
4%
5%
6%
Internal growth
-2%
-3%
-1%
-4%
-2%
-1%
Acquisitions
7%
0%
7%
1%
0%
0%
TOTAL
10%
4%
10%
1%
3%
5% |
 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, restrictions, or mergers of
investment 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. |