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

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8-K - FORM 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC.	d627723d8k.htm

November 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

Forward-Looking Statements

Use of Material Contained Herein

Explanation of the Company’s Use of 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. 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. In addition,

Broadridge believes this Non-GAAP information helps investors understand the effect of these items on reported results

and provides a better representation of the Company’s actual performance. Accompanying this presentation is a

reconciliation of these Non-GAAP measures to the comparable GAAP measures.

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.

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.

Broadridge Overview

Leading provider of Investor Communications and Technology-Driven Solutions to banks, broker-

dealers, mutual funds, and corporate issuers globally

We have strong positions in large and attractive markets with lots of room to grow

We have a balanced and diverse product portfolio across related businesses:

Bank/Broker-Dealer Communications and Issuer Services

Mutual Fund and Retirement Solutions

Bank/Broker-Dealer

Technology

and

Operations

will

grow

this

portfolio

capitalizing

three

disruptive

market

macro-trends:

Digital

transformation

Investor

Communications

digital

technologies

that

enable

lower

cost,

higher touch interactions

Cost

Mutualization

tremendous

industry

drive

standardize

duplicative,

non-differentiating

industry costs

Intelligence

created

from

our

unique

Data

enables

provide

clients

unrivaled

intelligence

and

create

unique

value

through

our

network

and

data

will

with

combination

organic

growth,

partnerships

and

acquisitions

As we move to the next phase of our journey we will target our opportunities across our related

businesses as follows…

Broadridge’s Strategic Vision and Journey to

Drive Top Quartile Stockholder Returns

This balanced approach, including a meaningful dividend and opportunistic share repurchases, expected

to drive top quartile total stockholder returns

Bank/Broker-Dealer

Communications and

Issuer Services

We enable the global

financial services industry to

communicate private and

significant information

securely and cost effectively

Broadridge’s Business Unit Strategy

Bank/Broker-Dealer

Technology and Operations

We are a scalable technology

services provider of equity and fixed

income processing to North

American sell side institutions with a

growing international and buy side

presence

We will leverage the jointly launched

post-trade processing platform with

Accenture to scale our unique 50-

market platform globally while

continuing to drive our core

solutions and addressing new

needs in adjacent markets (e.g.

fixed income, buy-side, derivatives)

We will lead the adoption of

digital and “big data”

capabilities to enhance

investors’, brokers’

and

corporate issuers’

efficiency

and decision making and

expand our offerings to provide

other communications of equal

significance

Mutual Fund and Retirement

Solutions

We are a rapidly growing

provider of data-driven reporting,

trade processing, compliance,

401k, and marketing solutions to

the mutual fund, retirement and

insurance industries across the

entire transaction lifecycle

Today

Focus of

the

Journey’s

phase

Leading provider of Investor Communications and Technology-Driven Solutions to banks,

broker-dealers, mutual funds, and corporate issuers globally

ICS-BBDI

ICS-Mutual

Funds

SPS

We will add new data-driven

capabilities to enable deeper

linkages between mutual funds

and their broker-dealer

distribution partners by fully

leveraging our unique network

serving the brokerage industry,

which continues to lead mutual

fund distribution

We are a Leader in a Number of Large

and Attractive Markets

Investor Communication Solutions

Securities Processing Solutions

U.S. and Global Banks/Broker-

Dealers Regulatory Communications

U.S. Banks/Broker-Dealers

Transactional Communications

U.S. Corporate Issuer Regulatory

Communications

U.S. Brokerage Processing

U.S. Fixed Income Processing

Canadian Brokerage Processing

International Brokerage Processing

Our leadership positions contribute to our

growing recurring fee revenues

HORIZON 1

Extend and defend existing core businesses

Time (years)

Throughout our Journey, we will Continue

to Enhance our Capabilities to Drive Growth

HORIZON 3

FY10

90%

FY14F

70%

FY10

10%

FY14F

30%

FY10

FY14F

.1%

* Percentage of Recurring Fee Revenue by Growth Horizon from FY10 to FY14 Forecast

Disruptive, transformative and longer term

businesses

Examples: Macro-trends-

digital comm., cost

mutualization, unique data

Adjacencies to build and expand emerging

businesses

Examples: Tax, asset data, mortgage backed

trading systems

HORIZON 2

Examples: Equity and mutual fund proxies, equity

and fixed income processing

Investor Communication Solutions (ICS)

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

ICS Operates a Unique Business Systems

Processing Model

Proxy

and

Interim

processing

system

the

“plumbing”

supporting

the

voting

process for corporate governance

Increase in electronic distribution

reduces postage revenue and

increases profits

ICS has a Diversified Revenue Base

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

Bank/Broker-Dealer clients

product

Broad client base

Financial metrics and statistics are for FY13 ended 6/30/13

Banks

Broker-Dealers

Mutual Funds

Corporate Issuers

Other

$151M

(9%)

Fulfillment

$143M

(8%)

Transaction

Reporting

$165M

(9%)

Interims

$191M

(11%)

Proxy

$356M

(20%)

Distribution

$755M (43%)

Primarily

Postage

ICS-Bank/Broker-Dealer Communications

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)

What We Do:

Beneficial proxy service

Registered shareholder communications

–

Registered proxy services

–

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-Issuer Services

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

services

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 Fund and Retirement Solutions

Securities Processing Solutions (SPS)

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

Broadridge global processing behind the scenes

Broadridge simplifies complex processes

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. 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

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%

SPS’s Client Base is Diversified Across

Large Financial Institutions

SPS client relationships are stable in volatile markets

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

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

SPS-Technology and Operations

Competitive Advantages:

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

What We Do:

Unique global technology platform

provides processing access to over 50

countries

Breadth of asset classes on single

“platform”

Flexible business model that can be

tailored to unique client needs

Trusted brand

Leading market position and scale

Financial Strategy

Our Financial Strategy is a key part of our

value creation strategy

Target paying out 40% of net earnings in dividends, but

expect

less

than

cents

per

annually

(subject

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 ratio 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)

Appendix

Key Financial Drivers

Actual

FY14

FY13

Range

Growth Drivers as a % of Recurring Revenues

Closed Sales

(Recurring)

7-8%

Client Losses

(2%)

(1%)

(3%)

Net New Business

4-5%

Internal Growth

(a)

(1%)

-1%

Organic Growth

10%

4-6%

Acquisitions

Total Recurring Revenue Growth

11%

5-7%

Growth Drivers as a % of Total Revenues

Recurring Revenue

-4%

Event-Driven

(b)

~0%

Distribution

(c)

~0%

FX/Other

(1%)

Total Revenue Growth

10%

-4%

EBIT Margin

(Non-GAAP)

13.8%

14.8%

15.8 -

16.4%

EPS

(Non-GAAP)

$0.39

$1.88

$2.00

-2.10

(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

Broadridge Q1 FY14

Broadridge FY14 Guidance

Cash

Flow

–Q1

FY14

Results

and

FY14

Forecast

Three Months Ending

September 2013

Low

High

Free Cash Flow

Net earnings from operations (GAAP)

233

246

Depreciation and amortization (includes other LT assets)

100

110

Stock-based compensation expense

Other

(2)

(5)

Subtotal

361

396

Working capital changes

(71)

(5)

Long-term assets & liabilities changes

(4)

(50)

(40)

Net cash flow (used in) provided by operating activities

(5)

306

361

Cash Flows From Investing Activities

Capital expenditures and software purchases

(13)

(60)

(55)

Free cash flow

(18)

246

306

Cash Flows From Other Investing and Financing Activities

Acquisitions

(38)

Stock repurchases net of options proceeds

(2)

Proceeds from borrowing net of debt repayments

(1)

Dividends paid

(22)

(96)

Other

(2)

(5)

Net change in cash and cash equivalents

(83)

104

174

Cash and cash equivalents, at the beginning of year

266

Cash and cash equivalents, at the end of period

183

370

440

(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

(Non-GAAP):

(Non-GAAP)

Revenues and Closed Sales FY08-FY13

Reconciliation of Non-GAAP to GAAP Measures

ICS Key Segment Revenue Stats

RC= Recurring

ED= Event-Driven

In millions

Fee Revenues

1Q13

1Q14

Type

Proxy

Equities

25.6

26.0

Stock Record Position Growth

-4%

Pieces

20.3

21.5

Mutual Funds

6.5

15.8

Pieces

8.2

20.4

Contests/Specials

3.0

4.2

Pieces

2.7

4.4

Total Proxy

35.1

46.0

Total Pieces

31.2

46.3

Notice and Access Opt-in %

48%

57%

Suppression %

56%

57%

Interims

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

31.8

38.8

Position Growth

12%

Pieces

150.7

173.5

Mutual Funds (Supplemental Prospectuses) & Other

14.7

12.2

Pieces

75.4

71.8

Total Interims

46.5

51.0

Total Pieces

226.1

245.3

Transaction

Transaction Reporting/Customer Communications

40.6

36.1

Reporting

Fulfillment

33.2

39.9

Emerging/Acquired

Emerging/Acquired (a)

25.8

34.2

and Other

Other (b)

8.1

8.4

+/-1% RC Fee Change:

Total Acquired, Emerging and Other

33.9

42.6

Fee

8.5

EBIT*

$3.4-$5.1

Total Fee Revenues

189.3

215.6

Total Distribution Revenues (c)

150.2

160.6

Total Revenues as reported - GAAP

339.5

376.2

FY14 Ranges

Low

High

Total RC Fees

157.0

175.0

903

921

% RC Growth

11%

Total ED Fees

32.3

40.6

146

Low

High

Sales

Key

Losses

-2%

Revenue

Net New Business

Drivers

Internal growth

(Recurring)

Recurring (Excluding Acquisitions)

10%

Acquisitions

Total Recurring

11%

Low

High

Revenue

Recurring Net (d)

Drivers

Event-Driven

-1%

(Total)

Distribution

TOTAL

11%

(a) Emerging and Acquired includes fee revenues from acquisitions (i.e. Access Data, New River, Matrix, Transfer Agency, Forefield, and Bonaire) and the portfolio of emerging products (i.e. Tax Services, Vote Recommendations, and Class Actions).

(b) Other includes other event-driven fee revenues such as corporate actions and development.

(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.

(d) Recurring, Net includes contribution from Net New Business, Internal Growth, and Acquisitions

mix(i.e. proxy or rev from new

sales

SPS Key Segment Revenue Stats

RC= Recurring

ED= Event-Driven

In millions

Note: Outsourcing is now included in Other Equity Services

1Q13

1Q14

Type

Equity

Transaction-Based

Equity Trades

30.0

32.4

Internal Trade Volume

780

891

Internal Trade Growth

-19%

14%

Trade Volume (Average Trades per Day in '000)

828

908

Non-Transaction

Other Equity Services

98.6

107.9

Total Equity

128.6

140.4

Fixed Income

Transaction-Based

Fixed Income Trades (a)

13.9

14.7

Internal Trade Volume

295

299

Internal Trade Growth

Trade Volume (Average Trades per Day in '000)

295

302

Non-Transaction

Other Fixed Income Services

11.5

13.6

Total Fixed Income

25.4

28.3

Total

Net

Revenue

reported

GAAP

153.9

168.7

FY14 Ranges

Low

High

Sales

11%

10%

Losses

-1%

-3%

-4%

Key

Net New Business

Internal growth

-8%

-2%

-1%

Acquisitions

TOTAL

-3%

10%

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

held

"street

name"

(meaning

that

they

are

held

record

brokers

banks,

which

turn

hold

the

behalf

their

clients,

the

ultimate

beneficial

owners)

and

held

"registered

name"

(shares

registered

directly

the

names

their

owners).

Mutual

Funds

Refers

the

proxy

services

provide

for

funds,

classes

trusts

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

change

directors,

fee

structures,

investment restrictions,

mergers

funds.

Contests

Refers

the

proxy

services

provide

when

separate

agenda

put

forth

one

stockholders

that

opposition

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., business combinations 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

the

services

provide

investment

companies

connection

with

information

they

are

required

regulation

distribute

periodically

their

investors.

These

reports

contain

pertinent

information

such

holdings,

fund

performance,

and other required

disclosure.

Mutual

Funds

(Supplemental

Prospectuses)

–

Refers

primarily

information

required

provided

mutual

funds

supplement

information

previously provided in an

annual

mutual

fund

prospectus

(e.g.,

change

portfolio

managers,

closing

funds

class

investors,

restating

clarifying

items

the

original

prospectus).

The

events could occur at any time throughout the year.

Other

–

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.

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

the

distribution

prospectuses,

offering

documents,

and

required

regulatory

disclosure

information

investors

connection

with

purchases of securities.

Pre-Sale

Fulfillment

–

Refers

the

distribution

marketing

literature,

welcome

kits,

enrollment

kits,

and

investor

information

prospective

investors,

existing

stockholders

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

Emerging,

Acquired

and

Other

Communications

Other

–

Refers

primarily

the

services

provide

connection

with

the

distribution

communications

material

not

included

the

above

definitions

such

non-objecting

beneficial

owner

(NOBO)

lists,

and

corporate

actions

such

tender

offer

transactions.

Emerging

–

Refers

the

services

provided

our

emerging

products

portfolio

(i.e.

Tax

Services,

Vote

Recommendations,

and

Class

Actions).

Acquired

–

Refers

the

services

provided

our

acquisitions

portfolio

(i.e.

Access

Data,

NewRiver,

Matrix,

Transfer

Agency,

Forefield,

and

Bonaire).

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