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| 8-K/A - 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC. | form8-ka.htm |
1© 2017 |
Earnings Webcast &
Conference Call
Fourth Quarter and Fiscal Year 2017
EXHIBIT 99.2
© 2017 |
Forward-Looking Statements
This presentation and other written or oral statements made from time to time by representatives of Broadridge Financial Solutions, Inc.
("Broadridge" or the "Company") 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 2018 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, 2016 (the “2016 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 2016 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; any material breach of Broadridge security affecting its clients’ customer
information; changes in laws and regulations affecting Broadridge’s clients or the services provided by Broadridge; declines in participation
and activity in the securities markets; 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.
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Use of Non-GAAP Financial Measures
Explanation and Reconciliation of the Company’s Use of Non-GAAP Financial Measures
The Company’s results in this presentation are presented in accordance with U.S. GAAP except where otherwise noted. In certain circumstances, results have been
presented that are not generally accepted accounting principles measures (“Non-GAAP”). These Non-GAAP measures are Adjusted Operating income, Adjusted
Operating income margin, Adjusted Net earnings, Adjusted earnings per share, and Free cash flow. These Non-GAAP financial measures should be viewed in addition
to, and not as a substitute for, the Company’s reported results.
The Company believes its Non-GAAP financial measures help investors understand how management plans, measures and evaluates the Company’s business
performance. Management believes that Non-GAAP measures provide consistency in its financial reporting and facilitates investors’ understanding of the Company’s
operating results and trends by providing an additional basis for comparison. Management uses these Non-GAAP financial measures to, among other things, evaluate
the Company's ongoing operations, for internal planning and forecasting purposes and in the calculation of performance-based compensation. In addition, and as a
consequence of the importance of these Non-GAAP financial measures in managing its business, the Company’s Compensation Committee of the Board of Directors
incorporates Non-GAAP financial measures in the evaluation process for determining management compensation.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Net Earnings and Adjusted Earnings per Share
These Non-GAAP measures reflect Operating income, Operating income margin, Net earnings, and Diluted earnings per share, as adjusted to exclude the impact of
certain costs, expenses, gains and losses and other specified items that management believes are not indicative of the Company's ongoing operating performance.
These adjusted measures exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, Acquisition and Integration Costs and the
Message Automation Limited ("MAL") investment gain. Amortization of Acquired Intangibles and Purchased Intellectual Property represents non-cash expenses
associated with the Company's acquisition activities. Acquisition and Integration Costs represent certain transaction and integration costs associated with the
Company’s acquisition activities. The MAL investment gain represents a non-cash, nontaxable gain on the Company’s 25% investment of shares of MAL. The Company
excludes Amortization of Acquired Intangibles and Purchased Intellectual Property, Acquisition and Integration Costs and the MAL investment gain from these
measures because excluding such information provides the Company with an understanding of the results from the primary operations of its business and these
items do not reflect ordinary operations or earnings. Management believes these measures may be useful to an investor in evaluating the underlying operating
performance of the Company's business.
Free Cash Flow
In addition to the Non-GAAP financial measures discussed above, the Company provides Free cash flow information because it considers Free cash flow to be a
liquidity measure that provides useful information to management and investors about the amount of cash generated that could be used for dividends, share
repurchases, strategic acquisitions and other discretionary investments. Free cash flow is a Non-GAAP financial measure and is defined by the Company as Net cash
flows provided by operating activities less Capital expenditures and Software purchases and capitalized internal use software.
Reconciliations of such Non-GAAP measures to the most directly comparable financial measures presented in accordance with GAAP can be found in the tables that
are part of this presentation.
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.
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© 2017 |
Highlights
▪ Strong fiscal year 2017 financial results
◦ 2017 recurring revenues rose 29%, including 6% organic growth
◦ Diluted EPS growth of 7% and Adjusted EPS growth of 15% to $3.13
▪ 14% recurring fee revenue and 11% Adjusted Earnings CAGR in line
or ahead of three year objectives
▪ Record Closed sales of $188 million up 25%
◦ Notable 4Q sales include back office managed services deal, proxy win-
back and strong contribution from NACC
◦ Strong pipeline
▪ NACC acquisition on track to achieve near-term, medium-term, and
long-term strategic goals
▪ 11% dividend increase underscores commitment to long-term
shareholder value and balanced capital allocation
▪ Fiscal year 2018 guidance calls for continued solid organic growth,
margin expansion, and double digit Adjusted EPS growth
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Business Update: Balanced Growth
▪ ICS segment benefited from growth in asset servicing activity
◦ Stock record growth accelerated to 8% from 3% in fiscal 2017 and mutual
fund interim record growth strengthened through the year
◦ NACC acquisition was the biggest driver of recurring fee revenue growth
◦ Event-driven activity benefited from increase in mutual fund activity and
recent activist campaigns
◦ Expect continued growth in 2018 with moderating impact from known
client losses in customer communications business
▪ Continued momentum in GTO
◦ Sales led growth reflects strong sales in recent years
◦ Record sales and implementation backlog position GTO for continued
growth
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© 2017 |
4Q 2017 Revenue Growth Drivers
▪ Fourth Quarter 2017 Recurring fee revenue grew 24% to $806 million
▪ Fourth Quarter 2017 Total revenue grew 38% to $1,346 million
4Q16 Total Revs. Recurring Event Driven Distribution FX 4Q17 Total Revs.
$1,346 M+16% +4%
+19%
-1%
4Q16 Recurring Revs. Closed Sales Client Losses Internal Growth Acquisitions 4Q17 Recurring Revs.
$975 M
$649 M
$806 M+5%
-2%
+4%
+17% +24%
+38%
Organic Growth: 8%
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Fiscal Year 2017 Revenue Growth Drivers
▪ Fiscal Year 2017 Recurring fee revenue grew 29% to $2.5 billion
▪ Fiscal Year 2017 Total revenue grew 43% to $4.1 billion
FY16 Total Revs. Recurring Event Driven Distribution Other FY17 Total Revs.
$4.1B
+19% +1%
+24%
-1%
FY16 Recurring Revs. Closed Sales Client Losses Internal Growth Acquisitions FY17 Recurring Revs.
$2.9 B
$1.9 B
$2.5 B
+6%
-2%
2%
+24% +29%
+43%
Organic Growth: 6%
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© 2017 |
Fourth Quarter 2017 Operating Income and EPS
Comparison
$ in millions, except per share amounts
4Q 2017 Change in Operating Income and
Adjusted Operating Income
4Q 2017 Change in EPS and Adjusted EPS
Operating Income Adj. Operating Income
$350
$330
$310
$290
$270
$250
4Q 2016 4Q 2017
$270
$297
$279
$324
Diluted EPS Adjusted EPS
$1.80
$1.70
$1.60
$1.50
$1.40
$1.30
$1.20
4Q 2016 4Q 2017
$1.40
$1.57
$1.45
$1.71
18%
16%
10%
12%
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© 2017 |
Fiscal Year 2017 Operating Income and EPS
Comparison
$ in millions, except per share amounts
Fiscal Year 2017 Change in Operating Income
and Adjusted Operating Income
Fiscal Year 2017 Change in EPS and
Adjusted EPS
Operating Income Adj. Operating Income
$650
$600
$550
$500
$450
FY 2016 FY 2017
$500
$532$537
$623
Diluted EPS Adjusted EPS
$3.20
$3.00
$2.80
$2.60
$2.40
$2.20
$2.00
FY 2016 FY 2017
$2.53
$2.70$2.73
$3.13
15%
16%
6%
7%
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($ in millions)
Investor Communication Solutions ("ICS")
4Q 2016 4Q 2017 Change FY 2016 FY 2017 Change
Recurring fee revenues $460 $596 30% $1,157 $1,649 42%
Total revenues $804 $1,162 45% $2,220 $3,421 54%
Earnings before income taxes $262 $296 13% $409 $421 3%
Pre-tax margins 32.6% 25.5% 18.4% 12.3%
Global Technology and Operations ("GTO")
4Q 2016 4Q 2017 Change FY 2016 FY 2017 Change
Total revenues $190 $210 11% $738 $803 9%
Earnings before income taxes $36 $41 15% $135 $170 25%
Pre-tax margins 18.7% 19.3% 18.3% 21.1%
Segment Results
Note: Amounts may not recalculate due to rounding.
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© 2017 |
Capital Allocation and Summary Balance Sheet
Fiscal Years 2014 - 2017:
Select Uses of Cash
Summary Balance Sheet
as of June 30, 2017
Assets
Cash and equivalents $ 271
Other assets 2,879
Total assets $ 3,150
Liabilities and Stockholders' Equity
Total debt outstanding $ 1,102
Other liabilities 1,044
Total liabilities $ 2,146
Total stockholders' equity $ 1,004
(a) Purchases of Treasury stock, net of proceeds from exercise of stock options
(b) Includes purchase of intellectual property assets
$ in millions
Dividends Share Repurchases (a)
Acquisitions (b)
$1,000
$800
$600
$400
$200
$0
FY 2014 FY 2015 FY 2016 FY 2017
$97 $122 $138 $152
$80
$240
$95
$282
$97
$203
$56
$539
Amounts may not sum due to rounding.
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© 2017 |
Fiscal Year 2018 Guidance
Recurring fee revenue growth 4 - 6%
Total revenue growth 2 - 3%
Operating income margin - GAAP ~14%
Adjusted Operating income margin - Non-GAAP ~16%
Diluted earnings per share growth* 15 - 19%
Adjusted earnings per share growth* - Non-GAAP 15 - 19%
Free cash flow* - Non-GAAP $400M - $450M
Closed sales $170M - $210M
* Includes projected $25 million, or $0.19 per share, from excess tax benefit from stock-based compensation
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© 2017 |
Closing Summary
▪ Strong Fourth Quarter and Fiscal Year 2017 results
▪ Achieved three year objectives laid out at December 2014 Investor
Day
▪ 10th consecutive increase in annual dividend amount
▪ Fiscal Year 2018 calls for another "Broadridge type of year"
▪ Increased breadth and depth of capabilities leaves Broadridge well-
positioned for future growth
◦ Significant head start in building de facto utility enables Broadridge to lead
mutualization trend in the capital markets industry
◦ Positioned to lead evolution of transactional communications to the cloud
SAVE THE DATE: Broadridge Investor Day on for December 5, 2017
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Appendix
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Reconciliation of GAAP to Non-GAAP Measures
$ in millions, except per share figures Three Months Ended June 30, Fiscal Year
2017 2016 2017 2016
Operating income (GAAP) $ 297.0 $ 270.3 $ 531.6 $ 500.3
Adjustments:
Amortization of Acquired Intangibles and Purchased Intellectual Property 19.7 7.9 72.6 31.8
Acquisition and Integration Costs 7.1 1.0 19.1 5.0
Adjusted Operating income (Non-GAAP) $ 323.9 $ 279.2 $ 623.3 $ 537.1
Operating income margin (GAAP) 22.1% 27.7% 12.8% 17.3%
Adjusted Operating income margin (Non-GAAP) 24.1% 28.6% 15.0% 18.5%
Three Months Ended June 30, Fiscal Year
2017 2016 2017 2016
Net earnings (GAAP) $ 187.1 $ 170.1 $ 326.8 $ 307.5
Adjustments:
Amortization of Acquired Intangibles and Purchased Intellectual Property 19.7 7.9 72.6 31.8
Acquisition and Integration Costs 7.1 1.0 19.1 5.0
MAL investment gain — — (9.3) —
Tax impact of adjustments (9.6) (3.3) (30.9) (12.7)
Adjusted Net earnings (Non-GAAP) $ 204.3 $ 175.6 $ 378.3 $ 331.7
Three Months Ended June 30, Fiscal Year
2017 2016 2017 2016
Diluted earnings per share (GAAP) $ 1.57 $ 1.40 $ 2.70 $ 2.53
Adjustments:
Amortization of Acquired Intangibles and Purchased Intellectual Property 0.17 0.06 0.60 0.26
Acquisition and Integration Costs 0.06 0.01 0.16 0.04
MAL investment gain — — (0.08) —
Tax impact of adjustments (0.08) (0.03) (0.26) (0.10)
Adjusted earnings per share (Non-GAAP) $ 1.71 $ 1.45 $ 3.13 $ 2.73
Note: Amounts may not sum due to rounding.
Fiscal Year
2017 2016
Net cash flows provided by operating activities (GAAP) $ 515.9 $ 437.7
Capital expenditures and Software purchases and capitalized internal use software (113.7) (75.5)
Free cash flow (Non-GAAP) $ 402.2 $ 362.2
(Unaudited)
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Reconciliation of GAAP to Non-GAAP Measures -
FY18 Guidance
(Unaudited)
Adjusted Earnings Per Share Growth Rate (1) (2)
Diluted earnings per share (GAAP) 15% - 19%
Adjusted earnings per share (Non-GAAP) 15% - 19%
Adjusted Operating Income Margin (3)
Operating income margin % (GAAP) ~14%
Adjusted Operating income margin % (Non-GAAP) ~16%
Free Cash Flow (2)
Net cash flows provided by operating activities (GAAP) $510 - $580 million
Capital expenditures and Software purchases and capitalized internal use software (110) - (130) million
Free cash flow (Non-GAAP) $400 - $450 million
(1) Adjusted EPS growth (Non-GAAP) is adjusted to exclude the projected impact of Amortization of Acquired Intangibles and Purchased Intellectual Property,
and Acquisition and Integration Costs is calculated using diluted shares outstanding. Fiscal year 2018 Non-GAAP Adjusted EPS guidance estimates exclude
Amortization of Acquired Intangibles and Purchased Intellectual Property, and Acquisition and Integration Costs, net of taxes, of approximately $0.50 per share.
(2) Includes projected $25 million, or $0.19 per share, from excess tax benefit from stock-based compensation.
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(3) Adjusted Operating income margin (Non-GAAP) is adjusted to exclude the projected impact of Amortization of Acquired Intangibles and Purchased
Intellectual Property, and Acquisition and Integration Costs. Fiscal year 2018 Non-GAAP Adjusted Operating income margin guidance estimates exclude
Amortization of Acquired Intangibles and Purchased Intellectual Property, and Acquisition and Integration Costs of approximately $90 million.
© 2017 |
Broadridge Investor Relations
W. Edings Thibault
Head of Investor Relations
Tel: 516-472-5129
Email: edings.thibault@broadridge.com
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