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. |