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. |