Attached files
| file | filename |
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| 8-K - FORM 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC. | d393437d8k.htm |
| EX-99.1 - PRESS RELEASE DATED AUGUST 9, 2012 - BROADRIDGE FINANCIAL SOLUTIONS, INC. | d393437dex991.htm |
 ©
2012 Broadridge Financial Solutions, Inc.
Broadridge and the Broadridge logo are registered trademarks of Broadridge
Financial Solutions, Inc. August 9, 2012
Earnings Webcast & Conference Call
Fourth Quarter and Fiscal Year 2012
Exhibit 99.2 |
 Forward-Looking Statements
This press release 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 press release 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 the Penson Charges, net, IBM Migration costs, and restructuring charges
are Non-GAAP measures. These measures are adjusted to exclude
costs incurred by the Company in connection with assets the Company held as a
result of the sale of substantially all of its securities clearing contracts to
Penson, the Penson outsourcing services agreement and the migration of its data
center to IBM, and restructuring charges, 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 such Non-GAAP measures provide 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
release
is
a
reconciliation
of
Non-GAAP
measures
to
the comparable GAAP measures.
Pre-Spin Financial Information
Financial information presented for periods prior to the March 30, 2007
spin-off of Broadridge from Automatic Data Processing, Inc. (“ADP”) represents
the operations of the brokerage services business which were operated as part of
ADP. Broadridge’s financial results for periods before the spin-off from
ADP may not be indicative of our future performance and do not necessarily reflect
what our results would have been had Broadridge operated as a separate,
stand-alone entity during the periods presented, including changes in our operations and capitalization as a result of the spin-off from ADP.
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. 1 |
 Today’s
Agenda Opening Remarks and Other
Rich Daly, CEO
Key Topics
Fourth Quarter and Fiscal Year 2012
Dan Sheldon, CFO
Highlights and Segment Results
Summary
Rich Daly, CEO
Q&A
Rich Daly, CEO
Dan Sheldon, CFO
Closing Remarks
Rich Daly, CEO
2 |
 Opening
Remarks Key Topics:
Fiscal Year Financial Highlights
Penson Update
Closed Sales Performance
Acquisition Update
Fiscal Year 2013 Guidance
3 |
 FY12 Financial
Highlights Recurring revenues for the year were up 11%
Approximately 50% organic growth and 50% growth from acquisitions
Strong recurring revenue closed sales results
Total revenue was up 6%
Event-driven
and
distribution
revenues
were
essentially
flat
with
last
year
Non-GAAP diluted earnings per share (EPS) were up
Fiscal year 2012 Non-GAAP diluted EPS of $1.55 were up 13%
•
Primarily due to increased revenues and cost containment
Non-GAAP Adjustments
Penson Charges, net, $0.42 per share
IBM Migration costs, $0.12 per share
Restructuring charges, $0.03 per share
Repurchased approximately 1.7M shares during FY12
The Board approved a new stock repurchase plan for up to 4M shares; with the
current share repurchase plan, the Company has approximately 10M shares
available for repurchase under its share repurchase plans
4 |
 Penson
Update In May 2012, Penson announced its agreement with PEAK6 to form
Apex Clearing (Apex) for the acquisition of Penson’s U.S.
broker-dealer business In June 2012, we announced that we had entered
into a ten-year agreement with Apex to provide outsourcing services
similar to what we had provided to
Penson
In fiscal year 2012, we wrote off Penson’s note receivable of $21M, common
stock of $13M, deferred conversion costs of $47M and other charges of $8M;
offset by extinguishment of our obligation of $15M to reimburse Penson
We anticipate that the Apex agreement will have a dilutive impact on FY13
earnings
Anticipate $16M in lower revenues and EPS impact of $0.08
The Apex contract pricing is based on a percentage of Apex revenue
5 |
 Closed Sales
Performance Strong recurring revenue closed sales of $120M for fiscal year
2012
Up 6% vs fiscal year 2011
ICS recurring revenue closed sales were up 13% to $72M
SPS recurring revenue closed sales were down slightly to
$48M from $50M
Recurring revenue closed sales from transactions less than
$5M were up >60% to $108M
Pipeline remains strong across existing and new products
Fiscal year 2013 recurring revenue closed sales guidance of
$110-150M
6 |
 Acquisition
Update Since fiscal year 2007, we have spent approximately $460M on
acquisitions The acquisitions contributed approximately $218M to revenue,
$39M to EBITDA (Non-GAAP) and $15M to EBT (GAAP) in fiscal year 2012
(less interest, depreciation and amortization of $24M)
We anticipate that the acquisitions will contribute approximately $250M to
revenue, $50M to EBITDA (Non-GAAP) and $25M to EBT (GAAP) in fiscal
year 2013 (less interest, depreciation and amortization of $25M)
While
we
looked
at
numerous
acquisition
opportunities
during
the
year,
we
only made one acquisition in fiscal year 2012
We acquired Paladyne in September 2011 for $72M
Our acquisition strategy
Accretive to growth, margin and earnings
>20% IRR
Focused on “tuck-in”
sized businesses
Going forward, we will determine the best way to report acquisition results
7
Presently
we
do
not
add
back
acquisition
intangible
amortization
to
Non-GAAP
financial results ($0.11 EPS impact for FY12 and expected for FY13)
|
 8
Fiscal Year 2013 Guidance
Recurring revenue growth 4-7%
•
Revenue growth of 3-4%
Non-GAAP diluted earnings per share from continuing
operations of $1.65-1.75, excluding Penson Charges, net
GAAP diluted earnings per share from continuing operations of
$1.60-1.70
Free cash flow of $225M (at mid-point)
Increasing dividend by 13% to $0.72 per share annualized
•
Increased the payout 7% in each of FY12 and FY11
•
Doubled the payout in FY10
•
Increased the payout 17% in FY09 |
 9
Revenue Growth Drivers and EBIT Margin
EBIT margins do not include one-time charges or benefits reflected as
Non-GAAP adjustments, including ~$10M expected in FY13 for outsourcing
restructuring In FY13, acquisitions since spin-off are expected to
represent ~10% of revenue, ~7% of EBT and ~10% EBITDA. FY12 and FY13
includes amortization of acquired intangibles of ~$20M (~100 bps) (Recurring)
Closed Sales
EBIT Margin
(Non-GAAP)
Historical CAGR
Actual
Forecast
(FY05-FY10)
FY11
Full yr
FY12
FY13
6%
(2)%
Total Revenue Growth
6%
3-4%
4%
3%
3%
4-5%
(2)%
(1)%
Client Losses
(1)%
(1)%
2%
2%
Net New Business
2%
3-4%
3%
1%
Internal Growth
(a)
1%
0%
0%
4%
Acquisitions
3%
0%
5%
7%
Total Recurring
6%
3-4%
1%
(6)%
Event-Driven
(b)
0%
0%
0%
(4)%
Distribution
(c)
0%
0%
0%
1%
FX/Other
0%
0%
13.1%
13.9%
14.9 -
15.7%
(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 Fulfillment (c) Distribution includes
pass-through fees from Matrix |
 10
Segment Results & Forecast –
Securities Processing Solutions
Fiscal Year 2012
Full year revenue up 10% driven by net new business (closed sales less client
losses), Paladyne and Penson
Closed sales of $48M were down slightly from $50M in FY11
Closed sales were up without the benefit of large deals (FY11 included a $22M
closed sale) Large deals contributed ~15% in FY12 and ~70% in FY11
Excluding the dilutive impact of Paladyne acquisition, margins increased 40
bps Fiscal Year 2013 Outlook
Expecting revenue growth of 0-4%: strong net new business offset by Apex/Penson
Canada Growth in revenue from closed sales driven primarily from
backlog High end of revenue range anticipates rebound in trade volumes
Apex/Penson Canada decreasing growth by ~3 points and EBIT by $16-20M
Margin range impacted by timing of conversions and trade volumes.
Anticipating IBM savings to contribute +$15M beginning Q2
Recurring revenue closed sales of $60-80M
Client revenue retention rate of 98%
Revenue/Growth
EBIT/Growth
(Non-GAAP)
Margin/Growth
FY12:
$655M / +10%
$91M / +4%
13.9% / (80) bps
FY13:
$658 to 683M / 0 to +4%
$79 to 102M / (13) to +12%
12.0 to 15.0% / (190) to +110 bps
(Non-GAAP) |
 11
Segment Results & Forecast –
Investor Communication Solutions
FY12 fee revenue, EBIT, and margin at high end of prior guidance. Recurring
fee revenue growth 11%; total revenue growth impacted by distribution
revenues Fiscal Year 2013 Outlook
Expecting total revenue growth of ~4% driven by recurring activity. Recurring
fee revenue growth 8-10% in line with 9% CAGR since spin-off
Revenue from closed sales expected to contribute 3 points with over 50% from FY12
closed sales Recurring revenue closed sales range $50-70M, achieved $72M
in closed sales in FY12 Client revenue retention levels in excess of
99% Expect 2 points of internal growth from continuation of the strong
position growth rates experienced in FY12
Event-driven revenues flat to FY12 and FY11 levels at ~$130M
Expecting
230-260
bps
of
margin
expansion,
with
more
than
100
bps
generated
by
the
core
recurring
business
and
~100
bps
related
to
MSSB
and
restructuring
Revenue/Growth
EBIT/Growth
(Non-GAAP)
Margin/Growth (Non-GAAP)
FY12:
$1,634M / 5%
$243M / 14%
14.9% / 120 bps
FY13:
$1,695 to 1,707M / ~4%
$291 to 299M / 20 to 23%
17.2 to 17.5% / 230 to 260 bps |
 12
Summary
Solid Non-GAAP operating results for fiscal year 2012
Recurring fee revenue and closed sales results continue to be strong
Volumes were up slightly and event-driven revenues were flat
Penson transaction disappointment
This is a different business than was spun off five years ago
We do not believe we need the markets to return to grow this business
We continue to build momentum
NYSE Proxy Fee Advisory Committee report
The IBM data center migration was substantially completed by fiscal year-
end
Morgan Stanley Smith Barney conversion
Fiscal Year 2013 Earnings Guidance
4-7% recurring revenue growth
$1.65-1.75 Non-GAAP diluted EPS |
 13
Q&A
There are no slides during this portion of the presentation
|
 14
Closing Comments
There are no slides during this portion of the presentation
|
 15
Appendix |
 16
Segment Results & Forecast –
Other & Foreign Exchange (FX)
Corporate
Expenses
Full
Year
FY12
results
as
expected
Interest,
net
FY12
reflects
higher
average
debt
balance
and
refinancing
of
our
credit facilities
Penson Charges, net:
Primarily non-cash impairment charges
:
:
FY12
Low
High
Corp. Expenses
$(28)M
$(30)M
$(37)M
Interest Expense, net
$(13)M
$(17)M
$(21)M
FX -
P&L -
Revenue
$13M
$13M
$13M
-
EBIT
$14M
$14M
$14M
-
Transaction Activity
$0M
$(1)M
$(1)M
IBM Migration costs
$(25)M
$0M
$0M
Restructuring charges
$(7)M
$0M
$0M
Penson Charges, net
$(74)M
$(10)M
$(10)M
FY13 Range
(Pre-tax Adjustments to Net Earnings reflected in the “Other” segment) |
  17
Broadridge 4Q and FY12 from Continuing Operations
Revenue
Earnings
FY11
FY12
FY11
FY12
FY11
FY12
FY11
FY12
Q4
Q4
Full Yr
Full Yr
($ in millions)
Q4
Q4
Full Yr
Full Yr
$617
$630
$1,559
$1,634
ICS
$174
$187
$213
$243
1%
2%
-7%
5%
Growth % / Margin %
28.3%
29.7%
13.7%
14.9%
$152
$167
$594
$655
SPS
$20
$18
$87
$91
10%
10%
11%
10%
Growth % / Margin %
13.2%
11.0%
14.7%
13.9%
$769
$797
$2,153
$2,290
Total Segments
$194
$205
$301
$334
3%
4%
-2%
6%
Margin %
25.3%
25.8%
14.0%
14.6%
$0
$0
$0
$0
Other
(a)
($8)
($11)
($25)
($28)
$7
$3
$14
$13
FX
(b)
$3
$5
$9
$14
$776
$800
$2,167
$2,304
Total Broadridge (Non-GAAP)
(a)
$190
$200
$285
$319
3%
3%
-2%
6%
Growth % / Margin %
24.4%
24.9%
13.1%
13.9%
Interest & Other
($2)
($4)
($8)
($13)
Total EBT (Non-GAAP)
(a)
$188
$196
$276
$306
Margin %
24.2%
24.5%
12.7%
13.3%
Income taxes
(a)
($68)
($68)
($100)
($108)
Tax Rate
36.3%
34.7%
36.3%
35.4%
Total Net Earnings (Non-GAAP)
(a)
$119
$128
$176
$198
Margin %
15.4%
16.0%
8.1%
8.6%
IBM Migration costs
($4)
($7)
($4)
($15)
Restructuring charges
$0
($4)
$0
($4)
Penson Charges, net
(c)
$0
($33)
$0
($54)
Non-GAAP Items (Net of Taxes)
($4)
($44)
($4)
($73)
Total Net Earnings (GAAP)
$115
$83
$172
$125
Margin %
14.9%
10.4%
7.9%
5.4%
(a)
Diluted Shares
127
128
128
128
Diluted EPS (Non-GAAP)
(a)
$0.94
$1.00
$1.37
$1.55
Diluted EPS (GAAP)
$0.91
$0.65
$1.34
$0.98
(b) Includes impacts of FX P&L and FX Transaction Activity.
(a) FY12 Q4 excludes the IBM Migration costs of $12M (after tax $7M, or $0.06 EPS impact),
restructuring charges of $7M (after tax $4M, or 0.03 EPS impact) and Penson Charges, net, of
$42M (after tax $33M, or $0.26 EPS impact). FY12 Full Year excludes the IBM Migration costs of $25M (after tax $15M, or $0.12 EPS impact), restructuring
charges of $7M (after tax $4M, or 0.03 EPS impact) and Penson Charges, net, of $74M (after tax $54M,
or $0.42 EPS impact). (c) FY12 Q4 and FY12 Full Year includes Penson deferred client conversion
and startup costs, OTTI charges, shutdown costs, less the elimination of the obligation to pay or credit
Penson fees. FY12 Full Year also includes the cancellation of the Note Receivable.
|
     18
Broadridge FY13 Guidance from Continuing Operations
Revenue
Earnings
FY12
FY13 Range
FY12
FY13 Range
Actual
Low
High
($ in millions)
Actual
Low
High
$1,634
$1,695
$1,707
ICS
$243
$291
$299
5%
4%
4%
Growth % / Margin %
14.9%
17.2%
17.5%
$655
$658
$683
SPS
$91
$79
$102
10%
0%
4%
Growth % / Margin %
13.9%
12.0%
15.0%
$2,290
$2,353
$2,390
Total Segments
$334
$370
$401
6%
3%
4%
Margin %
14.6%
15.7%
16.8%
$0
$0
$0
Other
(a)
($28)
($30)
($37)
$13
$13
$13
FX
(b)
$14
$13
$13
$2,304
$2,366
$2,403
Total Broadridge (Non-GAAP)
$319
$353
$377
6%
3%
4%
Growth % / Margin %
13.9%
14.9%
15.7%
Interest & Other
($13)
($17)
($21)
Total EBT (Non-GAAP)
$306
$336
$356
Margin %
13.3%
14.2%
14.8%
Income taxes
($108)
($124)
($132)
Recurring Closed Sales
Tax Rate
35.4%
37.0%
37.0%
FY13 Range
Segments
Low
High
Total Net Earnings (Non-GAAP)
$198
$212
$224
ICS
$50
$70
Margin %
8.6%
8.9%
9.3%
SPS
$60
$80
Total
$110
$150
IBM Migration costs
($15)
$0
$0
Restructuring charges
($4)
$0
$0
Penson Charges, net
($54)
($6)
($6)
Non-GAAP Items (Net of Taxes)
($73)
($6)
($6)
Total Net Earnings (GAAP)
$125
$205
$218
Margin %
5.4%
8.7%
9.1%
(a)
Diluted Shares
128
128
128
Diluted EPS (Non-GAAP)
$1.55
$1.65
$1.75
Diluted EPS (GAAP)
$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 in excess of the repurchases needed to achieve our 128 million diluted
weighted-average outstanding shares guidance. (a) FY12 excludes the IBM Migration costs of
$25M (after tax $15M, or $0.12 EPS impact), restructuring charges of $7M (after tax $4M, or 0.03 EPS
impact) and Penson Charges, net, of $74M (after tax $54M, or $0.42 EPS impact). FY13 excludes
estimated charges relating to Penson. (c) FY12 includes Penson deferred client conversion and
startup costs, OTTI charges, shutdown costs, cancellation of the note receivable, less the
elimination of the obligation to pay or credit Penson fees. FY13 includes estimated charges
relating to Penson. (a)
(a)
(a)
(a)
(c)
(a) |
 19
Cash Flow –FY12 Results and FY13 Forecast
(a)
Guidance does not take into consideration the effect of any future acquisitions,
additional debt and/or share repurchases in excess of the repurchases needed to achieve our 128 million
diluted weighted-average shares outstanding guidance.
(b)
FY12 includes IBM Migration costs of $25M.
Year ended
June 2012
Low
High
Free Cash Flow
(Non-GAAP)
:
Net earnings from continuing operations (GAAP)
125
$
205
$
218
$
Depreciation and amortization (includes other LT assets)
92
95
105
Stock-based compensation expense
28
31
31
Other
60
(5)
5
Subtotal
305
326
359
Working capital changes
72
(15)
(15)
Long-term
assets
&
liabilities
changes
(b)
(79)
(60)
(50)
Net cash flow (used in) provided by continuing operating activities
298
251
294
Cash Flows From Investing Activities
IBM / ITO data center investment
(8)
-
-
Penson
(7)
-
-
Capital expenditures & software purchases
(39)
(55)
(45)
Free cash flow (Non-GAAP)
244
$
196
$
249
$
Cash Flows From Other Investing and Financing Activities
Acquisitions
(72)
-
-
Stock repurchases net of options proceeds
(8)
-
-
Proceeds from borrowing net of debt repayments
-
-
-
Dividends paid
(78)
(86)
(86)
Other
(7)
(5)
5
Net change in cash and cash equivalents
79
105
168
Cash and cash equivalents, at the beginning of year
242
321
321
Cash and cash equivalents, at the end of period
321
$
426
$
489
$
($ millions)
Unaudited
Free
Cash
Flow
-
Non-GAAP
FY13 Range
(a) |
  20
Recurring Closed Sales to Revenue Contribution
($ in millions)
Closed Sales
Revenue Contribution
(a)
Backlog
(b)
Forecast
Forecast
Forecast
FY13
FY13
FY13
ICS
$50-70
~$50-60
~$35-45
~Contribution to revenue growth
~3%
SPS
$60-80
~$40-50
~$85-105
~Contribution to revenue growth
6-8%
Total Recurring Closed Sales
$110-150
~$90-110
~$120-150
~Contribution to revenue growth
4-5%
(a)
Revenue from current year and prior year Closed Sales.
(b)
Closed Sales that will convert to revenue in future years.
|
 21
Revenues and Closed Sales FY05-FY12
($ in millions)
Recurring Fee Revenues
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
ICS
444
$
513
$
519
$
558
$
583
$
610
$
650
$
699
$
Growth
16%
1%
8%
4%
5%
7%
8%
SPS
459
$
458
$
509
$
515
$
537
$
513
$
522
$
545
$
Growth
0%
11%
1%
4%
-4%
2%
4%
Segment Recurring Fee Revenues
903
$
971
$
1,028
$
1,073
$
1,120
$
1,123
$
1,172
$
1,244
$
Growth
7%
6%
4%
4%
0%
4%
6%
Acquisitions
(cumulative)
0
$
18
$
28
$
28
$
33
$
45
$
141
$
209
$
Total Recurring Fee Revenues
903
$
988
$
1,056
$
1,101
$
1,153
$
1,168
$
1,313
$
1,453
$
9%
7%
4%
5%
1%
12%
11%
Event-Driven
128
$
153
$
203
$
200
$
180
$
257
$
135
$
132
$
Growth
20%
33%
-1%
-10%
43%
-47%
-2%
Distribution
649
$
730
$
821
$
808
$
757
$
781
$
704
$
704
$
Growth
12%
12%
-2%
-6%
3%
-10%
0%
Other/FX
(25)
$
(19)
$
(12)
$
22
$
(17)
$
4
$
14
$
14
$
Total Revenues
1,656
$
1,853
$
2,068
$
2,131
$
2,072
$
2,209
$
2,167
$
2,304
$
Growth
12%
12%
3%
-3%
7%
-2%
6%
Recurring Closed Sales
77
$
92
$
63
$
82
$
95
$
119
$
113
$
120
$
Growth
19%
-32%
30%
16%
25%
-5%
6%
Organic
~50%
Growth Contribution
Acquisitions
~50%
Growth Contribution
($ in millions)
Forecast
Event-Driven Fee Revenues
(a)
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
Mutual Fund Proxy
51
$
61
$
79
$
92
$
55
$
150
$
39
$
28
$
27
$
Mutual Fund Supplemental
39
$
43
$
51
$
49
$
58
$
48
$
44
$
47
$
46
$
Contest/ Specials/ Other Communications
38
$
49
$
73
$
59
$
67
$
59
$
52
$
57
$
56
$
Total Event-Driven Fee Revenues
128
$
153
$
203
$
200
$
180
$
257
$
135
$
132
$
129
$
Growth
20%
33%
-1%
-10%
43%
-47%
-2%
Recurring Distribution Revenues
(b)
496
$
562
$
593
$
580
$
567
$
564
$
573
$
597
$
~$597
Growth
13%
6%
-2%
-2%
-1%
2%
4%
ED Distribution Revenues
(b)
153
$
169
$
228
$
228
$
190
$
217
$
131
$
107
$
~$107
Growth
10%
35%
0%
-17%
14%
-39%
-18%
Total Distribution Revenues
649
$
730
$
821
$
808
$
757
$
781
$
704
$
704
$
~$704
Growth
12%
12%
-2%
-6%
3%
-10%
0%
(a) Includes reclassification of Pre-sale Fulfillment from event-driven revenues to
recurring revenues. (b) Includes reclassification of Pre-sale Fulfillment
related distribution revenues and Matrix pass-through administrative services from event-driven revenues to recurring revenues. |
 22
Reconciliation of Non-GAAP to GAAP Measures
Total EBT from continuing operations (EBT) Reconciliation
4Q11
4Q12
FY11
FY12
FY13 Range
($ in millions)
Actual
Actual
Actual
Actual
Low
High
EBIT (Non-GAAP)
$190
$200
$285
$319
$353
$377
Margin %
24.4%
24.9%
13.1%
13.9%
14.9%
15.7%
Interest & Other
($2)
($4)
($8)
($13)
($17)
($21)
Total EBT (Non-GAAP)
$188
$196
$276
$306
$336
$356
Margin %
24.2%
24.5%
12.7%
13.3%
14.2%
14.8%
IBM Migration costs
($6)
($12)
($6)
($25)
$0
$0
Restructuring charges
$0
($7)
$0
($7)
$0
$0
Penson Charges, net
$0
($42)
$0
($74)
($10)
($10)
Total EBT (GAAP)
$181
$135
$270
$201
$326
$346
Margin %
23.3%
16.9%
12.4%
8.7%
13.8%
14.4%
Diluted EPS from continuing operations (Diluted EPS) Reconciliation
Diluted EPS (Non-GAAP)
$0.94
$1.00
$1.37
$1.55
$1.65
$1.75
IBM Migration costs
(0.03)
(0.06)
(0.03)
(0.12)
0.00
0.00
Restructuring charges
0.00
(0.03)
0.00
(0.03)
0.00
0.00
Penson Charges, net
0.00
(0.26)
0.00
(0.42)
(0.05)
(0.05)
Diluted EPS (GAAP)
$0.91
$0.65
$1.34
$0.98
$1.60
$1.70
Year ended
June 2012
Low
High
Free
Cash
Flow
(Non-GAAP):
Net earnings from continuing operations (GAAP)
125
$
205
$
218
$
Depreciation and amortization (includes other LT assets)
92
95
105
Stock-based compensation expense
28
31
31
Other
60
(5)
5
Subtotal
305
326
359
Working capital changes
72
(15)
(15)
Long-term
assets
&
liabilities
changes
(b)
(79)
(60)
(50)
Net cash flow (used in) provided by continuing operating activities
298
251
294
Cash Flows From Investing Activities
IBM / ITO data center investment
(8)
-
-
Penson
(7)
-
Capital expenditures & software purchases
(39)
(55)
(45)
Free
cash
flow
(Non
-GAAP)
244
$
196
$
249
$
($ millions)
Unaudited
Free
Cash
Flow
-
Non-GAAP
FY13 Range
(a)
(a)
Guidance does not take into consideration the effect of any future acquisitions,
additional debt and/or share repurchases in excess of the repurchases needed to achieve our
128 million diluted weighted-average shares outstanding guidance.
(b)
FY12 includes IBM Migration costs of $25M. |
 23
One-time Items
Total Acquisition Related Costs (a)
4Q11
4Q12
FY11
FY12
FY13 Range
Actual
Actual
Actual
Actual
Low
High
Deal Costs (b)
$0
$0
($3)
($2)
$0
$0
Amortization of Intangibles
($5)
($5)
($14)
($22)
($22)
($22)
Integration Costs
($1)
$0
($2)
$0
$0
$0
Total Acquisition Related Costs
($6)
($5)
($19)
($24)
($22)
($22)
Diluted EPS Impact
($0.03)
($0.02)
($0.09)
($0.12)
($0.11)
($0.11)
(a) For Informational Purposes Only. Included are other items that management believes should be
excluded from the GAAP financials when assessing the overall business performance. (b) Deal
Costs include only costs related to closed transactions. (For Informational Purposes
Only) |
  24
ICS Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
Fee Revenues
4Q11
4Q12
FY11
FY12
Type
Proxy
Equities
198.3
$
202.7
$
279.5
$
282.8
$
RC
Stock Record Position Growth
1%
1%
0%
1%
Pieces
214.2
214.4
283.8
280.5
Mutual Funds
8.9
$
8.9
$
39.0
$
28.2
$
ED
Pieces
10.4
12.0
51.4
41.7
Contests/Specials
4.7
$
6.0
$
15.0
$
15.7
$
ED
Pieces
4.9
6.3
15.8
17.0
Total Proxy
211.9
$
217.6
$
333.5
$
326.7
$
Total Pieces
229.5
232.7
351.0
339.2
Notice and Access Opt-in %
59%
64%
58%
64%
Suppression %
55%
60%
53%
59%
Interims
Mutual Funds (Annual/Semi-Annual Reports/Annual Prospectuses)
25.6
$
28.3
$
102.1
$
113.0
$
RC
Position Growth
7%
8%
9%
9%
Pieces
139.2
145.4
525.3
583.5
Mutual Funds (Supplemental Prospectuses) & Other
9.9
$
11.9
$
44.0
$
46.8
$
ED
Pieces
55.2
59.0
253.2
250.2
Total Interims
35.5
$
40.2
$
146.1
$
159.8
$
Total Pieces
194.4
204.3
778.5
833.7
Transaction
Transaction Reporting/Customer Communications
37.9
$
40.6
$
156.2
$
164.5
$
RC
Reporting
Fulfillment
Fulfillment (a)
31.4
$
37.5
$
117.0
$
132.1
$
RC
Other
Other - Recurring (b)
28.1
$
28.5
$
65.4
$
105.3
$
RC
Communications
Other - Event-Driven (c)
11.5
$
13.5
$
37.0
$
41.2
$
ED
Total Other
39.6
$
42.0
$
102.4
$
146.5
$
Total Fee Revenues
356.3
$
377.9
$
855.2
$
929.6
$
Total Distribution Revenues (d)
260.6
$
252.2
$
704.2
$
704.4
$
Total Revenues as reported - GAAP
616.9
$
630.1
$
1,559.4
$
1,634.0
$
FY13 Ranges
Low
High
Total RC Fees
321.3
$
337.6
$
720.2
$
797.7
$
862
$
874
$
% RC Growth
12%
5%
14%
11%
8%
10%
Total ED Fees
35.0
$
40.3
$
135.0
$
131.9
$
129
$
129
$
Low
High
Sales
2%
3%
2%
3%
3%
3%
Losses
-1%
-1%
0%
-1%
-1%
-1%
Key
Net New Business
1%
2%
2%
2%
2%
2%
Revenue
Internal growth
1%
1%
0%
1%
2%
2%
Drivers
Recurring (Excluding Acquisitions)
2%
3%
2%
3%
4%
4%
Acquisitions
3%
0%
3%
2%
0%
0%
Total Recurring
5%
3%
5%
5%
4%
4%
Event-Driven
-3%
1%
-7%
0%
0%
0%
Distribution
-1%
-2%
-5%
0%
0%
0%
TOTAL
1%
2%
-7%
5%
4%
4%
(a) Consolidated Pre-sale and Post-sale Fulfillment and reclassified Pre-sale from
event-driven to recurring revenues. (b) Other Recurring Fee Revenue includes Matrix, New
River, StockTrans, Access Data, Forefield and Tax Reporting. (c) Other event-driven
includes 1.3M pieces for 4Q11, 2.2M for 4Q12, 8.3M for FY11 and 7.9M for FY12, primarily related to corporate actions.
(d) Total Distribution revenues primarily include pass-through revenues related to the physical
mailing of Proxy and Interims, as well as Matrix administrative services. Note: Certain prior
period amounts have been reclassified to conform with current period presentation. |
 25
SPS and Outsourcing Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
4Q11
4Q12
FY11
FY12
Type
Equity
Transaction-Based
Equity
Trades
(a)
35.5
$
32.4
$
141.4
$
137.1
$
RC
Internal Trade Volume
965
901
964
957
Internal Trade Growth
-4%
-7%
-1%
-1%
Trade Volume (Average Trades per Day in '000)
972
908
983
963
Non-Transaction
Other Equity Services
77.5
$
85.5
$
308.4
$
337.6
$
RC
Total Equity
113.0
$
117.9
$
449.8
$
474.7
$
Fixed Income
Transaction-Based
Fixed Income Trades (a)
12.3
$
13.9
$
47.7
$
54.0
$
RC
Internal Trade Volume
249
272
254
271
Internal Trade Growth
6%
9%
16%
6%
Trade Volume (Average Trades per Day in '000
261
297
259
294
Non-Transaction
Other Fixed Income Services
10.3
$
11.1
$
38.5
$
44.7
$
RC
Total Fixed Income
22.6
$
25.0
$
86.1
$
98.6
$
Outsourcing
Outsourcing
16.4
$
23.8
$
57.7
$
82.2
$
RC
# of Clients
11
17
11
17
Total Net Revenue as reported -
GAAP
152.0
$
166.6
$
593.6
$
655.5
$
FY13 Ranges
Low
High
Sales
3%
6%
4%
5%
6%
8%
Losses
-2%
-1%
-3%
-1%
-2%
-2%
Key
Net New Business
1%
5%
1%
4%
4%
6%
Revenue
Transaction & Non-transaction
1%
0%
3%
1%
-1%
1%
Drivers
Concessions
-1%
-2%
-2%
-2%
-4%
-4%
Internal growth
0%
-2%
1%
-1%
-5%
-3%
Acquisitions
9%
7%
9%
7%
1%
1%
TOTAL
10%
10%
11%
10%
0%
4%
(a) Equities and Fixed Income trade volumes have been adjusted to exclude trades
processed under fixed-price contracts and semi-variable step contracts. The revenue related to
these contracts was re-classified from 'Transaction-Based' to
'Non-Transaction'. |
 26
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.
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).
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.
Mutual
Funds
(Supplemental
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.
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.
Refers
primarily
to
the
distribution
of
prospectuses,
offering
documents,
and
required
regulatory disclosure information to investors in connection with purchases of
securities.
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. 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. 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. 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.
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). Equities
–
Mutual
Funds
–
Contests
–
Specials –
Mutual
Funds
(Annual/Semi-Annual
Reports/Annual
Prospectuses)
–
Transaction Reporting
–
Post-Sale
Fulfillment
–
Pre-Sale
Fulfillment
–
Other
–
Other –
Proxy
Interims
Transaction Reporting
Fulfillment
Other
Communications
Broadridge ICS Definitions |