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| 8-K - FORM 8-K - BROADRIDGE FINANCIAL SOLUTIONS, INC. | d448095d8k.htm |
 December 2012
Continued Market Leadership
through Execution and Innovation
Investor Presentation
©
2012 Broadridge Financial Solutions, Inc.
Broadridge and the Broadridge logo are registered trademarks of Broadridge
Financial Solutions, Inc. Exhibit 99.1 |
 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
Penson Charges, net 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. 1 |
 Broadridge
Overview 2 |
 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 for 5
consecutive year
1. As recognized by the NY Society of Human Resources in 2008-2012 3
1
th |
 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
4 |
 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
5 |
 Investor Communication
Solutions
Securities Processing
Solutions
We are the leader in several markets
Market
Rank
Bank/Broker-Dealer
Regulatory
Communications
Broker-Dealer
Transactional
Communications
Corporate Issuer
Regulatory
Communications
Mutual Fund Proxy
Mail and Tabulation
Market
Rank
US Brokerage
Processing
US Fixed Income
Processing
Canadian Brokerage
Processing
#1
#1
#1
#1
#1
#1
#1
1. Marketshare based on Broadridge estimates
6
1
1 |
 Investor
Communication Solutions (ICS) 7 |
 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
Total addressable market $10B+ fee revenue
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
8
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.)
Issuer
Transfer agency
Shareholder analytics
Investor communications |
 ICS Unique
Business Systems Processing Model Proxy
and
Interim
processing
system
is
the
“plumbing”
supporting
the
voting
process for corporate governance
PROXY & INTERIMS PROCESSING OVERVIEW
"THE PLUMBING"
Broker/Bank 1
Issuer 1 / Fund 1
Broker/Bank 2
Issuer 2 / Fund 2
Broker/Bank 3
Issuer 3 / Fund 3
Broker/Bank 4
Issuer 4 / Fund 4
Broker/Bank 5
Issuer 5 / Fund 5
Broker/Bank 6
Issuer 6 / Fund 6
Broker/Bank 7
Issuer 7 / Fund 7
Broker/Bank 8
Issuer 8 / Fund 8
Broker/Bank 9
Issuer 9 / Fund 9
Brokers/Banks
800+
(1)
Issuers 10,000+
(3)
Funds 700+
(4)
Proxy Distribution
>40% of
accounts
require
special
processing
Vote Processing
Managing
~350M
active
positions
(2)
Majority of
all shares
are held in
Shareholder
Preferences
Database
Shareholder
Consent
Database
Equity and Mutual Fund Shareholders
Broadridge
manages
>1,600
Corporate
Issuers
Broadridge
processes on
average 85%
of U.S. shares
outstanding
Electronic or
Physical Vote Return
Data Hub and Platform
Electronic or
Physical Delivery
Registered Processing
> 50% of Hard Copy
Mailings Eliminated
via E-Delivery and
Suppressions
85% of Shares Voted
Electronically
BROADRIDGE
Proxy Processing System
Over 8 million lines of code and approximately 500,000 function points
Supported by 150+ dedicated programmers
ANNUAL CORPORATE ISSUER AND MUTUAL FUND EVENTS
Approximately 12,000 Events Per Year
(Annual Corporate Issuer Shareholder Meetings and Mutual Fund Proxy Meetings)
9
street-side
(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,
Street-side Processing
according to the Investment Company Institute’s 2009 Investment
Company Year Book |
 FY12 Product Revenues
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
Increase in electronic
distribution reduces postage
revenue and increases profits
FY12 Client Revenues
(Based on who pays BR as agent)
Bank/Broker
-
Dealer
(29%)
Mutual Fund
(41%)
Corporate
Issuer
(30%)
Distribution
$704M (43%)
Other
$146M (9%)
Fulfillment
$132M (8%)
Transaction
Reporting
$165M (10%)
Interims
$160M (10%)
Proxy
$327M (20%)
10
Primarily
Postage |
 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)
11 |
 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
12 |
 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
ICS-Issuers
13
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
Competitive Advantages: |
 Securities
Processing Solutions (SPS) 14 |
 US
Brokerage Processing Core equities and fixed income
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
$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
Global Processing
Core equities and fixed income
Global BPO
Reconciliations
Total
addressable
market
~
$14B
fee
revenue
15
spend is over $100 billion and growing at 5% |
 Broadridge
global processing behind the scenes Broadridge
simplifies complex processes WEBPORTAL
RECORDKEEPING
ACCOUNT
STATEMENTS
TRADE
CONFIRMATIONS
TAX
REPORTING
Trading
Order Routing
Order Execution
Block Orders
Books & Records
Post Trade
Clearing &
Settlement
Regulatory
Reporting
Trade
Support
Purchase &
Sales
Security
Master
Fail
Control
Cash
Processing
Asset
Servicing
Regulatory Compliance
Operational Risk Management
BROKER-DEALERS
EXCHANGES
CUSTODIANS
DEPOSITORIES
16
CLIENT EXPERIENCE
TECHNOLOGY/OPERATIONS INFRASTRUCTURE
•
Tax-lot accounting
•
Stock record
•
Multicurrency
accounting
•
Margin processing
•
P&L
•
Client positions
and transactions |
 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
FY12 Product Revenues
Outsourcing
(~13%)
$82M
Fixed Income
(~15%)
Transactions, $54M
Non-transactions, $45M
Equity
(~72%)
Transactions, $137M
Non-transactions, $338M
Equity Processing Client Volume
U.S. $ Fixed Income Client Volume
Operations Outsourcing
Broadridge
~30%
Competitors
~20%
In-house
~50%
Broadridge
~8%
Untapped
Market
~92%
(>$1 Billion)
Competitors
~2%
In-house
~43%
Broadridge
~55%
17 |
  SPS Top 15 Clients
for FY12 SPS client relationships are stable in volatile
market
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. 18
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 |
 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
19
Competitive Advantages:
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
Unique global technology platform
provides processing access to over 50
countries |
 Financial
Strategy 20 |
 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
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)
21
1
> |
 Appendix
22 |
 23
Revenue Growth Drivers and EBIT Margin
Historical CAGR
(FY07-FY12)
1Q
FY13
Forecast
FY13
2%
3%
(2%)
1%
1%
2%
4%
(1%)
(1%)
0%
Total Revenue Growth
Closed Sales
(Recurring)
Client Losses
Net New Business
Internal Growth
(a)
(b)
(c)
Acquisitions
Total Recurring
Event-Driven
Distribution
FX/Other
EBIT Margin
(Non-GAAP)
4%
3-4%
2%
3%
(1%)
2%
(1%)
1%
1%
2%
(1%)
6.6%
4-5%
(1)%
3-4%
0%
0%
0%
0%
0%
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
(c) Distribution includes pass-through fees from
Matrix
23
3-4% |
 24
Revenue
Earnings
FY12
FY13
FY12
FY13
Q1
Q1
Q1
Q1
$313
$339
$8
$27
12%
8%
2.7%
8.0%
$158
$154
$28
$9
12%
-3%
17.6%
6.1%
$471
$493
$36
$37
12%
5%
7.7%
7.4%
$0
$0
($7)
($7)
$5
$2
$2
$3
$476
$496
$32
$33
13%
4%
6.6%
6.6%
($2)
($3)
$6
$6
$36
$35
7.5%
7.0%
($13)
($13)
36.3%
36.0%
$23
$22
4.8%
4.5%
($4)
($4)
$0
($1)
($2)
$0
$0
$0
($6)
($4)
$17
$18
3.5%
3.7%
126.7
127.1
$0.18
$0.18
$0.13
$0.14
Broadridge FY13 Q1 from Continuing Operations
(a)
(a)
(c)
(d)
(a)
(d)
(c)
(e)
(d)
ICS
Growth % / Margin %
SPS
Growth % / Margin %
Total Segments
Margin %
Other
FX
Total Broadridge (Non-GAAP)
Growth % / Margin %
Interest & Other
Acquisition Amortization and Other Costs
Total EBT (Non-GAAP)
Margin %
Income taxes
Tax Rate
Total Net Earnings (Non-GAAP)
Margin %
Acquisition Amortization and Other Costs
Penson Charges, net
IBM Migration costs
Restructuring charges
Non-GAAP Items (Net of Taxes)
Total Net Earnings (GAAP)
Margin %
Diluted Shares
Diluted EPS (Non-GAAP)
Diluted EPS (GAAP)
(b)
(a)
(a) FY12 Q1 excludes IBM Migration costs of $3M (after tax $2M, or $0.02 EPS impact).
FY13 Q1 excludes Penson Charges, net of $1M (after tax $1M, or $0.01 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 Q1 excludes Acquisition Amortization and Other Costs of $6M (after tax $4M or $0.03 EPS
impact) and IBM Migration costs of $3M (after tax $2M, or $0.02 EPS impact).
FY13 Q1 excludes Acquisition Amortization and Other Costs of $6M (after tax $4M or $0.03 EPS impact)
and Penson Charges, net of $1M (after tax $1M, or $0.01 EPS impact).
(e) FY13 Q1 represents transition costs related to termination of the Penson agreement including
shutdown costs. |
 25
Broadridge FY13 Guidance from Continuing Operations
Revenue
Earnings
FY12
FY13 Range
FY12
FY13 Range
Actual
Low
High
($ 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)
(a)
$319
$353
$377
6%
3%
4%
Growth % / Margin %
13.9%
14.9%
15.7%
Interest & Other
($13)
($17)
($21)
Acquisition Amortization and Other Costs
(c)
$25
$22
$22
Total EBT (Non-GAAP)
(d)
$331
$358
$378
Margin %
14.4%
15.1%
15.7%
Income taxes
(d)
($118)
($133)
($140)
Recurring Closed Sales
Tax Rate
35.6%
37.0%
37.0%
FY13 Range
Segments
Low
High
Total Net Earnings (Non-GAAP)
(d)
$213
$226
$238
ICS
$50
$70
Margin %
9.3%
9.5%
9.9%
SPS
$60
$80
Total
$110
$150
Acquisition Amortization and Other Costs
(c)
($15)
($14)
($14)
Penson Charges, net
(e)
($54)
($6)
($6)
IBM Migration costs
($15)
$0
$0
Restructuring charges
($4)
$0
$0
Non-GAAP Items (Net of Taxes)
($88)
($20)
($20)
Total Net Earnings (GAAP)
$125
$205
$218
Margin %
5.4%
8.7%
9.1%
(a)
Diluted Shares
128
128
128
Diluted EPS (Non-GAAP)
(d)
$1.67
$1.76
$1.86
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. (a) FY12 excludes IBM Migration costs of $25M (after tax $15M, or
$0.12 EPS impact), Penson Charges, net, of $74M ( after tax $54M, or $0.42 EPS impact) and Restructuring charges of
$7M (after tax $4M, or $0.03 EPS impact). FY13 excludes Penson Charges, net.
(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), Penson
Charges, net, of $74M (after tax $54M, or $0.42 EPS impact) and Restructuring charges of $7M (after
tax $4M, or $0.03 EPS impact). FY13 excludes Acquisition Amortization and Other Costs of $22M
(after tax $14M or $0.11 EPS impact) and Penson Charges, net, 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. |
 26
Cash Flow –Q1 FY13 Results and FY13 Forecast
Three Months
Ended
September 2012
Low
High
Free Cash Flow (Non-GAAP)
:
Net earnings from continuing operations (GAAP)
18
$
205
$
218
$
Depreciation and amortization (includes other LT assets)
25
95
105
Stock-based compensation expense
5
31
31
Other
(1)
(5)
5
Subtotal
47
326
359
Working capital changes
(49)
(15)
(15)
Long-term assets & liabilities changes
(14)
(60)
(50)
Net cash flow (used in) provided by continuing operating activities
(16)
251
294
Cash Flows From Investing Activities
Capital expenditures & software purchases
(8)
(55)
(45)
Free cash flow (Non-GAAP)
(24)
$
196
$
249
$
Cash Flows From Other Investing and Financing Activities
Acquisitions
-
-
-
Stock repurchases net of options proceeds
(66)
(66)
(66)
Proceeds from borrowing net of debt repayments
-
-
-
Dividends paid
(20)
(86)
(86)
Other
1
(5)
5
Net change in cash and cash equivalents
(109)
39
102
Cash and cash equivalents, at the beginning of year
321
321
321
Cash and cash equivalents, at the end of period
212
$
360
$
423
$
(a) Guidance does not take into consideration the effect of any future acquisitions, additional debt
and/or share repurchases. ($ millions)
Unaudited
Free Cash Flow - Non-GAAP
FY13 Range
(a) |
   27
Revenues and Closed Sales FY07-FY13
($ in millions)
Recurring Fee Revenues
ICS
Growth
SPS
Growth
Total Recurring Fee Revenues
Growth
Event-Driven
Growth
Distribution
Growth
Other/FX
Total Revenues
Growth
Recurring Closed Sales
Growth
Forecast
FY07
FY08
FY09
FY10
FY11
FY12
FY13
529
$
567
$
594
$
632
$
720
$
798
$
$862-874
3%
7%
5%
6%
14%
11%
8-10%
527
$
534
$
559
$
536
$
594
$
655
$
$658-683
11%
1%
5%
-4%
11%
10%
0-4%
1,056
$
1,101
$
1,153
$
1,168
$
1,313
$
1,453
$
$1,520-1,557
7%
4%
5%
1%
12%
11%
4-7%
203
$
200
$
180
$
257
$
135
$
132
$
~$129
33%
-1%
-10%
43%
-47%
-2%
-2%
821
$
808
$
757
$
781
$
704
$
704
$
~$704
12%
-2%
-6%
3%
-10%
0%
0%
(12)
$
22
$
(17)
$
4
$
14
$
14
$
~$13
2,068
$
2,131
$
2,072
$
2,209
$
2,167
$
2,304
$
$2,366-2,403
12%
3%
-3%
7%
-2%
6%
63
$
82
$
95
$
119
$
113
$
120
$
$110-150
-32%
30%
16%
25%
-5%
6%
($ in millions)
Event-Driven Fee Revenues
(a)
Mutual Fund Proxy
Mutual Fund Supplemental
Contest/ Specials/ Other Communications
Total Event-Driven Fee Revenues
Growth
Recurring Distribution Revenues
(b)
Growth
ED Distribution Revenues
(b)
Growth
Total Distribution Revenues
Growth
(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.
Forecast
FY07
FY08
FY09
FY10
FY11
FY12
FY13
79
$
92
$
55
$
150
$
39
$
28
$
27
$
51
$
49
$
58
$
48
$
44
$
47
$
46
$
73
$
59
$
67
$
59
$
52
$
57
$
56
$
203
$
200
$
180
$
257
$
135
$
132
$
129
$
33%
-1%
-10%
43%
-47%
-2%
593
$
580
$
567
$
564
$
573
$
597
$
~$597
6%
-2%
-2%
-1%
2%
4%
228
$
228
$
190
$
217
$
131
$
107
$
~$107
35%
0%
-17%
14%
-39%
-18%
821
$
808
$
757
$
781
$
704
$
704
$
~$704
12%
-2%
-6%
3%
-10%
0% |
  28
Reconciliation of Non-GAAP to GAAP Measures
Free Cash Flow (Non-GAAP):
Net earnings from continuing operations (GAAP)
Depreciation and amortization (includes other LT assets)
Stock-based compensation expense
Other
Subtotal
Working capital changes
Long-term assets & liabilities changes
Net cash flow (used in) provided by continuing operating activities
Cash Flows From Investing Activities
Capital expenditures & software purchases
Free cash flow (Non-GAAP)
(a) Guidance does not take into consideration the effect of any future acquisitions, additional debt
and/or share repurchases. Reconciliation of EPS Guidance
1Q12
1Q13
FY12
FY13 Range
Actual
Actual
Actual
Low
High
Guidance Provided in August 2012 - Diluted EPS (Non-GAAP)
$0.15
$0.15
$1.55
$1.65
$1.75
Acquisition Amortization and Other Costs
$0.03
0.03
$0.12
0.11
0.11
Current Guidance - Diluted EPS (Non-GAAP)
$0.18
$0.18
$1.67
$1.76
$1.86
Acquisition Amortization and Other Costs
($0.03)
($0.03)
($0.12)
(0.11)
(0.11)
Penson Charges, net
$0.00
(0.01)
($0.42)
(0.05)
(0.05)
IBM Migration costs
($0.02)
0.00
($0.12)
0.00
0.00
Restructuring charges
$0.00
0.00
($0.03)
0.00
0.00
Current Guidance - Diluted EPS (GAAP)
$0.13
$0.14
$0.98
$1.60
$1.70
Reconciliation of EBT Guidance
(a)
1Q12
1Q13
FY12
FY13 Range
($ in millions)
Actual
Actual
Actual
Low
High
Guidance Provided in August 2012 - Total EBT (Non-GAAP)
$29
$29
$306
$336
$356
Margin %
6.2%
5.9%
13.3%
14.2%
14.8%
Acquisition Amortization and Other Costs
$6
$6
$25
$22
$22
Current Guidance - Total EBT (Non-GAAP)
$36
$35
$331
$358
$378
Margin %
7.5%
7.0%
14.4%
15.1%
15.7%
Acquisition Amortization and Other Costs
($6)
($6)
($25)
($22)
($22)
Penson Charges, net
$0
($1)
($74)
($10)
($10)
IBM Migration costs
($3)
$0
($25)
$0
$0
Restructuring charges
$0
$0
($7)
$0
$0
Total EBT (GAAP)
$26
$29
$201
$326
$346
Margin %
5.5%
5.8%
8.7%
13.8%
14.4%
(a) Amounts in this table may not sum to totals due to rounding.
Three Months
Ended
September 2012
Low
High
18
$
205
$
218
$
25
95
105
5
31
31
(1)
(5)
5
47
326
359
(49)
(15)
(15)
(14)
(60)
(50)
(16)
251
294
(8)
(55)
(45)
(24)
$
196
$
249
$
Free Cash Flow -Non-GAAP
Unaudited
($ millions)
FY13 Range
(a) |
 29
ICS Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
Fee Revenues
1Q12
1Q13
Type
Proxy
Equities
23.6
$
25.6
$
RC
Stock Record Position Growth
1%
-4%
Pieces
20.4
20.3
Mutual Funds
5.2
$
6.5
$
ED
Pieces
6.4
8.2
Contests/Specials
3.3
$
3.0
$
ED
Pieces
3.7
2.7
Total Proxy
32.1
$
35.1
$
Total Pieces
30.5
31.2
Notice and Access Opt-in %
54%
48%
Suppression %
54%
56%
Interims
Mutual Funds (Annual/Semi-Annual Reports/Annual Prospectuses)
25.5
$
31.8
$
RC
Position Growth
9%
9%
Pieces
131.9
150.7
Mutual Funds (Supplemental Prospectuses) & Other
10.6
$
14.7
$
ED
Pieces
59.3
75.4
Total Interims
36.1
$
46.5
$
Total Pieces
191.2
226.1
Transaction
Transaction Reporting/Customer Communications
37.4
$
40.6
$
RC
Reporting
Fulfillment
Fulfillment (a)
31.4
$
33.2
$
RC
Other
Other -
Recurring (b)
25.5
$
25.8
$
RC
Communications
Other -
Event-Driven (c)
8.3
$
8.1
$
ED
Total Other
33.8
$
33.9
$
Total Fee Revenues
170.8
$
189.3
$
Total Distribution Revenues (d)
142.2
$
150.2
$
Total
Revenues
as
reported
-
GAAP
313.0
$
339.5
$
FY13 Ranges
Low
High
Total RC Fees
143.4
$
157.0
$
862
$
874
$
% RC Growth
20%
9%
8%
10%
Total ED Fees
27.4
$
32.3
$
129
$
129
$
Low
High
Sales (FY'13 RC closed sales range $50-70M, FY'12 RC close sales $72M)
2%
3%
3%
3%
Losses
-1%
-1%
-1%
-1%
Key
Net New Business
1%
2%
2%
2%
Revenue
Internal growth
2%
2%
2%
2%
Drivers
Recurring (Excluding Acquisitions)
3%
4%
4%
4%
Acquisitions
6%
0%
0%
0%
Total Recurring
9%
4%
4%
4%
Event-Driven
0%
2%
0%
0%
Distribution
3%
2%
0%
0%
TOTAL
12%
8%
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 1.6M pieces for 1Q12, 1.8M for 1Q13, 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. |
 30
SPS and Outsourcing Key Segment Revenue Stats
RC= Recurring
ED= Event-Driven
In millions
1Q12
1Q13
Type
Equity
Transaction-Based
Equity Trades
(a)
36.4
$
30.0
$
RC
Internal Trade Volume
1,013
821
Internal Trade Growth
20%
-19%
Trade Volume (Average Trades per Day in '000)
1,020
828
Non-Transaction
Other Equity Services
80.4
82.1
RC
Total Equity
116.8
$
112.1
$
Fixed Income
Transaction-Based
Fixed Income Trades (a)
13.5
$
13.9
$
RC
Internal Trade Volume
292
293
Internal Trade Growth
11%
0%
Trade Volume (Average Trades per Day in '000)
292
295
Non-Transaction
Other Fixed Income Services
10.7
$
11.5
$
RC
Total Fixed Income
24.2
$
25.4
$
Outsourcing
Outsourcing
17.4
$
16.5
$
RC
# of Clients
12
16
Total
Net
Revenue
as
reported
-
GAAP
158.4
$
153.9
$
FY13 Ranges
Low
High
Sales (FY13 RC closed sales range $60-$80M. FY12 RC closed sales $48M)
5%
3%
6%
8%
Losses
-1%
-1%
-2%
-2%
Key
Net New Business
4%
2%
4%
6%
Revenue
Transaction & Non-transaction
6%
-5%
-1%
1%
Drivers
Concessions
-1%
-3%
-4%
-4%
Internal growth
5%
-8%
-5%
-3%
Acquisitions
3%
3%
1%
1%
TOTAL
12%
-3%
0%
4% |
 Broadridge ICS
Definitions 31
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).
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
–
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. 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 – 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. Proxy
Interims
Transaction Reporting
Fulfillment
Other Communications |