Broadridge Financial Solutions, Inc. · NYSE:BR
Broadridge Financial Solutions — Raymond James 38th Annual Institutional Investor Conference (March 2017)
30 slides from Broadridge Financial Solutions's conference presentation, Mar 6, 2017
Slide 1: Raymond James 38th Annual Institutional Investor Conference
Raymond James 38th Annual Institutional Investor Conference March 6, 2017 Fiscal Third Quarter 2017
Slide 2: Forward-Looking Statements
1© 2016 Forward‐Looking Statements This presentation and other written or oral statements made from time to time by representatives of Broadridge Financial Solutions, Inc. ("Broadridge" or the "Company") may contain “forward-looking statements” within the meaning of the Private Securities Litigation
Slide 3: Use of Non-GAAP Financial Measures
2© 2016 Use of Non‐GAAP Financial Measures Explanation and Reconciliation of the Company’s Use of Non‐GAAP Financial Measures The Company’s results in this presentation are presented in accordance with U.S. GAAP except where otherwise noted. In certain circumstances, results have been presented that
Slide 4: What is Broadridge?
3© 2016 What is Broadridge? Unique Franchises with Ubiquitous Presence Growing and Predictable Revenues • 6% Revenue CAGR since FY2011 with 98% client revenue retention rate Strong Free Cash Flow • FY2016 CapEx:Revenue ratio of 2.6% Balanced Capital Allocation • 45% dividend payout ratio target and
Slide 5: Broadridge's Unique Franchise in Financial Services
4© 2016 Broadridge’s Unique Franchise in Financial Services 98% client revenue retention rate 50+ years of financial services experience of the top‐101 global banks are our clients10 #1 leading provider of U.S. beneficial proxy and prospectus, U.S. fixed income & Canadian equity processing Billion i
Slide 6: Technology Solutions to its Core Client Segments
5© 2016 Broadridge Brings Technology Solutions to its Core Client Segments Capital Markets Wealth Management Asset Management Corporates Communications Processing Data & Analytics • 1,100 Banks & Brokers • 6,700 Institutional Investors • 140,000,000 Individual Accounts • 100,000 Financial Advisors •
Slide 7: Strong and Predictable Business Model
6© 2016 Strong and Predictable Business Model 98% client revenue retention rate Consistently high retention rate reflects the strength of our client relationships Long‐term contracts Expanding portfolio of growth products Growth products contributing a growing % of revenue NACC acquisition should ac
Slide 8: Fiscal Year 2016 Total Revenues of $2.9 Billion
7© 2016 Fiscal Year 2016 Total Revenues of $2.9 Billion FY 2016 Revenues by Type Recurring Fee Revenue Growth FY2011‐FY2016$0.9 29% $1.9 64% $0.2 7% Distribution Recurring Fees Event‐Driven FY 2016 Revenues by Segment $2.2 75% $0.7 25% ICS GTO $ in billions
Slide 9: $24B Market Propelled By Key Market Trends
8© 2016 $24B Market Propelled By Key Market Trends Current Addressable Market Key Market Trends $16B $8B Global Technology & Operations Investor Communication Solutions Mutualization Strong drive to standardize duplicative, non‐differentiating industry capabilities Digitization Digital technologies
Slide 10: $24B Market Propelled By Key Market Trends
9© 2016 $24B Market Propelled By Key Market Trends Key Market Trends Mutualization Digitization Data and Analytics Standardization of duplicative, non‐ differentiating industry capabilities Digital technologies that enable lower cost, higher touch interactions Network and data assets that enable cli
Slide 11: ICS Revenue Breakdown and Growth Trends
10© 2016 $1,647 $1,776 $1,881 $2,030 $2,220 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2,300 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 $ in millions ICS Revenue Breakdown and Growth Trends FY 2016 ICS Revenues of $2.22 billion1 Broad Client Base $864 39% $199 9% $290 13% $321 14% $193 9%
Slide 12: Customer Communications Combination Highlights
11© 2016 Customer Communications Combination Highlights Compelling financial and strategic opportunities Compelling near term financial benefits Attractive medium term expansion opportunity Larger long term digital opportunity Projected to be accretive to EPS and Adjusted EPS in FY 2017 (EPS accre
Slide 13: GTO Revenue Breakdown and Growth Trends
12© 2016 $642 $645 $681 $693 $738 $300 $400 $500 $600 $700 $800 $900 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 $ in millions GTO Revenue Breakdown and Growth Trends By Product1 Strong Market Position Clears and settles in over 70 countries Processes avg. of over $5 trillion in equity and fixed income
Slide 14: Executing Our Capital Stewardship Strategy
13© 2016 P r i o r i t y Executing Our Capital Stewardship Strategy To Enhance Shareholder Value Committed to a strong dividend Targeting tuck‐in acquisitions to drive growth Share repurchases Maintain investment grade credit rating Fiscal Years 2013 ‐ 2016: Select Uses of Cash (a) Purchases of Trea
Slide 15: On Track to Achieve Three Year Financial Objectives
14© 2016 FY15–FY17F FY16A FY17F* Recurring Fee Revenue Growth 7‐10% 9% 29‐31% Total Revenue Growth 5‐7% 8% 43‐45% Adjusted Operating Income Margin +50‐60bps/yr. 18.5% ~15% Adjusted Earnings Growth 9‐11% 8% 12‐17% On Track to Achieve Three Year Financial Objectives* 3‐Year CAGR * As of November 9 Fir
Slide 16: Guidance
15© 2016 Guidance* * As of February 8, 2017 Second Quarter Fiscal Year 2017 Earnings report ‐ includes impact of DST’s North American Customer Communications business, which was completed on July 1, 2016 Recurring fee revenue growth 29‐31% Total revenue growth 40‐42% Adjusted Operating income margin
Slide 17: Sustainable Growth, Operational Excellence, and Sound Capital Deployment
16© 2016 Sustainable Growth, Operational Excellence, and Sound Capital Deployment Drive Performance • Drive organic growth in current markets • Exploit adjacencies 7–10% Recurring Fee 3‐Year CAGR (FY14–FY17F) Sustainable Growth • Realize efficiencies • Increase operational leverage Consistent Margin
Slide 18: Second Quarter and First Six Months Fiscal Year 2017 Highlights
Broadridge Second Quarter and First Six Months Fiscal Year 2017 Highlights
Slide 19: Second Quarter 2017 Financial Summary
18© 2016 Second Quarter 2017 Financial Summary Total revenue growth of 40% and recurring fee revenue growth of 34% o NACC acquisition drove much of the growth o 6% organic growth of recurring revenue Continued growth in Adjusted operating income and Adjusted EPS o Profit growth driven by acquisi
Slide 20: Second Quarter 2017 Business Update
19© 2016 Second Quarter 2017 Business Update Broad momentum across both GTO and ICS o Reflects breadth of products and focus on clients Record Closed sales highlights growing recognition of power of Broadridge’s utility solutions o Tier one bank adopts BR’s SaaS equity trade processing platform
Slide 21: 2Q 2017 Revenue Growth Drivers
20© 2016 2Q16 Recurring Revs. Closed Sales Client Losses Internal Growth Acquisitions 2Q17 Recurring Revs. $ 399 M $536 M+7% ‐3% 2% +28% +34% 2Q16 Total Revs. Recurring Event Driven Distribution FX 2Q17 Total Revs. $893 M +21% ‐4% 23% $639 M ‐1% +40% 2Q 2017 Revenue Growth Drivers • Second Quarter 2
Slide 22: 1H 2017 Revenue Growth Drivers
21© 2016 1H16 Recurring Revs. Closed Sales Client Losses Internal Growth Acquisitions 1H17 Recurring Revs. $792 M $1,053 M +6% ‐3% 1% +28% +33% 1H16 Total Revs. Recurring Event Driven Distribution Other 1H17 Total Revs. $1.8 Bn +21% ‐2% 27% $1.2 Bn ‐1% +45% 1H 2017 Revenue Growth Drivers • Six Month
Slide 23: Second Quarter 2017 Operating Income and EPS Comparison
22© 2016 $0.33 $0.25 $0.38 $0.39 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 2Q 2016 2Q 2017 Diluted EPS Adjusted EPS +3% ‐24% Second Quarter 2017 Operating Income and EPS Comparison $ in millions 2Q 2017 Change in Operating Income and Adjusted Operating Income 2Q 2017 Change in EPS and Adjusted EPS $70 $59
Slide 24: Six Months Fiscal Year 2017 Operating Income and EPS Comparison
23© 2016 $0.61 $0.52 $0.71 $0.75 $0.40 $0.50 $0.60 $0.70 $0.80 1H 2016 1H 2017 Diluted EPS Adjusted EPS +6% ‐15% Six Months Fiscal Year 2017 Operating Income and EPS Comparison $ in millions Six Months Fiscal 2017 Change in Operating Income and Adjusted Operating Income Six Months Fiscal 2017 Change
Slide 25: Segment Results
24© 2016 Segment Results Quarter Ended December 31, % Six Months Ended December 31, % $ in millions 2016 2015 Change 2016 2015 Change Investor Communication Solutions ("ICS") Recurring Fee Revenues $334.3 $218.6 53% $663.4 $434.5 53% Total Revenues 709.6 471.7 50% 1,432.9 901.4 59% Earnings before i
Slide 26: Capital Allocation and Summary Balance Sheet
25© 2016 Capital Allocation and Summary Balance Sheet Summary Balance Sheet as of 12/31/2016 Select Uses of Cash in 2Q 2017 • $17 million in capital expenditures and software investment • Acquisition of M&O Systems for $25 million • Share repurchases of $60 million net of option proceeds $ in millio
Slide 27: Appendix
Appendix
Slide 28: Reconciliation of GAAP to Non-GAAP Measures
27© 2016 Reconciliation of GAAP to Non-GAAP Measures (Unaudited) Three Months Ended December 31, Six Months Ended December 31, $ in millions, except per share figures 2016 2015 2016 2015 Operating income (GAAP) $ 58.8 $ 70.2 $ 124.9 $ 129.3 Adjustments: Amortization of Acquired Intangibles and Purch
Slide 29: Reconciliation of GAAP to Non-GAAP Measures
28© 2016 Reconciliation of GAAP to Non-GAAP Measures $ in millions Six Months Ended December 31, 2016 2015 Net cash flows (used in) provided by operating activities (GAAP) $ (5.5) $ 42.6 Capital expenditures and Software purchases and capitalized internal use software (32.0) (36.9) Free cash flow (N
Slide 30: Fiscal Year 2017 Guidance
29© 2016 Fiscal Year 2017 Guidance Adjusted Earnings Per Share Growth Rate (1) Diluted earnings per share (GAAP) 2% ‐ 7% Adjusted earnings per share (Non‐GAAP) 12% ‐ 17% Adjusted Operating Income Margin (2) Operating income margin % (GAAP) ~13% Adjusted Operating income margin % (Non‐GAAP) ~15% Free