Broadridge
Financial Solutions, Inc
.
September 2009
Bank
of
America
-
Merrill
Lynch
SMid
Cap Conference 2009 Presentation
Richard J. Daly,
Chief Executive Officer
Exhibit 99.1
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2
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, such as our fiscal year 2009 financial guidance, 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. 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, 2009 (the “2009 Annual
Report”), as they may be updated
in any future reports filed with the Securities and
Exchange Commission. Any forward-looking statements are qualified in
their entirety
by reference to the factors discussed in the 2009 Annual Report. These risks include: the success of
Broadridge in retaining and selling additional services to its existing clients and in obtaining new
clients; the pricing of
Broadridge’s products and services; changes in laws affecting the
investor communication services provided by
Broadridge; changes in laws regulating registered
securities clearing firms and broker-dealers; declines in trading volume,
market prices, or
the liquidity of the securities markets; any material breach of Broadridge security affecting its clients’
customer information; Broadridge’s ability to continue to obtain data center services from its former
parent company,
Automatic Data Processing, Inc. (“ADP”); any significant slowdown or
failure of Broadridge’s systems; Broadridge’s failure
to keep pace with changes in
technology and demands of its clients; availability of skilled technical employees; the impact
of new acquisitions and divestitures; competitive conditions; overall market and economic conditions; and
any adverse
consequences from Broadridge’s spin-off from ADP. Broadridge
disclaims any obligation to update any forward-looking
statements, whether as a result of
new information, future events or otherwise.
This presentation may include certain Non-GAAP (generally accepted accounting principles) financial
measures in
describing Broadridge’s performance. Management believes that such
Non-GAAP measures, when presented in
conjunction with comparable GAAP measures provide
investors 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. These measures should be considered in addition to and not a
substitute for the measures of financial
performance prepared in accordance with GAAP. The
reconciliations of such measures to the comparable GAAP figures
are included in this
presentation.
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3
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, the Broadridge
logo and Aspire are registered trademarks of
Broadridge
Financial Solutions, Inc. Ridge and Ascendis
are
trademarks of
Broadridge
Financial Solutions, Inc.
©
2009 Broadridge
Financial Solutions, Inc.
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4
AGENDA
Broadridge Overview and Summary
Business Overview
Business Expansion Strategy Overview
Financial Overview
Conclusion
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5
Broadridge: Investment Thesis
Generate
very strong and
highly predictable
free cash flows
Strong core Investor
Communications business
which generates over 70% of
annual revenues and earnings
Market leader with high
client retention rates
driven by product innovation
Approximately 80%
in recurring annual revenues
Dependable mid-single-digit
revenue growth business
(4.5% CAGR since 2002)
Highly experienced
management team
(averaging 14 years)
focused on delivering
shareholder return
Scalable business model
with core business
generating margin expansion
(>16% margins, averaging ~50bps
annual growth last 3 fiscal years)
Averaged over $250M per year
during the last 3 fiscal years
Aim to invest in existing businesses and acquisitions to generate mid to high-
single-digit revenue growth and return excess cash to shareholders
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6
High: $270
$252
Forecast
$290
$251
$248
Broadridge: Free Cash Flow & Capital Allocation
Note: Free Cash Flow excludes financing activities in the Clearing and Outsourcing
Solutions segment
Dividends
•
Doubled annual dividend
from $0.28 to $0.56 per
share for FY10, or
approximately 35% payout
of FY09 GAAP net earnings
Stock
Repurchases
•
Authorized repurchase of
up to 10 million shares, or
approximately 7% of the
shares outstanding
Acquisitions
•
Strategic acquisitions to
leverage the Broadridge
brand and distribution
channels
Strong predictable free cash flow allows for flexible capital allocation options
(1) Free cash flow is a Non-GAAP financial measure and is defined
as net cash flow provided by operating activities excluding Ridge Clearing financing activities, less capital
expenditures and intangibles.
FY06
FY07
FY08
FY09
FY10
Free Cash Flow
(Non
-
GAAP)
(1)
($ in millions)
Low: $235
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7
Broadridge Mission
Partner with
Financial Institutions
to:
Reduce
Risk & Cost
Increase
Performance
•
Enable the financial services
industry to achieve higher levels
of performance by allowing firms
to focus on their core business
•
Help manage their regulatory
compliance risk by improving
clients’
processing,
communication accuracy and
data security
•
Deliver cost savings to financial
institutions through outsourcing
their non-differentiating back-
office processes
•
Develop long lasting relationships
with world class companies built
on mutual success
Our Mission is To Reduce Clients’
Risk While Lowering Their Total Cost of Ownership
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8
Individual (Retail) and Institutional
Clients
Broker-Dealers, Banks, Mutual Funds, Corporate Issuers
Integrated Solutions Spanning the Investment Lifecycle
Investment
Decision
(Pre-Trade)
Trade Processing
&
Books and Records
Asset
Servicing
(Post-Trade)
New Accounts
Welcome Kits
Proxy
Fulfillment
Archival
Confirms
Across the
investment
lifecycle...
...By partnering
with the world’s
leading financial
institutions...
...And delivering
broad and
innovative
global solutions
Investor Communications
Proxy management, corporate governance, and stockholder communications
Securities Processing
Global trade processing for equities, options, mutual funds,
and fixed income securities
Clearing and Outsourcing Solutions
Processing
Reporting
Statements
...Broadridge
touches
investors...
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9
Shareholder Positions
Images and Pieces
Processed
Processing Fees
(Trades Per Day)
Processing Fees
and
Accounts
Interest Rates
and
Lending Balances
Revenue Drivers
Market Leader
with
High Retention Rates
Recurring Revenue
Complex Proprietary
Processing Platforms
High Client Satisfaction
and Highly Engaged
Associates
Investor
Communication
Solutions
Clearing &
Outsourcing
Solutions
Securities
Processing
Solutions
Recurring
Revenue
(~80%)
Event-
Driven
Revenue
(~20%)
Indispensable Provider for
Mission Critical Processing
Resilient and Predictable Business Model
Business is resilient and largely independent of the stock market being at its highs or
lows……….predictable revenue stream drives predictable free
cash flow
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10
Business is Resilient in Changing Markets
Our revenue growth has been resilient through various economic and
market cycles
Stock Market
Rebounds
Decimalization
of Trades
Internet Bubble
Impact
Financial
Crisis
Note:
Fiscal
year
is
based
on
June
30
year
end
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
Dow Jones Industrial Average
Broadridge
Net Revenues
t
h
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11
This
is
Broadridge
•
We
are
a
market
leader
in
processing
and
distributing shareholder communications, and
provider of choice for mission-critical
securities processing solutions
•
Over
40
years
of
experience
and
a
solid
customer base with long standing
relationships
•
Our
core
business
is
resilient
and
largely
independent of the stock market being at its
highs or lows
•
Strong
and
predictable
Free
Cash
Flow
of
~$250M in each of the last 3 fiscal years
BR FY09 Business Revenues
(1)
BR FY09 Business EBIT & Margins
Investor
Communications
$1,531M (71%)
Securities
Processing
Businesses
$635M (29%)
Investor
Communications
EBIT $249M
Margin 16.3%
Securities
Processing
Businesses
EBIT $134M
Margin 21.0%
Clearing and Outsourcing
Innovative industry service provider
leverages processing technology platform
to retain and add new clients:
Correspondent
clearing
using
broker-
dealer subsidiary:
•
Clearing
(~12%)
•
Outsourcing
(~4%)
Investor Communications
(2)
Securities Processing
Leading global back-office processing service
bureau, as 8 of top 10 U.S. broker-dealers use
equity and fixed income components of our
processing
(3)
:
Hosted
applications
for
self-clearing
firms
using Broadridge’s
service bureau for:
•
Equity
(~71%)
•
Fixed
Income
(~13%)
World’s largest processor and provider of investor
communications with over one billion
communications processed annually:
Primary
business
unit
is
a
clear
market
leader
with
over
70%
of
Broadridge
revenues
and
pre-tax
earnings
Proxy
communications and vote processing and
interim
communications
(~65%)
Transaction
reporting
and
fulfillment
services
(~30%)
Other
(~5%)
Securities Processing Businesses
(2)
Only service provider offering service bureau, operations outsourcing or
correspondent clearing on a single platform
(1) Financial information and statistics shown are for the fiscal year
ended June 30, 2009. Segments do not add to total for reported revenue and earnings due to FX and other corporate expense not reflected.
(2) Percentages represent revenue contribution within each reporting
segment.
(3) Based on SIFMA’s 2007-2008 Annual
Yearbook’s top member firm list ranked by capital. This top 10 list does not include the impact of the Lehman
Brothers (declared bankruptcy), Merrill Lynch (acquired by Bank of America)
and Bear Stearns (acquired by JP Morgan) transactions which occurred in 2008.
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12
ICS Unique Business Systems Processing Model
PROXY 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)
ANNUAL CORPORATE ISSUER AND MUTUAL FUND EVENTS
Approximately 12,000 Events Per Year
(Annual Corporate Issuer Shareholder Meetings and Mutual Fund Proxy Meetings)
Proxy Distribution
Over 40% of
accounts
require
special
processing
Vote Processing
Managing
350M
active
positions
(2)
Majority of
all shares
are held in
street
-side
Shareholder
Preferences
Database
Shareholder`
Consent
Database
Equity and Mutual Fund Shareholders
Broadridge
manages
>1,500
Corporate
Issuers
Broadridge
processes on
average 70%
of U.S. shares
outstanding
Electronic or
Physical Vote Return
Data Hub and Platform
Electronic or
Physical Delivery
Street
-
side Processing
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
Proxy and Interim processing system is the “plumbing”
supporting the voting
process for corporate governance
(1)
Represents Broadridge’s estimated total number of brokerage firms and
banks in the U.S. and international markets.
(2)
Represents Broadridge’s
estimated total number of positions managed by U.S. brokers and banks.
(3)
Represents Broadridge’s estimated total number of corporate issuers in
the U.S.
(4)
Represents total number of Fund Sponsors in the U.S. who manage over 16,000
funds including Mutual Funds, Closed-end Funds, ETFs and UITs,
according to the Investment Company Institute’s 2009 Investment Company
Year Book .
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13
Distribution
$757M
(49%)
Other
$46M
(3%)
Fulfillment
$110M
(7%)
Transaction
Reporting
$132M
(9%)
Interims
$136M
(9%)
Proxy
$350M
(23%)
ICS FY09 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
Primarily
Postage
Increase in electronic
distribution reduces postage
revenue and increases profits
Bank/Broker-
Dealer
$1,383M
(90%)
Mutual Fund
$96M
(6%)
Corporate
Issuer
$52M
(4%)
ICS FY09 Client Revenues
…and we have deep and longstanding
client relationships
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14
Broadridge’s
Unique Securities Processing Model
Clearing and Outsourcing business has high growth potential and allows
us to serve the entire investment process
Securities Processing
Self-Clearing with
Service Bureau
Clearing
Fully-Disclosed Clearing
Outsourcing
Self-Clearing with Ops.
Outsourcing & Service
Bureau
Technology &
Data Center
Provided by
Broadridge
Provided by
Broadridge
Provided by
Broadridge
(via Ridge)
Operational
Infrastructure
Client
Responsibility
Provided by
Broadridge
(via Ridge)
Provided by
Broadridge
(via Ridge)
Financing
Activities and
Compliance
Client
Responsibility
Client
Responsibility
Provided by
Broadridge
(via Ridge)
Target
Large
Broker
-
Dealer
Firms
Large ~
Medium
Broker
-
Dealer
Firms
Medium
~ Small
Broker
-
Dealer
Firms
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15
Securities Processing Solutions Top 15 Clients
Broadridge
has faired well
during the recent industry
consolidations and financial
crisis
The top 15 SPS clients generate
approximately 70% of the SPS
segment’s revenues
11 of 15 top clients are under
multi-years agreements; contract
extensions for additional two
clients are in progress
Closed contract with Barclays to
handle new trade volume as
result of Lehman purchase and
executed direct contract with
Neuberger Berman for
processing
Closed contract with JP Morgan
for Bear Stearns fixed income
processing
Bank of America/Merrill Lynch
transaction resulted in loss of
equity processing business and
winning of fixed income
processing business
SPS client relationship are stable in volatile market
Alliance Bernstein
Bank of America/Merrill Lynch*
Barclays Capital Services
BMO Nesbitt Burns
BNP Paribas
CIBC World Markets
Deutsche Bank
E*Trade Group
Edward Jones
HSBC Securities
J.P. Morgan Chase
Jefferies & Company
Royal Bank of Canada
Scotia Capital
UBS Securities
Note: The above schedule is an alphabetical listing of the top 15 SPS clients based on
fiscal year 2009 revenues
* Bank of America/Merrill Lynch includes loss of
equity processing business as previously disclosed
Equity
Processing
Fixed
Income
Processing
Retail
Institutional
Top
Clients
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16
Business Expansion Strategy
Foundation
Five Pillars
Be Indispensable!
We enable the financial services industry
to
achieve
superior
levels
of
performance
through
our
passion
to
deliver
extraordinary value to our clients, shareholders, and associates
Client
Retention
Accelerate
Sales
Offer
New
Solutions
Leverage
Industry
Position
Margin
Improvement
•
Improve world
class service scores
for every product
every year
•
Zero losses to
competition
•
Be “indispensable”
•
Increase total
sales year-over-
year
•
Increase
existing client
penetration
•
Value
propositions
with “teeth”
•
Improve margins in
all products every
year
Data center
Leverage
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