Broadridge Reports First Quarter 2013 Results

Broadridge Reports First Quarter 2013 Results 
Reaffirms Full Year Guidance; Repurchased 3.2 Million Shares 
LAKE SUCCESS, NY -- (Marketwire) -- 11/06/12 --  Broadridge Financial
Solutions, Inc. (NYSE: BR) today reported financial results for the
first quarter of its fiscal year 2013. For the three months ended
September 30, 2012, the Company reported revenues of $496 million,
GAAP net earnings from continuing operations of $18 million, Non-GAAP
net earnings from continuing operations of $22 million, GAAP diluted
earnings per share from continuing operations of $0.14, and Non-GAAP
diluted earnings per share from continuing operations of $0.18. This
compares with revenues of $476 million, GAAP net earnings from
continuing operations of $17 million, Non-GAAP net earnings from
continuing operations of $23 million, GAAP diluted earnings per share
from continuing operations of $0.13, and Non-GAAP diluted earnings
per share from continuing operations of $0.18 for the three months
ended September 30, 2011.  
Our fiscal year 2013 Non-GAAP results exclude the impact of
Acquisition Amortization and Other Costs and Penson Worldwide, Inc.
("Penson") Charges, net. In addition, our fiscal year 2012 Non-GAAP
results also exclude the impact of IBM Migration costs. The
significant Non-GAAP adjustments to our results are described in more
detail below.  
Commenting on the results, Richard J. Daly, Chief Executive Officer,
said, "Overall, I am satisfied with our first quarter results. For
the quarter, our recurring revenues grew 3% and recurring revenue
closed sales were down approximately 30% compared with last year.
There were no recurring revenue closed sales from transactions of
greater than $5 million and our recurring revenue closed sales of
less than $5 million grew by approximately 8%. Our pipeline for all
sales -- large and small -- is strong. Due to the seasonal nature of
our business, our first quarter makes the smallest quarterly
contribution to our annual results." Mr. Daly concluded, "We expect
to achieve our full year guidance as a result of our strong sales
pipeline, 99% client revenue retention rate, and overall momentum
driven by our leading brand and growing product strength." 
Financial Results for First Quarter Fiscal Year 2013 
For the first quarter of fiscal year 2013
, recurring and total
revenues increased 3% and 4% to $311 million and $496 million,
respectively, compared to $302 million and $476 million for the
comparable period last year. The increase was driven by a positive
contribution from recurring fee revenues of approximately $9 million
including net new business (defined as closed sales less client
losses) and a slight improvement in event-driven fee revenues,
coupled with $8 million of higher distribution revenues. GAAP
earnings from continuing operations before income taxes margins of
5.8% increased compared to 5.5% for the same period last year.
Non-GAAP earnings from continuing operations before income taxes
margins were 7.0%, compared to 7.5% for the same period last year.  
For the first quarter of fiscal year 2013, GAAP net earnings from
continuing operations of $18 million increased 10%, compared to $17
million for the same period last year. Non-GAAP net earnings from
continuing operations were $22 million, compared to $23 million for
the same period last year. GAAP diluted earnings per share from
continuing operations increased to $0.14 per share, compared to $0.13
per share in the first quarter of fiscal year 2012. Non-GAAP diluted
earnings per share from continuing operations were $0.18 per share
compared to $0.18 per share for the same period last year.  
During the first quarter of fiscal year 2013, the Company
opportunistically repurchased approximately 3.2 million shares of
Broadridge common stock under its stock repurchase plans at an
average price of $23.61 per share. Approximately 6.7 million shares
remain available under the Company's current stock repurchase plans
as of September 30, 2012.  
Analysis of First Quarter Fiscal Year 2013 
Investor Communication Solutions
 Recurring and total revenues for
the Investor Communication Solutions segment increased 9% and 8% to
$157 million and $339 million, respectively, in the first quarter of
fiscal year 2013 compared to the first quarter of fiscal year 2012.
Higher recurring and event-driven fee revenues contributed $14
million and $5 million, respectively, coupled with an $8 million
increase in distribution revenues. The positive contribution from
recurring fee revenues was driven primarily by net new business and
internal growth. Operating margin increased by 530 basis points to
8.0% as a result of higher fee and distribution revenues and cost
containment efforts. 
Securities Processing Solutions
 Total revenues (which are all
considered recurring) for the Securities Processing Solutions segment
decreased 3% to $154 million in the first quarter of fiscal year 2013
compared to the first quarter of fiscal year 2012. The decrease was
primarily driven by lower trade volumes coupled with the decline in
revenue resulting from the new outsourcing services contract with
Apex Clearing Corporation ("Apex") replacing the terminated
outsourcing services contract with Penson, mostly offset by growth
from net new business and the impact of the Paladyne acquisition.
Operating margin decreased by 1150 basis points to 6.1% primarily as
a result of revenue mix and an increase in systems investments. 
Other
 The pre-tax loss from continuing operations for the Other
segment decreased by $1 million to $12 million in the first quarter
of fiscal year 2013 compared to the first quarter of fiscal year
2012. The decreased loss was primarily due to decreased IBM Migration
costs slightly offset by increased interest expense on borrowings.  
Fiscal Year 2013 Financial Guidance 
We are reaffirming our full year guidance. We anticipate recurring
revenue growth in the range of 4% to 7% and total revenue growth in
the range of 3% to 4%, GAAP earnings from continuing operations
before income taxes margins in the range of 13.8% to 14.4%, and
Non-GAAP earnings from continuing operations before income taxes
margins in the range of 15.1% to 15.7%.  
We anticipate GAAP diluted earnings per share from continuing
operations in the range of $1.60 to $1.70, and Non-GAAP diluted
earnings per share from continuing operations in the range of $1.76
to $1.86, based on diluted weighted-average shares outstanding of
approximately 128 million shares. Our free cash flow guidance is
expected to be in the range of approximately $200 million to $250
million. Our recurring revenue closed sales guidance is expected to
be in the range of $110 million to $150 million.  
Our Non-GAAP earnings guidance excludes the projected impact of
Acquisition Amortization and Other Costs and Penson Charges, net. The
Non-GAAP pre-tax earnings margins and diluted earnings per share
guidance ranges increased from our previously provided guidance as a
result of the exclusion of the impact of Acquisition Amortization and
Other Costs which was not excluded in the previous guidance. Our
guidance does not take into consideration the effect of any future
acquisitions, additional debt or share repurchases.  
Description of Non-GAAP Adjustments: 
Non-GAAP 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 release is a reconciliation of Non-GAAP measures to
the comparable GAAP measures.  
Acquisition Amortization and Other Costs 
Acquisition Amortization and Other Costs represents amortization
charges associated with intangible asset values as well as other deal
costs associated with the Company's acquisitions. Our Non-GAAP
results exclude the impact of the costs the Company incurred in
connection with acquisitions. The Acquisition Amortization and Other
Costs are recorded in our Cost of revenues in the Consolidated
Statements of Earnings for the three months ended September 30, 2012
and 2011, respectively.  
Penson Charges, net 
For the fiscal quarter ended September 30, 2012, there were $1
million in pre-tax charges primarily related to transition costs as a
result of the termination of the outsourcing services agreement with
Penson including shutdown costs associated with the transfer of our
subsidiary to Apex. The Penson Charges are recorded in our Other
segment and Other expenses, net in the Consolidated Statements of
Earnings for the quarter ended September 30, 2012.  
IBM Migration Costs 
In March 2010, Broadridge entered into an Information Technology
Services Agreement with International Business Machines ("IBM") under
which IBM provides us with certain aspects of our information
technology infrastructure. Our Non-GAAP results exclude the impact of
the costs the Company incurred in connection with the migration of
our data center to IBM (the "Migration"). The Migration costs are
recorded in our Other segment and Cost of revenues in the
Consolidated Statements of Earnings for the three months ended
September 30, 2012 and 2011, respectively. The more significant
mainframe Migration was successfully completed at the end of our 2012
fiscal year resulting in a pre-tax charge of $25 million. The
remaining aspects of the Migration were fully completed on August 26,
2012.  
Earnings Conference Call  
An analyst conference call will be held today, Tuesday, November 6th
at 8:30 a.m. ET. A live webcast of the call will be available to the
public on a listen-only basis. To listen to the webcast and view the
slide presentation, go to www.broadridge-ir.com and click on the
webcast icon. The presentation will be available to download and
print approximately 30 minutes before the webcast on the Broadridge
Investor Relations home page at www.broadridge-ir.com. Broadridge's
news releases, current financial information, SEC filings and
Investor Relations presentations are accessible on the same website.  
About Broadridge  
Broadridge is a technology services company focused on global capital
markets. Broadridge is the market leader enabling secure and accurate
processing of information for communications and securities
transactions among issuers, investors and financial intermediaries.
Broadridge builds the infrastructure that underpins proxy services
for over 90% of public companies and mutual funds in North America;
processes more than $4.5 trillion in fixed income and equity trades
per day; and saves companies billions annually through its technology
solutions. For more information about Broadridge, please visit
www.broadridge.com.  
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.  


 
                    Broadridge Financial Solutions, Inc.                    
                Condensed Consolidated Statements of Earnings               
                   (In millions, except per share amounts)                  
                                 (Unaudited)                                
                                                                            
                                                    
        Three Months    
                                                         Ended September 30,
                                                         -------------------
                                                            2012      2011  
                                                         --------- ---------
Revenues                                                 $   495.8 $   476.4
                                                         --------- ---------
                                                                            
                                                                            
Cost of revenues                                             390.0     382.8
Selling, general and administrative expenses                  72.9      64.7
Other expenses, net                                            4.3       2.7
                                                         --------- ---------
  Total expenses                                             467.2     450.2
                                                         --------- ---------
                                                                            
Earnings from continuing operations before income taxes       28.6      26.2
Provision for income taxes                                    10.3       9.5
                                                         --------- ---------
Net earnings from continuing operations                       18.3      16.7
Loss from discontinued operations, net of tax benefit           --        --
                                                         --------- ---------
Net earnings                                             $    18.3 $    16.7
                                                         --------- ---------
                                                                            
Basic earnings per share:                                                   
Basic earnings per share from continuing operations      $    0.15 $    0.14
Basic earnings per share from discontinued operations           --        --
                                                         --------- ---------
Basic earnings per share                                 $    0.15 $    0.14
                                                         --------- ---------
Diluted earnings per share:                                                 
Diluted earnings per share from continuing operations    $    0.14 $    0.13
Diluted earnings per share from discontinued operations         --        --
                                                         --------- ---------
Diluted earnings per share                               $    0.14 $    0.13
                                                         --------- ---------
                                                                            
                                                                            
Weighted-average shares outstanding:                                        
  Basic                                                      124.0     123.7
  Diluted                                                    127.1     126.7
                                                                            
Dividends declared per common share                      $    0.18 $    0.16
                                                                            
                                                                            
                                                                            
                    Broadridge Financial Solutions, Inc.                    
                   Condensed Consolidated Balance Sheets                    
                  (In millions, except per share amounts)                   
                                (Unaudited)                                 
                                                                            
                                                September 30,    June 30,   
                                                     2012          2012     
                                                -------------  ------------ 
Assets                                                                      
Current assets:                                                             
Cash and cash equivalents                       $       211.8  $      320.5 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $6.5 and $6.5,                                      
   respectively                                         321.4         370.7 
  Other current assets                                   87.7          86.2 
                                                -------------  ------------ 
    Total current assets                                620.9         777.4 
Property, plant and equipment, net                       76.3          79.0 
Goodwill                                                781.8         780.0 
Intangible assets, net                                  135.2         143.3 
Other non-current assets                                216.3         207.9 
                                                -------------  ------------ 
      Total assets                              $     1,830.5  $    1,987.6 
                                                -------------  ------------ 
                                                                            
Liabilities and Stockholders' Equity                                        
Current liabilities:                                                        
  Accounts payable                              $        88.9  $      102.2 
  Accrued expenses and other current                                        
   liabilities                                          174.1         260.6 
  Deferred revenues                                      50.6          47.5 
                                                -------------  ------------ 
    Total current liabilities                           313.6         410.3 
Long-term debt                                          524.4         524.4 
Deferred taxes                                           61.1          63.2 
Deferred revenues                                        36.9          38.3 
Other non-current liabilities                           105.0         100.9 
                                                -------------  ------------ 
      Total liabilities                               1,041.0       1,137.1 
                                                -------------  ------------ 
                                                                            
Commitments and contingencies                                               
                                                                            
Stockholders' equity:                                                       
  Preferred stock: Authorized, 25.0 shares;                                 
   issued and outstanding, none                            --            -- 
  Common stock, $0.01 par value: Authorized,                                
   650.0 shares; issued, 153.4 and 152.9                                    
   shares, respectively; outstanding, 122.1 and                             
   124.8 shares, respectively                             1.5           1.5 
  Additional paid-in capital                            753.3         739.4 
  Retained earnings                                     682.5         686.1 
  Treasury stock, at cost: 31.3 and 28.1                                    
   shares, respectively                                (656.1)       (580.0)
  Accumulated other comprehensive income                  8.3           3.5 
                                                -------------  ------------ 
    Total stockholders' equity                          789.5         850.5 
                                                -------------  ------------ 
                                                      
                      
      Total liabilities and stockholders'                                   
       equity                                   $     1,830.5  $    1,987.6 
                                                -------------  ------------ 
                                                                            
                                                                            
                                                                            
                    Broadridge Financial Solutions, Inc.                    
                               Segment Results                              
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                                                        Revenues            
                                           ---------------------------------
                                                      Three Months          
                                                  Ended September 30,       
                                                 2012             2011      
                                           ---------------- ----------------
Investor Communication Solutions           $          339.5 $          313.0
Securities Processing Solutions                       153.9            158.4
Other                                                    --               --
Foreign exchange                                        2.4              5.0
  Total                                    $          495.8 $          476.4
                                                                            
                                                                            
                                                                            
                                                                            
                                          Earnings (Loss) from Continuing   
                                          Operations before Income Taxes    
                                        ----------------------------------  
                                                   Three Months             
                                                Ended September 30,         
                                              2012              2011        
                                        ---------------- -----------------  
Investor Communication Solutions        $           27.2  $            8.4  
Securities Processing Solutions                      9.4              27.8  
Other                                              (11.9)            (12.9) 
Foreign exchange                                     3.9               2.9  
  Total                                 $           28.6  $           26.2  
                                                                            
                                                                            
                                                                            
                    Broadridge Financial Solutions, Inc.                    
                Reconciliation of Non-GAAP to GAAP Measures                 
                  (In millions, except per share amounts)                   
                                                                            
                                                   Earnings from Continuing 
                                                   Operations before Income 
                                                             Taxes          
                                                   ------------------------ 
                                                         Three Months       
                                                      Ended September 30,   
                                                       2012         2011    
                                                   -----------  ----------- 
Adjusted Earnings from Continuing Operations                                
 before Income Taxes (Non-GAAP)                         $ 34.8  $      35.7 
Acquisition Amortization and Other Costs                  (5.5)        (6.3)
Penson Charges, net                                       (0.7)          -- 
IBM Migration costs                                         --         (3.2)
Earnings from Continuing Operations before Income                           
 Tax (GAAP)                                        $      28.6  $      26.2 
                                                                            
Pre-tax Earnings Margins (Non-GAAP)                        7.0%         7.5%
Pre-tax Earnings Margins (GAAP)                            5.8%         5.5%
                                                                            
                                                                            
                                                                            
                                                       Net Earnings from    
                                                     Continuing Operations  
                                                   ------------------------ 
                                                         Three Months       
                                                      Ended September 30,   
                                                       2012         2011    
                                                   -----------  ----------- 
Adjusted Net Earnings from Continuing Operations                            
 (Non-GAAP)                                        $      22.3  $      22.8 
Acquisition Amortization and Other Costs, net of                            
 taxes                                                    (3.5)        (4.1)
Penson Charges, net, net of taxes                         (0.5)          -- 
IBM Migration Costs                                         --         (2.0)
Net Earnings from Continuing Operations (GAAP)                              
                                                   $      18.3  $      16.7 
                                                                            
                                                                            
                                                                            
                                                                            
                                                     Diluted Earnings Per   
                                                     Share from Continuing  
                                                          Operations        
                                                   ------------------------ 
                                                         Three Months       
                                                      Ended September 30,   
                                                       2012         2011    
                                                   -----------  ----------- 
Adjusted Diluted Earnings Per Share from                                    
 Continuing Operations (Non-GAAP)                  $      0.18  $      0.18 
Acquisition Amortization and Other Costs                 (0.03)       (0.03)
Penson Charges, net                                      (0.01)          -- 
IBM Migration costs                                         --        (0.02)
Diluted Earnings Per Share from Continuing                                  
 Operations (GAAP)                                 $      0.14  $      0.13 
                                                                            
                                                                            
                                                                            
                    Broadridge Financial Solutions, Inc.                    
                Reconciliation of Non-GAAP to GAAP Measu
res                 
               EBIT from Continuing Operations Reconciliation               
                  (In millions, except per share amounts)                   
                                                                            
                                                                            
                                                                            
                                                     Q1          FY13       
                                                    FY13    Guidance Range  
                                                                            
                                                   Actual    Low      High  
                                                  -------  -------  ------- 
EBIT (Non-GAAP)                                   $    33  $   353  $   377 
  EBIT Margins (Non-GAAP)                             6.6%    14.9%    15.7%
  Acquisition Amortization and Other Costs              6       22       22 
  Interest and Other                                   (3)     (17)     (21)
Total EBT (Non-GAAP)                                   35      358      378 
  EBT Margins (Non-GAAP)                              7.0%    15.1%    15.7%
  Acquisition Amortization and Other Costs             (6)     (22)     (22)
  Penson Charges, net                                  (1)     (10)     (10)
Total EBT (GAAP)                                       29      326      346 
  Margins (GAAP)                                      5.8%    13.8%    14.4%
                                                                            
NOTE: Amounts in this table may not sum to totals                           
 due to rounding.                                                           
                                                                            
                                                                            
                                                                            
                    Broadridge Financial Solutions, Inc.                    
                Reconciliation of Non-GAAP to GAAP Measures                 
                         Fiscal Year 2013 Guidance                          
                  (In millions, except per share amounts)                   
                                                               FY13         
                                                        Guidance Range (a)  
                                                           Low       High   
                                                       ---------  --------- 
Adjusted Earnings from Continuing Operations before                         
 Income Taxes (Non-GAAP)                               $     358  $     378 
                                                                            
  Acquisition Amortization and Other Costs                   (22)       (22)
  Penson Charges, net                                        (10)       (10)
                                                                            
                                                                            
Earnings from Continuing Operations before Income                           
 Taxes (GAAP)                                          $     326  $     346 
                                                                            
  Pre-tax Earnings Margins (Non-GAAP)                       15.1%      15.7%
  Pre-tax Earnings Margins (GAAP)                           13.8%      14.4%
                                                                            
                                                                            
                                                                            
                                                               FY13         
                                                        Guidance Range (a)  
                                                          Low        High   
                                                       ---------  --------- 
Adjusted Diluted EPS from Continuing Operations (Non-                       
 GAAP)                                                 $    1.76  $    1.86 
                                                                            
Acquisition Amortization and Other Costs                   (0.11)     (0.11)
Penson Charges, net                                        (0.05)     (0.05)
                                                                            
                                                                            
Diluted EPS from Continuing Operations (GAAP)          $    1.60  $    1.70 
                                                                            
(a)   Guidance does not take into consideration the effect of any future    
       acquisitions, additional debt and/or share repurchases.              
                                                                            
                                                                            
                                                                            
                    Broadridge Financial Solutions, Inc.                    
                Reconciliation of Non-GAAP to GAAP Measures                 
                               Free Cash Flow                               
                               (In millions)                                
                                                 Q1            FY13         
                                                FY13    Guidance Range (a)  
                                                                            
                                               Actual     Low        High   
                                              -------  ---------  --------- 
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 and software                                        
    purchases                                      (8)       (55)       (45)
                                                                            
Free cash flow (Non-GAAP)                     $   (24) $     196  $     249 
                                                                            
(a)   Guidance does not take into consideration the effect of any future    
       acquisitions, additional debt and/or share repurchases.              

  
Contact Information 
Investors: 
David Ng
Broadridge Financial Solutions, Inc. 
Director, Investor Relations 
(516) 472-5491