Broadridge Financial Solutions, Inc. (BR)

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Broadridge Financial Solutions, Inc. (BR)

F4Q09 (Qtr End 6/30/09) Earnings Call

August 11, 2009 8:30 am ET


Marvin Sims - VP Investor Relations

Richard J. Daly - Chief Executive Officer, Director

Dan Sheldon - Chief Financial Officer, Vice President


James Cassan - Bank of North America

Ian Zaffino – Oppenheimer

Tien-Tsin Huang - JPMorgan

Stefan Mykytiuk - Pike Place Capital

Vivian Mamlock - US Steel Pension Fund



Good morning. My name is Stephanie and I will be your conference facilitator. At this time I would like to welcome everyone to the fiscal year 2009 earnings conference call. I would like to inform you that this call is being recorded and that all lines have been placed on mute to prevent any background noise. There will be a question-and-answer period after the speakers' remarks. Please try to limit your questions to one per participant. I will now turn the conference over to Marvin Sims, Vice President of Investor Relations. Please go ahead, sir.

Marvin Sims

Stephanie, thank you. Good morning, everyone, and welcome to the Broadridge quarterly earnings call and webcast for the fourth quarter fiscal year 2009. As usual, this morning I’m here with Rich Daly, Chief Executive Officer for Broadridge, and Dan Sheldon, Chief Financial Officer for Broadridge.

I'm sure by now everyone has had the opportunity to review the earnings release we issued earlier this morning. The news release and slide presentation that accompanied today's earning call and webcast can be found on the investor relations homepage of our website at

As requested by some, earlier this morning our quarterly key metrics were posted on our IR website as well. We've also included a copy of the metrics in our appendix of our webcast for your reference, as they may be helpful during Dan's review of the financial results.

Before we begin I would like to remind everyone that during today's conference call we'll discuss some forward-looking statements regarding Broadridge that involve risk. These risks are discussed here on slide one, and we encourage participants to refer to our SEC filings, including those on Form 8-K, 10-Q, and 10-K, for a complete discussion of forward-looking statements and risks.

Now let's turn to the next slide and review today's agenda. Rich Daly will start today's call with his opening remarks and will provide a summary of the financial results for fiscal year 2009, followed by a discussion of a few key topics. Dan Sheldon will then review the fiscal year 2009 financial results and financial guidance in further detail, including a review of cash flows. Rich will then return and provide his overall summary and some closing thoughts before we head into the Q&A part of the call.

Now please turn the next slide and I’ll turn the call over to Rich Daly. Rich?

Richard J. Daly

Thanks, Marvin. Good morning, everyone. This morning, as part of my opening remarks I'll talk about the following topics. First, a summary of our fourth quarter and full fiscal-year financial results, followed by a review of our sales performance for the year and sales pipeline. Then, an overview of our fiscal year 2010 financial guidance, and finally, an update on our capital allocation policy and how we plan to use our free cash flow to create long-term shareholder value.

Let' start on slide number four. Overall I'm satisfied with the fiscal year results as the financial performance for the fourth quarter was in line with our expectations and includes an acceptable year. Our fiscal year non-GAAP EPS of $1.51 and GAAP EPS of $1.58 were both just above the midpoint of our May guidance.

Our revenue decline of 3% was at the low end of our May guidance due to lower equity stock record growth, somewhat offset by higher trading volumes in the fourth quarter.

As I think about revenue growth for the year and I exclude the lower distribution revenues and negative impact from foreign currency exchange, we had fee revenue growth of 2% and fee revenue growth in all three of our operating segments.

Our growth in recurring fee revenues has been one of the highlights for the business this year and was the foundation for growth during this challenging market, as it has helped to offset some of the decline in mutual-fund event-driven fee revenue for the year.

All of our revenues for the year were down. Our non-GAAP earnings per share were up 6% as we benefited from lower interest expense and a lower recurring effective tax rate, related to the work we’ve done since the spinoff, to obtain recurring state-tax credits.

We generated greater than $250 million in free cash flow which enabled us to internally fund two acquisitions, significantly pay down debt, buy back 2 million shares to offset dilution from our equity compensation plans, pay a dividend, and end the year with over $170 million in cash on our balance sheet.

In a few minutes I'll discuss our proposed use of this cash and our future free cash flow when I review our capital policies.

Let me put our fiscal year 2009 financial performance into context. We achieved our full-year EPS guidance, which we first issued last August just prior to the meltdown in the market, and this guidance remained unchanged throughout the crisis.

Broadridge faired better in this down market than it did in previous down markets. This is due to the breadth of products which include a broader registered proxy offering, the expansion of our fixed-income processing capabilities, as well as our unique three-tier securities processing offerings.

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