Broadridge Financial Solutions, Inc. (BR)

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Broadridge Financial Solutions, Inc. (BR)

F3Q10 Earnings Call

May 10, 2010 8:30 am ET

Executives

Rick Rodick – Treasurer and Vice President Investor Relations

Rich Daly - Chief Executive Officer

Dan Sheldon - Chief Financial Officer

Analysts

Jim Kissane – Bank of America-Merrill Lynch

Ian Zaffino – Oppenheimer

Tien-Tsin Huang - JP Morgan

Peter Dale – Omega Advisors

Stefan Mykytiuk - Pike Place Capital

Milan Gupta – Southpoint Capital

Presentation

Operator

(Operator Instructions) Welcome everyone to the Broadridge Financial Solutions Third Quarter Fiscal Year 2010 Earnings Conference Call. I will now turn the conference over to Rick Rodick, Treasurer and Vice President of Investor Relations.

Rick Rodick

Welcome to the Broadridge quarterly earnings call and webcast for the third quarter of fiscal year 2010. 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 today. The earnings release and slide presentation that accompany today's earnings call and webcast can be found on the Investor Relations homepage of our website at www.Broadridge.com. I’d like to remind everyone that we’ve also included a copy of the key metrics on pages 30 and 31 in the appendix of our webcast for your reference. You may find these metrics helpful during Dan’s review of the financial results for each segment.

During today’s conference call we’ll discuss some forward looking statements regarding Broadridge that involve risks. These risks are discussed here on slide number one and we encourage the participants to refer to our SEC filings including those on Forms 8-K, 10-Q, and 10-K for a complete discussion of forward looking statements and the risk factors related to our business.

Before we begin I’d like to point out to everyone that as a result of the Penson transaction we announced in the first quarter, the clearing business is now shown as discontinued operations and our remaining outsourcing business has been merged into the Securities Processing segment. Also as a result of the reporting treatment of the Penson transaction the financial results discussed today will address continuing operations unless otherwise stated.

Now let’s turn to slide two and review today’s agenda. Rich Daly will start today's call with his opening remarks and will provide you with a summary of the financial results for the third quarter of fiscal year 2010, followed by a discussion of a few key topics. Dan Sheldon will then review the third quarter fiscal year 2010 financial results and the full year 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 to slide number three and I'll turn the call over to Rich Daly.

Rich Daly

This morning as part of my opening remarks I’ll talk about the following topics. First, I’ll start with an executive summary of the quarter and year to date activities. Then I’ll provide an overview of our third quarter financial results, followed by a review of our strong closed sales performance and sales pipeline, and then a business update for our two segments. After Dan provides you more of the financial details on the quarter and a guidance update I’ll then wrap it up with my closing comments.

Let’s start on slide number four. Our business execution remains strong, year to date closed sales were 41% higher than last year and client revenue retention rates were 98%. We continue to grow in all of our markets during this down cycle and we were recently upgraded by Moody’s due to the company’s continued strong operating performance throughout the economic recession.

We are executing on our strategies. On April 1 we announced that IBM and Broadridge had signed both business alliance and data center outsourcing agreements. The Penson transaction is proceeding as planned and we anticipate closing the transaction prior to June 30, 2010. On March 9th we announced that we had entered the registered equity transfer agent market with our acquisition of StockTrans. We intend to be aggressive in this space by leveraging the more efficient street processing processes to the benefit of both issuers and shareholders.

The Morgan Stanley Smith Barney transaction that we announced in November is progressing nicely as the performance under the contract is tracking ahead of expectations. We have assumed the legacy print mail fulfillment operations of Smith Barney and have also begun converting the Morgan Stanley legacy applications.

Our high level of associate engagement and productivity was recognized when we were named the “Best Large Company in New York State” according to the new rankings issued by the “Best Company’s to Work For in New York Statewide Survey and Awards Program.” This is more than a big honor, this says our associates are the most engaged in the industry.

Key recurring revenues have not yet rebounded as originally anticipated at the start of the fiscal year. Trade volumes, stock record growth and fulfillment continue to run at levels below last year; however, they have improved from the first half of our fiscal year.

Fortunately this year’s unprecedented increase in event driven mutual fund proxy revenues enables us to be within our original earnings per share guidance even though we are taking our revenue guidance to the low end of the range at about 7% due to market driven factors such as trade volumes and stock record growth continuing to run at levels below last year.

Read the rest of this transcript for free on seekingalpha.com