Broadridge Financial Solutions, Inc. (BR)

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Broadridge Financial Solutions Inc. (BR)

F1Q2011 Earnings Call

November 04, 2010 08:30 pm ET

Executives

Rick Rodick - Treasurer & VP, IR

Rich Daly - CEO

Dan Sheldon - Corporate VP & CFO

Analysts

Peter Heckman - Avondale

Lee Cooperman - Omega Advisors

Jim Kissane - Bank of America Merrill Lynch

David Togut - Evercore Partners

Tien-Tsin Huang - JPMorgan

Justin Hughes - Philadelphia Financial

Presentation

Operator

Good morning my name is Suzan and I will be your conference facilitator. At this time I would like to welcome everyone to the Broadridge Financial Solutions first quarter fiscal year 2011 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’ remark. (Operator Instructions). I will now turn the conference over to Rick Rodick, Treasurer and Vice President of Investor Relations. Please go ahead sir.

Rick Rodick

Thank you good morning everyone and welcome to the Broadridge quarterly earnings call and webcast for the first quarter of fiscal year 2011. This morning I am 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 this morning. The news release and slide presentation that accompanies today’s call and webcast can be found on the Investor Relations homepage of our website at broadridge.com.

I’d like to remind everyone that we’ve also included a copy of the key metrics on pages 23 and 24 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 call, we’ll discuss some forward-looking statements regarding Broadridge that involve risk. These risks are discussed here on slide number one and we encourage 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 risk factors faced by our business.

Before we begin, I’d like to point out to everyone that as a result of the Penson transaction we closed in the fourth quarter of fiscal year 2010, the clearing business is now shown as discontinued operations and our remaining outsourcing business is now part of the Securities Processing Solutions 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 number two and view 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 first quarter of fiscal year 2011, followed by a discussion of a few key topics. Dan Sheldon will then review the first quarter of fiscal year 2011 financial results and the fiscal year 2011 financial guidance in further detail. 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 next slide number three and I’ll turn the call over to Rich Daly. Rich?

Rich Daly

Thanks Rick. Good morning, everyone. This morning as a part of my opening remarks, I’ll talk about the following topics. First, I’ll start with an overview of our financial performance, followed by a review of our closed sales performance and sales pipeline. Then I will provide an update on our key strategic initiatives and then a detailed regulatory update. After Dan provides you more of the financial details on the quarter, the full year and a guidance update, I’ll wrap it up with my closing comments.

Let’s start on slide number four. Overall I am satisfied with our first quarter results. All the results were lower than the last year primarily due to the expanded reduction and event driven revenues, expected reductions. Our recurring revenue closed sales were up 94% and as we maintained a recurring revenue retention rate of 98%.

The revenue decline was primarily due to lower venture in revenues partially offset by revenues from net new business and acquisitions. You need to keep in mind that due to the seasonal nature of our business, the first quarter is historically the quarter that contributes to the least amount to our annual results and it is way to early to assume, that our event-driven revenues will not rebound to the level it is needed or even beyond that.

Diluted earnings per share from continuing operations were down from last year as expected, primarily due to the decline in event-driven revenues coupled with costs related to our strategic initiatives and acquisitions. We acquired NewRiver during the quarter. NewRiver is a leader in mutual fund electronic investors disclosure solutions and was an important supplier to Broadridge for nearly a decade.

This acquisition will strengthen our capabilities as the industry leader in compliance communications and intelligent documents fulfillment. NewRiver's data warehouse of regulatory disclosure documents and productivity tools will enable Broadridge to offer additional solutions to its brokerage, mutual fund, variable annuity and retirement plan clients. Furthermore, the integration of additional data technology accelerates Broadridge's overall e-strategy with a broader set of solutions to assist our clients in the transformation from paper to electronic document delivery.

We repurchased approximately 4.5 million shares during the quarter and an average purchased price of $20.91. On to our existing approved repurchase plans we have Board authorization to repurchase approximately 11.8 million shares.

Now let's move to slide number five, closed sales for the quarter were $24 million, while closed sales were down 21% as compared with the first quarter of fiscal year 2010, I am very pleased that our recurring revenue sales were up 94%. Closed sales in our securities processing segment are off to a very strong start and they are more than double the amount they were to the first quarter of last year. Recurring revenue sales are also up to a strong start in our investor communication segment as they were up almost 30%.

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