Broadridge Financial Solutions, Inc. (BR)

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Broadridge Financial Solutions, Inc. (BR)

F4Q11 Earnings Call

August 11, 2011, 08:30 a.m. ET


Rick Rodick - VP, IR

Rich Daly - CEO

Dan Sheldon - Corporate VP and CFO


David Togut - Evercore

James Kissane - Bank of America/Merrill Lynch

Tien-tsin Huang - JP Morgan

Chris Donat - Sandler O'Neill

Peter Heckmann - Avondale Partners

Peter Dale - Omega

Stephan McAteer - Pike Place Capital



Good morning my name is [Shyra] and I will be your conference facilitator. At this time I would like to welcome everyone to the Broadridge Financial Solutions Fourth Quarter and Fiscal 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 fourth quarter and fiscal year 2011. This morning I’m here with Rich Daly, Chief Executive Officer of Broadridge and Dan Sheldon, Chief Financial Officer of Broadridge.

I’m sure by now everyone has had the opportunity to review the earnings release we issued. The news release and slide presentation that accompanies today’s earnings call and webcast can be found on the Investor Relations homepage of our website at

During today’s conference call, we’ll discuss some forward-looking statements regarding Broadridge that involve risk. These risks are summarized here on Slide number 1 and we encourage participants to refer to our SEC filings, including our Annual Report on Form 10-K for a complete discussion of forward-looking statements and the 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 that 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.

As previously disclosed we entered into an information technology services agreement with IBM in March 2010, under which IBM will provide us with data center services. Beginning with this earnings announcement we will include our results reported on a non-GAAP basis which excludes the impact of the cost related to our data center migration to IBM. These costs are significant and we believe this information helps investors understand the effect of their migration on our reported results.

Now, let’s turn to Slide number 2 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 fourth quarter and fiscal year 2011, followed by a discussion of a few key topics. Dan Sheldon will then review the fourth quarter and fiscal year 2011 financial results and the fiscal year 2012 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 Slide number 3 and I’ll turn the call over to Rich Daly. Rich?

Rich Daly

Thanks Rich. Good morning everyone. This morning as part of my opening remarks I will talk about the following topics. First, I’ll start with an overview of our fiscal year 2011 financial highlights. Then I will discuss our fiscal year 2012 guidance, followed by a review of our closed sales performance. And then an acquisition update before I turn it over to Dan.

After Dan provides you more of the financial and guidance detail, I’ll wrap it up with my closing comments during which I will highlight many of initiatives that give us confidence to create shareholder value beyond this year into fiscal year 2013 and beyond.

Let’s start of Slide 4, our fiscal year 2011 financial highlights. Overall I’m satisfied with our fourth quarter financial results, but disappointed with the full-year results because of previously discussed decline in event-driven revenue from the unprecedented high volume levels in fiscal year 2010 to their start low volume level in fiscal year 2011. The decline in event-driven drove an overall decline of 2% in total revenue despite all other revenue drivers having headed in the right direction.

Recurring revenues were up 13% as a result of our successful acquisition depends on outsourcing services conversion, strong recurring revenue closed sales result and internal growth. Long-term recurring revenue and related recurring revenue sales will be the primary component of creating long-term shareholder value. Event-driven revenue in fiscal year 2010 offset the weak economic environment by adding a benefit of approximately $0.18 per share more than we have planned. In fiscal year 2011, the lower than anticipated even-driven revenues and related distribution revenue cost us approximately $0.25 per share versus what we planned.

Even though last year was our lowest activity ever, we are not planning for an increase in fiscal year 2012. When event-driven revenues come back to more normal levels, our plan will be viewed as being conservative, but given it's almost entirely out of our control, we don’t want to disappoint again.

Our diluted earnings per share from continuing operations were $1.37 per share non-GAAP and a $1.34 GAAP for the fiscal year ended 2011. During the quarter we incurred IBM data center migration cost of approximately $0.03 per share. Dan will provide you with more detailed information in a few minutes. Again, our decrease in earnings per share from fiscal year 2010 was directly related to the decrease in event-driven revenues.

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