Broadridge Financial Solutions' CEO Discusses F4Q12 Results - Earnings Call Transcript

Broadridge Financial Solutions (BR)

F4Q12 Earnings Call

August 9, 2012 08:30 am ET

Executives

Rick Rodick - Vice President, Investor Relations

Rich Daly - Chief Executive Officer

Dan Sheldon - Corporate Vice President and Chief Financial Officer

Analysts

David Togut - Evercore Partners

Tien-tsin Huang - JPMorgan

Jim Kissane - Credit Suisse

Ian Zaffino - Oppenheimer

Christopher Donat - Sandler O'Neill

Peter Heckmann - Avondale Partners

Presentation

Operator

Good morning. My name is Kanisha 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 2012 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 would like to 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 2012. 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 this morning. The news release and slide presentation that accompany today's earnings call and webcast can be found on the investor relations homepage of our website at broadridge.com.

During today's conference call, we'll discuss some forward-looking statements regarding Broadridge that involve risks. These risks are summarized here on slide number one. 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 we closed in the fourth quarter fiscal year 2010, the clearing business is now shown as discontinued operations and our remaining outsourcing business is included in 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.

Our non-GAAP results exclude the impact of the Penson charges, IBM migration costs and restructuring charges. These one-time costs are significant and we believe the non-GAAP information provides investors with a more complete understanding of Broadridge underlying operating results.

Now, let's turn to slide number 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 highlights for the fourth quarter and fiscal year 2012, followed by discussion of a few key topics.

Dan Sheldon will then review the fourth quarter fiscal year 2012 financial results in further detail. Rich will then return and provide his overall summaries and closing thoughts before we head into the question-and-answering part of the call.

Now please turn to slide three and I'll turn the call over to Rich Daly. Rich?

Rich Daly

Thanks, Rick. Good morning, everyone. This morning as part of my opening remarks, I'll talk about the following topics. First, I'll start with an overview of our fiscal year 2012 financial highlights and then I'll provide you with an update on the Penson transition followed by a discussion of our closed sales performance. Next, I will provide you with a brief update on our acquisitions and then I will discuss our fiscal year 2013 guidance.

After Dan provides you more of the financial details, I'll wrap it up with my closing comments.

Let's start on slide four, our fiscal year 2012 financial highlights. Overall, I'm satisfied with our fiscal year 2012 non-GAAP financial highlights.

Revenues were up, a very healthy 11% for the year. The recurring revenue increase was a result of net new business, internal growth, acquisitions and 99% client revenue retention. Approximately 50% of the growth was organic and 50% was related to our recent acquisitions.

I am very pleased with our strong recurring revenue closed sales results due to a greater than 60% increase in closed sales of $5 million per deal, which grew in total to $108 million in fiscal year 2012. I will discuss how we achieved these strong sales results to our increased product offerings in a few minutes.

The revenue was up 6% as event-driven and distribution revenues were essentially flat with fiscal year 2011 results. I am satisfied with our non-GAAP diluted earnings per share results. They were up 13% to $1.55 per share for fiscal year 2012. This increase was primarily driven by higher revenues and our continued focus on cost containment.

Our non-GAAP to GAAP adjustments to our results consisted of Penson impairment charges, IBM data center migration costs and some restructuring. The Penson charges are related to the cost incurred by the company in connection with assets the company held as a result of the sale of substantially all of our security clearing contracts to Penson, and the Penson and outsourcing services agreement.

I will discuss this in significantly more detail on the next slide. The IBM data center migration cost or the cost we incurred in connection with the migration to our new data center. Most importantly, the IBM mainframe conversion was successfully completed on time without any service interruptions. We also incurred some restructuring costs during the year.

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