The operator welcomes listeners to the Broadridge Financial Solutions First Quarter and Fiscal Year 2024 Earnings Conference Call. The CEO and CFO will be discussing the company's strong start to fiscal 2024. They will be making forward-looking statements and referring to non-GAAP measures. Despite the uncertain economic environment, the company's business has continued to perform well, showing the strength of their business model and team execution. The CEO will begin by discussing the headlines.

Broadridge reported strong financial results in the first quarter, with recurring revenue growing 8% and adjusted EPS rising 30%. Despite uneven markets, the company saw growth in investor participation and continued to execute its strategy to democratize investing, simplify trading, and modernize wealth management. The company also reaffirmed its full year fiscal 2024 guidance and is returning to its historical mix of investment and capital allocation. The strong results were driven by the company's governance franchise.

In the third quarter, our ICS recurring revenue grew by 6% due to increased sales, investor participation, and interest income. Our regulatory solutions and data-driven fund and issuer solutions saw strong growth, while digital communications offset a temporary slowdown in print growth. New sales and expanding relationships with clients were the main drivers of growth. Despite market challenges, equity record growth remained strong at 8%. Managed accounts and passive fund positions also saw double-digit growth. Broadridge's issuer business successfully processed critical communications for a large cap spin-off, showcasing the company's ability to leverage its network to support important transactions.

Broadridge has appointed new leadership for their ICS business and their governance business is in good hands. Their capital markets revenues rose due to increased demand for their agency and principal trading capabilities. The company also helped a global bank simplify their back-office operations by transitioning to a single unified platform. Wealth management revenues grew due to the recognition of revenue from UBS and the company's "transformation on your terms" approach has resulted in success and a growing pipeline. The first quarter also saw strong closed sales, driven by underlying demand and sales that were moved from fiscal 2023.

Broadridge has seen sales growth across all franchises, particularly in wealth sales and BTCS. Despite market uncertainty, clients are still willing to invest in new capabilities, leading to longer closing times but a strong pipeline. The company's strong first quarter results are attributed to their strategy to democratize investing, simplify and innovate trading, and modernize wealth management. Long-term trends and strong execution are driving growth, and the company remains committed to balanced capital allocation. With investments in place and target leverage achieved, they plan to return additional capital to shareholders and maintain a mid to high-teens ROIC.

In the sixth paragraph, the speaker discusses the completion of a $150 million share buyback in the first quarter and reaffirms the company's guidance for fiscal 2024. They also mention their upcoming Investor Day in December and express gratitude for their associates' work. The speaker then takes a moment to remember a colleague who recently passed away and thanks all associates for their contributions to the company's success. The next speaker thanks the previous speaker and expresses their own pleasure in discussing the strong results from the quarter.

Broadridge had a strong first quarter, with top line growth driven by recurring revenue and higher event driven revenue. They expect to generate 25% of adjusted EPS in the first half of fiscal 2024 and have reaffirmed their fiscal 2024 guidance. Share repurchases have also resumed. Recurring revenues grew by 8%, driven by converting backlog to revenue and double digit trade volume growth. Both the ICS and GTO segments saw growth, with ICS recurring revenue up 6%. Regulatory revenue was up 5%, led by fund and equity position growth in line with expectations.

In the first quarter, Broadridge saw a 9% increase in revenue for its data-driven fund solutions, driven by higher float revenue in its mutual fund trade processing unit. Issuer revenue also grew by 19%, fueled by growth in registered shareholder solutions. Customer communications recurring revenue increased by 2%, with strong growth in digital business offsetting lower print revenues. The company expects print revenues to decline over time as it focuses on its print to digital strategy. In the GTO segment, recurring revenues grew by 11%, with strong performance in capital markets and wealth and investment management. Broadridge is confident in achieving its historical 5% to 7% growth objective for GTO. Investor participation in financial markets has continued to increase, with 8% growth in equity positions, driven by managed accounts.

In the second and third quarters, the company's testing results support their outlook for mid to high-single-digit growth for the full year. Mutual fund position growth was moderate, but driven by strong growth in passive funds. Trade volumes rose 15%, with double-digit growth in equities and fixed income. Recurring revenue grew 8%, all organic and above their growth objective for six consecutive quarters. Revenue from net new business, internal growth, and foreign exchange all contributed to recurring revenue growth. Total revenue grew 12%, with recurring revenue being the largest contributor. Event driven revenue was above their seven year average due to strong activity, but is expected to return to normal levels for the remainder of the year. Low to no margin distribution revenues also contributed to total revenue growth.

In the first quarter of 2024, distribution revenue increased by 14%, with half of the growth coming from postal rate increases. This had a dilutive impact on adjusted operating income margin, but the company still expects distribution revenue to grow in the high-single to low-double-digit range. Adjusted operating income margin improved by 220 basis points due to operating leverage, higher float income, and disciplined expense management. Excluding the impact of distribution revenue and float income, the company saw over 100 basis points of margin expansion. Closed sales were $48 million, $19 million higher than the previous year, and the company's pipeline remains strong. Cash flow was negative in the first quarter, but improved by $142 million compared to the previous year due to a reduction in client platform spend.

In the first quarter of 2024, Broadridge's free cash flow conversion was 103%, in line with their expectations for the full year. They have a balanced capital allocation policy, with a focus on maintaining their credit rating, investing internally, and returning excess capital to shareholders through dividends and share repurchases. They reaffirm their full year guidance for recurring revenue growth, operating income margin, EPS growth, and closed sales. The demand and trends driving their growth remain strong, and they expect continued growth in the second half of the fiscal year.

The speaker discusses the company's strong start to fiscal 2024 and how it is running at about 3x the targeted EPS growth for the year. They attribute this outperformance to recurring elements such as expense discipline and revenue growth, as well as non-recurring factors like event driven fees and the E-Trade acquisition. However, they remain conservative in their annual guide due to the small size of Q1 and their focus on driving medium to long-term growth.

The speaker is responding to a question about the company's performance in the second quarter and explains that the growth was primarily driven by non-recurring items. They also mention that the company expects to see more normalized revenue in the future and that the recurring drivers of growth are stable. The speaker also mentions that the company's strong expense management and backlog conversion contribute to their growth. They also address the company's improved bookings performance in the first quarter and attribute it to sales cycles being completed.

In the paragraph, the speaker discusses the company's record sales in Q1 and the lengthening of sales cycles. They mention the breadth of their product set and how it allows them to benefit from various market conditions. They also mention the demand for cost-saving components and solutions in the current market. The speaker confirms their financial forecast for the year and expresses condolences for a colleague who passed away. A question is asked about the demand and implementation cycles for wealth management components, and the speaker confirms an estimate of $20-30 million in new closed sales for these components.

The speaker discusses the progress of their wealth division and mentions the revenue they started recognizing from UBS in July. They also mention their pipeline and demand for components that can help drive advisor productivity, process alternatives, and handle corporate and class actions. They have multiple clients live and are targeting $20 to $30 million in incremental sales. They are focused on component sales and may consider larger deals in the future. The speaker also mentions that with their leverage back down, they may still pursue M&A deals in fiscal 2024.

The speaker discusses the current state of the market and the company's potential for future transactions. They also mention their focus on organic growth and the potential impact on M&A. They then address the communication side of the business, noting strong growth in digital and slower growth in print. They mention a recent client who has moved from print to digital, demonstrating the success of their digital solution.

The company saw a significant increase in digital revenues and profitability after transitioning to a new solution for their end clients and advisors. They expect to continue seeing strong growth in digital and profitability, with some bumps along the way due to demand for print consolidation. The company also continues to see margins expanding and double-digit earnings growth since the acquisition. They have good data and conviction on future trends, particularly in the mutual fund sector.

The speaker discusses the positive trends in both equity and mutual fund positions, with managed accounts and direct indexing contributing to record growth. They mention that the 3% growth in mutual funds was noisier due to timing, but overall, the long-term trends have not changed. They confirm their previous guidance and mention a positive outlook for the rest of the year. The speaker also briefly mentions the impact of foreign exchange and indicates that it will not have a significant impact.

The company saw a 15 basis point benefit to their recurring revenue in the quarter, which was in line with their previous guidance of a modest 0.5 point benefit to earnings. The company expects a 10% change in the U.S. dollar against key currencies to have a $15 million impact on earnings. The company anticipates a 20% margin expansion for the full year, but this may not be reflected in every quarter due to timing of investments and recurring/non-recurring factors. The reported margin expansion also includes float income and distribution revenue, but these do not impact earnings.

The company expects a dilutive impact of about 50 basis points for the full year due to two factors, but they are confident they can still achieve margin expansion of 50 basis points after absorbing the costs associated with the Wealth management platform. This is evident in their first quarter results, where they were able to drive 100 basis points of margin expansion despite the amortization costs. The company's focus is on paying down debt and investing in their wealth management and capital markets platforms, with the remaining free cash flow going towards dividends, potential M&A opportunities, and share repurchases.

The speaker discusses the components of share repurchases, such as free cash flow conversion, dividends, and M&A, and mentions that they tend to wait until they have high confidence in the year's performance. They clarify that the UBS go live announcement is part of the previously outlined $75 million contribution. There have been announcements of new AI-focused players entering the space, but the speaker does not see any significant changes in competitive dynamics.

The speaker discusses their company's strong first quarter results and their belief that they will continue to thrive due to their focus on safety, resilience, and smart economics. They also mention their leadership in the AI space and the success of their Digital Ledger Repo system. They look forward to sharing their outlook for the next three years at their upcoming Investor Day.

This summary was generated with AI and may contain some inaccuracies.