BROADRIDGE FINANCIAL SOLUTIONS INC

Previous wording

The key performance indicators for the three and six months ended December 31, 2023, and 2022, are as follows:

Current wording

The key performance indicators for the three and nine months ended March 31, 2024, and 2023, are as follows:

Previous wording

The following discussions of Analysis of Condensed Consolidated Statements of Earnings and Analysis of Reportable Segments refer to the three and six months ended December 31, 2023 compared to the three and six months ended December 31, 2022. The Analysis of Condensed Consolidated Statements of Earnings should be read in conjunction with the Analysis of Reportable Segments, which provides a more detailed discussion concerning certain components of the Condensed Consolidated Statements of Earnings.

Current wording

The following discussions of Analysis of Condensed Consolidated Statements of Earnings and Analysis of Reportable Segments refer to the three and nine months ended March 31, 2024 compared to the three and nine months ended March 31, 2023. The Analysis of Condensed Consolidated Statements of Earnings should be read in conjunction with the Analysis of Reportable Segments, which provides a more detailed discussion concerning certain components of the Condensed Consolidated Statements of Earnings.

Previous wording

Generally, mutual fund proxy activity has been subject to a greater level of volatility than the other components of event-driven activity. For the six months ended December 31, 2023, mutual fund proxy revenues were 116% higher compared to the six months ended December 31, 2022. During fiscal year 2023, mutual fund proxy revenues were 51% lower than the prior fiscal year. Although it is difficult to forecast the levels of event-driven activity, we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future.

Current wording

Generally, mutual fund proxy activity has been subject to a greater level of volatility than the other components of event-driven activity. For the nine months ended March 31, 2024, mutual fund proxy revenues were 86% higher compared to the nine months ended March 31, 2023. During fiscal year 2023, mutual fund proxy revenues were 51% lower than the prior fiscal year. Although it is difficult to forecast the levels of event-driven activity, we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future.

Previous wording

The inherent variability of transaction volumes and activity levels can result in some variability of amounts reported as actual achieved Closed sales. Larger Closed sales can take up to 12 to 24 months or longer to convert to revenues, particularly for the services provided by our Global Technology and Operations segment. For the three and six months ended December 31, 2023 and for the fiscal year ended June 30, 2023, we reported Closed sales net of a 5.0% allowance adjustment. Consequently, our reported Closed sales amounts will not be adjusted for actual revenues achieved because these adjustments are estimated in the period the sale is reported. We assess this allowance amount at the end of each fiscal year to establish the appropriate allowance for the subsequent year using the trailing five years actual data as the starting point, normalized for outlying factors, if any, to enhance the accuracy of the allowance.

Current wording

The inherent variability of transaction volumes and activity levels can result in some variability of amounts reported as actual achieved Closed sales. Larger Closed sales can take up to 12 to 24 months or longer to convert to revenues, particularly for the services provided by our Global Technology and Operations segment. For the three and nine months ended March 31, 2024 and for the fiscal year ended June 30, 2023, we reported Closed sales net of a 5.0% allowance adjustment. Consequently, our reported Closed sales amounts will not be adjusted for actual revenues achieved because these adjustments are estimated in the period the sale is reported. We assess this allowance amount at the end of each fiscal year to establish the appropriate allowance for the subsequent year using the trailing five years actual data as the starting point, normalized for outlying factors, if any, to enhance the accuracy of the allowance.

Previous wording

Closed sales for the three months ended December 31, 2023 were $58.0 million, a decrease of $7.4 million, or 11%, compared to $65.4 million for the three months ended December 31, 2022. Closed sales for the three months ended December 31, 2023 and December 31, 2022 are net of an allowance adjustment of $3.1 million and $3.4 million, respectively.

Current wording

Closed sales for the three months ended March 31, 2024 were $79.6 million, an increase of $18.0 million, or 29%, compared to $61.6 million for the three months ended March 31, 2023. Closed sales for the three months ended March 31, 2024 and March 31, 2023 are net of an allowance adjustment of $4.2 million and $3.2 million, respectively.

Previous wording

Closed sales for the six months ended December 31, 2023 were $105.6 million, an increase of $11.2 million, or 12%, compared to $94.4 million for the six months ended December 31, 2022. Closed sales for the six months ended December 31, 2023 and December 31, 2022 are net of an allowance adjustment of $5.6 million and $5.0 million, respectively.

Current wording

Closed sales for the nine months ended March 31, 2024 were $185.2 million, an increase of $29.2 million, or 19%, compared to $156.0 million for the nine months ended March 31, 2023. Closed sales for the nine months ended March 31, 2024 and March 31, 2023 are net of an allowance adjustment of $9.7 million and $8.2 million, respectively.

Previous wording

•Recurring revenues increased $123.8 million, or 8%, to $1,770.0 million. Recurring revenue growth constant currency (Non-GAAP) was 7%, all organic, driven by Net New Business and Internal Growth in GTO and ICS.

Current wording

•Recurring revenues increased $44.2 million, or 4%, to $1,126.2 million. Recurring revenue growth constant currency (Non-GAAP) was 4%, all organic, driven by Net New Business and Internal Growth in GTO and ICS.

Previous wording

Total operating expenses. Operating expenses increased $95.6 million, or 8%, to $1,280.6 million from $1,185.0 million:

Current wording

Total operating expenses. Operating expenses increased $64.7 million, or 5%, to $1,423.6 million from $1,358.9 million:

Previous wording

•Cost of revenues increased $153.8 million, or 8%, primarily reflects the impact of higher postage and distribution expenses in our ICS segment of $82.0 million and higher amortization expense in our GTO segment of $30.2 million.

Current wording

•Cost of revenues increased $49.6 million, or 4%, primarily reflecting the impact of higher amortization expense in our GTO segment of $16.0 million and higher postage and distribution expenses in our ICS segment of $13.2 million and an increase in other revenue related expenses.

Previous wording

•Selling, general and administrative expenses increased $28.7 million, or 7%, primarily driven by higher compensation related expenses.

Current wording

•Selling, general and administrative expenses increased $15.0 million, or 7%, primarily driven by higher compensation related expenses of $12.9 million.

Previous wording

Interest expense, net. Interest expense, net was $69.7 million, an increase of $8.7 million, from $61.0 million for the six months ended December 31, 2022. The increase of $8.7 million was due to an increase in interest expense from higher borrowing costs, partially offset by a decrease in average borrowings.

Current wording

Interest expense, net. Interest expense, net was $35.3 million, a decrease of $3.2 million, from $38.5 million for the three months ended March 31, 2023. The decrease of $3.2 million was primarily due to a decrease in average borrowings, partially offset by an increase in interest expense from higher borrowing costs.

Previous wording

Other non-operating expenses, net. Other non-operating expenses, net for the six months ended December 31, 2023 was $2.6 million, compared to $7.1 million for the six months ended December 31, 2022. The decreased expense of $4.6 million was primarily driven by improved performance on investments associated with our retirement plans and other investments compared to the prior year period.

Current wording

Other non-operating expenses, net. Other non-operating expenses, net for the three months ended March 31, 2024 was $0.9 million, compared to Other non-operating income of $1.8 million for the three months ended March 31, 2023. The increased expense of $2.7 million was primarily driven by higher net gains on investments associated with our retirement plans and other investments in the prior year period.

Previous wording

•Recurring revenues increased $58.4 million, or 7%, to $898.8 million. Recurring revenue growth constant currency (Non-GAAP) was 6%, all organic, driven by Net New Business and Internal Growth in GTO and ICS.

Current wording

•Recurring revenues increased $168.0 million, or 6%, to $2,896.2 million. Recurring revenue growth constant currency (Non-GAAP) was 6%, all organic, driven by Net New Business and Internal Growth in GTO and ICS.

Previous wording

•Distribution revenues increased $94.2 million, or 11%, driven by the postage rate increase of approximately$55.1 million as well as higher event-driven mailings.

Current wording

•Distribution revenues increased $115.5 million, or 9%, driven by the postage rate increase of approximately$84.7 million as well as higher event-driven mailings.

Previous wording

Total operating expenses. Operating expenses increased $182.5 million, or 8%, to $2,563.2 million from $2,380.8 million:

Current wording

Total operating expenses. Operating expenses increased $247.1 million, or 7%, to $3,986.8 million from $3,739.7 million:

Previous wording

•Cost of revenues increased $68.9 million, or 7%, primarily reflecting the impact of higher postage and distribution expenses in our ICS segment of $31.9 million and higher amortization expense in our GTO segment of $15.4 million.

Current wording

•Cost of revenues increased $203.4 million, or 7%, primarily reflecting the impact of higher postage and distribution expenses in our ICS segment of $98.2 million and higher amortization expense in our GTO segment of $46.2 million.

Previous wording

•Selling, general and administrative expenses increased $26.7 million, or 14%, primarily driven by higher compensation related expenses.

Current wording

•Selling, general and administrative expenses increased $43.7 million, or 7%, primarily driven by higher compensation related expenses of $42.9 million.

Previous wording

Interest expense, net. Interest expense, net was $36.3 million, an increase of $2.2 million, from $34.1 million for the three months ended December 31, 2022. The increase of $2.2 million was due to an increase in interest expense from higher borrowing costs, partially offset by a decrease in average borrowings.

Current wording

Interest expense, net. Interest expense, net was $105.1 million, an increase of $5.5 million, from $99.5 million for the nine months ended March 31, 2023. The increase of $5.5 million was due to an increase in interest expense from higher borrowing costs, partially offset by a decrease in average borrowings.

Previous wording

Other non-operating expenses, net. Other non-operating expenses, net for the three months ended December 31, 2023 was $0.4 million, compared to $1.9 million for the three months ended December 31, 2022. The decreased expense of $1.4 million was primarily driven by improved performance on investments associated with our retirement plans and other investments compared to the prior year period.

Current wording

Other non-operating expenses, net. Other non-operating expenses, net for the nine months ended March 31, 2024 was $3.5 million, compared to $5.3 million for the nine months ended March 31, 2023. The decreased expense of $1.8 million was primarily driven by improved performance on investments associated with our retirement plans and other investments compared to the prior year period.

Previous wording

The increase in the effective tax rate for the six months ended December 31, 2023 was driven by lower discrete tax benefits including a lower excess tax benefit related to equity compensation, relative to pre-tax income as compared to the prior year period.

Current wording

The increase in the effective tax rate for the nine months ended March 31, 2024 was driven by an increase in pre-tax income relative to total discrete tax benefits. The higher excess tax benefit related to equity compensation was offset by a decrease in other discrete tax benefits.

Previous wording

◦Data-driven fund solutions rose 9% and 9%, respectively, driven primarily by growth in our retirement and workplace products.

Current wording

◦Data-driven fund solutions rose 4% and 4%, respectively, driven primarily by growth in our retirement and workplace products.

Previous wording

•Earnings before income taxes increased $86.2 million, or 69%, to $211.0 million, primarily from higher Recurring revenue and higher event-driven revenue. Operating expenses rose 6%, or $102.0 million, to $1,817.2 million primarily driven by higher distribution expenses. Pre-tax margins increased by 3.6% to 10.4% from 6.8% in the prior period.

Current wording

•Earnings before income taxes increased $14.8 million, or 6%, to $270.3 million, primarily from higher Event-driven and Recurring revenue. Operating expenses rose 3%, or $29.3 million, to $1,031.0 million driven by higher distribution and other segment expenses. Pre-tax margins increased by 0.5% to 20.8% from 20.3% in the prior period.

Previous wording

◦Data-driven fund solutions rose 10% and 9% respectively, driven by growth in our retirement and workplace products.

Current wording

◦Data-driven fund solutions rose 8% and 7% respectively, driven by growth in our retirement and workplace products.

Previous wording

◦Issuer rose 15% and 15%, respectively, driven by growth in our registered shareholder solutions and disclosure solutions.

Current wording

◦Issuer rose 10% and 10%, respectively, driven by growth in our registered shareholder solutions and disclosure solutions.

Previous wording

◦Customer communications rose 1% and 1%, respectively, driven by higher digital communications offset by lower print revenue.

Current wording

◦Customer communications rose 1% and 1%, respectively, driven by growth in digital communications, partially offset by a modest decline in print revenue.

Previous wording

•Distribution revenues increased $94.2 million, or 11%, driven by the postage rate increase of approximately$55.1 million as well as higher event-driven mailings.

Current wording

•Distribution revenues increased $115.5 million, or 9%, driven by the postage rate increase of approximately$84.7 million as well as higher event-driven mailings.

Previous wording

•Earnings before income taxes increased $30.9 million, or 48%, to $95.8 million, primarily from higher Recurring revenue and higher event-driven revenue. Operating expenses rose 6%, or $49.2 million, to $903.7 million primarily driven by higher distribution expenses. Pre-tax margins increased by 2.5% to 9.6% from 7.1% in the prior period.

Current wording

•Earnings before income taxes increased $101.0 million, or 27%, to $481.4 million, primarily from higher Recurring revenue and higher event-driven revenue. Operating expenses rose 5%, or $131.4 million, to $2,848.2 million primarily driven by higher distribution expenses. Pre-tax margins increased by 2.2% to 14.5% from 12.3% in the prior period.

Previous wording

◦Capital Markets rose 12% and 10%, respectively, driven by Net New Business and Internal Growth. Internal Growth was driven primarily by higher trading volumes and software term license revenue.

Current wording

◦Capital Markets rose 8% and 8%, respectively, driven by Net New Business and Internal Growth. Internal Growth was driven primarily by software term license revenue and higher trading volumes.

Previous wording

◦Wealth and Investment Management rose 3% and 4%, respectively, driven primarily by Net New Business as strong sales were partially offset by client losses.

Current wording

◦Wealth and Investment Management rose 12% and 11%, respectively, driven primarily by Internal Growth from software term license revenue. Net New Business was flat as strong sales were offset by client losses.

Previous wording

•Earnings before income taxes decreased $11.3 million. Pre-tax margins decreased by 2.5 percentage points to 9.0% from 11.5% as higher revenues were more than offset by higher expenses, including an increase in amortization expenses of $30.2 million.

Current wording

•Earnings before income taxes increased $5.6 million. Pre-tax margins increased by 0.2 percentage points to 12.5% from 12.3% as higher revenues more than offset higher expenses, including an increase in amortization and depreciation expenses of $16.0 million.

Previous wording

•Recurring revenues increased $71.7 million, or 10%, to $807.9 million. Recurring revenue growth constant currency (Non-GAAP) was 9%, all organic, driven by Net New Business and Internal Growth.

Current wording

•Recurring revenues increased $108.3 million, or 10%, to $1,233.0 million. Recurring revenue growth constant currency (Non-GAAP) was 9%, all organic, driven by Net New Business and Internal Growth.

Previous wording

◦Capital Markets rose 11% and 9%, respectively, driven by Net New Business and Internal Growth, which benefited from higher trading volumes.

Current wording

◦Capital Markets rose 10% and 9%, respectively, driven by Net New Business and Internal Growth, which benefited from higher trading volumes.

Previous wording

◦Wealth and Investment Management rose 8% and 9%, respectively, driven primarily by Net New Business.

Current wording

◦Wealth and Investment Management rose 9% and 10%, respectively, driven primarily by Net New Business and Internal Growth.

Previous wording

•Earnings before income taxes decreased $4.7 million. Pre-tax margins decreased by 2.1 percentage points to 9.7% from 11.8% as higher revenues were more than offset by higher expenses, including an increase in amortization expenses of $15.4 million.

Current wording

•Earnings before income taxes decreased $5.7 million. Pre-tax margins decreased by 1.5 percentage points to 10.2% from 11.7% as higher revenues were more than offset by higher expenses, including an increase in amortization and depreciation expenses of $46.2 million.

Previous wording

Loss before income taxes was $47.5 million for the three months ended December 31, 2023, an increase of $10.5 million compared to $37.0 million for the three months ended December 31, 2022.

Current wording

Loss before income taxes was $56.9 million for the three months ended March 31, 2024, an increase of $3.8 million compared to $53.1 million for the three months ended March 31, 2023.

Previous wording

•The increased loss before income taxes was primarily due to higher compensation and other selling, general and administrative expenses and the $4.2 million net increase in interest expense and Other non-operating expenses, which offset the absence of Russia-Related Exit Costs.

Current wording

•The increased loss before income taxes was primarily due to a Litigation Settlement Charge of $8.2 million partially offset by lower compensation and other selling, general and administrative expenses and the absence of Russia-Related Exit Costs of $1.5 million.

Previous wording

Loss before income taxes was $83.5 million for the six months ended December 31, 2023, an increase of $1.6 million compared to $81.9 million for the six months ended December 31, 2022.

Current wording

Loss before income taxes was $140.4 million for the nine months ended March 31, 2024, an increase of $5.5 million compared to $134.9 million for the nine months ended March 31, 2023.

Previous wording

These Non-GAAP measures are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items, the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items: (i) Amortization of Acquired Intangibles and Purchased Intellectual Property, (ii) Acquisition and Integration Costs, and (iii) Russia-Related Exit Costs. Amortization of Acquired Intangibles and Purchased Intellectual Property represents non-cash amortization expenses associated with the Company’s acquisition activities. Acquisition and Integration Costs represent certain transaction and integration costs associated with the Company’s acquisition activities. Russia-Related Exit Costs are direct and incremental costs associated with the Company’s wind down of business activities in Russia in response to Russia’s invasion of Ukraine, including relocation-related expenses of impacted associates.

Current wording

These Non-GAAP measures are adjusted to exclude the impact of certain costs, expenses, gains and losses and other specified items, the exclusion of which management believes provides insight regarding our ongoing operating performance. Depending on the period presented, these adjusted measures exclude the impact of certain of the following items: (i) Amortization of Acquired Intangibles and Purchased Intellectual Property, (ii) Acquisition and Integration Costs, (iii) Russia-Related Exit Costs, (iv) Litigation Settlement Charge, and (v) Restructuring and Other Related Costs. Amortization of Acquired Intangibles and Purchased Intellectual Property represents non-cash amortization expenses associated with the Company’s acquisition activities. Acquisition and Integration Costs represent certain transaction and integration costs associated with the Company’s acquisition activities. Russia-Related Exit Costs are direct and incremental costs associated with the Company’s wind down of business activities in Russia in response to Russia’s invasion of Ukraine, including relocation-related expenses of impacted associates. Litigation Settlement Charge represents the reserve established during the third quarter of 2024 related to the settlement of a claim. Refer to Note 15, “Contractual Commitments, Contingencies and Off-Balance Sheet Arrangements” for further details. Restructuring and Other Related Costs represent costs associated with the Company’s Corporate Restructuring Initiative to exit and/or realign some of our businesses, streamline the Company’s management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas. Refer to Note 10, “Payables and Accrued Expenses” for further details on the Company’s Corporate Restructuring Initiative.

Previous wording

We exclude Acquisition and Integration Costs and Russia-Related Exit Costs from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods, as these items are not reflective of our underlying operations or performance. We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, as these non-cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company's capital allocation decisions, management compensation metrics or multi-year objectives. Furthermore, management believes that this adjustment enables better comparison of our results as Amortization of Acquired Intangibles and Purchased Intellectual Property will not recur in future periods once such intangible assets have been fully amortized. Although we exclude Amortization of Acquired Intangibles and Purchased Intellectual Property from our adjusted earnings measures, our management believes that it is important for investors to understand that these intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

Current wording

We exclude Acquisition and Integration Costs, Russia-Related Exit Costs, Litigation Settlement Charge, and Restructuring and Other Related Costs from our Adjusted Operating income (as applicable) and other adjusted earnings measures because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods, as these items are not reflective of our underlying operations or performance. We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property, as these non-cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company's capital allocation decisions, management compensation metrics or multi-year objectives. Furthermore, management believes that this adjustment enables better comparison of our results as Amortization of Acquired Intangibles and Purchased Intellectual Property will not recur in future periods once such intangible assets have been fully amortized. Although we exclude Amortization of Acquired Intangibles and Purchased Intellectual Property from our adjusted earnings measures, our management believes that it is important for investors to understand that these intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

Previous wording

(a) Total Russia-Related Exit Costs were $6.8 million, comprised of $7.9 million of operating expenses, offset by a gain of $1.2 million in non-operating income for the three months ended December 31, 2022. For the six months ended December 31, 2022, total costs were $9.3 million, comprised of $10.5 million of operating expenses, offset by the gain of $1.2 million in non-operating income.

Current wording

(a) Russia-Related Exit Costs were $1.5 million for the three months ended March 31, 2023. For the nine months ended March 31, 2023, Russia-Related Exit Costs were $10.8 million, comprised of $12.0 million of operating expenses, offset by a gain of $1.2 million in non-operating income.