At this time, I would like to welcome everyone to the Broadridge Financial Solutions Second Quarter Fiscal Year 2013 Earnings Conference Call. [Operator instructions.] I’d like to turn the conference over to David Ng, Senior Director, Investor Relations. Please go ahead, sir.

Thank you. Good morning everyone, and welcome to the Broadridge quarterly earnings call and webcast for the second quarter fiscal year 2013 results. This morning I’m here with Rich Daly, our Chief Executive Officer; and Dan Sheldon, our Chief Financial Officer. I trust that by now everyone has had the chance 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 page at broadridge.com. During today’s conference call, we’ll discuss some forward-looking statements regarding Broadridge that involve risks. These risks are summarized on slide 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 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 included in the Securities Processing Solutions segment. 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 fiscal year 2013 earnings results exclude the impact of acquisition and amortization and other costs and restructuring charges. These costs are significant, and we believe the non-GAAP information provides investors with a more complete understanding of Broadridge’s underlying operating results. A description of these non-GAAP adjustments and reconciliation to the comparable GAAP measures can be found in the earnings release. Now, let’s turn to slide 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 second quarter of fiscal year 2013, followed by discussion of a few key topics. Dan Sheldon will then review the second quarter financial results in further detail. Rich will then return and provide his overall summary and closing thoughts before we head to the Q&A part of the call. Now, let’s turn to slide three and I’ll turn the call over to Rich Daly. Rich?

Thanks, David, and 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 second quarter and year to date fiscal year 2013 financial highlights and guidance. Then, I’ll discuss our closed sales performance, followed by an update of our key activities. After Dan provides you more of the financial details, I’ll wrap it up with my closing comments, in which you will hear our fact-based confidence regarding the clear and executable strategy for both of our business segments going forward. Let’s start on slide four, our second quarter fiscal year 2013 financial highlights. Overall, I’m satisfied with our first half financial results. Recurring revenues were up 3% for the quarter and year to date versus the comparable periods in fiscal 2012. The recurring revenue increase was the result of net new business and a 99% client revenue retention rate. Event-driven activity was flat for the quarter, and up 9% year to date as we saw some pickup in activity in the first quarter. Trade volumes remained challenging, and were lower for the quarter. Notably, we have seen a pickup in volumes month over month from October through January. Our earnings continued to grow in both the quarter and year to date. Our non-GAAP diluted earnings per share increased $0.02 to $0.17 per share, and $0.35 per share for the quarter and year to date respectively versus fiscal year 2012. This was primarily due to higher revenues, increased margins driven by business mix, and our continuing focus on cost containment. While we’re off to a solid start for the first half of the fiscal year, due to the seasonal nature of our business, our first half earnings per share represent about 20% of our full year…

Thanks, Rich. I’m now on slide seven, our revenue growth drivers and EBIT margin. Rich already mentioned that we had 3% recurring revenue growth for the quarter and year to date, and the same is true for total revenues, which I’ll review with you on this page, and by the way, we’re still expecting 3% to 4% total revenue growth for the year, but do remember that when I hit the recurring revenue Rich already mentioned 4-7[%], and that’s our primary focus. So, looking at the specific drivers, revenue from recurring closed sales are at a run rate of 3% year to date, and we still expect to generate at least 4% for the year given our sales to date and the implementation of the securities processing backlog, which will begin to see the uplift in revenues and profits from some of the bigger deals we signed last year and in fiscal year ’11. Moving to client losses, they’re at a 1% run rate, and are expected to be at this level for the year. We have not been made aware of any large clients leaving. Internal growth appears to be moving in a positive direction. I’ll address more in the segment discussion. We haven’t made, as Rich said, any acquisition so far this year, but we’re always evaluating the properties, and if they meet our strategic requirements and [unintelligible] rates, we do have the financial capacity to close deals. Our cash position at the end of the first half was approximately $260 million, and we expect to end the year between $350 million to $400 million-plus, and that’s after dividends but before any new acquisitions or additional share buybacks. Event-driven revenues were basically flat to last year, and our expectations are the same for the full year. Distribution revenues…

Thanks, Dan. Please turn to page 10 for my summary wrap up. We are off to a solid start in fiscal year 2013. I am satisfied with the revenue growth and earnings results for the first six months of fiscal 2013. Recurring fee revenue continues to grow, and I am confident in our ability to convert our very strong sales pipeline into closed sales. However, as I stated earlier, the first half of the fiscal year makes a relatively small contribution to our annual earnings results, due to the seasonal nature of our business. We have clear and executable strategies to create shareholder returns in both of our business segments now. As I have stated many times, ICS is a great business. We continue to execute well, and ICS is considered by key industry influencers and regulators to be the thought leader and innovator in the investor communications space. We are well respected by all key constituents, including broker-dealers, custody and trust banks, corporate issuers, mutual funds, institutional investors and governance professionals, and regulators. After the recent financial crisis, ICS diverged from its earnings growth path due primarily to the disruption of event-driven revenue activities. With event-driven revenues holding in a range of their low historical contributions, all of ICS’s other key fundamentals, including its remarkable client revenue retention rate, are fairly easy to project, due to their consistent history, even through the financial crisis. We believe ICS is well-positioned to lead Broadridge to higher value for many years to come. I’ve also stated that SPS is a good business, with a leading market position. Over the last several years, we have clarified our strategy at SPS by exiting the clearing business. We are now finished with the difficult Penson challenges that resulted from exiting the clearing business. Moving forward,…

[Operator instructions.] Your first question comes from the line of George Mihalos with Credit Suisse.

Rich, you spoke about some of the delays in closed signings, and just want to get some color around that. Is your sense that that was partially impacted by anything related to fiscal cliff uncertainty and maybe kind of talk about what you’re seeing early into 2013, and how the consultant approach may be helping you there?

I’m not going to put anything related to sales onto the fiscal cliff. We have a number of things going on, so let me share them with you. We specifically noted here, more than normal, that we have been active in a couple of large deals, and they take a lot of time. But we like to believe, pretty far down the line, with both the efforts of our consultive approach, as well as the industry’s need to take cost out and the very, very strong value proposition we have. Beyond that, historically, the closing of sales, particularly the less than $5 million, is about 35% over the last three years in the first half, and 65% in the second half. What it really comes down to is that the summer is a pretty slow selling season, so we’re always, based on our fiscal year, going to have a stronger second half. Something that did take place, and a lot of effort was put into it, and ultimately didn’t succeed, which I acknowledged on the call, was that the contract with COR Clearing did not go forward, because the agreement between COR and Apex did not go forward. So that would have made the results a little closer to our normal activity. In the second half, with Penson and Apex and all this activity behind us, we feel very good that the entire organization can focus on all of our activities, all of our opportunities, and we will remain from now until June 30 - and I mean midnight June 30 - very, very focused on closing transactions, which, candidly, is pretty much a repeat of what happened last year as well.

And then just kind of shifting gears, I know obviously event-driven is volatile, and your outlook there at least seems very conservative given what we’ve seen so far in the year, and I guess some of the activity at least in the ETF business. Do you guys sense that you’re being a bit overly conservative on your guidance there?

The position that we’re taking in every aspect, most specifically internally, is that we’re not planning on revenue coming back that we can’t control. If it comes back, it will be an added benefit, but we are focused on how to create value and achieving that through the variables that are within our control. Nothing would make us happier than to have event-driven come back and to have trades become stronger than they are, but we’re going to run this business from a cost and revenue management point of view focused on the variables we can control.

Let me just add something there, though. The Q1 we saw the pop up of about $5 million, but Q2 was flat. Therefore, that’s the exact reason of why we’re holding it flat.

Right, but in all aspects, George, to your point, in my dialogs with the sales force, there are more dialogs going on about the potential need for funds to go out to investors, but the position that Dan and I and the entire management team have taken is we’re going to plan on staying at the historical lows and creating shareholder value in that environment.

Your next question comes from the line of Chris Donat with Sandler O’Neill.

First question for me is just on your commentary about acquisitions and $50 million of EBITDA, over $250 million of revenue. Just out of curiosity, if you were not to do any more acquisitions, where do you think that EBITDA margin could go to from 20%? What would be your ideal state? And again, I know if you do more acquisitions, you’d probably start at a lower point and the average would maybe hang around 20%, but I’m just curious where you think EBITDA margins could go to with acquisitions.

Let me give you a directional view, and then I’ll have Dan fill in with more details. Whether it be an acquired product or a product we create ourselves, the margin lifecycle generally gets better over time. It’s tough for me to think of something across our hundred-plus products that doesn’t apply to. So as we want to acquire a company, and then we add, what I’ll call Broadridge industrial strength to it… We generally have to beef up their operations and improve their disaster recovery, business continuity plans, etc. As we then have it at our standards, incremental revenue adds very nice incremental margins. So as we grow those entities, we always expect to see improving margins. The margin blend across Broadridge comes from as we add new products, which start at the beginning of the lifecycle again. Dan?

Yeah, let me help everybody understand a little bit more about the numbers we gave you. We gave you a 50 and 250, but in that 250, by the way, are pass-throughs, about $60 million. And that’s probably how we should talk about it in the future, is think smaller, about $50 million on $190, which is a 26% margin. And of course we would, as Rich said, as we go forward incrementally on each one of those, expect to be moving that up. I think what’s very important is if you also took Broadridge, and took out our postage, and took out the profit along with it, you’d see about a 25% margin. So what we’re very pleased with is that when you take out all the pass-throughs and everything else like that, these acquisitions are even doing better than Broadridge, and will continue to, just as Broadridge, as we go forward adding on to our scale, be able to move those margins up. That is our anticipation, and as Rich said, that’s absolutely our goal and our strategy.

And let me jump in with one additional comment, which really dovetails off this, Chris. You know, when Dan says take out postage, we have every intention of taking out postage by replacing it with digital activities, and although the net revenue would be lower at that point in time, the total profitability of that activities we are highly confident would be higher. I didn’t even mention anything going on with the stock exchange and the SEC, but let me jump in here now and say all of the activity around that we continue to be very pleased with. We continue to be very pleased at how they’re looking at the digital strategies we presented, the both of those organizations, and it’s already in the works with their filings with the stock exchange and the SEC, to make our digital strategy part of the industry going forward. I mean, it still has to be approved. It still has to go forward, but directionally, we’ve never been better positioned on this activity.

And then just to follow up on what you’re talking about right now, Rich, with the changes in the leadership at the SEC, just remind me of the status. I believe you’ve got the NYSE Proxy Fee Advisory Committee. They, last year, put out their paper. And then the SEC, do they have to do something? Or can they not do anything? Where are we in that process?

One of the updates is that the Proxy Fee Advisory Committee, through the NYSE, filed a report which did not include what’s called the EBIP, which is Enhanced Brokerage Internet Platform digital activity. That was then removed and refiled just recently with the EBIP as part of the filing. We’re very, very pleased that the filing now has the digital opportunity as part of it. And the SEC will need to either reject the filing or put it out for public comment. Literally, it’s either sometime this week or next week. So we believe that regardless of the time it takes, all the key industry constituents - and that’s why I said we’ve never been better positioned, and we’re viewed as the thought leader, in my comments - all the key industry is looking at digital as being an opportunity to both reduce the cost of the process by taking out the paper and postage, as well as further engaging investors and creating easier access to information. Broadridge is the thought leader on this, and we’ve proven we can do it already, and so Dan and I are both very excited about going after that remaining billion in paper and postage cost, and then further applying that through activities like [Fluent] to statements, confirms, and all communications between a financial institution and its investors. Somebody raised are we being conservative when it comes to event-driven activity. I don’t want to bet on something we can’t control. What we’re not putting in our numbers, but we believe will absolutely create a new wave of activity, is our leadership in digital.

And then just one last one, as the Postal Service has been in the news, and we just had a recent postal fee increase, are you seeing more interest in moving digital from your clients who are paying for postage and continue to pay a higher rate? Or is it sort of a steady state level of interest?

Given the challenges that our industry is still in, every firm has a clear view on what each percent of clients who convert from paper statements and confirms to digital means to them. And at every firm, it’s a meaningful number based on their scale and their size. So what we find very exciting is in our Fluent offering, we’re going to enable them to convert paper through various channels, whether it be through a digital mailbox on their website, which we would help them manage, or by enabling us to help them face off through various channels out there, whether it be things like [unintelligible] or Volly, or whether it be things like Facebook or Google. We will enable them to have that data out there, and from the client’s point of view, it will be their point of convenience access to data. I’m sorry, from the underlying investor customer’s point of view. From our clients’ point of view, the financial services firm, once the customer goes through Fluent into that data, it will be behind Broadridge’s firewall, which is the same firewall that protects their data today at all of our levels of data security, which is at the highest level, and for the majority of our clients, at a higher leverage than they’ve been able to achieve on their own. So this is, I’ll call it a great option that Broadridge has for its investors going forward.

Your next question comes from the line of Mark Best with Evercore Partners.

Hi, this is Mark Best on the line for David Togut. Given the 45% reduction in recurring revenue closed sales, year to date, why didn’t you bring down the full year outlook?

Our active pipeline management, particularly around a few larger transactions, gives us confidence that, not unlike other years, there’s a lot of work to be done in the second half. But we have a clear list of transactions that we believe we have a very strong likelihood to close. And upon closing those, we would get within our range for the full year.

Then with respect to stock record position growth, it was up 4% year over year. How is that 4% relative to your implied guidance?

It’s a great question. To remind everybody, our heavy proxy season of course is in the fourth quarter. So when you think about it, we use this kind of as a trend. The good news was, a year ago we were in the negative position. So you saw Q1 being pretty much flat. You see 4% here, that gives us some comfort that our overall view for the full year proxy is going to be at least positive, whether it’s 1 or 2 points. But that’s how we have to look at it, because by the way, in the first half, it’s less than 20% of all position.

And again, we’re not going to bank on the market’s returning to normalcy, but it certainly feels good to be here at this point, particularly before proxy season, with a positive trend.

I totally agree.

And then you were talking about the SEC’s concept release. Do you still expect to be able to raise prices based on the proxy release, specifically in proxy?

The concept release has now evolved to the New York Stock Exchange Proxy Fee Advisory Committee completing its report and now the Stock Exchange has again filed. So this is the second time they’ve filed a proposal for the SEC to approve. If that filing goes forward, I am confident that the following things will happen. One, the amount of digital activity will increase. Two, issuers will receive a very nice reduction in their cost through the elimination of the paper and postage. Three, the SEC will achieve its most significant goal of enabling investors to more easily be informed. And four, Broadridge’s shareholders will get a fair return on the investments and efforts that we’ve made to achieve all of this.

Could you be a bit more specific about the pricing?

We’re going to get paid for the work we do.

Great. And then just finally, can you give us an update on year over year unit pricing trends for equity trade processing and then stock records as well?

Are you talking about the pricing?

Yeah.

We really don’t go into pricing. What we’ve always said is to think about the following: For stock record growth, if we’re talking about equities, think about every 1% being about $3 million to revenue, and about $1 million to the bottom line. And if you’re thinking about the equities in the trade processing, we’ve said every 1% could be anywhere between $750,000, depending upon whether it’s heavily more weighted toward institutional versus retail, or $1.5 million. But that’s the best we can give you.

I want to take advantage of this opening you just created, Mark, though, to emphasize a point. Because to me it was the most significant point in the call. We all talk about trades, and we all talk about stock record and proxy. Broadridge is 150-plus products. The two most significant are proxy and trades. And the key message that I hope you heard in this call, though, was that if you look at ICS, there was one event that took place during the financial crisis, which we had to manage through, which was the reduction of event-driven. If you look at SPS, on a very simplistic basis, the one issue we really needed to manage through was the exit of the clearing business. Event-driven took less time to manage through than the exit of the clearing business, but what Dan and I are saying is we’re confident that we have both of these issues behind us, and that’s where the quote was that “SPS should finally become the icing on the ICS cake” comes from. And that’s what we’re looking to do as we exit ’13 and go into ’14 and beyond.

[Operator instructions.] Your next question comes from the line of Peter Heckmann with Avondale Partners.

Just wanted to follow up. You marked down one new outsourcing customer sequentially. Is that Questrade?

I did mention that Questrade has been converted onto the outsourcing platform, yes.

And then as regards Paladyne, just a little bit of follow up there. Have you had any progress in adding new prime broker relationships? And then number two, there’s been relatively heavy merger activity within the fund administration space. Do you see that creating any opportunity?

Paladyne was clearly a good opportunity for us to get into the buy side space. We have pretty much gotten to the end of, I’ll call it [broadvertising] Paladyne, meaning we are working very aggressively with Paladyne on both the capabilities that they have, and most significantly, including through eight o’clock last night, I was on the phone arranging, through our relationships in the marketplace, to introduce Paladyne’s products and services. So we feel good about the strategy. It is not as adjacent to what we do as New River was, for example. And as we go forward, without question, the activity that’s going on in fund administration, particularly around the underlying investor’s desire for very credible and independent record keeping and analysis. And Broadridge owning Paladyne supports the strategy that we’ve entered into.

And would you expect to continue to build your range of solutions for the buy side?

Yes.

I’m showing we have no further questions at this time. I’ll turn the call back to Mr. Daly.

As always, we want to thank you for your participation. Dan, David, and I, for those of you who will come to the lunch next week, we look forward to seeing you there. And as always, we appreciate your support, your questions, your comments. Choose to have a great day. I know we will. Thanks so much.