At this time, I would like to welcome everyone to the Broadridge Financial Solutions Second Quarter FY '16 Earnings Conference Call. [Operator Instructions]. I will now turn the conference over to Brian Shipman, Head of 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 of FY '16. This morning, I am here with Rich Daly, our President and Chief Executive Officer; and Jim Young, our Chief Financial Officer. I trust that by now everyone has had the opportunity to review the earnings release we issued this morning. The news release and slide presentations 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 will discuss some forward-looking statements regarding Broadridge that involve risk. These risks are summarized on slide number 2. 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. Our non-GAAP FY '16 earnings results and FY '16 earnings guidance exclude the impact of acquisition amortization and other costs. 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 any non-GAAP adjustments and reconciliations to the comparable GAAP measures can be found in the earnings release. Rich Daly will start today's call with his opening remarks and will provide you with a summary of the financial highlights from the second quarter of FY '16, followed by a discussion of a few key topics. Jim Young will then review the financial results in further detail. Rich will then provide some closing thoughts before the Q&A portion of the call. Now I'll turn the call over to Rich. Rich?

Thanks, Brian and good morning, everyone. Let's begin on slide 4 with the key points. I am pleased with our performance in the second quarter which keeps us solidly on track for the full fiscal year. Our performance was driven by continued solid recurring revenue from new sales, contributions from our acquisitions made in FY '15 and healthy event-driven activity. Overall, I am pleased with our first-half financial results. We continue to see solid recurring revenue growth and we anticipate some acceleration in the second half of the year. Recurring revenues were up 8% for the quarter and are up 9% year to date versus the comparable periods in FY '15. Given our solid first half of the fiscal year and the confidence we continue to have in our business, we're reaffirming our FY '16 guidance including recurring revenue growth of 10% to 12%, adjusted diluted EPS growth of 8% to 12% and closed sales of between $120 million and $160 million. We closed $49 million of sales in the second quarter, a strong result. I am particularly pleased to report that we closed Barclays for Europe and Asia under our strategic alliance with Accenture. Barclays is our third client on the Accenture Post-Trade Processing platform, also known as a APTP. I will talk more about this in our key updates in a few minutes. Importantly, our sales pipeline remains robust and we continue to see good activity through January. This, coupled with our solid first half performance, positions us to achieve our full-year sales plan. These results underscore just how much Broadridge's revenue model has evolved and how we're no longer primarily relying on market-based activities for growth. I am pleased how our buy, partner and build strategy has enabled Broadridge to enhance our growth potential and become even…

Thank you, Rich. Good morning, everyone. Before reviewing slide 7 and the details of our results, let me begin some callouts. First, our second quarter and year-to-date performance. In the second quarter, total revenues grew 11% and recurring fee revenues grew 8%, bringing us to 9% growth for both measures year to date. Earnings per share grew 19% in the second quarter and 15% on a year-to-date basis. Recognizing the first half as representing only about 20% to 30% of our full-year earnings in recent years, we're positioned to achieve our plan for the year and have reaffirmed our guidance. Second, event-driven revenue. Event driven revenue which has been about 6% of total revenue historically, grew 52% in the quarter and is now up 31% year to date. We have seen notable increases in the areas of mutual fund proxy, corporate action communications largely involving reorganizations and equity specials for non-routine stockholder meetings such as those related to business accommodations. In the beginning of the fiscal year, we indicated that we had planned for event-driven revenue to drop about 4% to 5% from the FY '15 levels. At this point, we anticipate that event-driven revenue will grow over the prior year. This is captured in our reaffirmed guidance. It is important to remember that event-driven revenue is inherently more difficult to forecast with precision. Third, foreign exchange. Canadian dollar and British pound exchange rates continue to be weaker than they were a year ago and are weaker than the forward rates we used to plan the year. For the second quarter, FX was about a 2-point drag on revenue growth and about a 5-point drag on earnings growth. Year-to-date, FX was also about a 2-point drag on revenue growth and about a 5-point drag on earnings growth. In the beginning…

Thanks, Jim. Please turn to page 10 for my summary wrap-up. I am pleased with our fiscal second quarter results. At the halfway point in the fiscal year, we're essentially in line with where we expected to be. As Jim pointed out, due to the seasonal nature of our business, our first two quarters' earnings historically contribute disproportionately less to our full-year results than the second half of the fiscal year. At Broadridge, our leaders will always be looking beyond the next quarter and the next year which is the key reason why we remain aligned with our three-year goals. Let me take a moment to provide some perspective on the financial markets and what it means for Broadridge. Last month was a volatile time for investors. From where I sit, I don't see anything that resembles the financial crisis of 2008. Regardless, we're well-positioned with multiple paths to achieve our goals. At our essence, we remain an asset servicing business, not a trading business. This means short term market fluctuations and volatility don't have the same impact on us. When you are a managed services leader for the books and records, you don't meaningfully participate in the upside in strong markets, but you remain critical and necessary in all markets. Furthermore, we have evolved our business to its strongest point yet. We have more recurring revenue and more long term contracts than ever. With our new products, we're more relevant to our clients than ever. And I can tell you, from frequent recent conversations with senior executives across our client base and products, that we're critical to their ongoing plans and the industry's need for transformational solutions. The model remains compelling. We generate a high level of free cash flow relative to net earnings and we have a compelling…

[Operator Instructions]. Your first question comes from the line of David Togut of Evercore ISI.

Rich, can you just flesh out how you see the new business pipeline in a little bit more detail? Really the underlying question behind this is the first quarter clearly was down pretty significantly from a bookings standpoint. Second quarter very solid, but if we just annualize the first half, it looks like you are tracking to the lower end of your new closed sales guidance for the year, so if you could just maybe elaborate a little bit on your thinking in terms of the target for the year and maybe a little bit more on the pipeline?

Sure. We're very pleased with the second quarter. I was pleased in the first quarter, because the momentum that we had that led to, for example, Barclays was clearly there. When you reach a certain stage in contracting and it's down to lawyers arguing thee versus thou, it is generally a pretty good place. Broadridge has expanded its product set, so you look at something like the simple thing we did this quarter, QED. We think that in some of our buy site opportunities, again this is not something that I think you are going to write a separate report about, but it's just another example of how we really are more relevant in all of these client dialogues. If you look at where we're tracking, I'm delighted that we're in the first half of the year tracking to be in the range just by using math times 2. If you go back and recall, most of Broadridge's prior history, certainly going back to the first years, it was very rare that if you took the first half performance and multiply it by two that you actually got into the range we were looking to get into, most of the time that didn't happen. Last year, we had a very strong start. This year, I think for the halfway point I am pleased where we're and what it comes down to, Dave, is the momentum and as we look at the pipeline, we believe it is as strong as it has ever been. As we continue that product, we feel good about that. Now, we will never be able to be tracked like retail or something where the comparison of one period to the next period or one month to another month, is going to have the same level of meaning. Because of some of the larger deals, it's always going to be a little lumpy. All in all, though, I feel very, very good about where we're across building, buying, partnering, as well as continuing to enhance relationships to our existing clients to get more wallet share from them in the things we're already doing.

Can you talk a little bit about blockchain? Perhaps expand on some of your earlier comments. Is blockchain more of an opportunity or a threat for you and the second part of that is does blockchain make in-house global trade processing more viable, let's say for someone who might be a target customer for you?

Okay. First of all, we think blockchain is really cool and very exciting. When I'm telling people internally, there are things we weren't able to do in the past, because we didn't have scale, let's use derivatives as an example. Going out and buying something had a multiple of infinity which although I may have liked the asset, because I thought at Broadridge, we could actually make it reliable and stable. I wasn't going to pay a silly price to get to it and I think blockchain will give us another shot at some of those things as we going forward. Dave, the most important thing to remember about Broadridge is we're a managed service company. We don't sell our technology to somebody else just to use on a pure technology plank. You don't go and buy it and it's shrunk wrap and you plug it in. Broadridge plays an active role in virtually everything we do for our clients. If blockchain dramatically improves, let's go to the trading side, dramatically improves and makes trade more efficient, you still need books and records and all the complexity around books and records that we've built into what we do. We think we want to be an enabler, so that is where the DAH investment comes into play. Most of the people who are the key firms investing are already clients, already use our books and records to an extensive degree. I specifically said, in our script, there are some firms in there that should be our clients and I know it and I think many of them know it. And so, by sitting with them, shoulder-to-shoulder, looking at how we can transform some of these activities to be more efficient, to make settlements more efficient and take a lot of the time and risk out of those settlements and for our clients for Broadridge to be able to integrate it into the books and records, that it's ultimately going to need to get into, I think positions us very well in this evolution. If we weren't a managed service, if we weren't books and records, if we were a single play, a single play being a specific activity or a specific market activity, I don't know if I would feel the same way. With all of my excitement, moving from the things we're doing today to what we're talking about moving to, I know how complex this is. This is not trading in your iPhone 5s for a 6s. It is not even remotely close to doing that. For Broadridge, it makes us more relevant in more conversations and you shouldn't be surprised if we do something else in the blockchain space beyond DAH.

Quick final question. The other costs were down 46% year-over-year. Jim, can you flesh that out a little bit? Was that mostly belt-tightening or what were the big drivers?

No real callouts. A little bit of expense management in the first half, a couple of unusual items in the first half, a relatively small expense base.

Your next question comes from Chris Donat of Sandler O'Neill.

Just wanted to maybe take one step back on some of the initiatives you have and just see if I can understand them and how they all fit together. If I think about APTP, you launched it really three years ago or that is when the process started, then last year, you put out the white paper on post-trade utility and now we've got your investment in Digital Asset and like you just said, there are other things may be coming in blockchain. Should we think about all this as one big piece or are they really discrete, separate initiatives that may or may not overlap. I'm just trying to figure out how they all fit together here.

Sure, in terms of remaining relevant, in terms of enabling our clients to get to a more efficient place, I'd call it part of an overall strategy. Certainly the white paper and APTP are very, very closely linked in things that clients can do today in a very meaningful way. When you look at blockchain and you pick things like syndicated loans and foreign FX, let's use those two examples. In the market today, we're not in either of those spaces and they are just horribly inefficient in the clearance of settlement activities. If that can be and it can be, incorporated and built out into a blockchain, I personally see that as the very likely successful execution activities that will happen first. As that happens, I see some of the bigger plays happening. Let's go back to what you said about APTP which was announced three years ago and we're now live in London. We already had a strong technology platform. Accenture certainly knows how to go in there and work with clients. Three years later with the pieces, in essence, already in place and needing fine tuning, we're now live with two very capable operators who execute for a living doing the execution. What I'm trying to point out is transformation, even when all the pieces are in place, is not for the faint of heart and is a pretty tough road to go down. The transformation I have been looking at with blockchain is wildly exciting because of what the technology enables. Building this out to cover all the intricacies that our markets have and the complexity that our markets have is going to be an even tougher road, but the opportunity here is so strong. For Broadridge, to be with our key clients or people who should be our key clients, in these dialogues, where for our clients, it will be clear that if we can get this technology achieved, to integrate it into the books and records that we're running for our clients now, we can make that part work for them, I think makes what we do today more relative for our clients, what we should be doing for the people who aren't our clients more relevant and makes us more relevant in these new dialogues going forward. But what I wanted to point out is APTP was not for the faint of heart and I am really psyched that we're live in London and that Barclays has signed. Many years from now, I expect to be saying the same thing about some blockchain initiatives, but again, nobody should be thinking this is, you know, go to the Apple Store, buy it, download the app and you are off and operating this afternoon. That is not what it will be.

Also on things that are not for the faint of heart, within the last couple of months, NASDAQ has announced it is going to use blockchain technology for proxy voting in the country of Estonia. Since it's proxy voting, it seems like it can be sort of in your neighborhood, granted that Estonia is not. I'm just wondering if you see, as you look differently down the road here, are there opportunities, also, for the blockchain technology or distributed ledger, to be used for proxy voting or is that something, working through the SEC and the NYSE's proxy fee advisory committee, could take years or decades?

First of all, anything in proxy is in our neighborhood. We do proxies in about 100 markets. Estonia is somewhat of a fairly unique market, in that not only is it the exchange, but from my understanding, it's also the books and records. It is through books and records, that is where all the shareholders are for the people who trade in the Estonia market. If you add that, you also happen to be asset servicing which includes proxy. Bear in mind, we service investors in any of the hundred markets that they need to do proxy in. For those investors, we're still going to need to link them into Estonia, because they are not looking to do proxy in a hundred different places, in particularly institutional investors where we're in the hundred markets, but they are looking to do it through proxy action. The key here, again, is that Broadridge is essentially a managed service. In proxy, it is completely a managed service. Irrespective of the technology that's being used in a specific market, our proxies are executed in a specific market. For example, in some markets, we have to use an agent to actually get the votes into the building by the nature of the legal ramifications in that esoteric market. As a managed service, we fully expect to be working with every market. I've actually met with Bob Greifeld to talk about what they are doing. We find it very exciting. I don't want to confuse what we think is a pragmatic view that these things are going to take time to execute and become realities with our enthusiasm for what blockchain could do. And we think for trusted operators like Broadridge who have significant positions with clients, whether it be institutional investors in proxy or global banks in books and records and trading support, we think we will enable them to take advantage of new technologies as we embrace those new technologies which we fully intend and expect to do. I think we'll be talking about this in future pipeline opportunities, but I'm not, in planning next year's operating plan, to be moving from what we do from the current environment to a blockchain environment. Again, let's go back to we just talked about with APTP, we had the pieces in place and three years later, we're really ecstatic that we're executing in London and live.

Your next question comes from Darrin Peller of Barclays.

I want to start off with an understanding, a little bit of a follow-up with new sales. Again, it seems like you're trending, you had a pretty good first half. I know it's still trending toward the low end of the range, but when we think about the second half and your set up, is there a fair amount of that? Are you expecting another large deal in that, like a Barclays for the APTP kind of business? I guess we're just trying to figure out how much reliance to make those numbers is on a large type of a contract, something like a Barclays.

Okay. Let me break it out in two pieces, Darrin. Let's first start with APTP, we just went live. Simultaneously with that and I'm not saying they are directly related, but simultaneously, Barclays signed. So, you have got the only operating common back office. And in my script, I specifically put, versus theoretical proposals, because the only other proposals I'm aware of out there is somebody proposing to take someone's existing back office platform, buy it from them, convert it to a multi-entity platform and then operate it. I'm not saying that it is impossible to take a large bank single entity platform and convert it to a multi-entity platform, but in the history of the world, it has never happened. Going all the way back to when Ross Perot bought F.I. DuPont and tried to convert that platform when the world was relatively pretty simple versus what happened today and if you go back and read the EDS Perot history, that was a crash and burn. There is a tangible platform out there. The need to mutualize cost is there. But we just went live, so we know this is going to create a buzz. We know that there is going to be activity. To think if somebody called us today and said, I'm really interested and that we would have them signed and sealed in this fiscal year would be the fastest it would ever happen from initiating dialogues and happening. Now, that's not to say there aren't dialogues going on. I'm just giving you a view that it is not instant gratification. We have over 200 offerings out here right now. There is a lot of ways we can achieve a sales activity. We have a good backlog of things that we need to convert and turn into revenue. I, absolutely, am pleased that the sales are where they are right now. I am pleased that the simple math of going times two puts us in our range and again, I'm going to repeat what I said earlier today, most of the years, at the halfway mark, you couldn't multiply by two and get into our range. We've historically had stronger sales in the second half of our fiscal year. Chris Perry, Tim Gokey and our leadership has done a better job in how we've created more activity throughout the year versus really pushing very hard at the end of the year and then traditionally having slower starts. But I feel good about the pipeline and the number of offerings we have and even in the market over the last month, there may have been volatility in the market, but there hasn't been volatility in what we believe is the momentum and dialogue for having the clients and the size of the pipeline.

Just a quick follow-up on the margin side. Jim, you came in better than we expected by a pretty good amount for the quarter. I understand the event driven revenue was also higher. I'm sure that contributed, but I guess to reiterate your guidance, it sounds like for margins not being a year of expansion given the investments, despite what we've seen so far in the first half of this year, again possibly related to revenue that came in better than your own estimates on the event side, can you explain why, are you reinvesting more than you initially expected?

Darrin, no changes in investment plans at the moment. Right now, at the halfway point, we think we're on track with those margins. As we talked about in the beginning of the year, clearly a drag on that are going to be acquisitions and those are performing as we'd expect. Event driven being a bit more favorable and as you said, generally speaking more margin accretive. We also have FX which when you roll it into the impact on margins, it is dilutive on margins. You're always looking at mix of revenue and if you've got, this quarter equity trades were down a little bit, so that revenue comes in, you know that's more dilutive to margin than obviously just bringing on high-margin equity trades or relative to net new business. A lot of factors. At this point, it feels like we're still pretty squarely staring at what we guided to at the beginning of the year.

Just a last question for me. I know it is still early, but any further evidence of success from the recent 2015 acquisitions you made? You're investing in them still this year, obviously, but we're always asked a lot of questions if the trade-off is going come of flat margins this year in favor of those deals. Are we seeing the fruit of those deals just yet or any evidence of it starting? I'll just leave it at that. Thanks, guys.

Darrin, I had a bit of trouble hearing you, so I'm going to let Jim who I think may have heard you better.

I think I heard correctly, the 2015 acquisitions in the early returns if I heard it correctly which, I think all four and Rich can jump in at the end, here. I think all four are performing right where we want to be. Obviously we track, pretty closely, our business case for each of those. They are all on track. We've talked about some of the early headline successes of Direxxis with some name brand wealth management players and some early wins there. But right now, I would say, it is still early days, but each is tracking right to the business case.

Darrin, from my feel about the business, last week I was out at the Matrix acquisition which was the old Wilmington unit in Phoenix. I put in front of the board a demo of Direxxis. There is no instant gratification out here, but let's just use those two as an example. You take the Broadridge brand and what we're doing already, then add on top of it better capabilities and larger plan activity in a world where retirement is going to be far more critical and the focus on efficient cost effective, bluntly low fee capabilities which we enable, is going to be more and more pressure on the markets and more and more pressure on providers to find those solutions, because it's going to be legally more difficult to provide high-speed plan solutions in the market. It feels great. Then you look at what we're doing in the wealth area where we're using our data and really cool technology that we put in here, that enable firms to do a far better job targeting the prospects they need to get in front of to make their FCs far more productive, far more efficient and have a far better reason to do business with that firm. Just those two examples and that is two of the four that we did last year feels very good. Again, there isn't instant gratification, there is a big of a drag as Jim pointed out, but when we talk about and I said this in the script and this is the proof point. When I talk about this management as thinking beyond next quarter and next year, that is absolutely the proof point and that is why when we say, we feel good about our ability to deliver top quartile total stockholder returns over any multiyear period, that is the way we believe is the right way to run the business is and that is what is behind statements like it. Not let just put out some fancy feel-good words.

Your next question comes from the line of Peter Heckmann of Avondale.

Maybe a question for Jim. We saw an uptick in the distribution revenues this quarter and if I remember correctly, the Wilmington acquisition was going to add something around the lines of about $25 million to $30 million of distribution revenue. Is that seasonal at all or should we be thinking for the rest of year that the distribution revenues could be up 10% or 15%?

Two elements in there. You are right in that the Wilmington deal did come with half of it being distribution revenues, so you will see an uptick as that annualizes. But then remember, the other piece is we had a pretty healthy event quarter which really is the biggest driver of the spike relative to previous quarters and distribution or cost of revenues.

We saw a pretty decent year-over-year uptick in notice and access. Is part of that being driven by Investor Mailbox and can we get an update on that initiative?

Sure. The Investor Mailbox has evolved into digital play. You have the SEC EBIP which we call Investor Mailbox. You have [indiscernible] encouraging people to adopt taking E or looking to get our channel plays inlet live this fiscal year. I would still call it a continuing evolution where we're building a stronger value prop, so E continues to evolve. If you go back to what we said to the SEC in our last comment letter, if you continue to push information in front of people, that is the highest way to get people to look at things, whether it be in paper or E. If you change the default and require them to go look at something, you literally could go from 70% of the people looking at something when you put it in front of them. If you change the default, the data shows it can drop down to less than 1% of the people actually looking at something, so that is why we're saying it's not that popular with lawmakers and with consumer groups. What we put also in that document and this ties back to your question, Pete. If the SEC was to do nothing, in a couple of years, just by Broadridge's continued evolution of E, it would save more money than what the SEC was thinking they might be able to help fund companies save by going to notice of access, without losing the vast, vast majority of people looking at information right now, today. The answer here is going to be technology going forward and we feel really good about Broadridge and what we put in front of our customers versus what people who want to be us or even when we're competing or price negotiating on renewals, what people are putting in front of them. Because with E, we're going to enable the market to save money on proxy and those costs that the issuer paid. We're going to be enabling our clients to save money on statements conference prospectus. We're going to do it in a way that enhances the customer experience and we're going to be doing it with all of the data security and compliance, in alignment with client compliance and rules and regulations that the market takes great comfort in doing business with us. I kind of hijacked your question to point out, across the board, what we're doing in E and it's enhancing Broadridge, but continues to be, I will call it, a steady evolution, not a revolution.

Your next question comes from the line of Stephanie Davis of JPMorgan.

A quick question on the Barclays win, I wanted to, how we should think about comparative sizing and if maybe you could see a faster ramp there given that the team has now experienced two of these transactions?

Okay. Scaling is something we do for living. If you're doing $5 trillion to $6 trillion a day in settlements, you need to scale. You need to understand scale and you need to be able to execute. We believe that is one of the key reasons why APTP has been successful, in that you take two very strong players, you bring the best they have to offer and again, it's not a secret that the industry has been talking about the need to mutualize costs. It is also pretty interesting that a lot of things that were being talked about over the last 18 months or 2 years or 3 years, most of them have evaporated. APTP is live. Signing clients and converting clients is the heavy lifting. I'm not concerned about when we do that our ability to understand the technology and scale it.

A follow-up on that, just giving your strong first half and reiterated guidance implies a bit of a slowdown in second half EPS. How much of this is conservatism versus some of the puts and takes like FX you mentioned in the prepared remarks?

As you know our growth on EPS can be a little uneven. If you look at our biggest earnings quarter, the fourth quarter, we were up something like 21% last year. As you look at the year-over-year growth, the comparables can be a little bit misleading. I think we're calling it as we see it right now. Clearly FX is a bigger drag than we anticipated, but we like our outlet. Obviously from the recurring revenue growth, we would expect a little bit of an uptick in the back half, so that is the core of our business and we see continued strength there. And the comps will be what they'll be, but we're kind of tracking to where we want to be right now.

There are no further questions.

Thanks for your interest and participation. We're going to choose to have a good day, here. We look forward to seeing many of you on the ninth in New York City and again, I want to repeat that we're going to have Tim Gokey walk everyone through a little more detail on APTP, Barclays and where we're at this time. Thanks, so much. Talk soon.