Good morning, everyone and welcome to the Broadridge First Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded.At this time, I'd like to turn the conference call over to Mr. Edings Thibault, Head of Investor Relations. Sir, please go ahead.

Thank you, Jamie. Good morning and welcome to Broadridge's fiscal first quarter 2020 earnings call. Our earnings release and the slides that accompany this call may be found on the Investor Relations section of broadridge.com. Joining me on the call this morning are Tim Gokey, our CEO and our CFO Jim Young.Before I turn the call over to Tim a few standard reminders. We will be making forward-looking statements on today's call regarding Broadridge that involve risks. A summary of these risks can be found on the second page of the slides and a more complete description on our annual report on Form 10-K. We'll also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Broadridge's underlying operating results. An explanation of these non-GAAP measures and reconciliations to their comparable GAAP measures can be found in the earnings release and presentation.Let me now turn the call over to Tim Gokey.

Thank you, Edings, and good morning, everyone on the call today. Broadridge had a solid first quarter and is well positioned for the year. We generated 8% recurring revenue growth. We had record first quarter sales and we continue to feel good about our underlying business trends. We also completed tuck-in acquisitions across each of our franchises that will strengthen Broadridge and drive long term growth.While the largely anticipated lower event driven activity impacted our results in this seasonally small quarter, we are well positioned to deliver a strong fiscal year 2020 and we are reaffirming our full year guidance. Moreover, ongoing industry trends continue to underline why Broadridge is so well positioned for longer term growth.This morning, I'll provide you with a brief overview of our first quarter results. And given the increased level of M&A we've seen over the past few months. I'll review how it fits together to strengthen our franchises. Jim, will then follow with an overview of our financial results, including the shift of our wealth advisor solutions from ICS and GTO. As always, we'll close with your questions.Let's get started on Slide 4. Broadridge reported solid first quarter results. As we analyze the quarter, keep in mind that Q1 is our seasonally lightest of the year. Typically, we generate anywhere from 12% to 14% of our full year adjusted EPS in the first quarter and that's right where we ended up.With that in mind, let's touch on the headline results. Recurring revenues rose 8% to $623 million driven in large part by the acquisitions we made in the fourth quarter, which are performing well. Organic growth was like 2%, but we expect it to accelerate through the year driven by stronger growth in both ICS and GTO from on-boarding sales that have already taken…

Thanks Tim and good morning everyone. Broadridge reported a solid first quarter and we're on track to deliver a strong fiscal year 2020. Before reviewing our results, I'll make a few call outs. First, a reminder on seasonality. Our first quarter is typically our smallest recurring revenue in earnings quarter of the year. Consistent with the outlook we provided in August in our historical average, our Q1 adjusted EPS came in at 13% of our full year adjusted EPS guidance at the mid-point.Second; acquisitions, fiscal year-to-date through early November, we have invested $179 million in four targeted tuck-in acquisitions aligned with our franchise strategy. We expect that these acquisitions will contribute an additional point to recurring fee growth in fiscal '20. We also expect that these acquisitions will be earnings dilutive in fiscal '20 after accounting for financing cost.These investments coupled with our seasonally negative free cash flow in Q1 pushed our adjusted leverage ratio up to 2.2 times at September 30, slightly above our long term target of 2.0 times. This was a temporary spike and we expect to finish the year close to our target. Third, event driven activity. As expected, event driven fee revenue declined notably from record first quarter a year ago, driving a decline in first quarter earnings. A $40 million Q1 event fees were also a bit lower than our expectations.However, this level of event fees in line with prior periods normalizing for significant mutual fund proxy activity or notable proxy contest. We now expect event fees to be at the low end of our initial full year expectations of a decline of 5% to 15%. Fourth, some modest changes to our segment reporting. As part of our strategy of building a wealth management franchise, we have consolidated our advisor solutions products into GTO…

[Operator Instructions]Ladies and gentlemen, at this time we will begin the question and answer session. [Operator Instructions] Our first question today comes from David Togut from Evercore ISI. Please go ahead with your question.

Thank you, good morning Tim and Jim. Just a quick question on organic revenue growth expectations for fiscal 2020, looks like the first quarter came in a little late at 2%. As you look at the 8% to 10% recurring fee revenue growth which you're reiterating in your 2020 guide, how many percentage points of that growth comes from organic versus acquisitions?

Good morning David, this is Jim. As I said, we think about 4 points or so will come from the acquisitions which keep us right in target for mid-single-digit organic growth contribution. As you point out we feel really good over the balance of the year, especially as we see these GTO on-boardings ramp up over the course of the year.

Got it. And I think on the June quarter call Jim, you called out 3PPT of growth from acquisitions for FY20 so that's a change?

Correct, because we just added, we just added these four acquisitions which will add about a point to our revenue growth.

Understood and then just a final question, so with the organic growth coming in about a point below expectation or else - or at least the 8 to 10 point revenue growth guide for recurring fee revenue growth, is there anything changing in your expectations or is this just this delay on the on-boarding at GTO?

Yeah, David when we look at kind of Q1 relative to the rest of the year, we definitely see a few transitory items. You had slightly low interim record growth, so we expect that to pickup with on-boarding come in later in the quarter as opposed to the beginning of the quarter. So we will get the full quarter benefit. Next quarter, small quarter, we're going to have things like we have some equity proxy activities that fell in Q1 last year, but now appears to be pushing to later in the year.So those are the types of things that we used to believe that the 2% organic for the quarter is light and that we pick up the pace starting in Q2 and put us on track for that mid-single-digit organic growth rate.

Understood, thank you very much.

Our next question comes from Darrin Peller from Wolfe Research. Please go ahead with your question.

Hey, guys thanks. Look, I just want to start-off. I mean it's good to see the M&A activity contributing, but I mean to follow up on that explain a little bit about the organic side. I guess what first of all would growth have been if the implementations were more on time on the GTO side? And then, I think more importantly what would you say is the pro forma growth profile of GTO now?In other words, have you owned all these deals a year ago, I know it was in your run rate, what would be the growth profile of GTO be?

Darrin this is Jim, well I think as opposed to sort of looking at what Q1 would have been we come back to feeling like this year it's going to be a mid-single-digit organic growth rate. And that's what we've measured, as you know, we can have some ups and downs and especially in a small quarter. So again, we feel really solid; we're on track for this mid-single-digit organic growth rate.And as we think about the GTO, we look at this business actually being above that average for the year. So we're targeting GTO to be mid to high single-digit organic growth. The acquisitions as Tim mentioned, generally speaking are accretive to that growth rate. So on balance of those annualized in we expect relatively small the grand few things for GTO. But on balance, they'll help the growth rate. But again, targeting mid to high single-digits growth for GTO with a really big revenue backlog behind us, feels like deadly good spot.

Yeah, just to add on to that Darrin. I think it's an interesting question you had. We owned these businesses a year ago, we probably would be reporting higher organic because they are experiencing very nice year-on-year growth within those businesses. So we feel good about the profile, especially on the GTO side where we're experiencing really good revenue from sales this year.

Okay, and then just on the BRCC side, I mean I guess that's been still a headwind, some of that was full transitory from a year, two years ago at this point, a year and a half ago. Where are we on that in terms of that business? Do you foresee that business turning leveling off or reflecting at some point soon?

Yeah. Darrin it's Tim, we are expecting BRCC to be a contributor to earnings growth in fiscal '20 but not to revenue growth. And we are continuing to as you mentioned work through the off boarding of a major client, the good news is, that that client is taking longer to go away which means that we'll make more revenue, and the bad news is we're still talking about it.But we think that's going to actually continue throughout fiscal '20. We had anticipated that will be done by now. I think the other point here is that, we do continue to have discussions with large clients about their in-house transaction communications that was a key part of our mid-term investment thesis. And, we are seeing good growth in digital products which is part of our long-term thesis, not enough to offset the correct volumes.

Okay, that's helpful. Just one last quick one. I mean, in terms of the backlog, it continues to look strong. Can you talk about the flow through the $330 million revenue backlog? And then in terms of new bookings, also, how much of that was inorganic versus organic? But more importantly, just the timing of the flow through of the backlog over the next few quarters and year and beyond?

Darren. So obviously the revenue backlog features prominently in our revenue growth. So in that mid-single digit organic growth rate that we're targeting, we need a number of points of growth, the majority of our points of growth coming from that backlog. So I won't give you an exact quantification of that, but that is our driver every year. So but we'll anticipate ending the year with continued healthy backlog as we add to it. But again, this is a business that always is thinking about how do we add 6, 7, 8 points of growth coming from that backlog. And that can give you a sense of the type of revenue conversion we have going on any one period.

Alright. That's helpful, Tim. Thanks, guys.

Our next question comes from Peter Heckman from D.A. Davidson. Please go ahead with your question.

Good morning, gentlemen. Can you talk about some of the puts and takes of both universal proxy and then confirms, both things that the SEC looks like they're relatively serious about pursuing and how Broadridge would work to facilitate that for the industry?

Yeah. Thanks, Peter, it's Tim. And that's a definitely good question. And we are - while I'd say broadly, there hasn't been anything on the regulatory front that is this really significant since our last call. The SEC is contained to work on issues around proxy. They made some statements around Investment Advisors. There's a meeting just yesterday.And some work on proxy plumbing. And when they talk about proxy plumbing, what they're largely talking about some of the things you mentioned, which is and to invoke confirmation and potentially universal proxy card. We are well set up to deliver on both of those. We are introducing end-to-end confirmation for those clients where we're the tabulator this year, which is significant portion of public companies.We are working with the industry to introduce that for all public companies. We need cooperation from others as a working group the SEC has established. But we think this is a positive development for corporate governance and a positive development for us. Not in any particular fee characteristic, but just in terms of increasing everyone's overall confidence.With respect to universal proxy, that's something that we are definitely able to support and have prototypes around and look forward to implementing whatever is decided by the by the SEC and the industry.

Our next question comes from Chris Donat from Sandler O'Neill Chris. Please go ahead with your question.

Good morning. Thanks for taking my questions. I want to ask one about the, I guess, sort of this year in longer term expectations for ETFs position growth. And this is related to the - a number of brokers going to zero commissions. It used to be the part of the proliferation of ETFs over the last five to 10 years with some brokers doing launching their own ETF and then having a promotional pricing on commissions for that.Now, it seems like the economic rationale for those ETFs is going away. And I would think one outcome might be that you see the industry consolidate on a handful of the really large liquid ETFs. Is that something you think might happen and would that potentially lead to fewer ETFs positions? Are there even how do you think in general about what the if the zero commission brokerage fees have any impact on ETF ownership?

Yeah. Chris, very interesting question. I think that ETFs are a really nice vehicle to have a lot of benefits for clients in terms of their liquidity and other characteristics and intraday pricing. And so I think they're going to continue to be very popular. It is true that there has been some trend around brokers introducing ones. I don't know how widely held those hours. I think actually the bigger trend is with more proliferation of different factory ETFs. And now people talking about active ETF. So there is a lot that is causing change there. I think another interesting sort of analogy is that while the number of public companies has stopped growing and even gone down, position growth has continued.So I'm not sure that there's a correlation between position growth and a number of choices out there. I will - just since you mentioned zero commissions. Just let me talk a little bit about that, because I think people actually wondering a little bit about what is the impact of that. And I think that is something that is. The timing is hard to hard to determine. So the timing may be unexpected, but essentially, it's just a long term trends that we've seen.The biggest impact is really clearly on the online brokers, Fidelity, Schwab, e-Trade, Ameritrade. Those are not as significant part of our wealth book. We're more focused on advisor and wealth managers. But we are seeing is that the change is creating the need for all wealth managers to evolve their business model in terms of how they add value because it is not as much from the asset management side from the stock ticking and trading side.And so to accomplish that evolution, they need to invest in technology for the differentiation. And I think that is really favoring us as we work with clients to create a broad range of services that it helps them not only take down costs, but also support these new sources of differentiation. So it's just, one of those clear signals that the world continues to evolve, which is why technology is so important.

Got it. And thanks for that piece on the evolution of the industry. Related to that just wondering and you just said that the online books are small piece of your revenues. But given lower commissions, do you think your pricing or really your contracts might change on the GTO side and being more fixed and less volumetric going forward or is it too soon to tell on that?

Yeah, I think it's too early to tell. It is - these contracts are all pretty long term in nature. We've had discussions with some wealth managers about the idea of focusing our contracts more on one position and a number of positions than on the number of trades, because you really look at what the cost drivers are and their revenue drivers on their side is more about positions. And we're looking for a long term construct between us and our clients that aligns with their revenue model and aligns with our cost model. And positions may be a better way to go on that. But those are long term discussions and I wouldn't expect to really see any impact in the years.

Got it. Okay. Thanks very much, Tim.

You bet.

And our next question comes from Puneet Jain from JPMorgan. Please go ahead with your question.

Okay, thanks for taking my question. I know you expect gross sales to contribute to growth acceleration rest of the year. Can you also review expected trends in internal growth?

Sure, as you recall a couple of key drivers in there are going to be interim record growth which comes in fairly evenly throughout the year, as we mentioned, little low this quarter. We're expecting it to come back. So that'll pick up in terms of contribution. And then, probably the single biggest contributor to that internal growth is our equity position growth SRG as we refer to it. And that's really back half weighted even specifically in Q4. So as those come into play, we expect really nice internal growth contribution as we get to the back half of the year.Other than that there are always puts and takes throughout the rest of the business, little bit of professional services here and there. But the really big drivers are to keep your eye on that along with trade growth, which is always a contributor to some degree in that mix. But really, it's the position growth that we keep our eye on as we think about that sort of full year number.

Got it. And it's been quite a while since you closed the UBS contract. Are you seeing any benefit from flywheel effect from closing the UBS deal with other wealth management clients, or is it too early for that?

Puneet, it's Tim. First of all, just we continue to make very good progress on UBS itself. And I'm really excited about the technology there. It has created lots of discussions with other large wealth managers. And when we talked about the pain points, and the open architecture platform of the future, there's a lot of head nodding and a lot of positivity.All that said, as you pointed out, these conversations are long-term in nature. So there's nothing imminent to report. What I would say is separate from the creation of the new platform and the conversations about that with other wealth managers is that we are continuing in other ways to strengthen our wealth capability and our wealth platform. And you certainly saw that with some of the M&A. You are seeing that with moving some of these product lines into GTO. When you look at some of our recent onboarding, they do include significant wealth components. When we look at the underlying what's happening in our wealth business as we develop that into our third franchise, we're seeing good progress there. So we think the strategy is on track, and we continue to be excited about the opportunity.

Got it. Thank you.

And ladies and gentlemen, at this time I'm showing no additional questions. I'd like to turn the conference call back over to management for any closing remarks.

Well, thank you. I just want to thank you everyone, for being here today. And to summarize, we feel very good about 8% as a recurring fee revenue number. Obviously, the record sales and our underlying business trends. As you heard, we're reiterating our full year guidance. And we continue to have a really good confidence in the long-term trend and in the investments that we're making to support that growth. So thank you very much again. And look forward to talk to you again next quarter.

Ladies and gentlemen, that does conclude today's conference call with you. Thank you for joining today's presentation. You may now disconnect your lines.