Broadridge Reports Strong Second Quarter Fiscal 2008 Results

Broadridge Financial Solutions, Inc. (NYSE: BR), a leading global provider of technology-based outsourcing solutions to the financial services industry, today reported earnings of $28.9 million, or $0.21 per share for the second quarter ended December 31, 2007, compared to $28.0 million or $0.20 per share for the comparable quarter of the previous fiscal year.

Commenting on the results, Richard J. Daly, Chief Executive Officer, said, "We are pleased with our second quarter revenue and earnings, which continue to be enhanced by market activity. Increased trading volume continues to provide positive momentum, although it provided less benefit this quarter than in our first quarter. Event-driven revenue was a more significant contributor this quarter than it was in our first quarter. Our operating margin increased, largely as a result of the inherent operating scale in our business. We believe that our strong second quarter performance and volume trends move us towards the higher end of our $1.30 - $1.40 earnings per share guidance range."

For the second quarter, net revenues grew 8% to $465.1 million from $431.3 million in the second quarter of fiscal year 2007. Net earnings increased 3% to $28.9 million from $28.0 million, and diluted earnings per share increased to $0.21 per share on slightly more shares outstanding, compared to $0.20 per share in the second quarter of fiscal year 2007. Excluding adjustments for one-time transition expenses and interest on debt related to Broadridge's March 2007 spin-off from Automatic Data Processing, Inc. (NYSE: ADP), the Non-GAAP net earnings for the second quarter of fiscal year 2008 grew to $36.9 million from $28.6 million, an increase of 29%, or $0.26 per share from $0.21 per share, compared to the second quarter of fiscal year 2007.

Net revenue growth in the second quarter of fiscal year 2008 was driven primarily by sales, internal growth from higher trading volumes, increases in Transaction Reporting and Fulfillment services, as well as higher event-driven activity in Mutual Fund Proxies and favorable foreign exchange rates, offset by the loss of two large clients previously announced in fiscal year 2007. Pre-tax margin of 10.2% decreased by 0.5 percentage points primarily as a result of the aforementioned spin-off adjustments. Our closed sales for the quarter were $38 million and are 5% greater than last year's comparable quarter and 9% greater on a year-to-date basis.

For the six months ended December 31, 2007, net revenues grew by 5% to $916.3 million primarily driven by sales, internal growth from higher trading volumes, increases in Interim Communication services and Transaction Reporting and Fulfillment services, as well as higher event-driven revenues related to Mutual Fund Proxies. The growth in these revenue areas helped to more than offset the impact of the loss of two large clients we previously announced. Pre-tax margins of 11.6% increased by 1.0 percentage point resulting from the inherent operating leverage in the business. Diluted earnings per share increased 12% to $0.46 for the first six months of fiscal year 2008, compared to diluted earnings per share of $0.41 in the first six months of fiscal year 2007. Excluding the aforementioned spin-off adjustments, the Non-GAAP net earnings for the six months ended December 31, 2007 grew to $79.5 million from $57.5 million, an increase of 38%, or $0.57 per share from $0.42 per share. A reconciliation of Non-GAAP to GAAP measures is included at the end of this release.

Analysis of Second Quarter Fiscal Year 2008

In the third quarter of fiscal year 2007, we changed our method for determining intersegment transfer pricing. This change had no impact on our consolidated results. In the business segment discussion below, we compare actual results for fiscal year 2008 to results for fiscal year 2007 that are adjusted to reflect the change in transfer pricing. We believe this provides a more meaningful comparison between current quarter results and prior quarters. A reconciliation to fiscal year 2007 results, as reported, is included at the end of this release.

Investor Communication Solutions

Net revenues for the Investor Communication Solutions segment increased 6% compared to the second quarter of fiscal year 2007, on both an as adjusted and as reported basis, to $303.2 million in the second quarter of fiscal year 2008. The increase was driven primarily by internal growth from Interim Communications and Transaction Reporting and Fulfillment services, as well as higher event-driven revenues related to Mutual Fund Proxies. Net new business (sales less losses) reduced revenue growth by 3%. Operating margin increased 3.3 percentage points compared to the second quarter of fiscal year 2007, as adjusted, and 3.2 percentage points on an as reported basis, primarily as a result of operating leverage associated with internal growth and event-driven revenues, and to a lesser degree a more favorable mix in distribution fees.