Broadridge Reports Third Quarter Fiscal 2008 Results and Increases EPS Guidance

Broadridge Financial Solutions, Inc. (NYSE: BR), a leading global provider of technology-based outsourcing solutions to the financial services industry, today reported earnings of $29.5 million, or $0.21 per share for the third quarter ended March 31, 2008, compared to $41.9 million or $0.30 per share for the comparable quarter of the previous fiscal year.

Commenting on the results, Richard J. Daly, Chief Executive Officer, said, "Our third quarter results are directly in line with our expectations. We are pleased that we were able to achieve this performance during a difficult time for the markets we serve. Our Investor Communication Solutions segment, historically responsible for over 70% of our annual revenues and earnings, continued to perform well. In our Securities Processing Solutions segment, we successfully completed an implementation for Royal Bank of Canada, which achieved what had been the elusive goal of consolidating retail and institutional securities processing onto one platform, and added new wealth management capabilities. Our year-to-date results combined with our view into our fourth and largest quarter lead us to revise our earnings per share guidance range to $1.35 - $1.45 from $1.30 - $1.40, Non-GAAP, which excludes one-time transition expenses."

For the third quarter of fiscal year 2008, net revenues grew 1.2% to $498.8 million compared to $492.8 million for the same period last year. Net earnings decreased 29.6% to $29.5 million from $41.9 million, and diluted earnings per share decreased to $0.21 per share on slightly more weighted-average shares outstanding, compared to $0.30 per share in the third quarter of fiscal year 2007. Excluding expense 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 third quarter of fiscal year 2008 decreased to $36.5 million from $42.0 million, a decrease of 13.1%, to $0.26 per share from $0.30 per share, compared to the same period last year.

Revenue growth of 1.2% in the third quarter of fiscal year 2008 was driven primarily by sales and internal growth, as well as favorable foreign exchange rates, and offset by the loss of two large clients previously announced in fiscal year 2007. Pre-tax margin of 9.7% decreased by 4.5 percentage points, half of which related to the aforementioned spin-off expense adjustments, and the remainder of which was due to the two client losses and incremental investments. Our closed sales for the quarter of $48.2 million and $116.0 million year-to-date are both above last year's comparable quarter and year-to-date results.

For the nine months ended March 31, 2008, net revenues grew by 3.7% to $1,415.1 million primarily driven by sales, internal growth from higher market activity, and favorable foreign exchange rates. Pre-tax margins of 10.9% decreased by 1.0 percentage point in fiscal year 2008, resulting from the aforementioned spin-off expense adjustments, higher incremental investments and the two client losses in fiscal year 2007, compared to the same period last year. Diluted earnings per share decreased 5.6% to $0.67 for the first nine months of fiscal year 2008, compared to diluted earnings per share of $0.71 in the first nine months of fiscal year 2007. Excluding the aforementioned spin-off expense adjustments, the Non-GAAP net earnings for the nine months ended March 31, 2008, grew to $116.0 million from $99.5 million, an increase of 16.6%, or $0.82 per share from $0.72 per share, compared to the same period last year. A reconciliation of Non-GAAP to GAAP measures is included at the end of this release.

Analysis of Third 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 the third quarter of fiscal year 2008 to results for the third quarter of fiscal year 2007. A reconciliation of the results for the nine months ended March 31, 2008 and the nine months ended March 31, 2007, as reported, is included at the end of this release.

Investor Communication Solutions

Net revenues for the Investor Communication Solutions segment increased 0.9% compared to the third quarter of fiscal year 2007, to $342.9 million in the third quarter of fiscal year 2008. The increase was driven primarily by sales and internal growth, both recurring and event-driven, offset by the client loss. Operating margin increased 0.2 percentage points compared to the third quarter of fiscal year 2007 reflecting product mix and scale in the business.

Securities Processing Solutions

Net revenues for the Securities Processing Solutions segment decreased 4.3% compared to the third quarter of fiscal year 2007, to $129.0 million in the third quarter of fiscal year 2008. The decrease was primarily related to the client loss, partially offset by sales. Operating margin decreased 5.2 percentage points compared to the third quarter of fiscal year 2007 as a result of the client loss in fiscal year 2007 and higher expenses associated with incremental investments.