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8-K - 8-K - SS&C Technologies Holdings Incd435484d8k.htm

Exhibit 99.1

 

LOGO

Adjusted diluted earnings per share of $0.39, up 39.3%, GAAP diluted earnings per share of $0.21, up 16.7%

WINDSOR, CT, November 5, 2012 (GLOBE NEWSWIRE) – SS&C Technologies Holdings, Inc. (NASDAQ: SSNC), a global provider of investment and financial software-enabled services and software, today announced its financial results for the quarter that ended September 30, 2012.

“I am delighted to report that our third quarter adjusted revenue of $166.0 million rose 76 percent year-over-year,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “We continue to use our operating cash flow to strengthen our overall service and product offerings. Our clients are very demanding and our depth and breadth of products and services continue to expand to meet their needs. We have acquired PORTIA, GlobeOp, Gravity and Hedgemetrix this year which expands our geographic footprint, deepens our expertise and adds materially to our service and product offering. Since acquiring GlobeOp, as of today, we have paid down $96.6 million in debt. SS&C was named to the Forbes ‘100 Best Small Companies’ 2012 list. Recognition by a prestigious business publication such as Forbes is always an honor and speaks to the dedication and capability of our 4100 personnel.”

“Hurricane Sandy shows why a business continuity plan is critical for organizations to have in place,” commented Stone. “Our superior cloud architecture and geographically dispersed data centers, together with our dedicated staff, allowed our customers uninterrupted service.”

Results

The Company reported GAAP revenue of $165.6 million for the third quarter of 2012, compared to $94.3 million in the third quarter of 2011. GAAP operating income for the third quarter of 2012 was $37.2 million, or 22.5 percent of revenue, up from $24.1 million in 2011’s third quarter. GAAP net income for the third quarter of 2012 was $17.6 million compared to net income of $14.9 million in the third quarter of 2011. On a GAAP fully diluted basis, earnings per share in the third quarter of 2012 was $0.21 compared to fully diluted earnings per share of $0.18 in the third quarter of 2011.

Adjusted revenue (a non-GAAP measure defined in note 1 to the attached Condensed Consolidated Financial Information) in the third quarter of 2012 was $166.0 million compared to $94.3 million in the third quarter of 2011, an increase of 76.0 percent. Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the third quarter of 2012 was $61.8 million, or 37.2 percent of adjusted revenue. This represents a 64.1 percent increase compared to adjusted operating income of $37.6 million and 39.9 percent of adjusted revenue in the third quarter of 2011. Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the third quarter of 2012 was $32.1 million compared to $22.6 million in 2011’s third quarter, an increase of 41.8 percent. Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the third quarter of 2012 was $0.39 per share compared to $0.28 per share in the third quarter of 2011, an increase of 39.3 percent.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $151.1 million for the third quarter of 2012, an annual run-rate of $604.5 million. This represents an increase of 82.4 percent from $82.8 million and $331.4 million run-rate in the same period in 2011 and an increase of 40.1 percent from Q2 2012’s $107.9 million and $431.5 million run-rate. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.

Operating Cash Flow

SS&C ended the quarter with $80.3 million in cash, and $1,070.8 million in debt for a net debt balance of $990.5 million. We generated net cash from operating activities, after $28.6 million in non-recurring acquisition expenses, of $60.7 million for the nine months ended September 30, 2012, compared to $71.6 million for the same period in 2011.


Guidance

Guidance

  Q4 2012   FY 2012

Adjusted Revenue ($M)

  $170.0 - $174.0   $550.9 - $554.9

Adjusted Net Income ($M)

  $32.7 - $33.7   $115.2 - $116.2

Cash from Operating Activities ($M)

  N/A   $109.0 - $113.0

Capital Expenditures (% of revenue)

  N/A   2.9% - 3.1%

Regulatory Solutions Group Formed

The SS&C GlobeOp division announced the formation of a Regulatory Solutions Group to focus on Form PF (Private Fund) and FATCA (Foreign Account Tax Compliance Act), AFMID (Alternative Investment Fund Managers Directive), and other compliance and reporting rules. Michael Megaw, a New York-based Managing Director, will head up this new group.

Non-GAAP Financial Measures

Adjusted revenue, adjusted operating income, adjusted consolidated EBITDA, adjusted net income and adjusted diluted earnings per share are non-GAAP measures. See the accompanying notes to the attached Condensed Consolidated Financial Information for the reconciliations and definitions for each of these non-GAAP measures and the reasons our management believes these measures provide useful information to investors regarding our financial condition and results of operations.

Earnings Call and Press Release

SS&C’s Q3 earnings call will take place at 5:00 p.m. eastern time today, November 5, 2012. The call will discuss Q3 2012 results and our guidance and business outlook. Interested parties may dial 877-312-8798 (U.S. and Canada) or 253-237-1193 (International) and request the “SS&C Technologies 2012 Third Quarter Earnings Conference Call,” conference ID # 38660479. A replay will be available after 8:00 p.m. eastern time on November 5, 2012, until midnight on November 12, 2012. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code # 38660479. The call will also be available for replay on SS&C’s website after November 5, 2012; access: http://investor.ssctech.com/results.cfm.

This press release contains forward-looking statements relating to, among other things, our financial guidance for the fourth quarter of 2012. Such statements reflect management’s best judgment based on factors currently known but are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, the state of the economy and the financial services industry, the Company’s ability to finalize large client contracts, fluctuations in customer demand for the Company’s products and services, intensity of competition from application vendors, delays in product development, the Company’s ability to control expenses, terrorist activities, exposure to litigation, the Company’s ability to integrate acquired businesses, the effect of the acquisitions on customer demand for the Company’s products and services, and those risks described in the Company’s publicly available filings with the Securities and Exchange Commission. The Company cautions investors that it may not update any or all of the foregoing forward-looking statements.

About SS&C Technologies

SS&C is a global provider of investment and financial software-enabled services and software focused exclusively on the global financial services industry. Founded in 1986, SS&C has its headquarters in Windsor, Connecticut and offices around the world. Some 5,500 financial services organizations, from the world’s largest institutions to local firms, manage and account for their investments using SS&C’s products and services. These clients in the aggregate manage over $26 trillion in assets.

Follow SS&C on Twitter, Linkedin and Facebook. The SS&C Technologies logo is available at

www.globenewswire.com/newsroom/prs/?pkgid=8587

For more information

Patrick Pedonti Chief Financial Officer Tel: +1-860-298-4738

E-mail: InvestorRelations@sscinc.com


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operation

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,     September 30,     September 30,  
     2012     2011     2012     2011  

Revenues:

        

Software licenses

   $ 5,885      $ 5,786      $ 15,463      $ 17,341   

Maintenance

     25,519        19,594        67,993        58,459   

Professional services

     8,553        5,688        21,562        16,815   

Software-enabled services

     125,605        63,255        275,069        182,518   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     165,562        94,323        380,087        275,133   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Software licenses

     1,764        1,714        4,609        5,089   

Maintenance

     10,883        8,729        29,338        26,196   

Professional services

     5,126        3,888        13,803        11,439   

Software-enabled services

     75,965        32,148        155,940        93,887   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     93,738        46,479        203,690        136,611   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     71,824        47,844        176,397        138,522   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     8,970        7,308        24,628        21,216   

Research and development

     13,193        9,328        32,478        26,353   

General and administrative

     11,668        7,118        24,527        20,861   

Transaction costs

     748        —          14,322        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     34,579        23,754        95,955        68,430   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     37,245        24,090        80,442        70,092   

Interest expense, net

     (13,726     (3,215     (18,760     (11,816

Other (expense) income, net

     (1,808     348        (16,225     180   

Loss on extinguishment of debt

     —          —          (4,355     (2,881
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     21,711        21,223        41,102        55,575   

Provision for income taxes

     4,096        6,324        11,364        17,814   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 17,615      $ 14,899      $ 29,738      $ 37,761   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.22      $ 0.19      $ 0.38      $ 0.50   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average number of common shares outstanding

     78,548        77,315        78,123        76,149   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.21      $ 0.18      $ 0.36      $ 0.47   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

     83,202        80,730        82,744        80,109   
  

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     September 30,
2012
     December 31,
2011
 

ASSETS

     

Current assets:

     

Cash

   $ 80,255       $ 40,318   

Accounts receivable, net

     91,898         47,201   

Prepaid income taxes

     17,114         788   

Deferred income taxes

     5,327         889   

Prepaid expenses and other current assets

     11,598         5,214   

Restricted cash

     2,460         1,149   
  

 

 

    

 

 

 

Total current assets

     208,652         95,559   

Property and equipment, net

     51,054         14,304   

Deferred income taxes

     3,884         1,111   

Goodwill

     1,531,009         931,639   

Intangible and other assets, net

     586,664         164,995   
  

 

 

    

 

 

 

Total assets

   $ 2,381,263       $ 1,207,608   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current portion of long-term debt

   $ 23,406       $ —     

Accounts payable

     6,947         4,170   

Accrued employee compensation and benefits

     32,317         19,770   

Other accrued expenses

     22,518         14,058   

Interest payable

     —           95   

Deferred maintenance and other revenue

     55,975         46,395   
  

 

 

    

 

 

 

Total current liabilities

     141,163         84,488   

Long-term debt, net of current portion

     1,047,392         100,000   

Other long-term liabilities

     16,223         14,081   

Deferred income taxes

     119,539         28,936   
  

 

 

    

 

 

 

Total liabilities

     1,324,317         227,505   

Total stockholders’ equity

     1,056,946         980,103   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 2,381,263       $ 1,207,608   
  

 

 

    

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

     Nine Months Ended  
     September 30,
2012
    September 30,
2011
 

Cash flow from operating activities:

    

Net income

   $ 29,738      $ 37,761   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     50,620        31,482   

Stock-based compensation expense

     3,798        9,215   

Income tax benefit related to exercise of stock options

     (2,863     (4,889

Amortization of loan origination costs and original issue discount

     7,814        2,223   

Loss on sale or disposition of property and equipment

     13        11   

Deferred income taxes

     (7,723     (8,781

Provision for doubtful accounts

     473        788   

Changes in operating assets and liabilities, excluding effects from acquisitions:

    

Accounts receivable

     (14,652     581   

Prepaid expenses and other assets

     8,873        (188

Accounts payable

     (2,240     (535

Accrued expenses

     (5,420     (1,168

Income taxes receivable and payable

     (4,333     2,460   

Deferred maintenance and other revenues

     (3,432     2,619   
  

 

 

   

 

 

 

Net cash provided by operating activities

     60,666        71,579   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Additions to property and equipment

     (8,839     (4,437

Cash paid for business acquisitions, net of cash acquired

     (964,523     (19,863

Additions to capitalized software

     (640     (1,264

Other

     87        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (973,915     (25,564
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Cash received from debt borrowings, net of costs

     1,304,210        —     

Repayment of debt

     (366,600     (118,210

Proceeds from common stock issuance, net

     —          51,971   

Proceeds from exercise of stock options

     12,325        7,034   

Payment of contingent consideration

     (1,800     —     

Income tax benefit related to exercise of stock options

     2,863        4,889   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     950,998        (54,316
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     2,188        (367
  

 

 

   

 

 

 

Net increase (decrease) in cash

     39,937        (8,668

Cash, beginning of period

     40,318        84,843   
  

 

 

   

 

 

 

Cash, end of period

   $ 80,255      $ 76,175   
  

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Information

Note 1. Reconciliation of Revenue to Adjusted Revenue

Adjusted revenue represents revenue adjusted for one-time purchase accounting adjustments to fair value deferred revenue acquired in business combinations. Adjusted revenue is presented because we use this measure to evaluate performance of our business against prior periods and believe it is a useful indicator of the underlying performance of the Company. Adjusted revenue is not a recognized term under generally accepted accounting principles (GAAP). Adjusted revenue does not represent revenue, as that term is defined under GAAP, and should not be considered as an alternative to revenue as an indicator of our operating performance. Adjusted revenue as presented herein is not necessarily comparable to similarly titled measures. The following is a reconciliation between adjusted revenue and revenue, the GAAP measure we believe to be most directly comparable to adjusted revenue.

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
(in thousands)    2012      2011      2012      2011  

Revenue

   $ 165,562       $ 94,323       $ 380,087       $ 275,133   

Purchase accounting adjustments to deferred revenue

     465         7         816         20   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted revenue

   $ 166,027       $ 94,330       $ 380,903       $ 275,153   
  

 

 

    

 

 

    

 

 

    

 

 

 

Note 2. Reconciliation of Operating Income to Adjusted Operating Income

Adjusted operating income represents operating income adjusted for amortization of acquisition-related intangible assets and purchase accounting adjustments for deferred revenue and other expenses. Adjusted operating income is presented because we use this measure to evaluate performance of our business and believe it is a useful indicator of the underlying performance of the Company. Adjusted operating income is not a recognized term under GAAP. Adjusted operating income does not represent operating income, as that term is defined under GAAP, and should not be considered as an alternative to operating income as an indicator of our operating performance. Adjusted operating income as presented herein is not necessarily comparable to similarly titled measures. The following is a reconciliation between adjusted operating income and operating income, the GAAP measure we believe to be most directly comparable to adjusted operating income.

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands)    2012     2011     2012     2011  

Operating income

   $ 37,245      $ 24,090      $ 80,442      $ 70,092   

Amortization of intangible assets

     21,325        9,295        43,745        27,408   

Stock-based compensation

     1,386        3,780        3,798        9,215   

Capital-based taxes

     (20     —          (785     154   

Unusual or non-recurring charges

     1,416        579        15,791        1,069   

Purchase accounting adjustments

     413        (104     661        (308

Other

     —          —          —          (30
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating income

   $ 61,765      $ 37,640      $ 143,652      $ 107,600   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note 3. Reconciliation of Net Income to EBITDA, Consolidated EBITDA and Adjusted Consolidated EBITDA

EBITDA represents net income before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA, defined under our Credit Agreement entered into in March 2012, is used in calculating covenant compliance, and is EBITDA adjusted for certain items. Consolidated EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described below. Adjusted consolidated EBITDA is calculated by subtracting acquired EBITDA from consolidated EBITDA. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are presented because we use these measures to evaluate performance of our business and believe them to be useful indicators of an entity’s debt capacity and its ability to service debt. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are not recognized terms under GAAP and should not be considered in isolation or as alternatives to operating income, net income or cash flows from operating activities. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA do not represent net income, as that term is defined under GAAP, and should not be considered as alternatives to net income as an indicator of our operating performance. The following is a reconciliation between EBITDA, consolidated EBITDA and adjusted consolidated EBITDA and net income.


     Three Months Ended
September 30,
    Nine Months Ended
September 30,
    Twelve  Months
Ended

September 30,
2012
 
(in thousands)    2012     2011     2012     2011    

Net income

   $ 17,615      $ 14,899      $ 29,738      $ 37,761      $ 42,998   

Interest expense, net

     13,726        3,215        23,115        14,697        27,833   

Taxes

     4,096        6,324        11,364        17,814        16,468   

Depreciation and amortization

     24,735        10,492        50,620        31,482        61,362   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     60,172        34,930        114,837        101,754        148,661   

Stock-based compensation

     1,386        3,780        3,798        9,215        8,076   

Capital-based taxes

     (20     —          (785     154        (585

Acquired EBITDA and cost savings

     333        156        34,841        1,192        58,647   

Unusual or non-recurring charges

     3,223        231        32,016        890        33,481   

Purchase accounting adjustments

     413        (104     661        (308     596   

Other

     (50     (122     (141     (36     (288
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

     65,457        38,871        185,227        112,861        248,588   

Less: acquired EBITDA

     (333     (156     (34,841     (1,192     (58,647
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated EBITDA

   $ 65,124      $ 38,715      $ 150,386      $ 111,669      $ 189,941   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note 4. Reconciliation of Net Income to Adjusted Net Income and Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share

Adjusted net income and adjusted diluted earnings per share represent net income and earnings per share before amortization of intangible assets and deferred financing costs, stock-based compensation, capital-based taxes and other unusual and non-recurring items. Adjusted net income and adjusted diluted earnings per share are not recognized terms under GAAP, do not represent net income or diluted earnings per share, as those terms are defined under GAAP, and should not be considered as alternatives to net income or diluted earnings per share as indicators of our operating performance. Adjusted net income and adjusted diluted earnings per share are important to management and investors because they represent our operational performance exclusive of the effects of amortization of intangible assets and deferred financing costs, stock-based compensation, capital-based taxes and other unusual and non-recurring items that are not operational in nature or comparable to those of our competitors. The following is a reconciliation between adjusted net income and adjusted diluted earnings per share and net income and diluted earnings per share.

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands, except per share data)    2012     2011     2012     2011  

GAAP – Net income

   $ 17,615      $ 14,899      $ 29,738      $ 37,761   

Plus: Amortization of intangible assets

     21,325        9,295        43,745        27,408   

Plus: Amortization of deferred financing costs and original issue discount

     1,370        414        1,959        1,300   

Plus: Stock-based compensation

     1,386        3,780        3,798        9,215   

Plus: Capital-based taxes

     (20     —          (785     154   

Plus: Unusual and non-recurring items

     3,223        231        32,016        890   

Plus: Loss on extinguishment of debt

     —          —          4,355        2,881   

Plus: Purchase accounting adjustments

     413        (104     661        (308

Plus: Other

     —          —          —          (30

Income tax effect (1)

     (13,197     (5,870     (33,034     (16,166
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 32,115      $ 22,645      $ 82,453      $ 63,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.39      $ 0.28      $ 1.00      $ 0.79   

GAAP diluted earnings per share

   $ 0.21      $ 0.18      $ 0.36      $ 0.47   

Diluted weighted-average shares outstanding

     83,202        80,730        82,744        80,109   

(1) An estimated normalized effective tax rate of 35% has been used to adjust the provision for income taxes for the purposes of computing adjusted net income.