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8-K - FORM 8-K - SS&C Technologies Holdings Incd487258d8k.htm

Exhibit 99.1

 

LOGO

GAAP diluted earnings per share of $0.19, up 18.8%, Adjusted diluted earnings per share of $0.42, up 44.8%

WINDSOR, CT, February 14, 2013 (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 fourth quarter and full year ended December 31, 2012.

Financial Highlights:

 

   

Revenue increased 79.5% to $171.8 million in fourth quarter 2012 and 48.8% to $551.8 million for the full year 2012.

 

   

GAAP net income increased 21.3% to $16.1 million in fourth quarter 2012 and diluted EPS for fourth quarter 2012 rose 18.8% to $0.19.

 

   

Adjusted net income grew 49.8% to $35.0 million for fourth quarter 2012 and adjusted diluted EPS (defined below) rose 44.8% to $0.42 in the same period.

 

   

Adjusted consolidated EBITDA (defined below) increased 77.2% to $70.1 million in fourth quarter 2012. For full year 2012, adjusted consolidated EBITDA increased 45.8% to $220.5 million.

 

   

SS&C’s Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $157.2 million for the fourth quarter of 2012, an annual run-rate of $628.7 million. This represents an increase of 88.7% from $83.3 million and $333.2 million run-rate for the same period in 2011.

“We are pleased with the progress we have made integrating our GlobeOp and PORTIA acquisitions. Our technological capabilities combined with our global operations and accounting expertise is proving to be a winner,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies. “Our innovative cloud-based services continue to be a strategic focus. We are well into our fourth release of our portals and mobility apps and we have begun to roll out a new analytics solution. The power of this solution is its ability to gather accounting and operational information our clients need to make the best possible decision on their data – every time, in real-time. We are branding these integrated capabilities SS&C Investment Intelligence. We believe SS&C Investment Intelligence complements the investment process and leverages our client’s investment intelligence. SS&C’s independence, transparency and focus are driving larger opportunities and leading to increased revenues and profit margins. Further we have reduced our leverage from 4.2x at the close of our GlobeOp acquisition to 3.7x at the end of December.”

Results

SS&C reported GAAP revenue of $171.8 million for the fourth quarter of 2012, up 79.5 percent compared to $95.7 million in the fourth quarter of 2011. Revenue for the year ended December 31, 2012 was $551.8 million, up 48.8 percent over $370.8 million in 2011. GAAP operating income for the fourth quarter of 2012 was $42.8 million, up 80.6 percent from $23.7 million in 2011’s fourth quarter. GAAP operating income for the year ended December 31, 2012 was $123.2 million, up 31.4 percent from $93.8 million for 2011.

GAAP net income for the fourth quarter of 2012 was $16.1 million compared to net income of $13.3 million in the fourth quarter of 2011, an increase of 21.3 percent. GAAP net income for the year ended December 31, 2012 was $45.8 million, or 8.3 percent of revenue, compared to $51.0 million, or 13.8 percent of revenue, in 2011. On a fully diluted GAAP basis, earnings per share in the fourth quarter of 2012 was $0.19 compared to fully diluted GAAP earnings per share of $0.16 in the fourth quarter of 2011, an increase of 18.8 percent. On a fully diluted basis, GAAP earnings per share for the year ended December 31, 2012, was $0.55, a 12.7 percent decrease over 2011’s $0.63 per share.


Adjusted revenue (a non-GAAP measure defined in note 1 to the attached Condensed Consolidated Financial Information) in the fourth quarter of 2012 was $172.0 million, up 79.8 percent compared to $95.7 million in the fourth quarter of 2011. Adjusted revenue for the year ended December 31, 2012 was $552.9 million, up 49.1 percent over $370.9 million for 2011. Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the fourth quarter of 2012 was $66.1 million, or 38.4 percent of adjusted revenue. This represents a 72.3 percent increase compared to adjusted operating income of $38.4 million and 40.1 percent of adjusted revenue in the fourth quarter of 2011. Adjusted operating income for the year ended December 31, 2012 was $209.8 million, up 43.7 percent from adjusted operating income of $146.0 million in 2011.

Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the fourth quarter of 2012 was $35.0 million, up 49.8 percent compared to $23.3 million in 2011’s fourth quarter. Adjusted net income for the year ended December 31, 2012 was $117.4 million, up 35.8 percent compared to $86.5 million for 2011. Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the fourth quarter of 2012 was $0.42 per share, up 44.8 percent compared to $0.29 per share in the fourth quarter of 2011. Adjusted diluted earnings per share for the year ended December 31, 2012 was $1.42, up 32.7 percent compared to $1.07 for 2011.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the sum of maintenance and software-enabled services revenue on an annualized basis, was $628.7 million based on maintenance and software-enabled services revenue of $157.2 million for the fourth quarter of 2012. This represents an increase of 88.7 percent from $83.3 million and $333.2 million run-rate in the same period in 2011 and an increase of 4.0 percent from $151.1 million for the third quarter of 2012, an annual run rate of $604.5 million. 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 $86.2 million in cash, and $1,021.0 million in gross debt for a net debt balance of $934.8 million. SS&C generated net cash from operating activities of $134.4 million for the year ended December 31, 2012, compared to $110.4 million for the same period in 2011, an increase of 21.8 percent.

Guidance

 

     Q1 2013   FY 2013

Adjusted Revenue ($M)

   $171.0 -$175.0   $710.0 -$720.0  

Adjusted Net Income ($M)

   $35.5 - $36.8   $152.0 -$156.0 

Cash from Operating Activities ($M)

   N/A   $168.0 - $175.0  

Capital Expenditures (% of revenue)

   N/A   2.4% - 2.8%

Diluted Shares (M)

   83.8 – 84.2   84.8 – 85.3

Effective Income Tax Rate (%)

   30%   30%

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 Q4 and Full Year 2012 earnings call will take place at 5:00 p.m. eastern time today, February 14, 2013. The call will discuss Q4 and Full Year 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 Fourth Quarter and 2012 Earnings Conference Call,” conference ID # 88030505. A replay will be available after 8:00 p.m. eastern time on February 14, 2013, until midnight on February 21, 2013. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code # 88030505. The call will also be available for replay on SS&C’s website after February 14, 2013; access: http://investor.ssctech.com/results.cfm.

This press release contains forward-looking statements relating to, among other things, our financial guidance for the first quarter and full year for 2013. 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)

 

     Three Months Ended     Year Ended  
     December 31,
2012
    December 31,
2011
    December 31,
2012
    December 31,
2011
 

Revenues:

        

Software-enabled services

   $ 131,408      $ 63,489      $ 406,477      $ 246,007   

Software licenses

     7,003        6,166        22,466        23,507   

Maintenance

     25,767        19,807        93,760        78,266   

Professional services

     7,577        6,233        29,139        23,048   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     171,755        95,695        551,842        370,828   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Software-enabled services

     78,274        33,034        234,214        126,921   

Software licenses

     1,727        1,736        6,336        6,825   

Maintenance

     11,056        8,797        40,394        34,993   

Professional services

     5,170        4,110        18,973        15,549   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     96,227        47,677        299,917        184,288   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     75,528        48,018        251,925        186,540   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     9,230        7,676        33,858        28,892   

Research and development

     13,301        9,297        45,779        35,650   

General and administrative

     10,270        7,360        34,797        28,221   

Transaction costs

     (47     —          14,275        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     32,754        24,333        128,709        92,763   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     42,774        23,685        123,216        93,777   

Interest expense, net

     (13,741     (2,812     (32,501     (14,628

Other (expense) income, net

     350        (603     (15,875     (423

Loss on extinguishment of debt

     —          (1,906     (4,355     (4,787
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     29,383        18,364        70,485        73,939   

Provision for income taxes

     13,301        5,104        24,665        22,918   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 16,082      $ 13,260      $ 45,820      $ 51,021   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.20      $ 0.17      $ 0.59      $ 0.67   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average number of common shares outstanding

     78,912        77,470        78,321        76,482   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.19      $ 0.16      $ 0.55      $ 0.63   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

     83,354        81,194     

 

82,888

  

    80,709   
  

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

 

     December 31,
2012
     December 31,
2011
 

ASSETS

     

Current assets:

     

Cash

   $ 86,160       $ 40,318   

Accounts receivable, net

     91,690         47,201   

Prepaid income taxes

     9,651         788   

Deferred income taxes

     5,408         889   

Prepaid expenses and other current assets

     11,548         5,214   

Restricted cash

     2,460         1,149   
  

 

 

    

 

 

 

Total current assets

     206,917         95,559   

Property and equipment, net

     55,039         14,304   

Deferred income taxes

     1,459         1,111   

Goodwill

     1,566,607         931,639   

Intangible and other assets, net

     532,883         164,995   
  

 

 

    

 

 

 

Total assets

   $ 2,362,905       $ 1,207,608   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current portion of long-term debt

   $ 22,248       $ —     

Accounts payable

     10,528         4,170   

Income taxes payable

     1,314         —     

Accrued employee compensation and benefits

     39,812         19,770   

Other accrued expenses

     22,650         14,058   

Interest payable

     —           95   

Deferred maintenance and other revenue

     63,700         46,395   
  

 

 

    

 

 

 

Total current liabilities

     160,252         84,488   

Long-term debt, net of current portion

     989,890         100,000   

Other long-term liabilities

     17,102         14,081   

Deferred income taxes

     120,158         28,936   
  

 

 

    

 

 

 

Total liabilities

     1,287,402         227,505   

Total stockholders’ equity

     1,075,503         980,103   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 2,362,905       $ 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)

 

     Year Ended  
     December 31,
2012
    December 31,
2011
 

Cash flow from operating activities:

    

Net income

   $ 45,820      $ 51,021   

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

    

Depreciation and amortization

     75,814        42,224   

Stock-based compensation expense

     5,590        13,493   

Income tax benefit related to exercise of stock options

     (3,531     (4,934

Amortization of loan origination costs and original issue discount

     9,215        4,485   

Loss on sale or disposition of property and equipment

     13        11   

Deferred income taxes

     (6,350     (12,423

Provision for doubtful accounts

     413        802   

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

    

Accounts receivable

     (14,051     (1,818

Prepaid expenses and other assets

     7,579        (324

Accounts payable

     1,835        278   

Accrued expenses

     3,015        4,076   

Income taxes receivable and payable

     5,039        9,115   

Deferred maintenance and other revenues

     4,021        4,401   
  

 

 

   

 

 

 

Net cash provided by operating activities

     134,422        110,407   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Additions to property and equipment

     (17,187     (6,222

Proceeds from sale of property and equipment

     374        —     

Cash paid for business acquisitions, net of cash acquired

Additions to capitalized software

    

 

(967,149

(1,105


   

 

(20,577

(1,406


Other

     87        (1,149
  

 

 

   

 

 

 

Net cash used in investing activities

     (984,980     (29,354
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Cash received from debt borrowings, net of costs

     1,304,037        100,000   

Repayment of debt

     (425,600     (291,051

Proceeds from common stock issuance, net

     —          51,971   

Proceeds from exercise of stock options

     14,354        8,788   

Payment of contingent consideration

     (1,800     —     

Income tax benefit related to exercise of stock options

     3,531        4,934   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     894,522        (125,358
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     1,877        (220
  

 

 

   

 

 

 

Net increase (decrease) in cash

     45,841        (44,525

Cash, beginning of period

     40,318        84,843   
  

 

 

   

 

 

 

Cash, end of period

   $ 86,159      $ 40,318   
  

 

 

   

 

 

 

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
December 31,
     Year Ended December 31,  
(in thousands)    2012      2011      2012      2011  

Revenue

   $ 171,755       $ 95,695       $ 551,842       $ 370,828   

Purchase accounting adjustments to deferred revenue

     285         7         1,100         27   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted revenue

   $ 172,040       $ 95,702       $ 552,942       $ 370,855   
  

 

 

    

 

 

    

 

 

    

 

 

 

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
December 31,
    Year Ended December 31,  
(in thousands)    2012     2011     2012     2011  

Operating income

   $ 42,774      $ 23,685      $ 123,216      $ 93,777   

Amortization of intangible assets

     21,373        9,418        65,118        36,826   

Stock-based compensation

     1,792        4,278        5,590        13,493   

Capital-based taxes

     —          200        (785     354   

Unusual or non-recurring charges

     (37     863        15,754        1,932   

Purchase accounting adjustments

     233        (65     894        (373

Other

     —          —          —          (30
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating income

   $ 66,135      $ 38,379      $ 209,787      $ 145,979   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 as indicators of our operating performance. The following is a reconciliation between EBITDA, consolidated EBITDA and adjusted consolidated EBITDA and net income.


     Three Months Ended
December 31,
    Year Ended
December 31,
 
(in thousands)    2012     2011     2012     2011  

Net income

   $ 16,082      $ 13,260      $ 45,820      $ 51,021   

Interest expense, net

     13,741        4,718        36,856        19,415   

Taxes

     13,301        5,104        24,665        22,918   

Depreciation and amortization

     25,194        10,742        75,814        42,224   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     68,318        33,824        183,155        135,578   

Stock-based compensation

     1,792        4,278        5,590        13,493   

Capital-based taxes

     —          200        (785     354   

Acquired EBITDA and cost savings

     40        —          35,531        1,192   

Unusual or non-recurring charges

     (387     1,465        31,629        2,355   

Purchase accounting adjustments

     233        (65     894        (373

Other

     124        (147     (17     (183
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

     70,120        39,555        255,997        152,416   

Less: acquired EBITDA

     (40     —          (35,531     (1,192
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated EBITDA

   $ 70,080      $ 39,555      $ 220,466      $ 151,224   
  

 

 

   

 

 

   

 

 

   

 

 

 

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
December 31,
    Year Ended
December 31,
 
(in thousands, except per share data)    2012     2011     2012     2011  

GAAP – Net income

   $ 16,082      $ 13,260      $ 45,820      $ 51,021   

Plus: Amortization of intangible assets

     21,373        9,418        65,118        36,826   

Plus: Amortization of deferred financing costs and original issue discount

     1,401        356        3,360        1,656   

Plus: Stock-based compensation

     1,792        4,278        5,590        13,493   

Plus: Capital-based taxes

     —          200        (785     354   

Plus: Unusual and non-recurring items

     (387     1,465        31,629        2,355   

Plus: Loss on extinguishment of debt

     —          1,906        4,355        4,787   

Plus: Purchase accounting adjustments

     233        (65     894        (373

Plus: Other

     —          —          —          (30

Income tax effect (1)

     (5,527     (7,469     (38,561     (23,635
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 34,967      $ 23,349      $ 117,420      $ 86,454   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.42      $ 0.29      $ 1.42      $ 1.07   

GAAP diluted earnings per share

   $ 0.19      $ 0.16      $ 0.55      $ 0.63   

Diluted weighted-average shares outstanding

     83,354        81,194        82,888        80,709   

 

(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.