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8-K - FORM 8-K - SS&C Technologies Holdings Incc20897e8vk.htm
Exhibit 99.1
(SS&C LOGO)
For Immediate Release
Contact:
Patrick Pedonti
Chief Financial Officer
Tel: +1-860-298-4738
E-mail: investorrelations@sscinc.com
SS&C Technologies Results for Q2 2011, Record Revenue of $92 Million
GAAP Net Income of $13.0 million, up 199%, Adjusted Net Income of $21.3 million, up 31.8%
WINDSOR, CT — August 3, 2011 — 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 ended June 30, 2011.
“I am pleased to report that our second quarter revenue of $91.8 million rose 12.5 percent year-over-year,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “For the six months ended June 30, 2011, we had strong cash flow from operations of $41.1 million, up 75 percent from $23.4 million for the same period in 2010.”
Results
The Company reported quarterly revenue of $91.8 million for the second quarter of 2011, compared to $81.6 million in the second quarter of 2010, an increase of 12.5 percent.
GAAP operating income for the second quarter of 2011 was $22.9 million, or 24.9 percent of revenue. This represents a 15.7 percent increase compared to GAAP operating income of 19.8 million and 24.2 percent of revenue in the second quarter of 2010. GAAP net income for the second quarter of 2011 was $13.0 million compared to $4.4 million in the second quarter of 2010, an increase of 199 percent.
On a fully diluted GAAP basis, earnings per diluted share in the second quarter of 2011 were up 167 percent to $0.16 compared with $0.06 in the second quarter of 2010.
Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the second quarter of 2011 was $35.8 million, or 39.0 percent of adjusted revenue. This represents a 10.7 percent increase compared to adjusted operating income of $32.4 million and 39.6 percent of adjusted revenue in the second quarter of 2010.
Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the second quarter of 2011 was $21.3 million compared to $16.2 million in 2010’s second quarter, a 31.8 percent increase.
Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the second quarter of 2011 were $0.26 compared to $0.22 in the second quarter of 2010, an increase of 18 percent.
Annual Run Rate Basis
Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $81.0 million for the second quarter of 2011, an annual run-rate of $323.8 million. This represents an increase of 14.9 percent from $70.4 million and $281.8 million run-rate in the same period in 2010 and an increase of 4.9 percent from Q1 2011’s $77.2 million and $308.7 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 $82.6 million in cash and cash equivalents, and $203.7 million in debt for a net debt balance of $121.1 million. We generated net cash from operating activities of $41.1 million for the six months ended June 30, 2011, compared to $23.4 million for the same period in 2010.
Guidance
SS&C announces the following financial guidance for the third quarter and fiscal year 2011:
         
Guidance   Q3 2011   FY 2011
Total Revenue ($M)
  $93.5 - $95.0   $369.0 - $373.0
Adjusted Net Income ($M)
  $21.6 - $22.1   $84.0 - $85.2
Cash from Operating Activities ($M)
  N/A   $84.0 -$87.0
Capital Expenditures (% of revenue)
  N/A   2.1% - 2.3%
Results of SS&C Technologies, Inc.
Our operating subsidiary, SS&C Technologies, Inc., posted the same revenues and net income for the second quarter of 2011 as the Company.
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 Q2 earnings call will take place at 5:00 p.m. eastern time today, August 3, 2011. The call will discuss Q2 2011 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 2011 Second Quarter Earnings Conference Call,” conference ID # 84807039. A replay will be available after 8:00 p.m. eastern time on August 3, 2011, until midnight on August 10, 2011. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code # 84807039. The call will also be available for replay on SS&C’s website after August 10, 2011; access: http://investor.ssctech.com/results.cfm.
This press release contains forward-looking statements relating to, among other things, our financial guidance for the third quarter of 2011 and full year 2011. 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, 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
Celebrating its 25th year, 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. 5,000 financial services organizations, from the world’s largest to local financial services organizations, manage and account for their investments using SS&C’s products and services. These clients in the aggregate manage over $16 trillion in assets.
Additional information about SS&C (NASDAQ: SSNC) is available at www.ssctech.com.
Follow SS&C on Twitter, Linkedin and Facebook.

 

 


 

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operation
(in thousands, except per share data)
(unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2011     2010     2011     2010  
Revenues:
                               
Software licenses
  $ 4,982     $ 6,074     $ 11,555     $ 11,663  
Maintenance
    19,418       17,817       38,865       35,836  
Professional services
    5,860       5,099       11,127       10,488  
Software-enabled services
    61,543       52,628       119,263       101,805  
 
                       
Total revenues
    91,803       81,618       180,810       159,792  
 
                       
 
                               
Cost of revenues:
                               
Software licenses
    1,700       1,908       3,375       3,836  
Maintenance
    8,801       8,084       17,467       16,081  
Professional services
    3,981       3,260       7,551       6,618  
Software-enabled services
    31,155       27,688       61,739       53,567  
 
                       
Total cost of revenues
    45,637       40,940       90,132       80,102  
 
                       
 
                               
Gross profit
    46,166       40,678       90,678       79,690  
 
                       
 
                               
Operating expenses:
                               
Selling and marketing
    7,018       6,483       13,908       12,635  
Research and development
    9,053       7,860       17,025       15,619  
General and administrative
    7,200       6,546       13,743       12,226  
 
                       
Total operating expenses
    23,271       20,889       44,676       40,480  
 
                       
 
                               
Operating income
    22,895       19,789       46,002       39,210  
 
                               
Interest expense, net
    (3,474 )     (8,058 )     (8,601 )     (17,075 )
Other income (expense), net
    119       115       (168 )      
Loss on extinguishment of debt
          (5,480 )     (2,881 )     (5,480 )
 
                       
 
                               
Income before income taxes
    19,540       6,366       34,352       16,655  
Provision for income taxes
    6,512       2,004       11,490       3,272  
 
                       
 
                               
Net income
  $ 13,028     $ 4,362     $ 22,862     $ 13,383  
 
                       
 
                               
Basic earnings per share
  $ 0.17     $ 0.06     $ 0.30     $ 0.20  
 
                       
 
                               
Basic weighted average number of common shares outstanding
    76,724       70,960       75,556       65,900  
 
                       
 
                               
Diluted earnings per share
  $ 0.16     $ 0.06     $ 0.29     $ 0.19  
 
                       
 
                               
Diluted weighted average number of common and common equivalent shares outstanding
    80,800       74,538       79,756       69,424  
 
                       
See Notes to Condensed Consolidated Financial Information.

 

 


 

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                 
    June 30,     December 31,  
    2011     2010  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 82,642     $ 84,843  
Accounts receivable, net
    44,728       45,531  
Prepaid income taxes
    8,522       2,242  
Deferred income taxes
    1,268       1,142  
Prepaid expenses and other current assets
    6,622       5,932  
 
           
Total current assets
    143,782       139,690  
 
               
Property and equipment, net
    13,964       13,570  
 
               
Deferred income taxes
    660       686  
Goodwill
    945,079       926,668  
Intangible and other assets, net
    182,750       195,112  
 
           
 
               
Total assets
  $ 1,286,235     $ 1,275,726  
 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Current portion of long-term debt
  $ 1,471     $ 1,702  
Accounts payable
    4,201       3,790  
Accrued employee compensation and benefits
    9,010       16,854  
Other accrued expenses
    11,973       11,052  
Interest payable
    652       1,305  
Deferred maintenance and other revenue
    48,992       41,671  
 
           
Total current liabilities
    76,299       76,374  
 
               
Long-term debt, net of current portion
    202,281       289,092  
Other long-term liabilities
    13,687       12,343  
Deferred income taxes
    35,324       40,734  
 
           
Total liabilities
    327,591       418,543  
 
               
Total stockholders’ equity
    958,644       857,183  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 1,286,235     $ 1,275,726  
 
           
See Notes to Condensed Consolidated Financial Information.

 

 


 

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                 
    Six Months Ended  
    June 30,     June 30,  
    2011     2010  
Cash flow from operating activities:
               
Net income
  $ 22,862     $ 13,383  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    20,990       20,297  
Stock-based compensation expense
    5,435       5,232  
Amortization of loan origination costs
    1,808       2,403  
Gain on sale or disposition of property and equipment
          (2 )
Deferred income taxes
    (5,904 )     (6,090 )
Provision for doubtful accounts
    649       454  
Changes in operating assets and liabilities, excluding effects from acquisitions:
               
Accounts receivable
    1,306       (2,423 )
Prepaid expenses and other assets
    (296 )     818  
Accounts payable
    243       (857 )
Accrued expenses and other liabilities
    (9,236 )     (10,914 )
Income taxes receivable and payable
    (3,457 )     (3,838 )
Deferred maintenance and other revenues
    6,654       4,971  
 
           
Net cash provided by operating activities
    41,054       23,434  
 
           
 
               
Cash flow from investing activities:
               
Additions to property and equipment
    (3,102 )     (2,238 )
Proceeds from sale of property and equipment
          52  
Cash paid for business acquisitions, net of cash acquired
    (14,798 )     (11,372 )
Additions to capitalized software and other intangibles
    (1,075 )     (99 )
 
           
Net cash used in investing activities
    (18,975 )     (13,657 )
 
           
 
               
Cash flow from financing activities:
               
Repayment of debt
    (87,833 )     (81,597 )
Proceeds from common stock issuance, net
    51,971       134,611  
Proceeds from exercise of stock options
    6,190       5,396  
Purchase of common stock for treasury
          (1,169 )
Income tax benefit related to exercise of stock options
    4,884       3,583  
 
           
Net cash (used in) provided by financing activities
    (24,788 )     60,824  
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    508       (770 )
 
           
 
               
Net (decrease) increase in cash and cash equivalents
    (2,201 )     69,831  
Cash and cash equivalents, beginning of period
    84,843       19,055  
 
           
Cash and cash equivalents, end of period
  $ 82,642     $ 88,886  
 
           
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     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2011     2010     2011     2010  
Revenue
  $ 91,803     $ 81,618     $ 180,810     $ 159,792  
Purchase accounting adjustments to deferred revenue
    7       62       14       142  
 
                       
Adjusted revenue
  $ 91,810     $ 81,680     $ 180,824     $ 159,934  
 
                       
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     Six Months Ended  
    June 30,     June 30,  
(in thousands)   2011     2010     2011     2010  
Operating income
  $ 22,895     $ 19,789     $ 46,002     $ 39,210  
Amortization of intangible assets
    9,161       8,734       18,113       17,408  
Stock-based compensation
    3,638       3,882       5,435       5,232  
Capital-based taxes
    2       228       154       454  
Unusual or non-recurring charges
    242       (153 )     490       83  
Purchase accounting adjustments
    (102 )     (60 )     (204 )     (37 )
Other
          (45 )     (30 )     161  
 
                       
Adjusted operating income
  $ 35,836     $ 32,375     $ 69,960     $ 62,511  
 
                       
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 November 2005, 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.

 

 


 

                                         
                                    Twelve Months  
    Three Months Ended     Six Months Ended     Ended  
    June 30,     June 30,     June 30,  
(in thousands)   2011     2010     2011     2010     2011  
Net income
  $ 13,028     $ 4,362     $ 22,862     $ 13,383     $ 41,892  
Interest expense, net
    3,474       13,538       11,482       22,555       24,819  
Taxes
    6,512       2,004       11,490       3,272       20,252  
Depreciation and amortization
    10,612       10,184       20,990       20,297       41,421  
 
                             
EBITDA
    33,626       30,088       66,824       59,507       128,384  
Stock-based compensation
    3,638       3,882       5,435       5,232       13,457  
Capital-based taxes
    2       228       154       454       791  
Acquired EBITDA and cost savings
                443       192       2,856  
Unusual or non-recurring charges
    123       (267 )     659       84       250  
Purchase accounting adjustments
    (102 )     (60 )     (204 )     (37 )     (405 )
Other
    116       (45 )     86       161       (36 )
 
                             
Consolidated EBITDA
    37,403       33,826       73,397       65,593       145,297  
Less: acquired EBITDA
                (443 )     (192 )     (2,856 )
 
                             
Adjusted Consolidated EBITDA
  $ 37,403     $ 33,826     $ 72,954     $ 65,401     $ 142,441  
 
                             
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     Six Months Ended  
    June 30,     June 30,  
(in thousands, except per share data)   2011     2010     2011     2010  
GAAP — Net income
  $ 13,028     $ 4,362     $ 22,862     $ 13,383  
Plus: Amortization of intangible assets
    9,161       8,734       18,113       17,408  
Plus: Amortization of deferred financing costs
    416       554       886       1,138  
Plus: Stock-based compensation
    3,638       3,882       5,435       5,232  
Plus: Capital-based taxes
    2       228       154       454  
Plus: Unusual and non-recurring items
    123       (267 )     659       84  
Plus: Loss on extinguishment of debt
          5,480       2,881       5,480  
Plus: Purchase accounting adjustments
    (102 )     (60 )     (204 )     (37 )
Plus: Other
          (45 )     (30 )     161  
Income tax effect (1)
    (4,960 )     (6,701 )     (10,296 )     (13,029 )
 
                       
Adjusted net income
  $ 21,306     $ 16,167     $ 40,460     $ 30,274  
 
                       
 
                               
Adjusted diluted earnings per share
  $ 0.26     $ 0.22     $ 0.51     $ 0.44  
 
                               
GAAP diluted earnings per share
  $ 0.16     $ 0.06     $ 0.29     $ 0.19  
 
                               
Diluted weighted-average shares outstanding
    80,800       74,538       79,756       69,424  
 
     
(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.