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8-K - FORM 8-K - SS&C Technologies Holdings Incc24346e8vk.htm
Exhibit 99.1
(PRESS RELEASE LOGO)
For Immediate Release
Contact:
Patrick Pedonti
Chief Financial Officer
Tel: +1-860-298-4738
E-mail: investorrelations@sscinc.com
SS&C Technologies Reports Record Revenue of $94.3 Million, Up 13.6%
Adjusted Diluted EPS of $0.28, up 22%, GAAP Diluted EPS of $0.18, up 38%
WINDSOR, CT — November 7, 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 September 30, 2011.
“I am very pleased by our top-line revenue growth, in particular, the 17.5 percent increase in software-enabled services,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “Our record Q3 2011 revenues reinforce our customer-focused strategy as they partner with us to innovate in technology, mobility, and cloud-based services. Today we also launched a radio campaign on Bloomberg to highlight our strong fund administration business.”
Results
The Company reported quarterly revenue of $94.3 million for the third quarter of 2011, compared to $83.0 million in the third quarter of 2010, an increase of 13.6 percent.
GAAP operating income for the third quarter of 2011 was $24.1 million, or 25.5 percent of revenue. This represents a 23.0 percent increase compared to GAAP operating income of $19.6 million and 23.6 percent of revenue in the third quarter of 2010. GAAP net income for the third quarter of 2011 was $14.9 million compared to $9.9 million in the third quarter of 2010, an increase of 51.2 percent.
On a fully diluted GAAP basis, earnings per diluted share in the third quarter of 2011 were up 38.5 percent to $0.18 compared with $0.13 in the third quarter of 2010.
Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the third quarter of 2011 was $37.6 million, or 39.9 percent of adjusted revenue. This represents a 15.3 percent increase compared to adjusted operating income of $32.7 million and 39.3 percent of adjusted revenue in the third quarter of 2010.
Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the third quarter of 2011 was $22.6 million compared to $17.2 million in 2010’s third quarter, a 31.9 percent increase.
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 2011 were $0.28 compared to $0.23 in the third quarter of 2010, an increase of 21.7 percent.
Annual Run Rate Basis
Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $82.8 million for the third quarter of 2011, an annual run-rate of $331.4 million. This represents an increase of 14.8 percent from $72.1 million and $288.6 million annual run-rate in the same period in 2010 and an increase of 2.3 percent from Q2 2011’s $81.0 million and $323.8 million annual run-rate. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.

 

 


 

Acquisition
In the third quarter of 2011, SS&C acquired Dublin-based BDO Simpson Xavier Fund Administration Services Limited, a company owned by BDO. This company is now known as SS&C Fund Services Ireland Limited. The addition of the regulated, fully staffed and operational office in Dublin provides SS&C entry into the strategically important European regulated funds market, providing support for additional fund structures, including UCITS and QIF funds.
Operating Cash Flow
SS&C ended the quarter with $76.2 million in cash and cash equivalents, and $172.7 million in debt for a net debt balance of $96.5 million. We generated net cash from operating activities of $71.6 million for the nine months ended September 30, 2011, compared to $47.6 million for the same period in 2010, an increase of 50.3 percent.
Guidance
SS&C announces the following financial guidance for the fourth quarter and fiscal year 2011:
                 
Guidance   Q4 2011     FY 2011  
Total Revenue ($M)
    $94.0 – $97.5       $369.0 – $373.0  
Adjusted Net Income ($M)
  $22.2 – $23.1     $85.3 – $86.2  
Cash from Operating Activities ($M)
    N/A       $87.0 – $90.0  
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 third 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 Q3 earnings call will take place at 5:00 p.m. eastern time today, November 7, 2011. The call will discuss Q3 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 Third Quarter Earnings Conference Call,” conference ID #16766822. A replay will be available after 8:00 p.m. eastern time on November 7, 2011, until midnight on November 14, 2011. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code #16766822. The call will also be available for replay on SS&C’s website after November 14, 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 fourth 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. More than 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     Nine Months Ended  
    September 30,     September 30,     September 30,     September 30,  
    2011     2010     2011     2010  
Revenues:
                               
Software licenses
  $ 5,786     $ 5,966     $ 17,341     $ 17,629  
Maintenance
    19,594       18,294       58,459       54,130  
Professional services
    5,688       4,896       16,815       15,384  
Software-enabled services
    63,255       53,847       182,518       155,652  
 
                       
Total revenues
    94,323       83,003       275,133       242,795  
 
                       
 
                               
Cost of revenues:
                               
Software licenses
    1,714       1,918       5,089       5,754  
Maintenance
    8,729       8,224       26,196       24,305  
Professional services
    3,888       3,625       11,439       10,243  
Software-enabled services
    32,148       28,570       93,887       82,137  
 
                       
Total cost of revenues
    46,479       42,337       136,611       122,439  
 
                       
 
                               
Gross profit
    47,844       40,666       138,522       120,356  
 
                       
 
                               
Operating expenses:
                               
Selling and marketing
    7,308       6,275       21,216       18,910  
Research and development
    9,328       7,867       26,353       23,486  
General and administrative
    7,118       6,939       20,861       19,165  
 
                       
Total operating expenses
    23,754       21,081       68,430       61,561  
 
                       
 
                               
Operating income
    24,090       19,585       70,092       58,795  
 
                               
Interest expense, net
    (3,215 )     (6,743 )     (11,816 )     (23,818 )
Other income, net
    348       653       180       653  
Loss on extinguishment of debt
                (2,881 )     (5,480 )
 
                       
 
                               
Income before income taxes
    21,223       13,495       55,575       30,150  
Provision for income taxes
    6,324       3,641       17,814       6,913  
 
                       
 
                               
Net income
  $ 14,899     $ 9,854     $ 37,761     $ 23,237  
 
                       
 
                               
Basic earnings per share
  $ 0.19     $ 0.14     $ 0.50     $ 0.34  
 
                       
Basic weighted average number of common shares outstanding
    77,315       71,889       76,149       67,919  
 
                       
Diluted earnings per share
  $ 0.18     $ 0.13     $ 0.47     $ 0.32  
 
                       
Diluted weighted average number of common and common equivalent shares outstanding
    80,730       75,441       80,109       71,499  
 
                       
See Notes to Condensed Consolidated Financial Information.

 

 


 

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                 
    September 30,     December 31,  
    2011     2010  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 76,175     $ 84,843  
Accounts receivable, net
    44,547       45,531  
Prepaid income taxes
    7,332       2,242  
Deferred income taxes
    1,198       1,142  
Prepaid expenses and other current assets
    6,312       5,932  
 
           
Total current assets
    135,564       139,690  
 
               
Property and equipment, net
    13,750       13,570  
 
               
Deferred income taxes
    627       686  
Goodwill
    924,835       926,668  
Intangible and other assets, net
    173,728       195,112  
 
           
 
               
Total assets
  $ 1,248,504     $ 1,275,726  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Current portion of long-term debt
  $ 1,195     $ 1,702  
Accounts payable
    3,322       3,790  
Accrued employee compensation and benefits
    14,384       16,854  
Other accrued expenses
    11,877       11,052  
Interest payable
    2,609       1,305  
Deferred maintenance and other revenue
    44,361       41,671  
 
           
Total current liabilities
    77,748       76,374  
 
               
Long-term debt, net of current portion
    171,492       289,092  
Other long-term liabilities
    13,603       12,343  
Deferred income taxes
    32,144       40,734  
 
           
Total liabilities
    294,987       418,543  
 
               
Total stockholders’ equity
    953,517       857,183  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 1,248,504     $ 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)
                 
    Nine Months Ended  
    September 30,     September 30,  
    2011     2010  
Cash flow from operating activities:
               
Net income
  $ 37,761     $ 23,237  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    31,482       30,356  
Stock-based compensation expense
    9,215       9,181  
Amortization of loan origination costs
    2,223       2,896  
Loss (gain) on sale or disposition of property and equipment
    11       (1 )
Deferred income taxes
    (8,781 )     (12,467 )
Provision for doubtful accounts
    788       580  
Changes in operating assets and liabilities, excluding effects from acquisitions:
               
Accounts receivable
    581       (2,009 )
Prepaid expenses and other assets
    (188 )     80  
Accounts payable
    (535 )     (2,151 )
Accrued expenses and other liabilities
    (1,168 )     90  
Income taxes receivable and payable
    (2,429 )     (2,392 )
Deferred maintenance and other revenues
    2,619       229  
 
           
Net cash provided by operating activities
    71,579       47,629  
 
           
 
               
Cash flow from investing activities:
               
Additions to property and equipment
    (4,437 )     (3,265 )
Proceeds from sale of property and equipment
          51  
Cash paid for business acquisitions, net of cash acquired
    (19,863 )     (11,372 )
Additions to capitalized software and other intangibles
    (1,264 )     (171 )
 
           
Net cash used in investing activities
    (25,564 )     (14,757 )
 
           
 
               
Cash flow from financing activities:
               
Repayment of debt
    (118,210 )     (107,670 )
Proceeds from common stock issuance, net
    51,971       134,613  
Proceeds from exercise of stock options
    7,034       5,880  
Purchase of common stock for treasury
          (1,169 )
Income tax benefit related to exercise of stock options
    4,889       3,453  
 
           
Net cash (used in) provided by financing activities
    (54,316 )     35,107  
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    (367 )     (59 )
 
           
 
               
Net (decrease) increase in cash and cash equivalents
    (8,668 )     67,920  
Cash and cash equivalents, beginning of period
    84,843       19,055  
 
           
Cash and cash equivalents, end of period
  $ 76,175     $ 86,975  
 
           
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     Nine Months Ended  
    September 30,     September 30,  
(in thousands)   2011     2010     2011     2010  
Revenue
  $ 94,323     $ 83,003     $ 275,133     $ 242,795  
Purchase accounting adjustments to deferred revenue
    7       36       20       178  
 
                       
Adjusted revenue
  $ 94,330     $ 83,039     $ 275,153     $ 242,973  
 
                       
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     Nine Months Ended  
    September 30,     September 30,  
(in thousands)   2011     2010     2011     2010  
Operating income
  $ 24,090     $ 19,585     $ 70,092     $ 58,795  
Amortization of intangible assets
    9,295       8,727       27,408       26,135  
Stock-based compensation
    3,780       3,949       9,215       9,181  
Capital-based taxes
          407       154       861  
Unusual or non-recurring charges
    579       121       1,069       204  
Purchase accounting adjustments
    (104 )     (87 )     (308 )     (124 )
Other
          (47 )     (30 )     114  
 
                       
Adjusted operating income
  $ 37,640     $ 32,655     $ 107,600     $ 95,166  
 
                       
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     Nine Months Ended     Ended  
    September 30,     September 30,     September 30,  
(in thousands)   2011     2010     2011     2010     2011  
Net income
  $ 14,899     $ 9,854     $ 37,761     $ 23,237     $ 46,937  
Interest expense, net
    3,215       6,743       14,697       29,298       21,291  
Income taxes
    6,324       3,641       17,814       6,913       22,935  
Depreciation and amortization
    10,492       10,059       31,482       30,356       41,854  
 
                             
EBITDA
    34,930       30,297       101,754       89,804       133,017  
Stock-based compensation
    3,780       3,949       9,215       9,181       13,288  
Capital-based taxes
          407       154       861       384  
Acquired EBITDA and cost savings
    156             749       192       2,003  
Unusual or non-recurring charges
    231       (533 )     890       (449 )     1,014  
Purchase accounting adjustments
    (104 )     (87 )     (308 )     (124 )     (422 )
Other
    (122 )     (47 )     (36 )     114       (111 )
 
                             
Consolidated EBITDA
    38,871       33,986       112,418       99,579       149,173  
Less: acquired EBITDA
    (156 )           (749 )     (192 )     (2,003 )
 
                             
Adjusted Consolidated EBITDA
  $ 38,715     $ 33,986     $ 111,669     $ 99,387     $ 147,170  
 
                             
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     Nine Months Ended  
    September 30,     September 30,  
(in thousands, except per share data)   2011     2010     2011     2010  
GAAP – Net income
  $ 14,899     $ 9,854     $ 37,761     $ 23,237  
Plus: Amortization of intangible assets
    9,295       8,727       27,408       26,135  
Plus: Amortization of deferred financing costs
    414       493       1,300       1,631  
Plus: Stock-based compensation
    3,780       3,949       9,215       9,181  
Plus: Capital-based taxes
          407       154       861  
Plus: Unusual and non-recurring items
    231       (533 )     890       (449 )
Plus: Loss on extinguishment of debt
                2,881       5,480  
Plus: Purchase accounting adjustments
    (104 )     (87 )     (308 )     (124 )
Plus: Other
          (47 )     (30 )     114  
Income tax effect (1)
    (5,870 )     (5,600 )     (16,166 )     (18,629 )
 
                       
Adjusted net income
  $ 22,645     $ 17,163     $ 63,105     $ 47,437  
 
                       
 
                               
Adjusted diluted earnings per share
  $ 0.28     $ 0.23     $ 0.79     $ 0.66  
 
                               
GAAP diluted earnings per share
  $ 0.18     $ 0.13     $ 0.47     $ 0.32  
 
                               
Diluted weighted-average shares outstanding
    80,730       75,441       80,109       71,499  
     
(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.