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8-K - FORM 8-K - SS&C Technologies Holdings Incd305706d8k.htm

Exhibit 99.1

 

LOGO

For Immediate Release

Contact:

Patrick Pedonti

Chief Financial Officer

Tel: +1-860-298-4738

E-mail: investorrelations@sscinc.com

SS&C Technologies Record Fourth Quarter and 2011 Results, 2011 Operating Cash Flow of

$110 million, up 46.1%

GAAP Diluted EPS of $0.16, up 33%, Adjusted Diluted EPS of $0.29, up 21%

WINDSOR, CT – February 21, 2012 — 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, 2011.

“2011 was the highest-ever revenue year in SS&C’s history and we believe we can continue our success in 2012,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “During 2011 our operating cash flow improved on 2010 and our strong financial position continued. In 2011 operating cash flow was $110 million up 46.1%, from $75.6 million in 2010.”

Results

The Company reported revenue of $95.7 million for the fourth quarter of 2011, compared to $86.1 million in the fourth quarter of 2010, an increase of 11.1 percent. Total revenue for the year ended December 31, 2011 was $370.8 million, a 12.7 percent increase over $328.9 million of revenue in 2010.

GAAP operating income for the fourth quarter of 2011 was $23.7 million, or 24.8 percent of revenue, up from $21.0 million in 2010’s fourth quarter. Operating income for the year ended December 31, 2011 was $93.8 million, or 25.3 percent of revenue, compared to $79.8 million for 2010.

Net income for the fourth quarter of 2011 was $13.3 million, compared to $9.2 million in the fourth quarter of 2010, an increase of 44.5 percent. Net income for the year ended December 31, 2011 was $51.0 million, compared to $32.4 million for 2010, a 57.4 percent increase.

On a fully diluted basis, earnings per share in the fourth quarter of 2011 were $0.16, a 33.3 percent increase from $0.12 in the fourth quarter of 2010. On a fully diluted basis, earnings per share for the year ended December 31, 2011 were $0.63, a 43.2 percent increase compared to 2010’s $0.44 per share.

Adjusted operating income (a non-GAAP financial measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the fourth quarter of 2011 was $38.4 million, or 40.1 percent of revenue. This represents a 12.6 percent increase compared to $34.1 million and 39.6 percent of revenue in the fourth quarter of 2010. Adjusted operating income for the year ended December 31, 2011 was $146.0 million. This represents a 12.9 percent increase compared to adjusted operating income of $129.2 million for 2010.


Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the fourth quarter of 2011 was $23.3 million, compared to $18.2 million in 2010’s fourth quarter, a 28.4 percent increase. Adjusted net income for the year ended December 31, 2011 was $86.5 million, a 31.7 percent increase compared to $65.6 million for 2010.

Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the fourth quarter were $0.29, a 20.8 percent increase from $0.24 in the fourth quarter of 2010. Adjusted diluted earnings per share for the year ended December 31, 2011 were $1.07, an 18.9 percent increase compared to $0.90 per share in 2010.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $83.3 million for the fourth quarter of 2011, an annual run-rate of $333.2 million. This represents an increase of 11.5 percent from $74.7 million and $298.9 million run-rate in the same period in 2010 and an increase of 0.5 percent from Q3 2011’s $82.8 million and $331.4 million run-rate. We believe ARRB of our recurring revenue is a good indicator of visibility.

Operating Cash Flow

SS&C ended the quarter with $40.3 million in cash and cash equivalents, and $100.0 million in debt, for a net debt balance of $59.7 million. SS&C generated net cash from operating activities of $110.4 million for the year ended December 31, 2011, compared to $75.6 million for 2010, representing a 46.1 percent increase. SS&C’s leverage ratio as defined in our credit agreement stood at 0.7 for the year ended 2011.

Guidance

SS&C announces the following financial guidance for the first quarter and fiscal year 2012:

 

Guidance

    

Q1 2012

    

FY 2012

Total Revenue ($M)

     $94.0 – $97.0      $398.0 – $408.0

Adjusted Net Income ($M)

     $22.8 – $23.9      $99.5 – $103.5

Cash from Operating Activities ($M)

     N/A      $115.0 – $120.0

Capital Expenditures ( percent of revenue)

     N/A      2.2% – 2.7%

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 that 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 Fiscal Year 2011 earnings call will take place at 5:00 p.m. eastern time today, February 21, 2012. The call will discuss Q4 and 2011 results. Interested parties may dial 877-312-8798 (U.S. and Canada) or 253-237-1193 (International) and request the “SS&C Fourth Quarter and 2011 Earnings Call,” conference ID #46268521. A replay will be available after 8:00 p.m. eastern time on February 21, until midnight on February 28, 2012. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code #46268521. The call will also be available for replay on SS&C’s website after February 21, 2012: 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 of 2012 and full year 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, 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. 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 Operations

(in thousands, except per share data)

 

September 30, September 30, September 30, September 30,
       Three Months Ended      Year Ended  
       December 31,
2011
     December 31,
2010
     December 31,
2011
     December 31,
2010
 

Revenues:

             

Software licenses

     $ 6,166       $ 6,054       $ 23,507       $ 23,683   

Maintenance

       19,807         18,573         78,266         72,703   

Professional services

       6,233         5,343         23,048         20,727   

Software-enabled services

       63,489         56,140         246,007         211,792   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

       95,695         86,110         370,828         328,905   
    

 

 

    

 

 

    

 

 

    

 

 

 

Cost of revenues:

             

Software licenses

       1,736         1,996         6,825         7,750   

Maintenance

       8,797         8,407         34,993         32,712   

Professional services

       4,110         3,711         15,549         13,954   

Software-enabled services

       33,034         29,379         126,921         111,516   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

       47,677         43,493         184,288         165,932   
    

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

       48,018         42,617         186,540         162,973   
    

 

 

    

 

 

    

 

 

    

 

 

 

Operating expenses:

             

Selling and marketing

       7,676         6,319         28,892         25,229   

Research and development

       9,297         7,956         35,650         31,442   

General and administrative

       7,360         7,297         28,221         26,462   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

       24,333         21,572         92,763         83,133   
    

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

       23,685         21,045         93,777         79,840   

Interest expense, net

       (2,812      (6,594      (14,628      (30,412

Other (expense) income, net

       (603      (154      (423      499   

Loss on extinguishment of debt

       (1,906      —           (4,787      (5,480
    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

       18,364         14,297         73,939         44,447   

Provision for income taxes

       5,104         5,121         22,918         12,034   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

     $ 13,260       $ 9,176       $ 51,021       $ 32,413   
    

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per share

     $ 0.17       $ 0.13       $ 0.67       $ 0.47   
    

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average number of common shares outstanding

       77,470         72,316         76,482         69,027   
    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

     $ 0.16       $ 0.12       $ 0.63       $ 0.44   
    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

       81,194         76,594         80,709         73,079   
    

 

 

    

 

 

    

 

 

    

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

September 30, September 30,
       December 31,
2011
       December 31,
2010
 

ASSETS

         

Current assets:

         

Cash and cash equivalents

     $ 40,318         $ 84,843   

Accounts receivable, net

       47,201           45,531   

Prepaid income taxes

       788           2,242   

Deferred income taxes

       889           1,142   

Prepaid expenses and other current assets

       5,214           5,932   

Restricted cash

       1,149           —     
    

 

 

      

 

 

 

Total current assets

       95,559           139,690   

Property and equipment, net

       14,304           13,570   

Deferred income taxes

       1,111           686   

Goodwill

       931,639           926,668   

Intangible and other assets, net

       164,995           195,112   
    

 

 

      

 

 

 

Total assets

     $ 1,207,608         $ 1,275,726   
    

 

 

      

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

         

Current liabilities:

         

Current portion of long-term debt

     $ —           $ 1,702   

Accounts payable

       4,170           3,790   

Accrued employee compensation and benefits

       19,770           16,854   

Other accrued expenses

       14,058           11,052   

Interest payable

       95           1,305   

Deferred maintenance and other revenue

       46,395           41,671   
    

 

 

      

 

 

 

Total current liabilities

       84,488           76,374   

Long-term debt, net of current portion

       100,000           289,092   

Other long-term liabilities

       14,081           12,343   

Deferred income taxes

       28,936           40,734   
    

 

 

      

 

 

 

Total liabilities

       227,505           418,543   

Total stockholders’ equity

       980,103           857,183   
    

 

 

      

 

 

 

Total liabilities and stockholders’ equity

     $ 1,207,608         $ 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)

September 30, September 30,
       Year Ended  
       December 31,
2011
     December 31,
2010
 

Cash flow from operating activities:

       

Net income

     $ 51,021       $ 32,413   

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

       

Depreciation and amortization

       42,224         40,728   

Stock-based compensation expense

       13,493         13,254   

Amortization of loan origination costs

       4,485         3,392   

Loss (gain) on sale or disposition of property and equipment

       11         (9

Deferred income taxes

       (12,423      (13,700

Provision for doubtful accounts

       802         831   

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

       

Accounts receivable

       (1,818      1,066   

Prepaid expenses and other assets

       (324      (133

Accounts payable

       278         (1,041

Accrued expenses and other liabilities

       4,076         (2,660

Income taxes receivable and payable

       4,181         2,073   

Deferred maintenance and other revenues

       4,401         (647
    

 

 

    

 

 

 

Net cash provided by operating activities

       110,407         75,567   
    

 

 

    

 

 

 

Cash flow from investing activities:

       

Additions to property and equipment

       (6,222      (4,834

Cash paid for business acquisitions, net of cash acquired

       (20,577      (45,815

Additions to capitalized software and other intangibles

       (1,406      (509

Other

       (1,149      59   
    

 

 

    

 

 

 

Net cash used in investing activities

       (29,354      (51,099
    

 

 

    

 

 

 

Cash flow from financing activities:

       

Proceeds from debt financing

       100,000         —     

Repayment of debt

       (291,051      (108,120

Proceeds from common stock issuance, net

       51,971         134,558   

Proceeds from exercise of stock options

       8,788         10,813   

Purchase of common stock for treasury

       —           (1,169

Income tax benefit related to exercise of stock options

       4,934         5,064   
    

 

 

    

 

 

 

Net cash (used in) provided by financing activities

       (125,358      41,146   
    

 

 

    

 

 

 

Effect of exchange rate changes on cash and cash equivalents

       (220      174   
    

 

 

    

 

 

 

Net (decrease) increase in cash and cash equivalents

       (44,525      65,788   

Cash and cash equivalents, beginning of period

       84,843         19,055   
    

 

 

    

 

 

 

Cash and cash equivalents, end of period

     $ 40,318       $ 84,843   
    

 

 

    

 

 

 

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.

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
       Year Ended
December 31,
 

(in thousands)

     2011        2010        2011        2010  

Revenue

     $ 95,695         $ 86,110         $ 370,828         $ 328,905   

Purchase accounting adjustments to deferred revenue

       7           11           27           189   
    

 

 

      

 

 

      

 

 

      

 

 

 

Adjusted revenue

     $ 95,702         $ 86,121         $ 370,855         $ 329,094   
    

 

 

      

 

 

      

 

 

      

 

 

 

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.

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
     Year Ended
December 31,
 

(in thousands)

     2011      2010      2011      2010  

Operating income

     $ 23,685       $ 21,045       $ 93,777       $ 79,840   

Amortization of intangible assets

       9,418         8,950         36,826         35,085   

Stock-based compensation

       4,278         4,073         13,493         13,254   

Capital-based taxes

       200         230         354         1,091   

Unusual or non-recurring charges (gains)

       863         (30      1,932         174   

Purchase accounting adjustments

       (65      (114      (373      (238

Other

       —           (75      (30      39   
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted operating income

     $ 38,379       $ 34,079       $ 145,979       $ 129,245   
    

 

 

    

 

 

    

 

 

    

 

 

 

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, 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.


 

September 30, September 30, September 30, September 30,
       Three months ended
December 31,
     Year ended
December 31
 

(in thousands)

     2011      2010      2011      2010  

Net income

     $ 13,260       $ 9,176       $ 51,021       $ 32,413   

Interest expense, net

       4,718         6,594         19,415         35,892   

Income taxes

       5,104         5,121         22,918         12,034   

Depreciation and amortization

       10,742         10,372         42,224         40,728   
    

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

       33,824         31,263         135,578         121,067   

Stock-based compensation

       4,278         4,073         13,493         13,254   

Capital-based taxes

       200         230         354         1,091   

Acquired EBITDA and cost savings

       —           329         1,192         6,392   

Unusual or non-recurring charges (gains)

       1,465         124         2,355         (325

Purchase accounting adjustments

       (65      (114      (373      (238

Other

       (147      (75      (183      39   
    

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated EBITDA

       39,555         35,830         152,416         141,280   

Less: acquired EBITDA and cost savings

       —           (329      (1,192      (6,392
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Consolidated EBITDA

     $ 39,555       $ 35,501       $ 151,224       $ 134,888   
    

 

 

    

 

 

    

 

 

    

 

 

 

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.

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
     Year Ended
December 31,
 

(in thousands, except per share data)

     2011      2010      2011      2010  

GAAP – Net income

     $ 13,260       $ 9,176       $ 51,021       $ 32,413   

Plus: Amortization of intangible assets

       9,418         8,950         36,826         35,085   

Plus: Amortization of deferred financing costs

       356         496         1,656         2,127   

Plus: Stock-based compensation

       4,278         4,073         13,493         13,254   

Plus: Capital-based taxes

       200         230         354         1,091   

Plus: Unusual or non-recurring charges (gains)

       1,465         124         2,355         (325

Plus: Loss on extinguishment of debt

       1,906         —           4,787         5,480   

Plus: Purchase accounting adjustments

       (65      (114      (373      (238

Plus: Other

       —           (75      (30      39   

Income tax effect (1)

       (7,469      (4,672      (23,635      (23,301
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

     $ 23,349       $ 18,188       $ 86,454       $ 65,625   
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted diluted earnings per share

     $ 0.29       $ 0.24       $ 1.07       $ 0.90   

GAAP diluted earnings per share

     $ 0.16       $ 0.12       $ 0.63       $ 0.44   

Diluted weighted-average shares outstanding

       81,194         76,594         80,709         73,079   

 

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