Attached files

file filename
8-K - FORM 8-K - SS&C Technologies Holdings Incd348616d8k.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 Reports Results for Q1 2012

GAAP Diluted EPS of $0.22, up 83%, Adjusted Diluted EPS of $0.28, up 16.7%

WINDSOR, CT – May 7, 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 quarter that ended March 31, 2012.

“Our software-enabled services business continues to grow, up 12 percent. Fund administration is where we see a lot of potential and we believe we are in an excellent position,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “We continue to see big opportunities in the fund services marketplace and we have won a number of large mandates in the second quarter. Form PF is an impetus and we believe we have the best solution and it is resonating with our prospects and customers. Although SS&C had a weak license quarter, we were able to recognize this and manage our expenses to continue to drive our earnings.”

Results

The Company reported quarterly revenue of $93.7 million for the first quarter of 2012, compared to $89.0 million in the first quarter of 2011, a 5.2 percent increase.

GAAP operating income for the first quarter of 2012 was $22.1 million, or 23.6 percent of revenue, down from $23.1 million in 2011’s first quarter, or 26.0 percent of revenue. Operating income was down 4.5 percent from 2011’s first quarter.

GAAP net income for the first quarter of 2012 was $17.9 million compared to $9.8 million in the first quarter of 2011, an 81.8 percent increase.

On a fully diluted basis, earnings per share in the first quarter of 2012 were $0.22 compared to $0.12 in the first quarter of 2011, an 83.3 percent increase.

The Company recorded transaction costs of $4.2 million in the first quarter related to the proposed offer to acquire GlobeOp Financial Services S.A. (GlobeOp) and the pending acquisition of the Thomson Reuters’ PORTIA® business. In addition, in other income (expense) the Company recorded a gain of $4.4 million related to a currency hedge put in place for the proposed acquisition of GlobeOp.

Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the first quarter of 2012 was $36.0 million, or 38.5 percent of revenue. This represents a 5.6 percent increase compared to $34.1 million and 38.3 percent of revenue in the first quarter of 2011.


Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the first quarter of 2012 was $23.1 million compared to $19.2 million in 2011’s first quarter, a 20.4 percent increase.

Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the first quarter of 2012 were $0.28 compared to $0.24 in the first quarter of 2011, a 16.7 percent increase.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $84.1 million for the first quarter of 2012, an annual run-rate of $336.3 million. This represents an increase of 8.9 percent from $77.2 million and $308.7 million run-rate in the same period in 2011 and an increase of 0.9 percent from Q4 2011’s $83.3 million and $333.2 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 $41.9 million in cash, and $85.0 million in debt, for a net debt balance of $43.1 million. SS&C generated net cash from operating activities of $13.1 million for the quarter ended March 31, 2012, compared to $12.1 million for the same period in 2011, representing an 8.6 percent increase. SS&C’s leverage ratio as defined in our credit agreement stood at 0.6 for the quarter ended March 31, 2012.

Guidance

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

 

Guidance    Q2 2012    FY 2012

Total Revenue ($M)

   $95.5 - $97.5    $392.0 - $400.0

Adjusted Net Income ($M)

   $24.0 - $24.8    $99.0 - $103.5

Cash from Operating Activities ($M)

   N/A    $115.0 - $120.0

Capital Expenditures (% 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 these measures provide useful information to investors regarding our financial condition and results of operations.

Earnings Call and Press Release

SS&C’s Q1 earnings call will take place at 5:00 p.m. eastern time today, May 7, 2012. The call will discuss Q1 2012 results and our guidance and business outlook. Interested parties may dial 877-312-8798 (U.S. and Canada) or 253-237-1193 (International) and request the “SS&C Technologies 2012 First Quarter Earnings Conference Call,” conference ID #. A replay will be available after 8:00 p.m. eastern time on May 7, 2012, until midnight on May 14, 2012. The dial-in number is 800-642-1687 (U.S. and Canada) 706-645-9291 (International); access code #. The call will also be available for replay on SS&C’s website after May 8, 2012; access: http://investor.ssctech.com/results.cfm.

This press release contains forward-looking statements relating to, among other things, our financial guidance for the second 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)

(unaudited)

 

    Three Months Ended March 31,  
    2012     2011  

Revenues:

   

Software licenses

  $ 3,810      $ 6,573   

Maintenance

    19,498        19,447   

Professional services

    5,792        5,267   

Software-enabled services

    64,575        57,720   
 

 

 

   

 

 

 

Total revenues

    93,675        89,007   
 

 

 

   

 

 

 

Cost of revenues:

   

Software licenses

    1,302        1,675   

Maintenance

    8,666        8,666   

Professional services

    3,972        3,570   

Software-enabled services

    32,912        30,584   
 

 

 

   

 

 

 

Total cost of revenues

    46,852        44,495   
 

 

 

   

 

 

 

Gross profit

    46,823        44,512   
 

 

 

   

 

 

 

Operating expenses:

   

Selling and marketing

    7,372        6,890   

Research and development

    8,639        7,972   

General and administrative

    4,588        6,543   

Transaction costs

    4,153        —     
 

 

 

   

 

 

 

Total operating expenses

    24,752        21,405   
 

 

 

   

 

 

 

Operating income

    22,071        23,107   

Interest expense, net

    (549     (5,127

Other income (expense), net

    4,126        (287

Loss on extinguishment of debt

    —          (2,881
 

 

 

   

 

 

 

Income before income taxes

    25,648        14,812   

Provision for income taxes

    7,765        4,978   
 

 

 

   

 

 

 

Net income

  $ 17,883      $ 9,834   
 

 

 

   

 

 

 

Basic earnings per share

  $ 0.23      $ 0.13   
 

 

 

   

 

 

 

Basic weighted average number of common shares outstanding

    77,718        74,375   
 

 

 

   

 

 

 

Diluted earnings per share

  $ 0.22      $ 0.12   
 

 

 

   

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

    82,007        78,692   
 

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     March 31,
2012
     December 31,
2011
 

ASSETS

     

Current assets:

     

Cash

   $ 41,944       $ 40,318   

Accounts receivable, net

     53,167         47,201   

Prepaid income taxes

     415         788   

Deferred income taxes

     880         889   

Prepaid expenses and other current assets

     9,787         5,214   

Restricted cash

     1,149         1,149   
  

 

 

    

 

 

 

Total current assets

     107,342         95,559   
  

 

 

    

 

 

 

Property and equipment, net

     14,293         14,304   

Deferred income taxes

     720         1,111   

Goodwill

     937,409         931,639   

Intangible and other assets, net

     157,506         164,995   
  

 

 

    

 

 

 

Total assets

   $ 1,217,270       $ 1,207,608   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

     5,181         4,170   

Accrued employee compensation and benefits

     6,678         19,770   

Other accrued expenses

     15,499         14,058   

Interest payable

     61         95   

Deferred maintenance and other revenue

     54,813         46,395   
  

 

 

    

 

 

 

Total current liabilities

     82,232         84,488   

Long-term debt

     85,000         100,000   

Other long-term liabilities

     12,544         14,081   

Deferred income taxes

     27,049         28,936   
  

 

 

    

 

 

 

Total liabilities

     206,825         227,505   
  

 

 

    

 

 

 

Total stockholders’ equity

     1,010,445         980,103   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 1,217,270       $ 1,207,608   
  

 

 

    

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

    Three Months Ended March 31,  
    2012     2011  

Cash flow from operating activities:

   

Net income

  $ 17,883      $ 9,834   

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

   

Depreciation and amortization

    10,205        10,378   

Non-cash gain on foreign currency derivatives

    (4,365     —     

Stock compensation expense

    1,229        1,797   

Amortization of loan origination costs

    58        1,393   

Loss on sale or disposition of property and equipment

    1        —     

Deferred income taxes

    (1,632     (2,776

Provision for doubtful accounts

    96        430   

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

   

Accounts receivable

    (5,759     (9,572

Prepaid expenses and other assets

    (522     (43

Accounts payable

    973        (566

Accrued expenses

    (13,558     (9,917

Income taxes prepaid and payable

    392        243   

Deferred maintenance and other revenue

    8,137        10,893   
 

 

 

   

 

 

 

Net cash provided by operating activities

    13,138        12,094   
 

 

 

   

 

 

 

Cash flow from investing activities:

   

Additions to property and equipment

    (1,232     (1,566

Cash paid for business acquisitions, net of cash acquired

    (19     (14,771

Additions to capitalized software

    (85     (539

Other

    87        —     
 

 

 

   

 

 

 

Net cash used in investing activities

    (1,249     (16,876
 

 

 

   

 

 

 

Cash flow from financing activities:

   

Cash received from debt borrowings

    15,000        —     

Repayment of debt

    (30,000     (67,054

Income tax benefit related to exercise of stock options

    536        1,701   

Proceeds from common stock issuance, net

    —          52,010   

Proceeds from exercise of stock options

    3,896        3,632   
 

 

 

   

 

 

 

Net cash used in financing activities

    (10,568     (9,711
 

 

 

   

 

 

 

Effect of exchange rate changes on cash

    305        485   
 

 

 

   

 

 

 

Net increase (decrease) in cash

    1,626        (14,008

Cash, beginning of period

    40,318        84,843   
 

 

 

   

 

 

 

Cash, end of period

  $ 41,944      $ 70,835   
 

 

 

   

 

 

 

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 the 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 March 31,  
(in thousands)    2012      2011  

Revenue

   $ 93,675       $ 89,007   

Purchase accounting adjustments to deferred revenue

     —           7   
  

 

 

    

 

 

 

Adjusted revenue

   $ 93,675       $ 89,014   
  

 

 

    

 

 

 

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 the 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 March 31,  
(in thousands)    2012     2011  

Operating income

   $ 22,071      $ 23,107   

Amortization of intangible assets

     8,856        8,952   

Stock-based compensation

     1,229        1,797   

Capital-based taxes

     (765     152   

Unusual or non-recurring charges

     4,684        248   

Purchase accounting adjustments

     (52     (102

Other

     —          (30
  

 

 

   

 

 

 

Adjusted operating income

   $ 36,023      $ 34,124   
  

 

 

   

 

 

 


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 December 2011, is used in calculating covenant compliance, and is EBITDA adjusted for certain items. Consolidated EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described below. Adjusted consolidated EBITDA is calculated by subtracting acquired EBITDA from consolidated EBITDA. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are presented because we use these measures to evaluate performance of our business and believe them to be useful indicators of an entity’s debt capacity and its ability to service debt. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are not recognized terms under GAAP and should not be considered in isolation or as alternatives to operating income, net income or cash flows from operating activities. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA do not represent net income, as that term is defined under GAAP, and should not be considered as alternatives to net income as an indicator of our operating performance. The following is a reconciliation between EBITDA, consolidated EBITDA and adjusted consolidated EBITDA and net income.

 

     Three months ended
March 31,
    Twelve months
ended
March 31,
 
(in thousands)    2012     2011     2012  

Net income

   $ 17,883      $ 9,834      $ 59,070   

Interest expense, net

     549        8,008        11,956   

Taxes

     7,765        4,978        25,705   

Depreciation and amortization

     10,205        10,378        42,051   
  

 

 

   

 

 

   

 

 

 

EBITDA

   $ 36,402      $ 33,198      $ 138,782   

Stock-based compensation

     1,229        1,797        12,925   

Capital-based taxes

     (765     152        (563

Acquired EBITDA and cost savings

     —          443        432   

Unusual or non-recurring charges

     558        536        2,377   

Purchase accounting adjustments

     (52     (102     (323

Other

     (43     (30     (196
  

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

     37,329        35,994        153,434   

Less: acquired EBITDA

     —          (443     (432
  

 

 

   

 

 

   

 

 

 

Adjusted Consolidated EBITDA

   $ 37,329      $ 35,551      $ 153,002   
  

 

 

   

 

 

   

 

 

 

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 presented because we use these measures to evaluate 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
March 31,
 
(in thousands)    2012     2011  

GAAP – Net income

   $ 17,883      $ 9,834   

Plus: Amortization of intangible assets

     8,856        8,952   

Plus: Amortization of deferred financing costs

     —          470   

Plus: Stock-based compensation

     1,229        1,797   

Plus: Capital-based taxes

     (765     152   

Plus: Unusual and non-recurring items

     558        536   

Plus: Loss on extinguishment of debt

     —          2,881   

Plus: Purchase accounting adjustments

     (52     (102

Plus: Other

     —          (30

Income tax effect (1)

     (4,651     (5,336
  

 

 

   

 

 

 

Adjusted net income

   $ 23,058      $ 19,154   
  

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.28      $ 0.24   

GAAP diluted earnings per share

   $ 0.22      $ 0.12   

Diluted weighted average shares outstanding

     82,007        78,692   

 

(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.