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8-K - FORM 8-K - SS&C Technologies Holdings Incd394476d8k.htm

Exhibit 99.1

 

LOGO

Q2 revenues up 31.6%, Adjusted diluted earnings per share of $0.33, up 26.9%, GAAP diluted loss per share of $0.07

WINDSOR, CT, August 9, 2012 (GLOBE NEWSWIRE) – SS&C Technologies Holdings, Inc. (NASDAQ: SSNC), a global provider of investment and financial software-enabled services and software, today announced its financial results for the quarter that ended June 30, 2012.

“I am delighted to report that our second quarter revenue of $120.9 million rose 31.6 percent year-over-year,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “Q2 was a transformational quarter for SS&C. We began the quarter with 1,492 personnel and ended with 4,034. Our people in all of our businesses stayed focused, tended to our customers and delivered solid results. Organic adjusted revenue rose 3.4% as we overcame some customer attrition and the daily focus on the two large acquisitions. Hans Hufschmid, founder and chief executive officer of GlobeOp, has decided to move on to pursue other opportunities. We wish him all the best and he will continue in a consultative role with the company until January 2013. Rahul Kanwar, Senior Vice President and Managing Director, will assume overall responsibility for the SS&C GlobeOp Business reporting to Normand Boulanger, President and Chief Operating Officer.”

“We are bringing forward powerful new products and services to market and as our teams gather momentum we are receiving good feedback from the marketplace. We are already beginning to see synergies across our businesses.”

Results

The Company reported revenue of $120.9 million for the second quarter of 2012, compared to $91.8 million in the second quarter of 2011, an increase of 31.6 percent.

GAAP operating income for the second quarter of 2012 was $21.1 million, or 17.5 percent of revenue, down from $22.9 million in 2011’s second quarter, or 24.9 percent of revenue. GAAP net loss for the second quarter of 2012 was $5.8 million compared to net income of $13.0 million in the second quarter of 2011.

On a GAAP fully diluted basis, loss per share in the second quarter of 2012 was $0.07 compared to fully diluted earnings per share of $0.16 in the second quarter of 2011.

Adjusted revenue (a non-GAAP measure defined in note 1 to the attached Condensed Consolidated Financial Information) in the second quarter of 2012 was $121.2 million compared to $91.8 million in the second quarter of 2011, an increase of 32.0 percent.

Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the second quarter of 2012 was $45.9 million, or 37.8 percent of adjusted revenue. This represents a 28.0 percent increase compared to adjusted operating income of $35.8 million and 39.0 percent of adjusted revenue in the second quarter of 2011.

Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the second quarter of 2012 was $27.2 million compared to $21.3 million in 2011’s second quarter, an increase of 27.9 percent.

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 2012 was $0.33 per share compared to $0.26 per share in the second quarter of 2011, an increase of 26.9 percent.

The Company’s results for the second quarter of 2012 include the results of the PORTIA business, which the company acquired from Thomson Reuters on May 9, 2012, and GlobeOp Financial Services, which the company acquired on May 31, 2012, in each case from the respective acquisition date.


Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $107.9 million for the second quarter of 2012, an annual run-rate of $431.5 million. This represents an increase of 33.2 percent from $81.0 million and $323.8 million run-rate in the same period in 2011 and an increase of 28.3 percent from Q1 2012’s $84.1 million and $336.3 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 $134.5 million in cash, and $1,147.1 million in debt for a net debt balance of $1,012.6 million. We generated net cash from operating activities of $35.7 million for the six months ended June 30, 2012, compared to $41.1 million for the same period in 2011.

Guidance

 

Guidance    Q3 2012      FY 2012

Adjusted Revenue ($M)

   $166.0 - $170.0      $554.0 - $562.5

Adjusted Net Income ($M)

   $30.5 - $31.5      $112.7 - $115.0

Cash from Operating Activities ($M)

   N/A      $108.0 - $112.0

Capital Expenditures (% of revenue)

   N/A      2.8% - 3.2%

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 9, 2012. The call will discuss Q2 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 Second Quarter Earnings Conference Call,” conference ID # 13731137. A replay will be available after 8:00 p.m. eastern time on August 9, 2012, until midnight on August 16, 2012. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code # 13731137. The call will also be available for replay on SS&C’s website after August 10, 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 third 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, exposure to litigation, the Company’s ability to integrate acquired businesses, the effect of the acquisitions on customer demand for the Company’s products and services, and those risks described in the Company’s publicly available filings with the Securities and Exchange Commission. The Company cautions investors that it may not update any or all of the foregoing forward-looking statements.

About SS&C Technologies

SS&C is a global provider of investment and financial software-enabled services and software focused exclusively on the global financial services industry. Founded in 1986, SS&C has its headquarters in Windsor, Connecticut and offices around the world. 5,500 financial services organizations, from the worlds’ 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. The SS&C Technologies logo is available at www.globenewswire.com/newsroom/prs/?pkgid=8587

For more information

Patrick Pedonti Chief Financial Officer Tel: +1-860-298-4738

E-mail: InvestorRelations@sscinc.com


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operation

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,
2012
    June 30,
2011
    June 30,
2012
    June 30,
2011
 

Revenues:

        

Software licenses

   $ 5,768      $ 4,982      $ 9,578      $ 11,555   

Maintenance

     22,976        19,418        42,474        38,865   

Professional services

     7,217        5,860        13,009        11,127   

Software-enabled services

     84,889        61,543        149,464        119,263   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     120,850        91,803        214,525        180,810   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Software licenses

     1,543        1,700        2,845        3,375   

Maintenance

     9,789        8,801        18,455        17,467   

Professional services

     4,705        3,981        8,677        7,551   

Software-enabled services

     47,063        31,155        79,975        61,739   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     63,100        45,637        109,952        90,132   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     57,750        46,166        104,573        90,678   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     8,286        7,018        15,658        13,908   

Research and development

     10,646        9,053        19,285        17,025   

General and administrative

     8,271        7,200        12,859        13,743   

Transaction costs

     9,421        —          13,574        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     36,624        23,271        61,376        44,676   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     21,126        22,895        43,197        46,002   

Interest expense, net

     (4,485     (3,474     (5,034     (8,601

Other (expense) income, net

     (18,543     119        (14,417     (168

Loss on extinguishment of debt

     (4,355     —          (4,355     (2,881
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (6,257     19,540        19,391        34,352   

(Benefit) provision for income taxes

     (497     6,512        7,268        11,490   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (5,760   $ 13,028      $ 12,123      $ 22,862   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic (loss) earnings per share

   $ (0.07)      $ 0.17      $ 0.16      $ 0.30   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average number of common shares outstanding

     78,098        76,724        77,908        75,556   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) earnings per share

   $ (0.07)      $ 0.16      $ 0.15      $ 0.29   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

     78,098        80,800        82,491        79,756   
  

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     June 30,
2012
     December 31,
2011
 

ASSETS

     

Current assets:

     

Cash

   $ 134,472       $ 40,318   

Accounts receivable, net

     85,120         47,201   

Prepaid income taxes

     21,541         788   

Deferred income taxes

     11,641         889   

Prepaid expenses and other current assets

     11,568         5,214   

Restricted cash

     1,149         1,149   
  

 

 

    

 

 

 

Total current assets

     265,491         95,559   

Property and equipment, net

     51,033         14,304   

Deferred income taxes

     11,161         1,111   

Goodwill

     1,512,624         931,639   

Intangible and other assets, net

     598,540         164,995   
  

 

 

    

 

 

 

Total assets

   $ 2,438,849       $ 1,207,608   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current portion of long-term debt

   $ 55,850       $ —     

Accounts payable

     8,048         4,170   

Accrued employee compensation and benefits

     33,595         19,770   

Other accrued expenses

     25,188         14,058   

Interest payable

     3,127         95   

Deferred income taxes

     1,091         —     

Deferred maintenance and other revenue

     61,110         46,395   
  

 

 

    

 

 

 

Total current liabilities

     188,009         84,488   

Long-term debt, net of current portion

     1,091,206         100,000   

Other long-term liabilities

     15,233         14,081   

Deferred income taxes

     137,232         28,936   
  

 

 

    

 

 

 

Total liabilities

     1,431,680         227,505   

Total stockholders’ equity

     1,007,169         980,103   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 2,438,849       $ 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)

 

     Six Months Ended  
     June 30,
2012
    June 30,
2011
 

Cash flow from operating activities:

    

Net income

   $ 12,123      $ 22,862   

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

    

Depreciation and amortization

     25,885        20,990   

Stock-based compensation expense

     2,412        5,435   

Income tax benefit related to exercise of stock options

     (1,592     (4,884

Amortization of loan origination costs and original issue discount

     6,445        1,808   

Loss on sale or disposition of property and equipment

     1        —     

Deferred income taxes

     (2,157     (5,904

Provision for doubtful accounts

     272        649   

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

    

Accounts receivable

     (8,286     1,306   

Prepaid expenses and other assets

     6,237        (296

Accounts payable

     (464     243   

Accrued expenses

     1,643        (9,236

Income taxes receivable and payable

     (8,208     1,427   

Deferred maintenance and other revenues

     1,362        6,654   
  

 

 

   

 

 

 

Net cash provided by operating activities

     35,673        41,054   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Additions to property and equipment

     (4,817     (3,102

Cash paid for business acquisitions, net of cash acquired

     (957,539     (14,798

Additions to capitalized software

     (322     (1,075

Other

     87        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (962,591     (18,975
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Cash received from debt borrowings, net of costs

     1,304,980        —     

Repayment of debt

     (290,000     (87,833

Proceeds from common stock issuance, net

     —          51,971   

Proceeds from exercise of stock options

     7,468        6,190   

Payment of contingent consideration

     (1,800     —     

Income tax benefit related to exercise of stock options

     1,592        4,884   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     1,022,240        (24,788
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (1,168     508   
  

 

 

   

 

 

 

Net increase (decrease) in cash

     94,154        (2,201

Cash, beginning of period

     40,318        84,843   
  

 

 

   

 

 

 

Cash, end of period

   $ 134,472      $ 82,642   
  

 

 

   

 

 

 

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
June 30,
     Six Months Ended
June 30,
 
(in thousands)    2012      2011      2012      2011  

Revenue

   $ 120,850       $ 91,803       $ 214,525       $ 180,810   

Purchase accounting adjustments to deferred revenue

     351         7         351         14   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted revenue

   $ 121,201       $ 91,810       $ 214,876       $ 180,824   
  

 

 

    

 

 

    

 

 

    

 

 

 

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
June 30,
    Six Months Ended
June 30,
 
(in thousands)    2012      2011     2012     2011  

Operating income

   $ 21,126       $ 22,895      $ 43,197      $ 46,002   

Amortization of intangible assets

     13,564         9,161        22,420        18,113   

Stock-based compensation

     1,183         3,638        2,412        5,435   

Capital-based taxes

     —           2        (765     154   

Unusual or non-recurring charges

     9,691         242        14,375        490   

Purchase accounting adjustments

     300         (102     248        (204

Other

     —           —          —          (30
  

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted operating income

   $ 45,864       $ 35,836      $ 81,887      $ 69,960   
  

 

 

    

 

 

   

 

 

   

 

 

 

Note 3. Reconciliation of Net Income to EBITDA, Consolidated EBITDA and Adjusted Consolidated EBITDA

EBITDA represents net income before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA, defined under our Credit Agreement entered into in March 2012, is used in calculating covenant compliance, and is EBITDA adjusted for certain items. Consolidated EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described below. Adjusted consolidated EBITDA is calculated by subtracting acquired EBITDA from consolidated EBITDA. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are presented because we use these measures to evaluate performance of our business and believe them to be useful indicators of an entity’s debt capacity and its ability to service debt. EBITDA, consolidated EBITDA and adjusted consolidated EBITDA are not recognized terms under GAAP and should not be considered in isolation or as alternatives to operating income, net income or cash flows from operating activities. 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
June 30,
    Six Months Ended
June 30,
    Twelve  Months
Ended

June 30,
2012
 
(in thousands)    2012     2011     2012     2011    

Net (loss) income

   $ (5,760   $ 13,028      $ 12,123      $ 22,862      $ 40,282   

Interest expense, net

     8,840        3,474        9,389        11,482        17,322   

Taxes

     (497     6,512        7,268        11,490        18,696   

Depreciation and amortization

     15,680        10,612        25,885        20,990        47,119   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     18,263        33,626        54,665        66,824        123,419   

Stock-based compensation

     1,183        3,638        2,412        5,435        10,470   

Capital-based taxes

     —          2        (765     154        (565

Acquired EBITDA and cost savings

     12,238        —          12,238        443        79,802   

Unusual or non-recurring charges

     28,235        123        28,793        659        30,489   

Purchase accounting adjustments

     300        (102     248        (204     79   

Other

     (48     116        (91     86        (360
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

     60,171        37,403        97,500        73,397        243,334   

Less: acquired EBITDA

     (12,238     —          (12,238     (443     (79,802
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated EBITDA

   $ 47,933      $ 37,403      $ 85,262      $ 72,954      $ 163,532   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
June 30,
    Six Months Ended
June 30,
 
(in thousands, except per share data)    2012     2011     2012     2011  

GAAP – Net (loss) income

   $ (5,760   $ 13,028      $ 12,123      $ 22,862   

Plus: Amortization of intangible assets

     13,563        9,161        22,419        18,113   

Plus: Amortization of deferred financing costs and original issue discount

     531        416        589        886   

Plus: Stock-based compensation

     1,183        3,638        2,412        5,435   

Plus: Capital-based taxes

     —          2        (765     154   

Plus: Unusual and non-recurring items

     28,235        123        28,793        659   

Plus: Loss on extinguishment of debt

     4,355        —          4,355        2,881   

Plus: Purchase accounting adjustments

     300        (102     248        (204

Plus: Other

     —          —          —          (30

Income tax effect (1)

     (15,166     (4,960     (19,837     (10,296
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 27,241      $ 21,306      $ 50,337      $ 40,460   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.33      $ 0.26      $ 0.61      $ 0.51   

GAAP diluted earnings per share

   $ (0.07   $ 0.16      $ 0.15      $ 0.29   

Diluted weighted-average shares outstanding

     82,822        80,800        82,491        79,756   

 

(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.