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8-K - FORM 8-K - SS&C Technologies Holdings Incd578125d8k.htm

Exhibit 99.1

 

LOGO

GAAP operating income of $45.3 million, up 114.4%, Non-GAAP adjusted operating income of $68.8 million, up 49.9%

WINDSOR, CT, August 1, 2013 (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, 2013.

“Our second quarter results are further evidence that our business strategy is on target and our software-enabled services business continues to drive growth, with software-enabled services revenue up 62.6 percent over the same period in 2012,” said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. “We are building world-class systems and processes and integrating them with subject matter expertise. Our Regulatory Solutions Group which was formed 1 year ago recently signed its 100th customer. We intend to be the thought leader and customer service leader. New capabilities in trading, risk, investor communications, and asset coverage will cement our leadership position”.

Results

SS&C reported GAAP revenue of $177.5 million for the second quarter of 2013, compared to $120.9 million in the second quarter of 2012, a 46.8 percent increase. GAAP operating income for the second quarter of 2013 was $45.3 million, or 25.5 percent of revenue. This represents an increase of 114.4 percent compared to $21.1 million, or 17.5 percent of revenue, in the second quarter of 2012. GAAP net income for the second quarter of 2013 was $26.1 million compared to a GAAP net loss of $5.8 million in the second quarter of 2012. On a fully diluted GAAP basis, earnings per share in the second quarter of 2013 were $0.31 compared to a fully diluted GAAP loss of $0.07 per share in the second quarter of 2012.

Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the second quarter of 2013 was $68.8 million, or 38.7 percent of adjusted revenue. This represents a 49.9 percent increase compared to $45.9 million, or 37.8 percent of adjusted revenue, in the second quarter of 2012. Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the second quarter of 2013 was $41.0 million compared to $27.2 million in 2012’s second quarter, a 50.5 percent increase. Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the second quarter of 2013 were $0.48 compared to $0.33 in the second quarter of 2012, a 45.5 percent increase.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the sum of maintenance and software-enabled services revenue for the quarter on an annualized basis, was $653.8 million based on maintenance and software-enabled services revenue of $163.5 million for the second quarter of 2013. This represents an increase of 51.5 percent from $107.9 million and $431.5 million annual run-rate in the same period in 2012 and an increase of 1.1 percent from $161.8 million for the first quarter of 2013, an annual run rate of $647.0 million. 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 $60.6 million in cash, and $919.0 million in gross debt, for a net debt balance of $858.4 million. SS&C generated net cash from operating activities of $70.0 million for the six months ended June 30, 2013, compared to $35.7 million for the same period in 2012, representing a 96.2 percent increase.


New Los Angeles Office

The increase in our software-enabled services can be attributed primarily to the growth of our alternative investment services. “We continue to see momentum in this business,” said Stone. “Ares Management LLC, a $65.9 billion Los Angeles-based asset management firm, which signed a Strategic Partnership Agreement with SS&C GlobeOp to provide certain administrative support services. In conjunction with such Strategic Partnership Agreement, SS&C has entered into a long-term lease in Century City to facilitate this opportunity.”

Guidance

 

     Q3 2013     FY 2013  

Adjusted Revenue ($M)

   $ 179.0 - $183.0      $ 714.0 - $722.0   

Adjusted Net Income ($M)

   $ 42.5 - $44.0      $ 165.0 - $167.5   

Cash from Operating Activities ($M)

     N/A      $ 181.0 - $187.0   

Capital Expenditures (% of revenue)

     N/A        2.4% - 2.8%   

Diluted Shares (M)

     86.9 - 87.2        85.5 - 85.9   

Effective Income Tax Rate (%)

     30     30

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 1, 2013. The call will discuss Q2 2013 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 2013 Second Quarter Earnings Conference Call,” conference ID # 17176429. A replay will be available after 8:00 p.m. eastern time on August 1, 2013, until midnight on August 8, 2013. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code # 17176429. The call will also be available for replay on SS&C’s website after August 1, 2013; access: http://investor.ssctech.com/results.cfm.

Certain information contained in this press release relating to, among other things, our financial guidance for the third quarter and full year of 2013, constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “estimates”, “projects”, “forecasts”, “may” and “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. 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 discussed in the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission and can also be accessed on our website. 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. Some 5,500 financial services organizations, from the world’s largest institutions to local firms, manage and account for their investments using SS&C’s products and services. These clients in the aggregate manage over $26 trillion in assets.

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,
2013
    June 30,
2012
    June 30,
2013
    June 30,
2012
 

Revenues:

        

Software-enabled services

   $ 138,047      $ 84,889      $ 273,786      $ 149,464   

Software licenses

     6,626        5,768        12,696        9,578   

Maintenance

     25,410        22,976        51,425        42,474   

Professional services

     7,374        7,217        12,768        13,009   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     177,457        120,850        350,675        214,525   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Software-enabled services

     80,245        47,063        160,972        79,975   

Software licenses

     1,348        1,543        2,622        2,845   

Maintenance

     10,283        9,789        20,803        18,455   

Professional services

     4,885        4,705        9,805        8,677   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     96,761        63,100        194,202        109,952   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     80,696        57,750        156,473        104,573   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     10,563        8,286        20,027        15,658   

Research and development

     13,639        10,646        27,441        19,285   

General and administrative

     11,202        8,271        21,717        12,859   

Transaction costs

     —          9,421        —          13,574   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     35,404        36,624        69,185        61,376   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     45,292        21,126        87,288        43,197   

Interest expense, net

     (11,784     (4,485     (24,289     (5,034

Other income (expense), net

     2,370        (18,543     2,516        (14,417

Loss on extinguishment of debt

     —          (4,355     —          (4,355
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     35,878        (6,257     65,515        19,391   

Provision (benefit) for income taxes

     9,759        (497     17,967        7,268   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 26,119      $ (5,760   $ 47,548      $ 12,123   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share

   $ 0.32      $ (0.07   $ 0.59      $ 0.16   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average number of common shares outstanding

     81,186        78,098        80,268        77,908   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share

   $ 0.31      $ (0.07   $ 0.56      $ 0.15   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average number of common and common equivalent shares outstanding

     85,280        78,098        84,550        82,491   
  

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Information.


SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     June 30,
2013
     December 31,
2012
 

ASSETS

     

Current assets:

     

Cash

   $ 60,586       $ 86,160   

Accounts receivable, net

     97,372         91,690   

Prepaid income taxes

     21,738         9,651   

Deferred income taxes

     5,681         5,408   

Prepaid expenses and other current assets

     24,504         11,548   

Restricted cash

     2,460         2,460   
  

 

 

    

 

 

 

Total current assets

     212,341         206,917   

Property and equipment, net

     53,703         55,039   

Deferred income taxes

     1,100         1,459   

Goodwill

     1,526,428         1,559,607   

Intangible and other assets, net

     489,045         539,883   
  

 

 

    

 

 

 

Total assets

   $ 2,282,617       $ 2,362,905   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current portion of long-term debt

   $ 20,196       $ 22,248   

Accounts payable

     8,542         10,528   

Income taxes payable

     —           1,314   

Accrued employee compensation and benefits

     22,931         39,812   

Other accrued expenses

     32,543         22,650   

Deferred maintenance and other revenue

     59,655         63,700   
  

 

 

    

 

 

 

Total current liabilities

     143,867         160,252   

Long-term debt, net of current portion

     890,618         989,890   

Other long-term liabilities

     17,421         17,102   

Deferred income taxes

     115,139         120,158   
  

 

 

    

 

 

 

Total liabilities

     1,167,045         1,287,402   

Total stockholders’ equity

     1,115,572         1,075,503   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 2,282,617       $ 2,362,905   
  

 

 

    

 

 

 

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,
2013
    June 30,
2012
 

Cash flow from operating activities:

    

Net income

   $ 47,548      $ 12,123   

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

    

Depreciation and amortization

     49,742        25,885   

Stock-based compensation expense

     4,035        2,412   

Income tax benefit related to exercise of stock options

     (4,941     (1,592

Amortization of loan origination costs and original issue discount

     2,988        6,445   

Loss on sale or disposition of property and equipment

     322        1   

Deferred income taxes

     (4,474     (2,157

Provision for doubtful accounts

     314        272   

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

    

Accounts receivable

     (6,418     (8,286

Prepaid expenses and other assets

     (4,712     6,237   

Accounts payable

     (2,248     (464

Accrued expenses

     (14,245     1,643   

Income taxes prepaid and payable

     5,600        (8,208

Deferred maintenance and other revenue

     (3,506     1,362   
  

 

 

   

 

 

 

Net cash provided by operating activities

     70,005        35,673   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Additions to property and equipment

     (7,724     (4,817

Proceeds from sale of property and equipment

     55        —     

Cash paid for business acquisitions, net of cash acquired

     —          (957,539

Additions to capitalized software

     (428     (322

Other

     —          87   
  

 

 

   

 

 

 

Net cash used in investing activities

     (8,097     (962,591
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Cash received from debt borrowings, net of loan origination costs

     —          1,304,980   

Repayment of debt

     (102,000     (290,000

Proceeds from exercise of stock options

     14,086        7,468   

Payment of contingent consideration

     —          (1,800

Income tax benefit related to exercise of stock options

     4,941        1,592   

Other

     (1,917     —     
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (84,890     1,022,240   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (2,592     (1,168
  

 

 

   

 

 

 

Net (decrease) increase in cash

     (25,574     94,154   

Cash, beginning of period

     86,160        40,318   
  

 

 

   

 

 

 

Cash, end of period

   $ 60,586      $ 134,472   
  

 

 

   

 

 

 

Supplemental disclosure of non-cash activities:

    

Excess tax benefit related to stock option exercises

   $ 12,956      $ —     

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)    2013      2012      2013      2012  

Revenue

   $ 177,457       $ 120,850       $ 350,675       $ 214,525   

Purchase accounting adjustments to deferred revenue

     22         351         136         351   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted revenue

   $ 177,479       $ 121,201       $ 350,811       $ 214,876   
  

 

 

    

 

 

    

 

 

    

 

 

 

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)    2013     2012      2013     2012  

Operating income

   $ 45,292      $ 21,126       $ 87,288      $ 43,197   

Amortization of intangible assets

     21,174        13,564         42,192        22,420   

Stock-based compensation

     1,929        1,183         4,035        2,412   

Capital-based taxes

     —          —           —          (765

Unusual or non-recurring charges

     395        9,691         (15     14,375   

Purchase accounting adjustments

     (24     300         41        248   

Other

     —          —           —          —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted operating income

   $ 68,766      $ 45,864       $ 133,541      $ 81,887   
  

 

 

   

 

 

    

 

 

   

 

 

 

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 2013, 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 as indicators of our operating performance. The following is a reconciliation of EBITDA, consolidated EBITDA and adjusted consolidated EBITDA to net income.


     Three Months Ended
June 30,
    Six Months Ended
June 30,
    Twelve  Months
Ended

June 30,
2013
 
(in thousands)    2013     2012     2013     2012    

Net income (loss)

   $ 26,119      $ (5,760   $ 47,548      $ 12,123      $ 81,245   

Interest expense, net

     11,784        8,840        24,289        9,389        51,756   

Taxes

     9,759        (497     17,967        7,268        35,364   

Depreciation and amortization

     24,990        15,680        49,742        25,885        99,671   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     72,652        18,263        139,546        54,665        268,036   

Stock-based compensation

     1,929        1,183        4,035        2,412        7,213   

Capital-based taxes

     —          —          —          (765     (20

Acquired EBITDA and cost savings

     —          12,238        —          12,238        632   

Unusual or non-recurring charges

     (1,976     28,235        (2,532     28,793        304   

Purchase accounting adjustments

     (24     300        41        248        687   

Other

     6        (48     217        (91     291   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

     72,587        60,171        141,307        97,500        277,143   

Less: acquired EBITDA

     —          (12,238     —          (12,238     (632
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Consolidated EBITDA

   $ 72,587      $ 47,933      $ 141,307      $ 85,262      $ 276,511   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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)    2013     2012     2013     2012  

GAAP – Net income (loss)

   $ 26,119      $ (5,760   $ 47,548      $ 12,123   

Plus: Amortization of intangible assets

     21,174        13,563        42,192        22,419   

Plus: Amortization of deferred financing costs and original issue discount

     1,600        531        2,988        589   

Plus: Stock-based compensation

     1,929        1,183        4,035        2,412   

Plus: Capital-based taxes

     —          —          —          (765

Plus: Unusual and non-recurring items

     (1,976     28,235        (2,532     28,793   

Plus: Loss on extinguishment of debt

     —          4,355        —          4,355   

Plus: Purchase accounting adjustments

     (24     300        41        248   

Income tax effect (1)

     (7,815     (15,166     (15,704     (19,837
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 41,007      $ 27,241      $ 78,568      $ 50,337   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.48      $ 0.33      $ 0.93      $ 0.61   

GAAP diluted earnings per share

   $ 0.31      $ (0.07   $ 0.56      $ 0.15   

Diluted weighted-average shares outstanding

     85,280        82,822        84,550        82,491   

 

(1) An estimated normalized effective tax rate of 30% has been used to adjust the provision for income taxes for the purpose of computing adjusted net income.