WINDSOR, Conn., Aug. 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 100 th 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.
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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 InformationNote 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 EndedJune 30,
Six Months EndedJune 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 EndedJune 30,
Six Months EndedJune 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 EndedJune 30,
(in thousands)
2013
2012
2013
2012
2013
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.
CONTACT: Patrick Pedonti Chief Financial Officer Tel: +1-860-298-4738 E-mail: InvestorRelations@sscinc.com