SS&C Technologies Holdings, Inc.

SS&C Technologies Reports Record Revenue of $94.3 Million, Up 13.6%

Adjusted Diluted EPS of $0.28, up 22%, GAAP Diluted EPS of $0.18, up 38%

WINDSOR, Conn., Nov. 7, 2011 (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 ended September 30, 2011.

"I am very pleased by our top-line revenue growth, in particular, the 17.5 percent increase in software-enabled services," said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. "Our record Q3 2011 revenues reinforce our customer-focused strategy as they partner with us to innovate in technology, mobility, and cloud-based services. Today we also launched a radio campaign on Bloomberg to highlight our strong fund administration business."

Results

The Company reported quarterly revenue of $94.3 million for the third quarter of 2011, compared to $83.0 million in the third quarter of 2010, an increase of 13.6 percent.

GAAP operating income for the third quarter of 2011 was $24.1 million, or 25.5 percent of revenue. This represents a 23.0 percent increase compared to GAAP operating income of $19.6 million and 23.6 percent of revenue in the third quarter of 2010. GAAP net income for the third quarter of 2011 was $14.9 million compared to $9.9 million in the third quarter of 2010, an increase of 51.2 percent.

On a fully diluted GAAP basis, earnings per diluted share in the third quarter of 2011 were up 38.5 percent to $0.18 compared with $0.13 in the third quarter of 2010.

Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the third quarter of 2011 was $37.6 million, or 39.9 percent of adjusted revenue. This represents a 15.3 percent increase compared to adjusted operating income of $32.7 million and 39.3 percent of adjusted revenue in the third quarter of 2010.

Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the third quarter of 2011 was $22.6 million compared to $17.2 million in 2010's third quarter, a 31.9 percent increase.

Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the third quarter of 2011 were $0.28 compared to $0.23 in the third quarter of 2010, an increase of 21.7 percent.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $82.8 million for the third quarter of 2011, an annual run-rate of $331.4 million. This represents an increase of 14.8 percent from $72.1 million and $288.6 million annual run-rate in the same period in 2010 and an increase of 2.3 percent from Q2 2011's $81.0 million and $323.8 million annual run-rate. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.

Acquisition

In the third quarter of 2011, SS&C acquired Dublin-based BDO Simpson Xavier Fund Administration Services Limited, a company owned by BDO. This company is now known as SS&C Fund Services Ireland Limited. The addition of the regulated, fully staffed and operational office in Dublin provides SS&C entry into the strategically important European regulated funds market, providing support for additional fund structures, including UCITS and QIF funds.

Operating Cash Flow

SS&C ended the quarter with $76.2 million in cash and cash equivalents, and $172.7 million in debt for a net debt balance of $96.5 million. We generated net cash from operating activities of $71.6 million for the nine months ended September 30, 2011, compared to $47.6 million for the same period in 2010, an increase of 50.3 percent.

Guidance

SS&C announces the following financial guidance for the fourth quarter and fiscal year 2011:

GuidanceQ4 2011FY 2011
Total Revenue ($M) $94.0 -- $97.5 $369.0 -- $373.0
Adjusted Net Income ($M) $22.2 -- $23.1 $85.3 -- $86.2
Cash from Operating Activities ($M) N/A $87.0 -- $90.0
Capital Expenditures (% of revenue) N/A 2.1% - 2.3%

Results of SS&C Technologies, Inc.

Our operating subsidiary, SS&C Technologies, Inc., posted the same revenues and net income for the third quarter of 2011 as the Company.

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 Q3 earnings call will take place at 5:00 p.m. eastern time today, November 7, 2011. The call will discuss Q3 2011 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 2011 Third Quarter Earnings Conference Call," conference ID #16766822. A replay will be available after 8:00 p.m. eastern time on November 7, 2011, until midnight on November 14, 2011. The dial-in number is 855-859-2056 (U.S. and Canada) 404-537-3406 (International); access code #16766822. The call will also be available for replay on SS&C's website after November 14, 2011; access: http://investor.ssctech.com/results.cfm.

This press release contains forward-looking statements relating to, among other things, our financial guidance for the fourth quarter of 2011 and full year 2011. 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

Celebrating its 25th year, 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. More than 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.

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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 EndedNine Months Ended
  September 30,
   2011
September 30,
2010
September 30,
 2011
September 30,
 2010
Revenues:        
Software licenses $ 5,786 $ 5,966  $ 17,341 $ 17,629
Maintenance 19,594 18,294 58,459 54,130
Professional services 5,688 4,896 16,815 15,384
Software-enabled services 63,255 53,847 182,518 155,652
Total revenues 94,323 83,003 275,133 242,795
         
Cost of revenues:        
Software licenses 1,714 1,918 5,089 5,754
Maintenance 8,729 8,224 26,196 24,305
Professional services 3,888 3,625 11,439 10,243
Software-enabled services 32,148 28,570 93,887 82,137
Total cost of revenues 46,479 42,337 136,611 122,439
         
Gross profit 47,844 40,666 138,522 120,356
         
Operating expenses:        
Selling and marketing 7,308 6,275 21,216 18,910
Research and development 9,328 7,867 26,353 23,486
General and administrative 7,118 6,939 20,861 19,165
Total operating expenses 23,754 21,081 68,430 61,561
         
Operating income 24,090 19,585 70,092 58,795
         
Interest expense, net (3,215) (6,743) (11,816) (23,818)
Other income, net 348 653 180 653
Loss on extinguishment of debt -- -- (2,881) (5,480)
         
Income before income taxes 21,223 13,495  55,575 30,150
Provision for income taxes   6,324 3,641 17,814 6,913
         
Net income $ 14,899 $ 9,854 $ 37,761 $ 23,237
         
Basic earnings per share $   0.19 $   0.14 $    0.50 $   0.34
Basic weighted average number of
common shares outstanding
 
77,315
 
71,889
 
76,149
 
67,919
Diluted earnings per share $   0.18 $   0.13 $   0.47 $   0.32
Diluted weighted average number
of common and common equivalent
shares outstanding
80,730  75,441  80,109  71,499

See Notes to Condensed Consolidated Financial Information.

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 September 30,
2011
December 31,
2010
ASSETS    
Current assets:    
Cash and cash equivalents $ 76,175  $ 84,843
Accounts receivable, net 44,547 45,531
Prepaid income taxes 7,332   2,242
Deferred income taxes 1,198 1,142
Prepaid expenses and other current assets 6,312 5,932
Total current assets  135,564  139,690
     
Property and equipment, net 13,750 13,570
     
Deferred income taxes 627 686
Goodwill 924,835 926,668
Intangible and other assets, net 173,728 195,112
     
Total assets  $ 1,248,504  $ 1,275,726
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:      
Current portion of long-term debt $  1,195 $ 1,702
Accounts payable   3,322  3,790
Accrued employee compensation and benefits 14,384 16,854
Other accrued expenses 11,877 11,052
Interest payable 2,609 1,305
Deferred maintenance and other revenue 44,361 41,671
Total current liabilities 77,748 76,374
     
Long-term debt, net of current portion 171,492 289,092
Other long-term liabilities 13,603 12,343
Deferred income taxes 32,144 40,734
Total liabilities 294,987 418,543
     
Total stockholders' equity 953,517 857,183
     
Total liabilities and stockholders' equity  $ 1,248,504  $ 1,275,726
     

See Notes to Condensed Consolidated Financial Information.

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Nine Months Ended
  September 30, 
 2011
September 30,
 2010
Cash flow from operating activities:    
Net income  $  37,761  $ 23,237
Adjustments to reconcile net income to net cash provided    
by operating activities:    
Depreciation and amortization 31,482 30,356
Stock-based compensation expense 9,215 9,181
Amortization of loan origination costs 2,223 2,896
Loss (gain) on sale or disposition of property and equipment  11  (1)
Deferred income taxes (8,781) (12,467)
Provision for doubtful accounts   788   580
Changes in operating assets and liabilities, excluding effects  
from acquisitions:
   
Accounts receivable 581 (2,009)
Prepaid expenses and other assets (188) 80
Accounts payable  (535)  (2,151)
Accrued expenses and other liabilities (1,168) 90
Income taxes receivable and payable   (2,429)  (2,392)
Deferred maintenance and other revenues 2,619 229
Net cash provided by operating activities  71,579  47,629
     
Cash flow from investing activities:    
Additions to property and equipment   (4,437)   (3,265)
Proceeds from sale of property and equipment -- 51
Cash paid for business acquisitions, net of cash acquired   (19,863)   (11,372)
Additions to capitalized software and other intangibles  (1,264)  (171)
Net cash used in investing activities   (25,564) (14,757)
     
Cash flow from financing activities:    
Repayment of debt  (118,210) (107,670)
Proceeds from common stock issuance, net 51,971 134,613
Proceeds from exercise of stock options 7,034 5,880
Purchase of common stock for treasury -- (1,169)
Income tax benefit related to exercise of stock options 4,889 3,453
Net cash (used in) provided by financing activities  (54,316) 35,107
     
Effect of exchange rate changes on cash and cash equivalents  (367)  (59)
     
Net (decrease) increase in cash and cash equivalents (8,668)   67,920
Cash and cash equivalents, beginning of period  84,843  19,055
Cash and cash equivalents, end of period  $ 76,175  $ 86,975

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 
September 30,
Nine Months Ended
 September 30,
(in thousands)20112010 2011  2010 
Revenue $ 94,323 $ 83,003 $ 275,133  $ 242,795
Purchase accounting adjustments to  
deferred revenue
 
7
 
36
 
20
 
178
Adjusted revenue $ 94,330  $ 83,039 $ 275,153 $ 242,973

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
September 30,
Nine Months Ended
September 30,
(in thousands)20112010 2011  2010   
Operating income $ 24,090 $ 19,585 $ 70,092  $ 58,795
Amortization of intangible assets 9,295 8,727 27,408 26,135
Stock-based compensation 3,780 3,949 9,215 9,181
Capital-based taxes -- 407 154 861
Unusual or non-recurring charges 579 121 1,069 204
Purchase accounting adjustments (104) (87) (308) (124)
Other -- (47) (30) 114
Adjusted operating income $ 37,640  $ 32,655 $ 107,600 $  95,166

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 November 2005, 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
September 30,
Nine Months Ended
September 30,
Twelve Months
Ended

September 30,
(in thousands)20112010 2011 2010 2011
Net income  $ 14,899 $ 9,854  $ 37,761  $ 23,237  $ 46,937
Interest expense, net 3,215  6,743  14,697  29,298  21,291
Income taxes 6,324 3,641 17,814 6,913 22,935
Depreciation and amortization 10,492  10,059  31,482  30,356  41,854
EBITDA  34,930  30,297  101,754  89,804  133,017
Stock-based compensation 3,780 3,949 9,215 9,181 13,288
Capital-based taxes -- 407 154 861 384
Acquired EBITDA and cost savings 156  --  749  192   2,003
Unusual or non-recurring charges 231  (533)  890  (449)  1,014
Purchase accounting adjustments (104)   (87)  (308)  (124)  (422)
Other (122) (47) (36) 114 (111)
Consolidated EBITDA  38,871  33,986  112,418  99,579  149,173
Less: acquired EBITDA (156) -- (749) (192) (2,003)
Adjusted Consolidated EBITDA $ 38,715  $ 33,986 $ 111,669 $ 99,387 $ 147,170

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
September 30,
Nine Months Ended
September 30,
(in thousands, except per share data)20112010 2011  2010 
GAAP — Net income $ 14,899 $ 9,854 $ 37,761  $ 23,237
Plus: Amortization of intangible assets 9,295 8,727 27,408 26,135
Plus: Amortization of deferred financing costs 414 493 1,300 1,631
Plus: Stock-based compensation 3,780 3,949 9,215 9,181
Plus: Capital-based taxes -- 407 154 861
Plus: Unusual and non-recurring items 231 (533) 890 (449)
Plus: Loss on extinguishment of debt -- -- 2,881 5,480
Plus: Purchase accounting adjustments (104) (87) (308) (124)
Plus: Other -- (47) (30) 114
Income tax effect (1) (5,870) (5,600) (16,166) (18,629)
Adjusted net income $ 22,645  $ 17,163 $ 63,105 $ 47,437
         
Adjusted diluted earnings per share $ 0.28 $ 0.23 $ 0.79 $ 0.66
         
GAAP diluted earnings per share $  0.18 $ 0.13 $ 0.47 $ 0.32
         
Diluted weighted-average shares outstanding 80,730 75,441 80,109 71,499

(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.

CONTACT: Patrick Pedonti

         Chief Financial Officer

         Tel: +1-860-298-4738

         E-mail: investorrelations@sscinc.com