SS&C Technologies Holdings, Inc.

SS&C Technologies Results for Q2 2012, Record Revenue of $120.9 Million

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, Conn., Aug. 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

GuidanceQ3 2012FY 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. 

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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 EndedSix Months Ended
 June 30,June 30,June 30,June 30,
 2012201120122011
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 (loss) earnings per share $(0.07) $0.16 $0.15 $0.29
         
See Notes to Condensed Consolidated Financial Information.
         
     
SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
 June 30,December 31,
 20122011
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,June 30,
 20122011
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 Six Months Ended
 June 30,June 30,
(in thousands)2012201120122011
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 EndedSix Months Ended
 June 30,June 30,
(in thousands)2012201120122011
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 EndedSix Months EndedTwelve Months Ended
 June 30,June 30,June 30,
(in thousands)20122011201220112012
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 EndedSix Months Ended
 June 30,June 30,
(in thousands, except per share data)2012201120122011
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.
         
CONTACT: Patrick Pedonti Chief Financial Officer Tel: +1-860-298-4738

         E-mail: InvestorRelations@sscinc.com