May 1, 2013

SS&C Technologies Reports Record Q1 2013 Results, Revenues up 84.9%

GAAP Diluted Earnings Per Share of $0.26, up 18%, Adjusted Diluted Earnings Per Share of $0.45, up 61%

WINDSOR, Conn., May 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 March 31, 2013.

"Our software-enabled services business continues to grow, up 110.2 percent over the same period in 2012. We see a lot of potential in fund administration and believe we are in an excellent position," said Bill Stone, Chairman and Chief Executive Officer, SS&C Technologies Holdings, Inc. "We continue to win large mandates and we are seeing opportunity throughout hedge, private equity, managed accounts, pension and insurance markets. The best technology, combined with the best people and processes, are clear and convincing winners."

Results

SS&C reported GAAP revenue of $173.2 million for the first quarter of 2013, compared to $93.7 million in the first quarter of 2012, an 84.9 percent increase.

GAAP operating income for the first quarter of 2013 was $42.0 million, or 24.2 percent of revenue. This represents an increase of 90.3 percent compared to $22.1 million, or 23.6 percent of revenue, in the first quarter of 2012. GAAP net income for the first quarter of 2013 was $21.4 million compared to $17.9 million in the first quarter of 2012, a 19.8 percent increase. On a fully diluted GAAP basis, earnings per share in the first quarter of 2013 were $0.26 compared to $0.22 in the first quarter of 2012, an 18.2 percent increase.

Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the first quarter of 2013 was $64.8 million, or 37.4 percent of revenue. This represents a 79.8 percent increase compared to $36.0 million, or 38.5 percent of revenue, in the first quarter of 2012. Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the first quarter of 2013 was $37.6 million compared to $23.1 million in 2012's first quarter, a 62.6 percent increase. Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the first quarter of 2013 were $0.45 compared to $0.28 in the first quarter of 2012, a 60.7 percent increase.

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as the sum of maintenance and software-enabled services revenue on an annualized basis, was $647.0 million based on maintenance and software-enabled services revenue of $161.8 million for the first quarter of 2013. This represents an increase of 92.4 percent from $84.1 million and $336.3 million annual run-rate in the same period in 2012 and an increase of 2.9 percent from $157.2 million for the fourth quarter of 2012, an annual run rate of $628.7 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 $68.8 million in cash, and $976.0 million in gross debt, for a net debt balance of $907.2 million. SS&C generated net cash from operating activities of $20.6 million for the quarter ended March 31, 2013, compared to $13.1 million for the same period in 2012, representing a 57.1 percent increase.                                                                           

Guidance

  Q2 2013 FY 2013
Adjusted Revenue ($M) $175.0 - $179.0 $712.0 - $722.0
Adjusted Net Income ($M) $38.3 - $39.3 $157.0 - $160.0
Cash from Operating Activities ($M) N/A $171.0 - $177.0
Capital Expenditures (% of revenue) N/A 2.4% - 2.8%
Diluted Shares (M) 85.4 - 85.6 85.4 — 85.8
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 Q1 earnings call will take place at 5:00 p.m. eastern time today, May 1, 2013. The call will discuss Q1 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 First Quarter Earnings Conference Call," conference ID # 36643187. A replay will be available after 8:00 p.m. eastern time on May 1, 2013, until midnight on May 8, 2013. The dial-in number is (855) 859-2056 (U.S. and Canada) (404) 537-3406 (International); access code # 36643187. The call will also be available for replay on SS&C's website after May 8, 2013; access: http://investor.ssctech.com/results.cfm.

This press release contains forward-looking statements relating to, among other things, our financial guidance for the second quarter and full year of 2013. 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. 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 Operations
(in thousands, except per share data)
(unaudited)
     
  Three Months Ended March 31,
  2013 2012
Revenues:    
Software-enabled services $135,739 $64,575
Software licenses 6,070 3,810
Maintenance 26,015 19,498
Professional services 5,394 5,792
Total revenues 173,218 93,675
     
Cost of revenues:    
Software-enabled services 80,727 32,912
Software licenses 1,274 1,302
Maintenance 10,520 8,666
Professional services 4,920 3,972
Total cost of revenues 97,441 46,852
     
Gross profit 75,777 46,823
     
Operating expenses:    
Selling and marketing 9,464 7,372
Research and development 13,802 8,639
General and administrative 10,515 4,588
Transaction costs  --  4,153
Total operating expenses 33,781 24,752
     
Operating income 41,996 22,071
     
Interest expense, net (12,505) (549)
Other income, net 146 4,126
     
Income before income taxes 29,637 25,648
Provision for income taxes 8,208 7,765
     
Net income $21,429 $17,883
     
Basic earnings per share $0.27 $0.23
     
Basic weighted average number of common shares outstanding 79,340 77,718
     
Diluted earnings per share $0.26 $0.22
     
Diluted weighted average number of common and common equivalent shares outstanding 83,770 82,007
     
See Notes to Condensed Consolidated Financial Information.
     
SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
  March 31, December 31,
  2013 2012
ASSETS    
Current assets:    
Cash $68,838 $86,160
Accounts receivable, net 91,496 91,690
Prepaid income taxes 23,750 9,651
Deferred income taxes 7,700 5,408
Prepaid expenses and other current assets 11,142 11,548
Restricted cash 2,460 2,460
Total current assets 205,386 206,917
     
Property and equipment, net 53,083 55,039
     
Deferred income taxes 1,686 1,459
Goodwill 1,536,038 1,559,607
Intangible and other assets, net 509,912 539,883
     
Total assets $2,306,105 $2,362,905
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of long-term debt $21,384 $22,248
Accounts payable 6,053 10,528
Income taxes payable -- 1,314
Accrued employee compensation and benefits 14,582 39,812
Other accrued expenses 23,402 22,650
Deferred maintenance and other revenue 66,893 63,700
Total current liabilities 132,314 160,252
     
Long-term debt, net of current portion 946,089 989,890
Other long-term liabilities 16,215 17,102
Deferred income taxes 118,292 120,158
Total liabilities 1,212,910 1,287,402
     
Total stockholders' equity 1,093,195 1,075,503
     
Total liabilities and stockholders' equity $2,306,105 $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)
     
  Three Months Ended March 31,
  2013 2012
     
Cash flow from operating activities:    
Net income $21,429 $17,883
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 24,752 10,205
Non-cash gain on foreign currency derivatives -- (4,365)
Stock-based compensation expense 2,106 1,229
Income tax benefit related to exercise of stock options (2,679) (536)
Amortization of loan origination costs and original issue discount 1,388 58
(Gain) loss on sale or disposition of property and equipment (7) 1
Deferred income taxes (3,919) (1,632)
Provision for doubtful accounts 184 96
Changes in operating assets and liabilities, excluding effects from acquisitions:    
Accounts receivable (1,751) (5,759)
Prepaid expenses and other assets 2,624 (522)
Accounts payable (4,267) 973
Accrued expenses (23,463) (13,558)
Income taxes prepaid and payable 668 928
Deferred maintenance and other revenue 3,578 8,137
Net cash provided by operating activities 20,643 13,138
     
Cash flow from investing activities:    
Additions to property and equipment (2,044) (1,232)
Proceeds from sale of property and equipment 7  --
Cash paid for business acquisitions, net of cash acquired  --  (19)
Additions to capitalized software (202) (85)
Other -- 87
Net cash used in investing activities (2,239) (1,249)
     
Cash flow from financing activities:    
Cash received from debt borrowings -- 15,000
Repayments of debt (45,000) (30,000)
Income tax benefit related to exercise of stock options 2,679 536
Proceeds from exercise of stock options 8,931 3,896
Other (1,055) --
Net cash used in financing activities (34,445) (10,568)
     
Effect of exchange rate changes on cash (1,281) 305
     
Net (decrease) increase in cash  (17,322) 1,626
Cash, beginning of period 86,160 40,318
Cash, end of period $68,838 $41,944
     
Supplemental disclosure of non-cash activities:    
Excess tax benefit related to stock option exercises  $ 12,710 $ --
     
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 the 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 March 31,
(in thousands) 2013 2012
Revenue  $173,218 $93,675
Purchase accounting adjustments to deferred revenue 114  --
Adjusted revenue $173,332 $93,675

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 the 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 March 31,
(in thousands) 2013 2012
Operating income  $41,996 $22,071
Amortization of intangible assets 21,018 8,856
Stock-based compensation 2,106 1,229
Capital-based taxes -- (765)
Unusual or non-recurring charges (410) 4,684
Purchase accounting adjustments 65 (52)
Adjusted operating income $64,775 $36,023

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

      Twelve months ended 
  Three months ended March 31, March 31,
(in thousands) 2013 2012 2013
Net income $21,429 $17,883 $49,366
Interest expense, net 12,505 549 48,812
Taxes 8,208 7,765 25,108
Depreciation and amortization 24,752 10,205 90,361
EBITDA $66,894 $36,402 $213,647
Stock-based compensation 2,106 1,229 6,467
Capital-based taxes -- (765) (20)
Acquired EBITDA and cost savings -- -- 13,408
Unusual or non-recurring charges (556) 558 30,515
Purchase accounting adjustments 65 (52) 1,011
Other 211 (43) 237
Consolidated EBITDA 68,720 37,329 265,265
Less: acquired EBITDA  --  -- (13,408)
Adjusted Consolidated EBITDA $68,720 $37,329 $251,857

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 March 31,
(in thousands, except per share data) 2013 2012
GAAP — Net income  $21,429 $17,883
Plus: Amortization of intangible assets 21,018 8,856
Plus: Amortization of deferred financing costs and original issue discount 1,388 58
Plus: Stock-based compensation 2,106 1,229
Plus: Capital-based taxes -- (765)
Plus: Unusual and non-recurring items (556) 558
Plus: Purchase accounting adjustments 65 (52)
Income tax effect (1) (7,889) (4,671)
Adjusted net income $37,561 $23,096
     
Adjusted diluted earnings per share $0.45 $0.28
GAAP diluted earnings per share $0.26 $0.22
     
     
Diluted weighted average shares outstanding 83,770 82,007
     
(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: For more information

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

         E-mail: InvestorRelations@sscinc.com

 

 

 


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