SS&C Technologies Holdings, Inc.

SS&C Reports Q4 and Full Year 2014 Results

Q4 GAAP Diluted Earnings Per Share of $0.42 Up 35.5%, Adjusted Diluted Earnings Per Share of $0.62, Up 17.0%

WINDSOR, Conn., Feb. 12, 2015 (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 fourth quarter and full year ended December 31, 2014.

Financial Highlights:

"We have just completed our 5th year as a public company. I am happy to report our 5th year of record adjusted revenue and adjusted diluted EPS," said Bill Stone, Chairman and CEO of SS&C Technologies. "We have expanded our range of products and services, won big mandates, and focused on delighting our customers. SS&C has reached over 300 Regulatory Solution's customers in its two-year lifespan, and has a newly formed REIT Servicing group where we have six of the leading mortgage REITs. In December 2014, we announced the acquisition of DST Global Solutions, which includes industry-leading products HiPortfolio and Anova, and just last week, we announced our plan to acquire Advent Software. 2014 was an exceptional year. We look forward to 2015 as a period of intense customer focus."

GAAP Results

SS&C reported GAAP revenue of $200.7 million for the fourth quarter of 2014, up 10.0 percent compared to $182.5 million in the fourth quarter of 2013. Revenue for the year ended December 31, 2014 was $767.9 million, up 7.7 percent over $712.7 million in 2013. GAAP operating income for the fourth quarter of 2014 was $53.6 million, up 12.1 percent from $47.8 million in 2013's fourth quarter. GAAP operating income for the year ended December 31, 2014 was $200.4 million, up 9.5 percent from $183.0 million for 2013. On a fully diluted GAAP basis, earnings per share in the fourth quarter of 2014 was $0.42 compared to fully diluted GAAP earnings per share of $0.31 in the fourth quarter of 2013, an increase of 35.5 percent. On a fully diluted basis, GAAP earnings per share for the year ended December 31, 2014, was $1.50, an 8.7 percent increase over 2013's $1.38 per share.

Adjusted Non-GAAP Results (defined in Notes 1-4 below)

Adjusted revenue in the fourth quarter of 2014 was $201.2 million, up 10.3 percent compared to $182.5 million in the fourth quarter of 2013. Adjusted revenue for the year ended December 31, 2014 was $768.4 million, up 7.8 percent over $712.8 million for 2013. Adjusted operating income in the fourth quarter of 2014 was $80.2 million, or 39.9 percent of adjusted revenue. This represents an 11.1 percent increase compared to adjusted operating income of $72.2 million and 39.6 percent of adjusted revenue in the fourth quarter of 2013. Adjusted operating income for the year ended December 31, 2014 was $305.5 million, up 10.3 percent from adjusted operating income of $276.9 million in 2013.

Adjusted net income for the fourth quarter of 2014 was $54.7 million, up 18.9 percent compared to $46.0 million in 2013's fourth quarter. Adjusted net income for the year ended December 31, 2014 was $205.8 million, up 21.8% percent compared to $169.0 million for 2013. Adjusted diluted earnings per share in the fourth quarter of 2014 was $0.62 per share, up 17.0 percent compared to $0.53 per share in the fourth quarter of 2013. Adjusted diluted earnings per share for the year ended December 31, 2014 was $2.36, up 19.8 percent compared to $1.97 for 2013.

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 $724.4 million based on maintenance and software-enabled services revenue of $181.1 million for the fourth quarter of 2014. This represents an increase of 8.8 percent from $166.5 million and $665.8 million run-rate in the same period in 2013 and an increase of 3.6 percent from $174.9 million for the third quarter of 2014, an annual run rate of $699.5 million. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.

Operating Cash Flow

SS&C ended the year with $109.6 million in cash, and $645.0 million in gross debt for a net debt balance of $535.4 million. SS&C generated net cash from operating activities of $252.5 million for the year ended December 31, 2014, compared to $208.3 million for the same period in 2013, an increase of 21.2 percent.

SS&C Acquisition of DST Global Solutions

SS&C expanded its global offering of investment management software and services with the acquisition of DST Global Solutions in December 2014 for $95 million in cash. SS&C financed $75 million of the purchase price by drawing down on its line of credit. This marks SS&C's 40th completed acquisition since inception, and adds industry leading platforms HiPorfolio and Anova to SS&C's suite of investment management products. This acquisition adds over 150 clients across the globe, and 90 percent of all revenue is generated in EMEA and Asia Pacific.

Guidance    
 Q1 2015FY 2015
Adjusted Revenue ($M) $204.0 - $210.0 $852.0 - $872.0
Adjusted Net Income ($M) $50.9 - $53.0 $229.0 - $240.0
Cash from Operating Activities ($M) N/A $260.0 - $275.0
Capital Expenditures (% of revenue) N/A 2.5% - 3.0%
Diluted Shares (M) 88.4 - 88.8 88.9 - 89.7
Effective Income Tax Rate (%) 28% 28%

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 Q4 and Full Year 2014 earnings call will take place at 5:00 p.m. eastern time today, February 12, 2015. The call will discuss Q4 and Full Year 2014 results and our guidance and business outlook. Interested parties may dial 877-312-8798 (US and Canada) or 253-237-1193 (International), and request the "SS&C Technologies Fourth Quarter and 2014 Earnings Conference Call"; conference ID# 74865368. A replay will be available after 8:00 p.m. eastern time on February 12, 2015, until midnight on February 18, 2015. The dial-in number is 855-859-2056 (US and Canada) or 404-537-3406 (International); access code # 74865368. The call will also be available for replay on SS&C's website after February 12, 2015; access: http://investor.ssctech.com/results.cfm .

Certain information contained in this press release relating to, among other things, our financial guidance for the first quarter and full year of 2014 and our intention to repurchase shares of our common stock from time to time and the intended use of any repurchased shares, 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, the market price of the Company's stock prevailing from time to time, the Company's cash flow from operations, general economic conditions, 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 6,900 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)
         
 Three Months EndedYear Ended
 December 31,December 31,December 31,December 31,
 2014201320142013
Revenues:        
Software-enabled services $152,313 $140,656 $592,528 $552,565
Software licenses 9,778 7,807 36,339 28,687
Maintenance 28,786 25,806 105,598 103,409
Professional services 9,854 8,253 33,396 28,041
Total revenues 200,731 182,522 767,861 712,702
         
Cost of revenues:        
Software-enabled services 85,916 81,872 342,625 322,719
Software licenses 1,152 1,394 3,701 5,302
Maintenance 11,256 10,093 41,254 41,046
Professional services 7,292 5,044 23,151 19,733
Total cost of revenues 105,616 98,403 410,731 388,800
         
Gross profit 95,115 84,119 357,130 323,902
         
Operating expenses:        
Selling and marketing 12,910 11,009 48,592 41,885
Research and development 15,826 13,304 57,287 53,862
General and administrative 12,784 11,990 50,879 45,187
Total operating expenses 41,520 36,303 156,758 140,934
         
Operating income 53,595 47,816 200,372 182,968
         
Interest expense, net (5,734) (7,954) (25,472) (41,279)
Other income, net 1,967 1,092 2,754 3,498
         
Income before income taxes 49,828 40,954 177,654 145,187
Provision for income taxes 13,221 14,073 46,527 27,292
         
Net income $36,607 $26,881 $131,127 $117,895
         
Basic earnings per share $0.44 $0.33 $1.57 $1.45
         
Basic weighted average number of common shares outstanding 83,869 82,428 83,314 81,195
         
Diluted earnings per share $0.42 $0.31 $1.50 $1.38
         
Diluted weighted average number of common and common equivalent shares outstanding 87,799 86,716 87,331 85,616
         
See Notes to Condensed Consolidated Financial Information.
 
SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
     
 December 31,December 31,
 20142013
ASSETS    
Current assets:    
Cash $109,577 $84,470
Accounts receivable, net 94,359 91,221
Prepaid income taxes 11,857 19,932
Deferred income taxes 2,975 6,526
Prepaid expenses and other current assets 14,927 16,567
Restricted cash 1,477 2,460
Total current assets 235,172 221,176
     
Property and equipment, net 54,277 51,697
     
Deferred income taxes 1,135 1,077
Goodwill 1,571,375 1,541,386
Intangible and other assets, net 423,911 459,988
     
Total assets $2,285,870 $2,275,324
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of long-term debt $20,470 $23,212
Accounts payable 12,004 8,368
Income taxes payable 1,116 2,169
Accrued employee compensation and benefits 53,975 44,664
Deferred taxes 110 --
Other accrued expenses 30,666 26,028
Deferred maintenance and other revenue 73,254 62,561
Total current liabilities 191,595 167,002
     
Long-term debt, net of current portion 618,435 751,295
Other long-term liabilities 26,446 14,913
Deferred income taxes 102,724 110,406
Total liabilities 939,200 1,043,616
     
Total stockholders' equity 1,346,670 1,231,708
     
Total liabilities and stockholders' equity $2,285,870 $2,275,324
     
See Notes to Condensed Consolidated Financial Information.
 
SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
     
 Year Ended
 December 31,December 31,
 20142013
Cash flow from operating activities:    
Net income $131,127 $117,895
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 99,831 99,780
Stock-based compensation expense 11,483 8,386
Income tax benefit related to exercise of stock options (15,484) (24,194)
Amortization and write-offs of loan origination costs 5,839 5,830
Loss on sale or disposition of property and equipment 687 317
Deferred income taxes (14,620) (11,069)
Provision for doubtful accounts 610 666
Changes in operating assets and liabilities, excluding effects from acquisitions:    
Accounts receivable 3,902 814
Prepaid expenses and other assets (5,382) (4,695)
Accounts payable 1,525 (4,032)
Accrued expenses 10,140 1,695
Income taxes prepaid and payable 21,560 18,060
Deferred maintenance and other revenue 1,284 (1,184)
Net cash provided by operating activities 252,502 208,269
     
Cash flow from investing activities:    
Additions to property and equipment (15,040) (11,921)
Proceeds from sale of property and equipment 42 67
Cash paid for business acquisitions, net of cash acquired (86,911) (3,657)
Additions to capitalized software (3,517) (2,399)
Net changes in restricted cash 983 --
Net cash used in investing activities (104,443) (17,910)
     
Cash flow from financing activities:    
Cash received from debt borrowings, net of loan origination costs 75,000 --
Repayments of debt (212,000) (239,000)
Proceeds from exercise of stock options 24,110 27,817
Income tax benefit related to exercise of stock options 15,484 24,194
Payment of fees related to refinancing activities (512) (1,917)
Payment of contingent consideration (500) --
Purchase of common stock for treasury (11,223) (943)
Common stock dividends (10,494) --
Net cash used in financing activities (120,135) (189,849)
     
Effect of exchange rate changes on cash (2,817) (2,200)
     
Net increase (decrease) in cash 25,107 (1,690)
Cash, beginning of period 84,470 86,160
Cash, end of period $109,577 $84,470
     
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 EndedYear Ended
 December 31,December 31,
(in thousands)2014201320142013
Revenue $200,731 $182,522 $767,861 $712,702
Purchase accounting adjustments to deferred revenue 503 -- 503 136
Adjusted revenue $201,234 $182,522 $768,364 $712,838

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 EndedYear Ended
 December 31,December 31,
(in thousands)2014201320142013
Operating income  $53,595 $47,816 $200,372 $182,968
Amortization of intangible assets 21,557 21,597 85,486 85,036
Stock-based compensation 2,929 2,376 11,483 8,386
Capital-based taxes -- 182 6 182
Unusual or non-recurring charges 1,611 286 7,630 377
Purchase accounting adjustments 503 (46) 476 (52)
Adjusted operating income $80,195 $72,211 $305,453 $276,897

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.

 Three Months EndedYear Ended
 December 31,December 31,
(in thousands)2014201320142013
Net income $36,607 $26,881 $131,127 $117,895
Interest expense, net 5,734 7,954 25,472 41,279
Taxes 13,221 14,073 46,527 27,292
Depreciation and amortization 25,338 25,339 99,831 99,780
EBITDA 80,900 74,247 302,957 286,246
Stock-based compensation 2,929 2,376 11,483 8,386
Capital-based taxes -- 182 6 182
Acquired EBITDA and cost savings 1,835 -- 5,467 890
Unusual or non-recurring charges (355) (806) 4,876 (3,121)
Purchase accounting adjustments 503 (46) 476 (52)
Other 114 56 315 235
Consolidated EBITDA 85,926 76,009 325,580 292,766
Less: acquired EBITDA (1,835) -- (5,467) (890)
Adjusted Consolidated EBITDA $84,091 $76,009 $320,113 $291,876

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 Year Ended
 December 31,December 31,
(in thousands, except per share data)2014201320142013
GAAP - Net income  $36,607 $26,881 $131,127 $117,895
Plus: Amortization of intangible assets 21,557 21,597 85,486 85,036
Plus: Amortization of deferred financing costs and original issue discount 1,442 1,422 5,839 5,830
Plus: Stock-based compensation 2,929 2,376 11,483 8,386
Plus: Capital-based taxes -- 182 6 182
Plus: Unusual and non-recurring items (355) (806) 4,876 (3,121)
Plus: Purchase accounting adjustments 503 (46) 476 (52)
Income tax effect (1) (8,032) (5,631) (33,501) (45,142)
Adjusted net income $54,651 $45,975 $205,792 $169,014
         
Adjusted diluted earnings per share $0.62 $0.53 $2.36 $1.97
         
GAAP diluted earnings per share $0.42 $0.31 $1.50 $1.38
         
Diluted weighted-average shares outstanding  87,799 86,716 87,331 85,616

(1) An estimated normalized effective tax rate of 28% 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

         

         Justine Stone

         Investor Relations

         Tel: +1-212-367-4705

         E-mail: Justine.stone@sscinc.com