EX-99.1 2 c04223exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(SS&C PRESS RELEASE LOGO)
For Immediate Release
Contact:
Patrick Pedonti
Chief Financial Officer
Tel: +1-860-298-4738
E-mail: investorrelations@sscinc.com
SS&C Technologies Results for Q2 2010: Revenue up 21%
Software-Enabled Services Revenue up 25.9% and Adjusted Diluted EPS of $0.22 up 22%
WINDSOR, CT — August 3, 2010 — SS&C Technologies Holdings, Inc. (Nasdaq: SSNC), a global provider of financial services software and software-enabled services, today announced results for the quarter ended June 30, 2010.
Revenue on a GAAP basis for the second quarter of 2010 was $81.6 million. This is an increase of $14.4 million, or 21.4%, from revenues over the same period in 2009. Net income, on a GAAP basis, for the second quarter of 2010 was $4.4 million, an increase of $0.9 million, or 24.9%, over the same period in 2009. Diluted earnings per share (EPS) for Q2 2010 were $0.06 and remained flat compared to the same period in Q2 2009, reflecting the issuance of an aggregate of 9.8 million shares of common stock in the Company’s IPO.
Adjusted revenue, which is adjusted for one-time purchase accounting adjustments (a non-GAAP measure defined in note 1 to the attached Consolidated Condensed Financial Information), was $81.7 million, an increase of $14.4 million or 21.5% from $67.3 million in the same period of 2009.
Annual Run Rate Basis (ARRB) recurring revenue, defined as the addition of maintenance and software-enabled services revenue, was $70.4 million, an annual run rate of $281.6 million. This represents an increase of 21.7% from $57.9 million and $231.5 million run-rate in the same period in 2009 and an increase of 4.8% from Q1 2010’s $67.2 million and $268.8 million run-rate. We believe a good indicator of visibility is the ARRB of our recurring revenue.
Adjusted operating income (a non-GAAP financial measure defined in note 2 to the attached Consolidated Condensed Financial Information) was $32.4 million for the three months ended June 30, 2010, compared to $26.0 million in Q2 2009, an increase of 24.7%. GAAP operating income in the second quarter of 2010 was $19.8 million and included amortization of $8.7 million and stock-based compensation of $3.9 million, compared to $15.8 million of operating income in Q2 2009, an increase of 25.0%. Adjusted Consolidated EBITDA (a non-GAAP financial measure defined in note 3 to the Consolidated Condensed Financial Information) in Q2 2010 was $33.8 million, compared to $27.2 million in Q2 2009, an increase of 24.2%.

 

 

 

Adjusted net income and adjusted diluted earnings per share (non-GAAP measures defined in note 4 to the attached Consolidated Condensed Financial Information) were $16.2 million and $0.22 compared to $11.2 million and $0.18 in Q2 2009.
“We are pleased with our second quarter results and our 21.5% increase in adjusted revenue,” said Bill Stone, Chairman and CEO, SS&C Technologies Holdings, Inc. “We continue to execute on our strategy to remain focused on the financial services industry, worldwide, and grow our software-enabled services revenue, both organically and from our acquisitions, and in Q2 SS&C achieved a 25.9% increase in software-enabled services revenues over Q2 2009.”
“We continue to improve our operating margins and our strong 24.7% increase in adjusted operating income confirms our focus,” continued Stone.
Cash Flow
SS&C generated net cash from operating activities of $23.4 million for the six months ended June 30, 2010, compared to $20.9 million for the same period in 2009, representing a 12.1% increase. We ended the quarter with $88.9 million of cash on the balance sheet.
“Our balance sheet and cash flow continue to improve. We generated $23.4 million in net cash from operations during the first six months of 2010,” said Stone. “As we previously announced, we completed a redemption of $71.75 million in aggregate principal amount outstanding of our 11 3/4% Senior Subordinated Notes due 2013 during the second quarter. Additionally we paid down $9.8 million of our term loan facility during the six months ended June 30, 2010.”
New Products
We are focusing our development organization to deliver new products and services in 2010. Most recently we launched Risk Analytics’ daily and monthly risk reporting integrated with our fund administration business. SS&C Fund Services provides middle- and back-office services for more than 3,000 funds under administration, and supports multiple structures, including hedge funds, fund of funds, private equity funds and managed account platforms.
In Q2, we launched SS&C Private Equity Industry (PEI) Solutions, which combines our TNR Solution private equity platform with our private equity fund administration services. SS&C’s private equity business services more than 1,000 funds worldwide.
“We have spent considerable time in 2010 developing a high quality end-user experience for clients through secure web portals,” said Stone. “In Q2, we launched new web front-end portals for our fund administration businesses, TradeThru and LMS.”
We continue to integrate our Tradeware acquisition with the SS&C family of products and services and focus on its development. In Q2, Tradeware FIXLink started reporting short positions in securities to the Australian Securities and Investments Commission (ASIC) and announced the signing of two institutional clients.
New Clients
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. “One deal of note was a Geneva-based fund of funds manager launching a managed account platform did a worldwide search for a fund administrator and turned to SS&C for their expertise.”
SS&C Lightning, our capital markets solution, continues to gain market acceptance, particularly its collateral management capability. In Q2, Bank of the West completed their implementation of Lightning to support their fixed income trading, sales and collateral management services.
SS&C continues to see momentum with our GEARS (Global Enterprise Accounting and Reporting Solution) platform in the institutional and asset management market. In Q2, SS&C added blue chip clients Bombardier and Guardian Capital LP.
SS&C’s Municipal Finance software business remains strong and we added the investment banking arm of Edward Jones. Commenting on the strength of this business, Stone says, “The State and Local Governments are facing record tax shortfalls, which are being met by the issuance of Municipal Bonds. SS&C has been a leader in this business since acquiring Dubois Brown & Co. (DBC) in November 2002. Cities, states, colleges and universities, as well as the advisors who counsel them, turn to DBC Finance to structure their offerings in the most optimized way.”
Outlook
Based on the information available as of August 3, 2010, we currently expect third quarter revenues to be in the range of $82.0 to $83.0 million, and adjusted net income to be in the range of $16.3 to $16.8 million, assuming an effective tax rate of 35% and approximately 75.5 to 76.0 million diluted shares outstanding for the quarter ending September 30, 2010. For full year 2010, our expectation is for revenues to be in the range of $325.0 to $329.0 million and adjusted net income in the range of $63.0 to $64.0 million. We currently expect the number of diluted shares outstanding to increase by approximately an additional 0.5 million in the fourth quarter of 2010.
Results of SS&C Technologies, Inc.
Our operating subsidiary, SS&C Technologies, Inc., posted the same revenues and net income for the second quarter of 2010 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 Consolidated Condensed Financial Information for the reconciliations and definitions for each of these non-GAAP measures and the reasons our management believes that these measures provide useful information to investors regarding our financial condition and results of operations.
Earnings Call and Press Release
SS&C’s Q2 2010 earnings call will take place at 5:00 p.m. eastern time today, August 3, 2010. The SS&C Q2 earnings press release will be released after the close of the market on August 3, 2010. The call will discuss Q2 2010 results. Interested parties may dial 877-312-8798 (U.S. and Canada) or 253-237-1193 (International) and request the “SS&C Second Quarter 2010 Earnings Call,” conference ID #88691403. A replay will be available after 8:00 p.m. eastern time on August 3rd, until midnight on August 10th, 2010. The dial-in number is 800-642-1687 (U.S. and Canada) 706-645-9291 (International); access code #88691403. The call will also be available for replay on SS&C’s website after August 4th, 2010: 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 2010 and full year 2010 and our plans to acquire new businesses. 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 Holdings, Inc.
SS&C delivers investment and financial management software and related services focused exclusively on the financial services industry. Additional information is available at www.ssctech.com.
Follow SS&C on Twitter at @ssctechnologies.

 

 

 

SS&C Technologies Holdings, Inc. and Subsidiaries
Consolidated Condensed Statements of Operation
(in thousands, except per share data)
(unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2010     2009     2010     2009  
Revenues:
                                
Software licenses
   $ 6,074     $ 3,983     $ 11,663     $ 9,803  
Maintenance
     17,817       16,066       35,836       31,606  
Professional services
     5,099       5,393       10,488       10,589  
Software-enabled services
     52,628       41,809       101,805       78,975  
 
                        
Total revenues
     81,618       67,251       159,792       130,973  
 
                        
 
                                
Cost of revenues:
                                
Software licenses
     1,908       2,123       3,836       4,171  
Maintenance
     8,084       6,853       16,081       13,327  
Professional services
     3,260       3,512       6,618       7,489  
Software-enabled services
     27,688       22,033       53,567       42,606  
 
                        
Total cost of revenues
     40,940       34,521       80,102       67,593  
 
                        
 
                                
Gross profit
     40,678       32,730       79,690       63,380  
 
                        
 
                                
Operating expenses:
                                
Selling and marketing
     6,483       5,039       12,635       10,267  
Research and development
     7,860       6,757       15,619       12,624  
General and administrative
     6,546       5,099       12,226       10,181  
 
                        
Total operating expenses
     20,889       16,895       40,480       33,072  
 
                        
 
                                
Operating income
     19,789       15,835       39,210       30,308  
 
                                
Interest expense, net
     (8,058 )     (9,294 )     (17,075 )     (18,644 )
Loss on extinguishment of debt
     (5,480 )     —       (5,480 )     —  
Other income (expense), net
     115       (1,479 )     —       (922 )
 
                        
 
                                
Income before income taxes
     6,366       5,062       16,655       10,742  
Provision for income taxes
     2,004       1,571       3,272       3,353  
 
                        
 
                                
Net income
   $ 4,362     $ 3,491     $ 13,383     $ 7,389  
 
                        
 
                                
Basic earnings per share
   $ 0.06     $ 0.06     $ 0.20     $ 0.12  
 
                        
 
                                
Basic weighted-average number of common shares outstanding
     70,960       60,382       65,900       60,372  
 
                        
 
                                
Diluted earnings per share
   $ 0.06     $ 0.06     $ 0.19     $ 0.12  
 
                        
 
                                
Diluted weighted-average number of common and common equivalent shares outstanding
     74,538       63,376       69,424       63,134  
 
                        
See Notes to Consolidated Condensed Financial Information.

 

 

 

SS&C Technologies Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                 
    June 30,     December 31,  
    2010     2009  
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 88,886     $ 19,055  
Accounts receivable, net
     44,744       41,600  
Income taxes receivable
     7,896       669  
Deferred income taxes
     1,988       1,780  
Prepaid expenses and other current assets
     5,243       6,164  
 
            
Total current assets
     148,757       69,268  
 
                
Property and equipment, net
     13,312       14,036  
 
                
Deferred income taxes
     559       499  
Goodwill
     886,982       885,517  
Intangible and other assets, net
     199,002       216,321  
 
            
 
                
Total assets
   $ 1,248,612     $ 1,185,641  
 
            
 
                
LIABILITIES AND STOCKHOLDER’S EQUITY
                
Current liabilities:
                
Current portion of long-term debt
   $ 2,011     $ 4,270  
Accounts payable
     3,921       4,804  
Income taxes payable
     —       703  
Accrued employee compensation and benefits
     8,341       14,693  
Other accrued expenses
     12,184       16,938  
Interest payable
     1,305       2,070  
Deferred maintenance and other revenue
     45,827       40,400  
 
            
Total current liabilities
     73,589       83,878  
 
                
Long-term debt, net of current portion
     313,387       392,989  
Other long-term liabilities
     9,574       10,764  
Deferred income taxes
     47,043       52,023  
 
            
Total liabilities
     443,593       539,654  
 
                
Total stockholder’s equity
     805,019       645,987  
 
            
 
                
Total liabilities and stockholder’s equity
   $ 1,248,612     $ 1,185,641  
 
            
See Notes to Consolidated Condensed Financial Information.

 

 

 

SS&C Technologies Holdings, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
                 
    Six Months Ended  
    June 30,     June 30,  
    2010     2009  
Cash flow from operating activities:
                
Net income
   $ 13,383     $ 7,389  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     20,297       17,598  
Stock-based compensation expense
     5,232       2,794  
Amortization of loan origination costs
     2,403       1,145  
(Gain) loss on sale or disposition of property and equipment
     (2 )     3  
Deferred income taxes
     (6,090 )     (5,628 )
Provision for doubtful accounts
     454       327  
Changes in operating assets and liabilities excluding effects from acquisitions:
                
Accounts receivable
     (2,423 )     1,649  
Prepaid expenses and other assets
     818       1,634  
Income taxes receivable
     (3,838 )     —  
Accounts payable
     (857 )     (145 )
Accrued expenses
     (10,914 )     (7,136 )
Income taxes payable
     —       (2,549 )
Deferred maintenance and other revenue
     4,971       3,824  
 
            
Net cash provided by operating activities
     23,434       20,905  
 
            
 
                
Cash flow from investing activities:
                
Additions to property and equipment
     (2,238 )     (621 )
Proceeds from sale of property and equipment
     52       3  
Cash paid for business acquisitions, net of cash acquired
     (11,372 )     (10,327 )
Additions to capitalized software
     (99 )     —  
 
            
Net cash used in investing activities
     (13,657 )     (10,945 )
 
            
 
                
Cash flow from financing activities:
                
Repayment of debt and acquired debt
     (81,597 )     (1,153 )
Exercise of stock options
     5,396       1,592  
Income tax benefit related to exercise of stock options
     3,583       —  
Proceeds from common stock issuance, net
     134,611       —  
Purchase of common stock for treasury
     (1,169 )     (1,776 )
 
            
Net cash provided by (used in) financing activities
     60,824       (1,337 )
 
            
 
                
Effect of exchange rate changes on cash
     (770 )     1,145  
 
            
 
                
Net increase in cash and cash equivalents
     69,831       9,768  
Cash and cash equivalents, beginning of period
     19,055       29,299  
 
            
Cash and cash equivalents, end of period
   $ 88,886     $ 39,067  
 
            
See Notes Consolidated Condensed Financial Information.

 

 

 

SS&C Technologies Holdings, Inc. and Subsidiaries
Notes to Consolidated Condensed 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 June 30,     Six months ended June 30,  
(in thousands)   2010     2009     2010     2009  
Revenue
   $ 81,618     $ 67,251     $ 159,792     $ 130,973  
Purchase accounting adjustments to deferred revenue
     62       —       142       —  
 
                        
Adjusted revenue
   $ 81,680     $ 67,251     $ 159,934     $ 130,973  
 
                        
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 accepted accounting principles 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 June 30,     Six months ended June 30,  
(in thousands)   2010     2009     2010     2009  
Operating income
   $ 19,789     $ 15,835     $ 39,210     $ 30,308  
Amortization of intangible assets
     8,734       7,752       17,408       15,174  
Stock-based compensation
     3,882       1,525       5,232       2,794  
Capital-based taxes
     228       342       454       676  
Unusual or non-recurring charges
     (153 )     276       83       361  
Purchase accounting adjustments
     (60 )     (54 )     (37 )     (105 )
Other
     (45 )     295       161       640  
 
                        
Adjusted operating income
   $ 32,375     $ 25,971     $ 62,511     $ 49,848  
 
                        
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 an alternative 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 an alternative 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.

 

 

 

                                         
                                    Twelve months  
                                    ended  
    Three months ended June 30,     Six months ended June 30,     June 30,  
(in thousands)   2010     2009     2010     2009     2010  
Net income
   $ 4,362     $ 3,491     $ 13,383     $ 7,389     $ 25,012  
Interest expense, net
     13,538       9,294       22,555       18,644       40,774  
Taxes
     2,004       1,571       3,272       3,353       9,723  
Depreciation and amortization
     10,184       9,025       20,297       17,598       38,727  
 
                              
EBITDA
     30,088       23,381       59,507       46,984       114,236  
Stock-based compensation
     3,882       1,525       5,232       2,794       8,045  
Capital-based taxes
     228       342       454       676       573  
Acquired EBITDA and cost savings
     —       857       192       2,025       4,041  
Unusual or non-recurring charges
     (267 )     1,755       84       1,283       791  
Purchase accounting adjustments
     (60 )     (54 )     (37 )     (105 )     (25 )
Other
     (45 )     295       161       640       722  
 
                              
Consolidated EBITDA
     33,826       28,101       65,593       54,297       128,383  
Less: acquired EBITDA
     —       (857 )     (192 )     (2,025 )     (4,041 )
 
                              
Adjusted Consolidated EBITDA
   $ 33,826     $ 27,244     $ 65,401     $ 52,272     $ 124,342  
 
                              
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 it represents 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)   2010     2009     2010     2009  
GAAP — Net income
   $ 4,362     $ 3,491     $ 13,383     $ 7,389  
Plus: Amortization of intangible assets
     8,734       7,752       17,408       15,174  
Plus: Amortization of deferred financing costs
     554       575       1,138       1,145  
Plus: Stock-based compensation
     3,882       1,525       5,232       2,794  
Plus: Capital-based taxes
     228       342       454       676  
Plus: Unusual and non-recurring items
     (267 )     1,755       84       1,283  
Plus: Loss on extinguishment of debt
     5,480       —       5,480       —  
Plus: Purchase accounting adjustments
     (60 )     (54 )     (37 )     (105 )
Plus: Other
     (45 )     295       161       640  
Income tax effect (1)
     (6,701 )     (4,467 )     (13,029 )     (7,969 )
 
                        
Adjusted net income
   $ 16,167     $ 11,214     $ 30,274     $ 21,027  
 
                        
 
                                
Adjusted diluted earnings per share
   $ 0.22     $ 0.18     $ 0.44     $ 0.33  
 
                                
GAAP diluted earnings per share
   $ 0.06     $ 0.06     $ 0.19     $ 0.12  
 
                        
 
                                
Diluted weighted-average shares outstanding
     74,538       63,376       69,424       63,134  
 
                        
     
(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.