Q1 GAAP revenue $324.1 million, Fully Diluted GAAP Earnings Per share $0.07, Adjusted revenue $343.1 million, Adjusted Diluted Earnings Per Share of $0.74
WINDSOR, Conn., May 5, 2016 /CNW/ -- 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 first quarter ended March 31, 2016.
SS&C reported for the first quarter of 2016 GAAP revenue of $324.1 million, GAAP operating income of $50.4 million, GAAP net income of $7.0 million and GAAP diluted earnings per share of $0.07.
Highlights:
- Adjusted revenue and adjusted operating income (defined below) were $ 343.1 million and $135.2 million, respectively. Adjusted revenue and adjusted operating income were up 66.5 percent and 74.7 percent respectively, from $206.1 million and $77.4 million in the first quarter 2015.
- Adjusted diluted earnings per share for Q1 2016 of $0.74, a 23.3 percent increase from Q1 2015.
- SS&C closed the acquisition of Citi Alternative Investor Services on March 11, 2016 for a purchase price of $321.0 million.
"I am happy to report another strong start to the year, with record adjusted revenues of $343.1 million, adjusted diluted earnings per share of $0.74 cents and paying down $29.8 million in debt," says Bill Stone, Chairman and CEO of SS&C Technologies. "We are committed to providing advanced, reliable, and efficient software to our customers, this quarter announcing exciting new releases of SS&C products. These products underpin our growing fund administration and middle office operations businesses. Today, SS&C conducted a grand opening ceremony of the new office in Evansville, Indiana as the growing mid-west operating center surpasses 200 employees. This office continues to service our global customer base and we are excited to occupy the signature building in Sterling Square."
GAAP Results
SS&C reported GAAP revenue of $324.1 million for the first quarter of 2016, compared to $205.7 million in the first quarter of 2015, a 57.5 percent increase. GAAP operating income for the first quarter of 2016 was $50.4 million, or 15.6 percent of revenue. This represents a 16.9 percent increase compared to $43.1 million, or 21.0 percent of revenue, in 2015's first quarter. GAAP net income for the first quarter of 2016 was $7.0 million compared to $26.2 million in the first quarter of 2015, a 73.3 percent decrease. On a fully diluted GAAP basis, earnings per share in the first quarter of 2016 were $0.07.
Adjusted Non-GAAP Results (defined in Notes 1-4 below)
Adjusted revenue in the first quarter of 2016 was $343.1 million, up 66.5 percent compared to $206.1 million in the first quarter of 2015. Adjusted operating income in the first quarter of 2016 was $135.2 million, or 39.4 percent of adjusted revenue. This represents a 74.7 percent increase compared to adjusted operating income of $77.4 million and 37.5 percent of adjusted revenue in the first quarter of 2015.
Adjusted net income for the first quarter of 2016 was $75.4 million, up 43.0 percent compared to $52.7 million in 2015's first quarter. Adjusted diluted earnings per share in the first quarter of 2016 were $0.74 per share, up 23.3 percent compared to $0.60 per share in the first quarter of 2015.
Annual Run Rate Basis
Annual Run Rate Basis (ARRB) recurring revenue, defined as adjusted recurring revenue on an annualized basis, was $1,262.9 million based on adjusted recurring revenue $315.7 million for the first quarter of 2016. This represents an increase of 62.8 percent from $193.9 million and $775.8 million run-rate in the same period in 2015 and an increase of 7.0 percent from $295.0 million for the fourth quarter of 2015, an annual run rate of $1,180.0 million. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.
Operating Cash Flow
SS&C generated net cash from operating activities of $18.6 million for the three months ended March 31, 2016, compared to $31.2 million for the same period in 2015, representing a 40.3 percent decrease. Cash flow in the first quarter was impacted by the annual employee cash incentive, higher debt interest payments due to senior credit facility and notes put in place to acquire Advent in July 2015, and an increase in accounts receivables. We expect to generate approximately $100 million in cash flow in Q2 2016 and $375 million to $390 million for the full year. SS&C ended the quarter with $101.8 million in cash, and $2,790.2 million in gross debt, for a net debt balance of $2,688.4 million. SS&C's leverage ratio as defined in our credit agreement stood at 4.6 times consolidated EBITDA as of March 31, 2016.
Guidance
| Q2 2016 |
FY 2016 |
|
| Adjusted Revenue ($M) |
$378.0 - $384.0 |
$1,505.0 - $1,535.0 |
| Adjusted Net Income ($M) |
$76.0 - $78.5 |
$321.0 - $337.5 |
| Cash from Operating Activities ($M) |
- |
$375.0 - $390.0 |
| Capital Expenditures (% of revenue) |
- |
2.5% - 2.8% |
| Diluted Shares (M) |
102.5 – 103.0 |
102.6 - 103.3 |
| Effective Income Tax Rate (%) |
- |
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 Q1 2016 earnings call will take place at 5:00 p.m. eastern time today, May 5, 2016. The call will discuss Q1 2016 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 First Quarter 2016 Conference Call"; conference ID#95271341. A replay will be available after 8:00 p.m. eastern time on May 5, 2016, until midnight on May 12, 2016. The dial-in number is 855-859-2056 (US and Canada) or 404-537-3406 (International); access code #95271341. The call will also be available for replay on SS&C's website after May 5, 2016; access: http://investor.ssctech.com/results.cfm.
Certain information contained in this press release relating to, among other things, our financial guidance for the quarter and full year of 2016 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 10,000 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 $44 trillion in assets.
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| SS&C Technologies Holdings, Inc. and Subsidiaries |
||||||||
| Three Months Ended March 31, |
||||||||
| 2016 |
2015 |
|||||||
| Revenues: |
||||||||
| Software-enabled services |
$ |
205,647 |
$ |
153,567 |
||||
| Maintenance and term licenses |
95,120 |
39,974 |
||||||
| Total recurring revenues |
300,767 |
193,541 |
||||||
| Perpetual licenses |
5,215 |
3,070 |
||||||
| Professional services |
18,149 |
9,124 |
||||||
| Total non-recurring revenues |
23,364 |
12,194 |
||||||
| Total revenues |
324,131 |
205,735 |
||||||
| Cost of revenues: |
||||||||
| Software-enabled services |
113,728 |
88,602 |
||||||
| Maintenance and term licenses |
46,946 |
14,167 |
||||||
| Total recurring cost of revenues |
160,674 |
102,769 |
||||||
| Perpetual licenses |
498 |
1,024 |
||||||
| Professional services |
15,512 |
8,514 |
||||||
| Total non-recurring cost of revenues |
16,010 |
9,538 |
||||||
| Total cost of revenues |
176,684 |
112,307 |
||||||
| Gross profit |
147,447 |
93,428 |
||||||
| Operating expenses: |
||||||||
| Selling and marketing |
29,861 |
13,387 |
||||||
| Research and development |
36,447 |
19,608 |
||||||
| General and administrative |
30,695 |
17,300 |
||||||
| Total operating expenses |
97,003 |
50,295 |
||||||
| Operating income |
50,444 |
43,133 |
||||||
| Interest expense, net |
(33,089) |
(5,600) |
||||||
| Other expense, net |
(1,847) |
(1,507) |
||||||
| Income before income taxes |
15,508 |
36,026 |
||||||
| Provision for income taxes |
8,503 |
9,780 |
||||||
| Net income |
$ |
7,005 |
$ |
26,246 |
||||
| Basic earnings per share |
$ |
0.07 |
$ |
0.31 |
||||
| Basic weighted average number of common shares outstanding |
98,760 |
84,263 |
||||||
| Diluted earnings per share |
$ |
0.07 |
$ |
0.30 |
||||
| Diluted weighted average number of common and common equivalent shares outstanding |
102,131 |
88,456 |
||||||
| Net income |
$ |
7,005 |
$ |
26,246 |
||||
| Other comprehensive income (loss), net of tax: |
||||||||
| Foreign currency exchange translation adjustment |
9,321 |
(36,219) |
||||||
| Total comprehensive income (loss), net of tax |
9,321 |
(36,219) |
||||||
| Comprehensive income (loss) |
$ |
16,326 |
$ |
(9,973) |
||||
See Notes to Condensed Consolidated Financial Information.
| SS&C Technologies Holdings, Inc. and Subsidiaries |
||||||||
| March 31, |
December 31, |
|||||||
| 2016 |
2015 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
101,826 |
$ |
434,159 |
||||
| Accounts receivable, net |
262,753 |
169,951 |
||||||
| Prepaid expenses and other current assets |
32,444 |
27,511 |
||||||
| Prepaid income taxes |
36,848 |
40,627 |
||||||
| Restricted cash |
2,818 |
2,818 |
||||||
| Total current assets |
436,689 |
675,066 |
||||||
| Property, plant and equipment, net |
69,211 |
67,143 |
||||||
| Deferred income taxes |
1,860 |
2,199 |
||||||
| Goodwill |
3,655,005 |
3,549,212 |
||||||
| Intangible and other assets, net |
1,627,947 |
1,508,622 |
||||||
| Total assets |
$ |
5,790,712 |
$ |
5,802,242 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt |
$ |
32,062 |
$ |
32,281 |
||||
| Accounts payable |
20,014 |
11,957 |
||||||
| Income taxes payable |
— |
1,428 |
||||||
| Accrued employee compensation and benefits |
38,575 |
83,894 |
||||||
| Interest payable |
19,048 |
28,903 |
||||||
| Other accrued expenses |
40,894 |
36,231 |
||||||
| Deferred revenue |
251,741 |
222,024 |
||||||
| Total current liabilities |
402,334 |
416,718 |
||||||
| Long-term debt, net of current portion |
2,691,960 |
2,719,070 |
||||||
| Other long-term liabilities |
58,653 |
51,434 |
||||||
| Deferred income taxes |
498,839 |
509,574 |
||||||
| Total liabilities |
3,651,786 |
3,696,796 |
||||||
| Total stockholders' equity |
2,138,926 |
2,105,446 |
||||||
| Total liabilities and stockholders' equity |
$ |
5,790,712 |
$ |
5,802,242 |
||||
See Notes to Condensed Consolidated Financial Information.
| SS&C Technologies Holdings, Inc. and Subsidiaries |
||||||||
| Three Months Ended March 31, |
||||||||
| 2016 |
2015 |
|||||||
| Cash flow from operating activities: |
||||||||
| Net income |
$ |
7,005 |
$ |
26,246 |
||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
55,273 |
25,996 |
||||||
| Stock-based compensation expense |
15,347 |
4,106 |
||||||
| Income tax benefit related to exercise of stock options |
(8,174) |
(2,839) |
||||||
| Amortization and write-offs of loan origination costs |
2,653 |
1,435 |
||||||
| (Gain) loss on sale or disposition of property and equipment |
(2) |
209 |
||||||
| Deferred income taxes |
(6,274) |
(2,131) |
||||||
| Provision for doubtful accounts |
679 |
437 |
||||||
| Changes in operating assets and liabilities, excluding effects from acquisitions: |
||||||||
| Accounts receivable |
(33,203) |
(12,058) |
||||||
| Prepaid expenses and other assets |
(1,221) |
4,744 |
||||||
| Accounts payable |
3,592 |
(333) |
||||||
| Accrued expenses |
(52,843) |
(25,283) |
||||||
| Income taxes prepaid and payable |
10,526 |
1,517 |
||||||
| Deferred revenue |
25,260 |
9,121 |
||||||
| Net cash provided by operating activities |
18,618 |
31,167 |
||||||
| Cash flow from investing activities: |
||||||||
| Additions to property and equipment |
(2,808) |
(2,249) |
||||||
| Proceeds from sale of property and equipment |
2 |
— |
||||||
| Cash paid for business acquisitions, net of cash acquired |
(317,554) |
— |
||||||
| Additions to capitalized software |
(2,169) |
(928) |
||||||
| Net cash used in investing activities |
(322,529) |
(3,177) |
||||||
| Cash flow from financing activities: |
||||||||
| Repayments of debt |
(29,825) |
(44,000) |
||||||
| Proceeds from exercise of stock options |
7,629 |
4,661 |
||||||
| Withholding taxes related to equity award net share settlement |
(1,559) |
— |
||||||
| Income tax benefit related to exercise of stock options |
8,174 |
2,839 |
||||||
| Dividends paid on common stock |
(12,353) |
(10,539) |
||||||
| Net cash used in financing activities |
(27,934) |
(47,039) |
||||||
| Effect of exchange rate changes on cash and cash equivalents |
(488) |
(2,198) |
||||||
| Net decrease in cash and cash equivalents |
(332,333) |
(21,247) |
||||||
| Cash and cash equivalents, beginning of period |
434,159 |
109,577 |
||||||
| Cash and cash equivalents, end of period |
$ |
101,826 |
$ |
88,330 |
||||
See Notes to Condensed Consolidated Financial Information.
SS&C Technologies Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Information
Note 1. Reconciliation of Revenues to Adjusted Revenues
Adjusted revenues represents revenues adjusted for one-time purchase accounting adjustments to fair value deferred revenue acquired in business combinations. Adjusted revenues 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 revenues is not a recognized term under generally accepted accounting principles (GAAP). Adjusted revenues does not represent revenues, as that term is defined under GAAP, and should not be considered as an alternative to revenues as an indicator of our operating performance. Adjusted revenues as presented herein is not necessarily comparable to similarly titled measures. Below is a reconciliation between adjusted revenues and revenues, the GAAP measure we believe to be most directly comparable to adjusted revenues.
| Three Months Ended March 31, |
||||||||
| (in thousands) |
2016 |
2015 |
||||||
| Revenues |
$ |
324,131 |
$ |
205,735 |
||||
| Purchase accounting adjustments to deferred revenue |
18,983 |
397 |
||||||
| Adjusted revenues |
$ |
343,114 |
$ |
206,132 |
||||
The following is a breakdown of recurring and non-recurring revenues and adjusted recurring and non-recurring revenues.
| Three Months Ended March 31, |
||||||||
| (in thousands) |
2016 |
2015 |
||||||
| Software-enabled services |
$ |
205,647 |
$ |
153,567 |
||||
| Maintenance and term licenses |
95,120 |
39,974 |
||||||
| Total recurring revenues |
300,767 |
193,541 |
||||||
| Perpetual licenses |
5,215 |
3,070 |
||||||
| Professional services |
18,149 |
9,124 |
||||||
| Total non-recurring revenues |
23,364 |
12,194 |
||||||
| Total revenues |
$ |
324,131 |
$ |
205,735 |
||||
| Software-enabled services |
$ |
205,786 |
$ |
153,567 |
||||
| Maintenance and term licenses |
109,950 |
40,371 |
||||||
| Total adjusted recurring revenues |
315,736 |
193,938 |
||||||
| Perpetual licenses |
5,215 |
3,070 |
||||||
| Professional services |
22,163 |
9,124 |
||||||
| Total adjusted non-recurring revenues |
27,378 |
12,194 |
||||||
| Total adjusted revenues |
$ |
343,114 |
$ |
206,132 |
||||
Note 2. Reconciliation of Operating Income to Adjusted Operating Income
Adjusted operating income represents operating income adjusted for amortization of acquisition-related intangible assets, stock-based compensation, 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 March 31, |
||||||||
| (in thousands) |
2016 |
2015 |
||||||
| Operating income |
$ |
50,444 |
$ |
43,133 |
||||
| Amortization of intangible assets |
49,680 |
22,181 |
||||||
| Stock-based compensation |
15,347 |
4,106 |
||||||
| Capital-based taxes |
472 |
— |
||||||
| Unusual or non-recurring charges |
3,618 |
7,585 |
||||||
| Purchase accounting adjustments |
15,628 |
397 |
||||||
| Adjusted operating income |
$ |
135,189 |
$ |
77,402 |
||||
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 July 2015, 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 Ended March 31, |
Twelve Months Ended |
|||||||||||
| (in thousands) |
2016 |
2015 |
2016 |
|||||||||
| Net income |
$ |
7,005 |
$ |
26,246 |
$ |
23,621 |
||||||
| Interest expense, net |
33,089 |
5,600 |
135,263 |
|||||||||
| Taxes |
8,503 |
9,780 |
16,703 |
|||||||||
| Depreciation and amortization |
55,273 |
25,996 |
180,111 |
|||||||||
| EBITDA |
103,870 |
67,622 |
355,698 |
|||||||||
| Stock-based compensation |
15,347 |
4,106 |
55,320 |
|||||||||
| Capital-based taxes |
472 |
— |
1,300 |
|||||||||
| Acquired EBITDA and cost savings |
4,768 |
1,767 |
83,131 |
|||||||||
| Unusual or non-recurring charges |
5,465 |
9,092 |
22,521 |
|||||||||
| Purchase accounting adjustments |
15,628 |
397 |
65,158 |
|||||||||
| Other |
784 |
95 |
2,218 |
|||||||||
| Consolidated EBITDA |
$ |
146,334 |
$ |
83,079 |
$ |
585,346 |
||||||
| Less: acquired EBITDA |
(4,768) |
(1,767) |
(83,131) |
|||||||||
| Adjusted Consolidated EBITDA |
$ |
141,566 |
$ |
81,312 |
$ |
502,215 |
||||||
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, other unusual and non-recurring items, purchase accounting adjustments, and loss on extinguishment of debt 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) |
2016 |
2015 |
||||||
| GAAP – Net income |
$ |
7,005 |
$ |
26,246 |
||||
| Plus: Amortization of intangible assets |
49,680 |
22,181 |
||||||
| Plus: Amortization of deferred financing costs and original issue discount |
2,653 |
1,435 |
||||||
| Plus: Stock-based compensation |
15,347 |
4,106 |
||||||
| Plus: Capital-based taxes |
472 |
— |
||||||
| Plus: Unusual and non-recurring items |
5,465 |
9,092 |
||||||
| Plus: Purchase accounting adjustments |
15,628 |
397 |
||||||
| Income tax effect (1) |
(20,828) |
(10,726) |
||||||
| Adjusted net income |
$ |
75,422 |
$ |
52,731 |
||||
| Adjusted diluted earnings per share |
$ |
0.74 |
$ |
0.60 |
||||
| GAAP diluted earnings per share |
$ |
0.07 |
$ |
0.30 |
||||
| Diluted weighted-average shares outstanding |
102,131 |
88,456 |
||||||
(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.
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SOURCE SS&C
For more information: Patrick Pedonti, Chief Financial Officer, Tel: +1-860-298-4738, E-mail: [email protected]; Justine Stone, Investor Relations, Tel: +1-212-367-4705, E-mail: [email protected], http://www.ssctech.com
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