D+H Announces First Quarter 2015 Earnings and Quarterly Dividend - Fundtech Acquisition to Close April 30

First quarter highlights:

  • Revenues of $295 million, up 11%
  • Net income of $34 million, up 183%
  • Net income per share of $0.39, up 164%
  • Quarterly dividend of $0.32 per share
  • Adjusted revenues1 of $297 million, up 8%
  • Adjusted EBITDA1 of $87 million, up 10%
  • Adjusted net income1 of $47 million, up 22%
  • Adjusted net income per share1 of $0.55, up 14%

TORONTO, April 28, 2015 /CNW/ - DH Corporation (TSX:DH) ("D+H" or the "Company"), a leading provider of technology solutions to domestic and global financial institutions, today reported its financial results for the three months ended March 31, 2015.

"First quarter results were in line with our expectations driven by growth in our Canadian lending business and solid U.S. sales performance in both lending and integrated core, coupled with a strong U.S. dollar," said D+H Chief Executive Officer Gerrard Schmid. "Looking ahead, we remain focused on continuing to drive organic growth across all of our businesses, and following the closing of the Fundtech acquisition, capitalizing on the various growth opportunities from our expanded capabilities and global scale."

First Quarter Highlights 

  • Revenues increased 11% to $295 million from $266 million in the same quarter in 2014. Adjusted revenues totalled $297 million, an increase of $21 million, or 8%, over the same quarter in 2014.  Excluding the impact of foreign exchange, Adjusted revenues increased 2% for the first quarter with the Canadian Segment increasing by 5% and the U.S. Segment decreasing by 1%.
  • Adjusted EBITDA increased 10% to $87 million (29% margin) from $79 million (29% margin) compared to the same quarter in 2014. Excluding the impact of foreign exchange, Adjusted EBITDA increased 4% for the first quarter.
  • Net income increased to $34 million ($0.39 per share, basic and diluted), from $12 million ($0.15 per share, basic and diluted) in the same quarter in 2014.
  • Adjusted net income increased 22% to $47 million from $39 million in the same quarter in 2014. Adjusted net income per share increased 14% to $0.55 from $0.48 in the same quarter in 2014.

_______________________________

1 Non-IFRS measure.  See the "Use of Non-IFRS Financial Information" section of this press release for further details.

First Quarter 2015 Highlights

Selected Financial Information
(C$ millions unless otherwise indicated, unaudited)
Three months ended
March 31
2015 2014
Revenues $295.0 $266.3
Adjusted revenues1 $296.5 $275.7
EBITDA1 $94.0 $69.0
Adjusted EBITDA1 $87.0 $78.7
Adjusted EBITDA margin1 29% 29%
Net income $34.0 $12.0
Adjusted net income1 $47.4 $38.8
Net income per share, basic and diluted (C$) $0.39 $0.15
Adjusted net income per share1 (C$) $0.55 $0.48

Revenues by Segment and Service Area2, 3
(C$ millions, unaudited)
Three months ended March 31
Canadian Segment U.S. Segment Consolidated
2015 2014 2015 2014 2015 2014
Lending solutions $83.5 $75.4 $74.6 $60.4 $158.1 $135.8
Payments solutions 73.7 74.7 - - 73.7 74.7
Enterprise solutions - - 63.2 55.8 63.2 55.8
Total Revenues $157.3 $150.1 $137.7 $116.2 $295.0 $266.3

Adjusted revenues1 by Segment and Service Area2,3
(C$ millions, unaudited)
Three months ended March 31
Canadian Segment U.S. Segment Consolidated
2015 2014 2015 2014 2015 2014
Lending solutions $83.5 $75.4 $75.9 $68.7 $159.5 $144.2
Payments solutions 73.7 74.7 - - 73.7 74.7
Enterprise solutions - - 63.3 56.9 63.3 56.9
Total Adjusted revenues1 $157.3 $150.1 $139.3 $125.7 $296.5 $275.7

U.S. Segment revenues2,3
(US$ millions, unaudited)
Three months ended
March 31
2015 2014
Lending solutions $60.0 $54.7
Enterprise solutions 50.9 50.5
U.S. Segment revenues $110.9 $105.2

U.S. Segment Adjusted revenues1,2,3
(US$ millions, unaudited)
Three months ended
March 31
2015 2014
Lending solutions $61.1 $62.3
Enterprise solutions 51.0 51.5
U.S. Segment Adjusted revenues1 $112.2 $113.8

1 Non-IFRS measure.  See the "Use of Non-IFRS Financial Information" section of this press release for further details.
2 Totals may not sum due to rounding.
3 Effective October 1, 2014, revenues reported as 'lending solutions' comprise of 'lending processing solutions' and 'banking technology solutions - lending' as reported in prior periods. Revenues reported as 'enterprise solutions' comprise of 'banking technology solutions - enterprise' as reported in prior periods.

Dividend Reinvestment Plan

On January 14, 2015, the Company announced the adoption of a Dividend Reinvestment Plan which became effective in the first quarter of 2015. The Dividend Reinvestment Plan participation rate for the first quarter of 2015 was approximately 25% of outstanding D+H shares. The dividend declared by D+H in the second quarter of 2015, as described in the "Dividend" section of this press release below, will also be eligible for the Dividend Reinvestment Plan.

At this time, the Company intends to have these common shares issued from treasury at a 4% discount to the weighted average trading price of the common shares on the TSX during the five trading days immediately preceding the dividend payment date. The 4% discount will remain in effect for all cash dividends that may be declared, if any, by the Company's Board of Directors until otherwise announced. To participate in the Dividend Reinvestment Plan, eligible shareholders should refer to plan information on the D+H website at dh.com.  Eligible shareholders who have not previously registered must register on or before June 1, 2015, the dividend record date, to participate in the program for the dividend payable on June 30, 2015.

SUBSEQUENT EVENTS

Acquisition of Fundtech

On March 30, 2015, D+H announced its intention to acquire all of the outstanding shares of Fundtech, subject to regulatory approval, for a purchase price of US$1.25 billion. The Company has received the requisite regulatory approval and expects to close the transaction on April 30, 2015.

Fundtech is a leading provider of financial technology to banks and corporations of all sizes in the Americas, EMEA (Europe, Middle East and Africa), and APAC (Asia and Pacific) regions with approximately 1,500 employees and 19 offices worldwide, including development centers in the United States, India, Israel, Switzerland and the United Kingdom. Fundtech's solutions are mission-critical to the day-to-day operations of banks and corporate clients. Fundtech offers a comprehensive line of transaction banking solutions including global and domestic payments solutions, financial messaging, corporate cash and liquidity management and merchant services. Fundtech has approximately 1,200 clients, including global money center banks, mid-sized banks and credit unions, non-bank financial institutions, central banks and corporates.

The acquisition is expected to be funded through a combination of approximately $720.1 million from issuance of 18,975,000 subscription receipts of common shares at a price of $37.95; and $230 million from issuance of 5.0%, 5.5 year, extendible convertible unsecured subordinated debentures at the conversion price of $52.75; US$80 million senior secured guaranteed notes of 4.32% with a term of 7 years; US$245 million non-revolving, non-amortizing secured credit facility maturing in 5 years; and the balance of the purchase price will be financed through D+H's revolving credit facility.

D+H will also replace its current $450 million revolving, non-amortizing term credit facility with a new $550 million revolving, non-amortizing five-year term credit facility.

The financing includes exercise of the overallotments for both the subscription receipts and convertible debentures.

Dividend

DH Corporation today announced that its Board of Directors has declared a quarterly dividend of $0.32 per common share payable on June 30, 2015, to shareholders of record at the close of business on June 1, 2015. The dividend is an eligible dividend for Canadian income tax purposes.

OUTLOOK

For further information on trends, management's outlook and corporate priorities in 2015, please refer to section 3 of the Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2015.

The selected financial information included in this press release is qualified in its entirety by, and should be read together with the Unaudited Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2015, and the MD&A for the three months ended March 31, 2015, which can be found at dh.com and in the disclosure documents filed by the Company with the securities regulatory authorities at sedar.com.

MANAGEMENT CONFERENCE CALL AND WEBCAST

Teleconference:

A conference call to review these financial results, including a presentation, will take place at 10:00 a.m. (EST) on Wednesday, April 29, 2015 hosted by Chief Executive Officer Gerrard Schmid and Chief Financial Officer Karen H. Weaver. To access the call, please dial 647-427-7450 (Local/Int'l) or 1-888-231-8191 (toll-free within North America).  A replay of the call will also be available until May 13, 2015 by dialing 416-849-0833 (Local/Int'l) or 1-855-859-2056 (toll-free within North America), with Encore Password 26002256.

Webcast:

The conference call will also be webcast at http://event.on24.com/r.htm?e=980347&s=1&k=154090EEAEACB4C2D89CFDC42E1E26FF and will be archived for 90 days after the call. The link to the webcast and an accompanying slide presentation will be posted in the Investors section of the D+H website under Events and Presentations at http://www.dh.com/investors/events-and-presentations/conference-calls.

ABOUT D+H

D+H (TSX: DH) is a leading financial technology provider the world's financial institutions rely on every day to help them grow and succeed. Our lending, payments and enterprise solutions are trusted by nearly 7,000 banks, specialty lenders, community banks, credit unions and governments. Headquartered in Toronto, Canada, D+H has more than 4,000 employees worldwide who are passionate about partnering with clients to create forward-thinking solutions that fit their needs. With annual revenues of more than $1 billion, D+H is recognized as one of the world's top FinTech companies on IDC Financial Insights FinTech Rankings and American Banker's FinTech Forward ranking. For more information, visit dh.com.

Use of Non-IFRS Financial Information

D+H's financial results are prepared in accordance with International Financial Reporting Standards ("IFRS").  D+H reports several non-IFRS financial measures, including Adjusted revenues, EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted net income per share, and Debt to EBITDA.  See "Non-IFRS Financial Measures" in D+H's MD&A for the three months ended March 31, 2015 for a more complete description of these terms and for reconciliations to their most directly comparable IFRS measures, where applicable. Any non-IFRS financial measures should be considered in context with the IFRS financial statement presentation and should not be considered in isolation or as a substitute for IFRS revenues, net income or cash flows. Furthermore, D+H's financial measures may be calculated differently from similarly titled financial measures of other companies.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning D+H's objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would", "could", "should", "continue", "goal", "objective", and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause D+H's actual results, performance or achievements, or developments in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.

Risks related to forward-looking statements include, among other things, increased pricing pressures and competition which could lead to loss of contracts or reduced margins; the Company's ability to comply with regulations; the Company's ability to deliver products and services in line with the changes in the United States of America and Canadian banking and financial services industry; the Company's ability to avoid inherent risks in the technology industry related to cyber-security threats and breaches; the Company's dependence on a limited number of large financial institution customers in Canada and dependence on their acceptance of new programs;  declines in the use of personal and business cheques; strategic initiatives being undertaken to grow our business and increase profitability; stability and growth in the real estate, mortgage and other lending markets; the Company's ability to generate cash to invest in the business and at the same time be able to pay dividends and debt repayments; as well as general market conditions, including economic, foreign exchange and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The documents incorporated by reference herein also identify additional factors that could affect the operating results and performance of the Company. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and D+H does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.

All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.

REGULATORY FILINGS AND ADDITIONAL INFORMATION

DH Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found at dh.com and in the disclosure documents filed by DH Corporation with the securities regulatory authorities at sedar.com.

 

SOURCE DH Corporation

For further information:

Contacts:
Karen H. Weaver, Executive Vice President and Chief Financial Officer, D+H
Richard Colgan, Senior Investor Relations Manager, D+H
(416) 696-7700, investorrelations@dh.com or visit our website at dh.com.


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