D+H Announces Fourth Quarter and Full Year 2015 Earnings

TORONTO, Feb. 23, 2016 /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 and year ended December 31, 2015.

"We are pleased with our results for the fourth quarter which showed growth in all of our business segments, led by strong growth in our Global Transaction Banking Solutions segment," said D+H Chief Executive Officer Gerrard Schmid.  "Demand for payments technology increased Adjusted revenues in this segment by 13% in the fourth quarter on a proforma(4) constant currency basis, and by 8% for the full year on a proforma(4) constant currency basis.  Additionally, we continued to see growth and stability in our Canadian segment, as well as strong bookings growth in both our GTBS and Lending & Integrated Core segments."

Fourth Quarter and Full Year 2015 Highlights 

The financial results for the fourth quarter and full year 2015 showed continued growth in each of D+H's business segments.

  • Revenues increased 43% in the fourth quarter, to $424 million from $297 million in the same quarter in the prior year. For the full year, revenues increased 32% to $1,507 million from $1,139 million in the same prior year period.
  • Adjusted revenues(1) totalled $438 million in the fourth quarter, an increase of $139 million or 46% over the same quarter in the prior year. For the full year, Adjusted revenues(1) increased 32% to $1,528 million from $1,159 million in the same prior year period.
  • In our software solutions in L&IC and GTBS segments, full year 2015 consolidated bookings(1) increased 26% on a constant currency basis, driven by 29% proforma(4) bookings(1) growth in GTBS and 25% bookings(1) growth in L&IC.
  • Adjusted EBITDA(1) increased 71% to $150 million (34.3% margin) in the fourth quarter, from $88 million (29.4% margin) in the same period in the prior year. For the full year, Adjusted EBITDA(1) increased 35% to $475 million (31.1% margin) from $352 million (30.4% margin) in the same prior year period.
  • Net income of $13 million ($0.13 per share, basic and diluted) in the fourth quarter decreased, compared to $32 million ($0.39 per share, basic and diluted) in the same period in the prior year. For the full year, net income of $84 million ($0.84 per share, basic and diluted) decreased, compared to $106 million ($1.31 per share, basic and diluted) in prior year.
  • Adjusted net income(1) increased 68% to $83 million in the fourth quarter, from $49 million in the same period in the prior year. For the full year, Adjusted net income(1) increased 34% to $255 million from $190 million in prior year.
  • Adjusted net income per share(1) was $0.78 in the fourth quarter compared to $0.59 in the same period in the prior year. For the full year, Adjusted net income per share(1) was $2.56 as compared to $2.34 in prior year.
  • Total equity increased to $2.4 billion (106.4 million shares outstanding) at December 31, 2015 from $1.4 billion (86.4 million shares outstanding) at December 31, 2014.
  • Loans, borrowings, and convertible debentures increased to $2.1 billion at December 31, 2015 from $1.0 billion at December 31, 2014.
  • The Debt to EBITDA(1) ratio was 3.19x at December 31, 2015, as compared to 3.45x at April 30, 2015 (at closing of the acquisition of Fundtech) and 2.11x at December 31, 2014. The Company repaid $30 million of debt during the fourth quarter and a total of $50 million since the acquisition of Fundtech.
  • Net cash from operating activities increased by 14% in the fourth quarter, to $96 million from $84 million in the same period in the prior year. For the full year, net cash from operating activities increased by 15% to $221 million from $192 million in prior year.
  • Adjusted net cash from operating activities(1) increased by 28% in the fourth quarter, to $112 million from $88 million in the same period in the prior year. For the full year, Adjusted net cash from operating activities(1) increased by 38% to $282 million from $204 million in prior year.
  • Enterprise value(1) totalled $5.5 billion at December 31, 2015 and $4.2 billion at December 31, 2014.

Fourth Quarter and Full Year 2015 Results

The selected financial information included in this press release is qualified in its entirety by, and should be read together with, the audited consolidated financial statements for the year ended December 31, 2015, and the MD&A for the three months and year ended December 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.

Selected Consolidated Financial Information3 

Three months ended December 31


Years ended December 31


2015

2014


2015

2014

Revenues






Revenues

$424.1

$297.5


$1,506.6

$1,138.9


Add: Acquisition accounting adjustments

13.6

1.7


21.6

20.1

Adjusted revenues1

$437.7

$299.2


$1,528.2

$1,159.1

EBITDA






EBITDA1

$116.8

$89.9


$424.7

$335.2


Add: Acquisition accounting adjustments

10.8

(0.7)


11.0

9.4


Add: Acquisition-related and other charges

16.3

3.5


60.8

12.5


Add: Foreign exchange loss (gain)

6.2

(4.7)


(21.8)

(4.7)

Adjusted EBITDA1

$150.1

$88.0


$474.7

$352.3

Adjusted EBITDA margin1

34.3%

29.4%


31.1%

30.4%

Net Income






Net income

$13.3

$32.4


$84.0

$106.5

Net income per share, basic and diluted (C$)

$0.13

$0.39


$0.84

$1.31

Adjusted net income1

$82.7

$49.1


$254.9

$190.1

Adjusted net income per share, basic and diluted1 (C$)

$0.78

$0.59


$2.56

$2.34

Liquidity






Net cash from operating activities

$96.1

$84.2


$221.4

$192.0


Add: Acquisition-related and other charges

16.3

3.5


60.8

12.5

Adjusted net cash from operating activities1

$112.4

$87.7


$282.2

$204.4

Uses of Adjusted net cash from operating activities1:







Capital Expenditures

$27.7

$20.0


$103.3

$57.7


Dividends

$24.7

$25.9


$93.9

$103.4

Adjusted net cash from operating activities after capital






expenditures and cash dividends1

$60.0

$41.9


$85.0

$43.3


Net debt repayment

$30.0

$11.6


$50.0

$26.6

Adjusted net cash from operating activities after capital






expenditures, cash dividends and net debt repayment1

$30.0

$30.3


$35.0

$16.7













Revenues and Adjusted revenues by Service Area3

Three months ended December 31


Years ended December 31

(C$ millions unless otherwise indicated, unaudited)

2015

2014


2015

2014

Revenues by service area






Lending solutions

$183.4

$162.5


$688.8

$608.1

Payments solutions

79.3

75.4


316.7

302.8

Integrated core solutions

72.1

59.6


268.9

228.0

Global transaction banking solutions

89.3

-


232.3

-

Total revenues

$424.1

$297.5


$1,506.6

$1,138.9

Adjusted revenues1 by service area






Lending solutions

$184.3

$164.0


$693.3

$626.0

Payments solutions

79.3

75.4


316.7

302.8

Integrated core solutions

72.2

59.7


269.4

230.2

Global transaction banking solutions

101.9

-


248.8

-

Total Adjusted revenues1

$437.7

$299.2


$1,528.2

$1,159.1

 

Results by Segment3

Three months ended December 31

 (C$ millions unaudited)

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014


GTBS

L&IC

Canada

Corporate

Consolidated

Revenues

$89.3

-

$162.4

$134.0

$172.4

$163.5

-

-

$424.1

$297.5

Expenses

65.6

-

95.8

85.3

123.4

123.5

$22.5

$(1.3)

307.3

207.5

EBITDA1

$23.7

-

$66.6

$48.8

$49.0

$39.9

$(22.5)

$1.3

$116.8

$89.9

EBITDA Margin1

26.6%

-

41.0%

36.4%

28.4%

24.4%

-

-

27.5%

30.2%

Adjusted revenues1

$101.9

-

$163.5

$135.7

$172.4

$163.5

-

-

$437.7

$299.2

Adjusted EBITDA1

$35.6

-

$65.6

$48.1

$49.0

$39.9

-

-

$150.1

$88.0

Adjusted EBITDA margin1

34.9%

-

40.1%

35.4%

28.4%

24.4%

-

-

34.3%

29.4%















Years ended December 31

(C$ millions, unaudited)

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014


GTBS

L&IC

Canada

Corporate

Consolidated

Revenues

$232.3

-

$590.6

$487.8

$683.7

$651.1

-

-

$1,506.6

$1,138.9

Expenses

178.5

-

369.2

316.2

495.2

479.8

$39.0

$7.7

$1,081.9

$803.7

EBITDA1

$53.8

-

$221.4

$171.6

$188.5

$171.3

$(39.0)

$(7.7)

$424.7

$335.2

EBITDA Margin1

23.2%

-

37.5%

35.2%

27.6%

26.3%

-

-

28.2%

29.4%

Adjusted revenues1

$248.8

-

$595.7

$507.9

$683.7

$651.1

-

-

$1,528.2

$1,159.1

Adjusted EBITDA1

$68.5

-

$217.7

$181.0

$188.5

$171.3

-

-

$474.7

$352.3

Adjusted EBITDA margin1

27.5%

-

36.5%

35.6%

27.6%

26.3%

-

-

31.1%

30.4%

 

Results by Segment in U.S. dollars3

Three months ended December 31


Years ended December 31

 (US$ millions, unaudited)

2015

2014


2015

2014

GTBS Segment Revenues, Adjusted revenues1 and Adjusted EBITDA1:






Revenues2

US$66.8

-


US$178.6

-

Adjusted revenues1, 2

US$76.0

-


US$190.9

-

Adjusted EBITDA1, 2

US$26.2

-


US$51.9

-

Adjusted EBITDA margin1, 2

34.5%

-


27.2%

-

L&IC Segment revenues:






Lending solutions – revenues

US$67.4

US$65.5


US$250.9

US$234.8

Integrated core solutions – revenues

54.0

52.4


210.1

206.3

Total L&IC segment revenues

US$121.4

US$117.9


US$461.0

US$441.1

L&IC Segment Adjusted revenues1 and Adjusted EBITDA1:






Lending solutions – Adjusted revenues1

US$68.1

US$66.8


US$254.5

US$251.1

Integrated core solutions – Adjusted revenues1

54.1

52.6


210.5

208.4

Total L&IC segment Adjusted revenues1

US$122.1

US$119.3


US$465.0

US$459.4

L&IC segment Adjusted EBITDA1

US$48.8

US$42.4


US$169.1

US$163.8

L&IC segment Adjusted EBITDA margin1

40.0%

35.5%


36.4%

35.7%

 

1

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

2

Reported results for GTBS begin as of closing of the acquisition of Fundtech on April 30, 2015 and include the period from April 30, 2015 through December 31, 2015.

3

Totals may not add due to rounding.

4

Proforma GTBS figures include the period prior to the acquisition of Fundtech (January 1, 2015 – April 29, 2015) and the full year 2014.

 

Dividend

DH Corporation today announced that its Board of Directors has declared a quarterly dividend of $0.32 per common share payable on March 31, 2016 to shareholders of record at the close of business on March 17, 2016. The dividend is an eligible dividend for Canadian income tax purposes.

Outlook

For further information on management's outlook for 2016, please refer to section 3 of the MD&A for the three months and year ended December 31, 2015.

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. (EDT) on Wednesday, February 24, 2016 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 March 9, 2016 by dialing 416-849-0833 (Local/Int'l) or 1-855-859-2056 (toll-free within North America), with Encore Password 78851067.

Webcast:

The conference call will also be webcast at http://event.on24.com/r.htm?e=1093616&s=1&k=E967F6A5FA3421D85944AAC062067513 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, integrated core and global transaction banking solutions are trusted by nearly 8,000 banks, specialty lenders, community banks, credit unions, governments and corporations. Headquartered in Toronto, Canada, D+H has more than 5,500 employees worldwide who are passionate about partnering with clients to create forward-thinking solutions that fit their needs. With annual revenues in excess of $1.5 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 rankings. 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", "Constant Currency", "Bookings", "Backlog", "EBITDA", "EBITDA margin" (EBITDA divided by revenues), "Adjusted EBITDA", "Adjusted EBITDA margin" (Adjusted EBITDA divided by Adjusted revenues), "Adjusted net income", "Adjusted net income per share" and "Adjusted net cash from operating activities".  D+H also reports "Debt to EBITDA ratio", which is also not a defined term under IFRS.  See "Non-IFRS financial measures and key performance indicators" in D+H's MD&A for the three months and year ended December 31, 2015 for a more complete description of these terms and for reconciliations to their most directly comparable IFRS measure, 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.

Bookings and Backlog

Bookings represent new, signed revenue contracts with new and existing customers for incremental business, excluding renewals, that will generate revenues in the current and future periods. Bookings are derived based on the total contract revenues to be earned over the duration of the contract. Management regards these bookings as an important directional indicator of future revenues but they are not to be substituted for an analysis of revenues under IFRS. Bookings are not cumulative and are compiled on an annual basis. Bookings at the end of the year that have not been recognized in revenue in the current year become part of the backlog as described below.

Bookings include perpetual licenses, other term based license subscriptions and related maintenance, data processing fees, hardware and professional services fees. SaaS subscriptions and maintenance is included in the bookings for L&IC solutions but excluded from GTBS' bookings after the first year of the new contract due to the nature of their licensed and SaaS products. L&IC term-based SaaS, term licenses, processing and subscription products will generally have contractual terms ranging between three and ten years and are included in bookings for the full term. GTBS SaaS subscriptions and maintenance which typically have evergreen renewals are included in bookings at the annual contract value. Usage based contracts are estimated based on expected annual run rate when fully deployed. Non-USD based contracts are calculated at spot rates. Term-based SaaS and subscription products will generally have contractual terms ranging between one and five years and are included in bookings for the full term. For the GTBS segment, bookings growth compares the full year 2015 bookings, including the period prior to the acquisition (January 1, 2015 to April 29, 2015), to the full year 2014 bookings which was also prior to the acquisition (January 1, 2014 to December 31, 2014).

Backlog represents committed but undelivered products and services for contracts at the period end. Backlog is not a complete measure of our future revenues.

Both bookings and backlog may fluctuate significantly due to the timing of signing large contracts and the length of time for implementation which varies significantly by software solution. The timing of revenue recognition may also vary; refer to section 9 of D+H's MD&A for the revenue recognition policies. Beginning total backlog plus bookings, minus revenues, will not equal ending total backlog due to foreign currency fluctuations, contract adjustments and other factors.

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.

Risks related to forward-looking statements include, among other things, those outlined in section 13 – Business Risks of the Company's MD&A for the three months and year ended December 31, 2015.

Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The documents referred to 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.

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 available at that time, 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.

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: 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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