D+H Reports Solid Fourth Quarter 2014 Earnings and Announces Quarterly Dividend

Fourth quarter highlights:



  • Revenues of $297 million, up 15%
  • Adjusted revenues1 of $299 million, up 10%
  • Net income of $32 million, up 86%
  • Adjusted EBITDA1 of $88 million, up 8%
  • Net income per share of $0.39, up 82%
  • Adjusted net income1 of $49 million, up 17%
  • Quarterly dividend of $0.32 per share
  • Adjusted net income per share1 of $0.59, up 14%

TORONTO, Feb. 24, 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 and year ended December 31, 2014. 

"We are pleased with our fourth quarter and full year financial results which were driven by solid organic growth in both our Canadian and U.S. operations," said D+H chief executive officer Gerrard Schmid.  "With a full year contribution from the acquisition of Harland Financial Solutions and the integration behind us, we've made good progress on our journey to becoming a leading FinTech provider. Our U.S. business now generates 44% of consolidated Adjusted revenues and our strategy to offer a more comprehensive set of solutions to new and existing clients is gaining momentum."

Fourth Quarter and Full Year Highlights 

The fourth quarter provided the first complete year-over-year comparison, as the fourth quarters of both 2014 and 2013 included Harland Financial Solutions ("HFS") results for the entire quarter. Our key financial metrics for the quarter showed solid organic growth in both our Canadian and U.S. businesses compared to the prior year period. 

  • Revenues from continuing operations increased 15% to $297.5 million from $259.1 million in the same quarter in 2013. For the full year, revenues from continuing operations increased 36% to $1,138.9 million from $837.1 million in the same prior year period.

  • Adjusted revenues totalled $299.2 million, an increase of $27 million, or 10%, over the same quarter in 2013.  Adjusted revenues for the full year totalled $1,159.1 million, an increase of $292.8 million, or 34%, compared to 2013. Excluding the impact of foreign exchange, Adjusted revenues increased 6% for the fourth quarter with the U.S. Segment increasing by 8% and the Canadian Segment increasing by 5%. For the full year, excluding the impact of foreign exchange, Adjusted revenues increased by 30% with the U.S. Segment and the Canadian Segment increasing by 110% and 2%, respectively.

  • Adjusted EBITDA increased 8% to $88 million (29% margin) from $81.3 million (30% margin) compared to the same quarter in 2013. For the full year, Adjusted EBITDA increased 42% to $352.3 million (30% margin) from $247.5 million (29% margin) compared to the same prior year period. Excluding the impact of foreign exchange, Adjusted EBITDA increased 4% and 38% for the fourth quarter and full year, respectively. The fourth quarter Adjusted EBITDA growth, after adjusting for foreign exchange, was impacted by additional charges totalling $6 million and included consulting costs related to the Canada Student Loans Program request for proposal and increased employee related costs for performance based compensation.

  • Net income increased to $32.4 million ($0.39 per share, basic and diluted), from $17.4 million ($0.22 per share, basic and diluted) in the same quarter in 2013. Net income for the full year totalled $106.5 million ($1.31 per share, basic and diluted), an increase of $62.8 million, or 144%, compared to $43.7 million ($0.65 per share, basic and diluted) in the same prior year period.

  • Adjusted net income increased 17% to $49.1 million from $42.0 million in the same quarter in 2013. Adjusted net income per share increased 14% to $0.59 from $0.52 in the same quarter in 2013. For the full year, Adjusted net income increased 40% to $190.1 million in 2014 from $136.1 million in 2013 and Adjusted net income per share increased 16% to $2.34 from $2.02.

  • On December 2, 2014, the Company issued 5,554,500 common shares for gross proceeds of $201.4 million. Proceeds of the share issuance and cash on hand were used to repay $209.6 million of debt during the fourth quarter and $224.6 million for the year in addition to the costs of the equity issuance. At December 31, 2014, the Company's Debt to EBITDA1 ratio was 2.11.

  • Cash generated from operating activities in the fourth quarter totalled $103.8 million dollars, an increase of 16% or $14.4 million dollars over the same quarter in 2013. For the full year, cash generated from operations totalled $308.5 million, an increase of 42% or $90.6 million over 2013.  Cash from operations during the quarter was used to pay interest and taxes, repay debt, make capital investments for growth, and to pay dividends. Cash and cash equivalents as at December 31, 2014, totalled $34.8 million.

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

Fourth Quarter and Full Year 2014 Highlights

Selected Financial Information

(C$ millions unless otherwise indicated, unaudited)

Three months ended

December 31

Years ended

December 31

2014

2013

2014

2013

Revenues

$297.5

$259.1

$1,138.9

$837.1

Adjusted revenues1

$299.2

$272.1

$1,159.1

$866.3

EBITDA1

$89.9

$68.2

$335.2

$199.5

Adjusted EBITDA1

$88.0

$81.3

$352.3

$247.5

Adjusted EBITDA margin1

29%

30%

30%

29%

Net income

$32.4

$17.4

$106.5

$43.7

Adjusted net income1

$49.1

$42.0

$190.1

$136.1

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

$0.39

$0.22

$1.31

$0.65

Adjusted net income per share1 (C$)

$0.59

$0.52

$2.34

$2.02

Revenues by Segment and Service Area2,3,5

(C$ millions, unaudited)

Three months ended December 31

Canadian
Segment

U.S. Segment

Consolidated

2014

2013

2014

20134

2014

20134

Lending solutions

$88.0

$79.7

$74.5

$52.8

$162.5

$132.4

Payments solutions

75.4

76.0

-

-

75.4

76.0

Enterprise solutions

-

-

59.6

50.7

59.6

50.7

Total Revenues

$163.5

$155.7

$134.0

$103.4

$297.5

$259.1

Adjusted revenues1 by Segment and Service Area2,3,5

(C$ millions, unaudited)

Three months ended December 31

Canadian
Segment

U.S. Segment

Consolidated

2014

2013

2014

20134

2014

20134

Lending solutions

$88.0

$79.7

$76.0

$63.9

$164.0

$143.6

Payments solutions

75.4

76.0

-

-

75.4

76.0

Enterprise solutions

-

-

59.7

52.6

59.7

52.6

Total Adjusted revenues1

$163.5

$155.7

$135.7

$116.5

$299.2

$272.1

Revenues by Segment and Service Area2,3,5

(C$ millions, unaudited)

Years ended December 31

Canadian
Segment

U.S. Segment

Consolidated

2014

2013

2014

20134

2014

20134

Lending solutions

$348.3

$334.6

$259.8

$120.3

$608.1

$454.9

Payments solutions

302.8

304.4

-

-

302.8

304.4

Enterprise solutions

-

-

228.0

77.8

228.0

77.8

Total Revenues

$651.1

$639.0

$487.8

$198.1

$1,138.9

$837.1

Adjusted revenues1 by Segment and Service Area2,3,5

(C$ millions, unaudited)

Years ended December 31

Canadian
Segment

U.S. Segment

Consolidated

2014

2013

2014

20134

2014

20134

Lending solutions

$348.3

$334.6

$277.7

$142.3

$626.0

$477.0

Payments solutions

302.8

304.4

-

-

302.8

304.4

Enterprise solutions

-

-

230.2

84.9

230.2

84.9

Total Adjusted revenues1

$651.1

$639.0

$507.9

$227.3

$1,159.1

$866.3

U.S. Segment revenues2,3,5

(USD millions, unaudited)

Three months ended

December 31

Year ended

December 31

2014

20134

2014

20134

Lending solutions

$65.5

$50.1

$234.8

$116.0

Enterprise solutions

52.4

48.3

206.3

74.7

U.S. Segment revenues

$117.9

$98.5

$441.1

$190.7

U.S. Segment Adjusted revenues1,2,3,5

(USD millions, unaudited)

Three months ended

December 31

Year ended

December 31

2014

20134

2014

20134

Lending solutions

$66.8

$60.8

$251.1

$137.2

Enterprise solutions

52.6

50.2

208.4

81.5

U.S. Segment Adjusted revenues1

$119.3

$110.9

$459.4

$218.7

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.
4 Certain 2013 U.S. revenues were reclassified from enterprise solutions to lending solutions to conform to current year presentation.
5 Effective January 1, 2014 results from Canadian equipment financing and commercial lending technology, our technology solution that supports equipment financing, leasing and commercial lending are reported as part of the U.S. segment. Comparative periods have been conformed to the current period classification.

SUBSEQUENT EVENTS

Dividend Reinvestment Plan

On January 14, 2015, the Company announced the adoption of a 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 beginning in the first quarter of 2015 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 must register on or before March 6, 2015, the dividend record date, to participate in the program for the dividend payable on March 31, 2015.

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, 2015, to shareholders of record at the close of business on March 6, 2015. The dividend is an eligible dividend for Canadian income tax purposes.

OUTLOOK

For further information on trends, managements outlook and corporate priorities in 2015, please refer to section 4 of the MD&A for the three months and year ended December 31, 2014.

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 years ended December 31, 2014 and 2013 and the Management's Discussion and Analysis ("MD&A") for the three months and year ended December 31, 2014, 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 9:00 a.m. (EST) on Wednesday, February 25, 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 March 11, 2015 by dialing 416-849-0833 (Local/Int'l) or 1-855-859-2056 (toll-free within North America), with Encore Password 65655251.

Webcast:

The conference call will also be webcast at http://event.on24.com/r.htm?e=924521&s=1&k=FD3EA991BD594320A25ED04BB90A1C7F 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 and year ended December 31, 2014 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. Further, 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 ("U.S.") 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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