Solium Releases 2014 Fourth Quarter and Year-end Financial Results

  • Revenue increased by 16% year over year
  • Adjusted EBITDA increased by 14% year over year
  • Cash position strong at $57.7 million

CALGARY, March 17, 2015 /CNW/ - Solium Capital Inc. ("Solium" or the "Company") today announced its financial results for the fourth quarter and year ended December 31, 2014.

Financial and operating highlights for the fourth quarter and year ended December 31, 2014:

  • Revenue increased by 7% to $18.7 million for the fourth quarter of 2014 and by 16% to $79.1 million for the year ended December 31, 2014;

  • Earnings from operations decreased by 22% to $2.0 million for the fourth quarter of 2014 and increased by 23% to $14.7 million for the year ended December 31, 2014;

  • Adjusted EBITDA1 decreased by 26% to $2.9 million in the fourth quarter of 2014 and increased by 14% to $19.2 million in the year ended December 31, 2014;

  • Net earnings decreased by 59% to $1.0 million in the fourth quarter of 2014 and increased by 11% to $9.6 million in the year ended December 31, 2014;

  • Cash on hand and short term investments as at December 31, 2014 totaled $57.7 million with no debt on the balance sheet;

Key factors affecting financial results for the fourth quarter and year ended December 31, 2014:

  • Strategic initiatives – The Company accelerated its strategically driven expenses during the year ended December 31, 2014. The accelerated spending relates to the building out of the Company's international team, further development of the Company's global equity administration platform, and adding to the associated shared services capabilities in Canada. To highlight this shift, the Company's employees based outside of North America grew from 22 at the end of 2013 to 51 full time equivalent employees at the end of 2014.

  • Organic growth and increased transaction based revenue – The Company experienced higher license and subscription fees in the three and twelve months ended December 31, 2014 as compared to the same periods in 2013 as a result of organic growth. Organic growth, in turn, drove a corresponding increase to transaction based revenue during the year as compared to 2013. The exception to this was in the fourth quarter of 2014 which saw a decrease in transaction volumes and associated revenue as compared to the same period in 2013.

  • Foreign exchange – The U.S. dollar (USD) was higher compared to the Canadian dollar (CAD) during the year ended December 31, 2014 compared to 2013. This had a positive impact on the Company's net earnings due to the translation of USD financial results into CAD financial results for consolidated financial reporting purposes.

  • Acquisitions – GlobalSharePlans (rebranded to Solium GSP), a leading online provider of regulatory and tax information for companies with global equity incentive plans was acquired at the beginning of 2014. Revenue of $0.4 million and $1.4 million was recorded from the acquired business for the three and twelve months ended December 31, 2014 respectively. Income before income taxes of $0.2 million and a loss before income taxes of $0.6 million was recorded for the three and twelve months ended December 31, 2014 respectively. This is compared to no revenue or loss before income taxes in the year ended December 31, 2013.

Selected financial information for the fourth quarter and year ended December 31, 2014:
(In thousands of Canadian dollars except per share amount)







Three Months Ended December 31,


Year Ended December 31,

 

2014

2013

% Change


2014

2013

 

% Change

Revenue

$18,680

$17,395

7%


$79,146

$68,079

16%

Operating expenses

$16,631

$14,759

13%


$64,398

$56,082

15%

Earnings from operations

$2,049

$2,638

(22%)


$14,748

$11,997

23%

Adjusted EBITDA1

$2,897

$3,889

(26%)


$19,218

$16,833

14%

Net earnings2

$1,028

$2,500

(59%)


$9,631

$8,703

11%

Adjusted net earnings2

$1,028

$1,803

(43%)


$9,631

$8,006

20%









Net earnings per share









Basic

$0.021

$0.056

(63%)


$0.203

$0.202

0.5%


Diluted3

$0.021

$0.053

(60%)


$0.193

$0.191

1%









Adjusted net earnings per share









Basic

$0.021

$0.040

(48%)


$0.203

$0.186

9%


Diluted3

$0.021

$0.038

(45%)


$0.193

$0.175

10%









Issued and outstanding









Common shares





47,820

46,905

2%


Diluted4





52,344

51,384

2%









Revenue from Canadian operations was $7.1 million in the fourth quarter of 2014 (2013: $7.5 million) and $32.2 million in the year ended December 31, 2014 (2013: $28.3 million), while revenue from U.S. operations was $9.7 million in the fourth quarter of 2014 (2013: $9.1 million) and $38.3 million in the year ended December 31, 2014 (2013: $35.1 million). Revenue from International operations was $1.9 million in the fourth quarter of 2014 (2013: $0.8 million) and $8.7 million in the year ended December 31, 2014 (2013: $4.7 million).

Adjusted EBITDA1 in Canada was $2.4 million in the fourth quarter of 2014 (2013: $2.5 million) and $12.3 million in the year ended December 31, 2014 (2013: $9.9 million), while Adjusted EBITDA1 in the U.S. was $2.1 million in the fourth quarter of 2014 (2013: $2.5 million) and $10.1 million in the year ended December 31, 2014 (2013: $7.5 million). Adjusted EBITDA1 in International operations was a loss of $1.6 million in the fourth quarter of 2014 (2013: loss of $1.1 million) and a loss of $3.1 million in the year ended December 31, 2014 (2013: $0.6 million).

Adjusted net earnings2 from Canadian operations were $1.7 million in the fourth quarter of 2014 (2013: $2.0 million) and $9.6 million in the year ended December 31, 2014 (2013: $6.9 million), while adjusted net earnings3 from U.S. operations were $0.8 million in the fourth quarter of 2014 (2013: $0.9 million) and $4.1 million in the year ended December 31, 2014 (2013: $1.8 million). Adjusted net earnings2 from International operations were a loss of $1.4 million in the fourth quarter of 2014 (2013: loss of $1.0 million) and a loss of $4.1 million in the year ended December 31, 2014 (2013: loss of $0.7 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.

Adjusted net earnings per share was $0.021 in the fourth quarter of 2014 (2013: $0.040) and $0.203 in the year ended December 31, 2014 (2013: $0.204).

During the year ended December 31, 2014, the Company had overall cash inflow of $26.6 million (2013: $9.8 million).  Funds from operations were $22.9 million for the year ended December 31, 2014 (2013: $19.7 million), while total cash inflow from operations inclusive of working capital changes was $14.8 million (2013: $11.8 million).  Net cash inflow from financing activities was $0.6 million (2013: $22.9 million). Cash increased from investing activities by $10.8 million (2013: outflow $25.2 million) as a result of the maturity of short term highly liquid bank-issued bearer deposit notes.  Working capital as at December 31, 2014 was $54.3 million (December 31, 2013: $41.9 million).

Outlook

Solium will continue to invest significantly in Shareworks, the first and only equity administration platform with end-to-end global capabilities on a single platform, and, as a result of strong global client and revenue growth, will continue to build out the Company's international operations.  This investment in product and organizational capacity is in response to very positive business opportunities across various regions.

Notes:


1.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA are non-IFRS financial measures which do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers.  EBITDA and Adjusted EBITDA provide useful information to users as they reflect the net earnings prior to the effect of non-operating expenses such as foreign exchange gain or loss, gain on reversal of contingent obligations, intangibles and goodwill charges, finance income and costs, amortization, and income tax expense or recovery. Management uses Adjusted EBITDA in measuring the financial performance of the Company.  Management monitors Adjusted EBITDA against budget and past results on a regular basis. The measure is a component in determining the annual bonus pool for staff and management.          






The following is a reconciliation of Adjusted EBITDA to net earnings:

 


Three months ended December 31


Year ended December 31


 

2014

 

2013


 

2014

 

2013

Adjusted EBITDA

2,897

3,889


19,218

16,833

Foreign exchange gain (loss)

14

620


473

628

Gain on reversal of contingent

     obligation

 

-

 

2,948


 

-

 

2,948

Intangibles and goodwill charges

-

(3,752)


-

(3,752)

EBITDA

2,911

3,705


19,691

16,657

Finance income (costs)

147

(41)


655

(352)

Amortization expense

(848)

(1,253)


(4,470)

(4,837)

Income tax (expense) recovery

(1,182)

89


(6,245)

(2,765)

Net earnings

1,028

2,500


9,631

8,703












2.

The following  is a reconciliation of adjusted net earnings to net earnings:

 


Three months ended December 31


Year ended December 31


 

2014

 

2013


 

2014

 

2013

Adjusted net earnings

1,028

1,803


9,631

8,006

Gain on reversal of contingent

     obligation

 

-

 

2,948


 

-

 

2,948

Intangibles and goodwill charges

-

(3,752)


-

(3,752)

Deferred tax recovery

-

1,501


-

1,501

Net earnings

1,028

2,500


9,631

8,703









3.

Diluted net earnings per share is calculated using the treasury stock method.





4.

Diluted shares as presented equals issued and outstanding common shares plus outstanding stock options and restricted share units.

 

About Solium Capital Inc.

Solium Capital Inc. (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance.  From offices in the United States, Canada, the United Kingdom, Europe and Australia, our innovative software-as-a-service (SaaS) technology powers share plan administration and equity transactions for more than 3,000 corporate clients with employee participants in more than 100 countries.  Follow us @Solium and visit us at solium.com.

Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Specific forward-looking statements in this press release include statements with respect to continued investment in Shareworks, and the growth of international operations and international markets. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect, including assumptions with respect to the ability of the Company to identify, hire, train, motivate and retain qualified personnel, the Company's ability to maintain or accurately forecast revenue from its products and services, and the competitive environment in which the Company operates.  Although Solium believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because Solium can give no assurance that such expectations will prove to be correct. The forward-looking statements and information are based on Solium's current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including general business and economic conditions, actions of competitors and partners, the regulatory environment and product capability and acceptance. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.

The Management's Discussion and Analysis and the Consolidated Financial Statements for the year ended December 31, 2014 referred to herein will be available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.solium.com.

SOURCE Solium Capital Inc.

For further information: Investor relations: Conrad Seguin, TMX, Equicom, 416.815.0700 x 251, cseguin@tmxequicom.com


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