SS&C Technologies Reports Q1 2016 Results

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
Condensed Consolidated Statements of Operation
(in thousands, except per share data)
(unaudited)







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
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)










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
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)







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
March 31,


(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.

Logo - http://photos.prnewswire.com/prnh/20150410/197838LOGO

SOURCE SS&C

For further information: For more information: Patrick Pedonti, Chief Financial Officer, Tel: +1-860-298-4738, E-mail: InvestorRelations@sscinc.com; Justine Stone, Investor Relations, Tel: +1-212-367-4705, E-mail: Justine.stone@sscinc.com, http://www.ssctech.com


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