- Revenue increased by 11%
- Adjusted EBITDA decreased by 19%
- Cash position strong at $55.3 million
CALGARY, Nov. 4, 2014 /CNW/ - Solium Capital Inc. ("Solium" or the "Company") today announced its financial results for the third quarter ended September 30, 2014.
Financial and operating highlights for the three and nine month periods ended September 30, 2014:
- Revenue increased by 11% to $18.7 million in the third quarter of 2014 and by 19% to $60.5 million for the nine month period ended September 30, 2014;
- Earnings from operations decreased by 26% to $2.5 million in the third quarter of 2014 and increased by 36% to $12.7 million for the nine month period ended September 30, 2014;
- Adjusted EBITDA1 decreased by 19% to $3.7 million in the third quarter of 2014 and increased by 26% to $16.3 million in the nine month period ended September 30, 2014;
- Net earnings decreased by 27% to $1.6 million in the third quarter of 2014 and increased by 39% to $8.6 million in the nine month period ended September 30, 2014; and
- Cash and short-term investments as at September 30, 2014 totaled $55.3 million.
Key factors affecting financial results in the three and nine month periods ended September 30, 2014:
- Strategic initiatives - The Company continued to accelerate its strategically driven expenses during the third quarter and the nine month period ended September 30, 2014. As a result, expenditures related to strategic initiatives were significantly higher compared to the third quarter of 2013, as well as compared to the second quarter of 2014. The accelerated spending relates to the building out of regional teams in the UK, Europe and Australia, 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 North America grew from 22 at the end of 2013 to 49 at the end of the third quarter of 2014. These expenditures are in anticipation of positive future business opportunities in these regions.
- Organic growth and increased transaction based revenue - The Company experienced higher license and subscription fees in the three and nine months ended September 30, 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 compared to the same periods in 2013. Despite the growth in revenue between the comparable quarters of 2013 to 2014, the growth was outpaced by the increased strategic spending associated with geographical expansion resulting in decreased Adjusted EBITDA between the comparable quarters. Transactional volumes were down from the second quarter of 2014 but were in line with normal seasonal trends.
- Foreign exchange - The U.S. dollar (USD) was higher compared to the Canadian dollar (CAD) during the three and nine months ended September 30, 2014 compared to the same periods in 2013. This had a positive impact on the Company's net earnings due to the translation of USD financial results into CAD 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 $0.3 million and $1.0 million and a loss before income taxes of $0.2 million and $0.8 million was recorded from the acquired business in the three and nine months ended September 30, 2014 respectively. This is compared to no revenue or loss before income taxes in the three and nine months ended September 30, 2013.
Selected financial information for the third quarter and nine month period ended September 30, 2014:
|Three Months Ended September 30,||Nine Months Ended September 30,|
|2014||2013||% Change||2014||2013||% Change|
|Earnings from operations||$2,512||$3,400||(26%)||$12,700||$9,360||36%|
|Net earnings per share2|
|Issued and outstanding|
Revenue was $18.7 million in the third quarter of 2014 (2013: $16.9 million) and $60.5 million in the nine month period ended September 30, 2014 (2013: $50.7 million).
Adjusted EBITDA was $3.7 million in the third quarter of 2014 (2013: $4.6 million) and $16.3 million in the nine month period ended September 30, 2014 (2013: $12.9 million). The decrease between the comparable third quarters of 2013 and 2014 was a result of increased strategically driven expenses in 2014, as well as reflecting a downward fluctuation in expenses in the third quarter of 2013 due to the timing of certain expense accruals.
Net earnings were $1.6 million in the third quarter of 2014 (2013: $2.2 million) and $8.6 million in the nine month period ended September 30, 2014 (2013: $6.2 million).
Net earnings per share (basic) was $0.034 in the third quarter of 2014 (2013: $0.051) and $0.182 in the nine month period ended September 30, 2014 (2013: $0.148).
During the nine month period ended September 30, 2014, the Company generated $12.3 million from its operational activities (2013: $6.3 million). $6.6 million of the cash generated was placed into short-term investments, increasing the short-term investments balance to $28.7 million as at September 30, 2014. $2.7 million of cash was used in the acquisition of GlobalSharePlans (rebranded to Solium GSP) in January 2014 and $0.6 million of cash was used in a small acquisition in July 2014.
Working capital as at September 30, 2014 was $51.6 million (December 31, 2013: $41.9 million).
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 accelerate its investment into the expansion of international operations. This investment in product and organizational capacity is in response to very positive business opportunities across various regions..
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 finance income and costs, income tax, amortization, and foreign exchange gain or loss (on translation of working capital). 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 September 30||Nine months ended September 30|
|Foreign exchange gain (loss)||114||(111)||459||8|
|Finance income (costs)||188||(104)||507||(311)|
|Income tax expense||(1,214)||(1,004)||(5,063)||(2,854)|
2. Diluted net earnings per share is calculated using the treasury stock method.
3. 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, Spain, France, 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 Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 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.
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