SS&C Technologies Reports Q3 2015 Results

GAAP Revenue $280.9 million; Adjusted Revenue $311.4 million, up 61.7 percent 

WINDSOR, Conn., Nov. 2, 2015 /PRNewswire/ -- 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 quarter ended September 30, 2015.

SS&C reported for the third quarter of 2015 GAAP revenue of $280.9 million, GAAP operating income of $15.0 million, GAAP net loss of $34.6 million and diluted loss per share of $0.36.

Financial Highlights:

• Adjusted revenue (defined below) of $311.4 million in the third quarter 2015, representing an increase of 61.7 percent from third quarter 2014
• Adjusted operating income (defined below) increased 59.3 percent to $125.3 million, or 40.2 percent of adjusted revenue
• Adjusted consolidated EBITDA (defined below) increased to $130.8 million, a 59.3 percent increase from third quarter 2014
• Adjusted diluted EPS (defined below) increased to $0.68 in the third quarter 2015, representing an increase of 11.5 percent

"SS&C's third quarter once again defines our company as a company that executes. We delivered three hundred and eleven million in adjusted revenue, one hundred and thirty million in adjusted consolidated EBITDA and $0.68 in adjusted diluted earnings per share," says Bill Stone, Chairman and CEO of SS&C Technologies. "We are delivering new products and services through a world class sales and marketing organization.  The opportunities presenting themselves today are larger and more lucrative than ever.  SS&C has the talent, technology and will to win.  We believe over the next several years we will demonstrate the superiority of our customer delivery model and our overall business model."

Results

Adjusted revenue (a non-GAAP measure defined in note 1 to the attached Condensed Consolidated Financial Information) in the third quarter of 2015 was $311.4 million, or 61.7% increase from the third quarter of 2014. Adjusted operating income (a non-GAAP measure defined in note 2 to the attached Condensed Consolidated Financial Information) in the third quarter of 2015 was $125.3 million, or 40.2 percent of adjusted revenue. This represents a 59.3 percent increase compared to $78.6 million, or 40.8 percent of adjusted revenue, in the third quarter of 2014.  Adjusted net income (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) for the third quarter of 2015 was $68.6 million compared to $53.3 million in 2014's third quarter, a 28.7 percent increase.  Adjusted diluted earnings per share (a non-GAAP measure defined in note 4 to the attached Condensed Consolidated Financial Information) in the third quarter of 2015 were $0.68 compared to $0.61 in the third quarter of 2014, an 11.5 percent increase.

Operating Cash Flow

SS&C generated net cash from operating activities of $120.6 million for the nine months ended September 30, 2015, compared to $164.3 million for the same period in 2014. The cash from operating activities was affected by $66.4 million of costs related to the financing and acquisition of Advent and the pending acquisitions. SS&C ended the quarter with $503.8 million in cash, and $2,900.0 million in gross debt for a net debt position of $2,396.2 million.

Annual Run Rate Basis                                              

Annual Run Rate Basis (ARRB) adjusted recurring revenue, defined as adjusted recurring revenue for the quarter on an annualized basis, was $1,152.2 million based on adjusted recurring revenue of $288.0 million for the third quarter of 2015. This represents an increase of 62.7 percent from $177.0 million and $708.1 million annual run-rate in the same period in 2014 and an increase of 52.1 percent from $189.4 million for the second quarter of 2015, an annual run rate of $757.6 million. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.

Guidance      

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 Q3 earnings call will take place at 5:00 p.m. eastern time today, November 2, 2015. The call will discuss Q3 2015 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 2015 Third Quarter Earnings Conference Call" conference ID# 57585753. A replay will be available after 8:00 p.m. eastern time on November 2, 2015, until midnight on November 6, 2015. The dial-in number is 855-859-2056 (US and Canada) or 404-537-3406 (International); access code # 57585753. The call will also be available for replay on SS&C's website after November 2, 2015; access: http://investor.ssctech.com/results.cfm.

Certain information contained in this press release relating to, among other things, our financial guidance for the fourth quarter and full year of 2015, 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. SS&C's technology and services helps firms minimize risk, work together seamlessly, and discover new opportunities in a constantly evolving world.

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SS&C Technologies Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Information

Note 1.  Reconciliation of Revenue to Adjusted Revenue

Adjusted revenue represents revenue adjusted for one-time purchase accounting adjustments to fair value deferred revenue acquired in business combinations. Adjusted revenue 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 revenue is not a recognized term under generally accepted accounting principles (GAAP). Adjusted revenue does not represent revenue, as that term is defined under GAAP, and should not be considered as an alternative to revenue as an indicator of our operating performance. Adjusted revenue as presented herein is not necessarily comparable to similarly titled measures. Below is a reconciliation between adjusted revenue and revenue, the GAAP measure we believe to be most directly comparable to adjusted revenue.  Also below is our breakdown of recurring and non-recurring adjusted revenue.

Note 2. Reconciliation of Operating Income to Adjusted Operating Income

Adjusted operating income represents operating income adjusted for amortization of acquisition-related intangible assets and 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.

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.

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.

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