SS&C Technologies Reports Q4 and FY 2015 Results

Feb 11, 2016, 16:05 ET from SS&C

Q4 GAAP revenue $300.9 million, Fully Diluted GAAP Earnings Per share $0.12, Adjusted revenue $325.8 million, Adjusted Diluted Earnings Per Share of $0.72

WINDSOR, Conn., Feb. 11, 2016 /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 fourth quarter and full year ended December 31, 2015.

SS&C reported for the fourth quarter of 2015 GAAP revenue of $300.9 million, GAAP operating income of $48.3 million, GAAP net income of $12.1 million and GAAP diluted earnings per share of $0.12.

Highlights:

  • Adjusted revenue (defined below) for the fourth quarter 2015 was $325.8 million, up 61.9% from the fourth quarter 2014.
  • Adjusted operating income (defined below) increased 66.2 percent to $133.3 million, or 40.9 percent of adjusted revenue.
  • Adjusted diluted earnings per share for Q4 2015 of $0.72, a 16.1% increase from Q4 2014.
  • Annual Run Rate Basis (ARRB) was $1,180.0 million based on adjusted recurring revenue of $295.0 million for the fourth quarter 2015, a 59.9 percent increase from the same period in 2014.
  • SS&C received a 17-A exemption from registration as a clearing agent from the SEC that permits us to offer matching and electronic trade confirmation (ECN) services in the U.S. through our SSCNet post-trade communication network.

"2015 was a transformational year and the fourth quarter provides a glimpse of the power of our business model.  Adjusted revenue was $325.8 million for the quarter, up $124.6 million from Q4 2014 advancing 62%," says Bill Stone, Chairman and CEO of SS&C Technologies. "Advent, DST Global Solutions, Primatics and Varden all contributed to our robust fourth quarter. The worldwide workforce of SS&C now totals almost 6,100 people and they are a talented, hardworking group.  We look forward to adding the 1,400 dedicated Citi Alternative Investor Services employees to our team at the closing of the acquisition, which is expected to occur in the first quarter. "

GAAP Results

SS&C reported GAAP revenue of $300.9 million for the fourth quarter of 2015, compared to $200.7 million in the fourth quarter of 2014. GAAP revenue for the year ended December 31, 2015 was $1,000.3 million, increasing from $767.9 million in 2014. GAAP operating income for the fourth quarter of 2015 was $48.3 million, compared to $53.6 million in 2014's fourth quarter. GAAP operating income for the year ended December 31, 2015 was $164.7 million, down from $200.4 million for 2014. On a fully diluted GAAP basis, earnings per share in the fourth quarter of 2015 was $0.12 compared to fully diluted GAAP earnings per share of $0.42 in the fourth quarter of 2014. On a fully diluted basis, GAAP earnings per share for the year ended December 31, 2015 was $0.45, down from 2014's $1.50 per share.

Adjusted Non-GAAP Results (defined in Notes 1-4 below)

Adjusted revenue in the fourth quarter of 2015 was $325.8 million, up 61.9 percent compared to $201.2 million in the fourth quarter of 2014. Adjusted revenue for the year ended December 31, 2015 was $1,056.4 million, up 37.5 percent over $768.4 million for 2014. Adjusted operating income in the fourth quarter of 2015 was $133.3 million, or 40.9 percent of adjusted revenue. This represents a 66.2 percent increase compared to adjusted operating income of $80.2 million and 39.9 percent of adjusted revenue in the fourth quarter of 2014. Adjusted operating income for the year ended December 31, 2015 was $421.5 million, up 38.0 percent from adjusted operating income of $305.5 million in 2014.

Adjusted net income for the fourth quarter of 2015 was $73.6 million, up 34.7 percent compared to $54.7 million in 2014's fourth quarter. Adjusted net income for the year ended December 31, 2015 was $253.6 million, up 23.3% percent compared to $205.8 million for 2014. Adjusted diluted earnings per share in the fourth quarter of 2015 was $0.72 per share, up 16.1 percent compared to $0.62 per share in the fourth quarter of 2014. Adjusted diluted earnings per share for the year ended December 31, 2015 was $2.66, up 12.7 percent compared to $2.36 for 2014.

Annual Run Rate Basis                                                                                              

Annual Run Rate Basis (ARRB) recurring revenue, defined as adjusted recurring revenue on an annualized basis, was $1,180.0 million based on adjusted recurring revenue $295.0 million for the fourth quarter of 2015. This represents an increase of 59.9 percent from $184.5 million and $738.1 million run-rate in the same period in 2014 and an increase of 2.4 percent from $288.0 million for the third quarter of 2015, an annual run rate of $1,152.2 million. We believe ARRB of our recurring revenue is a good indicator of visibility into future revenue.

Operating Cash Flow

SS&C ended the year with $434.2 million in cash, and $2,820.0 million in gross debt for a net debt balance of $2,385.8 million. Net cash from operating activities was $110.1 million in Q4 2015, a 24.7 percent increase from $88.3 million in Q4 2014. For the full year ended December 31, 2015, SS&C generated net cash from operating activities of $230.6 million, compared to $252.5 million for the same period in 2014. The cash from operating activities was affected by $67.0 million of costs related to the financing and acquisition of Advent Software, Primatics Financial and pending acquisitions.

Guidance                                                                                                                        

Q1 2016

FY 2016

Adjusted Revenue ($M)

$327.0 - $333.0

$1,360.0 - $1,380.0

Adjusted Net Income ($M)

$72.0 - $75.0

$312.5 - $325.0

Cash from Operating Activities ($M)

-

$355.0 - $370.0

Capital Expenditures (% of revenue)

-

2.5% - 3.0%

Diluted Shares (M)

102.0 - 102.5

102.5 - 103.5

Effective Income Tax Rate (%)

28%

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 Q4 and Full Year 2015 earnings call will take place at 5:00 p.m. eastern time today, February 11, 2016. The call will discuss Q4 and Full Year 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 Fourth Quarter and Full Year 2015 Conference Call"; conference ID# 22646110. A replay will be available after 8:00 p.m. eastern time on February 11, 2016, until midnight on February 18, 2016. The dial-in number is 855-859-2056 (US and Canada) or 404-537-3406 (International); access code # 22646110. The call will also be available for replay on SS&C's website after February 11, 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 first 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)

Three Months Ended

Year Ended

December 31,

2015

December 31,

2014

December 31,

2015

December 31,

2014

Revenues:

Recurring revenues

$

273,109

$

184,030

$

916,592

$

708,137

Non-recurring revenues

27,779

16,701

83,693

59,724

Total revenues

300,888

200,731

1,000,285

767,861

Cost of revenues:

Recurring revenues

144,062

97,274

487,259

384,049

Non-recurring revenues

14,614

8,342

45,091

26,682

Total cost of revenues

158,676

105,616

532,350

410,731

Gross profit

142,212

95,115

467,935

357,130

Operating expenses:

Selling and marketing

30,550

12,910

94,950

48,592

Research and development

35,898

15,826

110,415

57,287

General and administrative

27,462

12,784

97,832

50,879

Total operating expenses

93,910

41,520

303,197

156,758

Operating income

48,302

53,595

164,738

200,372

Interest expense, net

(33,693)

(5,734)

(77,357)

(25,472)

Other (expense) income, net

(1,404)

1,967

3,878

2,754

Loss on extinguishment of debt

(30,417)

Income before income taxes

13,205

49,828

60,842

177,654

Provision for income taxes

1,107

13,221

17,980

46,527

Net income

$

12,098

$

36,607

$

42,862

$

131,127

Basic earnings per share

$

0.12

$

0.44

$

0.47

$

1.57

Basic weighted average number of common shares

   outstanding

97,660

83,869

91,098

83,314

Diluted earnings per share

$

0.12

$

0.42

$

0.45

$

1.50

Diluted weighted average number of common and common

   equivalent shares outstanding

101,953

87,799

95,448

87,331

See Notes to Condensed Consolidated Financial Information.

 

SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

December 31,

December 31,

2015

2014

ASSETS

Current assets:

Cash and cash equivalents

$

434,159

$

109,577

Accounts receivable, net

169,951

94,359

Prepaid expenses and other current assets

27,511

14,927

Prepaid income taxes

40,627

11,857

Deferred income taxes

2,975

Restricted cash

2,818

1,477

Total current assets

675,066

235,172

Property, plant and equipment, net

67,143

54,277

Deferred income taxes

2,199

1,135

Goodwill

3,549,212

1,573,227

Intangible and other assets, net

1,508,622

402,344

Total assets

$

5,802,242

$

2,266,155

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

32,281

$

20,470

Accounts payable

11,957

12,004

Income taxes payable

1,428

1,116

Accrued employee compensation and benefits

83,894

53,975

Deferred income taxes

110

Interest payable

28,903

Other accrued expenses

36,231

30,666

Deferred revenue

222,024

73,254

Total current liabilities

416,718

191,595

Long-term debt, net of current portion

2,719,070

599,268

Other long-term liabilities

51,434

26,446

Deferred income taxes

509,574

102,176

Total liabilities

3,696,796

919,485

Total stockholders' equity

2,105,446

1,346,670

Total liabilities and stockholders' equity

$

5,802,242

$

2,266,155

See Notes to Condensed Consolidated Financial Information.

 

SS&C Technologies Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2015

2014

Cash flow from operating activities:

Net income

$

42,862

$

131,127

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

150,834

99,831

Stock-based compensation expense

44,079

11,483

Income tax benefit related to exercise of stock options

(32,960)

(15,454)

Amortization and write-offs of loan origination costs

8,126

5,839

Loss on extinguishment of debt

3,954

Loss on sale or disposition of property and equipment

336

687

Deferred income taxes

(39,806)

(13,583)

Provision for doubtful accounts

1,137

610

Changes in operating assets and liabilities, excluding effects from acquisitions:

Accounts receivable

(12,160)

3,902

Prepaid expenses and other current assets

(6,019)

(6,419)

Accounts payable

(5,586)

1,525

Accrued expenses

4,073

10,140

Income taxes prepaid and payable

11,514

21,560

Deferred revenue

60,240

1,284

Net cash provided by operating activities

230,624

252,532

Cash flow from investing activities:

Additions to property and equipment

(13,600)

(15,040)

Proceeds from sale of property and equipment

64

42

Cash paid for business acquisitions, net of cash acquired

(2,730,956)

(86,911)

Additions to capitalized software

(4,273)

(3,517)

Net changes in restricted cash

453

983

Net cash used in investing activities

(2,748,312)

(104,443)

Cash flow from financing activities:

Cash received from debt borrowings, net of original issue discount

3,068,075

75,000

Repayments of debt

(903,448)

(212,000)

Proceeds from exercise of stock options

30,092

24,110

Withholding taxes related to equity award net share settlement

(6,939)

Payment of contingent consideration

-

(500)

Income tax benefit related to exercise of stock options

32,960

15,454

Proceeds from common stock issuance, net

717,802

Purchase of common stock for treasury

-

(11,223)

Payment of fees related to refinancing activities

(46,025)

(512)

Dividends paid on common stock

(45,451)

(10,494)

Net cash provided by (used in) financing activities

2,847,066

(120,165)

Effect of exchange rate changes on cash and cash equivalents

(4,796)

(2,817)

Net increase in cash and cash equivalents

324,582

25,107

Cash and cash equivalents, beginning of period

109,577

84,470

Cash and cash equivalents, end of period

$

434,159

$

109,577

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

December 31,

Year Ended

December 31,

(in thousands)

2015

2014

2015

2014

Revenues

$

300,888

$

200,731

$

1,000,285

$

767,861

Purchase accounting adjustments to deferred revenue

24,923

503

56,154

503

Adjusted revenues

$

325,811

$

201,234

$

1,056,439

$

768,364

The following is a breakdown of recurring and non-recurring revenues and adjusted recurring and non-recurring revenues.

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands)

2015

2014

2015

2014

Software-enabled services

$

185,736

$

152,313

$

670,170

$

592,528

Term licenses

38,810

4,140

80,745

13,760

Perpetual maintenance

48,563

27,577

165,677

101,849

Total recurring revenues

273,109

184,030

916,592

708,137

Professional services

18,838

9,854

52,226

33,396

Perpetual licenses

8,941

6,847

31,467

26,328

Total non-recurring revenues

27,779

16,701

83,693

59,724

Total revenues

$

300,888

$

200,731

$

1,000,285

$

767,861

Software-enabled services

$

186,151

$

152,313

$

670,585

$

592,528

Term licenses

60,117

4,355

129,517

13,975

Perpetual maintenance

48,732

27,865

166,279

102,137

Total adjusted recurring revenues

295,000

184,533

966,381

708,640

Professional services

21,870

9,854

58,591

33,396

Perpetual licenses

8,941

6,847

31,467

26,328

Total adjusted non-recurring revenues

30,811

16,701

90,058

59,724

Total adjusted revenues

$

325,811

$

201,234

$

1,056,439

$

768,364

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.

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands)

2015

2014

2015

2014

Operating income

$

48,302

$

53,595

$

164,738

$

200,372

Amortization of intangible assets

44,131

21,557

131,913

85,486

Stock-based compensation

12,644

2,929

44,079

11,483

Capital-based taxes

1,464

828

6

Unusual or non-recurring charges

4,776

1,611

30,027

7,630

Purchase accounting adjustments

21,954

503

49,927

476

Adjusted operating income

$

133,271

$

80,195

$

421,512

$

305,453

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

December 31,

Year Ended

December 31,

(in thousands)

2015

2014

2015

2014

Net income

$

12,098

$

36,607

$

42,862

$

131,127

Interest expense, net

33,693

5,734

77,357

25,472

Taxes

1,107

13,221

17,980

46,527

Depreciation and amortization

49,994

25,338

150,834

99,831

EBITDA

96,892

80,900

289,033

302,957

Stock-based compensation

12,644

2,929

44,079

11,483

Capital-based taxes

1,464

828

6

Acquired EBITDA and cost savings

3,175

4,601

109,492

11,405

Unusual or non-recurring charges

6,179

(355)

26,148

4,876

Loss on extinguishment of debt

30,417

Purchase accounting adjustments

21,954

503

49,927

476

Other

630

114

1,529

315

Consolidated EBITDA

142,938

88,692

551,453

331,518

Less:  acquired EBITDA

(3,175)

(4,601)

(109,492)

(11,405)

Adjusted Consolidated EBITDA

$

139,763

$

84,091

$

441,961

$

320,113

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

December 31,

Year Ended

December 31,

(in thousands, except per share data)

2015

2014

2015

2014

GAAP – Net income

$

12,098

$

36,607

$

42,862

$

131,127

Plus: Amortization of intangible assets

44,131

21,557

131,913

85,486

Plus: Amortization of deferred financing costs and

   original issue discount

2,653

1,442

8,126

5,839

Plus: Stock-based compensation

12,644

2,929

44,079

11,483

Plus: Capital-based taxes

1,464

828

6

Plus: Unusual and non-recurring items

6,179

(355)

26,148

4,876

Plus: Loss on extinguishment of debt

30,417

Plus: Purchase accounting adjustments

21,954

503

49,927

476

Income tax effect (1)

(27,517)

(8,032)

(80,657)

(33,501)

Adjusted net income

$

73,606

$

54,651

$

253,643

$

205,792

Adjusted diluted earnings per share

$

0.72

$

0.62

$

2.66

$

2.36

GAAP diluted earnings per share

$

0.12

$

0.42

$

0.45

$

1.50

Diluted weighted-average shares outstanding

101,953

87,799

95,448

87,331

(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.

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SOURCE SS&C



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