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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