SS&C Technologies Reports Record Revenue, Record Earnings, and Record Cash flow for Q4 and FY 2016

Q4 GAAP revenue $400.9 million, Fully Diluted GAAP Earnings Per Share $0.28, Adjusted revenue $404.6 million, Adjusted Diluted Earnings Per Share $0.46

WINDSOR, Conn., Feb. 15, 2017 /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, 2016. 

GAAP Results

SS&C reported GAAP revenue of $400.9 million for the fourth quarter of 2016, compared to $300.9 million in the fourth quarter of 2015. GAAP revenue for the year ended December 31, 2016 was $1,481.4 million, increasing from $1,000.3 million in 2015. GAAP operating income for the fourth quarter of 2016 was $95.3 million, compared to $48.3 million in 2015's fourth quarter. GAAP operating income for the year ended December 31, 2016 was $288.7 million, an increase from $164.7 million for 2015. On a fully diluted GAAP basis, earnings per share in the fourth quarter of 2016 was $0.28 compared to fully diluted GAAP earnings per share of $0.06 in the fourth quarter of 2015. On a fully diluted GAAP basis, earnings per share for the year ended December 31, 2016 was $0.64, up from 2015's $0.22 per share.

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

Adjusted revenue in the fourth quarter of 2016 was $404.6 million, up 24.2 percent compared to $325.8 million in the fourth quarter of 2015. Adjusted revenue for the year ended December 31, 2016 was $1,524.0 million, up 44.3 percent over $1,056.4 million for 2015. Adjusted operating income in the fourth quarter of 2016 was $160.4 million, or 39.6 percent of adjusted revenue. This represents a 20.3 percent increase compared to adjusted operating income of $133.3 million and 40.9 percent of adjusted revenue in the fourth quarter of 2015. Adjusted operating income for the year ended December 31, 2016 was $586.6 million, up 39.2 percent from adjusted operating income of $421.5 million in 2015.

Adjusted net income for the fourth quarter of 2016 was $95.2 million, up 29.3 percent compared to $73.6 million in 2015's fourth quarter. Adjusted net income for the year ended December 31, 2016 was $337.5 million, up 33.1 percent compared to $253.6 million for 2015. Adjusted diluted earnings per share in the fourth quarter of 2016 was $0.46 per share, up 27.8 percent compared to $0.36 per share in the fourth quarter of 2015. Adjusted diluted earnings per share for the year ended December 31, 2016 was $1.64, up 23.3 percent compared to $1.33 for 2015.

Highlights:

• SS&C adjusted revenue for Q4 2016 was $404.6 million, up 24.2 percent from Q4 2015 revenue of $325.8 million.
• Adjusted diluted earnings per share was $0.46 for Q4 2016, increasing 27.8 percent from Q4 2015's $0.36 adjusted diluted earnings per share.
• Q4 2016 net cash from operating activities was $181.4 million, an increase of 64.8 percent.
• Net cash from operating activities increased 81.4 percent to $418.4 million for the twelve months ended December 31, 2016.
• SS&C closed Wells Fargo Global Fund Services and Conifer Financial Services acquisitions in December 2016, adding a total of $159.9 billion in assets under administration.
• SS&C paid off $263.4 million of debt net of the revolver draw down which was used to fund the fourth quarter acquisitions, bringing our net debt to consolidated EBITDA leverage ratio to 3.93x.

"SS&C closed out 2016 with over $1.5 billion in adjusted revenues, and adjusted consolidated EBITDA margins above 40 percent" says Bill Stone, Chairman and Chief Executive Officer. "Our year is marked by our acquisitions of Citi Alternative Investor Services, Salentica, Wells Fargo Global Fund Services, and Conifer Financial Services – expanding our reach and capability in fund administration and RIAs. The talent we acquired, both organically and through acquisitions, increase our market opportunity and our ability to win bigger, more complex mandates from top financial institutions."

Annual Run Rate Basis

Annual Run Rate Basis (ARRB) recurring revenue, defined as adjusted recurring revenue on an annualized basis, was $1,473.8 million based on adjusted recurring revenue $368.5 million for the fourth quarter of 2016. This represents an increase of 24.9 percent from $295.0 million and $1,180.0 million run-rate in the same period in 2015 and an increase of 2.3 percent from $360.3 million for the third quarter of 2016, an annual run rate of $1,441.3 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 $117.6 million in cash, and $2,559.6 million in gross debt for a net debt balance of $2,442.0 million. Net cash from operating activities was $181.4 million in Q4 2016, a 64.8 percent increase from $110.1 million in Q4 2015. For the full year ended December 31, 2016, SS&C generated net cash from operating activities of $418.4 million, compared to $230.6 million for the same period in 2015, an 81.4 percent increase. SS&C's leverage ratio as defined in our credit agreement stood at 3.93 times consolidated EBITDA as of December 31, 2016.

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 Q4 and Full Year 2016 earnings call will take place at 5:00 p.m. eastern time today, February 15, 2017. The call will discuss Q4 and Full Year 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 Fourth Quarter and Full Year 2017 Conference Call"; conference ID #53329711. A replay will be available after 8:00 p.m. eastern time on February 15, 2017, until midnight on February 22, 2017. The dial-in number is 855-859-2056 (US and Canada) or 404-537-3406 (International); access code #53329711. The call will also be available for replay on SS&C's website after February 15, 2017; 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 2017 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", "assume", "anticipates", "intend", "will", "continue", "opportunity", "predict", "potential", "future", "guarantee", "likely", "target", "indicate", "would", "could" 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 11,000 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
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 are 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. 

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

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.

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 2016, 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.

SOURCE SS&C