SS&C TECHNOLOGIES HOLDINGS, INC. 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.
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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, December 31, December 31, December 31,
2015 2014 2015 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 97,660 83,869 91,098 83,314
outstanding
Diluted earnings per share $0.12 $0.42 $0.45 $1.50
===== ===== ===== =====
Diluted weighted average number of
common and common 101,953 87,799 95,448 87,331
equivalent shares outstanding
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 Year Ended
December 31, 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 Year Ended
December 31, 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 Year Ended
December 31, 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 Year Ended
December 31, 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 Year Ended
December 31, 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 2,653 1,442 8,126 5,839
original issue
discount
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
