For Immediate Release
SS&C Technologies Releases Q2 2020 Earnings, Announces Renewal and Increase of Common Stock Repurchase Program for $750 million
Q2 2020 GAAP revenue $1,138.1 million, down 0.9%, Fully Diluted GAAP Earnings Per Share $0.64, up 42.2%
Adjusted revenue $1,140.8 million, down 1.3%, Adjusted Diluted Earnings Per Share $1.04, up 14.3%
Cash flow provided by operations for the six months ended June 30, 2020 was $555.7 million, up 33.4%
WINDSOR, CT, July 28, 2020 (PR Newswire) SS&C Technologies Holdings, Inc. (NASDAQ: SSNC), a global provider of investment, financial, and healthcare software-enabled services and software, today announced its financial results for the second quarter ended June 30, 2020.
Due to the uncertainty caused by COVID-19, we have withdrawn our quarterly and 2020 guidance, instead providing 2020 scenario analysis, based on a number of assumptions, which can be found in our Q2 2020 earnings results slides at investor.ssctech.com.
SS&C reported GAAP revenue of $1,138.1 million for the second quarter of 2020, down 0.9% compared to $1,148.0 million in the second quarter of 2019. GAAP operating income for the second quarter of 2020 was $241.3 million, or 21.2% of GAAP revenue, compared to GAAP operating income of $223.5 million, or 19.5% of GAAP revenue, in 2019’s second quarter, representing an 8.0% increase.
GAAP net income for the second quarter of 2020 was $169.5 million compared to GAAP net income of $121.1 million in 2019’s second quarter, up 40.0%. On a fully diluted GAAP basis, earnings per share in the second quarter of 2020 were $0.64 per share compared to earnings per share of $0.45 on a fully diluted GAAP basis in the second quarter of 2019, up 42.2%.
Adjusted Non-GAAP Results (defined in Notes 1-4 below)
Adjusted revenue was $1,140.8 million for the second quarter of 2020, down 1.3% compared to $1,155.8 million in the second quarter of 2019. Adjusted operating income for the second quarter of 2020 was $430.1 million, or 37.7% of adjusted revenue, compared to $426.2 million, or 36.9% of adjusted revenue, in 2019’s second quarter, representing a 0.9% increase and an increase of 80 basis points in adjusted operating margin.
Adjusted net income for the second quarter of 2020 was $276.1 million, up 14.3% compared to $241.6 million in 2019’s second quarter. Adjusted diluted earnings per share in the second quarter of 2020 were $1.04 per share, up 14.3% compared to $0.91 per share in the second quarter of 2019.
SS&C Renews Common Stock Repurchase Program, Increases Program to $750 Million
SS&C announced that its Board of Directors (“Board”) has authorized the renewal and increase of its stock repurchase program, which will enable the Company to repurchase up to $750 million in the aggregate of the company’s outstanding shares of common stock. This represents a $250 million increase from the company’s previous stock repurchase program. Under the renewed program, SS&C’s proposed repurchases may be made from time to time in one or more transactions on the open market or in privately negotiated purchase and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended. The timing and amount of any shares repurchased will be determined by the company's management based on its evaluation of market conditions and other factors. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with the SS&C’s stock plans and for other corporate purposes. The company’s authority to repurchase shares under the renewed program shall continue until the one year anniversary of the Board’s authorization, unless earlier terminated by the Board.
SS&C’s COVID-19 Response
SS&C is operating in a global public health crisis. Covid-19’s impact is devastating to many and nations are being tested from human and economic perspectives. As long as the duration and scale of the pandemic and economic slowdown remains we expect markets to be volatile. The slowdown in the global economy will take time to recover.
Due to this uncertainty, we have withdrawn our quarterly and 2020 guidance. We are providing 2020 scenario analysis, based on a number of assumptions, which can be found in our Q2 2020 earnings results slides at investor.ssctech.com.
Second Quarter Highlights:
- Cash flow provided by operations was $555.7 million for the six months ended June 30, 2020, a 33.4% increase from $416.6 million for the prior six months.
- Paid down $2,302.3 million of net debt since our April 2018 acquisition of DST Systems, bringing our net leverage ratio to 60 times consolidated EBITDA, and our net secured leverage ratio to 2.53 times consolidated EBITDA.
- Repurchased 0.5 million shares of common stock in Q2 2020, at an average price of $58.62 per share for $27.9 million.
- Adjusted operating income margins were 37.7% of adjusted revenue in Q2 2020 compared to 36.9 percent in Q2 2019.
- Adjusted consolidated EBITDA increased by $0.2 million to $448.4 million in Q2 2020. Adjusted consolidated EBITDA margin was 39.3% of adjusted revenue, an increase from 38.8% of adjusted revenue in Q2 2019.
- Daniel DelMastro was promoted to Senior Vice President and General Manager of SS&C Health, and will report to Rahul Kanwar, President and COO.
“The past five months has presented unique challenges, both professionally and personally, for SS&C's global workforce. Our global team’s hard work, perseverance, talent and dedication has resonated with our 18,000 clients,” says Bill Stone, Chairman and CEO of SS&C Technologies. “The critical nature of our work has proven to be indispensable. Client satisfaction remains high, indicated by our 96.0 percent revenue retention rate, and we continue to grow in key markets. I believe our results, including a 14.3 percent increase in adjusted earnings per share and a 33.4 percent increase in year to date operating cash flow, validate our business model. Investment in our people, ownership of our technology, and fierce protection of our intellectual property are keys to SS&C's success.”
Operating Cash Flow
SS&C generated net cash from operating activities of $555.7 million for the six months ended June 30, 2020, compared to $416.6 million for the same period in 2019, representing a 33.4 percent increase. SS&C ended the second quarter with $261.9 million in cash and cash equivalents and $6,972.6 million in gross debt, for a net debt balance of $6,710.7 million. SS&C’s consolidated net leverage ratio as defined in our credit agreement stood at 3.60 times consolidated EBITDA as of June 30, 2020. SS&C’s net secured leverage ratio stood at 2.53 times consolidated EBITDA as of June 30, 2020.
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 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 Q2 2020 earnings call will take place at 5:00 p.m. Eastern time today, July 28, 2020. The call will discuss Q2 2020 results and business outlook. Interested parties may dial +1 844-343-4183 (US and Canada) or +1 647-689-5128 (International), and request the “SS&C Technologies Second Quarter 2020 Conference Call”; conference ID #5097986. In connection with the earnings call, a presentation will be available on SS&C’s website at http://investor.ssctech.com/results.cfm. A replay will be available after 10:00 p.m. eastern time on July 28, 2020, until midnight on August 4, 2020. The replay dial-in number is +1 800-585-8367 or +1 416-621-4642; access code #5097986. The call will also be available for replay on SS&C’s website after July 28, 2020; access: http://investor.ssctech.com/results.cfm.
Certain information contained in this press release relating to, among other things, the Company’s scenario analysis, constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance, underlying assumptions, and other statements that are other than statements of historical facts. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “estimates”, “projects”, “forecasts”, “may”, “assume”, “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 and other industries in which the Company’s clients operate, the Company’s ability to realize anticipated benefits from its acquisitions, including DST Systems, Inc., the effect of customer consolidation on demand for the Company’s products and services, the increasing focus of the Company’s business on the hedge fund industry, the variability of revenue as a result of activity in the securities markets, the ability to retain and attract clients, fluctuations in customer demand for the Company’s products and services, the intensity of competition with respect to the Company’s products and services, the exposure to litigation and other claims, terrorist activities and other catastrophic events, disruptions, attacks or failures affecting the Company’s software-enabled services, risks associated with the Company’s foreign operations, privacy concerns relating to the collection and storage of personal information, evolving regulations and increased scrutiny from regulators, the Company’s ability to protect intellectual property assets and litigation regarding intellectual property rights, delays in product development, investment decisions concerning cash balances, regulatory and tax risks, risks associated with the Company’s joint ventures, changes in accounting standards, risks related to the Company’s substantial indebtedness, the market price of the Company’s stock prevailing from time to time, and the risks discussed in the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which are on file with the Securities and Exchange Commission and can also be accessed on our website. Forward-looking statements speak only as of the date on which they are made and, except to the extent required by applicable securities laws, we undertake no obligation to update or revise any forward-looking statements.
About SS&C Technologies
SS&C is a global provider of services and software for the financial services and healthcare industries. Founded in 1986, SS&C is headquartered in Windsor, Connecticut, and has offices around the world. Some 18,000 financial services and healthcare organizations, from the world's largest companies to small and mid-market firms, rely on SS&C for expertise, scale, and technology.
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