01—Abstract
Summary
Summary of the 10-K filed February 26, 2015. Cited figures are marked; the original filing is the authoritative source.
SS&C Technologies Holdings, Inc. (NASDAQ: SSNC) reported revenues of $767.9 milliona for fiscal 2014, up from $712.7 million in 2013, with net income of $131.1 million and diluted EPS of $1.50.
Software-enabled services remained the core of the business at $592.5 millionb of revenue, and contractually recurring revenues (software-enabled services and maintenance) represented 90.9% of total revenues. Operating income rose to $200.4 million from $183.0 million, and cash provided by operating activities was $252.5 million. The company's gross margin reached 46.5% in 2014, and it generated 33% of revenues outside the United States.
The company's balance sheet shows total assets of $2.29 billionc, long-term debt of $638.9 million including current portion (down from $774.5 million), and stockholders' equity of $1.35 billion. The company repaid $212.0 million of debt during 2014, drew $75.0 million on its revolver to help fund the DST Global Solutions acquisition, and paid its first quarterly dividend of $0.125 per share in December 2014. Its covenant-defined net senior secured leverage ratio was 1.62x against a 4.75x maximum.
The filing's dominant forward-looking item is the pending acquisition of Advent Software, Inc. for an enterprise value of approximately $2.7 billiond in cash, or $44.25 per share plus assumed debt. The company plans to fund it with $3.0 billion of debt financing, cash on hand and approximately $400 million of equity, with closing expected in the second quarter of 2015 subject to Advent stockholder approval and regulatory clearances. Investors should also weigh the Millennium-related UK Arbitration against GlobeOp, for which the company states the amount of any potential loss cannot be reasonably estimated.
02—Key points
Key Highlights
- Revenue grew to $767.9 million in 2014 from $712.7 million in 2013; software-enabled services revenue was $592.5 million, versus $552.6 million in 2013.
- Operating income increased to $200.4 million from $183.0 million, and net income rose to $131.1 million from $117.9 million; diluted EPS was $1.50 versus $1.38.
- Contractually recurring revenues were $698.1 million, or 90.9% of total revenues in 2014, supporting the company's subscription-based model.
- Cash provided by operating activities was $252.5 million in 2014, up from $208.3 million in 2013.
- Pending acquisition of Advent Software for an enterprise value of approximately $2.7 billion in cash ($44.25 per share plus assumed debt), expected to close in the second quarter of 2015 and financed with $3.0 billion of debt, cash on hand and about $400 million of equity.
- Long-term debt including current portion declined to $638.9 million from $774.5 million, and the company repaid $212.0 million of debt during 2014.
- Board declared its first quarterly cash dividend of $0.125 per share in November 2014, with a further $0.125 dividend declared in February 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, SS&C Technologies Holdings kept $0.17.
- Revenue$767.9M100.0%
- Cost of revenue−$410.7M53.5%
- Gross profit$357.1M46.5%
- Operating costs−$156.8M20.4%
- Operating income$200.4M26.1%
- Interest, other & tax−$69.2M9.0%
- Net income$131.1M17.1%
Where FY2014 revenue went
$767.9M- Cost of revenue: $410.7M, 53% of revenue
- Net income: $131.1M, 17% of revenue
- Other operating costs: $99.5M, 13% of revenue
- R&D: $57.3M, 7.5% of revenue
- Interest, other & tax: $69.2M, 9.0% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 26, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $767.86M$712.70M | +7.7% |
| Cost of Revenue | $410.73M$388.80M | +5.6% |
| Gross Profit | $357.13M$323.90M | +10.3% |
| R&D Expenses | $57.29M$53.86M | +6.4% |
| Operating Expenses | $156.76M$140.93M | +11.2% |
| Operating Income | $200.37M$182.97M | +9.5% |
| Interest Expense | $27.18M$42.40M | −35.9% |
| Net Income | $131.13M$117.89M | +11.2% |
| EPS (Basic) | $0.79$1.45 | −45.5% |
| EPS (Diluted) | $0.75$1.38 | −45.7% |
| Shares Outstanding (Basic) | 166.63M81.19M | +105.2% |
| Shares Outstanding (Diluted) | 174.66M85.62M | +104.0% |
05—Questions
Frequently Asked Questions
How much revenue did SS&C generate, and where did it come from?
SS&C generated $767.9 million of revenue in 2014 versus $712.7 million in 2013. Revenue from clients in North America was 75% of the total and 25% came from clients outside North America. Software-enabled services accounted for $592.5 million, and maintenance revenue was $105.6 million.
What is the Advent acquisition and how will it be financed?
In February 2015 SS&C agreed to acquire Advent Software, Inc. for an enterprise value of approximately $2.7 billion in cash, equating to $44.25 per share plus assumed debt. The company plans to fund the acquisition and refinancing of existing debt with $3.0 billion of debt financing, cash on hand and approximately $400 million of equity. Closing is expected in the second quarter of 2015 and remains subject to Advent stockholder approval, regulatory clearances and customary closing conditions.
How strong is the company's balance sheet and debt position?
At December 31, 2014 total assets were $2.29 billion and stockholders' equity was $1.35 billion. Long-term debt including the current portion was $638.9 million, and borrowings under the senior credit facility totaled $645.0 million. The company reported a net senior secured leverage ratio of 1.62x against a covenant maximum of 4.75x, and it was in compliance with its covenants at year end.
What legal risk does the company face?
GlobeOp, a subsidiary, is contesting a UK arbitration brought on behalf of the Millennium Managers and the liquidators of the Millennium Global Emerging Credit Master Fund, which alleges damages in excess of $160 million. The U.S. class action related to the same matter was settled and dismissed with prejudice in 2014, with GlobeOp's insurers funding the settlement. The company states that it believes it has strong defenses, and the amount of any potential loss cannot be reasonably estimated at this time.
06—Continue