01—Abstract
Summary
Summary of the 10-K filed February 25, 2021. Cited figures are marked; the original filing is the authoritative source.
SS&C Technologies Holdings, Inc. reported total revenues of $4,667.9 milliona for the year ended December 31, 2020, up from $4,632.9 million in 2019.
Software-enabled services revenues were $3,891.3 millionb, or 83% of total revenues, and the company describes itself as the world's largest hedge fund and private equity administrator and the largest mutual fund transfer agent. Net income rose to $625.2 million from $438.5 million in 2019, and diluted earnings per share were $2.35 versus $1.66. Operating income was $985.8 million, and cash provided by operating activities was $1,184.7 million.
The company's balance sheet carried total debt of $6,496.0 millionc at year-end, including $4,485.9 million of variable-rate senior secured credit facilities and $2,000.0 million of 5.5% senior notes due 2027. Management reported organic revenue declines in 2020 attributed in part to COVID-19 weakness, offset by acquisitions including Captricity, Innovest and Millennium. Cash and cash equivalents, including restricted cash and funds held on behalf of clients, were $1,337.9 million at year-end.
The company paid $136.1 milliond in dividends and repurchased $227.7 million of common stock during 2020. The filing also discloses ongoing ERISA-related litigation and arbitrations involving DST Systems, Inc., with an agreed $27 million settlement in principle for the putative class claims that remained subject to court approval.
Management stated that it had not yet determined the extent to which these matters would affect its financial position or results of operations. The auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion, identified goodwill impairment testing for the health business reporting unit as a critical audit matter, and concluded that internal control over financial reporting was effective.
02—Key points
Key Highlights
- Total revenues of $4,667.9 million in 2020, up from $4,632.9 million in 2019; software-enabled services were $3,891.3 million, or 83% of revenues.
- Net income of $625.2 million in 2020 versus $438.5 million in 2019; diluted EPS of $2.35 versus $1.66.
- Operating income of $985.8 million, with a gross margin of 44.9% versus 43.6% in 2019.
- Total debt of $6,496.0 million at December 31, 2020, including $4,485.9 million of variable-rate senior secured facilities and $2,000.0 million of 5.5% senior notes due 2027.
- Cash from operations of $1,184.7 million; $738.2 million of net debt repayment, $136.1 million of dividends and $227.7 million of treasury stock purchases in 2020.
- Organic revenues decreased $65.3 million in 2020, with acquisitions contributing $100.4 million; management cited COVID-19 pressure on certain businesses.
- Pending DST Systems ERISA litigation with a $27 million settlement in principle for putative class claims, subject to court approval; 487 individual arbitration demands had been filed.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, SS&C Technologies Holdings kept $0.13.
- Revenue$4.67B100.0%
- Cost of revenue−$2.57B55.1%
- Gross profit$2.09B44.9%
- Operating costs−$1.11B23.7%
- Operating income$985.8M21.1%
- Interest, other & tax−$360.6M7.7%
- Net income$625.2M13.4%
Where FY2020 revenue went
$4.67B- Cost of revenue: $2.57B, 55% of revenue
- Other operating costs: $708.6M, 15% of revenue
- Net income: $625.2M, 13% of revenue
- R&D: $399.4M, 8.6% of revenue
- Interest, other & tax: $360.6M, 7.7% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 25, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $4.67B$4.63B | +0.8% |
| Cost of Revenue | $2.57B$2.61B | −1.4% |
| Gross Profit | $2.09B$2.02B | +3.6% |
| R&D Expenses | $399.40M$383.70M | +4.1% |
| Operating Expenses | $1.11B$1.11B | +0.1% |
| Operating Income | $985.80M$914.40M | +7.8% |
| Interest Expense | $249.90M$409.60M | −39.0% |
| Net Income | $625.20M$438.50M | +42.6% |
| EPS (Basic) | $2.44$1.73 | +41.0% |
| EPS (Diluted) | $2.35$1.66 | +41.6% |
| Shares Outstanding (Basic) | 256.40M252.90M | +1.4% |
| Shares Outstanding (Diluted) | 266.60M264.20M | +0.9% |
05—Questions
Frequently Asked Questions
How did SS&C perform financially in 2020?
Total revenues were $4,667.9 million, up slightly from $4,632.9 million in 2019. Net income increased to $625.2 million from $438.5 million, and diluted EPS rose to $2.35 from $1.66. The filing states that organic revenues decreased $65.3 million, with acquisitions adding $100.4 million.
How much debt does SS&C carry and when does it mature?
Total debt was $6,496.0 million at December 31, 2020. This comprised $4,485.9 million of senior secured credit facilities, with Term B-3 and B-4 loans maturing April 16, 2025, and $2,000.0 million of 5.5% senior notes due 2027. Annual interest payments were estimated at approximately $196.0 million.
What are the main risks flagged in the filing?
Key risks include the effects of COVID-19, dependence on hedge fund industry activity, customer consolidation, competition, cybersecurity and service disruptions, and substantial indebtedness with LIBOR-related rate uncertainty. The filing also cites exposure to international operations, with 27% of 2020 revenues from outside the U.S., and ongoing ERISA litigation tied to DST.
What is the status of the DST ERISA litigation?
Plaintiffs and the DST defendants reached a settlement agreement dated January 8, 2021 for the putative class claims at $27 million, subject to court approval. Objections had been filed, and preliminary approval remained pending as of the filing date. Management said it had not yet determined the extent of the impact on its financial position or results of operations.
How much capital did SS&C return to shareholders in 2020?
SS&C paid quarterly cash dividends totaling $136.1 million in 2020, with a $0.16 per share quarterly dividend declared on February 24, 2021. It repurchased 3.7 million shares for about $227.7 million during 2020, and $462.0 million remained available under its repurchase program as of December 31, 2020.
06—Continue