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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number 001-34675

 

img162246553_0.jpg 

SS&C TECHNOLOGIES HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

71-0987913

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

80 Lamberton Road

Windsor, CT 06095

(Address of principal executive offices, including zip code)

860-298-4500

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

SSNC

The Nasdaq Global Select Market

There were 255,026,351 shares of the registrant’s common stock outstanding as of July 28, 2022.

 

 

 


 

SS&C TECHNOLOGIES HOLDINGS, INC.

INDEX

 

 

 

Page
Number

 

 

 

PART 1. FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements (unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

30

 

 

 

Item 4. Controls and Procedures

 

31

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

32

 

 

 

Item 1A. Risk Factors

 

32

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

32

 

 

 

Item 6. Exhibits

 

33

 

 

 

EXHIBIT INDEX

 

33

 

 

 

SIGNATURE

 

34

 

 

 

SS&C Technologies Holdings, Inc., or “SS&C Holdings,” is our top-level holding company. SS&C Technologies, Inc., or “SS&C,” is our primary operating company and a wholly-owned subsidiary of SS&C Technologies Holdings, Inc. “We,” “us,” “our” and the “Company” mean SS&C Technologies Holdings, Inc. and its consolidated subsidiaries, including SS&C.

This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. 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. The important factors discussed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. We do not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

 

 

 

2


 

PART I

Item 1. Financial Statements

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data) (Unaudited)

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

438.3

 

 

$

564.0

 

Funds receivable and funds held on behalf of clients

 

 

1,620.3

 

 

 

2,755.7

 

Accounts receivable, net of allowance for credit losses of $21.6 and $17.9, respectively

 

 

826.3

 

 

 

713.4

 

Contract asset

 

 

31.6

 

 

 

27.4

 

Prepaid expenses and other current assets

 

 

166.1

 

 

 

187.5

 

Restricted cash and cash equivalents

 

 

3.3

 

 

 

4.2

 

Total current assets

 

 

3,085.9

 

 

 

4,252.2

 

Property, plant and equipment, net (Note 2)

 

 

356.5

 

 

 

382.0

 

Operating lease right-of-use assets

 

 

278.2

 

 

 

291.2

 

Investments (Note 3)

 

 

160.1

 

 

 

172.8

 

Unconsolidated affiliates (Note 4)

 

 

308.2

 

 

 

306.1

 

Contract asset

 

 

86.5

 

 

 

77.9

 

Goodwill (Note 6)

 

 

8,866.8

 

 

 

8,045.5

 

Intangible and other assets, net of accumulated amortization of $3,146.7 and $2,890.5, respectively

 

 

4,358.1

 

 

 

3,805.3

 

Total assets

 

$

17,500.3

 

 

$

17,333.0

 

Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt (Note 7)

 

$

57.8

 

 

$

47.4

 

Client funds obligations

 

 

1,620.3

 

 

 

2,755.7

 

Accounts payable

 

 

54.5

 

 

 

28.7

 

Income taxes payable

 

 

 

 

 

25.5

 

Accrued employee compensation and benefits

 

 

196.7

 

 

 

322.2

 

Interest payable

 

 

27.5

 

 

 

27.5

 

Other accrued expenses

 

 

347.4

 

 

 

310.1

 

Deferred revenues

 

 

471.6

 

 

 

334.0

 

Total current liabilities

 

 

2,775.8

 

 

 

3,851.1

 

Long-term debt, net of current portion (Note 7)

 

 

7,234.5

 

 

 

5,901.5

 

Operating lease liabilities

 

 

253.8

 

 

 

268.2

 

Other long-term liabilities

 

 

250.5

 

 

 

254.0

 

Deferred income taxes

 

 

871.5

 

 

 

835.0

 

Total liabilities

 

 

11,386.1

 

 

 

11,109.8

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Redeemable noncontrolling interest (Note 3)

 

 

2.1

 

 

 

 

Stockholders’ equity (Note 8):

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 5.0 million shares authorized; no shares issued

 

 

 

 

 

 

Class A non-voting common stock, $0.01 par value per share, 5.0 million shares authorized;
   
no shares issued

 

 

 

 

 

 

Common stock, $0.01 par value per share, 400.0 million shares authorized; 270.3 million shares
   and
269.1 million shares issued, respectively, and 255.0 million shares and 256.0 million shares
   outstanding, respectively

 

 

2.7

 

 

 

2.7

 

Additional paid-in capital

 

 

5,039.3

 

 

 

4,895.7

 

Accumulated other comprehensive loss

 

 

(505.0

)

 

 

(242.0

)

Retained earnings

 

 

2,473.3

 

 

 

2,293.0

 

 

 

 

7,010.3

 

 

 

6,949.4

 

Less: cost of common stock in treasury, 15.4 and 13.1 million shares, respectively

 

 

(954.9

)

 

 

(784.0

)

Total SS&C stockholders’ equity

 

 

6,055.4

 

 

 

6,165.4

 

Noncontrolling interest (Note 9)

 

 

56.7

 

 

 

57.8

 

Total stockholders’ equity

 

 

6,112.1

 

 

 

6,223.2

 

Total liabilities, redeemable noncontrolling interest and stockholders’ equity

 

$

17,500.3

 

 

$

17,333.0

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data) (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Software-enabled services

 

$

1,070.7

 

 

$

1,057.1

 

 

$

2,155.9

 

 

$

2,100.5

 

License, maintenance and related

 

 

258.0

 

 

 

201.9

 

 

 

467.8

 

 

 

391.9

 

Total revenues

 

 

1,328.7

 

 

 

1,259.0

 

 

 

2,623.7

 

 

 

2,492.4

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Software-enabled services

 

 

610.3

 

 

 

582.8

 

 

 

1,205.8

 

 

 

1,178.3

 

License, maintenance and related

 

 

94.1

 

 

 

81.2

 

 

 

173.8

 

 

 

160.0

 

Total cost of revenues

 

 

704.4

 

 

 

664.0

 

 

 

1,379.6

 

 

 

1,338.3

 

Gross profit

 

 

624.3

 

 

 

595.0

 

 

 

1,244.1

 

 

 

1,154.1

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

139.3

 

 

 

97.7

 

 

 

250.2

 

 

 

189.7

 

Research and development

 

 

118.4

 

 

 

100.8

 

 

 

224.2

 

 

 

208.7

 

General and administrative

 

 

121.0

 

 

 

83.6

 

 

 

232.3

 

 

 

173.7

 

Total operating expenses

 

 

378.7

 

 

 

282.1

 

 

 

706.7

 

 

 

572.1

 

Operating income

 

 

245.6

 

 

 

312.9

 

 

 

537.4

 

 

 

582.0

 

Interest expense, net

 

 

(67.7

)

 

 

(51.0

)

 

 

(117.0

)

 

 

(102.4

)

Other (expense) income, net

 

 

(20.4

)

 

 

6.5

 

 

 

(29.4

)

 

 

24.5

 

Equity in earnings of unconsolidated affiliates, net

 

 

1.1

 

 

 

(0.4

)

 

 

2.4

 

 

 

(0.1

)

Loss on extinguishment of debt

 

 

(3.1

)

 

 

(1.5

)

 

 

(3.1

)

 

 

(1.8

)

Income before income taxes

 

 

155.5

 

 

 

266.5

 

 

 

390.3

 

 

 

502.2

 

Provision for income taxes

 

 

45.2

 

 

 

76.7

 

 

 

108.7

 

 

 

137.5

 

Net income

 

 

110.3

 

 

 

189.8

 

 

 

281.6

 

 

 

364.7

 

Net loss attributable to noncontrolling interest

 

 

0.3

 

 

 

 

 

 

1.1

 

 

 

 

Net income attributable to SS&C common stockholders

 

$

110.6

 

 

$

189.8

 

 

$

282.7

 

 

$

364.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to SS&C common stockholders

 

$

0.43

 

 

$

0.74

 

 

$

1.11

 

 

$

1.42

 

Diluted earnings per share attributable to SS&C common stockholders

 

$

0.42

 

 

$

0.71

 

 

$

1.06

 

 

$

1.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted-average number of common shares outstanding

 

 

254.9

 

 

 

255.7

 

 

 

255.3

 

 

 

256.4

 

Diluted weighted-average number of common and common equivalent shares outstanding

 

 

263.9

 

 

 

267.6

 

 

 

265.5

 

 

 

267.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

110.3

 

 

$

189.8

 

 

$

281.6

 

 

$

364.7

 

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gain on interest rate swaps

 

 

0.3

 

 

 

(0.2

)

 

 

1.5

 

 

 

0.3

 

Foreign currency exchange translation adjustment

 

 

(235.1

)

 

 

1.9

 

 

 

(263.4

)

 

 

10.3

 

Change in defined benefit pension obligation

 

 

 

 

 

0.1

 

 

 

(1.1

)

 

 

0.1

 

Total other comprehensive (loss) income, net of tax

 

 

(234.8

)

 

 

1.8

 

 

 

(263.0

)

 

 

10.7

 

Comprehensive (loss) income

 

 

(124.5

)

 

 

191.6

 

 

 

18.6

 

 

 

375.4

 

Comprehensive loss attributable to noncontrolling interest

 

 

0.3

 

 

 

 

 

 

1.1

 

 

 

 

Comprehensive (loss) income attributable to SS&C common stockholders

 

$

(124.2

)

 

$

191.6

 

 

$

19.7

 

 

$

375.4

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flow from operating activities:

 

 

 

 

 

 

Net income

 

$

281.6

 

 

$

364.7

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

329.6

 

 

 

335.3

 

Equity in earnings of unconsolidated affiliates, net

 

 

(2.4

)

 

 

0.1

 

Cash distributions received from unconsolidated affiliates

 

 

 

 

 

10.0

 

Gain on bargain purchase

 

 

 

 

 

(3.2

)

Stock-based compensation expense

 

 

85.9

 

 

 

55.5

 

Net losses (gains) on investments

 

 

12.1

 

 

 

(17.2

)

Amortization and write-offs of loan origination costs and original issue discounts

 

 

6.5

 

 

 

6.7

 

Loss on extinguishment of debt

 

 

3.1

 

 

 

1.8

 

Loss on sale or disposition of property and equipment

 

 

1.2

 

 

 

0.1

 

Deferred income taxes

 

 

(66.8

)

 

 

(47.2

)

Provision for credit losses

 

 

7.1

 

 

 

4.5

 

Changes in operating assets and liabilities, excluding effects from acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

(82.0

)

 

 

(63.7

)

Prepaid expenses and other assets

 

 

41.7

 

 

 

(17.5

)

Contract assets

 

 

(13.0

)

 

 

(0.8

)

Accounts payable

 

 

2.1

 

 

 

(0.1

)

Accrued expenses and other liabilities

 

 

(149.5

)

 

 

(82.1

)

Income taxes prepaid and payable

 

 

12.0

 

 

 

32.2

 

Deferred revenue

 

 

(21.7

)

 

 

(16.8

)

Net cash provided by operating activities

 

 

447.5

 

 

 

562.3

 

Cash flow from investing activities:

 

 

 

 

 

 

Cash paid for business acquisitions, net of cash acquired and asset acquisitions

 

 

(1,597.1

)

 

 

7.3

 

Additions to property and equipment

 

 

(22.6

)

 

 

(17.6

)

Proceeds from sale of property and equipment

 

 

8.7

 

 

 

 

Additions to capitalized software

 

 

(63.3

)

 

 

(42.1

)

Investments in securities

 

 

(10.0

)

 

 

(10.0

)

Proceeds from sales / maturities of investments

 

 

5.6

 

 

 

38.9

 

Collection of other non-current receivables

 

 

5.1

 

 

 

5.6

 

Net cash used in investing activities

 

 

(1,673.6

)

 

 

(17.9

)

Cash flow from financing activities:

 

 

 

 

 

 

Cash received from debt borrowings, net of original issue discount

 

 

1,667.1

 

 

 

210.0

 

Repayments of debt

 

 

(317.9

)

 

 

(393.1

)

Payment of deferred financing fees

 

 

(12.4

)

 

 

 

Net (decrease) increase in client funds obligations

 

 

(1,052.0

)

 

 

1,682.7

 

Proceeds from exercise of stock options

 

 

58.3

 

 

 

88.9

 

Withholding taxes paid related to equity award net share settlement

 

 

(0.6

)

 

 

(5.6

)

Purchases of common stock for treasury

 

 

(170.9

)

 

 

(325.0

)

Dividends paid on common stock

 

 

(102.4

)

 

 

(82.1

)

Net cash provided by financing activities

 

 

69.2

 

 

 

1,175.8

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(21.7

)

 

 

(1.6

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(1,178.6

)

 

 

1,718.6

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

3,171.4

 

 

 

1,337.9

 

Cash, cash equivalents and restricted cash and cash equivalents, end of period

 

$

1,992.8

 

 

$

3,056.5

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash and cash equivalents:

 

Cash and cash equivalents

 

$

438.3

 

 

$

247.1

 

Restricted cash and cash equivalents

 

 

3.3

 

 

 

3.9