SS&C Technologies Holdings Inc (SSNC) 2005 Q3 法說會逐字稿

Good afternoon. My name is Beveren (ph), and I'll be your conference facilitator. At this time, I would like to welcome everyone to the SS&C Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star, then number 1 on your telephone keypad. If you would like to withdraw your question, press star and the number 2 on your telephone keypad. Thank you. Mr. Stone, you may begin your conference.

Thank you Beveren. Good afternoon and thank everyone for being on our Q3 earnings call today. I'm Bill Stone, CEO of SS&C. With me on the call is Norm Boulanger, President and Chief Operating Officer, and Patrick Pedonti, our Chief Financial Officer. Before we get to the third quarter results, we need to review some information about SS&C's current proxy filing with the Securities and Exchange Commission. SS&C filed its definitive merger proxy statement with the SEC on October 19, 2005, and plans to begin mailing the proxy statement to its stockholders on or about October 21, 2005. The proxy statement contains important information about SS&C, the merger, and related matters. Investors are urged to read the proxy statement carefully. Investors can obtain free copies of the proxy statement and other documents filed with the SEC through the SEC's website at www.sec.gov. In addition, investors can obtain free copies of the proxy statement from SS&C by contacting our Investor Relations Department at 80 Lamberton Road, Windsor, Connecticut 06095, and our telephone number is 860-298-4500.

SS&C and its directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the merger. Information regarding our directors and executive officers contained in our last 10-K, our 2005 annual meeting proxy statement, and the merger proxy statement, all of which were filed with the Securities and Exchange Commission. In addition, various remarks we may make on the conference call about our future expectations, plans and prospects to constitute the forward-looking statements for purpose of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the SS&C's filings with the Securities and Exchange Commission, including the Company's quarterly report on form 10-Q for the quarter ended June 30, 2005.

We move to Q3 results. Q3 was a solid quarter for SS&C with solid results on all fronts. We had record revenues of 46.1 million, with key contributions from all revenue streams. Revenues grew through acquisitions as well as organically. At 7.6 million, our license revenues continue to trend upward and increased 84% in Q3 2004. This quarter we saw strong results from CAMRA, our portfolio management system; LMS, our commercial loan management system; SKYLINE, our property management solutions; Antares, our trade order management system; Altair, our Netherlands targeted portfolio management solutions; Sylvan, our performance attribution system; and FundRunner, our investor relationship management system targeted to hedge funds and fund-to-fund.

Recurring revenues which include both maintenance and outsourcing revenues continue to be a major growth factor. In Q3, we hit a new high of 34.9 million, an increase of 93% over Q3 2004 due primarily to our acquisition maintenance revenues of 13.3 million for the quarter, an increase of 39% over Q3 2004. Our outsourcing revenues continue to decline, and this quarter reached 21.6 million, an increase of 153% over the same period last year.

We are dedicated to taking care of business every day, customer satisfaction, lead generation, product development, and integration of our acquisition. We do this to keep our operating costs in line, maximize our resources and personnel, and look for efficiencies. When we do this and we do this well, our efforts should show up in our numbers, and in Q3, our operating income rose by 59% over Q3 last year to 11.9 million. Our net income was 7 million, a 44% increase over Q3 last year. Our Q3 operating income was up 59%. Diluted earnings per share for Q3 were $0.28, an increase of 40% over the $0.20 diluted share of 2003.

Merger costs related to the Carlisle transaction and included in Q3 earnings per share for '05 were $0.04 per diluted earnings per share this quarter. On August 24, we closed the MarginMan acquisition. The MarginMan product delivered collateralized trading software for the FX marketplace, and like many of our acquisitions, complements our existing family of products and services. Based in Dublin, MarginMan broadens our global presence and supports our strategy of being a leading provider of solutions to the worldwide financial services industry.

As an update on The Carlisle Group transaction, we believe our transaction with The Carlisle Group is good for our customers, employees and shareholders. The transaction is progressing as planned. As I said at the beginning of the call, our final proxy was filed with the SEC yesterday, the 19th, and we anticipate mailing the proxy to our shareholders tomorrow, the 21st. We encourage all of our investors and stockholders to read the statement. The proxy contains important information about our pending transactions.

Shareholder meeting to adopt the merger agreement has been set for November 22, 2005. Our original timeline of closing the transaction in Q4 has not changed, and at this time I would be open for any questions anyone might have. Beveren?

(OPERATOR INSTRUCTIONS) Your first question comes from Steven Hansen.

That's a very quiet question.

Mr. Hansen, your line is open.

For the first nine months of the year and the numbers that you put out, does that include the full nine months for the financial models acquisition, or is it just the portion of the revenues for after the deal closed?

It's only since the acquisition on April 19.

Okay. Do you have the numbers for the full year for both companies that you can give to us?

We've got an 8-K on file for the acquisition. That has their first quarter results.

Okay, great. And now that the proxy has been finalized and mailed, has there been any change in plans for the high yield financing and the road show?

Here again, we haven't disclosed the road show dates yet, but as we said before, we still expect the close of the deal in Q4.

Okay. But you still plan on coming to market with a high yield deal to finance the deal, for a portion of it.

Again, we have filed 13 --

I think the financing that we expect to do is in our proxy.

Okay. And there has been no change to that either. You do high yield or there's a credit facility that backs --

The [inaudible] was just filed yesterday and I think it covers the financing.

Okay, thank you.

Your next question comes from Roy Hockenstein (ph). Mr. Hockenstein, would you please press star, 1 again?

Roy has a quiet question as well. Maybe we can go to the next one, Beveren?

Mr. Hockenstein, your line is open.

Can you guys hear me?

We can now.

Sorry about that. Something happened there. I was going to ask some similar questions about the financing, but I'll just -- I'll move on. Thank you.

Your next question comes from Sam Sabak.

Hi. It's ST Telefrigatta with Sam Sabak. In addition to the merger-related costs, are there any other non-recurring charges that we should be aware of?

No, there aren't.

Okay. And I just want to confirm. There is a bridge loan that backstop the high yield offering in the event that -- in the event the offering couldn't be absorbed by the capital market?

Again, we've got to refer you to the proxy.

Okay, thank you.

[OPERATOR INSTRUCTIONS) At this time, sir, there are no further questions.

Again, as we've said a couple of times already on this call, we really refer everybody to our definitive proxy statement that we filed yesterday, and we will be mailing it out to all the shareholders tomorrow. We look forward to completing this transaction in Q4, and we appreciate everyone's long-term holdings as we are aware you have. Thanks again, and --

Excuse me, Mr. Stone?

Yes?

You do have another question from Mitch Nordon.

Hi, good afternoon. Nice quarter. I'm wondering -- two questions. One, can you talk about your top five customers and what percent of your revenues they would account for in the last quarter?

In general, we don't really disclose our top five customers by quarter, but what we do disclose is that the top 10 customers are less than 20% of our revenues, and no customer represents more than 4% of our revenue.

Okay, terrific. In terms of the funding, you keep referring questioners to the proxy, and I'm wondering why is it you cannot comment on plans for funding, because there has been a -- you know, spreads have opened up a little bit in the credit market. If there was a change in plans for funding, would we have seen that in the proxy?

I don't believe there are any changes from the definitive proxy to the previous proxies that have been filed, so everything that we have said before in any of our filings with the SEC, I don't think there's anything but some technical changes, although I think, again, we would refer you to read it and read it with your advisors and all that kind of stuff, but all of the things that we had in place before, we have in place now and, as I said, we expect to close in Q4.

And would the closing occur promptly after the shareholder meeting, or do you anticipate that the financing would take a number of weeks following the meeting, so that closing wouldn't occur until a good amount of time after the shareholder meeting? What's the target that you're shooting for?

I believe that's disclosed in the proxy, but I think in the proxy it says no more than 10 business days afterwards.

No more than 10 afterwards. And do you think you'll need the full 10, or do you think you can close --

I think it will be about 6.35782 days. What do you think?

I'm sorry?

I think it will be about 6.5382 days.

I'm not doing the funding, so I guess I'm unable to answer that question. I was hoping you'd be able to give a little bit more of a straight answer. We can all read the proxy, but with the conference call, hopefully, you can all give us clarification.

We appreciate that you've read the proxy.

Okay. And do you have the ability to take down bank debt versus junk debt if you wanted to do so?

I think again, I think we're obviously very -- I think you need to understand we're really limited, that we can't disclose anything other than what's in our public filings. I think, again, you've got to look at the proxy.

Yes, and if you were able to answer these questions, you could file them as an 8-K, which would become an SEC filing, so I'm unclear why -- the impression I'm getting is that you're avoiding answering these questions and I'm wondering why.

You can have whatever impression you want. We're trying to do what we're supposed to do. We have advisors and more advisors and more advisors, and we're doing what we've been advised to do, and we appreciate your questions.

Terrific. Thanks very much. Nice quarter.

Your next question comes from Michael Levitt (ph).

I think you need to tell him to press 1 again.

: Mr. Levitt, your line is open.

Hi guys. Thanks for taking my question. I just jumped back on the call, so this may have been asked. Can you walk us through the sources and uses of funds as currently contemplated to fund the transaction?

Again, I think what we're trying to say is that all that information is in the proxy statement, and we're really not commenting on anything other than what's in the proxy statement and, really, we're referring everyone to the proxy statement in order not to say anything that is not consistent with the proxy statement.

Understood. Can you help identify the changes to the proxy that have been made? There have been, I think, three versions distributed, right?

I don't think we filed a black line.

I don't think we can. I think if you look at the current one, at least you'll get the current version, but --

Has the percentage of equity being rolled into the deal changed at all?

I don't think the total equity has changed.

Has the source of the equity changed?

Again, there are three proxy filings that we've made, and right now the amount of equity that's been rolled is in the proxy statement. Again, the numbers have not changed that I could tell you, between the second filing and the third filing, but you might want to check between the first and the second. That's all I can point you to.

Okay, thank you.

Your next question comes from Alex Hyde (ph).

Alex?

Hello?

Go ahead.

Yes. I'm trying to find out under the bridge facility term sheet that was filed, there are certain terms that were not made public, and we're trying to understand exactly how good is that bridge facility and under what conditions it would not be available? Could you shed some light on it?

Again, I don't believe that we have any color other than what's in the proxy statement and what's been filed publicly.

Okay, thank you. Have a good quarter.

You do have a follow-up question from Sam Sabak.

Hi, it's ST Telefrigatta again with Sam. Thanks for taking our second question. In the proxy it appears that there's been a slight change in the amount of equity that management is rolling over. I was wondering if you could confirm that's the correct interpretation of the proxy, and if you could provide any explanation for why that change was made and if it has to do with the contemplated sources and uses in the financing?

I don't think that there has been any change in the amount of rollover from management. It's primarily me that's rolling over the money, and the amount of money that I'm rolling over is to maintain about a 30% ownership in the Company, and that's why the numbers might have changed slightly, but that's the only change in the management rollover to date.

Okay. Thank you.

Your next question comes from Adam Giddy (ph).

Hi. We did -- actually, all of our questions have been asked and answered. I appreciate it.

Okay.

There are no further questions.

Okay. Well, thanks again for being on the call. That's it, Beveren.

This concludes today's SS&C Third Quarter Earnings Conference Call. You may now disconnect.