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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
March 31,
2024
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
SS&C TECHNOLOGIES HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 71-0987913
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
T
here were
247,323,277
shares of the registrant's common stock outstanding as of April 24, 2024.
-------------------------------------------------------------------------------
SS&C TECHNOLOGIES HOLDINGS, INC.
INDEX
Page
Number
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited) 3
Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 3
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 4
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 5
Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2024 and 2023 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 23
Item 6. Exhibits 24
EXHIBIT INDEX 24
SIGNATURE 25
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, 2023, filed with the Securities and Exchange Commission on February 28,
2024, 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
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PART
I
Item 1. Financ
ial Statements
SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDA
TED BALANCE SHEETS
(In millions, except per share data) (Unaudited)
March 31, December 31,
2024 2023
Assets
Current assets:
Cash and cash equivalents $ 412.5 $ 432.2
Funds receivable and funds held on behalf of clients 2,027.0 2,615.6
Accounts receivable, net of allowance for credit losses of $ 879.9 799.4
27.4
and $
25.1
, respectively
Contract assets 43.2 36.1
Prepaid expenses and other current assets 142.8 165.8
Restricted cash and cash equivalents 2.2 2.4
Total current assets 3,507.6 4,051.5
Property, plant and equipment, net (Note 2) 300.1 315.3
Operating lease right-of-use assets 213.5 221.4
Investments (Note 3) 183.7 184.7
Unconsolidated affiliates (Note 4) 346.7 345.2
Contract assets 100.2 99.7
Goodwill (Note 5) 8,933.2 8,969.5
Intangible and other assets, net of accumulated amortization of $ 3,801.8 3,915.2
4,203.6
and $
4,063.4
, respectively
Total assets $ 17,386.8 $ 18,102.5
Liabilities and Equity
Current liabilities:
Current portion of long-term debt (Note 6) $ 50.8 $ 51.5
Client funds obligations 2,027.0 2,615.6
Accounts payable 38.3 80.3
Income taxes payable 65.3 22.3
Accrued employee compensation and benefits 168.9 270.2
Interest payable 2.8 29.4
Other accrued expenses 226.5 232.3
Deferred revenues 493.2 470.3
Total current liabilities 3,072.8 3,771.9
Long-term debt, net of current portion (Note 6) 6,593.5 6,668.5
Operating lease liabilities 191.7 199.1
Other long-term liabilities 256.2 248.7
Deferred income taxes 779.9 816.6
Total liabilities 10,894.1 11,704.8
Commitments and contingencies (Note 13)
Stockholders' equity (Note 7):
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, $ 2.8 2.8
0.01
par value per share,
400.0
million shares authorized;
277.3
million shares and
275.9
million shares issued, respectively, and
247.2
million shares and
246.6
million shares outstanding, respectively
Additional paid-in capital 5,468.2 5,371.0
Accumulated other comprehensive loss ( ) ( )
473.9 426.3
Retained earnings 3,224.2 3,126.3
Cost of common stock in treasury, ( ) ( )
30.1 1,787.1 1,734.2
and
29.3
million shares, respectively
Total SS&C stockholders' equity 6,434.2 6,339.6
Noncontrolling interest (Note 8) 58.5 58.1
Total equity 6,492.7 6,397.7
Total liabilities and equity $ 17,386.8 $ 18,102.5
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEM
ENTS OF COMPREHENSIVE INCOME
(In millions, except per share data) (Unaudited)
Three Months Ended March 31,
2024 2023
Revenues:
Software-enabled services $ 1,187.7 $ 1,114.2
License, maintenance and related 247.3 248.5
Total revenues 1,435.0 1,362.7
Cost of revenues:
Software-enabled services 633.8 631.0
License, maintenance and related 94.0 94.7
Total cost of revenues 727.8 725.7
Gross profit 707.2 637.0
Operating expenses:
Selling and marketing 140.9 139.8
Research and development 120.9 118.2
General and administrative 112.5 98.9
Total operating expenses 374.3 356.9
Operating income 332.9 280.1
Interest expense, net ( ) ( )
116.0 111.9
Other income, net 6.6 5.4
Equity in earnings of unconsolidated affiliates, net 2.3 5.7
Loss on extinguishment of debt ( ) ( )
1.1 0.6
Income before income taxes 224.7 178.7
Provision for income taxes 66.7 52.5
Net income 158.0 126.2
Net income attributable to noncontrolling interest ( ) ( )
0.4 0.2
Net income attributable to SS&C common stockholders $ 157.6 $ 126.0
Basic earnings per share attributable to SS&C common stockholders $ 0.64 $ 0.50
Diluted earnings per share attributable to SS&C common stockholders $ 0.62 $ 0.49
Basic weighted-average number of common shares outstanding 247.0 250.4
Diluted weighted-average number of common and common equivalent shares outstanding 253.3 257.0
Net income $ 158.0 $ 126.2
Other comprehensive (loss) income, net of tax:
Foreign currency exchange translation adjustment ( ) 42.0
47.6
Change in defined benefit pension obligation - 0.1
Total other comprehensive (loss) income, net of tax ( ) 42.1
47.6
Comprehensive income 110.4 168.3
Comprehensive income attributable to noncontrolling interest ( ) ( )
0.4 0.2
Comprehensive income attributable to SS&C common stockholders $ 110.0 $ 168.1
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED S
TATEMENTS OF CASH FLOWS
(In millions) (Unaudited)
Three Months Ended March 31,
2024 2023
Cash flow from
operating activities:
Net income $ 158.0 $ 126.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and 165.5 165.9
amortization
Equity in earnings of ( ) ( )
unconsolidated affiliates, net 2.3 5.7
Distributions received from - 15.0
unconsolidated affiliates
Stock-based 45.1 41.9
compensation expense
Net gains on ( ) ( )
investments 0.3 1.0
Amortization and write-offs of loan origination 3.3 3.5
costs and original issue discounts
Loss on extinguishment 1.1 0.6
of debt
Loss on sale or disposition - 6.4
of property and equipment
Deferred ( ) ( )
income taxes 31.4 30.2
Provision for 5.1 5.0
credit losses
Changes in operating assets and liabilities,
excluding effects from acquisitions:
Accounts ( ) ( )
receivable 89.7 35.3
Prepaid expenses 7.9 38.7
and other assets
Contract ( ) 0.1
assets 8.6
Accounts ( ) ( )
payable 40.6 9.3
Accrued expenses and ( ) ( )
other liabilities 133.9 155.7
Income taxes prepaid 70.1 59.6
and payable
Deferred 31.2 29.1
revenue
Net cash provided by 180.5 254.8
operating activities
Cash flow from
investing activities:
Cash paid for business acquisitions, net ( ) -
of cash acquired and asset acquisitions 0.7
Additions to property ( ) ( )
and equipment 5.8 10.5
Proceeds from sale of 3.3 -
property and equipment
Additions to ( ) ( )
capitalized software 50.0 42.6
Proceeds from sales / 0.1 0.9
maturities of investments
Collection of other 2.5 2.4
non-current receivables
Net cash used in ( ) ( )
investing activities 50.6 49.8
Cash flow from
financing activities:
Cash received from debt borrowings, 15.0 145.0
net of original issue discount
Repayments ( ) ( )
of debt 94.9 189.6
Net decrease in client ( ) ( )
funds obligations 690.0 541.9
Proceeds from exercise 53.4 15.3
of stock options
Withholding taxes paid related to ( ) ( )
equity award net share settlement 6.8 0.1
Purchases of common ( ) ( )
stock for treasury 52.9 133.3
Dividends paid ( ) ( )
on common stock 59.7 50.7
Net cash used in ( ) ( )
financing activities 835.9 755.3
Effect of exchange rate changes on cash, ( ) 0.9
cash equivalents and restricted cash 3.8
Net decrease in cash, cash ( ) ( )
equivalents and restricted cash 709.8 549.4
Cash, cash equivalents and 2,998.6 1,337.6
restricted cash, beginning of period
Cash, cash equivalents and restricted $ 2,288.8 $ 788.2
cash and cash equivalents, end of period
Reconciliation of cash, cash equivalents
and restricted cash and cash equivalents:
Cash and cash $ 412.5 $ 433.3
equivalents
Restricted cash and 2.2 2.5
cash equivalents
Restricted cash and cash equivalents included in 1,874.1 352.4
funds receivable and funds held on behalf of clients
$ 2,288.8 $ 788.2
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
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SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions) (Unaudited)
Three Months Ended March 31, 2024
SS&C
Stockholders
Common
Stock
Number Accumulated
of Additional Other Total
Issued Paid-in Retained Comprehensive Treasury Noncontrolling Stockholders'
Shares Amount Capital Earnings Loss Stock Interest Equity
Balance, 275.9 $ 2.8 $ 5,371.0 $ 3,126.3 $ ( ) $ ( ) $ 58.1 $ 6,397.7
at 426.3 1,734.2
December
31, 2023
Net - - - 157.6 - - 0.4 158.0
income
Foreign - - - - ( ) - - ( )
exchange 47.6 47.6
translation
adjustment
Stock-based - - 45.1 - - - - 45.1
compensation
expense
Exercise of 1.4 - 51.9 - - - - 51.9
options, net
of withholding
taxes
Cash - - 0.2 ( ) - - - ( )
dividends 59.7 59.5
declared
- $
0.24
per
share
Purchases - - - - - ( ) - ( )
of 52.9 52.9
common
stock
Balance, 277.3 $ 2.8 $ 5,468.2 $ 3,224.2 $ ( ) $ ( ) $ 58.5 $ 6,492.7
at 473.9 1,787.1
March 31,
2024
Three Months Ended March 31, 2023
SS&C
Stockholders
Common
Stock
Number Accumulated
of Additional Other Total
Issued Paid-in Retained Comprehensive Treasury Noncontrolling Stockholders'
Shares Amount Capital Earnings (Loss) Stock Interest Equity
Income
Balance, 271.9 $ 2.7 $ 5,111.6 $ 2,740.1 $ ( ) $ ( ) $ 56.6 $ 6,100.8
at 550.1 1,260.1
December
31, 2022
Net - - - 126.0 - - 0.2 126.2
income
Foreign - - - - 42.0 - - 42.0
exchange
translation
adjustment
Defined - - - - 0.1 - - 0.1
benefit
pension
adjustment
Stock-based - - 41.9 - - - - 41.9
compensation
expense
Exercise of 0.4 - 15.2 - - - - 15.2
options, net
of withholding
taxes
Cash - - - ( ) - - - ( )
dividends 50.7 50.7
declared
- $
0.20
per
share
Purchases - - - - - ( ) - ( )
of 134.7 134.7
common
stock
Balance, 272.3 $ 2.7 $ 5,168.7 $ 2,815.4 $ ( ) $ ( ) $ 56.8 $ 6,140.8
at 508.0 1,394.8
March 31,
2023
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
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SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOL
IDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1-Basis of Presentation and Principles of Consolidation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). These accounting principles were applied on a basis consistent with
those of the audited Consolidated Financial Statements contained in our Annual
Report on Form 10-K for the year ended December 31, 2023, filed with the
Securities and Exchange Commission (the "SEC") on February 28, 2024 (the "2023
Form 10-K"). In the opinion of management, the accompanying unaudited
Condensed Consolidated Financial Statements contain all adjustments
(consisting of only normal recurring adjustments, except as noted elsewhere in
the notes to the Condensed Consolidated Financial Statements) necessary for a
fair statement of our financial position as of March 31, 2024, the results of
our operations for the three months ended March 31, 2024 and 2023, and our
cash flows for the three months ended March 31, 2024 and 2023. These
statements do not include all of the information and footnotes required by
GAAP for annual financial statements. The Condensed Consolidated Financial
Statements contained herein should be read in conjunction with the audited
Consolidated Financial Statements and footnotes as of and for the year ended
December 31, 2023, which were included in the 2023 Form 10-K. The December 31,
2023 Consolidated Balance Sheet data were derived from audited financial
statements but do not include all disclosures required by GAAP for annual
financial statements. The results of operations for the three months ended
March 31, 2024 are not necessarily indicative of the expected results for any
subsequent quarters or the full year.
The accompanying unaudited condensed consolidated financial statements include
the accounts of SS&C Technologies Holdings, Inc. and its subsidiaries,
including a variable interest entity ("VIE") for which we are the primary
beneficiary. All intercompany balances and transactions have been eliminated
in consolidation.
Recent Accounting Pronouncements Not Yet Effective
In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
The standard is applicable to all public entities, including public entities
with a single reportable segment, and requires enhanced reportable segment
disclosures. The disclosures include significant segment expenses regularly
provided to the chief operating decision maker ("CODM") and included within
each reported measure of segment profit or loss. The standard also requires
disclosure of the title and position of the CODM as well as how the CODM uses
the reported measures of a segment's profit or loss to assess segment
performance and decide how to allocate resources. The new standard is
effective for fiscal years beginning after December 15, 2023, and interim
periods within fiscal years beginning after December 31, 2024. Early adoption
is permitted. We are currently evaluating the potential impact the standard
will have on our disclosures.
In December 2023, the FASB issued ASU 2023-09,
Improvements to Income Tax Disclosures (Topic 740)
. The standard requires more enhanced disclosures specifically related to
effective tax rate reconciliation and income taxes paid. The new requirements
will be effective for fiscal years beginning after December 15, 2024, on a
prospective basis. Early adoption and retrospective application are permitted.
We are currently evaluating the potential impact the standard will have on our
income tax disclosures.
Note 2-Property, Plant and Equipment, net
Property, plant and equipment and the related accumulated depreciation are as
follows (in millions):
March 31, December 31,
2024 2023
Land $ 37.5 $ 37.7
Building and improvements 266.1 265.5
Equipment, furniture, and fixtures 525.2 525.7
828.8 828.9
Less: accumulated depreciation ( ) ( )
528.7 513.6
Total property, plant and equipment, net $ 300.1 $ 315.3
Depreciation expense for the three months ended March 31, 2024 and 2023 was $
17.9
million and $
19.0
million, respectively. As of
March 31, 2024
and December 31, 2023, assets held for sale were $
5.9
million and $
9.0
million, respectively,
and are presented in prepaid expenses and other current assets in our
condensed consolidated balance sheet. Unpaid property, plant and equipment
additions of $
1.0
million and $
2.9
million are included in accounts payable and other accrued expenses as of
March 31, 2024
and December 31, 2023, respectively, in our condensed consolidated balance
sheet.
7
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Note 3-Investments
Investments are as follows (in millions):
March 31, December 31,
2024 2023
Non-marketable equity securities $ 124.0 $ 124.0
Seed capital investments 26.3 26.1
Marketable equity securities 22.5 23.1
Partnership interests in private equity funds 10.9 11.5
Total investments $ 183.7 $ 184.7
There were no realized gains or losses for our equity securities in the three
months ended March 31, 2024 and 2023
.
Unrealized gains for our equity securities are as follows (in millions):
Three Months Ended March 31,
2024 2023
Unrealized gains on equity securities held as of the end of the period $ 0.9 $ 2.3
Fair Value Measurement
Authoritative accounting guidance on fair value measurements establishes a
three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value. These tiers include: Level 1, defined as observable
inputs such as quoted prices in active markets; Level 2, defined as inputs
other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs for which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.
As of March 31, 2024 and December 31, 2023, we held certain investment assets
and certain liabilities that are required to be measured at fair value on a
recurring basis. These investments include money market funds and marketable
equity securities where fair value is determined using quoted prices in active
markets. Accordingly, the fair value measurements of these investments have
been classified as Level 1 in the tables below. Investments for which we
elected net asset value as a practical expedient for fair value and
investments measured using the fair value measurement alternative are excluded
from the tables below. Fair value for deferred compensation liabilities that
are credited with deemed gains or losses of the underlying hypothetical
investments, primarily equity securities, have been classified as Level 1 in
the tables below.
The following tables present assets and liabilities measured at fair value on
a recurring basis (in millions):
Fair Value Measurements
at Reporting Date Using
March 31, Quoted prices in Active Markets Significant Other Significant Unobservable
2024 for Identical Assets (Level 1) Observable Inputs (Level 2) Inputs (Level 3)
Money market $ 1,781.6 $ 1,781.6 $ - $ -
funds (1)
Seed capital 26.3 26.3 - -
investments (2)
Marketable equity 22.5 22.5 - -
securities (2)
Deferred compensation ( ) ( ) - -
liabilities (3) 12.3 12.3
Total $ 1,818.1 $ 1,818.1 $ - $ -
Fair Value Measurements
at Reporting Date Using
December Quoted prices in Active Markets Significant Other Significant Unobservable
31, 2023 for Identical Assets (Level 1) Observable Inputs (Level 2) Inputs (Level 3)
Money market $ 2,212.6 $ 2,212.6 $ - $ -
funds (1)
Seed capital 26.1 26.1 - -
investments (2)
Marketable equity 23.1 23.1 - -
securities (2)
Deferred compensation ( ) ( ) - -
liabilities (3) 11.7 11.7
Total $ 2,250.1 $ 2,250.1 $ - $ -
8
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(1)
As of
March 31, 2024
, included $
112.3
million of cash and cash equivalents, $
1.6
million of restricted cash and $
1,667.7
million of funds receivable and funds held on behalf of clients on the
Condensed Consolidated Balance Sheet. As of
December 31, 2023
, included $
131.7
million of cash and cash equivalents, $
1.8
million of restricted cash and $
2,079.1
million of funds receivable and funds held on behalf of clients on the
Condensed Consolidated Balance Sheet.
(2)
Included in Investments on the Condensed Consolidated Balance Sheet
.
(3)
Included in Other long-term liabilities on the Condensed Consolidated Balance
Sheet
.
We have partnership interests in various private equity funds that are not
included in the tables above. Our inve
stments in private equity funds were $
10.9
million and $
11.5
million at
March 31, 2024 and December 31, 2023
, respectively, of which $
9.3
million and $
9.2
million, respectively, were measured using net asset value as a practical
expedient for fair value and $
1.6
m
illion and $
2.3
million, respectively, were accounted for under the equity method of
accounting. The investments in private equity funds represent underlying
investments in domestic and international markets across various industry
sectors.
Generally, our investments in private equity funds are non-transferable or are
subject to long holding periods, and withdrawals from the private equity firm
partnerships are typically not permitted. The maximum risk of loss related to
our private equity fund investments is limited to the carrying value of its
investments in the entities.
Note 4-Unconsolidated Affiliates
Investments in unconsolidated affiliates are as follows (in millions):
March 31, 2024 December
31, 2023
Ownership Carrying Excess carrying Carrying Excess carrying
Percentage Value value of investment Value value of investment
over proportionate over proportionate
share of net assets share of net assets
Orbit 9.8 $ 212.9 $ - $ 211.6 $ -
Private %
Investments
L.P.
International 50.0 68.9 30.6 68.3 31.4
Financial %
Data Services
L.P.
Broadway 50.0 53.1 29.3 53.4 29.5
Square %
Partners,
LLP
Pershing Road 50.0 9.9 54.8 10.0 55.4
Development %
Company,
LLC
Other 1.9 - 1.9 -
unconsolidated
affiliates
Total $ 346.7 $ 114.7 $ 345.2 $ 116.3
Investments in unconsolidated affiliates are accounted for under the equity
method of accounting. We record our proportionate share of the results of the
unconsolidated affiliates and amortization expense related to basis
differences in Equity in earnings of unconsolidated affiliates, net on the
Condensed Consolidated Statements of Comprehensive Income.
Equity in earnings of unconsolidated affiliates, net are as follows (in
millions):
Three Months Ended March 31,
2024 2023
Orbit Private Investments L.P. $ 1.2 $ 4.8
International Financial Data Services L.P. 1.5 1.1
Pershing Road Development Company, LLC ( ) ( )
0.1 0.2
Broadway Square Partners, LLP ( ) 0.1
0.3
Other unconsolidated affiliates - ( )
0.1
Total $ 2.3 $ 5.7
Note 5-Goodwill
The change in carrying value of goodwill as of and for the
three months ended March 31, 2024 is as follows (in millions):
Balance at December 31, 2023 $ 8,969.5
Adjustments to prior acquisitions 0.1
Effect of foreign currency translation ( )
36.4
Balance at March 31, 2024 $ 8,933.2
9
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Note 6-Debt
At
March 31, 2024 and December 31, 2023, debt consisted of the following (in
millions):
March 31, December 31,
2024 2023
Senior secured credit facilities, weighted-average interest rate of $ 4,675.2 $ 4,755.1
7.32
% and
7.35
%, respectively
5.5 2,000.0 2,000.0
% senior notes due
2027
Unamortized original issue discount and debt issuance costs ( ) ( )
30.9 35.1
6,644.3 6,720.0
Less: current portion of long-term debt 50.8 51.5
Long-term debt $ 6,593.5 $ 6,668.5
The table below provides a summary of the key terms of our Senior Secured
Credit Facilities and Senior Notes:
Amount Outstanding Maturity Scheduled Quarterly
at March 31, 2024
(in millions) Date Payments Required
Senior Secured Credit Facilities
Term Loan B-3 $ 994.4 April 16, 2025 0.25
%
Term Loan B-4 938.9 April 16, 2025 0.25
%
Term Loan B-5 1,582.0 April 16, 2025 0.25
%
Term Loan B-6 394.0 March 22, 2029 0.25
%
Term Loan B-7 765.9 March 22, 2029 0.25
%
Revolving Credit Facility - December 28, 2027 None
Senior Notes 2,000.0 September 30, 2027 None
We intend to refinance the $3,515.3 million Term Loans B-3, B-4 and B-5, which
are due April 16, 2025, in the near term. However, there can be no assurance
that we will be able to obtain such financing on acceptable terms, or at all.
Fair Value of Debt
The carrying amounts and fair values of financial instruments are as follows
(in millions):
March 31, 2024 December 31, 2023
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial liabilities:
Senior secured credit facilities $ 4,646.9 $ 4,688.4 $ 4,722.7 $ 4,774.4
5.5% senior notes due 2027 1,997.4 1,958.9 1,997.3 1,974.0
The above fair values, which are Level 2 liabilities, were computed based on
comparable quoted market prices. The fair values of cash, accounts receivable,
net, short-term borrowings, and accounts payable approximate the carrying
amounts due to the short-term maturities of these instruments.
Note 7-Stockholders' Equity
Stock repurchase program
In both July 2022 and July 2023, our Board of Directors authorized a stock
repurchase program, which enabled us to repurchase up to $
1
billion in the aggregate of our outstanding common stock on the open market or
in privately negotiated transactions until the one-year anniversary of the
Board's authorization, unless earlier terminated by the Board. During the
three months ended March 31, 2024 and 2023
, we repurchased
0.8
million and
2.3
million shares, respectively, of common stock for approximately $
52.9
million and $
134.7
million, respectively, which includes a 1% excise tax on share repurchases.
We use the cost method to account for treasury stock purchases. Under the cost
method, the price paid for the stock is charged to the treasury stock account.
Dividends
We paid a quarterly cash dividend of $
0.24
per share of common stock in March 2024 totaling $
59.7
million. We paid a quarterly cash dividend of $
0.20
per share of common stock in March 2023 totaling $
50.7
million.
10
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Accumulated
Other Comprehensive Loss
Accumulated other comprehensive loss balances, net of tax, consist of the
following (in millions):
Foreign Currency Defined Benefit Accumulated Other
Translation Obligation Comprehensive Loss
Balance, December $ ( ) $ ( ) $ ( )
31, 2023 424.5 1.8 426.3
Net current period other ( ) - ( )
comprehensive loss 47.6 47.6
Balance, March $ ( ) $ ( ) $ ( )
31, 2024 472.1 1.8 473.9
Adjustments to accumulated other comprehensive loss are as follows (in
millions):
Three Months Ended March 31,
2024 2023
Pretax Tax Effect Pretax Tax Effect
Defined Benefit Pension
Unrealized net gains on defined benefit pension plan $ - $ - $ - $ 0.1
Foreign Currency Translation
Current period translation adjustments ( ) 1.0 44.2 ( )
48.6 2.2
Total other comprehensive (loss) income $ ( ) $ 1.0 $ 44.2 $ ( )
48.6 2.1
Note 8-Variable Interest Entity
In July 2021, we entered into an agreement whereby we obtained an
80.2
% interest in DomaniRx, LLC (
"
DomaniRx
"
), a variable interest entity under GAAP. We have the power to direct the
majority of the activities of DomaniRx that most significantly impact its
economic performance, the obligation to absorb losses and the right to receive
benefits from DomaniRx. Accordingly, we determined that we are the primary
beneficiary of DomaniRx and consolidate its results.
The carrying value of the assets and liabilities associated with DomaniRx
included in our condensed consolidated balance sheet at
March 31, 2024 and December 31, 2023, which are limited for use in its
operations and do not have recourse against our general credit or our senior
secured credit facilities, are as follows:
March 31, December 31,
2024 2023
Assets:
Cash and cash equivalents $ 95.1 $ 100.2
Intangible assets 200.6 193.3
Other assets 2.3 3.2
Liabilities:
Other liabilities 3.3 3.9
Note 9-Revenues
We generate revenues primarily through our software-enabled services. Our
software-enabled services are generally provided under contracts with initial
terms of
one
to
five years
that require monthly or quarterly payments and are subject to automatic annual
renewal at the end of the initial term unless terminated by either party. We
also generate revenues by licensing our software to clients through either
perpetual or term licenses and by selling maintenance services. We classify
license revenues related to sales-based royalty arrangements as term license
revenue. Maintenance services are generally provided under annually renewable
contracts. Our pricing typically scales as a function of our clients' assets
under management, the complexity of asset classes managed, the volume of
transactions and the level of service the client requires. Revenues from
professional services consist mostly of services provided on a time and
materials basis.
Deferred revenues primarily represent unrecognized fees billed or collected
for maintenance and professional services. Deferred revenues are recognized as
(or when) we perform under the contract. Deferred revenues are recorded on a
net basis with contract assets at the contract level. Accordingly, as of March
31, 2024 and December 31, 2023
, approximately $68.5 million and $
72.0
million, respectively, of deferred revenue is presented net within contract
assets arising from the same con
tracts. The amount of revenues recognized in the period that was included in
the opening deferred revenues balance was $158.2 million for the three months
ended March 31, 2024.
As of March 31, 2024, revenue of approximately $1,005.2 million is expected to
be recognized from remaining performance obligations for license, maintenance
and related revenues, of which $496.2 million is expected to be recognized
over the next twelve months.
We record revenue net of any taxes assessed by governmental authorities.
11
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Revenue Disaggregation
The following table disaggregates our revenues by geography (in millions):
Three Months Ended March 31,
2024 2023
United States $ 992.3 $ 954.9
United Kingdom 165.5 155.9
Europe (excluding United Kingdom), Middle East and Africa 115.9 105.4
Asia-Pacific and Japan 73.3 68.0
Canada 59.6 55.5
Americas, excluding United States and Canada 28.4 23.0
Total $ 1,435.0 $ 1,362.7
The following table disaggregates our revenues by source (in millions):
Three Months Ended March 31,
2024 2023
Software-enabled services $ 1,187.7 $ 1,114.2
Maintenance and term licenses 218.8 213.3
Professional services 23.8 27.7
Perpetual licenses 4.7 7.5
Total $ 1,435.0 $ 1,362.7
Note 10-Stock Based Compensation
S
tock options, SARs, PSUs and RSUs
The amount of stock-based compensation expense recognized in our Condensed
Consolidated Statements of Comprehensive Income for the
three months ended March 31, 2024 and 2023 was as follows (in millions):
Three Months Ended March 31,
Condensed Consolidated Statements of Comprehensive Income Classification 2024 2023
Cost of software-enabled services $ 15.4 $ 15.5
Cost of license, maintenance and other related 1.6 1.8
Total cost of revenues 17.0 17.3
Selling and marketing 7.7 7.9
Research and development 6.2 5.4
General and administrative 14.2 11.3
Total operating expenses 28.1 24.6
Total stock-based compensation expense $ 45.1 $ 41.9
The stock-based compensation expense related to performance awards is adjusted
for changes in our assessment of the performance target level that is probable
of being achieved and the number of performance-based equity awards expected
to vest. In
December
2021, we granted performance-based stock options ("PSOs") for which the 3-year
performance period ends in December
12
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2024.
If the threshold level of performance is not achieved for these PSOs, $
42.7
million of previously recorded stock-based compensation expense will be
reversed.
The following table summarizes stock option and stock appreciation rights
("SARs") activity, as well as performance stock units ("PSUs") and restricted
stock units ("RSUs") activity, for the
three months ended March 31, 2024 (shares in millions):
Stock Options and SARs PSUs and RSUs
Outstanding at December 31, 2023 38.8 3.5
Granted 1.8 3.4
Cancelled/forfeited ( ) ( )
0.5 0.8
Exercised ( ) -
1.3
Vested - ( )
0.3
Outstanding at March 31, 2024 38.8 5.8
Note 11-Income Taxes
The effective tax rate was
29.7
%
and
29.4
%
for the three months ended March 31, 2024 and 2023, respectively. The change
in the effective tax rate for the three months ended March 31, 2024 compared
to the prior year was primarily due to a proportionate change in the
composition of income before income taxes from foreign and domestic tax
jurisdictions.
Note 12-Earnings per Share
The following table sets forth the computation of basic and diluted EPS (in
millions, except per share amounts):
Three Months Ended March 31,
2024 2023
Net income attributable to $ 157.6 $ 126.0
SS&C common stockholders
Shares attributable
to SS&C:
Weighted-average common shares outstanding 247.0 250.4
- used in calculation of basic EPS
Weighted-average common stock equivalents 6.3 6.6
- stock options and restricted shares
Weighted-average common and common equivalent shares 253.3 257.0
outstanding - used in calculation of diluted EPS
Earnings per share attributable to $ 0.64 $ 0.50
SS&C common stockholders - Basic
Earnings per share attributable to $ 0.62 $ 0.49
SS&C common stockholders - Diluted
Weighted-average stock options, SARs, RSUs and PSUs representing
18.4
mill
ion and
25.0
million shares were outstanding for the
three months ended March 31, 2024 and 2023
, respectively, but were not included in the computation of diluted EPS
because the effect of including them would be anti-dilutive.
Note 13-Commitments and Contingencies
From time to time, we are subject to legal proceedings and claims. In our
opinion, we are not involved in any litigation or proceedings that would have
a material adverse effect on us or our business.
Item 2. Management's Discussion and Analysis o
f Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results
of Operations, or MD&A, is intended to provide readers of our Condensed
Consolidated Financial Statements with the perspectives of management. It
presents, in narrative form, information regarding our financial condition,
results of operations, liquidity and certain other factors that may affect our
future results. It should be read in conjunction with our 2023 Form 10-K and
the Condensed Consolidated Financial Statements included in this Form 10-Q. We
use the term organic to refer to the businesses and operations that are
included in the comparable prior year period on a constant currency basis.
Organic excludes the impact of any business which we acquired for the time
period which would impact the comparable prior year period.
Ongoing macroeconomic conditions, such as increases in interest rates,
inflation and changes in foreign currency exchange rates, could have impacts
on our results that are uncertain and, in many respects, outside our control.
The situations remain dynamic and subject to rapid and possibly material
change, which ultimately could result in material negative effects on our
business and
13
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results of operations. We will continue to evaluate the nature and extent of
the potential impacts to our business, consolidated results of operations,
liquidity and capital resources.
Critical Accounting Policies
Certain of our accounting policies require the application of significant
judgment by our management, and such judgments are reflected in the amounts
reported in our Condensed Consolidated Financial Statements. In applying these
policies, our management uses its judgment to determine the appropriate
assumptions to be used in the determination of estimates. Those estimates are
based on our historical experience, terms of existing contracts, management's
observation of trends in the industry, information provided by our clients and
information available from other outside sources, as appropriate. Actual
results may differ significantly from the estimates contained in our Condensed
Consolidated Financial Statements. There have been no material changes to our
critical accounting estimates and assumptions or the judgments affecting the
application of those estimates and assumptions since the filing of our 2023
Form 10-K. Our critical accounting policies are described in the 2023 Form
10-K and include:
.
Investments
.
Intangible Assets and Goodwill
.
Software Capitalization
.
Revenue Recognition
.
Stock-based Compensation
.
Income Taxes
Results of Operations
Revenues
We derive our revenues from two sources: software-enabled services revenues
and license, maintenance and related revenues. As a general matter,
fluctuations in our software-enabled services revenues are attributable to the
number of new software-enabled services clients as well as total assets under
management in our clients' portfolios and the number of outsourced
transactions provided to our existing clients. Software-enabled services
revenues also fluctuate as a result of reimbursements received for
"out-of-pocket" expenses, such as postage and telecommunications charges,
which are recorded as revenues on an accrual basis. Because these additional
revenues are offset by the reimbursable expenses incurred, there is no impact
on gross profit, operating income and net income, however the reimbursements
billed and expenses incurred can lead to fluctuations in revenues, cost of
revenues and gross margin percentage each period. License, maintenance and
related revenues consist primarily of term and perpetual license fees,
maintenance fees and professional services. Maintenance revenues vary based on
customer retention and on the annual increases in fees, which are generally
tied to the consumer price index. License and professional services revenues
tend to fluctuate based on the number of new licensing clients, the timing and
terms of contract renewals and demand for consulting services.
Our results of operations below include the results of our recent acquisition
from the date which it was acquired. The Iress Managed Funds Administration
Business ("2023 acquisition") was acquired in October 2023.
The following table sets forth the percentage of our total revenues
represented by each of the following sources of revenues for the periods
indicated:
Three Months Ended March 31,
2024 2023
Software-enabled services 82.8 % 81.8 %
License, maintenance and related 17.2 % 18.2 %
Total revenues 100.0 % 100.0 %
The following table sets forth revenues (dollars in millions) and percent
change in revenues for the periods indicated:
Three Months Ended March 31, Percent
Change from
Prior
Period
2024 2023
Software-enabled services $ 1,187.7 $ 1,114.2 6.6 %
License, maintenance and related 247.3 248.5 (0.5 )%
Total revenues $ 1,435.0 $ 1,362.7 5.3 %
14
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Three Months Ended March 31, 2024 and 2023
. Our revenues increased $72.3 million, or 5.3%, primarily due to an increase
of $63.8 million in organic revenues driven by strength in the SS&C GlobeOp
fund administration and virtual data room services businesses. Our revenues
also increased due to the favorable impact from foreign currency translation
of $5.6 million and the 2023 acquisition, which contributed $2.9 million in
revenues. Software-enabled services revenues increased $73.5 million, or 6.6%,
primarily due to an increase in organic revenues of $65.5 million and the
favorable impact from foreign currency translation of $5.4 million, as well as
the acquisition, which added $2.6 million in revenues. License, maintenance
and related revenues decreased $1.2 million, or 0.5%, primarily due to a
decrease in organic revenues of $1.7 million. Those decreases were partially
offset by the acquisition, which added $0.3 million in revenues, and the
favorable impact from foreign currency translation of $0.2 million.
Cost of Revenues
Cost of software-enabled services revenues consists primarily of costs related
to personnel utilized in providing our software-enabled services and
amortization of intangible assets. Cost of license, maintenance and other
related revenues consists primarily of the costs related to personnel utilized
in servicing our maintenance contracts and to provide implementation,
conversion and training services to our software licensees, as well as system
integration and custom programming consulting services and amortization of
intangible assets.
The following tables set forth each of the following cost of revenues as a
percentage of their respective revenue source for the periods indicated:
Three Months Ended March 31,
2024 2023
Cost of software-enabled services 53.4 % 56.6 %
Cost of license, maintenance and related 38.0 % 38.1 %
Total cost of revenues 50.7 % 53.3 %
Gross margin percentage 49.3 % 46.7 %
The following table sets forth cost of revenues (dollars in millions) and
percent change in cost of revenues for the periods indicated:
Three Months Ended March 31, Percent
Change from
Prior
Period
2024 2023
Cost of software-enabled services $ 633.8 $ 631.0 0.4 %
Cost of license, maintenance and related 94.0 94.7 (0.7 )%
Total cost of revenues $ 727.8 $ 725.7 0.3 %
Three Months Ended March 31, 2024 and 2023
. Our total cost of revenues increased by $2.1 million, or 0.3%, due to the
2023 acquisition, which added costs of $4.7 million, and the unfavorable
impact from foreign currency translation, which increased costs by $3.1
million. These increases were partially offset by a $5.7 million decrease in
organic costs. Our organic cost decrease reflects continued efficiency
improvement efforts in delivering client service. Cost of software-enabled
services revenues increased $2.8 million, or 0.4%, primarily due to the 2023
acquisition, which added $4.7 million in costs, and the unfavorable impact
from foreign currency translation of $2.6 million. These increases were
partially offset by a $4.5 million decrease in organic costs. Cost of license,
maintenance and related revenues decreased $0.7 million, or 0.7%, primarily
due to a $1.2 million decrease in organic costs, partially offset by the
unfavorable impact from foreign currency translation of $0.5 million.
Operating Expenses
Selling and marketing expenses consist primarily of the personnel costs
associated with the selling and marketing of our products, including salaries,
commissions and travel and entertainment. Such expenses also include
amortization of intangible assets, the cost of branch sales offices, trade
shows and marketing and promotional materials. Research and development
expenses consist primarily of personnel costs attributable to the enhancement
of existing products and the development of new software products. General and
administrative expenses consist primarily of personnel costs related to
management, accounting and finance, information management, human resources
and administration and associated overhead costs, as well as fees for
professional services.
15
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The following table sets forth the percentage of our total revenues
represented by each of the following operating expenses for the periods
indicated:
Three Months Ended March 31,
2024 2023
Selling and marketing 9.8 % 10.3 %
Research and development 8.4 % 8.7 %
General and administrative 7.8 % 7.3 %
Total operating expenses 26.0 % 26.3 %
The following table sets forth operating expenses (dollars in millions) and
percent change in operating expenses for the periods indicated:
Three Months Ended March 31, Percent
Change from
Prior
Period
2024 2023
Selling and marketing $ 140.9 $ 139.8 0.8 %
Research and development 120.9 118.2 2.3 %
General and administrative 112.5 98.9 13.8 %
Total operating expenses $ 374.3 $ 356.9 4.9 %
Three Months Ended March 31, 2024 and 2023
. Operating expenses increased $17.4 million, or 4.9%, due to an increase of
$15.1 million in organic operating expenses, the unfavorable impact from
foreign currency translation of $1.8 million and the 2023 acquisition, which
added $0.5 million in expenses. Total operating expenses, excluding the impact
of acquisitions and foreign currency translation, primarily increased due to
shifting resources to support organic growth.
Comparison of the Three Months Ended March 31, 2024 and 2023 for Interest,
Taxes and Other
Interest expense, net
. Net interest expense totaled $116.0 million for the three months ended March
31, 2024 compared to $111.9 million for the three months ended March 31, 2023.
The increase in interest expense, net for 2024 as compared to 2023, is due to
a higher average interest rate on debt. We had an average interest rate of
6.86% and 6.21%, respectively, for the three months ended March 31, 2024 and
2023.
Other income, net
. Other income, net was $6.6 million for the three months ended March 31, 2024
compared to $5.4 million for the three months ended March 31, 2023. For the
three months ended March 31, 2024, other income, consisted primarily of
dividend income of $10.5 million, partially offset by foreign currency
translation losses of $4.7 million. For the three months ended March 31, 2023,
other income, net consisted primarily of dividend income of $10.2 million,
partially offset by losses of $6.1 million related to the fair value
adjustments on assets held for sale.
Equity in earnings of unconsolidated affiliates, net.
Equity in earnings of unconsolidated affiliates, net totaled $2.3 million and
$5.7 million for the three months ended March 31, 2024 and 2023. Our equity in
earnings of unconsolidated affiliates, net in 2023 included a $4.8 million
adjustment to increase the carrying value of one of our investments.
Provision for income taxes
. The following table sets forth the provision for income taxes (dollars in
millions) and effective tax rates for the periods indicated:
Three Months Ended March 31,
2024 2023
Provision for income taxes $ 66.7 $ 52.5
Effective tax rate 29.7 % 29.4 %
Our effective tax rates for the three months ended March 31, 2024 and 2023
differ from the statutory rate of 21.0% primarily due to the composition of
income before income taxes from foreign and domestic tax jurisdictions,
foreign income that is being taxed in the U.S. offset by foreign tax credits
that are being limited and the recognition of windfall tax benefits from stock
awards. The change in the effective tax rate for the three months ended March
31, 2024 compared to the prior year was primarily due to a proportionate
change in the composition of income before income taxes from foreign and
domestic tax jurisdictions. While we have income from multiple foreign
sources, the majority of our non-U.S. operations are in the United Kingdom and
India. We anticipate the statutory tax rates in 2024 to be 25.0% in the United
Kingdom and approximately 28.0% in India. A future change in the composition
of income before income taxes from foreign and domestic tax jurisdictions
could impact our periodic effective tax rate.
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On August 16, 2022, the Inflation Reduction Act was signed into law, which
includes a 15% corporate alternative minimum tax and a 1% excise tax on stock
repurchases. The provisions were effective January 1, 2023 and were immaterial
to our financial results, financial position and cash flows. The 1% excise tax
on share repurchases is included as a cost to acquire treasury stock.
In 2021, the OECD ("Organisation for Economic Co-operation and Development")/G20
Inclusive Framework on Base Erosion and Profit Shifting released Model Global
Anti-Base Erosion rules under Pillar Two. Further guidance has been released
throughout 2022 and 2023. Certain aspects of Pillar Two are effective January
1, 2024 and other aspects are effective January 1, 2025. Many non-U.S. tax
jurisdictions in which we operate have either recently enacted legislation or
are in the process of enacting legislation to adopt certain components of the
Pillar Two Model Rules beginning in 2024 or in future years. We do not expect
the provisions effective in 2024 to materially impact our financial results,
financial position and cash flows.
Liquidity and Capital Resources
Our principal cash requirements are to finance the costs of our operations
pending the billing and collection of client receivables, to fund payments
with respect to our indebtedness, to invest in research and development, to
acquire complementary businesses or assets, to repurchase shares of our common
stock and to pay dividends on our common stock.
We intend to refinance the $3,515.3 million Term Loans B-3, B-4 and B-5, which
are due April 16, 2025, in the near term. However, there can be no assurance
that we will be able to obtain such financing on acceptable terms, or at all.
Provided that we do obtain such financing, we expect our cash on hand, cash
flows from operations and cash available under our Credit Agreement to provide
sufficient liquidity to fund our current obligations, projected working
capital requirements and capital spending for at least the next twelve months.
We paid a quarterly cash dividend of $0.24 per share of common stock in March
2024 totaling $59.7 million. We paid a quarterly cash dividend of $0.20 per
share of common stock in March 2023 totaling $50.7 million.
Client funds obligations include our transfer agency client balances invested
overnight as well as our contractual obligations to remit funds to satisfy
client pharmacy claim obligations and are recorded on the Condensed
Consolidated Balance Sheet when incurred, generally after a claim has been
processed by us. Our contractual obligations to remit funds to satisfy client
obligations are primarily sourced by funds held on behalf of clients. We had
$2,027.0 million of client funds obligations at March 31, 2024.
Cash flows from operating, investing and financing activities, as reflected in
our Condensed Consolidated Statements of Cash Flows, are summarized in the
following table (in millions):
Three Months
Ended March 31,
Net cash, cash equivalents and 2024 2023 Change From
restricted cash provided by (used in): Prior Year
Operating $ 180.5 $ 254.8 $ (74.3 )
activities
Investing (50.6 ) (49.8 ) (0.8 )
activities
Financing (835.9 ) (755.3 ) (80.6 )
activities
Effect of exchange rate changes on cash, (3.8 ) 0.9 (4.7 )
cash equivalents and restricted cash
Net decrease in cash, cash $ (709.8 ) $ (549.4 ) $ (160.4 )
equivalents and restricted cash
Net cash provided by operating activities was $180.5 million for the three
months ended March 31, 2024. Cash provided by operating activities primarily
resulted from net income of $158.0 million adjusted for non-cash items of
$186.1 million, partially offset by changes in our working capital accounts
totaling $163.6 million. The changes in our working capital accounts were
driven by decreases in accrued expenses, an increase in accounts receivable
and a decrease in accounts payable, partially offset by an increase in
deferred revenue and change in income taxes prepaid and payable. The change in
income taxes prepaid and payable is primarily driven by the timing of tax
payments.
Investing activities used net cash of $50.6 million for the three months ended
March 31, 2024, primarily related to $50.0 million in capitalized software
development costs and $5.8 million in capital expenditures, partially offset
by proceeds from the sale of property and equipment of $3.3 million and the
collection of other non-current receivables of $2.5 million.
Financing activities used net cash of $835.9 million for the three months
ended March 31, 2024, primarily representing a net decrease in client fund
obligations of $690.0 million, $79.9 million of net debt repayments, $59.7
million in quarterly dividends paid and $52.9 million of purchases of common
stock for treasury. These expenditures were partially offset by proceeds of
$53.4 million from stock option exercises.
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We have made a permanent reinvestment determination in certain non-U.S.
operations that have historically generated positive operating cash flows. At
March 31, 2024, we held approximately $225.2 million in cash and cash
equivalents at non-U.S. subsidiaries where we had made such a determination
and in turn no provision for income taxes had been made. At March 31, 2024, we
held approximately $111.2 million in cash that was available to our foreign
borrowers under our senior secured credit facility and will be used to
facilitate debt servicing of those entities.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Senior Secured Credit Facilities and Senior Notes
The table below provides a summary of the key terms of our Senior Secured
Credit Facilities and Senior Notes:
Amount Outstanding Maturity Scheduled Quarterly
at March 31, 2024
(in millions) Date Payments Required
Senior Secured Credit Facilities
Term Loan B-3 $ 994.4 April 16, 2025 0.25%
Term Loan B-4 938.9 April 16, 2025 0.25%
Term Loan B-5 1,582.0 April 16, 2025 0.25%
Term Loan B-6 394.0 March 22, 2029 0.25%
Term Loan B-7 765.9 March 22, 2029 0.25%
Revolving Credit Facility - December 28, 2027 None
Senior Notes 2,000.0 September 30, 2027 None
The senior secured credit facility has a revolving credit facility available
for borrowings by SS&C with $600.0 million in available commitments
("Revolving Credit Facility"), of which $596.2 million was available as of
March 31, 2024. The Revolving Credit Facility also contains a $75.0 million
letter of credit sub-facility, of which $3.8 million was utilized as of March
31, 2024.
Our obligations under the Term Loans are guaranteed by (i) our existing and
future U.S. wholly-owned restricted subsidiaries, in the case of the Term B-3
Loan, Term B-5 Loan, Term B-6 Loan and the Revolving Credit Facility and (ii)
our existing and future wholly-owned restricted subsidiaries, in the case of
the Term B-4 Loan and Term B-7 Loan.
The obligations of the U.S. loan parties under the amended senior secured
credit facility are secured by substantially all of the assets of such persons
(subject to customary exceptions and limitations), including a pledge of all
of the capital stock of substantially all of the U.S. wholly-owned restricted
subsidiaries of such persons (with customary exceptions and limitations) and
65% of the capital stock of certain foreign restricted subsidiaries of such
persons (with customary exceptions and limitations). All obligations of the
non-U.S. loan parties under the amended senior secured credit facility are
secured by substantially all of our and the other guarantors' assets (subject
to customary exceptions and limitations), including a pledge of all of the
capital stock of substantially all of our wholly-owned restricted subsidiaries
(with customary exceptions and limitations).
The amended senior secured credit facility includes negative covenants that,
among other things and subject to certain thresholds and exceptions, limit our
ability and the ability of our restricted subsidiaries to incur debt or liens,
make investments (including in the form of loans and acquisitions), merge,
liquidate or dissolve, sell property and assets, including capital stock of
our subsidiaries, pay dividends on our capital stock or redeem, repurchase or
retire our capital stock, alter the business we conduct, amend, prepay, redeem
or purchase subordinated debt, or engage in transactions with our affiliates.
The amended senior secured credit facility also contains customary
representations and warranties, affirmative covenants and events of default,
subject to customary thresholds and exceptions. In addition, the amended
senior secured credit facility contains a financial covenant for the benefit
of the Revolving Credit Facility requiring us to maintain a minimum
consolidated net secured leverage ratio. In addition, under the amended senior
secured credit facility, certain defaults under agreements governing other
material indebtedness could result in an event of default under the amended
senior secured credit facility, in which case the lenders could elect to
accelerate payments under the amended senior secured credit facility and
terminate any commitments they have to provide future borrowings. As of March
31, 2024, we were in compliance with all financial and non-financial covenants.
The Senior Notes are guaranteed, jointly and severally, by SS&C Holdings and
all of its existing and future domestic restricted subsidiaries that guarantee
our existing senior secured credit facilities or certain other indebtedness.
The Senior Notes are unsecured
18
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senior obligations that are equal in right of payment to all of our existing
and future senior unsecured indebtedness. Interest on the Senior Notes is
payable on March 30 and September 30 of each year.
At any time and from time to time, we may, at our option, redeem some or all
of the Senior Notes, in whole or in part, at the redemption prices set forth
in the following table, expressed as a percentage of the principal amount,
plus accrued and unpaid interest to the redemption date:
Redemption Date Price
On or after March 30, 2024 101.375 %
March 30, 2025 and thereafter 100.000 %
We may also, from time to time in our sole discretion, purchase, redeem, or
retire any outstanding Senior Notes, through tender offers, in privately
negotiated or open market transactions, or otherwise.
The indenture governing the Senior Notes contains a number of covenants that
restrict, subject to certain thresholds and exceptions, our ability and the
ability of our domestic restricted subsidiaries to incur debt or liens, make
certain investments, pay dividends, dispose of certain assets, or enter into
transactions with its affiliates. Any event of default under the amended
senior secured credit facility that leads to an acceleration of those amounts
due also results in a default under the indenture governing the Senior Notes.
Covenant Compliance
Under the Revolving Credit Facility portion of the amended senior secured
credit facility, we are required to satisfy and maintain a specified financial
ratio at the end of each fiscal quarter if the sum of (i) outstanding amount
of all loans under the Revolving Credit Facility and (ii) all non-cash
collateralized letters of credit issued under the Revolving Credit Facility in
excess of $20 million is equal to or greater than 30% of the total commitments
under the Revolving Credit Facility. Our ability to meet this financial ratio
can be affected by events beyond our control, and we cannot assure you that we
will meet this ratio. Any breach of this covenant could result in an event of
default under the amended senior secured credit facility. Upon the occurrence
of any event of default under the amended senior secured credit facility, the
lenders could elect to declare all amounts outstanding under the amended
senior secured credit facility to be immediately due and payable and terminate
all commitments to extend further credit. Any default and subsequent
acceleration of payments under the amended senior secured credit facility
would have a material adverse effect on our results of operations, financial
position and cash flows. Additionally, under the amended senior secured credit
facility, our ability to engage in activities such as incurring additional
indebtedness, making investments and paying dividends is also tied to baskets
and ratios based on Consolidated EBITDA.
Consolidated EBITDA is a non-GAAP financial measure used in key financial
covenants contained in the amended senior secured credit facility, which is
the material facility supporting our capital structure and providing liquidity
to our business. Consolidated EBITDA is defined as earnings before interest,
taxes, depreciation and amortization ("EBITDA"), further adjusted to exclude
unusual items and other adjustments permitted in calculating covenant
compliance under the amended senior secured credit facility. We believe that
the inclusion of supplementary adjustments to EBITDA applied in presenting
Consolidated EBITDA is appropriate to provide additional information to
investors to demonstrate compliance with the specified financial ratio and
other financial condition tests contained in the amended senior secured credit
facility.
Management uses Consolidated EBITDA to gauge the costs of our capital
structure on a day-to-day basis when full financial statements are
unavailable. Management further believes that providing this information
allows our investors greater transparency and a better understanding of our
ability to meet our debt service obligations and make capital expenditures.
Consolidated EBITDA does not represent net income or cash flow from operations
as those terms are defined by generally accepted accounting principles, or
GAAP, and does not necessarily indicate whether cash flows will be sufficient
to fund cash needs. Further, the amended senior secured credit facility
requires that Consolidated EBITDA be calculated for the most recent four
fiscal quarters. As a result, the measure can be disproportionately affected
by a particularly strong or weak quarter. Further, it may not be comparable to
the measure for any subsequent four-quarter period or any complete fiscal year.
Consolidated EBITDA is not a recognized measurement under GAAP and investors
should not consider Consolidated EBITDA as a substitute for measures of our
financial performance and liquidity as determined in accordance with GAAP,
such as net income, operating income or net cash provided by operating
activities. Because other companies may calculate Consolidated EBITDA
differently than we do, Consolidated EBITDA may not be comparable to similarly
titled measures reported by other companies. Consolidated EBITDA has other
limitations as an analytical tool, when compared to the use of net income,
which is the most directly comparable GAAP financial measure, including:
.
Consolidated EBITDA does not reflect the significant interest expense we incur
as a result of our debt leverage;
19
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.
Consolidated EBITDA does not reflect the provision of income tax expense in
our various jurisdictions;
.
Consolidated EBITDA does not reflect any attribution of costs to our
operations related to our investments and capital expenditures through
depreciation and amortization charges;
.
Consolidated EBITDA does not reflect the cost of compensation we provide to
our employees in the form of stock-based awards;
.
Consolidated EBITDA does not reflect the equity in earnings of unconsolidated
affiliates; and
.
Consolidated EBITDA excludes expenses and income that are permitted to be
excluded per the terms of our amended senior secured credit facility, but
which others may believe are normal expenses for the operation of a business.
The following is a reconciliation of net income to Consolidated EBITDA
attributable to SS&C common stockholders as defined in our amended senior
secured credit facility.
Three Months Twelve Months
Ended March 31, Ended March 31,
(in millions) 2024 2023 2024
Net income $ 158.0 $ 126.2 $ 640.4
Interest 116.0 111.9 473.9
expense, net
Provision for 66.7 52.5 263.3
income taxes
Depreciation and 165.5 165.9 670.1
amortization
EBITDA 506.2 456.5 2,047.7
Stock-based 45.1 41.9 162.6
compensation
Acquired EBITDA and - - -
cost savings (1)
Loss on extinguishment 1.1 0.6 2.7
of debt
Equity in earnings of (2.3 ) (5.7 ) (96.6 )
unconsolidated affiliates, net
Purchase accounting 1.9 2.0 9.1
adjustments (2)
ASC 606 (0.7 ) (0.7 ) (3.0 )
adoption impact
Foreign currency 4.7 (0.5 ) 4.9
translation losses (gains)
Investment (10.6 ) (11.2 ) (18.4 )
gains (3)
Facilities and workforce 12.2 17.8 51.2
restructuring
Acquisition 0.8 2.3 (1.6 )
related (4)
Other (5) (0.5 ) 6.6 0.3
Consolidated $ 557.9 $ 509.6 $ 2,158.9
EBITDA
Consolidated EBITDA attributable (1.1 ) (0.6 ) (3.4 )
to noncontrolling interest (6)
Consolidated EBITDA attributable $ 556.8 $ 509.0 $ 2,155.5
to SS&C common stockholders
________________________
(1)
Acquired EBITDA reflects the EBITDA impact of significant businesses that were
acquired during the period as if the acquisition occurred at the beginning of
the period, as well as cost savings enacted in connection with acquisitions.
(2)
Purchase accounting adjustments include (a) an adjustment to increase revenues
by the amount that would have been recognized if deferred revenue were not
adjusted to fair value at the date of acquisitions, (b) an adjustment to
increase personnel and commissions expense by the amount that would have been
recognized if prepaid commissions and deferred personnel costs were not
adjusted to fair value at the date of the acquisitions and (c) an adjustment
to increase or decrease rent expense by the amount that would have been
recognized if lease obligations were not adjusted to fair value at the date of
acquisitions.
(3)
Investment gains includes unrealized fair value adjustments of investments and
dividend income received on investments.
(4)
Acquisition related includes costs related to both current acquisitions and
the resolution of pre-acquisition matters.
(5)
Other includes additional expenses and income that are permitted to be
excluded per the terms of our amended senior secured credit facility from
Consolidated EBITDA, a financial measure used in calculating our covenant
compliance.
(6)
Consolidated EBITDA attributable to noncontrolling interest represents
Consolidated EBITDA based on the ownership interest retained by the
noncontrolling parties of DomaniRx, our consolidated variable interest entity.
Our covenant requirement for consolidated net secured leverage ratio and the
actual ratio as of March 31, 2024 are as follows:
Covenant Actual
Requirement Ratio
Maximum consolidated net secured leverage to 6.25x 2.02x
Consolidated EBITDA ratio
(1)
20
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_____________________________________________________
(1)
Calculated as the ratio of consolidated net secured funded indebtedness, net
of cash and cash equivalents, excluding $95.1 million of cash and cash
equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the
amended senior secured credit facility, for the period of four consecutive
fiscal quarters ended on the measurement date. Consolidated net secured funded
indebtedness is comprised of indebtedness for borrowed money, letters of
credit, deferred purchase price obligations and capital lease obligations, all
of which is secured by liens on our property.
Recent Accounting Pronouncements Not Yet Effective
In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
The standard is applicable to all public entities, including public entities
with a single reportable segment, and requires enhanced reportable segment
disclosures. The disclosures include significant segment expenses regularly
provided to the chief operating decision maker ("CODM") and included within
each reported measure of segment profit or loss. The standard also requires
disclosure of the title and position of the CODM as well as how the CODM uses
the reported measures of a segment's profit or loss to assess segment
performance and decide how to allocate resources. The new standard is
effective for fiscal years beginning after December 15, 2023, and interim
periods within fiscal years beginning after December 31, 2024. Early adoption
is permitted. We are currently evaluating the potential impact the standard
will have on our disclosures.
In December 2023, the FASB issued ASU 2023-09,
Improvements to Income Tax Disclosures (Topic 740)
. The standard requires more enhanced disclosures specifically related to
effective tax rate reconciliation and income taxes paid. The new requirements
will be effective for fiscal years beginning after December 15, 2024, on a
prospective basis. Early adoption and retrospective application are permitted.
We are currently evaluating the potential impact the standard will have on our
income tax disclosures.
Item 3. Quantitative and Qualitat
ive Disclosures About Market Risk
We do not use derivative financial instruments for trading or speculative
purposes. We have generally invested our available cash in short-term, highly
liquid financial instruments, having initial maturities of three months or
less. When necessary, we have borrowed to fund acquisitions.
Interest Rate Risk
We derive service revenues from investment earnings related to cash balances
maintained in bank accounts on which we are the agent for clients. The
balances maintained in the bank accounts will fluctuate. For the three months
ended March 31, 2024, our average daily cash balances of approximately
$1,821.3 million were maintained in such accounts. We estimate that a 100
basis point change in the interest earnings rate would equal approximately
$9.7 million of net income, net of income taxes, on an annual basis. The
effect of changes in interest rates attributable to earnings derived from cash
balances we hold for clients is offset by changes in interest rates on our
variable debt.
At March 31, 2024, total variable interest rate debt was approximately
$4,675.2 million. As of March 31, 2024, a 100 basis point increase in interest
rates would result in an increase in interest expense of approximately $46.8
million per year.
Equity Price Risk
We have exposure to equity price risk as a result of our investments in equity
securities. Equity price risk results from changes in the level or volatility
of equity prices which affect the value of equity securities or instruments
that derive their value from such securities or indexes. The fair value of our
investments that are subject to equity price risk as of March 31, 2024 was
approximately $49.0 million. The impact of a 10% change in fair value of these
investments would have been approximately $3.6 million to net income, net of
income taxes. Changes in equity values of our investments could have a
material effect on our results of operations and our financial position.
Foreign Currency Exchange Rate Risk
During the three months ended March 31, 2024, approximately 31% of our
revenues were from clients located outside the United States. A portion of the
revenues from clients located outside the United States is denominated in
foreign currencies, the majority being the British pound. While revenues and
expenses of our foreign operations are primarily denominated in their
respective local currencies, some subsidiaries do enter into certain
transactions in currencies that are different from their local currency. These
transactions consist primarily of cross-currency intercompany balances and
trade receivables and payables. As a result of these transactions, we have
exposure to changes in foreign currency exchange rates that result in foreign
currency transaction gains and losses, which we report in other income, net.
These amounts were not material for the three months ended March 31, 2024. The
amount of these balances can fluctuate in the future as we bill customers and
buy products or services in currencies other than our functional currency,
which could increase our exposure to foreign currency exchange rates. We
continue to monitor our exposure to
21
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foreign exchange rates because of our acquisitions and changes in our
operations. We do not enter into any market risk sensitive instruments for
trading purposes.
The foregoing risk management discussion and the effect thereof are
forward-looking statements. Actual results in the future may differ materially
from these projected results due to actual developments in global financial
markets. The analytical methods used by us to assess and minimize risk
discussed above should not be considered projections of future events or
losses.
Item 4. Controls
and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and
chief financial officer (our principal executive officer and principal
financial officer, respectively), evaluated the effectiveness of our
disclosure controls and procedures as of March 31, 2024. The term "disclosure
controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended, or Exchange Act, means
controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
company's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding
required disclosure. Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable
assurance of achieving their objectives, and management necessarily applies
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures. Based on the evaluation of our disclosure controls and
procedures as of March 31, 2024, our chief executive officer and chief
financial officer concluded that, as of such date, our disclosure controls and
procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
that occurred during the fiscal quarter ended March 31, 2024 that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II - OTHE
R INFORMATION
Item 1. Legal Proceedings
The information regarding certain legal proceedings in which we are involved
as set forth in Note 13 - Commitments and Contingencies of the Notes to the
Condensed Consolidated Financial Statements (Part I, Item 1 of this Quarterly
Report on Form 10-Q) is incorporated by reference into this Item 1.
In addition, we are involved in various other legal proceedings arising in the
normal course of our businesses. At this time, we do not believe any material
losses under these claims to be probable. While the ultimate outcome of such
legal proceedings cannot be predicted with certainty, it is in the opinion of
management, after consultation with legal counsel, that the final outcome in
such proceedings, in the aggregate, would not have a material adverse effect
on our consolidated financial condition, results of operations or cash flows.
Item 1A. Risk Factors
As of the date of this report, there have been no material changes to the risk
factors we previously disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2023.
22
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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer
Purchases of Equity Securities
The following is a summary of the repurchases of our common stock in the first
quarter of 2024 (in millions, except average price per share):
Period (1) (a) Total (b) Average (c) (d)
Number of Price Total Number of Shares Maximum Number (or Approximate
Shares Paid per Purchased as Part of Dollar Value) of Shares
Purchased (2) Share Publicly Announced that May Yet be Purchased
Plans or Programs (3) Under Plans or Programs (3)
January - $ - - $ 772.5
1, 2024 -
January
31, 2024
February - $ 63.81 - $ 769.5
1, 2024 -
February
29, 2024
March 1, 0.8 $ 63.21 0.8 $ 719.6
2024 -
March 31,
2024
Total 0.8 0.8
(1) Information is based on trade dates of repurchase transactions.
(2) Represents shares repurchased in open market transactions pursuant to the
Common Stock Repurchase Program.
(3) Share repurchases were made pursuant to our Common Stock Repurchase
Program, most recently authorized by our Board of Directors in July 2023. The
program allows for the purchase of up to $1 billion of outstanding common
stock in one or more transactions on the open market or in privately
negotiated purchases.
23
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Item 6.
Exhibits
The exhibits listed in the Exhibit Index immediately preceding such exhibits
are filed as part of this Report.
EXHIBI
T INDEX
Exhibit Description of Exhibit
Number
10.1 First Supplemental Indenture, dated as of April 26, 2024,
by and among SS&C Technologies, Inc., certain of SS&C
Technologies Holdings, Inc.'s subsidiaries, as guarantors,
and Wilmington Trust, National Association, as trustee*
31.1 Certification of the Registrant's
Chief Executive Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*
31.2 Certification of the Registrant's
Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*
32 Certification of the Registrant's Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (furnished and not filed for purposes of
sections 11 or 12 of the Securities Act and section 18 of the Exchange Act)*
101.INS Inline XBRL Instance Document - the instance
document does not appear in the Interactive
Data File because its XBRL tags are
embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy
Extension Schema Document.*
101.CAL Inline XBRL Taxonomy Calculation
Linkbase Document.*
101.LAB Inline XBRL Taxonomy Label
Linkbase Document.*
101.PRE Inline XBRL Taxonomy
Presentation Linkbase Document.*
101.DEF Inline XBRL Taxonomy Extension
Definition Linkbase Document.*
104 Cover Page Interactive Data File (formatted
as Inline XBRL and
contained in Exhibit 101).
* Filed herewith
24
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SIGNA
TURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SS&C TECHNOLOGIES HOLDINGS, INC.
By: /s/ Brian N. Schell
Brian N. Schell
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer, Principal Financial and Accounting Officer)
Date: May 1, 2024
25
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Exhibit 10.1
FIRST SUPPLEMENTAL INDENTURE
This First Supplemental Indenture (this
Supplemental Indenture
), is dated as of April 26, 2024, by and among SS&C Technologies, Inc., a
Delaware corporation (the
Issuer
), ALPS Fund Services, Inc., a Colorado corporation, SS&C Retirement
Solutions, LLC, a Delaware limited liability company, DST Realty, Inc., a
Missouri corporation, and DST Technologies, Inc., a Missouri corporation
(each, a
Guaranteeing Subsidiary
) and Wilmington Trust, National Association, as trustee under the Indenture
referred to below (the
Trustee
).
W I T N E S S E T H
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an
indenture, dated as of March 28, 2019 (the
Indenture
), providing for the issuance of the Issuers 5.500% Senior Notes due 2027 (the
Notes
);
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiaries shall execute and deliver to the Trustee a
supplemental indenture pursuant to which the Guaranteeing Subsidiaries shall
unconditionally guarantee all of the Issuers Obligations under the Notes and
the Indenture on the terms and conditions set forth herein and under the
Indenture (the
Guarantee
); and
WHEREAS, pursuant to
Section 9.01
of the Indenture, the Issuer and the Trustee are authorized to execute and
deliver this Supplemental Indenture without the consent of the Holders of the
Notes.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties mutually covenant and agree for the equal and ratable benefit of the
Holders of the Notes as follows:
(1)
Capitalized Terms
. Capitalized terms used herein without definition shall have the meanings
assigned to them in the Indenture.
(2)
Agreement to Guarantee
. Each of the Guaranteeing Subsidiaries hereby (a) jointly and severally
agrees, along with all the other Guaranteeing Subsidiaries and with all
existing Guarantors, to provide an unconditional Guarantee of the Notes on the
terms set forth in the Indenture including but not limited to
Article X
thereof and (b) becomes a party to the Indenture as a Guarantor and, as such,
will have the rights and be subject to all of the obligations and agreements
of a Guarantor under the Indenture.
(3)
No Recourse Against Others
. No director, officer, employee, incorporator, member, partner or stockholder
of each of the Guaranteeing Subsidiaries shall have any liability for any
obligations of the Issuer or the Guarantors (including the Guaranteeing
Subsidiaries) under the Notes, any Guarantees, the Indenture or this
Supplemental Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by accepting the Notes
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
-------------------------------------------------------------------------------
(4)
GOVERNING LAW
. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(5)
Counterparts
. The parties may sign any number of copies of this Supplemental Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement. The exchange of copies of this Supplemental Indenture and of
signature pages by facsimile or PDF transmission shall constitute effective
execution and delivery of this Supplemental Indenture as to the parties hereto
and may be used in lieu of the original Supplemental Indenture and signature
pages for all purposes.
(6)
Effect of Headings
. The Section headings herein are for convenience only and shall not affect
the construction hereof.
(7)
The Trustee
. The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or for
or in respect of the recitals contained herein, all of which recitals are made
solely by the Guaranteeing Subsidiaries.
(8)
Notices
. All notices or other communications to the Guarantors shall be given as
provided in
Section 12.01
of the Indenture.
(9)
Ratification of Indenture; Supplemental Indentures Part of Indenture
. Except as expressly amended and supplemented hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture
shall form a part of the Indenture for all purposes, and every Holder of the
Notes heretofore or hereafter authenticated and delivered shall be bound
hereby.
[Remainder of Page Intentionally Blank]
-------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed, all as of the date first above written.
SS&C TECHNOLOGIES, INC.,
as Issuer
By: /s/ Rahul Kanwar
Name: Rahul Kanwar
Title: President and Chief Operating Officer
ALPS FUND SERVICES, INC.,
as Guarantor
By: /s/ Neal Chansky
Name: Neal Chansky
Title: President
SS&C RETIREMENT SOLUTIONS, LLC,
as Guarantor
By: SS&C GIDS, Inc., is sole member
/s/ Brian N. Schell
Name: Brian N. Schell
Title: Executive Vice President
DST REALTY, INC.,
as Guarantor
By: /s/ Brian N. Schell
Name: Brian N. Schell
Title: President
DST TECHNOLOGIES, INC.,
as Guarantor
By: /s/ Brian N. Schell
Name: Brian N. Schell
-------------------------------------------------------------------------------
Title: Vice President
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
By: /s/ Barry D. Somrock
Name: Barry D. Somrock
Title: Vice President
-------------------------------------------------------------------------------
Exhibit 31.1
CERTIFICATION
I, William C. Stone, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SS&C Technologies
Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent
fiscal quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Date: May 1, 2024 /s/ William C. Stone
William C. Stone
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
-------------------------------------------------------------------------------
Exhibit 31.2
CERTIFICATION
I, Brian N. Schell, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SS&C Technologies
Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent
fiscal quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Date: May 1, 2024 /s/ Brian N. Schell
Brian N. Schell
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
-------------------------------------------------------------------------------
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-Q of SS&C Technologies
Holdings, Inc. (the Company) for the period ended March 31, 2024 as filed with
the Securities and Exchange Commission on the date hereof (the Report), the
undersigned officers of the Company hereby certify to their knowledge,
pursuant to 18 U.S.C. Section 1350, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: May 1, 2024 By: /s/ William C. Stone
William C. Stone
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Date: May 1, 2024 By: /s/ Brian N. Schell
Brian N. Schell
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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{graphic omitted}
{graphic omitted}
{graphic omitted}