"We are happy to report strong operating results for the third quarter. We have seen our outsourcing revenue grow by 125% and outsourcing margins improve to 30% from breakeven a year ago," said William C. Stone, SS&C's President, CEO and Chairman of the Board. "By carefully managing our expenses and continuing to focus our sales efforts on "best-fit" opportunities, our operating income for the quarter grew to $3.3 million, up 173% over Q3 2001."
For the nine months ended September 30, 2002, revenues rose to $46.2 million, up from $41.8 million for the same period in 2001. Operating income was $7.1 million versus $0.8 million in 2001; net income was $4.7 million, or $0.34 per diluted share, compared with $2.8 million, or $0.19 per diluted share, in 2001.
Cash and marketable securities as of September 30, 2002, were $43.4 million, an increase of $3.7 million in the quarter. Excluding acquisitions and stock buy backs, cash and marketable securities have increased $12.8 million since December 31, 2001.
"While we expect market conditions to remain difficult in the near term, we estimate Q4 revenue to be about $15 to $16 million and net income to be between $0.15 and $0.20 per diluted share. For the year, we now estimate pro-forma after-tax earnings (i.e., excluding the Q1 In-Process Research and Development write-off, investment gains and the Q2 impairment charge) to be between $0.58 and $0.63 per diluted share. Our strong products and outstanding client base, combined with our talented people, has allowed us to raise our estimates in each of the past three quarters," stated Stone.
Key Wins by Market
"The Financial Institutions business based in Minneapolis expanded its alliance program and won important contracts with a number of dealer banks and corporate credit unions including BB&T Capital Markets, Corporate America Credit Union, First Carolina Corporate Credit Union, and South Dakota Credit Union League. We believe these new alliance partners will create solid growth opportunities for us in the coming quarters as they convert their customers to PortProÂ® and PALMSâ¢. With the Lightningâ¢ product suite, we signed up Associated Bank for TradeDeskâ¢ and put our Safekeeping module into production at SouthWest Bank," remarked Stone.
"The Real Estate business had its best third quarter in three years. Several new regional clients were added. Version 2.0 of SKYLINE IIâ¢ was released and a number of key existing clients upgraded and expanded their systems. Competition in this line of business is intense. Through persistence, paying attention to details, and focusing on how SKYLINE IIâ¢ satisfies clients' needs, we have been successful. Our strategy of aligning with compatible third-party products also seems to be catching on," said Stone.
Hedge & Family Office
"In the Hedge and Family Office business, we released Version 2.3 of our AdvisorWareÂ® product which included a number of important new tax features related to layering and wash sales. This release represents the culmination of all the functionality required to make AdvisorWareÂ® a comprehensive package for portfolio management, accounting and tax reporting. Importantly, we added several very well-known hedge funds to our list of AdvisorWareÂ® clients," stated Stone.
"In the Insurance market, our new CAMRAâ¢ D Class product was introduced to the small company segment and six new clients signed up. Our Finesseâ¢ team landed its first UK client, Highway Insurance Holdings, Plc, and secured an important new long-term relationship with Summit Strategies, a St. Louis based institutional investment consultant," commented Stone.
"Overseas, we signed a licensing and distribution agreement with TSL Inc., a financial services technology integrator operating in 14 countries in the Middle East and Africa. We also expanded our relationship with the Employee Provident Fund of Malaysia resulting in the licensing of additional Antaresâ¢ seats," remarked Stone.
Senior Management Announcements
In August, the Company announced the promotion of Patrick Pedonti to Chief Financial Officer and in October, Paul Hindes joined as a Senior Vice President and Chief Information Officer. "In line with our continuing efforts to tightly manage and grow our business, we rely heavily on the leadership skills of our senior managers. Both Patrick and Paul are seasoned professionals whose expertise will help us improve our overall performance," said Stone.
SS&C's Q3 2002 earnings call will take place at 5:00 p.m. EDT today, October 17, 2002. Interested parties may dial (888) 880-1552 (U.S. and Canada) or (706) 643-7858 (International), and request the "SS&C Third Quarter Earnings Call." A replay will be available by dialing (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (International) and entering the access code 5855927 after 8:00 p.m. today until October 25, 2002.
This press release contains forward-looking statements relating to the Company's expected Q4 revenues and earnings per share and its expected pro forma earnings per share for 2002. Such statements reflect management's best judgment based on factors currently known but are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to, the Company's ability to finalize large client contracts, undetected software errors or bugs, fluctuations in customer demand for the Company's products and services, intensity of competition from other application vendors, terrorist activities, delays in product development, and general economic and industry conditions, and those risks described in the Company's filings with the Securities and Exchange Commission, including without limitation, the Company's Annual Report on Form 10-K for the year ended December 31, 2001. SS&C cautions investors that it may not update any or all of the foregoing forward-looking statements.