SunGard, one of the world's leading software and technology services companies, today reported results for the third quarter ended September 30, 2013.
(Media-Newswire.com) - SunGard, one of the world’s leading software and technology services companies, today reported results for the third quarter ended September 30, 2013. For the third quarter, revenue was $1.0 billion, down 1% year over year. Currency had no material impact on reported revenue for the quarter compared to the prior year. Operating income was $122 million and the operating margin was 11.9% in the quarter, compared to an operating loss of $279 million in the third quarter of 2012. Third quarter 2012 included a $385 million non-cash goodwill impairment charge. Excluding this charge, operating income increased 16% year over year. This was driven by a 3% decline in total costs and expenses. Adjusted EBITDA was $306 million, up 3% year over year, and the adjusted EBITDA margin was 29.7%, up 1.1 points year over year. Adjusted EBITDA is defined in Note 1 attached to this release.
Year to date, revenue was $3.1 billion, down 3% year over year ( down 2% adjusting for currency ). Operating income was $289 million and the operating margin was 9.5%, compared to an operating loss of $122 million last year. Excluding the goodwill impairment charge mentioned above, operating income increased 10% year over year. This was driven by a 4% decline in total costs and expenses. Adjusted EBITDA was $839 million, flat year over year, and the adjusted EBITDA margin was 27.5%, up 0.8 points year over year.
Russ Fradin, president and chief executive officer, commented, “We remain focused on improving our growth profile. Many of our solutions are seeing strong demand around the world, including our treasury, risk and compliance, and public sector solutions. We’ve instilled disciplined management processes and are realigning our investments for growth, resulting in improved margins, stronger cash flows and reduced debt levels. We are confident that our strategies are taking hold and we are encouraged by SunGard’s opportunities.”
Financial Systems ( “FS” ) revenue was $635 million in the third quarter, down 1% year over year ( also down 1% adjusting for currency ). During the quarter, FS recognized $11.5 million of revenue related to the sale of a customer bankruptcy claim. Excluding this sale, FS revenue declined 2% year to year, principally driven by a decline in professional services. Partially offsetting this was growth in software license fees of 23%, or $10 million, to $53 million. Adjusted EBITDA for the period was $194 million, up 14% from the prior year, and the adjusted EBITDA margin was 30.5%, up 3.9 points from last year. Year to date, FS revenue was $1.9 billion, down 3% year over year ( also down 3% adjusting for currency ). For the same period, license fees were $132 million, a decrease of $4 million year over year. Adjusted EBITDA was $502 million, up 6% from the prior year, and the adjusted EBITDA margin was 26.9%, up 2.3 points from last year.
Notable deals in the quarter included the following:
SunGard's Stream Clearvision was selected by a global agency broker and clearing firm to support its global derivatives clearing business. SunGard’s Front Arena was renewed by one of Denmark’s largest banks to support cross-asset trading, OTC derivatives operations, and enterprise risk management. SunGard's AvantGard solution was selected by one of the world’s foremost technology companies for treasury and cash management services with additional hosting and managed services. SGN Funds was renewed by one of the world’s largest asset management firms to support its trust and employee benefits customers. SunGard’s Stream Transfer Agency was selected by one of the largest U.S. banks as part of a renewed and expanded commitment to help transform the bank’s corporate trust operations and consolidate multiple debt and equity processing systems. Availability Services ( “AS” ) revenue was $340 million in the third quarter, down 2% year over year ( down 1% adjusting for currency ), reflecting customer attrition and incremental investments in new service offerings. Adjusted EBITDA was $108 million, down 11% from the prior year, and the adjusted EBITDA margin was 31.6%, down 3.2 points from last year. Year to date, AS revenue was $1.0 billion, down 2% year over year ( also down 2% adjusting for currency ), and adjusted EBITDA was $325 million, down 7% from the prior year, and the adjusted EBITDA margin was 31.5%, down 1.9 points from last year.
Notable deals in the quarter included the following:
SunGard was selected by one of the largest U.S. insurance companies to provide a complete disaster recovery solution, including hot site recovery services, advanced recovery services with co-location, and the Managed Recovery Program. A leading supplier of aerospace and energy generation components selected SunGard to help modernize and consolidate its disaster recovery program with Managed Vaulting services and Recover2Cloud for Vaulting. A leading U.K. e-commerce logistics and delivery company expanded its relationship with SunGard to include consulting and cloud hosting services. Public Sector and Education revenue was $53 million in the third quarter, up 6% year over year, reflecting strong demand for newly introduced software solutions. Adjusted EBITDA was $16 million, up 10% year over year, and the adjusted EBITDA margin was 31.4%, up 1 point from last year. Year to date, revenue was $155 million, an increase of 2% year over year, and adjusted EBITDA was $48 million, up 3% from the prior year, and the adjusted EBITDA margin was 31.2%, up 0.2 points from last year.
Notable deals in the quarter included the following:
SunGard Public Sector’s ONESolution was selected by a city in Texas to provide public safety solutions for computer-aided emergency dispatch, records management and mobile computing. SunGard K-12 Education’s eSchoolPLUS and PerformancePLUS were selected by one of the largest public school districts in Pennsylvania to help manage student data and support student achievement and for tracking student performance and building local benchmark assessments. Financial Position
For the nine months ended September 30, 2013, the continuing operations of the Company generated $569 million in cash flow from operations, up $143 million year over year, and invested $160 million in capital expenditures, down $13 million from the prior year. In addition, year to date the Company used its cash flow and available cash to repay $218 million of debt.
At September 30, 2013, total debt was $6.4 billion and cash was $689 million. The Company’s leverage ratio, as defined in its senior secured credit agreement, was 4.50x, down from 4.75x at the end of 2012. The leverage ratio is calculated using adjusted EBITDA as defined in Note 2 attached to this release.
Conference Call & Webcast
SunGard will host a conference call and live web broadcast to discuss third quarter 2013 results today at 9:00 a.m. ( Eastern Time ). The dial-in number for the conference call is 706-902-1370, and the conference ID number is 89628597. You may also listen to the call at www.investorcalendar.com by clicking on the "audio" icon for SunGard. An audio replay will be available two hours after the call ends through midnight on November 12, 2013. To listen to the replay, please dial 1-855-859-2056 or 404-537-3406 and enter the conference ID number 89628597.
SunGard is one of the world’s leading software and technology services companies. SunGard serves approximately 25,000 customers in more than 70 countries and has approximately 17,000 employees. SunGard provides software and processing solutions for financial services, education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software. With annual revenue of over $4.0 billion, SunGard is one of the largest privately held IT software and services company. For more information, please visit www.sungard.com.
Trademark Information: SunGard, the SunGard logo, Front Arena, AvantGard, eSchoolPlus, PerformancePlus, Stream Clearvision, Stream Transfer Agency, SGN Funds, and SunGard Stream are trademarks or registered trademarks or registered trademarks of SunGard Data Systems Inc. or its subsidiaries in the U.S. and other countries. All other trade names are trademarks or registered trademarks of their respective holders.
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Statements in this release other than historical facts constitute forward-looking statements. You can identify forward-looking statements because they contain words such as "believes," "expects," "may," "will," "would," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions which concern our strategy, plans or intentions. All statements we make relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, financial results and pro forma estimates are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Some of the factors that we believe could affect our results include: global economic and market conditions; the condition of the financial services industry, including the effect of any further consolidation among financial services firms; our high degree of debt-related leverage; the effect of war, terrorism, natural disasters or other catastrophic events; the effect of disruptions to our systems and infrastructure; the timing and magnitude of software sales; the timing and scope of technological advances; customers taking their information availability solutions in-house; the trend in information availability toward solutions utilizing more dedicated resources; the market and credit risks associated with broker/dealer operations; the ability to retain and attract customers and key personnel; risks relating to the foreign countries where we transact business; the integration and performance of acquired businesses; the ability to obtain patent protection and avoid patent-related liabilities in the context of a rapidly developing legal framework for software and business-method patents; a material weakness in our internal controls; and unanticipated changes in our income tax provision or the enactment of new tax legislation, issuance of regulations or relevant judicial decisions. The factors described in this paragraph and other factors that may affect our business or future financial results are discussed in our periodic filings with the U.S. Securities and Exchange Commission, copies of which may be obtained from us without charge. We assume no obligation to update any written or oral forward-looking statement made by us or on our behalf as a result of new information, future events or other factors.
This story was released on 2013-10-30. Please make sure to visit the official company or organization web site to learn more about the original release date. See our disclaimer for additional information.