SS&C(SSNC) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted revenue for Q3 2019 was $1,150.8 million, with adjusted diluted earnings per share at $0.93, and adjusted consolidated EBITDA at $445.8 million, representing a margin of 38.7% [8][20][22] - Organic revenue growth was reported at 3.2%, with adjusted revenue increasing by 14.7% year-over-year [8][21] - Adjusted operating income rose by 23.5% compared to Q3 2018, reaching $425.6 million [20][22] - The company paid down $629 million in debt during 2019, reducing total net leverage to 4.05 times [12][28] Business Line Data and Key Metrics Changes - The fund services business, SS&C GlobeOp, continued to gain traction with new launches and conversions from other administrators [14] - The real assets business saw increased momentum in open-ended real estate and private equity outsourcing [14] - The alternatives business reported organic growth of approximately 5.4% in Q3, with expectations for further acceleration in Q4 [42][50] Market Data and Key Metrics Changes - The company has expanded its presence in the Asia Pacific region, capitalizing on new fund launches and growing assets [15] - Key deals included a $50 billion asset manager expanding their relationship and a $400 billion bank extending their use of SS&C's accounting solutions [16][17] Company Strategy and Development Direction - The company is focused on enhancing technology and service offerings, particularly in financial services and healthcare [14][31] - Strategic acquisitions, such as Investrack and Algorithmics, are expected to enhance capabilities and market reach [12][46] - The company aims to improve organic revenue growth to the mid-single digits by mid-2020 and potentially higher in 2021 [106] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operational changes and new leadership, indicating a positive outlook for 2020 [38][40] - The company anticipates challenges in organic growth due to the performance of the DST business but expects core business growth to remain strong [41][42] - Management highlighted the importance of execution and leveraging talent to drive future success [40][106] Other Important Information - The company declared and paid $76 million in common stock dividends, an increase from $50.7 million in the same period last year [26] - The effective tax rate for adjusted net income was estimated at 26% [24] Q&A Session Summary Question: Changes in management and sustainability for 2020 - Management acknowledged the changes and expressed optimism about new leadership and their capabilities [36][38] Question: Organic growth expectations for Q4 - Management indicated that organic growth might decline slightly due to the DST business but core business remains strong [41][42] Question: Revenue contribution from Investrack and Algorithmics - Expected revenue contribution from Investrack and Algorithmics is estimated at $50 million to $60 million annually [46] Question: Performance of DST in healthcare and financial services - Management noted progress in DST with increasing pipeline and execution, despite some client attrition [48] Question: Client retention rates and conversion rates - Client retention was reported at 96.4%, indicating strong performance in maintaining existing clients [118]