Solera Holdings, Inc. Reports First Quarter Fiscal Year 2008 Results
SAN DIEGO, Nov. 7, 2007 -- Solera Holdings, Inc. , the leading global provider of software and services for the automobile insurance claims processing industry, today reported results for the first quarter of fiscal year 2008, the three months ending September 30, 2007.
Results for First Quarter Fiscal Year 2008:
GAAP Results
* Revenue for the first quarter ended September 30, 2007 was $124.2
million - an 11.4% increase over first quarter 2007 revenue of $111.5
million;
* GAAP net income allocable to common stockholders for the first quarter
ended September 30, 2007 was $3.9 million - a $25.9 million improvement
over the first quarter ended September 30, 2006 net loss allocable to
common stockholders of $22.1 million;
* GAAP diluted net income per share for the first quarter ended September
30, 2007 was $0.06, an $0.82 per share improvement over the first
quarter ended September 30, 2006 diluted net loss per share of ($0.76).
Non-GAAP Results
* Adjusted EBITDA for the first quarter ended September 30, 2007 was
$41.4 million - a 30.7% increase over first quarter ended September 30,
2006, Adjusted EBITDA of $31.7 million;
* Adjusted Net Income for the first quarter ended September 30, 2007 was
$16.9 million, a 197.7% increase over first quarter ended September 30,
2006, Adjusted Net Income of $5.7 million;
* Adjusted Net Income per diluted share (or cash earnings per diluted
share) for the first quarter ended September 30, 2007 was $0.26, a
33.8% increase over first quarter ended September 30, 2006, Adjusted
Net Income per diluted share of $0.20.
"Our solid first quarter results reflect our focused efforts on capitalizing on the global opportunities we enjoy," said Tony Aquila, founder, chairman and CEO of Solera Holdings, Inc. "By delivering value to our customers we achieved strong revenue growth across the globe. The inherent leverage in our operating model was apparent in our Adjusted EBITDA growth which outpaced revenue growth by nearly three times. By developing evolving and emerging markets, while vigorously competing and investing in mature markets, we are creating long-term growth and value."
Business Statistics
* EMEA revenue for the first quarter of fiscal year 2008 was $74.5
million, a 13.8% increase over first quarter fiscal year 2007 revenue
of $65.4 million;
* Americas revenue for the first quarter of fiscal year 2008 was $49.7
million, an 8.0% increase over first quarter fiscal year 2007 revenue
of $46.1 million;
* Revenue from insurance company customers for the first quarter ended
September 30, 2007 was $50.1 million, an 11.5% increase over first
quarter fiscal 2007;
* Revenue from collision repair facility customers for the first quarter
ended September 30, 2007 was $46.9 million, a 14.5% increase over first
quarter fiscal 2007;
* Revenue from independent assessor customers for the first quarter ended
September 30, 2007 was $13.2 million, a 10.9% increase over first
quarter fiscal 2007;
* Revenue from automotive recycling and other customers for the first
quarter ended September 30, 2007 was $14.0 million, a 2.1% increase
over first quarter fiscal 2007.
Outlook
Based upon the first quarter results for the period ended September 30, 2007 outlined above - the Company is updating its previously released outlook for its fiscal year ending June 30, 2008 as follows:
Previous FY08 Outlook Updated FY08 Outlook Revenues $500 -- $510 million $505 -- $510 million Net Income (Loss) ($5) -- $0 million $10 -- $15 million Adjusted Net Income None $65 -- $70 million Adjusted EBITDA $155 -- $160 million $158 -- $162 million
The FY08 outlook above assumes constant exchange rates from those currently prevalent and no acquisitions.
Earnings Conference Call
The Company will be hosting its first quarter fiscal year 2008 earnings call this afternoon at 4:30 p.m. (Eastern Time) - November 7, 2007. The conference call will be webcast live on the Internet and can be accessed by visiting: http://www.solerainc.com/. A replay will be available on the Solera website until midnight on November 21, 2007. A live audio broadcast of the call will be accessible to the public by calling 866.510.0708 or 617.597.5377; please enter the following access code when prompted: 81759554. Callers should dial in approximately ten minutes before the call begins.
SOLERA HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED SEPTEMBER 30, 2007 AND 2006
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended September 30
2007 2006
Revenues $124,181 $111,482
Cost of revenues:
Operating expenses 32,340 32,710
Systems development and programming costs 15,973 16,176
Total cost of revenues (excluding
depreciation and amortization) 48,313 48,886
Selling, general and administrative expenses 33,542 30,890
Depreciation and amortization 22,405 25,176
Restructuring charges 1,623 895
Interest expense 11,162 17,857
Other (income) expense - net (1,156) 4,340
67,576 79,158
Income (loss) before provision for
income taxes and minority interests 8,292 (16,562)
Income tax provision 2,877 243
Minority interest in net income of
consolidated subsidiaries 1,561 1,085
Net income (loss) 3,854 (17,890)
Dividends and redeemable preferred unit
accretion - 4,191
Net income (loss) allocable to common
stockholders/unitholders $3,854 $(22,081)
Net income (loss) allocable to common
stockholders/unitholders per share/unit:
Basic $0.06 $(0.76)
Diluted $0.06 $(0.76)
Weighted average shares/units used in
the calculation of net income (loss)
per share/unit allocable to common
stockholders/unitholders:
Basic 62,833 29,038
Diluted 64,589 29,038
Non-GAAP Financial Measures
The Company uses a number of non-GAAP financial measures that are not intended to be used in lieu of GAAP presentations, but are provided because management believes that they provide additional information with respect to the performance of our fundamental business activities and are also frequently used by securities analysts, investors, and other interested parties to facilitate the evaluation of our business on a comparable basis to other companies. The three primary non-GAAP financial measures that we use are Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share. We believe that Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per diluted share are useful to investors in providing information regarding our operating results and our continuing operations. We rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our company Company and our management team in connection with our executive compensation and bonus plans. Adjusted EBITDA also allows us to compare our current operating results with corresponding prior periods as well as to the operating results of other companies in our industry. We present Adjusted Net Income and Adjusted Net Income per diluted share because we believe both of these measures provide useful information regarding our operating results in addition to our GAAP measures. We believe that Adjusted Net Income and Adjusted Net Income per diluted share provide investors with valuable insight into our profitability exclusive of unusual adjustments, and provide further insight into the cash impact resulting from the different treatments of goodwill for financial reporting and tax purposes.
Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per diluted share have limitations as analytical tools, and you should not consider them in isolation or as a substitute for net income, earnings per share and other consolidated income statement data prepared in accordance with accounting principles generally accepted in the United States. Because of these limitations, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share should not be considered as a replacement for net income. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share as supplemental information.
* Adjusted EBITDA is a non-GAAP financial measure that represents GAAP
net earnings (loss) allocable to common stockholders/unitholders,
excluding interest, taxes, depreciation and amortization, stock-based
compensation, restructuring charges, other (income) expense - net, and
acquisition-related costs. Acquisition-related costs consist of
transaction costs, retention-related compensation costs, legal and
professional fees, severance costs and other transition costs
associated with the Company's acquisition of the Claims Services Group
from ADP. A reconciliation of our Adjusted EBITDA to GAAP net earnings
(loss) allocable to common stockholders/unitholders, the most directly
comparable GAAP measure, is provided in the attached table.
Three Months Ended September 30,
2007 2006
Reconciliation to Adjusted EBITDA
Net earnings (loss) $3,854 $(17,890)
Add: Income tax provision 2,877 243
Net earnings (loss) before income tax 6,731 (17,647)
Add: Depreciation and amortization 22,405 25,176
Add: Interest expense 11,162 17,857
Add: Stock-based compensation expense 602 191
Add: Restructuring charges 1,623 895
Add: Other (income) expense -- net (1,156) 4,340
Add: Acquisition related costs 51 887
Adjusted EBITDA $41,418 $31,699
* Adjusted Net Income is a non-GAAP financial measure that represents
GAAP net earnings (loss) allocable to common stockholders/unitholders,
plus the following items: provision for income taxes, amortization of
acquisition-related intangibles, stock-based compensation expense,
restructuring charges, other (income) expense - net, and acquisition-
related costs. Acquisition-related costs consist of transaction costs,
retention-related compensation costs, legal and professional fees,
severance costs and other transition costs associated with the
Company's acquisition of the Claims Services Group from ADP. From this
figure, the Company then subtracts a provision for income taxes at a
rate of 33% to arrive at Adjusted Net Income. We use a tax rate of 33%
in order to approximate our long-term effective corporate tax rate,
which includes certain benefits from net operating loss carryforwards,
deductible goodwill and intangibles amortization for tax purposes. A
reconciliation of our Adjusted Net Income to GAAP net earnings (loss)
allocable to common stockholders/unitholders, the most directly
comparable GAAP measure, is provided in the attached table.
* Adjusted Net Income per diluted share (or cash earnings per diluted
share) is a non-GAAP financial measure that represents Adjusted Net
Income (as defined above) divided by the number of diluted shares
outstanding for the period. A reconciliation of our Adjusted Net
Income per diluted share (or cash earnings per diluted share) to GAAP
net earnings (loss) per share, the most directly comparable GAAP
measure, is provided in the attached table.
Three Months Ended September 30,
2007 2006
Reconciliation to Adjusted Net Income
Net earnings (loss) $3,854 $(17,890)
Add: Income tax provision 2,877 243
Net earnings (loss) before income tax 6,731 (17,647)
Add: Amortization of acquisition related
intangibles 17,313 19,787
Add: Stock-based compensation expense 602 191
Add: Restructuring charges 1,623 895
Add: Other (income) expense -- net (1,156) 4,340
Add: Acquisition related costs 51 887
Adjusted earnings (loss) before income
tax provision 25,164 8,453
Less: Assumed provision for income taxes
at 33% rate (8,304) (2,790)
Adjusted net income $16,860 $5,663
Adjusted net income per share / unit
Basic $0.27 $0.20
Diluted $0.26 $0.20
Weighted average shares/units used in the
calculation of adjusted net income per
share/unit
Basic 62,833 29,038
Diluted 64,589 29,038
SOLERA HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007 AND JUNE 30, 2007
(In thousands, except share amounts)
(Unaudited)
September 30, June 30,
2007 2007
Assets
Current Assets:
Cash and cash equivalents $107,124 $89,868
Accounts receivable, net 86,562 85,543
Other receivables 9,834 9,297
Other current assets 18,503 16,901
Deferred income tax assets 3,077 3,248
Total current assets 225,100 204,857
Property and equipment, net 52,121 51,485
Other Assets 14,453 11,625
Long-term deferred income tax assets 24,190 23,835
Goodwill 599,231 569,165
Intangible assets, net 359,467 362,986
Total assets $1,274,562 $1,223,953
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $26,540 $25,571
Accrued expenses and other current liabilities 90,933 89,240
Income taxes payable 16,399 13,995
Deferred income tax liabilities 419 1,076
Current portion of long-term debt 7,723 14,140
Total current liabilities 142,014 144,022
Long-term debt 620,172 599,128
Other liabilities 30,857 25,378
Long-term deferred income tax liabilities 42,986 42,922
Total liabilities $836,029 $811,450
Minority interests in consolidated subsidiaries 13,412 11,229
Stockholders' equity:
Common Shares, $0.01 par value,
150,000,000 shares authorized;
64,754,813 and 64,813,563 issued and
outstanding, as of September 30,
2007 and June 30, 2007, respectively 506,428 505,939
Accumulated deficit (106,806) (111,687)
Accumulated other comprehensive income 25,499 7,022
Total stockholders' equity 425,121 401,274
Total liabilities and stockholders' equity $1,274,562 $1,223,953
SOLERA HOLDINGS, INC. AND SUBSIDIARIES
SELECTED STATEMENT OF CASH FLOWS INFORMATION
FOR THE QUARTER ENDED SEPTEMBER 30, 2007
(In thousands)
(Unaudited)
Net cash provided by operating activities $26,224
Net cash (used in) investing activities (5,208)
Net cash (used in) financing activities (9,130)
Effect of exchange rate changes 5,370
Net increase in cash and cash equivalents 17,256
Cash and cash equivalents, beginning of period 89,868
Cash and cash equivalents, end of period $107,124
Supplemental Cash Flow Information:
Cash paid for interest $10,405
Supplemental Disclosure of
Non-cash Investing and Finance Activities:
Capital assets financed $660
Cautions about Forward-Looking Statements
This press release contains forward-looking statements, including statements about business outlook and strategy, and statements about historical results that may suggest trends for our business. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. There may be other factors that may cause our actual results to differ materially from the forward-looking statements. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward- looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does, what impact they will have on our results of operations and financial condition. You should carefully read the factors described in the "Risk Factors" section of our filings with the Securities and Exchange Commission for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements. All forward- looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this earnings release to reflect events or circumstances after the date hereof.
About Solera
Solera is the leading global provider of software and services for the automobile insurance claims processing industry. Solera has operations in 49 countries across 5 continents. The Solera companies include Audatex in the United States, Canada, and in more than 35 additional countries, Informex in Belgium, Sidexa in France, ABZ in the Netherlands, Hollander serving the North American recycling market, and IMS providing medical review services. For more information, please refer to the Company's website at www.solerainc.com.
Contacts: Investor Relations Paul Gange Solera Holdings, Inc. 858-946-1751 paul.gange@audatex.com Media Relations John P. Dudzinsky Taylor Rafferty 212-889-4350 solera@taylor-rafferty.com