GAAP Third Quarter Revenue of $ 139.3 Million; GAAP Net Income per
Share of $0.17, up 52.7% from Prior Year; Company Updates
Previously Issued Guidance for Fiscal Year 2009 SAN DIEGO, May 7
/PRNewswire-FirstCall/ -- Solera Holdings, Inc. (NYSE: SLH), the
leading global provider of software and services to the automobile
insurance claims processing industry, today reported results for
the third quarter of fiscal year 2009. GAAP Results for the Quarter
Ended March 31, 2009: -- Revenue for the third quarter of fiscal
year 2009 was $139.3 million, a 0.9% increase over the prior year
third quarter revenue of $138.0 million. After adjusting for
changes in foreign currency exchange rates, revenue for the third
quarter of fiscal year 2009 increased approximately 17.7% over the
prior year third quarter; -- GAAP net income for the third quarter
of fiscal year 2009 was $12.0 million, a 64.0% improvement over the
prior year third quarter GAAP net income of $7.3 million; -- GAAP
diluted net income per share for the third quarter of fiscal year
2009 was $0.17, a 52.7% per share improvement over the prior year
third quarter diluted net income per share of $0.11. Non-GAAP
Results for the Quarter Ended March 31, 2009: -- Adjusted EBITDA
for the third quarter of fiscal year 2009 was $53.0 million, a
10.0% increase over the prior year third quarter Adjusted EBITDA of
$48.1 million; -- Adjusted Net Income for the third quarter of
fiscal year 2009 was $27.5 million, a 30.9% increase over the prior
year third quarter Adjusted Net Income of $21.0 million; --
Adjusted Net Income per diluted share (or cash earnings per diluted
share) for the third quarter of fiscal year 2009 was $0.40, a 21.9%
increase over the prior year third quarter Adjusted Net Income per
diluted share of $0.32. "With third quarter revenue of $139.3
million, we continued to demonstrate solid organic growth. Our
Adjusted EBITDA margin of 38.0% was ahead of consensus and very
solid given the strong US Dollar versus most of the currencies we
use to transact our business," said Tony Aquila, founder, chairman
and CEO of Solera Holdings, Inc. "Consistent with the last few
quarters, we had an overall increase in the number of claims we
processed despite weakness in some markets. This illustrates the
diversity and strength of our portfolio of mature and evolving
markets, and the value of our products and services to our
customers." Business Statistics for the Quarter Ended March 31,
2009: -- EMEA revenue for the third quarter of fiscal year 2009 was
$87.9 million, a 2.3% increase over the prior year third quarter
revenue of $85.9 million. After adjusting for the changes in
foreign currency exchange rates (the "FX Changes"), EMEA revenue
for the third quarter of fiscal year 2009 increased 24.8% over the
prior year third quarter. After excluding revenue during the third
quarter of fiscal year 2009 from the acquisition of HPI, Ltd. and
the FX Changes, EMEA revenue for the quarter grew approximately
9.7% over the prior year third quarter on an organic basis; --
Americas revenue for the third quarter of fiscal year 2009 was
$51.4 million, a 1.4% decrease versus the prior year third quarter
revenue of $52.1 million. After the FX Changes, Americas revenue
for the third quarter of fiscal year 2009 increased 6.1% over the
prior year third quarter. After excluding revenue during the third
quarter of fiscal year 2009 from InPart Servicos Ltda. and the FX
Changes, Americas revenue for the quarter grew approximately 4.7%
over the prior year third quarter on an organic basis; -- Revenue
from insurance company customers for the third quarter of fiscal
year 2009 was $56.8 million, a 1.1% increase over the $56.2 million
in revenue from insurance company customers in the prior year third
quarter. After FX Changes, insurance company customer revenue
increased 15.7% over the prior year third quarter; -- Revenue from
collision repair facility customers for the third quarter of fiscal
year 2009 was $48.7 million, a 7.5% decrease versus the $52.6
million in revenue from collision repair facility customers in the
prior year third quarter. After FX Changes, collision repair
facility customer revenue increased 9.6% over the prior year third
quarter; -- Revenue from independent assessor customers for the
third quarter of fiscal year 2009 was $13.0 million, a 9.6%
decrease versus the $14.4 million in revenue from independent
assessor customers in the prior year third quarter. After FX
Changes, independent assessor customer revenue increased 5.8% over
the prior year third quarter; -- Revenue from automotive recycling
and other customers for the third quarter of fiscal year 2009 was
$20.8 million, a 39.8% increase versus the $14.8 million in revenue
from automotive recycling and other customers in the prior year
third quarter. After FX Changes, automotive recycling and other
customer revenue increased 66.2% over the prior year third quarter.
Fiscal Year 2009 Outlook We are updating our previously issued
outlook for our full fiscal year ending June 30, 2009 as follows:
Previous Outlook Current Outlook ---------------- ---------------
Revenues $549 million - $553 million $550 million - $552 million
Net Income $52 million - $54 million $53 million - $55 million
Adjusted Net Income $106 million - $108 million $106 million - $108
million Adjusted Net Income per diluted share $1.56 - $1.60 $1.57 -
$1.59 Adjusted EBITDA $204 million - $207 million $206 million -
$208 million The current fiscal year 2009 outlook above assumes
constant exchange rates with those currently prevailing, no
additional acquisitions, and a 28% tax rate to calculate Adjusted
Net Income, which we use in order to approximate our long-term
effective corporate tax rate (which includes certain benefits from
net operating loss carryforwards, tax deductible goodwill and
amortization, and a low tax-rate jurisdiction for certain corporate
holding companies). We anticipate that currency exchange rates will
have a negative impact on our revenues, but have a positive impact
on our interest expense and our intangibles amortization expense
for the full fiscal year ending June 30, 2009. If the US Dollar
exchange rate versus most major foreign currencies we use to
transact our business remains relatively constant throughout the
remainder of fiscal year 2009, we anticipate that currency exchange
rates will have a negative impact on our quarterly and annual
revenues versus the corresponding prior year periods of
approximately 17% and 9% for our fiscal quarter ending June 30,
2009, and our fiscal year ending June 30, 2009, respectively,
excluding the incorporation of HPI's results. Conversely, if the US
Dollar exchange rate versus most major foreign currencies we use to
transact our business remains relatively constant throughout the
remainder of fiscal year 2009, we anticipate that currency exchange
rates will have a positive impact on our quarterly and annual
interest expense versus the corresponding prior year periods of
approximately 14% and 8% for our fiscal quarter June 30, 2009, and
our fiscal year ending June 30, 2009, respectively, and a positive
impact on our quarterly and annual intangibles amortization expense
versus the corresponding prior year periods of approximately 8% for
our fiscal quarter ending June 30, 2009, and 8% for our fiscal year
ending June 30, 2009, excluding the incorporation of HPI's results
in each case. All percentage amounts and ratios were calculated
using the underlying data in whole dollars. We measure the effects
on our results that are attributed to the change in foreign
currency rates by measuring the incremental difference between
translating the current results at the monthly average rates for
the same period from the prior year, compared to the monthly
average rates used to translate current year actual results.
Earnings Conference Call: We will host our third quarter ended
March 31, 2009 earnings call on May 7, 2009 at 8:30 a.m. (Eastern
Time). 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 May 22,
2009. A live audio broadcast of the call will be accessible to the
public by calling (866) 770-7125 or for international callers,
(617) 213-8066; please enter the following access code when
prompted: 76752400. Callers should dial in approximately ten
minutes before the call begins. For those unable to participate in
the live audiocast, a replay will be available until midnight on
May 22, 2009. To access the replay, dial (888) 286-8010 or, from
outside the U.S., (617) 801-6888 and enter the following access
code when prompted: 65006382. SOLERA HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE THREE AND NINE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008 (In
thousands, except per share amounts) (Unaudited)
----------------------------------------------------------------------
Three Months Nine Months Ended Ended March 31, March 31,
------------------ ------------------ 2009 2008 2009 2008 --------
-------- -------- -------- Revenues $139,263 $138,049 $413,556
$394,320 -------- -------- -------- -------- Cost of revenues :
Operating expenses 32,079 32,803 95,521 98,130 Systems development
and programming costs 14,793 16,389 44,930 48,939 -------- --------
-------- -------- Total cost of revenues (excluding depreciation
and amortization) 46,872 49,192 140,451 147,069 Selling, general
and administrative expenses 41,484 40,889 118,555 111,956
Depreciation and amortization 22,227 24,034 63,413 69,887
Restructuring charges 658 1,171 1,412 2,837 Interest expense 9,518
11,406 29,612 34,288 Other income - net (909) (563) (15,143)
(6,328) -------- -------- -------- -------- 119,850 126,129 338,300
359,709 -------- -------- -------- -------- Income before income
tax provision and minority interests 19,413 11,920 75,256 34,611
Income tax provision 5,394 2,699 23,167 7,641 Minority interest in
net income of consolidated subsidiaries 2,032 1,913 6,105 4,799
-------- -------- -------- -------- Net income $11,987 $7,308
$45,984 $22,171 ======== ======== ======== ======== Net income per
share: Basic $0.17 $0.11 $0.69 $0.35 ======== ======== ========
======== Diluted $0.17 $0.11 $0.68 $0.34 ======== ======== ========
======== Weighted average shares used in the calculation of net
income per share: Basic 69,053 63,732 66,637 63,339 ========
======== ======== ======== Diluted 69,491 64,689 67,137 64,539
======== ======== ======== ======== Non-GAAP Financial Measures We
use 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 and certain members of our management team in connection
with our executive compensation and certain of our 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, and we use Adjusted Net Income to assess the operating
performance of our Company for certain members of our management
team in connection with their executive compensation and certain of
our bonus plans. 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 income, excluding
interest, taxes, depreciation and amortization, stock-based
compensation, restructuring charges, other income - 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 our acquisitions, including our acquisition of the
Claims Services Group from ADP in April 2006. A reconciliation of
our Adjusted EBITDA to GAAP net income, the most directly
comparable GAAP measure, is provided in the attached table. Three
Months Nine Months Ended Ended March 31, March 31, ----------------
------------------ 2009 2008 2009 2008 ------- ------- --------
-------- Reconciliation to Adjusted EBITDA Net income $11,987
$7,308 $45,984 $22,171 Add: Income tax provision 5,394 2,699 23,167
7,641 ------- ------- -------- -------- Net income before income
tax 17,381 10,007 69,151 29,812 Add: Depreciation and amortization
22,227 24,034 63,413 69,887 Add: Interest expense 9,518 11,406
29,612 34,288 Add: Stock-based compensation expense 1,659 1,732
4,848 3,373 Add: Restructuring charges 658 1,171 1,412 2,837 Add:
Other income - net (909) (563) (15,143) (6,328) Add: Acquisition
related costs 2,430 352 2,979 742 ------- ------- -------- --------
Adjusted EBITDA $52,964 $48,139 $156,272 $134,611 ======= =======
======== ======== -- Adjusted Net Income is a non-GAAP financial
measure that represents GAAP net income, plus the following items:
provision for income taxes, amortization of acquisition-related
intangibles related to our acquisition of the Claims Services Group
from ADP in April 2006 (as well as the excess, if any, from
subsequent acquisitions above that which would be derived from
utilizing the straight-line method of amortization), stock-based
compensation expense, restructuring charges, other income - net
(not including interest income for periods ending after June 30,
2008), 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 our acquisitions, including our acquisition
of the Claims Services Group from ADP in April 2006. From this
figure, we then subtract a provision for income taxes to arrive at
Adjusted Net Income. For periods ended June 30, 2008 and prior, we
use a 33% tax rate. For periods ending after June 30, 2008, we use
a 28% tax rate. We use this 28% tax rate in order to approximate
our long-term effective corporate tax rate, which includes certain
benefits from net operating loss carryforwards, tax deductible
goodwill and amortization, and a low tax-rate jurisdiction for
certain corporate holding companies. A reconciliation of our
Adjusted Net Income to GAAP net income, 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 income per share, the most directly comparable GAAP
measure, is provided in the attached table. Three Months Nine
Months Ended Ended March 31, March 31, ----------------
---------------- 2009 2008 2009 2008 ------- ------- -------
------- Reconciliation to Adjusted Net Income Net income $11,987
$7,308 $45,984 $22,171 Add: Income tax provision 5,394 2,699 23,167
7,641 ------- ------- ------- ------- Net income before income tax
17,381 10,007 69,151 29,812 Add: Amortization of acquisition
related intangibles 16,287 18,620 47,164 53,905 Add: Stock-based
compensation expense 1,659 1,732 4,848 3,373 Add: Restructuring
charges 658 1,171 1,412 2,837 Add: Other income -- not including
interest income FY09 (261) (563) (11,991) (6,328) Add: Acquisition
related costs 2,430 352 2,979 742 ------- ------- ------- -------
Adjusted income before income tax provision 38,154 31,319 113,563
84,341 Less: Assumed provision for income taxes at 28% and 33% rate
for March 31, 2009 and March 31, 2008, respectively (10,683)
(10,335) (31,798) (27,833) ------- ------- ------- ------- Adjusted
net income $27,471 $20,984 $81,765 $56,508 ======= ======= =======
======= Adjusted net income per share: Basic $0.40 $0.33 $1.23
$0.89 ======= ======= ======= ======= Diluted $0.40 $0.32 $1.22
$0.88 ======= ======= ======= ======= Weighted average shares used
in the calculation of adjusted net income per share: Basic 69,053
63,732 66,637 63,339 ======= ======= ======= ======= Diluted 69,491
64,689 67,137 64,539 ======= ======= ======= ======= SOLERA
HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS AS OF MARCH 31, 2009 AND JUNE 30, 2008 (In thousands, except
share amounts)
----------------------------------------------------------------
March 31, June 30, 2009 2008 (Unaudited) (Unaudited) (1)
------------ --------------- Assets Current Assets: Cash and cash
equivalents $188,042 $149,311 Accounts receivable, net 89,854
95,843 Other receivables 10,709 9,784 Other current assets 18,857
18,314 Deferred income tax assets 4,577 4,802 ------------
--------------- Total current assets 312,039 278,054 ------------
--------------- Property and equipment, net 48,068 49,243 Other
Assets 14,268 22,980 Long-term deferred income tax assets 5,138
5,162 Goodwill 612,301 646,098 Intangible assets, net 317,976
330,218 ------------ --------------- Total assets $1,309,790
$1,331,755 ============ =============== Liabilities and
Stockholders' Equity Current Liabilities: Accounts payable $25,225
$32,191 Accrued expenses and other current liabilities 94,031
103,597 Income taxes payable 16,950 12,449 Deferred income tax
liabilities 784 842 Current portion of long-term debt 5,660 6,336
------------ --------------- Total current liabilities 142,650
155,415 ------------ --------------- Long-term debt 569,525 624,570
Other liabilities 45,446 33,475 Long-term deferred income tax
liabilities 46,987 36,558 ------------ --------------- Total
liabilities $804,608 $850,018 ------------ --------------- Minority
interests in consolidated subsidiaries 14,052 15,429 Stockholders'
equity: Common Shares, $0.01 par value, 150,000,000 shares
authorized; 69,491,199 and 64,816,018 issued and outstanding, as of
March 31, 2009 and June 30, 2008, respectively 602,816 510,900
Accumulated deficit (64,173) (110,157) Accumulated other
comprehensive (loss)/income (47,513) 65,565 ------------
--------------- Total stockholders' equity 491,130 466,308
------------ --------------- Total liabilities and stockholders'
equity $1,309,790 $1,331,755 ============ =============== (1)
Derived from audited consolidated financial statements as of June
30, 2008. SOLERA HOLDINGS, INC. AND SUBSIDIARIES SELECTED
STATEMENTS OF CASH FLOWS INFORMATION FOR THE NINE MONTHS ENDED
MARCH 31, 2009 and 2008 (In thousands) (Unaudited)
----------------------------------------------------- Nine Months
ended March 31, ------------------ 2009 2008 -------- -------- Net
cash provided by operating activities $86,612 $80,693 Net cash used
in investing activities (104,271) (14,220) Net cash provided
by/(used) in financing activities 80,139 (34,249) Effect of
exchange rate changes (23,749) 17,050 -------- -------- Net
increase in cash and cash equivalents 38,731 49,274 Cash and cash
equivalents, beginning of period 149,311 89,868 -------- --------
Cash and cash equivalents, end of period $188,042 $139,142 ========
======== Supplemental Cash Flow Information: Cash paid for interest
$29,264 $33,725 Cash paid for income taxes $23,058 $17,322 --------
-------- Supplemental Disclosure of Non-cash Investing and Finance
Activities: Capital assets financed $1,586 $3,739 Note payable from
acquisitions of businesses $17,330 $ -- -------- -------- About
Solera Solera is the leading global provider of software and
services to the automobile insurance claims processing industry.
Solera is active in over 50 countries across six continents. The
Solera companies include Audatex in the United States, Canada, and
in more than 45 additional countries, Informex in Belgium, Sidexa
in France, ABZ in The Netherlands, HPI in the United Kingdom,
Hollander serving the North American recycling market, and IMS
providing medical review services. For more information, please
refer to the company's website at http://www.solerainc.com/.
Cautions about Forward-Looking Statements: This press release
contains forward-looking statements, including statements about our
business outlook for fiscal year 2009, our expectations regarding
currency exchange rates and their impact on our financial results
and statements about historical results or performance, including
statements about our organic revenue growth rates and growth in the
number of claims processed and revenue per claim that may suggest
trends for our business. These statements are based on our current
expectations, estimates and assumptions and are subject to many
risks, uncertainties and unknown future events that could cause
actual results to differ materially. Actual results may differ
materially from those set forth in this press release due to the
risks and uncertainties inherent in our business, including,
without limitation: our reliance on a limited number of customers
for a substantial portion of our revenues; unpredictability and
volatility of our operating results, which include the volatility
associated with foreign currency exchange risks; risks associated
with the uncertainty in and volatility of global economic
conditions; risks associated with and possible negative
consequences of acquisitions, joint ventures, divestitures and
similar transactions, including our ability to successfully
integrate HPI and InPart; effects of competition on our software
and service pricing and our business; time and expenses associated
with customers switching from competitive software and services to
our software and services; rapid technology changes in our
industry; costs and possible future losses or impairments relating
to our acquisitions; the financial impact of future significant
restructuring and severance charges; use of cash to service our
debt and effects on our business of restrictive covenants in our
debt facility; our ability to obtain additional financing as
necessary to support our operations; effects of changes in or
violations by us or our customers of government regulations; our
reliance on third-party information for our software and services;
effects of system failures or security breaches on our business and
reputation; country-specific risks associated with operating in
multiple countries; any material adverse impact of current or
future litigation on our results or business; and our dependence on
a limited number of key personnel. For a discussion of these and
other factors that could impact our operations or financial results
and cause our results to differ materially from those in the
forward-looking statements, please refer to our filings with the
Securities and Exchange Commission, particularly our Quarterly
Report on Form 10-Q for the Quarter Ended December 31, 2008. We are
under no obligation to (and specifically disclaims any such
obligation to) update or alter our forward-looking statements
whether as a result of new information, future events or otherwise.
DATASOURCE: Solera Holdings, Inc. CONTACT: Kamal Hamid, Investor
Relations of Solera Holdings, Inc., +1-858-946-1676, Web Site:
http://www.solerainc.com/
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