Solium Releases 2013 First Quarter Financial Results
CALGARY, May 7, 2013
- Revenue increased by 43%
- Adjusted EBITDA increased by 31%
- Cash position strong at $14.6 million
Solium Capital Inc. (“Solium” or the “Company”), the leading provider of software as a service for global equity administration, financial reporting and compliance, today announced its financial results for the first quarter ended March 31, 2013.
Financial and operating highlights for the first quarter ended March 31, 2013:
- Revenue increased by 43% to $18.2 million for the first quarter of 2013;
- Earnings from operations increased by 45% to $4.2 million for the first quarter of 2013;
- Adjusted EBITDA1 increased by 31% to $5.4 million in the first quarter of 2013;
- Net earnings increased by 36% to $2.7 million in the first quarter of 2013;
- Cash on hand as at March 31, 2013 was $14.6 million with no significant debt on the balance sheet except for the contingent liability of $2.6 million due to Computershare;
- The convertible notes issued in relation to the acquisition of OptionEase in November 2012 automatically converted to common shares in February 2013 resulting in the issuance of 734,324 common shares at the conversion price of $3.00 per share.
Key factors affecting financial results for the first quarter ended March 31, 2013:
Trading activity – The Company experienced very strong participant share trading activity and corresponding transaction based revenue in the three months ended March 31, 2013. Certain seasonal factors typically contribute to higher transaction based revenue in the first quarter of a given year.
Acquisitions – CapMX, OptionEase, and Corporate Focus were each acquired in 2012 subsequent to the first quarter. Revenue, expenses and a small loss were recorded from these acquired businesses in the three months ended March 31, 2013 compared to no revenue or expenses in the first quarter of 2012.
SRED ITC’s (“ITCs”) – The Company accrued $0.2 million of ITCs as a reduction to operating expenses in the first quarter of 2013 (2012: $0.6 million).
Strategic Initiatives – The Company continued to incur significant strategically driven expenses during the first quarter pursuing potential business growth opportunities. This includes the continued development of a global equity administration platform and geographical expansion into the U.K and Australia. The Company is pleased with the excellent progress and results achieved to date with the above strategic initiatives.
Selected financial information for the first quarter ended March 31, 2013:
|Three Months Ended March 31,|
|Expenses before income taxes||14,242,695||10,051,595||42%|
|Earnings from operations||4,242,024||2,934,420||45%|
|Earnings before income taxes||3,907,873||2,601,077||50%|
|Net earnings per share|
|Issued and outstanding|
Revenue from Canadian operations was $9.6 million in the first quarter of 2013 (2012: $6.7 million), while revenue from U.S. operations was $8.5 million in the first quarter of 2013 (2012: $6.0 million).
Adjusted EBITDA1 in Canada was $3.8 million in the first quarter of 2013 (2012: $2.5 million), while adjusted EBITDA1 in the U.S. was $1.6 million in the first quarter of 2013 (2012: $1.7 million).
Net earnings from Canadian operations were $2.6 million in the first quarter of 2013 (2012: $1.6 million), while net earnings from U.S. operations were $0.1 million in the first quarter of 2013 (2012: $0.3 million). The amortization of intangible assets is predominantly attributable to the U.S. operations.
The effective income tax rate increased from 24.3% in the first quarter of 2012 to 31.6% in the first quarter of 2013 mainly due to the impact of acquisitions made in the U.S. throughout 2012 which will increase the proportion of U.S. taxable income forecasted for 2013 relative to total taxable income for the year, and the related higher tax rate in the U.S.
Net earnings per share were $0.063 in the first quarter of 2013 (2012: $0.047).
During the first quarter of 2013, the Company had a net cash outflow of $0.07 million (2012: $0.4 million). Funds from operations were $4.9 million (2012: $3.7 million). Consistent with prior years, payment of 2012 staff bonuses in the first quarter reduced total cash flow from operations to $0.2 million (2012: $1.0 million). Net cash outflow from investing activities was $0.6 million during the quarter ended March 31, 2013 (2012: $0.1 million). Working capital as at March 31, 2013 was $9.4 million (December 31, 2012: $7.0 million).
Positive results in the first quarter built on the growth and momentum experienced in 2012. Transaction based revenue, which follows a seasonal pattern that is typically strongest in the first quarter of any given year, was very strong in the first quarter of 2013. While the acquisitions completed in 2012 generated a small loss in the first quarter of 2012, the Company anticipates that these businesses will have a positive contribution to net earnings once they are fully integrated into Solium. Solium will continue to invest in Shareworks, the first and only equity administration platform with end to end global capabilities on a single platform.
Excellent progress and results were achieved in the Company’s UK operations in the first quarter. Solium expects organic growth to continue in the UK going forward as new direct clients go live on the Shareworks platform and the Barclays white-label arrangement gains momentum.
The Company completed the acquisition of the RSSOne product from Computershare on April 30, 2013, which consists of a suite of services for U.S. public companies for Rule 10b5-1 and Rule 144, insider trading compliance management, and the technology used to provide such services. The acquisition of this toolset comes with an established base of US clients in the brokerage community and is expected to be accretive to earnings. The Company will continue to look for additional revenue-generating opportunities by integrating its expertise in technology into the financial services ecosystem.
1. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses such as finance costs, income tax, amortization, and foreign exchange gain or loss. Management uses Adjusted EBITDA in measuring the financial performance of the Company. Management monitors Adjusted EBITDA against budget and past results on a regular basis.
The following is a reconciliation of Adjusted EBITDA to net earnings:
|Three months ended March 31|
|Foreign exchange loss||-234,127||-13,820|
|Income tax expense||-1,235,090||-631,855|
2. Diluted net earnings per share is calculated using the treasury stock method.
3. Diluted shares as presented equals issued and outstanding common shares plus outstanding stock options, restricted share units and shares to be issued on conversion of the convertible notes.
About Solium Capital Inc.
Solium Capital Inc. (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance. From our operation centers in the United States, Canada, the United Kingdom and Australia, our innovative software-as-a-service (SaaS) technology powers share plan administration and equity transactions for more than 3,000 corporate clients with employee participants in more than 150 countries. Follow us @Solium and visit us at solium.com.
Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, or similar words suggesting future outcomes or statements regarding an outlook. Specific forward-looking statements in this press release include statements with respect to the timing and success of implementations of the Shareworks platform, the timing and anticipated benefits from the migration of Canadian trade flow into the Canadian brokerage business, and the realization of revenues from UK operations. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect, including assumptions with respect to the satisfaction and timing of receipt of required shareholder and regulatory approvals and other conditions to closing, the ability of the Company to identify, hire, train, motivate and retain qualified personnel, the Company’s ability to maintain or accurately forecast revenue from its products and services and the competitive environment in which the Company operates. Although Solium believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because Solium can give no assurance that such expectations will prove to be correct. The forward-looking statements and information are based on Solium’s current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including general business and economic conditions, actions of competitors and partners, the regulatory environment and product capability and acceptance. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
The Management’s Discussion and Analysis and the condensed consolidated interim financial statements for the three months ended March 31, 2013 referred to herein will be available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.solium.com.
For further information:
Aaron Kabucis, CFA
TMX | Equicom
416.815.0700 x 230