- Quarterly revenue increased by 9%
- Quarterly adjusted EBITDA decreased by 15%
- Cash position strong at $67.0
million
CALGARY, Aug. 9, 2017 /CNW/ - Solium Capital Inc. (TSX:
SUM) ("Solium" or the "Company") today announced its financial
results for the three and six month periods ended June 30, 2017.
Financial and operating highlights for the three and six
month period ended June 30, 2017,
compared to the same periods in 2016:
- In the second quarter, the Company entered into a license
agreement with UBS Financial Services Inc. ("UBS") whereby UBS
customers will transition to a UBS branded version of the plan
administration modules of Shareworks;
- Revenue increased by 9% to $21.6
million in the second quarter of 2017 and by 12% to
$42.8 million for the six month
period ended June 30, 2017;
- Adjusted EBITDA1 decreased by 15% to $3.1 million in the second quarter of 2017 and
increased by 7% to $7.5 million for
the six month period ended June 30,
2017;
- Earnings from operations increased by 86% to $2.1 million in the second quarter of 2017 and by
61% to $5.5 million for the six month
period ended June 30, 2017;
- Net earnings increased from $nil to $1.7
million in the second quarter of 2017 and by 221% to
$4.2 million for the six month period
ended June 30, 2017;
- For the six month period ended June 30,
2017, Solium incurred capital expenditures of $2.2 million, primarily relating to the build out
of the Company's new Calgary
headquarters, as well as expansion of its data centre.
Key factors affecting financial results in the three and six
month periods ended June 30,
2017:
- License revenue – License and subscription fees
increased by $1.4 million or 11%
during the second quarter of 2017 and $1.5
million or 6% for the six months ended June 30, 2017, as compared to the same periods in
2016. Based on local currencies, the growth was 12% during the
second quarter and 7% for the six months ended June 30, 2017. Growth in license revenue is
primarily driven by the Morgan Stanley and UBS license agreements
in the U.S. entered into in November
2016 and May 2017,
respectively.
- Transaction activity – In addition to the recurring
license revenue that Solium collects for the use of its Shareworks
platform, the Company also collects re-occurring transaction based
revenue. Transaction based revenue remained the same during the
second quarter and increased by $2.3
million or 20% for the six months ended June 30, 2017, as compared to the same periods in
2016. The per participant trading activity was 10% lower in the
second quarter of 2017 compared to the same period in 2016 and 6%
higher than the historical five-year Q2 average.
- Operating costs – Operating expenses (excluding a change
in estimate to Scientific Research and Experimental Development
(SRED) tax credit claims in 2016) increased by $2.2 million or 13% during the second quarter of
2017 and $3.9 million or 11% for the
six months ended June 30, 2017, when
compared to the same periods in 2016. The increase is primarily as
a result of planned hiring to support the Morgan Stanley and UBS
partnerships. The Company had 594 full-time equivalent employees
(FTEs) at the end of the second quarter of 2017 compared to 474
FTEs at the end of the second quarter of 2016.
Selected financial information for the three and six
month periods ended June 30,
2017:
(Expressed in thousands of
USD except per share amounts and percentages)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2017
$
|
2016
$
|
%
Change
|
2017
$
|
2016
$
|
%
Change
|
Revenue
|
21,581
|
19,860
|
9%
|
42,847
|
38,415
|
12%
|
Operating
expenses
|
19,478
|
18,731
|
4%
|
37,371
|
35,021
|
7%
|
Adjusted
EBITDA1
|
3,127
|
3,683
|
(15%)
|
7,471
|
6,958
|
7%
|
Earnings from
operations
|
2,103
|
1,129
|
86%
|
5,476
|
3,394
|
61%
|
Net earnings
(loss)
|
1,671
|
(49)
|
NM(a)
|
4,215
|
1,312
|
221%
|
|
|
|
|
|
|
|
Net earnings (loss)
per share2
|
|
|
|
|
|
|
|
Basic
|
0.033
|
(0.001)
|
NM(a)
|
0.084
|
0.027
|
211%
|
|
Diluted
|
0.033
|
(0.001)
|
NM(a)
|
0.082
|
0.026
|
215%
|
|
|
|
|
|
|
|
Issued and
outstanding
|
|
|
|
|
|
|
|
Common
shares
|
|
|
|
50,711
|
49,733
|
2%
|
|
Diluted3
|
|
|
|
53,665
|
52,928
|
1%
|
(a) NM denotes as
non-measurable.
|
Regional breakdown of results:
(Expressed in thousands of USD except percentages)
Currently included in the International reportable segment are
the results relating to the U.K., Europe, Australia, and Hong
Kong operations.
|
|
|
Three Months Ended
June 30,
|
|
Canada
|
U.S.
|
International
|
Consolidated
|
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
6,861
|
7,262
|
10,730
|
9,015
|
3,990
|
3,583
|
21,581
|
19,860
|
Adjusted
EBITDA1
|
2,416
|
2,702
|
734
|
1,301
|
(23)
|
(320)
|
3,127
|
3,683
|
Adjusted EBITDA
%1
|
35%
|
37%
|
7%
|
14%
|
(1%)
|
(9%)
|
14%
|
19%
|
Earnings (loss) from
operations
|
2,114
|
945
|
98
|
613
|
(109)
|
(429)
|
2,103
|
1,129
|
|
|
|
Six Months Ended
June 30,
|
|
Canada
|
U.S.
|
International
|
Consolidated
|
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
14,839
|
13,792
|
20,322
|
18,018
|
7,686
|
6,605
|
42,847
|
38,415
|
Adjusted
EBITDA1
|
4,507
|
4,433
|
2,848
|
3,241
|
116
|
(716)
|
7,471
|
6,958
|
Adjusted EBITDA
%1
|
30%
|
32%
|
14%
|
18%
|
2%
|
(11%)
|
17%
|
18%
|
Earnings (loss) from
operations
|
3,950
|
2,457
|
1,603
|
1,867
|
(77)
|
(930)
|
5,476
|
3,394
|
Basic net earnings per share was $0.033 in the second quarter of 2017 (2016:
$0.001 loss per share) and
$0.084 for the six month period ended
June 30, 2017 (2016: $0.027).
During the six month period ended June
30, 2017, the Company had an overall net increase in cash
and cash equivalents of $3.3 million
(2016: $5.3 million). Changes in
working capital and cash tax payments brought total cash inflow
from operations to $3.3 million
during the six month period ended June 30,
2017 (2016: $1.7 million).
Working capital as at June 30,
2017 was $68.3 million
(December 31, 2016: $63.2 million). Included in working capital was
trade and other receivables of $19.0
million (December 31, 2016:
$16.4 million).
Outlook
In Q4 2016, Solium entered into a license agreement with Morgan
Stanley, whereby Morgan Stanley's corporate customers and their
respective employee participants will transition to a Morgan
Stanley branded version of Shareworks. In order to execute on this
agreement, Solium has added headcount and committed additional
resources in the first half of 2017 to ensure the success of this
project. In Q2 2017, Solium had substantially completed the hiring
of the employees necessary to support the Morgan Stanley
implementation. However, the full financial impact of these new
hires will not be fully reflected in the Company's financial
results until the second half of 2017.
In Q2 2017, Solium entered into a license agreement with UBS
Financial Services Inc., where UBS's corporate customers will
transition to a UBS branded version of the plan administration
modules of Shareworks. During the quarter, Solium started to
add additional employees to support the UBS implementation, and
this hiring is anticipated to continue throughout the second half
of 2017.
Solium remains committed to investing for future revenue growth
over the course of 2017, resulting in near-term pressure on
profitability. The Company continues to invest in its capabilities
and infrastructure – ensuring best-in-class technology and service
– to drive long term investor returns.
Notes:
|
|
1.
|
Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
Adjusted EBITDA are non-IFRS financial measures which do not have
any standardized meaning prescribed by IFRS and are therefore
unlikely to be comparable to similar measures presented by other
issuers. EBITDA and Adjusted EBITDA provide useful
information to users as they reflect the net earnings prior to the
effect of non-operating expenses such as finance income, income
taxes, depreciation of property and equipment, amortization of
intangible assets, foreign exchange gain or loss (on translation of
working capital), gain on derecognition of liability, sales tax
adjustment, and change in estimate of scientific research and
experimental development ("SRED") investment tax credits.
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 measure is
a component in determining the annual bonus pool for staff and
management.
|
|
|
The following is a
reconciliation of Adjusted EBITDA to net earnings:
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2017
|
2016
|
2017
|
2016
|
Adjusted
EBITDA
|
3,127
|
3,683
|
7,471
|
6,958
|
Foreign exchange
(loss) gain
|
(352)
|
(644)
|
45
|
(1,244)
|
Gain on derecognition
of liability
|
-
|
-
|
-
|
445
|
Sales tax adjustment
included in operating expenses
|
-
|
(85)
|
-
|
(165)
|
SRED investment tax
credits included in operating expenses
|
-
|
(1,502)
|
-
|
(1,502)
|
EBITDA
|
2,775
|
1,452
|
7,516
|
4,492
|
Finance
income
|
195
|
172
|
383
|
313
|
Depreciation of
property and equipment
|
(381)
|
(307)
|
(724)
|
(577)
|
Amortization of
intangible assets
|
(643)
|
(660)
|
(1,271)
|
(1,320)
|
Income
taxes
|
(275)
|
(706)
|
(1,689)
|
(1,596)
|
Net earnings
(loss)
|
1,671
|
(49)
|
4,215
|
1,312
|
|
|
|
|
|
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 the
effects of dilutive outstanding stock options and restricted share
units.
|
About Solium Capital Inc.
Solium Capital Inc. (TSX: SUM) provides cloud-enabled services
for global equity administration, financial reporting and
compliance. From offices in the
United States, Canada,
Europe, Australia and Hong
Kong, 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 100 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 projects with Morgan Stanley and UBS
Financial Services Inc. including the financial impact of new hires
and plans to hire additional employees, and the Company's
investment strategy. 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 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, the competitive environment
in which the Company operates, and the Company's ability to realize
the anticipated benefits from its investment in the partnerships
with Morgan Stanley and UBS Financial Services Inc. 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 quarter and
period ended June 30, 2017 referred
to herein will be available on SEDAR at
www.sedar.com under Solium Capital Inc., or
at www.solium.com.
SOURCE Solium Capital Inc.