First Quarter Revenue of $143.0 Million, up 15.1%; GAAP Net Income
per Share of $0.22, up 266.7%; Company Updates Previously Issued
Guidance for Fiscal Year 2009 SAN DIEGO, Nov. 5
/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 first quarter of fiscal year 2009. GAAP Results for the Quarter
ended September 30, 2008: -- Revenue for the first quarter of
fiscal year 2009 was $143.0 million, a 15.1% increase over the
prior year first quarter revenue of $124.2 million. After adjusting
for changes in foreign currency rates, revenue for the first
quarter of fiscal year 2009 increased approximately 9.2% over the
prior year first quarter; -- GAAP net income for the first quarter
of fiscal year 2009 was $14.3 million, a $10.4 million improvement
over the prior year first quarter GAAP net income of $3.9 million;
-- GAAP diluted net income per share for the first quarter of
fiscal year 2009 was $0.22, a $0.16 per share improvement over the
prior year first quarter diluted net income per share of $0.06.
Non-GAAP Results for the Quarter ended September 30, 2008: --
Adjusted EBITDA for the first quarter of fiscal year 2009 was $54.5
million, a 31.6% increase over the prior year first quarter
Adjusted EBITDA of $41.4 million; -- Adjusted Net Income for the
first quarter of fiscal year 2009 was $28.2 million, a 67.5%
increase over the prior year first quarter Adjusted Net Income of
$16.9 million; -- Adjusted Net Income per diluted share (or cash
earnings per diluted share) for the first quarter of fiscal year
2009 was $0.43, a 66.5% increase over the prior year first quarter
Adjusted Net Income per diluted share of $0.26. "The first quarter
represented another strong quarter for us, with organic revenue
growth of 9.2%, up slightly from the 8.9% organic revenue growth we
recorded in the fourth quarter of fiscal 2008. Our Adjusted EBITDA
margin of 38.1% in the first quarter was due, in part, to our
continued focus on eliminating waste and driving efficiencies in
the business, as well as limited expenditures during the quarter on
Sarbanes-Oxley compliance efforts, which tend to increase later in
our fiscal year," said Tony Aquila, founder, chairman and CEO of
Solera Holdings, Inc. "With the recent strength of the US Dollar
negatively impacting our revenues, we will continue to focus on
further eliminating waste and driving efficiencies to minimize the
impact to our bottom line." Business Statistics for the Quarter
ended September 30, 2008: -- EMEA revenue for the first quarter of
fiscal year 2009 was $90.3 million, a 21.3% increase over the prior
year first quarter revenue of $74.5 million. After adjusting for
the change in foreign currency rates, EMEA revenue for the first
quarter of fiscal year 2009 increased 12.7% over the prior year
first quarter; -- Americas revenue for the first quarter of fiscal
year 2009 was $52.7 million, a 5.9% increase over the prior year
first quarter revenue of $49.7 million. After adjusting for the
change in foreign currency rates, Americas revenue for the first
quarter of fiscal year 2009 increased 4.0% over the prior year
first quarter; -- Revenue from insurance company customers for the
first quarter of fiscal year 2009 was $60.4 million, a 20.7%
increase over the $50.1 million in revenue from insurance company
customers in the prior year first quarter; -- Revenue from
collision repair facility customers for the first quarter of fiscal
year 2009 was $53.5 million, a 14.0% increase over the $46.9
million in revenue from collision repair facility customers in the
prior year first quarter; -- Revenue from independent assessor
customers for the first quarter of fiscal year 2009 was $14.6
million, a 10.5% increase over the $13.2 million in revenue from
independent assessor customers in the prior year first quarter; --
Revenue from automotive recycling and other customers for the first
quarter of fiscal year 2009 was $14.5 million, a 3.4% increase over
the $14.0 million in revenue from automotive recycling and other
customers in the prior year first quarter. Fiscal Year 2009
Outlook: Since our preliminary earnings release on October 21,
2008, the US Dollar has continued to strengthen appreciably against
most foreign currencies we use to transact our business. For
example, on October 21, 2008, one Euro was equal to approximately
$1.34, and on November 4, 2008, one Euro was equal to approximately
$1.30. This change from October 21, 2008 to November 4, 2008
represents a strengthening of the US Dollar versus the Euro of
approximately 3.0%. Due to the appreciable strengthening of the US
Dollar over the last several weeks, we are updating our previously
issued outlook for our full fiscal year ending June 30, 2009 as
follows: Previous Outlook Current Outlook ----------------
--------------- Revenues $542 million - $548 million $530 million -
$535 million Net Income $45 million - $48 million $45 million - $48
million Adjusted Net Income $103 million - $106 million $103
million - $106 million Adjusted Net Income per diluted share $1.56
- $1.60 $1.56 - $1.60 Adjusted EBITDA $200 million - $205 million
$197 million - $202 million The current fiscal year 2009 outlook
above assumes constant exchange rates from those currently
prevailing, no 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 (12%), (13%), (15%) and (9%) for our
fiscal quarters ending December 31, 2008, March 31, 2009 and June
30, 2009, and our fiscal year ending June 30, 2009, respectively.
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 9%, 11%, 13% and
6% for our fiscal quarters ending December 31, 2008, March 31, 2009
and 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 7% for each of our fiscal quarters
ending December 31, 2008, March 31, 2009 and June 30, 2009, and 8%
for our fiscal year ending June 30, 2009. Earnings Conference Call:
We will host our first quarter ended September 30, 2008 earnings
call on November 5, 2008 at 5:00 p.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 November 19,
2008. A live audio broadcast of the call will be accessible to the
public by calling (866) 356-3093 or for international callers,
(617) 597-5381; please enter the following access code when
prompted: 506249418. Callers should dial in approximately ten
minutes before the call begins. SOLERA HOLDINGS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
MONTH PERIODS SEPTEMBER 30, 2008 AND 2007 (In thousands, except per
share amounts) (Unaudited)
------------------------------------------------------- Three
Months Ended September 30, -------------------------------- 2008
2007 -------- -------- Revenues $142,992 $124,181 -------- --------
Cost of revenues: Operating expenses 33,279 32,340 Systems
development and programming costs 16,258 15,973 -------- --------
Total cost of revenues (excluding depreciation and amortization)
49,537 48,313 -------- -------- Selling, general and administrative
expenses 38,734 33,542 Depreciation and amortization 21,236 22,405
Restructuring charges 471 1,623 Interest expense 11,066 11,162
Other income - net (3,498) (1,156) -------- -------- 68,009 67,576
-------- -------- Income before income tax provision and minority
interests 25,446 8,292 Income tax provision 9,009 2,877 Minority
interest in net income of consolidated subsidiaries 2,090 1,561
-------- -------- Net income $14,347 $3,854 ======== ======== Net
income per share: Basic $0.22 $0.06 ======== ======== Diluted $0.22
$0.06 ======== ======== Weighted average shares used in the
calculation of net income per share: Basic 64,365 62,833 ========
======== Diluted 64,978 64,589 ======== ======== 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 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 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 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 Ended September 30,
------------------- 2008 2007 ------- ------ Reconciliation to
Adjusted EBITDA Net income $14,347 $3,854 Add: Income tax provision
9,009 2,877 ------- ------ Net income before income tax 23,356
6,731 Add: Depreciation and amortization 21,236 22,405 Add:
Interest expense 11,066 11,162 Add: Stock-based compensation
expense 1,568 602 Add: Restructuring charges 471 1,623 Add: Other
income - net (3,498) (1,156) Add: Acquisition related costs 307 51
------- ------ Adjusted EBITDA $54,506 $41,418 ------- ------ --
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, 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 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 Ended September 30, ------------------- 2008
2007 ------- ------- Reconciliation to Adjusted Net Income Net
income $14,347 $3,854 Add: Income tax provision 9,009 2,877 -------
------- Net income before income tax 23,356 6,731 Add: Amortization
of acquisition related intangibles 15,807 17,313 Add: Stock-based
compensation expense 1,568 602 Add: Restructuring charges 471 1,623
Add: Other income -- not including interest income FY09 (2,289)
(1,156) Add: Acquisition related costs 307 51 ------- -------
Adjusted income before income tax provision 39,220 25,164 Less:
Assumed provision for income taxes at 28% and 33% rate for
September 30, 2008 and September 30, 2007, respectively (10,981)
(8,304) ------- ------- Adjusted net income $28,239 $16,860 =======
======= Adjusted net income per share: Basic $0.44 $0.27 =======
======= Diluted $0.43 $0.26 ======= ======= Weighted average shares
used in the calculation of adjusted net income per share: Basic
64,365 62,833 ======= ======= Diluted 64,978 64,589 ======= =======
SOLERA HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2008 AND JUNE 30, 2008 (In thousands, except
share amounts)
----------------------------------------------------------
September 30, June 30, 2008 2008 (Unaudited) (Audited)
------------- ---------- Assets Current Assets: Cash and cash
equivalents $159,969 $149,311 Accounts receivable, net 91,705
95,843 Other receivables 8,995 9,784 Other current assets 18,121
18,314 Deferred income tax assets 4,285 4,802 ---------- ----------
Total current assets 283,075 278,054 ---------- ---------- Property
and equipment, net 46,478 49,243 Other Assets 20,066 22,980
Long-term deferred income tax assets 5,219 5,162 Goodwill 599,975
646,098 Intangible assets, net 298,612 330,218 ----------
---------- Total assets $1,253,425 $1,331,755 ========== ==========
Liabilities and Stockholders' Equity Current Liabilities: Accounts
payable $29,514 $32,191 Accrued expenses and other current
liabilities 94,150 103,597 Income taxes payable 14,441 12,449
Deferred income tax liabilities 695 842 Current portion of
long-term debt 5,984 6,336 ---------- ---------- Total current
liabilities 144,784 155,415 ---------- ---------- Long-term debt
588,337 624,570 Other liabilities 30,520 33,475 Long-term deferred
income tax liabilities 34,262 36,558 ---------- ---------- Total
liabilities $797,903 $850,018 ---------- ---------- Minority
interests in consolidated subsidiaries 16,096 15,429 Stockholders'
equity: Common Shares, $0.01 par value, 150,000,000 shares
authorized; 64,938,889 and 64,816,018 issued and outstanding, as of
September 30, 2008 and June 30, 2008, respectively 513,373 510,900
Accumulated deficit (95,810) (110,157) Accumulated other
comprehensive income 21,863 65,565 ---------- ---------- Total
stockholders' equity 439,426 466,308 ---------- ---------- Total
liabilities and stockholders' equity $1,253,425 $1,331,755
========== ========== SOLERA HOLDINGS, INC. AND SUBSIDIARIES
SELECTED STATEMENTS OF CASH FLOWS INFORMATION FOR THE THREE MONTH
PERIODS ENDED SEPTEMBER 30, 2008 and 2007 (In thousands)
(Unaudited) -------------------------------------------------------
Three Months ended September 30, --------------------- 2008 2007
-------- -------- Net cash provided by operating activities $33,817
$26,224 Net cash used in investing activities (7,559) (5,208) Net
cash used in financing activities (1,965) (9,130) Effect of
exchange rate changes (13,635) 5,370 -------- -------- Net increase
in cash and cash equivalents 10,658 17,256 Cash and cash
equivalents, beginning of period 149,311 89,868 -------- --------
Cash and cash equivalents, end of period $159,969 $107,124 ========
======== Supplemental Cash Flow Information: Cash paid for interest
$10,915 $10,405 Cash paid for income taxes $5,339 $3,926 --------
-------- Supplemental Disclosure of Non-cash Investing and Finance
Activities: Capital assets financed $329 $660 -------- --------
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, 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, our
efforts to minimize the effects of currency exchange rate
fluctuations on our financial results and statements about
historical results or performance, including statements about our
organic growth rates, 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 and uncertainty in global economic
conditions; 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
2006 acquisition of the Claims Services Group from Automatic Data
Processing, Inc.; 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; risks associated with any future acquisitions, joint
ventures or similar transactions; 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 Annual Report on Form 10-K for the Year Ended June
30, 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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