GAAP Second Quarter Revenue of $131.3 Million; GAAP Net Income per
Share of $0.29, up 72.0%; Company Updates Previously Issued
Guidance for Fiscal Year 2009 SAN DIEGO, Feb. 4
/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 second quarter of fiscal year 2009. GAAP Results for the
Quarter ended December 31, 2008: -- Revenue for the second quarter
of fiscal year 2009 was $131.3 million, a 0.6% decrease over the
prior year second quarter revenue of $132.1 million. After
adjusting for changes in foreign currency exchange rates, revenue
for the second quarter of fiscal year 2009 increased approximately
10.3% over the prior year second quarter; -- GAAP net income for
the second quarter of fiscal year 2009 was $19.6 million, a 78.4%
improvement over the prior year second quarter GAAP net income of
$11.0 million; -- GAAP diluted net income per share for the second
quarter of fiscal year 2009 was $0.29, a 72.0% per share
improvement over the prior year second quarter diluted net income
per share of $0.17. Non-GAAP Results for the Quarter ended December
31, 2008: -- Adjusted EBITDA for the second quarter of fiscal year
2009 was $48.8 million, an 8.3% increase over the prior year second
quarter Adjusted EBITDA of $45.1 million; -- Adjusted Net Income
for the second quarter of fiscal year 2009 was $26.1 million, a
39.6% increase over the prior year second quarter Adjusted Net
Income of $18.7 million; -- Adjusted Net Income per diluted share
(or cash earnings per diluted share) for the second quarter of
fiscal year 2009 was $0.39, a 34.5% increase over the prior year
second quarter Adjusted Net Income per diluted share of $0.29. "The
second quarter was another strong quarter for us, with organic
revenue growth once again coming in above the high end of our 6% -
8% guidance. Our Adjusted EBITDA margin of 37.2% was in-line with
our expectations 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. "Despite
the global economic crisis, we grew the number of claims we
processed around the world year-over-year and increased revenue
per-claim." Business Statistics for the Quarter ended December 31,
2008: -- EMEA revenue for the second quarter of fiscal year 2009
was $80.6 million, a 0.4% decrease over the prior year second
quarter revenue of $80.9 million. After adjusting for the changes
in foreign currency exchange rates, EMEA revenue for the second
quarter of fiscal year 2009 increased 13.5% over the prior year
second quarter. After excluding the approximately $1.0 million in
revenues during the quarter from the acquisition of HPI, Ltd., EMEA
revenue for the second quarter grew approximately 11.8% over the
prior year on an organic basis; -- Americas revenue for the second
quarter of fiscal year 2009 was $50.7 million, a 1.0% decrease over
the prior year second quarter revenue of $51.2 million. After
adjusting for the changes in foreign currency exchange rates,
Americas revenue for the second quarter of fiscal year 2009
increased 5.4% over the prior year second quarter; After excluding
the approximately $0.2 million in revenue during the quarter from
InPart Servicos Ltda., Americas revenue for the second quarter grew
approximately 4.8% over the prior year on an organic basis; --
Revenue from insurance company customers for the second quarter of
fiscal year 2009 was $56.0 million, a 3.7% increase over the $54.0
million in revenue from insurance company customers in the prior
year second quarter. After adjusting for the changes in foreign
currency exchange rates, insurance company customer revenue
increased 13.8% over the prior year second quarter; -- Revenue from
collision repair facility customers for the second quarter of
fiscal year 2009 was $48.8 million, a 2.0% decrease versus the
$49.8 million in revenue from collision repair facility customers
in the prior year second quarter. After adjusting for the changes
in foreign currency exchange rates, collision repair facility
customer revenue increased 11.0% over the prior year second
quarter; -- Revenue from independent assessor customers for the
second quarter of fiscal year 2009 was $12.9 million, a 7.2%
decrease over the $13.9 million in revenue from independent
assessor customers in the prior year second quarter. After
adjusting for the changes in foreign currency exchange rates,
independent assessor customer revenue increased 3.0% over the prior
year second quarter; -- Revenue from automotive recycling and other
customers for the second quarter of fiscal year 2009 was $13.6
million, a 5.1% decrease versus the $14.3 million in revenue from
automotive recycling and other customers in the prior year second
quarter. After adjusting for the changes in foreign currency
exchange rates, automotive recycling and other customer revenue
increased 1.8% over the prior year second quarter; Fiscal Year 2009
Outlook: Since our earnings release on November 5, 2008, (1) the US
Dollar has continued to strengthen appreciably against most foreign
currencies we use to transact our business, and (2) we completed
the acquisition of HPI, Ltd. and InPart Servicos Ltda. As an
example of appreciable strengthening of the US Dollar, on November
4, 2008, one British Pound was equal to approximately $1.60 and on
February 3, 2009, one British Pound was equal to approximately
$1.44. This change from November 4, 2008 to February 3, 2009
represents a strengthening of the US Dollar versus the British
Pound of approximately 10.1%. On December 19, 2008, we announced
the acquisition of HPI, Ltd., the leading UK provider of used
vehicle validation services, and issued a preliminary estimate of
HPI's expected contribution to Fiscal Year 2009 financial results
of approximately $21.0 million in revenues, $9.0 million of
Adjusted EBITDA, $4.0 million of GAAP Net Income, and $4.5 million
of Adjusted Net Income, all at an assumed exchange rate of 1.00
British Pound-for-$1.50 US dollar. Due to the appreciable
strengthening of the US Dollar over the last several months against
both the British Pound and other foreign currencies we use to
transact our business, as well as the completion of the acquisition
of HPI, Ltd., we are updating our previously issued outlook for our
full fiscal year ending June 30, 2009 as follows: Previous Outlook
Current Outlook ---------------- --------------- Revenues $530
million - $535 million $549 million - $553 million Net Income $45
million - $48 million $52 million - $54 million Adjusted Net Income
$103 million - $106 million $106 million - $108 million Adjusted
Net Income per diluted share $1.56 - $1.60 $1.56 - $1.60 Adjusted
EBITDA $197 million - $202 million $204 million - $207 million The
current fiscal year 2009 outlook above assumes constant exchange
rates from 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 (15%), (17%) and
(10%) for our fiscal quarters ending March 31, 2009 and 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 12%, 14% and 8% for our fiscal quarters ending 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 8% for each of our fiscal
quarters ending March 31, 2009 and 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 second quarter
ended December 31, 2008 earnings call on February 4, 2009 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 February 19, 2009. A live audio broadcast
of the call will be accessible to the public by calling (866)
831-6272 or for international callers, (617) 213-8859; please enter
the following access code when prompted: 15154538. 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 February 19, 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:
87460477. SOLERA HOLDINGS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH
PERIODS ENDED DECEMBER 31, 2008 AND 2007 (In thousands, except per
share amounts) (Unaudited) ----------- Three Months Six Months
Ended Ended December 31, December 31, ---------------
---------------- 2008 2007 2008 2007 ---- ---- ---- ---- Revenues
$131,301 $132,089 $274,293 $256,271 -------- -------- --------
-------- Cost of revenues: Operating expenses 30,163 32,987 63,443
65,327 Systems development and programming costs 13,880 16,577
30,137 32,550 ------ ------ ------ ------ Total cost of revenues
(excluding depreciation and amortization) 44,043 49,564 93,580
97,877 ------ ------ ------ ------ Selling, general and
administrative expenses 38,336 37,525 77,070 71,067 Depreciation
and amortization 19,950 23,447 41,186 45,853 Restructuring charges
283 43 754 1,666 Interest expense 9,028 11,721 20,095 22,882 Other
income - net (10,735) (4,610) (14,234) (5,765) ------- ------
------- ------ 56,862 68,126 124,871 135,703 ------ ------ -------
------- Income before income tax provision and minority interests
30,396 14,399 55,842 22,691 Income tax provision 8,763 2,065 17,772
4,942 Minority interest in net income of consolidated subsidiaries
1,988 1,325 4,078 2,886 ----- ----- ----- ----- Net income $19,645
$11,009 $33,992 $14,863 ======= ======= ======= ======= Net income
per share: Basic $0.30 $0.17 $0.52 $0.24 ===== ===== ===== =====
Diluted $0.29 $0.17 $0.52 $0.23 ===== ===== ===== ===== Weighted
average shares used in the calculation of net income per share:
Basic 66,523 63,468 65,456 63,145 ====== ====== ====== ======
Diluted 66,990 64,551 65,990 64,497 ====== ====== ====== ======
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 acquisitions. A reconciliation of our
Adjusted EBITDA to GAAP net income the most directly comparable
GAAP measure, is provided in the attached table. Three Months Six
Months Ended Ended December 31, December 31, ---------------
---------------- 2008 2007 2008 2007 ---- ---- ---- ----
Reconciliation to Adjusted EBITDA Net income $19,645 $11,009
$33,992 $14,863 Add: Income tax provision 8,763 2,065 17,772 4,942
----- ----- ------ ----- Net income before income tax 28,408 13,074
51,764 19,805 Add: Depreciation and amortization 19,950 23,447
41,186 45,853 Add: Interest expense 9,028 11,721 20,095 22,882 Add:
Stock-based compensation expense 1,621 1,039 3,189 1,641 Add:
Restructuring charges 283 43 754 1,666 Add: Other income - net
(10,735) (4,610) (14,234) (5,765) Add: Acquisition related costs
242 339 549 390 --- --- --- --- Adjusted EBITDA $48,797 $45,053
$103,303 $86,472 ======= ======= ======== ======= -- 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. 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 Six
Months Ended December 31, Ended December 31, ---------------
--------------- 2008 2007 2008 2007 ---- ---- ---- ----
Reconciliation to Adjusted Net Income Net income $19,645 $11,009
$33,992 $14,863 Add: Income tax provision 8,763 2,065 17,772 4,942
----- ----- ------ ----- Net income before income tax 28,408 13,074
51,764 19,805 Add: Amortization of acquisition related intangibles
15,070 17,973 30,878 35,285 Add: Stock-based compensation expense
1,621 1,039 3,189 1,641 Add: Restructuring charges 283 43 754 1,666
Add: Other income -- not including interest income FY09 and FY08
(9,439) (4,610) (11,729) (4,153) Add: Acquisition related costs 242
339 549 390 --- --- --- --- Adjusted income before income tax
provision 36,185 27,858 75,405 54,634 Less: Assumed provision for
income taxes at 28% and 33% rate for December 31, 2008 and December
31, 2007, respectively (10,132) (9,193) (21,114) (18,029) -------
------ ------- ------- Adjusted net income $26,053 $18,665 $54,291
$36,605 ======= ======= ======= ======= Adjusted net income per
share: Basic $0.39 $0.29 $0.83 $0.58 ===== ===== ===== =====
Diluted $0.39 $0.29 $0.82 $0.57 ===== ===== ===== ===== Weighted
average shares used in the calculation of adjusted net income per
share: Basic 66,523 63,468 65,456 63,145 ====== ====== ======
====== Diluted 66,990 64,551 65,990 64,497 ====== ====== ======
====== SOLERA HOLDINGS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2008 AND JUNE 30,
2008 (In thousands, except share amounts) December 31, June 30,
2008 2008 ---- ---- Assets Current Assets: Cash and cash
equivalents $173,258 $149,311 Accounts receivable, net 86,056
95,843 Other receivables 10,392 9,784 Other current assets 16,030
18,314 Deferred income tax assets 4,228 4,802 ----- ----- Total
current assets 289,964 278,054 ------- ------- Property and
equipment, net 49,650 49,243 Other Assets 14,927 22,980 Long-term
deferred income tax assets 4,865 5,162 Goodwill 640,785 646,098
Intangible assets, net 350,142 330,218 ------- ------- Total assets
$1,350,333 $1,331,755 ========== ========== Liabilities and
Stockholders' Equity Current Liabilities: Accounts payable $20,557
$32,191 Accrued expenses and other current liabilities 95,359
103,597 Income taxes payable 16,277 12,449 Deferred income tax
liabilities 856 842 Current portion of long-term debt 5,893 6,336
----- ----- Total current liabilities 138,942 155,415 -------
------- Long-term debt 594,123 624,570 Other liabilities 45,152
33,475 Long-term deferred income tax liabilities 51,138 36,558
------ ------ Total liabilities $829,355 $850,018 -------- --------
Minority interests in consolidated subsidiaries 15,504 15,429
Stockholders' equity: Common Shares, $0.01 par value, 150,000,000
shares authorized; 69,435,674 and 64,816,018 issued and
outstanding, as of December 31, 2008 and June 30, 2008,
respectively 600,854 510,900 Accumulated deficit (76,165) (110,157)
Accumulated other comprehensive (loss)/income (19,215) 65,565
------- ------ Total stockholders' equity 505,474 466,308 -------
------- Total liabilities and stockholders' equity $1,350,333
$1,331,755 ========== ========== SOLERA HOLDINGS, INC. AND
SUBSIDIARIES SELECTED STATEMENTS OF CASH FLOWS INFORMATION FOR THE
SIX MONTHS ENDED DECEMBER 31, 2008 and 2007 (In thousands)
(Unaudited) ----------- Six Months ended December 31,
---------------- 2008 2007 ---- ---- Net cash provided by operating
activities $57,859 $47,945 Net cash used in investing activities
(97,876) (10,118) Net cash provided by / (used in) financing
activities 81,841 (24,791) Effect of exchange rate changes (17,877)
4,896 ------- ----- Net increase in cash and cash equivalents
23,947 17,932 Cash and cash equivalents, beginning of period
149,311 89,868 ------- ------ Cash and cash equivalents, end of
period $173,258 $107,800 ======== ======== Supplemental Cash Flow
Information: Cash paid for interest $20,293 $21,912 Cash paid for
income taxes $16,364 $12,260 ------- ------- Supplemental
Disclosure of Non-cash Investing and Finance Activities: Capital
assets financed $485 $2,812 Note payable for acquisition of
business $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, HPI,
Ltd.'s contributions to our consolidated financial performance for
fiscal year 2009 and statements about historical results or
performance, including statements about our organic revenue growth
rates and growth in the number of claims processed 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; risks associated with and possible
negative consequences of acquisitions, including risks associated
with the integration of HPI; joint ventures, divestitures and
similar transactions, including our ability to successfully
integrate HPI; 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 September 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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