Second Quarter Revenue of $163.3 million, up 24.4% on a GAAP Basis
and up 15.2% on a Constant Currency Basis; GAAP Diluted Net Income
Attributable to Solera Holdings, Inc. Per Common Share of $0.33, up
13.5%; Adjusted Net Income per Diluted Common Share of $0.54, up
38.5%; Company Increases Fiscal 2010 Guidance; Company Announces
Quarterly Cash Dividend 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 2010. Results for the Second Quarter Ended December 31, 2009:
GAAP Results: -- Revenue for the second quarter was $163.3 million,
a 24.4% increase over the prior year second quarter revenue of
$131.3 million. After adjusting for changes in foreign currency
exchange rates ("FX Changes"), revenue for the second quarter of
fiscal year 2010 increased by approximately 15.2% over the prior
year second quarter; -- GAAP net income attributable to Solera
Holdings, Inc. for the second quarter was $23.3 million, an 18.5%
increase over the prior year second quarter GAAP net income
attributable to Solera Holdings, Inc. of $19.6 million; -- Diluted
net income attributable to Solera Holdings, Inc. per common share
for the second quarter was $0.33, a 13.5% increase over the prior
year diluted net income attributable to Solera Holdings, Inc. per
common share of $0.29. "Our second quarter performance demonstrates
steady improvement despite continued global economic uncertainty,"
said Tony Aquila, founder, chairman and CEO of Solera Holdings,
Inc. "The combination of our total growth, including revenue
contributions from acquisitions, and our continued operating
discipline, including eliminating waste in our global operations,
allowed us to turn in an Adjusted EBITDA margin of 40.9% - up
approximately 380 basis points over the prior year period."
Non-GAAP Results: -- Adjusted EBITDA for the second quarter was
$66.8 million, a 36.9% increase over the prior year second quarter
Adjusted EBITDA of $48.8 million. After adjusting for FX Changes,
Adjusted EBITDA for the second quarter of fiscal year 2010
increased by approximately 25.7% over the prior year second
quarter; -- Adjusted Net Income for the second quarter was $37.8
million, a 45.1% increase over the prior year second quarter
Adjusted Net Income of $26.1 million; -- Adjusted Net Income per
diluted common share for the second quarter was $0.54, a 38.5%
increase over the prior year second quarter Adjusted Net Income per
diluted common share of $0.39. Business Statistics for the Second
Quarter ended December 31, 2009: -- EMEA revenue was $111.1 million
for the second quarter, representing a 37.9% increase over the
prior year period revenue of $80.6 million. After adjusting for FX
Changes, EMEA revenue for the second quarter increased 26.0% over
the respective prior year period. After excluding HPI, Ltd.'s run
rate revenue from the second quarter, EMEA revenue increased 27.7%
over the prior year period, and after adjusting for FX changes,
increased 16.1% over the prior year period. HPI's run rate revenue
is its GAAP revenue during the three months ended March 31, 2009;
-- Americas revenue was $52.2 million for the second quarter,
representing a 3.0% increase over the prior year period. After
adjusting for FX Changes, Americas revenue for the second quarter
decreased 1.9% versus the prior year period; -- Revenue from
insurance company customers was $ 62.2 million for the second
quarter, representing an 11.2% increase over the prior year period.
After adjusting for FX Changes, revenue from insurance company
customers for the second quarter increased 2.7% over the prior year
period; -- Revenue from collision repair facility customers was
$57.3 million for the second quarter, representing a 17.3% increase
over the prior year period. After adjusting for FX Changes, revenue
from collision repair facility customers for the second quarter
increased 9.0% over the prior year period; -- Revenue from
independent assessors was $15.6 million for second quarter,
representing a 21.0% increase over the prior year period. After
adjusting for FX Changes, revenue from independent assessors for
the second quarter increased 8.1% over the prior year period; --
Revenue from automotive recycling, salvage and other customers was
$28.2 million for the second quarter, representing a 107.7%
increase over the prior year period. After adjusting for FX
Changes, revenue from automotive recycling, salvage and other
customers for the second quarter increased 96.0% over the prior
year period. Updated Fiscal Year 2010 Outlook: We are updating our
previously issued outlook for our full fiscal year ending June 30,
2010 as follows: Previous Fiscal Year Current Fiscal Year 2010
Outlook 2010 Outlook ----------------------------
---------------------------- Revenues $627 million -- $632 million
$629 million -- $632 million Net Income $62 million -- $71 million
$70 million -- $76 million Adjusted Net Income $132 million -- $138
million $136 million -- $141 million Adjusted Net Income per
diluted share $1.89 -- $1.97 $1.94 -- $2.01 Adjusted EBITDA $244
million -- $253 million $248 million -- $255 million The Fiscal
Year 2010 outlook above assumes constant currency exchange rates
from those currently prevailing, no acquisitions, and an assumed
28% tax rate to calculate Adjusted Net Income. Exchange rates
between most of the major foreign currencies we use to transact our
business and the U.S. dollar have fluctuated significantly over the
last few years, and we expect that they will continue to fluctuate
during the remainder of fiscal year 2010. The majority of our
revenues and costs are denominated in Euros, Pound Sterling, Swiss
francs, Canadian dollars and other international currencies. The
following table provides the average quarterly exchange rates for
the Euro and Pound Sterling versus the U.S. dollar since the
beginning of fiscal year 2009: Average Average Euro- Pound-to-
to-Dollar Dollar Exchange Exchange Period Rate Rate
-------------------------------------- ------------- ----------
Quarter ended September 30, 2008 $1.51 $1.90 Quarter ended December
31, 2008 1.32 1.58 Quarter ended March 31, 2009 1.31 1.44 Quarter
ended June 30, 2009 1.36 1.55 Quarter ended September 30, 2009 1.43
1.64 Quarter ended December 31, 2009 1.48 1.63 During second
quarter of fiscal year 2010 as compared to the prior year second
quarter, the U.S. dollar weakened against most major foreign
currencies we use to transact our business. For example, the
average U.S. dollar weakened against the Euro by 12.1%, and the
average U.S. dollar weakened against the Pound Sterling by 3.7%.
This weakening of the U.S. dollar had a positive comparable impact
on our revenues, but a negative comparable impact on our expenses
for second quarter of fiscal year 2010 as compared to the prior
year second quarter. A hypothetical 5% increase or decrease in the
U.S. dollar versus other currencies in which we transact our
business would have resulted in an approximately $6.4 million
change to our revenues during the second quarter of fiscal year
2010. All percentage amounts and ratios were calculated using the
underlying data in whole dollars. We measure constant currency, or
the effects on our results that are attributed to FX Changes, by
measuring the incremental difference between translating the prior
period and the current results at the monthly average rates for the
same period from the prior year. Quarterly Dividend: The Audit
Committee of the Board of Directors has approved a quarterly cash
dividend of $0.0625 per share of outstanding common stock and per
outstanding restricted stock unit. The dividend will be payable on
March 22, 2010 to stockholders and restricted stock unit holders of
record at the close of business on February 22, 2010. Earnings
Conference Call: We will host our second quarter ended December 31,
2009 earnings call today at 5:00 p.m. (Eastern Time) - February 4,
2010. The conference call will be webcast live in listen-only mode
and can be accessed by visiting the Investor Relations section of
the Solera website: http://www.solerainc.com/. A webcast replay
will be available on the website until midnight on February 18,
2010. A live audiocast will also be accessible to the public by
calling (800) 591-6923 or from outside the U.S., (617) 614-4907.
When prompted, the following access code is required: 84140425.
Callers should dial in approximately 10 minutes before the call
begins. For those unable to participate in the live audiocast, a
replay will be available until midnight on February 18, 2010. 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:
45481646. SOLERA HOLDINGS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS
ENDED DECEMBER 31, 2009 AND 2008 (In thousands, except per share
amounts) (Unaudited) Three Months Ended Six Months Ended December
31, December 31, --------------- ---------------- 2009 2008 2009
2008 ---- ---- ---- ---- Revenues $163,318 $131,301 $314,087
$274,293 -------- -------- -------- -------- Cost of revenues :
Operating expenses 33,718 30,163 66,689 63,209 Systems development
and programming costs 18,850 13,747 35,498 30,004 ------ ------
------ ------ Total cost of revenues (excluding depreciation and
amortization) 52,568 43,910 102,187 93,213 Selling, general and
administrative expenses 43,463 38,212 81,799 76,872 Depreciation
and amortization 22,685 19,950 44,320 41,186 Restructuring charges,
asset impairments, and other costs of exit or disposal activities
1,731 283 3,460 754 Acquisition-related costs 524 257 2,138 564
Interest expense 8,610 9,028 17,374 20,095 Other (income) expense,
net 150 (10,735) 564 (14,233) --- ------- --- ------- 129,731
100,905 251,842 218,451 ------- ------- ------- ------- Income
before income tax provision 33,587 30,396 62,245 55,842 Income tax
provision 7,908 8,763 14,439 17,772 ----- ----- ------ ------ Net
income 25,679 21,633 47,806 38,070 Less: Net income attributable to
noncontrolling interest 2,401 1,988 4,545 4,078 ----- ----- -----
----- Net income attributable to Solera Holdings, Inc. $23,278
$19,645 $43,261 $33,992 ======= ======= ======= ======= Net income
attributable to Solera Holdings, Inc. per common share: Basic $0.33
$0.29 $0.62 $0.51 ===== ===== ===== ===== Diluted $0.33 $0.29 $0.62
$0.51 ===== ===== ===== ===== Dividends per share $0.06 $- $0.13 $-
===== === ===== === Weighted average shares used in the calculation
of net income attributable to Solera Holdings, Inc. per common
share: Basic 69,469 66,523 69,380 65,456 ====== ====== ======
====== Diluted 69,693 66,538 69,526 65,507 ====== ====== ======
====== 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 common share. We believe that Adjusted EBITDA,
Adjusted Net Income and Adjusted Net Income per diluted common
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 common
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 common 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 common 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 common 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 common share as supplemental information. -- Adjusted
EBITDA is a non-GAAP financial measure that represents GAAP net
income attributable to Solera Holdings, Inc., excluding (i)
interest expense, (ii) provision for income taxes, (iii)
depreciation and amortization, (iv) stock-based compensation
expense, (v) restructuring charges, asset impairments, and other
costs associated with exit or disposal activities, (vi) other
(income) expense, net and (vii) acquisition-related costs.
Acquisition-related costs include legal and professional fees and
other transaction costs associated with completed and contemplated
business combinations and asset acquisitions, costs associated with
integrating acquired businesses, including costs incurred to
eliminate workforce redundancies and for product rebranding, other
charges incurred as a direct result of our acquisition efforts. As
a result of our adoption of Statement of Financial Accounting
Standards No. 141(R), Business Combinations, in fiscal year 2010,
acquisition-related costs in the current period include legal and
professional fees and other transaction costs associated with
completed acquisitions, whereas in periods prior to our adoption of
SFAS No. 141(R), legal and professional fees and other transaction
costs associated with completed acquisitions were included in the
determination of the purchase price and capitalized in the balance
sheet. A reconciliation of our Adjusted EBITDA to GAAP net income
attributable to Solera Holdings, Inc., the most directly comparable
GAAP measure, is provided in the attached table. Three Months Ended
Six Months Ended Dec 31, Dec 31, --------------- ----------------
2009 2008 2009 2008 ---- ---- ---- ---- Reconciliation to Adjusted
EBITDA: Net income attributable to Solera Holdings, Inc. $23,278
$19,645 $43,261 $33,992 Add: Income tax provision 7,908 8,763
14,439 17,772 ----- ----- ------ ------ Net income attributable to
Solera Holdings, Inc. before income tax provision 31,186 28,408
57,700 51,764 Add: Depreciation and amortization 22,685 19,950
44,320 41,186 Add: Restructuring charges, asset impairments and
other costs of exit or disposal activities 1,731 283 3,460 754 Add:
Acquisition-related costs 524 257 2,138 564 Add: Interest expense
8,610 9,028 17,374 20,095 Add: Other (income) expense, net 150
(10,735) 564 (14,233) Add: Stock-based compensation expense 1,945
1,621 3,433 3,189 ----- ----- ----- ----- Adjusted EBITDA $66,831
$48,812 $128,989 $103,319 ======= ======= ======== ======== --
Adjusted Net Income is a non-GAAP financial measure that represents
GAAP net income attributable to Solera Holdings, Inc., excluding
(i) provision for income taxes, (ii) amortization of
acquisition-related intangibles, (iii) stock-based compensation
expense, (iv) restructuring charges, asset impairments, and other
costs associated with exit or disposal activities, (v) other
(income) expense, net and (vi) acquisition-related costs. From this
figure, we then subtract an assumed provision for income taxes to
arrive at Adjusted Net Income. We assume a 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 a certain corporate holding company. A
reconciliation of our Adjusted Net Income to GAAP net income
attributable to Solera Holdings, Inc., the most directly comparable
GAAP measure, is provided in the attached table. -- Adjusted Net
Income per diluted common 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 used in the
calculation of GAAP net income attributable to Solera Holdings,
Inc. per diluted common share. A reconciliation of our Adjusted Net
Income per diluted common share to GAAP net income attributable to
Solera Holdings, Inc. per diluted common share, the most directly
comparable GAAP measure, is provided in the attached table. Three
Months Ended Six Months Ended Dec 31, Dec 31, -----------------
----------------- 2009 2008 2009 2008 ---- ---- ---- ----
Reconciliation to Adjusted Net Income: Net income attributable to
Solera Holdings, Inc. $23,278 $19,645 $43,261 $33,992 Add: Income
tax provision 7,908 8,763 14,439 17,772 ----- ----- ------ ------
Net income attributable to Solera Holdings, Inc. before income tax
provision 31,186 28,408 57,700 51,764 Add: Amortization of
acquisition-related intangibles 16,598 15,070 32,369 30,878 Add:
Restructuring charges, asset impairments and other costs of exit or
disposal activities 1,731 283 3,460 754 Add: Acquisition-related
costs 524 257 2,138 564 Add: Other (income) expense, not including
interest income 531 (9,439) 1,383 (11,728) Add: Stock-based
compensation expense 1,945 1,621 3,433 3,189 ----- ----- -----
----- Adjusted Net Income before income tax provision 52,515 36,200
100,483 75,422 Less: Assumed provision for income taxes at 28%
(14,704) (10,136) (28,135) (21,118) ------- ------- ------- -------
Adjusted Net Income $37,811 $26,064 $72,348 $54,303 ======= =======
======= ======= Adjusted Net Income per share: Basic $0.54 $0.39
$1.04 $0.83 ===== ===== ===== ===== Diluted $0.54 $0.39 $1.04 $0.83
===== ===== ===== ===== Weighted average shares used in the
calculation of GAAP net income attributable to Solera Holdings,
Inc. and Adjusted Net Income per share: Basic 69,469 66,523 69,380
65,456 ====== ====== ====== ====== Diluted 69,693 66,538 69,526
65,507 ====== ====== ====== ====== SOLERA HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER
31, 2009 AND JUNE 30, 2009 (In thousands, except per share amounts)
December 31, June 30, 2009 2009 (Unaudited) (Unaudited)(1)
----------- ------------ Assets Current Assets: Cash and cash
equivalents $204,452 $223,420 Short term investments - 11,941
Accounts receivable, net 95,649 98,565 Other receivables 14,486
12,177 Other current assets 19,930 19,550 Deferred income tax
assets 4,300 4,392 ----- ----- Total current assets 338,817 370,045
Property and equipment, net 58,346 50,784 Goodwill 735,386 651,099
Intangible assets, net 318,708 322,843 Other noncurrent assets
12,937 13,660 Noncurrent deferred income tax assets 8,447 10,178
----- ------ Total assets $1,472,641 $1,418,609 ==========
========== Liabilities and Stockholders' Equity Current
Liabilities: Accounts payable $20,549 $30,447 Accrued expenses and
other current liabilities 99,280 104,414 Income taxes payable 8,212
17,462 Deferred income tax liabilities 523 1,037 Current portion of
long-term debt 6,004 5,880 ----- ----- Total current liabilities
134,568 159,240 Long-term debt 595,773 592,200 Other noncurrent
liabilities 34,278 36,935 Noncurrent deferred income tax
liabilities 58,507 53,965 ------ ------ Total liabilities 823,126
842,340 Redeemable noncontrolling interests 97,704 92,012
Stockholders' equity: Solera Holdings, Inc. stockholders' equity:
Common Shares, $0.01 par value, 150,000 shares authorized; 69,823
and 69,531 issued and outstanding, as of December 31, 2009 and June
30, 2009, respectively 548,663 526,547 Accumulated deficit (17,824)
(52,332) Accumulated other comprehensive income 14,521 3,113 ------
----- Total Solera Holdings, Inc. stockholders' equity 545,360
477,328 Noncontrolling interests 6,451 6,929 ----- ----- Total
stockholder's equity 551,811 484,257 ------- ------- Total
liabilities and stockholders' equity $1,472,641 $1,418,609
========== ========== (1) Derived from audited consolidated
financial statements as of June 30, 2009. SOLERA HOLDINGS, INC. AND
SUBSIDIARIES SELECTED STATEMENTS OF CASH FLOWS INFORMATION FOR THE
SIX MONTHS ENDED DECEMBER 31, 2009 and 2008 (In thousands)
(Unaudited) Six Months Ended December 31, ---------------- 2009
2008 ---- ---- Net cash provided by operating activities $68,980
$57,859 Net cash used in investing activities (84,803) (97,876) Net
cash provided by (used in) financing activities (11,160) 81,841
Effect of exchange rate changes 8,015 (17,877) ----- ------- Net
change in cash and cash equivalents (18,968) 23,947 Cash and cash
equivalents, beginning of period 223,420 149,311 ------- -------
Cash and cash equivalents, end of period $204,452 $173,258 ========
======== Supplemental Cash Flow Information: Cash paid for interest
$17,395 $20,293 Cash paid for income taxes $24,351 $16,364
Supplemental Disclosure of Non-cash Investing and Finance
Activities: Capital assets financed $3,691 $485 Notes payable from
acquisitions of businesses $- $17,330 Accrued contingent purchase
consideration $4,330 $- 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 and Greece, Sidexa in France, ABZ in The
Netherlands, HPI in the United Kingdom, Hollander serving the North
American recycling market, AUTOonline providing salvage disposition
in a number of European countries and Mexico, 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
expectations regarding changes in foreign currency exchange rates,
our business outlook for fiscal year 2010, and statements about
dividends, historical results or performance 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, our sales cycle,
seasonality and other factors; 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 or AUTOonline; 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; effects of changes in or
violations by us or our customers of government regulations; costs
and possible future losses or impairments relating to our
acquisitions; the financial impact of future significant
restructuring and severance charges; the impact of changes in our
tax provision (benefit) or effective tax rate; 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; our ability to
pay dividends in future periods; our reliance on third-party
information for our software and services; effects of system
failures or security breaches on our business and reputation; 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, 2009. Solera is under no obligation to
(and specifically disclaims any such obligation to) update or alter
its 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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