D+H Reports Solid Third Quarter 2014 Earnings and Announces Quarterly Dividend

Third Quarter Highlights:

  • Revenues of $289 million, up 38% 
  • Net income of $32 million, up 365%
  • Net income per share of $0.40, up 300%
  • Quarterly dividend of $0.32 per share
  • Adjusted revenues1 of $292 million, up 30%
  • Adjusted EBITDA1 of $93 million, up 43%
  • Adjusted net income1 of $50.6 million, up 38%
  • Adjusted net income per share1 of $0.63, up 19%

TORONTO, October 27, 2014 /CNW/ - DH Corporation (TSX:DH) ("D+H" or the "Company"), a leading provider of technology solutions to domestic and global financial institutions, today reported its financial results for the three and nine months ended September 30, 2014. 

"We are pleased to report another solid quarter and nine months reflecting continued growth from our acquisitions coupled with organic growth" said Gerrard Schmid, Chief Executive Officer.  "Our strategic acquisitions and notably the Harland Financial Solutions acquisition from just over a year ago, are now well integrated and instrumental in the execution of our strategy of geographic, product and revenue diversification and growth. Our banking technology solutions now represent 48% of our Adjusted revenues and 42% of our Adjusted revenues are now generated from our U.S. businesses."

Third Quarter and Nine Months Highlights 

Growth in the third quarter and first nine months, compared to the same periods in the prior year, was primarily driven by the addition of Harland Financial Solutions ("HFS") and also by solid performance and organic growth in D+H's Canadian and U.S. businesses.

  • Revenues from continuing operations increased 38% to $289.2 million from $209.2 million in the same quarter in 2013. For the first nine months of the year revenue from continuing operations increased 46% to $841.5 million from $578 million in the same prior year period. After eliminating the impact of foreign exchange, revenues increased 35% for the third quarter and 41% for the first nine months of 2014.

  • Adjusted revenues totalled $292 million, an increase of $66.7 million, or 30%, over the same quarter in 2013.  Adjusted revenues for the first nine months totalled $859.9 million, an increase of $265.8 million, or 45%, compared to the same prior year period. Excluding impacts of foreign exchange, Adjusted revenues increased 27% and 40%, respectively, for the third quarter and year to date.

  • Adjusted EBITDA increased 43% to $92.6 million (32% margin) from $64.8 million (29% margin) compared to the same quarter in 2013. For the first nine months, Adjusted EBITDA increased 59%  to $264.3 million (31% margin) from $166.2 million (28% margin) compared to the same prior year period. Excluding the impact of foreign exchange, Adjusted EBITDA increased 40% and 53% for the third quarter and first nine months, respectively.

  • Net income increased to $32.2 million ($0.40 per share, basic and diluted), from $6.9 million ($0.10 per share, basic and diluted) compared to the same quarter in 2013. Net income for the first nine months totalled $74.1 million ($0.92 per share, basic and diluted), an increase of $47.8 million, or 182%, compared to $26.3 million ($0.42 per share, basic and diluted) in the same prior year period.

  • Adjusted net income increased 38% to $50.6 million from $36.7 million in the same quarter in 2013. Adjusted net income per share increased 19% to $0.63 from $0.52 in the same quarter in 2013. For the first nine months of 2014 Adjusted net income increased 50% to $140.9 million from $94 million in the same period in the prior year and Adjusted net income per share increased 17% to $1.74 from $1.50.

  • Debt repayment during the third quarter of 2014 was $5 million, resulting in a September 30, 2014 Debt to EBITDA ratio of 2.79. This ratio, after eliminating the impact of non-cash foreign exchange volatility, was 2.64. Debt repayments net of drawings during the first nine months of 2014 totalled $15 million.

  • Cash generated from operating activities totalled $72.2 million dollars, an increase of 24% or $13.8 million dollars over the same quarter in 2013. For the first nine months of the year cash generated from operations totalled $204.7 million, an increase of 59% or $76.3 million over the same prior year period. Cash from operations during the quarter was utilized to pay cash interest and taxes, repay debt, invest in internally developed software and pay dividends. Cash and cash equivalents as at September 30, 2014 totalled $13.6 million.

  • D+H climbed to 24th place from 33rd in 2013 on the IDC Financial Insights 2014 FinTech Rankings (formerly known as the FinTech 100).

1 Non-IFRS measure. See the "Use of Non-IFRS Financial Information" section of this press release for further details.

Third Quarter and Nine Months 2014 Highlights





Selected Financial Information

(C$ Millions unless otherwise indicated, unaudited)

Quarter ended

September 30

Nine months ended

September 30

2014

2013

2014

2013

Revenues

$289.2

$209.2

$841.5

$578.0

Adjusted revenues1

$292.0

$225.3

$859.9

$594.1

EBITDA1

$88.5

$36.7

$245.3

$131.3

Adjusted EBITDA1

$92.6

$64.8

$264.3

$166.2

Adjusted EBITDA margin1

32%

29%

31%

28%

Net income

$32.2

$6.9

$74.1

$26.3

Adjusted net income1

$50.6

$36.7

$140.9

$94.0

Net income per share (C$)

$0.40

$0.10

$0.92

$0.42

Adjusted net income per share1 (C$)

$0.63

$0.52

$1.74

$1.50







Quarter ended September 30

Adjusted revenues1 

by Country and Service Area2

(C$ Millions, unaudited)

Canada

U.S.

Consolidated

2014

2013

2014

2013

2014

2013


Payments solutions

76.4

76.1

-

-

76.4

76.1


Lending processing solutions

76.8

73.0

-

-

76.8

73.0


Banking technology





Lending

15.6

15.7

65.7

37.3

81.3

52.9



Enterprise

-

-

57.5

23.2

57.5

23.2

Total Adjusted revenues1

$168.8

$164.8

$123.2

$60.5

$292.0

$225.3































Nine months ended September 30

Adjusted revenues1 

by Country and Service Area2

(C$ Millions, unaudited)

Canada

U.S.

Consolidated

2014

2013

2014

2013

2014

2013


Payments solutions

227.4

228.4

-

-

227.4

228.4


Lending processing solutions

220.0

214.3

-

-

220.0

214.3


Banking technology





Lending

40.3

40.6

201.8

79.2

242.1

119.8



Enterprise

-

-

170.5

31.6

170.5

31.6

Total Adjusted revenues1

$487.7

$483.3

$372.2

$110.8

$859.9

$594.1








1Non-IFRS measure. See the "Use of Non-IFRS Financial Infomation" section of this press release for further details.

2Totals may not add due to rounding.


SUBSEQUENT EVENTS

Dividend

DH Corporation today announced that its Board of Directors has declared a quarterly dividend of $0.32 per common share payable on December 31, 2014 to shareholders of record at the close of business on November 28, 2014. The dividend is an eligible dividend for Canadian income tax purposes.

OUTLOOK

For further information on management's outlook and view on the business environment please refer to the "Outlook" section in the MD&A for the three and nine months ended September 30, 2014.

The selected financial information included in this release is qualified in its entirety by, and should be read together with the Unaudited Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2014 and 2013 and the Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2014, which can be found at www.dhltd.com and in the disclosure documents filed by the Company with the securities regulatory authorities at www.sedar.com.

MANAGEMENT CONFERENCE CALL AND WEBCAST

Teleconference:

A conference call to review these financial results, including a presentation will take place at 10:00 a.m. (EDT) on Tuesday, October 28, 2014 hosted by Gerrard Schmid, Chief Executive Officer and Karen H.  Weaver, Chief Financial Officer. To access the call please dial 647-427-7450 (Local/Int'l) or 1-888-231-8191 (toll-free within North America).  A replay of the call will also be available until November 11, 2014 by dialing 416-849-0833 (Local/Int'l) or 1-855-859-2056 (toll-free within North America), with Encore Password 10276078.

Webcast:

To access the webcast and presentation please go to the CNW website at: http://event.on24.com/r.htm?e=876142&s=1&k=5509B180F90DEC7A4A6AE4DAEE9E73EB. The webcast will be archived for 30 days after the call. The link to the webcast is also available in the Conference Calls section of the D+H website at http://dhltd.com/investors/events-presentations/conference-calls/.  The presentation, entitled Q3 2014 Earnings Call, will also be available for download on the D+H website at http://dhltd.com/investors/events-presentations/presentations/.

ABOUT D+H

D+H is a leading provider of secure and reliable technology solutions to domestic and global financial institutions with a reputation for being a trusted partner that helps clients build deeper, more profitable relationships with their customers based on rich industry and market insight, and consumer knowledge. Today, approximately 7,000 financial institutions including major banks, community banks, credit unions and specialty lenders rely on D+H to deliver solutions across three broad service areas: Banking Technology Solutions, Lending Processing Solutions and Payments Solutions. Our integrated, compliant technology solutions enable clients to grow, compete and optimize their operations, while our forward looking approach helps them stay ahead of the market and anticipate changing consumer needs. D+H is one of the world's top FinTech companies as measured on IDC Financial Insights FinTech Rankings.

USE OF NON-IFRS FINANCIAL INFORMATION

D+H's financial results are prepared in accordance with International Financial Reporting Standards ("IFRS").  D+H reports several non-IFRS financial measures, including EBITDA, EBITDA margin, Adjusted revenues, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income per share mentioned above.  See "Non-IFRS Financial Measures" in D+H's MD&A for the three and nine months ended September 30, 2014 for a more complete description of these terms and for a reconciliation to their most directly comparable IFRS measures, where applicable. Any non-IFRS financial measures should be considered in context with the IFRS financial statement presentation and should not be considered in isolation or as a substitute for IFRS revenues, net income or cash flows. Further, D+H's financial measures may be calculated differently from similarly titled financial measures of other companies.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning D+H's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would", "could", "should", "continue", "goal", "objective", and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 

D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause D+H's actual results, performance or achievements, or developments in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.

Risks related to forward-looking statements include, among other things, increased pricing pressures and competition which could lead to loss of contracts or reduced margins; the Company's ability to comply with regulations; the Company's ability to deliver products and services in line with the changes in the United States of America ("U.S.") banking and financial services industry; the Company's ability to avoid inherent risks in the technology industry related to cyber-security threats and breaches; the Company's dependence on a limited number of large financial institution customers in Canada and dependence on their acceptance of new programs; declines in the use of personal and business cheques; strategic initiatives being undertaken to grow our business and increase profitability; stability and growth in the real estate, mortgage and lending markets; the Company's ability to generate cash to invest in the business and at the same time be able to pay dividends and debt repayments; as well as general market conditions, including economic, foreign exchange and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The documents referenced herein also identify additional factors that could affect the operating results and performance of the Company. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and D+H does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.

All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.

REGULATORY FILINGS AND ADDITIONAL INFORMATION

DH Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found at www.dhltd.com and in the disclosure documents filed by DH Corporation with the securities regulatory authorities at www.sedar.com

SOURCE DH Corporation