Q4 2021 SS&C Technologies Holdings Inc Earnings Call
Ladies and gentlemen, this is the operator, thank you for standing by. Today's conference call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience.
[music].
Okay.
Good afternoon. Thank you for standing by. My name is Brent and I will be your conference operator today.
At this time I would like to welcome everyone to the SS&S Technologies' fourth quarter and full year 2021 earnings conference call.
All lines have been placed on mute to prevent any background noise.
After the speakers' remarks, there will be a question and answer session.
If you'd like to ask a question at that time simply press star followed by the number one on your telephone keypad.
If you'd like to withdraw your question, again press star one. Thank you.
It's now my pleasure to turn today's call over to Justine Stone, Head of Investor Relations. Please go ahead, ma'am.
Hi, everyone welcome and thank you for joining us for our fourth quarter and full-year 2021 earnings call. I'm Justine Stone, Investor relations for SS&C Technologies.
With me today is Bill Stone, Chairman and Chief Executive Officer, Rahul Kanwar, President and Chief Operating Officer, and Patrick Pedonti, Our Chief Financial Officer. Before we get started, we need to review the Safe Harbor statement. Please note that various remarks, we make today about future expectations plans and prospects, including the financial outlook. We provide constitute forward-looking statements for the purposes of the Safe Harbor.
Provision under the private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent annual report on Form 10-K, which is on file with the SEC and can also be accessed on our website.
These forward-looking statements represent our expectations only as of today February 10th 2021, while the company may elect to update these forward-looking statements. It specifically disclaims any obligation to do so.
During today's call, we will referring to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures comparable GAAP financial measures is included in today's earnings release, which is located in the Investor Relations section of our website at www.ss&ctec.com.
In the third quarter of 2021, we entered into a joint venture named DomaniRx LLC, which we are the majority interest holder and primary beneficiary. All earnings figures discussed today, including operating income EBITDA, net income and EPS are attributable to SS&C based on the ownership interests retained by SS&C.
Bye.
I will now call the turn over to Bill.
Thanks, Justine and thanks, everyone for joining.
Our results for the fourth quarter are $1.96 billion in adjusted revenue up 7.5% and $1.28, and adjusted diluted earnings per share up 13.3%.
For the year adjusted revenue was 5 billion $58.9 million.
$58.9 million up 8.1% and adjusted diluted EPS was $5.02.
Billion 58, $9 million up eight 1% and adjusted diluted EPS was $5 <unk>.
Up 16.7%.
Adjusted consolidated EBITDA was $522.9 million for the quarter and our EBITDA margin was 43%.
Our fourth quarter adjusted organic revenue was up 6.9%.
Ahead of our expectations.
Our alternative interlinked businesses interlinked businesses continue to drive our topline growth.
Growing at 12.9 and 23% respectively.
Growing at 12.9 and 23% respectively.
Respectively.
As I mentioned in our earnings press release, a pandemic and its impact on our labor force and put pressure on our Cogs.
Much of our R&D efforts are diverted towards automation and efficiency in our services business.
And these productivity gains should counteract.
The pressure from higher labor costs.
At the same time.
The great resignation is drawing attention at the highest levels of fund companies, causing many to consider third party administrators.
This creates opportunity.
We continue to see shifts in tower across.
Across the industry.
First within house operations cannot hire talent fast enough.
And our competitors are not able to replace talent or meet the needs of scaling their businesses.
We see this phenomenon worldwide and we expect it to be a catalyst for outsourcing services as well as clients being willing to invest in technology.
2021 was a record breaking a record breaking year for M&A propelling, our interlink business to new heights, while our execution generated market share gains.
Well eliminate volumes topped five trillion for the first time ever.
Comfortably eclipsing the previous record of $4.55 trillion.
Based on publicly announced deals we gained 5% market share in the M&A market.
Our current forecast based on a survey of over 300 dealmakers and a majority expected level of M&A activity to increase in 2022.
SS&C generated net cash from operating activities of $1.429 billion for the 12 months ended December 31st 2021.
Up 20.6% or $244 million from 2020.
We paid down $519.9 billion in debt in 2021, and our leverage ratio stands at 1.72 secured and $2.69 totalled.
Our shareholder [frankly] capital allocation strategy remains a top priority.
<unk> capital allocation strategy remains a top priority.
In 2021, we bought back $6.8 million shares at an average price of $71.74 per share for a total of $487.9 million.
We were restricted from buying back stock in Q4, '21, due to material nonpublic information related to the Blue Blue Prism acquisition.
In November the board approved a 25% increase in our quarterly dividend payout now at 20 cents per share.
We are still limited to what we can say regarding the Blue Prism acquisition. We have made good progress with regulatory approvals and expect to close in Q1 or Q2.
For more background on this acquisition and information on our strategic rationale. Please refer to our scheme document.
For more background on this acquisition and information on our strategic rationale. Please refer to our scheme document.
Ground on this acquisition and information on our strategic rationale. Please please refer to our scheme document.
I'll now turn the call over to Rahul to discuss the quarter in more detail.
Thanks, Bill.
Sales execution, market strength and collaboration across our business units have been key drivers to this year's performance our business performed extremely well and we've made great progress on new technology, which will set us up for further success.
We continue to focus on innovation and algorithm makes our clients front office operations can now achieve nanosecond response times for pre-trade deal checks.
Algorithmic integration with singularity.
Have led to new wins and increased pipeline.
Chorus, our automated workflow solution has released a new workforce optimization tool focused on in office remote and hybrid management to improve productivity and provide insights.
Newly created SS&C Cross suite, combining black Diamond Trust under a single contract in commercial model was sold to the first client.
On the health care front, DomaniRx has been making great strides.
In building a cloud native API driven claims adjudication platform.
Now I will mention some key deals for Q4, a top health insurance company chose singularity outsourcing services for their investment accounting operations.
$8 billion in AUM hedge fund chose a suite of global ops middle and back-office services, citing our ownership with technology as a key component to the win.
A premier financial services firm chose our mutual fund sub accounting and all serve solution to efficiently scale and grow their new business.
$4.5 billion AUM asset manager based in Kuwait chosen sweet of advent Geneva products.
Our $7.5 billion AUM Trust company chose a suite of AD been cloud delivery products due to our overall solution for equity and fixed income.
And New York based hedge fund with a firm wide objective to move to the cloud upgraded their trading operations to add the clips.
The pension and investment arm of one of the Canadian provinces chose to upgrade to our newest investment accounting solution Aloha.
A large Malaysia insurer also chose Aloha and our vision reporting solution I will now turn it over to Patrick to run through the financials.
Thank you.
Results for the fourth quarter 2021 were GAAP revenues of $1,294,000,000.2.
$294 2 million.
GAAP net income of 250.9 million and diluted EPS of 94 cents cents.
Adjusted revenues were $1,296,000,000.2, including the impact of the adoption of the revenue side of 606 and for acquired deferred revenue adjustments.
For acquisitions.
Adjusted revenue was up 7.5%. Adjusted operating income increased 10.6% and adjusted EPS was $1.28.
A 13.3 increase over Q4 of 2020.
Revenue showed strong growth with strengths across several product lines, including the alternative asset business.
Advent, Alps brokerage and the interlinked businesses.
Adjusted revenue increased $90.1 million or 7.5% over Q4 2020.
Our acquisitions contributed $10.5 million in the quarter.
Foreign exchange had a favorable impact of .8 million.
Or .1% in the quarter.
Adjusted organic revenue increased on a constant currency basis was 6.9% in quarter.
Adjusted operating income for the fourth quarter was.
507.5 million, an increase of $48.7 or 10.6% in the fourth quarter of 2020.
Adjusted operating margins increased from 38% in the fourth quarter of 2020 to 39.2% in the fourth quarter of 2021.
Driven by revenue growth and cost controls.
Expenses increased 4.2% on a constant currency basis. Acquisitions added $8.6 million of expenses and foreign currency increased costs by $.7 million.
Adjusted consolidated EBITDA defined in note three of our earnings release was $522.9 million or
43% of adjusted revenue.
An increase of $47.1 million or 9.9% from Q4 2020.
Net interest expense for the quarter was $49 million and includes $3.2 million of noncash.
Amortize financing costs and OID.
The average interest rate in the quarter.
For our credit facility.
Including on senior notes was 3.09% compared to 2.99%.
In the fourth quarter of 2020.
A reduction in the debt balance resulted in interest expense decrease of $4.1 million or 8%.
Adjusted net income defined in note four of our earnings release was $341.3 million.
And adjusted EPS was $1.23.
And the effective tax rate used for adjusted net income was 26%.
Diluted shares increased $267 million from $266.5 million in Q3.
As a result of an increase in the average share price and option exercises.
Okay.
On our balance sheet and cash flow, we ended the fourth quarter with $564 million of cash and cash equivalents and 6 billion of gross debt.
SS&C's net debt as defined in our credit agreement.
Which [so it is] cash and cash equivalents of $139 5 million held by the DomaniRx LLC was 5.6 billion as of the end of the year.
So it is cash and cash equivalents of $139 5 million held by the mining Rx LLC was five six.
Bill again as well.
At the end of the year.
Operating cash flow for the 12 months was $1,429,000,000.
A $244 million or 20.6% increase compared to 2020.
And for the 12 months ended December 31st.
For the full year, we allocated proportionally our free cash flow to both stock buybacks and debt payments.
Treasury stock buybacks were $487.9 million for purchases of 6.8 million shares.
At an average price of $71.74 per share.
That compares to $227.7 million of Treasury buybacks in 2020.
In July 2021, the board authorized a new stock repurchase program for up to $1 billion in stock buybacks.
We have approximately $837 million remaining on the authorization.
Net debt payments were $519.9 million.
Compared to $738.2 million in 2020.
We declared and paid $174 million of common stock dividends as compared to $136.1 million last year, an increase of 27.8%.
For the full year, we paid income taxes of $310.4 million.
And that compares to the $244.4 million in 2020.
Our accounts receivable DSO was down to 49.5 days compared to 50.8 days as of September 21.
Our accounts receivable DSO was down to 49.5 days compared to 50.8 days as of September 21.
And 48.4 days as of December 2020.
Capital expenditures and capitalized software was $136.6 million.
Which is about 2.7% of adjusted revenue compared to $106.4 million in 2020.
Spending was predominantly for capitalized software and IT infrastructure.
Option exercise of proceeds for the year were $197.7 million for 5 million shares.
Compared to $189.7 million for 6.3 million shares last year.
Our consolidated EBITDA, which are used for our covenant compliance was $2,066,000,000.
$66 million.
And includes $1.3 million of acquired EBITDA and cost savings related to our acquisition.
And based on net debt of $5.6 million.
Total leverage ratio was 2.69 times.
And our secured ratio was 1.72 times.
On our outlook for the year, I'll first cover some high-level assumptions.
As we're focusing on client services, we expect retention rates to continue to be in the range of most recent results.
Pending acquisitions are not included in our current 2022 guidance.
We have assumed foreign currency exchange will be at the current levels.
As a result of jet adjusted organic growth for the year will be in the range of 2% to 6%.
And adjusted organic growth for Q1 will be in the range of 1.9% to 5.1%.
On interest rates, we have assumed for the near term it will be a 30 day LIBOR plus.
Plus a spread of 175 bps.
In midyear in the latter part of the year, we've assumed the three to six months LIBOR plus the spread.
We expect staff cost to increase due to continued wage inflation and we will manage our expenses during this period by controlling variable expenses to maintain our operating margins.
And we will continue to invest in our business with capital expenditures of approximately 2.8% of revenue.
Our free cash flow will continue to.
Allocate both to debt pay down and stock buybacks.
And we expect the adjusted tax rate to continue to be approximately 26%.
The adjusted tax rate to continue to be approximately 26%.
So for the first quarter of 2022, we expect revenue to be in the range of $1,258,000,000.
To 1,298,000,000. Adjusted net income in the range of $326 million.
To $343.5 million.
Diluted shares in the range of $268.3 million to $267.8 million.
For the full year of 2022, we expect revenue in the range of $5,130,000,000 to $5,330,000,000.
Adjusted net income in the range of $1,375,000,000 to $1,445,000,000.
And diluted shares in the range of 269.5 to 267.5 million.
And on operating cash flow, we expect the full year to be in the range of $1,440,000,000.
To $1,510,000,000.
And I'll turn it over back to Bill for final comments.
You might be on mute.
Okay.
I am proud to announce that we have completed our SS&C private cloud stock one.
And we are very close to our private, our stock two on our private cloud, which we expect to have.
Within a week.
These types of audits required an enormous amount of coordination and commitment.
Not only have we delivered on our contractual commitments to customers, but our sales staff is busy showing prospects.
We are one of the first companies with a stock one and stock two certified private cloud offerings.
As soon as we rollout products and services, which utilize this hyper-secure robust and lightning SaaS technology.
I'll now open it up for questions.
At this time I would like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad.
In the interest of time, we request you limit yourself to one question and one follow up question. Thank you.
Your first question comes from the line of Mike Yeung with Truest Securities. Your line is open.
Sorry about that. I was having a bit of an issue with my mute button as well, thanks for taking the question.
Just maybe wanted to start with the commentary about the staff costs increases and try and offset those with some other cost savings. Just as we kind of look forward to next year with kind of a revenue guide and in line with current expectations should we think of kind of the EBITDA margin is at normal kind of slight expansion.
And year over year or do you think there'll be some pressure on that given kind of some of the dynamics with inflation?
Okay.
Well I mean, we're not immune right.
We are in businesses.
That our employees are highly sought after and they're a great team.
Great team.
And.
The.
The raises and bonuses are going to be larger and more frequent.
We also are going to have lots of productivity gains.
And we think that we will be able to.
To expand our margins.
In the 50 to 75 basis points, and if we get a little tailwind, maybe we'll do a little better.
Okay. That's helpful and maybe just as a follow up as we kind of think about maybe the business as a whole or specific business lines, how much does kind of inflation play into contract pricing and how much of a tailwind should we be expecting as a part of that next year?
Well, you know, our customers are like trust and other sophisticated.
Users of technology.
And financial accounting and investment accounting and reporting and tax accounting and reporting.
Accounting and investment accounting and reporting and tax accounting and reporting.
So it's it's.
They are aware that our cost to increase and they wanted to keep the same staff says we have on our clients and that's what really gets our people to work hand in glove with our clients and so people understand when costs go up prices have to go up and I think that that that is something that.
We are very cognizant of.
And we have focused on it for the last two or three years and I think that nobody.
Nobody likes price increases people certainly understand.
Okay.
Your next question comes from the line of Surinder [inaudible] with Jefferies. Your line is open.
Thank you.
I'd like to start with a question about the revenue guidance for next year.
It sounds like the adjusted organic growth is going to be in the 2% to 6% range for the full year can you put that in the context of Investor day, where you talked about 47% longer-term.
Is it near term headwinds that you're seeing our clients thinking about delaying projects, how should we think about
What we heard at Investor day, a few months ago versus what the guidance's currently.
Well again.
We're trying to.
Two.
Maybe a little conservative, but certainly be
To be realistic and make sure.
It's a pretty uncertain time right now.
With the speculation on interest rates.
The regulatory environment.
It's constantly changing.
We.
When you see as much M&A activity as you do today.
A lot of times, our clients can merge too.
So we've been realistic and we've been able to surprise positively for a few quarters.
Been able to.
Surprised positively for a few quarters.
And.
And I am hoping that
a bunch of business comes in. We have four pipelines, we've got great products coming out so we have some optimism.
But we also want to temper that with realism.
That's helpful.
And then as a follow up to the earlier question about.
It sounds like you're still expecting to be able to expand margins by about 50 to maybe 75 basis points this year. Is there a bridge that you can provide us there in the sense that
Obviously, there is wage inflation.
And then are you able to pass most of that or some of that cost on to clients or how should we think about that versus the productivity initiatives. At this point just trying to get an idea for the balance of how to think about the push pull on margins at this point.
Yes.
Again.
Yes.
We don't control inflation and.
Like Mike everybody.
We I think last year.
Five seven.
How will that be.
Alright, so thats a lot of people.
And so that's a lot of training and Thats a lot of education.
And.
That's a lot of administration so.
Costs are going to go up and when it's inflationary theyre going to go up more.
We're going to compete and we're going to compete hard.
And we're.
Going to deliver superior service to our clients.
In a period, where we believes that.
There are a number of our competitors are going to deliver in <unk>.
And that's the opportunity and that's one of the ways in which.
If our win rates go up and our prices firm.
Our margins are going to go up.
Rahul you might have something to add.
Bill in addition to the productivity.
And the Labor force dynamics that you covered we still have some opportunities on things like enterprise contracts that are coming up for renewal.
And third party software and discretionary spend so in addition to obviously, making sure that we've got highly motivated employees that are continuously innovating and making our processes better. We also keep looking at other areas in which to control costs and all of those things together ought to result in some margin improvement.
That's helpful. Thank you.
Your next question comes from the line of Peter Heckmann with D. <unk> Company. Your line is open.
Thank you Hey, this is John on for Pete.
One within fund administration, I think I've seen any change in the competitive dynamics over the last year.
Okay.
Okay.
Thank you.
I think if you if you look at the.
It's a league tables, you'll see that apex's.
As buying everything in sight, and so so theyre getting larger in and.
But they've done a number of acquisitions I got a couple of them left on that on.
On the limb to finish I think but acquisitions or chat.
<unk>.
And my guess is it's challenging for them.
So other than than what they have done.
I don't think there's been that much.
The difference in.
In.
In our competitive landscape would would you agree with that rule.
I would bill I'd also say if you look at our growth rates our business is accelerating right. So the other change the dynamic is that as we continue to build products and services and get more and more scale.
Our ability to compete and enhance that win rate.
Just gets a little bit better every year and Thats, what we saw this past year.
Got it got it.
And are the acquisition are included in the current 2020 guide, but just wondering how should we look at the.
Potential contribution of the Osha as Etfs and Hubbell ideals.
Okay.
I think it's Patrick.
How was fairly small.
Paul it might be around $8 million for revenue.
And.
No shares might be around $20 million.
Yes.
Okay.
Got it thank you so much.
They are both not included as we indicated.
Your next question comes from the line of Andrew Schmidt with Citi. Your line is open.
Hey, guys. Thanks for taking my questions I like to slide you have in the in the Investor deck is just organic growth type business. It highlights the good growth in the alternatives business in 2021 I.
I was wondering if you could talk about the expectation within the organic growth rate within the organic growth guidance for alternatives for 2022.
And particularly how you think about potential we do see market volatility continue what impact it could have on that business. Thanks.
Patrick.
I think that at the midpoint of our guidance.
We expect to fund administration.
Growth.
In the high single digits.
For 'twenty.
2022, so continue to be higher than.
Historical.
And while there has been volatility at different times.
You look at the chart.
Of our capital markets.
Our capital movements indicator that we have.
Publish every months.
Since 2011, I think its almost.
Straight line.
North.
So I think that.
The talent.
In the alternatives business.
Match to the to the.
Brett.
<unk>.
Of investment strategies.
That talented group of people have I think bodes well for the alternatives, we see nothing but.
With increased interest from from very large scale fund companies from very large scale institutions from very large scale sovereign wealth funds and government. So I see.
If anything that that.
And our guidance and steps that are alternatives guidance might be the most conservative of wall.
Okay.
Got it that's pretty constructive I appreciate that.
And then just in the fourth quarter and maybe in the first quarter did omicron have an impact on sales pipeline or deal closings. Just wondering if you might have temporary slowed things down which might imply some some pent up demand at some point in the first quarter into the second quarter. Thanks.
Well like everything right everything is on the Koran related.
There aren't any for mobile desk anymore. They are all.
Our awesome omnicom or some other corporate derivatives.
Bob.
But I.
I think that six 9% organic.
Growth off of a pretty good Q4 of 'twenty.
It's pretty solid.
And I think.
Yes.
Yes, I think so I understood before our four to seven that we talked about on analyst day, that's at the high end of that.
The 4% to seven then.
Yes.
We again are focused on organic growth.
And even the acquisitions that we've done are really weak.
We think.
We're going to be very additive to our product offerings and the scope and capabilities that we're going to be able to offer across our entire product line.
Your next question comes from Jackson Ader with Jpmorgan. Your line is open.
Great. Thanks for taking my questions guys.
First one is on.
Blue Prism.
It kind of has a different financial profile and some of the other recent acquisitions that you've made so just curious any initial thoughts on <unk>.
And what the integration of our strategy.
Closing might look like relative to some of it.
Different acquisitions.
Maintenance.
Yes, Jackson, we're really not in any position to comment on.
No.
The vote.
London.
U K.
Take overboard trounce for us to say anything so.
We think that that should close in late Q1, or Q2, and we'll be happy to.
Set up a call with you at that time.
No big deal.
But like I had to ask and then the.
Yes.
Follow up question.
Rick with retention rates and <unk>.
They both kind of ticking down I'm curious how much.
The impact maybe does that lower retention rates had on one asset versus maybe market factors.
Yes, I don't think.
We're going to get a little bit of fluctuation.
With our.
Our EUA, both with with market.
Market values, and then also when when when certain clients launch new funds or even shut down funds and I do think we had one sovereign wealth fund without a lot of assets, but very few services. So.
The amount.
Mount of a drop could have been.
30, 40, 50 billion, but I don't think we.
Very much money on.
On it because they didn't take very many services right. So.
We don't view that as much of a.
Much of a headwind.
And I think.
I think in the first quarter of 'twenty, we were at 2 billion $1 50.
Sure.
Two.
217% so.
I think we have a very strong business and it's getting stronger.
Okay alright, thank you.
Your next question comes from the line of Chris Donat with Piper Sandler Your line is open.
Okay.
Good evening, Thanks for taking my questions Bill and I just wanted to follow up on that last one.
The <unk> just looking at slide 12 I will.
A little.
So surprised that the reduction quarter on quarter in <unk> and.
And Bill you just made the comment about the sovereign wealth fund and I know you've got.
Higher mix of.
Our fixed income.
Assets, then probably equities focus people like me think about but.
Can you just help me understand the sequential decline and again equity bias. So I think by the S&P 500 being up like 10, 5% in the fourth quarter, So I'm probably.
Looking at the wrong.
A fraction of the benchmark.
Yeah.
Ken.
Like I said, we're going to have some fluctuation in this but I would say that over.
Over time, we.
We have really grown grown.
The first quarter of 2020, we were at the trillion 750, and now we're up almost 500 billion.
In two years and if you look at the league tables in this I think.
<unk> hundred billion.
You get to be about fit.
And the league tables fifth or sixth.
And so.
And I think it was up.
I mean Robert.
Middle Eastern sovereign wealth.
Okay.
Yes.
Right. So there is there are there is one one sort of a one off in there which is like Bill just said theres a nearly $50 billion.
And a single customer that paid us less than $1 million a year.
So that's the that's that I think is the biggest reason the underlying follower.
All of our metrics on new funds, new business that we have one performance driven growth things like that continue to be in line with historical averages.
Okay.
Okay. Thanks.
Thanks Robert.
Comment a little bit.
We have very strong pipelines and we have a very strong sales force and.
And they are executing.
Okay.
Thanks for clarifying that and then for Patrick.
I would also add I appreciate seeing the organic growth by business.
Broken out just thinking about the software businesses and DST financial.
Are the organic growth rates for 2021, probably the best way to think about growth rates for 2022.
Okay.
Hum.
I think so I think the major changes, we'll see in 2022.
As we're expecting a decline.
And our health care business in 2022.
Oh.
Currently we expect the growth rate of intra links.
To continue to be double digits, but not as high as 2021.
Ben.
The vast majority of the other product lines will be pretty similar.
Okay. Thanks, very much Patrick.
Your next question comes from the line of Kevin Mcveigh with Credit Suisse. Your line is open.
Great. Thanks, so much.
I Wonder if you could.
Just talking to the revenue guidance for 2022, it looks like the range is 2% to 6%.
Last year it looks like the range was about 200 basis points from the low to the high end any sense of the puts and takes on what would get you to the low end this year versus the high end and why you widened the range a little bit.
Okay.
I think the range in 2020 was somewhere around $180 million and now it's $2 million will take us that much different from what I recall.
Yeah.
Okay.
In absolute dollars.
Yes.
Okay, maybe I had made.
That's what I recall, but I can get back to Q1.
Okay, maybe I'll follow up offline.
Can you just remind us of the seasonality I know there is some year end work things like that does that fall into the first quarter in terms of the filings and things like that is there any way to think about what the impact is on a quarter on that.
Well there is a little more tax and financial statement works in the first and second quarters.
Then the third and fourth quarters.
I think thats the primary seasonality that we have.
Got it right.
That's right Bill and the other one is just there tends to be a little bit more license in.
In Q4.
Great. Thank you.
Your next question comes from the line of Jason <unk> with Morgan Stanley . Your line is open.
Hi, This is Jonathan on for James.
I appreciate that I appreciate the color here can you provide an update on sort of the M&A environment from what you are seeing obviously youre waiting on two deals to close but are you seeing any other attractive targets in the market and sort of what assets would you be looking for from a capability or geographic perspective.
Yes.
There is a number of properties that are better.
And the market or coming to the market.
We will have some interest in.
No.
Fintech is.
It has kind of reset as far as prices concerned if you look across the.
Across the horizon.
So a number of a number of <unk> that we're trying to get public didn't give it out.
And some of the ones that kind of early in the year kind of come back to.
Just.
Moderate nosebleed levels instead of experience.
So so that gives us a lot more stuff to take a look at.
But at the same time right, we're going to we're going to push hard to get that organic revenue growth up and so.
The acquisition has to have a higher hurdle.
And we have a lot of people that wanted to be.
Acquisitions within a certain fee, but they recognize that if they don't have organic revenue growth. We don't have much capital for their acquisition plan. So its trying to have a disappointment in the process.
Everybody understands that.
Yes.
We always want to back our best businesses.
Thanks for that color Bill and I want to build on some of the questions that have already been asked around sort of pricing environment and then wage inflation. How are you thinking about the magnitude and timing of price increases through the year, just given some of that wage inflation that you're seeing in the market.
Yes.
Jonathan that's a great question.
It is one that that.
We've given a lot of thought to.
We're trying to figure out different ways in which to.
Make a assess and see a great place to work.
Make sure that we pay very well.
And that we're extremely competitive.
And so on.
On that side.
That is just.
What the labor market demand.
And it's something that we are well aware of it.
With a lot of ways, it's running their business.
And when your costs go up if you don't send your prices up.
<unk> your margins are going to get hammered.
No.
Not that anxious to getting hammered so we're focusing on those things.
Working hard with our clients to make sure that.
When they have issues that they need to have solved that.
It's our number of they call.
So that as you see we came out with a press release, I think a week ago or so.
About our Treasury management system, and we just did a seminar I think today, where we had 277 people wind up signed up to come to our webinar on.
Our new Treasury management system, we have another product coming out.
Very short our cargo central that we're really excited about.
So we've got a lot of stuff happening.
You got to execute you got to win.
You have to have satisfied clients.
And have to be upfront and.
Brutally honest with everybody. So that we can get on with doing the things that are necessary to have.
Business.
Loud and clear thanks Bill.
Your next question comes from the line of Alex Kramm with UBS. Your line is open.
Yeah, Hey, Hello, everyone.
Just.
On the healthcare comment from earlier was the decline hopefully I got this right but.
Can you flesh that out a little bit more I mean, very recently you saw on its super bullish on that business.
So just just want to make sure I didn't miss anything there and may be related I think you are hoping to get some more partners into the Omani JV. So maybe any updates there would be great.
Yes.
Yes, I mean, we remain very optimistic.
We have.
A number of people that are trying to to become partners.
And customers.
We have.
Knock on wood.
Some.
Progress on the development side.
And so we're optimistic about that and.
Hopefully we will have some.
Some announcements on health care over the next quarter or two that are that are quite positive.
Is that how you would look at it.
That's right Bill.
We're making really good progress on the.
New system that we're building and have lots of great support from our partners.
Sure.
And in regards to the decline.
Why is this business going to be down this year remind me please.
There are some attrition on the medical claim side. So the money is very focused on on pharmacy and on the medical claim side, we have some attrition and some we've known about and.
We're going to need to overcome that this year.
Yeah. Okay. Thanks. Thanks for the reminder, and then just real quick in terms of capital allocation not sure. If this came up already but.
I know, obviously, you've got blue prism here soon but outside of that given the cash flow that you're throwing off.
We already delivered decently like so should we assume buybacks can continue at a pretty attractive pes or how should we be thinking about the remainder of the cash and absence of any deals.
Yes, again, Alex what we're trying to be as wide as we can be.
I would guess.
Given that that.
The term the term market is still pretty strong.
The high yield market is not as.
So.
I would imagine that we will be.
Pretty active in buying back our shares.
And we will still pay down.
A good amount of debt.
Obviously, we're not.
We're not paying down our 2% debt. So we can just refinance it on blue prism at 3% or three and a half. So so we have a whole lot of cash that we will use it.
John .
In closing these acquisitions and then and then we're still generally like like.
As you saw we generated.
Almost a quarter of a $1 billion in cash above what we.
Bid in 2020 so.
At $1 429, you have an awful lot of flexibility in an awful lot of optionality.
Very good thank you very much.
Your final question comes from the line of Patrick O'shaughnessy with Raymond James Your line is open.
Hi, good evening on the M&A front do you think getting the regulatory approval for larger acquisitions is going to be incrementally more challenging going forward given the current stance of global regulators or would you anticipate largely steering clear from extended antitrust reviews.
Well I mean again.
Patrick.
We are not anxious to have.
Antitrust reviews as you can imagine at the same time, the more attractive and acquisition is.
The more we will be to close it.
And hopefully that's.
That's the way that we drive we drive.
Our success in our M&A activities.
Activities in.
<unk>.
But we're getting big right. So so we're not going to be able to hide.
Got it Okay, and then staying on the regulatory theme do you guys have any preliminary thoughts on how the FCC's proposal to increase disclosure requirements on private fund managers might offer either opportunities or threats to SMC.
Yes.
I think it's primarily an opportunity to help our clients with.
With additional regulation that where we're at.
Optimistic.
And our ability to do that.
Alright, thank you.
There are no further questions at this time I would now like to turn the call back over to Mr. Bill Stone for closing remarks.
Thanks to everybody, we look forward to talking to you at the end of <unk>.
At the end of Q1 and.
Stay healthy and stay safe and we'll talk to you in 90 days or so thank you.
Yeah.
Ladies and gentlemen, thank you for your participation. This concludes today's conference call you may now disconnect.
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