Vantiv Reports Second Quarter 2016 Results
Strong Second Quarter Results Leads Vantiv to Raise Its Full Year Guidance; Vantiv Renews Fifth Third Bank Relationship and Terminates Certain TRAs
/EINPresswire.com/ -- CINCINNATI, OH--(Marketwired - July 28, 2016) - Vantiv, Inc. (NYSE: VNTV) ("Vantiv" or the "company") today announced financial results for the second quarter ended June 30, 2016. Total revenue increased 13% to $891 million in the second quarter as compared to $786 million in the prior year period. Net revenue increased 13% to $480 million as compared to $424 million in the prior year period, reflecting strong growth in both business segments. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. increased 58% to $0.38 as compared to $0.24 in the prior year period. Pro forma adjusted net income per share increased 25% to $0.70 as compared to $0.56 in the prior year period. (See Schedule 2 for pro forma adjusted net income per share.)
"Our performance in the first half of the year as well as the opportunities that we see before us give us confidence," said Charles Drucker, president and chief executive officer at Vantiv. "Complexity and change play to our strengths, and we continue to serve our clients well."
Merchant Services
Merchant Services net revenue increased 15% to $388 million in the second quarter as compared to $337 million in the prior year period, primarily due to a 9% increase in transactions and a 6% increase in net revenue per transaction as our high growth channels continued to grow at above market rates. Sales and marketing expenses increased 19% to $139 million in the second quarter as compared to $117 million in the prior year period, primarily due to new sales growth in partner channels.
Financial Institution Services
Financial Institution Services net revenue increased 7% to $93 million in the second quarter as compared to $87 million in the prior year period, primarily due to an 8% increase in net revenue per transaction. Net revenue per transaction growth benefited from the contribution of value added services, including the impact of EMV card reissuance and fraud related services. Sales and marketing expenses decreased 5% to $5.7 million in the second quarter as compared to $6.1 million in the prior year period.
Fifth Third Renewal and Tax Receivable Agreement Termination
Fifth Third Bank and Vantiv agreed to renew their commercial relationship and extend it through the end of 2024. This relationship includes services provided to Fifth Third Bank within Vantiv's Financial Institution Services segment, as well as ongoing merchant referrals to Vantiv from Fifth Third Bank.
Fifth Third Bank and Vantiv also agreed to terminate and settle portions of Vantiv's obligations under their tax receivable agreements ("TRAs"). This agreement includes an initial payment of approximately $116 million to Fifth Third Bank in order to terminate and settle approximately $331 million of obligations. Under the terms of the agreement, Vantiv has the option to terminate and settle additional obligations under the TRAs in 2017 and 2018. If all options are exercised, the combination of the renewal and the TRA terminations will generate the potential for approximately $0.06 in on-going annual pro forma adjusted net income per share beginning in 2017, as well as the potential for an additional $0.06 in on-going annual pro forma adjusted net income per share beginning in 2018.
Full-Year and Third Quarter Financial Outlook
Based on our strong performance in the second quarter and increased confidence in our outlook for the remainder of the year, we are increasing our full-year 2016 expectations. Net revenue for the full-year 2016 is expected to be $1,850 to $1,875 million, representing an increase of 10% to 11% above the prior year. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. is expected to be $1.39 to $1.44 for the full-year 2016. Pro forma adjusted net income per share is expected to be $2.61 to $2.66 for the full-year 2016.
For the third quarter of 2016, net revenue is expected to be $470 to $475 million, representing an increase of 9% to 10% above the prior year period. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. is expected to be $0.37 to $0.39 for the third quarter of 2016. Pro forma adjusted net income per share is expected to be $0.67 to $0.69 for the third quarter of 2016.
Earnings Conference Call and Audio Webcast
The company will host a conference call to discuss the second quarter financial results today at 7:30 a.m. ET. The conference call can be accessed live over the phone by dialing (888) 389-5997, or for international callers (719) 457-2637, and referencing conference code 6515439. A replay will be available approximately two hours after the call concludes and can be accessed by dialing (888) 203-1112, or for international callers (719) 457-0820, and entering replay passcode 6515439. The replay will be available through August 11, 2016. The call will also be webcast live from the company's investor relations website at http://investors.vantiv.com. Following completion of the call, a recorded replay of the webcast will be available on the website.
ABOUT VANTIV
Vantiv, Inc. (NYSE: VNTV) is a leading payment processor differentiated by an integrated technology platform. Vantiv offers a comprehensive suite of traditional and innovative payment processing and technology solutions to merchants and financial institutions of all sizes, enabling them to address their payment processing needs through a single provider. We build strong relationships with our customers, helping them become more efficient, more secure and more successful. Vantiv is the second largest merchant acquirer and the largest PIN debit acquirer based on number of transactions in the U.S. The company's growth strategy includes expanding further into high-growth channels and verticals, including integrated payments, eCommerce, and merchant bank. Visit us at the new www.vantiv.com, or follow us on Twitter, Facebook, LinkedIn, Google+ and YouTube.
© 2016 Vantiv, LLC. All Rights Reserved. All trademarks, service marks and trade names referenced herein are the property of their respective owners. Vantiv and other Vantiv products and services mentioned herein as well as their respective logos are registered trademarks or trademarks of Vantiv, LLC in the U.S. and other countries.
Non-GAAP and Pro Forma Financial Measures
This earnings release presents non-GAAP and pro forma financial information including net revenue, adjusted EBITDA, pro forma adjusted net income, and pro forma adjusted net income per share. These are important financial performance measures for the company, but are not financial measures as defined by GAAP. The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP and pro forma financial performance measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Reconciliations of these measures to the most directly comparable GAAP financial measures are presented in the attached schedules.
Forward-Looking Statements
This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements including any statements regarding guidance and statements of a general economic or industry specific nature. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.
The forward-looking statements contained in this release are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual future performance or results and cause them to differ materially from those anticipated in the forward-looking statements. Certain of these factors and other risks are discussed in the company's filings with the U.S. Securities and Exchange Commission (the "SEC") and include, but are not limited to: (i) our ability to adapt to developments and change in our industry; (ii) competition; (iii) unauthorized disclosure of data or security breaches; (iv) systems failures or interruptions; (v) our ability to expand our market share or enter new markets; (vi) our ability to identify and complete acquisitions, joint ventures and partnerships; (vii) failure to comply with applicable requirements of Visa, MasterCard or other payment networks or changes in those requirements; (viii) our ability to pass along fee increases; (ix) termination of sponsorship or clearing services; (x) loss of clients or referral partners; (xi) reductions in overall consumer, business and government spending; (xii) fraud by merchants or others; (xiii) a decline in the use of credit, debit or prepaid cards; (xiv) consolidation in the banking and retail industries; (xv) the effects of governmental regulation or changes in laws; and (xvi) outcomes of future litigation or investigations. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. More information on potential factors that could affect the company's financial results and performance is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the company's periodic reports filed with the SEC, including the company's most recently filed Annual Report on Form 10-K and its subsequent filings with the SEC.
Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Schedule 1
Vantiv, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except share data)
Three Months Ended June 30,
---------------------------
2016 2015 % Change
------------- ------------- -------------
Total revenue $ 891,217 $ 785,995 13%
Network fees and other costs 410,736 362,349 13%
------------- -------------
Net revenue(1) 480,481 423,646 13%
Sales and marketing 144,844 122,925 18%
Other operating costs 73,599 76,551 (4)%
General and administrative 49,120 47,060 4%
Depreciation and amortization 65,234 67,659 (4)%
------------- -------------
Income from operations 147,684 109,451 35%
Interest expense-net (26,118) (25,714) 2%
Non-operating expenses(2) (4,664) (6,725) (31)%
------------- -------------
Income before applicable income
taxes 116,902 77,012 52%
Income tax expense 38,441 24,319 58%
------------- -------------
Net income 78,461 52,693 49%
Less: Net income attributable to
non-controlling interests (19,134) (16,157) 18%
------------- -------------
Net income attributable to Vantiv,
Inc. $ 59,327 $ 36,536 62%
============= =============
Net income per share attributable
to Vantiv, Inc. Class A common
stock:
Basic $ 0.38 $ 0.25 52%
Diluted(3) $ 0.38 $ 0.24 58%
Shares used in computing net
income per share of Class A
common stock:
Basic 155,670,267 145,566,899
Diluted 197,258,209 201,831,467
Non Financial Data:
Transactions (in millions) 6,183 5,768 7%
Six Months Ended June 30,
---------------------------
2016 2015 % Change
------------- ------------- -------------
Total revenue $ 1,709,840 $ 1,491,606 15%
Network fees and other costs 798,149 693,495 15%
------------- -------------
Net revenue(1) 911,691 798,111 14%
Sales and marketing 280,482 238,980 17%
Other operating costs 147,302 145,290 1%
General and administrative 93,104 94,903 (2)%
Depreciation and amortization 133,464 135,461 (1)%
------------- -------------
Income from operations 257,339 183,477 40%
Interest expense-net (53,847) (51,725) 4%
Non-operating expenses(2) (10,316) (15,491) (33)%
------------- -------------
Income before applicable income
taxes 193,176 116,261 66%
Income tax expense 62,267 36,572 70%
------------- -------------
Net income 130,909 79,689 64%
Less: Net income attributable to
non-controlling interests (31,844) (24,164) 32%
------------- -------------
Net income attributable to Vantiv,
Inc. $ 99,065 $ 55,525 78%
============= =============
Net income per share attributable
to Vantiv, Inc. Class A common
stock:
Basic $ 0.64 $ 0.38 68%
Diluted(3) $ 0.63 $ 0.37 70%
Shares used in computing net
income per share of Class A
common stock:
Basic 155,533,813 145,051,664
Diluted 197,018,018 201,276,166
Non Financial Data:
Transactions (in millions) 12,003 11,131 8%
(1) Net revenue is revenue, less network fees and other costs which
primarily consist of pass through expenses incurred by us in connection with
providing processing services to our clients, including Visa and MasterCard
network association fees, payment network fees, third party processing
expenses, telecommunication charges, postage and card production costs.
(2) Non-operating expenses for the three and six months ended June 30, 2016
and 2015 primarily relate to the change in fair value of a tax receivable
agreement ("TRA") entered into as part of the acquisition of Mercury.
(3) Due to our structure as a C corporation and Vantiv Holding's structure
as a pass-through entity for tax purposes, the numerator in the diluted net
income per share calculation is adjusted to reflect our income tax expense
at an expected effective tax rate assuming the conversion of the Class B
units of Vantiv Holding into shares of our Class A common stock. The
expected effective tax rate for 2016 and 2015 was 36.0%. The components of
the diluted net income per share calculation are as follows:
Three Months Ended June
30, Six Months Ended June 30,
------------------------- -------------------------
2016 2015 2016 2015
------------ ------------ ------------ ------------
Income before applicable
income taxes $ 116,902 $ 77,012 $ 193,176 $ 116,261
Taxes 42,085 27,724 69,543 41,854
------------ ------------ ------------ ------------
Net income $ 74,817 $ 49,288 $ 123,633 $ 74,407
Diluted shares 197,258,209 201,831,467 197,018,018 201,276,166
Diluted EPS $ 0.38 $ 0.24 $ 0.63 $ 0.37
Schedule 2
Vantiv, Inc.
Pro Forma Adjusted Net Income
(Unaudited)
(in thousands, except share data)
Three Months Ended June 30,
---------------------------
2016 2015 % Change
------------- ------------- -------------
(in thousands)
Income before applicable income
taxes $ 116,902 $ 77,012 52%
Non-GAAP Adjustments:
Transition, acquisition and
integration costs(1) 12,408 23,345 (47)%
Share-based compensation 7,940 5,097 56%
Intangible amortization(2) 47,242 47,524 (1)%
Non-operating expenses(3) 4,664 6,725 (31)%
------------- -------------
Non-GAAP Adjusted Income
Before Applicable Taxes 189,156 159,703 18%
Less: Pro Forma Adjustments
Income tax expense(4) 68,096 57,493 18%
Tax adjustments(5) (18,070) (11,644) 55%
Other(6) 692 1,083 (36)%
------------- -------------
Pro Forma Adjusted Net Income $ 138,438 $ 112,771 23%
============= =============
Pro Forma Adjusted Net Income Per
Share $ 0.70 $ 0.56 25%
Adjusted Shares Outstanding 197,258,209 201,831,467
Six Months Ended June 30,
---------------------------
2016 2015 % Change
------------- ------------- -------------
(in thousands)
Income before applicable income
taxes $ 193,176 $ 116,261 66%
Non-GAAP Adjustments:
Transition, acquisition and
integration costs(1) 19,571 38,019 (49)%
Share-based compensation 16,292 16,720 (3)%
Intangible amortization(2) 94,907 94,749 -%
Non-operating expenses(3) 10,316 15,491 (33)%
------------- -------------
Non-GAAP Adjusted Income
Before Applicable Taxes 334,262 281,240 19%
Less: Pro Forma Adjustments
Income tax expense(4) 120,334 101,246 19%
Tax adjustments(5) (36,140) (23,336) 55%
Other(6) 1,227 1,151 7%
------------- -------------
Pro Forma Adjusted Net Income $ 248,841 $ 202,179 23%
============= =============
Pro Forma Adjusted Net Income Per
Share $ 1.26 $ 1.00 26%
Adjusted Shares Outstanding 197,018,018 201,276,166
Non-GAAP and Pro Forma Financial Measures
This schedule presents non-GAAP and pro forma financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP. Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.
Pro forma adjusted net income is derived from GAAP income before applicable income taxes and adjusted for the following items described below:
Schedule 3
Vantiv, Inc.
Segment Information
(Unaudited)
(in thousands)
Merchant Services
Three Months Ended
June 30,
---------------------
2016 2015 $ Change % Change
---------- ---------- ---------- ----------
Total revenue $ 762,593 $ 661,258 $ 101,335 15%
Network fees and other costs 374,820 324,166 50,654 16%
---------- ---------- ---------- ----------
Net revenue 387,773 337,092 50,681 15%
Sales and marketing 139,108 116,860 22,248 19%
---------- ---------- ---------- ----------
Segment profit $ 248,665 $ 220,232 $ 28,433 13%
========== ========== ========== ==========
Non-financial data:
Transactions (in millions) 5,156 4,737 9%
Net revenue per transaction $ 0.0752 $ 0.0712 6%
Six Months Ended June
30,
---------------------
2016 2015 $ Change % Change
---------- ---------- ---------- ----------
Total revenue $1,457,173 $1,247,970 $ 209,203 17%
Network fees and other costs 728,154 620,196 107,958 17%
---------- ---------- ---------- ----------
Net revenue 729,019 627,774 101,245 16%
Sales and marketing 268,444 227,035 41,409 18%
---------- ---------- ---------- ----------
Segment profit $ 460,575 $ 400,739 $ 59,836 15%
========== ========== ========== ==========
Non-financial data:
Transactions (in millions) 10,003 9,144 9%
Net revenue per transaction $ 0.0729 $ 0.0687 6%
Financial Institution Services
Three Months Ended
June 30,
---------------------
2016 2015 $ Change % Change
---------- ---------- ----------- -----------
Total revenue $ 128,624 $ 124,737 $ 3,887 3%
Network fees and other costs 35,916 38,183 (2,267) (6)%
---------- ---------- ----------- -----------
Net revenue 92,708 86,554 6,154 7%
Sales and marketing 5,736 6,065 (329) (5)%
---------- ---------- ----------- -----------
Segment profit $ 86,972 $ 80,489 $ 6,483 8%
========== ========== =========== ===========
Non-financial data:
Transactions (in millions) 1,027 1,031 -%
Net revenue per transaction $ 0.0903 $ 0.0840 8%
Six Months Ended June
30,
---------------------
2016 2015 $ Change % Change
---------- ---------- ----------- -----------
Total revenue $ 252,667 $ 243,636 $ 9,031 4%
Network fees and other costs 69,995 73,299 (3,304) (5)%
---------- ---------- ----------- -----------
Net revenue 182,672 170,337 12,335 7%
Sales and marketing 12,038 11,945 93 1%
---------- ---------- ----------- -----------
Segment profit $ 170,634 $ 158,392 $ 12,242 8%
========== ========== =========== ===========
Non-financial data:
Transactions (in millions) 2,000 1,987 1%
Net revenue per transaction $ 0.0913 $ 0.0857 7%
Schedule 4
Vantiv, Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in thousands)
June 30, December 31,
2016 2015
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 202,724 $ 197,096
Accounts receivable-net 721,703 680,033
Related party receivable 4,208 3,999
Settlement assets 132,304 143,563
Prepaid expenses 32,646 31,147
Other 69,556 61,661
------------ ------------
Total current assets 1,163,141 1,117,499
Customer incentives 64,043 57,984
Property, equipment and software-net 338,755 308,009
Intangible assets-net 764,181 863,066
Goodwill 3,366,528 3,366,528
Deferred taxes 715,078 731,622
Other assets 31,602 20,718
------------ ------------
Total assets $ 6,443,328 $ 6,465,426
============ ============
Liabilities and equity
Current liabilities:
Accounts payable and accrued expenses $ 379,118 $ 364,878
Related party payable 3,394 4,698
Settlement obligations 635,161 677,502
Current portion of note payable 109,501 116,501
Current portion of tax receivable agreement
obligations to related parties 35,659 31,232
Current portion of tax receivable agreement
obligations 59,503 64,227
Deferred income 14,395 14,470
Current maturities of capital lease obligations 8,601 7,931
Other 20,104 13,940
------------ ------------
Total current liabilities 1,265,436 1,295,379
Long-term liabilities:
Note payable 2,888,625 2,943,638
Tax receivable agreement obligations to related
parties 766,170 801,829
Tax receivable agreement obligations 78,551 126,980
Capital lease obligations 17,536 21,801
Deferred taxes 26,659 15,836
Other 34,721 34,897
------------ ------------
Total long-term liabilities 3,812,262 3,944,981
Total liabilities 5,077,698 5,240,360
Commitments and contingencies
Equity:
Total equity(1) 1,365,630 1,225,066
------------ ------------
Total liabilities and equity $ 6,443,328 $ 6,465,426
============ ============
(1) Includes equity attributable to non-controlling interests.
Schedule 5
Vantiv, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended June 30,
---------------------------
2016 2015
------------- -------------
Operating Activities:
Net income $ 130,909 $ 79,689
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense 133,464 135,461
Amortization of customer incentives 12,581 8,183
Amortization and write-off of debt issuance
costs 3,237 5,196
Share-based compensation expense 16,292 16,720
Deferred taxes 32,400 22,705
Excess tax benefit from share-based
compensation (8,067) (13,753)
Tax receivable agreements non-cash items 10,252 13,733
Other 382 -
Change in operating assets and liabilities:
Accounts receivable and related party
receivable (41,879) 30,348
Net settlement assets and obligations (31,082) 41,380
Customer incentives (23,343) (13,342)
Prepaid and other assets (1,695) (2,163)
Accounts payable and accrued expenses 17,867 24,043
Payable to related party (1,304) 595
Other liabilities (1,528) 3,582
------------- -------------
Net cash provided by operating activities 248,486 352,377
------------- -------------
Investing Activities:
Purchases of property and equipment (62,883) (42,013)
Acquisition of customer portfolios and related
assets and other (883) (37,154)
Purchase of derivative instruments (21,523) -
------------- -------------
Net cash used in investing activities (85,289) (79,167)
------------- -------------
Financing Activities:
Borrowings on revolving credit facility 855,000 -
Repayment of revolving credit facility (855,000) -
Repayment of debt and capital lease
obligations (69,521) (262,946)
Proceeds from issuance of Class A common stock
under employee stock plans 8,538 9,628
Repurchase of Class A common stock (to satisfy
tax withholding obligations) (5,784) (15,867)
Settlement of certain tax receivable
agreements (41,163) -
Payments under tax receivable agreements (53,474) (22,805)
Excess tax benefit from share-based
compensation 8,067 13,753
Distributions to non-controlling interests (4,220) (3,132)
Other (12) -
Decrease in cash overdraft - (2,627)
------------- -------------
Net cash used in financing activities (157,569) (283,996)
------------- -------------
Net increase (decrease) in cash and cash
equivalents 5,628 (10,786)
Cash and cash equivalents-Beginning of period 197,096 411,568
------------- -------------
Cash and cash equivalents-End of period $ 202,724 $ 400,782
============= =============
Cash Payments:
Interest $ 50,814 $ 48,502
Taxes 13,443 5,054
Schedule 6
Vantiv, Inc.
Non-GAAP Adjusted Income Before Applicable Income Taxes
(Unaudited)
(in thousands, except share data)
See schedule 7 and 8 for a reconciliation of GAAP income before applicable income taxes to non-GAAP adjusted income before applicable income taxes.
Three Months Ended Six Months Ended June
June 30, 30,
------------------- -----------------------
% %
2016 2015 Change 2016 2015 Change
--------- --------- ------ ----------- ----------- ------
Total revenue $891,217 $785,995 13% $1,709,840 $1,491,606 15%
Network fees and
other costs 410,736 362,349 13% 798,149 693,495 15%
--------- --------- ----------- -----------
Net revenue(1) 480,481 423,646 13% 911,691 798,111 14%
Sales and
marketing 144,844 122,925 18% 280,482 238,980 17%
Other operating
costs 70,112 64,643 8% 141,327 127,057 11%
General and
administrative 32,259 30,526 6% 63,216 58,397 8%
--------- --------- ----------- -----------
Adjusted
EBITDA(2) 233,266 205,552 13% 426,666 373,677 14%
Depreciation and
amortization 17,992 20,135 (11)% 38,557 40,712 (5)%
--------- --------- ----------- -----------
Adjusted income
from operations 215,274 185,417 16% 388,109 332,965 17%
Interest expense-
net (26,118) (25,714) 2% (53,847) (51,725) 4%
--------- --------- ----------- -----------
Non-GAAP adjusted
income before
applicable income
taxes $189,156 $159,703 18% $ 334,262 $ 281,240 19%
========= ========= =========== ===========
Non-GAAP Financial Measures
This schedule presents non-GAAP financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP. Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.
(1) Net revenue is revenue, less network fees and other costs which
primarily consist of pass through expenses incurred by us in connection with
providing processing services to our clients, including Visa and MasterCard
network association fees, payment network fees, third party processing
expenses, telecommunication charges, postage and card production costs.
(2) See schedule 9 for a reconciliation of GAAP net income to adjusted
EBITDA.
Schedule 7
Vantiv, Inc.
Reconciliation of GAAP Income Before Applicable Income Taxes to Non-GAAP Adjusted Income Before Applicable
Income Taxes
(Unaudited)
(in thousands)
Three Months Ended June 30, 2016
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Transition,
Acquisition
and Share-Based
GAAP Integration(2) Compensation
-------------- -------------- --------------
Total revenue $ 891,217 $ - $ -
Network fees and other costs 410,736 - -
-------------- -------------- --------------
Net revenue(1) 480,481 - -
Sales and marketing 144,844 - -
Other operating costs 73,599 (3,487) -
General and administrative 49,120 (8,921) (7,940)
Depreciation and amortization 65,234 - -
-------------- -------------- --------------
Income from operations 147,684 12,408 7,940
Interest expense-net (26,118) - -
Non-operating income (expense) (4,664) - -
-------------- -------------- --------------
Income before applicable income
taxes $ 116,902 $ 12,408 $ 7,940
============== ============== ==============
Three Months Ended June 30, 2016
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Non-GAAP
Adjusted
Amortization Non Operating Income Before
of Intangible Income Applicable
Assets(3) (Expense)(4) Income Taxes
-------------- ------------- --------------
Total revenue $ - $ - $ 891,217
Network fees and other costs - - 410,736
-------------- ------------- --------------
Net revenue(1) - - 480,481
Sales and marketing - - 144,844
Other operating costs - - 70,112
General and administrative - - 32,259
Depreciation and amortization (47,242) - 17,992
-------------- ------------- --------------
Income from operations 47,242 - 215,274
Interest expense-net - - (26,118)
Non-operating income (expense) - 4,664 -
-------------- ------------- --------------
Income before applicable income
taxes $ 47,242 $ 4,664 $ 189,156
============== ============= ==============
Three Months Ended June 30, 2015
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Transition,
Acquisition
and Share-Based
GAAP Integration(2) Compensation
-------------- -------------- --------------
Total revenue $ 785,995 $ - $ -
Network fees and other costs 362,349 - -
-------------- -------------- --------------
Net revenue(1) 423,646 - -
Sales and marketing 122,925 - -
Other operating costs 76,551 (11,908) -
General and administrative 47,060 (11,437) (5,097)
Depreciation and amortization 67,659 - -
-------------- -------------- --------------
Income from operations 109,451 23,345 5,097
Interest expense-net (25,714) - -
Non-operating income (expense) (6,725) - -
-------------- -------------- --------------
Income before applicable income
taxes $ 77,012 $ 23,345 $ 5,097
============== ============== ==============
Three Months Ended June 30, 2015
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Non-GAAP
Adjusted
Amortization Non Operating Income Before
of Intangible Income Applicable
Assets(3) (Expense)(4) Income Taxes
-------------- ------------- --------------
Total revenue $ - $ - $ 785,995
Network fees and other costs - - 362,349
-------------- ------------- --------------
Net revenue(1) - - 423,646
Sales and marketing - - 122,925
Other operating costs - - 64,643
General and administrative - - 30,526
Depreciation and amortization (47,524) - 20,135
-------------- ------------- --------------
Income from operations 47,524 - 185,417
Interest expense-net - - (25,714)
Non-operating income (expense) - 6,725 -
-------------- ------------- --------------
Income before applicable income
taxes $ 47,524 $ 6,725 $ 159,703
============== ============= ==============
Non-GAAP Financial Measures
This schedule presents non-GAAP financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP. Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.
(1) Net revenue is revenue, less network fees and other costs which
primarily consist of pass through expenses incurred by us in connection with
providing processing services to our clients, including Visa and MasterCard
network association fees, payment network fees, third party processing
expenses, telecommunication charges, postage and card production costs.
(2) Represents acquisition and integration costs incurred in connection with
our acquisitions, charges related to employee termination benefits and other
transition activities.
(3) Represents amortization of intangible assets acquired through business
combinations and customer portfolio and related asset acquisitions.
(4) Non-operating income (expense) during 2016 and 2015 primarily relates to
the change in the fair value of a TRA entered into as part of the
acquisition of Mercury.
Schedule 8
Vantiv, Inc.
Reconciliation of GAAP Income Before Applicable Income Taxes to Non-GAAP Adjusted Income Before Applicable Income Taxes
(Unaudited)
(in thousands)
Six Months Ended June 30, 2016
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Transition,
Acquisition
and Share-Based
GAAP Integration(2) Compensation
-------------- -------------- --------------
Total revenue $ 1,709,840 $ - $ -
Network fees and other costs 798,149 - -
-------------- -------------- --------------
Net revenue(1) 911,691 - -
Sales and marketing 280,482 - -
Other operating costs 147,302 (5,975) -
General and administrative 93,104 (13,596) (16,292)
Depreciation and amortization 133,464 - -
-------------- -------------- --------------
Income from operations 257,339 19,571 16,292
Interest expense-net (53,847) - -
Non-operating income (expense) (10,316) - -
-------------- -------------- --------------
Income before applicable income
taxes $ 193,176 $ 19,571 $ 16,292
============== ============== ==============
Six Months Ended June 30, 2016
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Non-GAAP
Adjusted
Amortization Non Operating Income Before
of Intangible Income Applicable
Assets(3) (Expense)(4) Income Taxes
-------------- ------------- --------------
Total revenue $ - $ - $ 1,709,840
Network fees and other costs - - 798,149
-------------- ------------- --------------
Net revenue(1) - - 911,691
Sales and marketing - - 280,482
Other operating costs - - 141,327
General and administrative - - 63,216
Depreciation and amortization (94,907) - 38,557
-------------- ------------- --------------
Income from operations 94,907 - 388,109
Interest expense-net - - (53,847)
Non-operating income (expense) - 10,316 -
-------------- ------------- --------------
Income before applicable income
taxes $ 94,907 $ 10,316 $ 334,262
============== ============= ==============
Six Months Ended June 30, 2015
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Transition,
Acquisition
and Share-Based
GAAP Integration(2) Compensation
-------------- -------------- --------------
Total revenue $ 1,491,606 $ - $ -
Network fees and other costs 693,495 - -
-------------- -------------- --------------
Net revenue(1) 798,111 - -
Sales and marketing 238,980 - -
Other operating costs 145,290 (18,233) -
General and administrative 94,903 (19,786) (16,720)
Depreciation and amortization 135,461 - -
-------------- -------------- --------------
Income from operations 183,477 38,019 16,720
Interest expense-net (51,725) - -
Non-operating income (expense) (15,491) - -
-------------- -------------- --------------
Income before applicable income
taxes $ 116,261 $ 38,019 $ 16,720
============== ============== ==============
Six Months Ended June 30, 2015
--------------------------------------------
Non-GAAP Adjustments
-----------------------------
Non-GAAP
Adjusted
Amortization Non Operating Income Before
of Intangible Income Applicable
Assets(3) (Expense)(4) Income Taxes
-------------- ------------- --------------
Total revenue $ - $ - $ 1,491,606
Network fees and other costs - - 693,495
-------------- ------------- --------------
Net revenue(1) - - 798,111
Sales and marketing - - 238,980
Other operating costs - - 127,057
General and administrative - - 58,397
Depreciation and amortization (94,749) - 40,712
-------------- ------------- --------------
Income from operations 94,749 - 332,965
Interest expense-net - - (51,725)
Non-operating income (expense) - 15,491 -
-------------- ------------- --------------
Income before applicable income
taxes $ 94,749 $ 15,491 $ 281,240
============== ============= ==============
Non-GAAP Financial Measures
This schedule presents non-GAAP financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP. Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.
(1) Net revenue is revenue, less network fees and other costs which
primarily consist of pass through expenses incurred by us in connection with
providing processing services to our clients, including Visa and MasterCard
network association fees, payment network fees, third party processing
expenses, telecommunication charges, postage and card production costs.
(2) Represents acquisition and integration costs incurred in connection with
our acquisitions, charges related to employee termination benefits and other
transition activities.
(3) Represents amortization of intangible assets acquired through business
combinations and customer portfolio and related asset acquisitions.
(4) Non-operating income (expense) during 2016 and 2015 primarily relates to
the change in the fair value of a TRA entered into as part of the
acquisition of Mercury.
Schedule 9
Vantiv, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited)
(in thousands)
Three Months
Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2016 2015 % Change 2016 2015 % Change
-------- -------- --------- -------- -------- ---------
Net income $ 78,461 $ 52,693 49% $130,909 $ 79,689 64%
Income tax expense 38,441 24,319 58% 62,267 36,572 70%
Non-operating
expenses(1) 4,664 6,725 (31)% 10,316 15,491 (33)%
Interest expense-net 26,118 25,714 2% 53,847 51,725 4%
Share-based
compensation 7,940 5,097 56% 16,292 16,720 (3)%
Transition,
acquisition and
integration
costs(2) 12,408 23,345 (47)% 19,571 38,019 (49)%
Depreciation and
amortization 65,234 67,659 (4)% 133,464 135,461 (1)%
-------- -------- -------- --------
Adjusted EBITDA $233,266 $205,552 13% $426,666 $373,677 14%
======== ======== ======== ========
Non-GAAP Financial Measures
This schedule presents adjusted EBITDA, which is an important financial performance measure for the Company, but is not a financial measure as defined by GAAP. Such financial measure should not be considered as an alternative to GAAP net income, and such measure may not be comparable to those reported by other companies.
(1) Non-operating expenses for the three and six months ended June 30, 2016
and 2015 primarily relate to the change in fair value of a TRA entered into
as part of the acquisition of Mercury.
(2) Represents acquisition and integration costs incurred in connection with
our acquisitions, charges related to employee termination benefits and other
transition activities.
Schedule 10
Vantiv, Inc.
Outlook Summary
(Unaudited)
(in millions, except share data)
Third Quarter Financial
Outlook Full Year Financial Outlook
---------------------------- ----------------------------
Three Months
Ended Year Ended
September 30, December 31,
----------------- -----------------
2016 2015 2016 2015
Outlook Actual % Change Outlook Actual % Change
-------- -------- ---------- -------- -------- ----------
GAAP net income
per share
attributable to $0.37 - $1.39 -
Vantiv, Inc. $0.39 $0.27 37% - 44% $1.44 $0.95 46% - 52%
Adjustments to
reconcile GAAP to
non-GAAP pro
forma adjusted
net income per
share(1) $0.30 $0.32 (6)% $1.22 $1.29 (5)%
-------- -------- -------- --------
Pro forma adjusted
net income per $0.67 - $2.61 -
share $0.69 $0.59 14% - 17% $2.66 $2.24 17% - 19%
======== ======== ======== ========
Non-GAAP and Pro Forma Financial Measures
This schedule presents non-GAAP and pro forma financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP. Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.
(1) Represents adjustments for the following items: (a) acquisition and
integration costs incurred in connection with our acquisitions, charges
related to employee termination benefits and other transition activities;
(b) share-based compensation; (c) amortization of intangible assets acquired
in business combinations and customer portfolio and related asset
acquisitions; (d) non-operating expense primarily associated with the change
in fair value of a TRA entered into as part of the acquisition of Mercury;
(e) non-controlling interest; (f) adjustments to income tax expense to
reflect an effective rate of 36%, assuming conversion of the Fifth Third
Bank non-controlling interests into shares of Class A common stock,
including the tax effect of adjustments described above; and (g) tax
benefits due to the amortization of intangible assets and other tax
attributes resulting from or acquired with our acquisitions, and to the tax
basis step up associated with our separation from Fifth Third Bank and the
purchase or exchange of Class B units of Vantiv Holding, net of payment
obligations under tax receivable agreements.
CONTACTS
Investors
Nathan Rozof, CFA
Investor Relations
(866) 254-4811
(513) 900-4811
IR@vantiv.com
Media
Andrew Ciafardini
Corporate Communications
(513) 900-5308
Andrew.Ciafardini@vantiv.com
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
