Vantiv Reports Second Quarter 2017 Results
CINCINNATI, Aug. 9, 2017 /PRNewswire/ -- Vantiv, Inc. (NYSE: VNTV) ("Vantiv" or the "company") today announced financial results for the second quarter ended June 30, 2017. Total revenue increased 12% to $998.8 million as compared to $891.2 million in the prior year period. Net revenue increased 10% to $530.0 million as compared to $480.5 million in the prior year period. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. increased 11% to $0.42 as compared to $0.38 in the prior year period. Pro forma adjusted net income per share increased 19% to $0.83 as compared to $0.70 in the prior year period. (See Schedule 1 for net income per diluted share attributable to Vantiv, Inc. and Schedule 2 for pro forma adjusted net income per share.)
"Our scale, distribution and technology have enabled us to consistently generate strong net revenue growth," said Charles Drucker, president and chief executive officer at Vantiv. "Our team continues to execute at the highest level, bringing our strategy of investing in high growth channels and verticals to life in a way that enhances our growth potential and increases shareholder value."
Merchant Services
Merchant Services net revenue increased 16% to $449.1 million in the second quarter as compared to $387.8 million in the prior year period, primarily due to a 10% increase in transactions and a 5% increase in net revenue per transaction. On an organic basis, Merchant Services net revenue grew low double digits in the second quarter as compared to the prior year period. Sales and marketing expenses increased 17% to $162.6 million in the second quarter as compared to $139.1 million in the prior year period, primarily due to strong new sales growth in partner channels. (See Schedule 3 for segment information.)
Financial Institution Services
Financial Institution Services net revenue decreased 13% to $80.9 million in the second quarter as compared to $92.7 million in the prior year period. Net revenue growth was impacted by compression from the Fifth Third Bank contract renewal, lapping the contribution from EMV card reissuance and fraud related services in the prior year period, and the de-conversion of a major client. Sales and marketing expenses decreased 2% to $5.6 million in the second quarter as compared to $5.7 million in the prior year period. (See Schedule 3 for segment information.)
Operating Expenses
Other operating costs increased 7% on a GAAP basis to $78.9 million in the second quarter as compared to $73.6 million in the prior year period. When excluding transition, acquisition and integration costs of $5.0 million, Other operating costs increased 5% on a pro forma basis to $74.0 million as compared to $70.1 million in the prior year period. (See schedule 1 for GAAP financial measures and Schedule 2 for non-GAAP and pro forma adjustments.)
General and administrative expenses increased 3% on a GAAP basis to $50.7 million in the second quarter as compared to $49.1 million in the prior year period. When excluding transition, acquisition and integration costs of $8.3 million as well as share-based compensation of $10.9 million, General and administrative expenses decreased 2% on a pro forma basis to $31.6 million as compared to $32.3 million in the prior year period. (See schedule 1 for GAAP financial measures and Schedule 2 for non-GAAP and pro forma adjustments.)
Adjusted EBITDA
Adjusted EBITDA increased 10% to $256.2 million in the second quarter as compared to $233.3 million in the prior year period. (See Schedule 6 for a reconciliation of GAAP net income to adjusted EBITDA.)
Depreciation and Amortization
Depreciation and amortization expense increased 20% on a GAAP basis to $78.4 million in the second quarter as compared to $65.2 million in the prior year period. Excluding intangible amortization of $54.3 million, depreciation and amortization expense increased 34% on a pro forma basis to $24.1 million as compared to $18.0 million in the prior year period. (See Schedule 1 for GAAP financial measures and Schedule 2 for non-GAAP and pro forma adjustments.)
$1.27 Billion Share Purchase
On August 7, 2017, Vantiv entered into a transaction agreement with Fifth Third Bank pursuant to which Vantiv will purchase 19,790,000 shares of its Class A common stock directly from Fifth Third Bank at a price of $64.04 per share, which is equal to the closing share price of Vantiv's Class A common stock on August 4, 2017. The total purchase price of approximately $1.27 billion was funded with an additional Term B Loan. In connection with the purchase, Vantiv expects to record a liability of approximately $650 million during the quarter ending September 30, 2017 under the tax receivable agreement Vantiv entered into with Fifth Third Bank at the time of its initial public offering.
Full-Year and Third Quarter Financial Outlook
For the full-year 2017, net revenue is expected to be $2,100 to $2,120 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 $1.31 - $1.36 for the full-year 2017. Pro forma adjusted net income per share is expected to be $3.31 - $3.36 for the full-year 2017. (See Schedule 7 for a reconciliation of the outlook for GAAP net income per share attributable to Vantiv, Inc. to pro forma adjusted net income per share.)
For the third quarter of 2017, net revenue is expected to be $544 to $554 million, representing an increase of 11% to 13% above the prior year period. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. is expected to be $0.41 - $0.43 for the third quarter of 2017. Pro forma adjusted net income per share is expected to be $0.88 - $0.90 for the third quarter of 2017. (See Schedule 7 for a reconciliation of the outlook for GAAP net income per share attributable to Vantiv, Inc. to pro forma adjusted net income per share.)
Earnings Conference Call and Audio Webcast
The company will host a conference call to discuss the second quarter financial results today at 8:00 a.m. ET. The conference call can be accessed live over the phone by dialing (855) 442-0877, or for international callers (724) 928-9460 and referencing "U.S. Analyst Call". A replay will be available approximately two hours after the call concludes and can be accessed by dialing (844) 230-8058, and entering replay passcode 6801825#. 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 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 www.vantiv.com, or follow us on Twitter, Facebook, LinkedIn, Google+ and YouTube.
© 2017 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.
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
Schedule 1
Vantiv, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Total revenue $998,764 $891,217 12% $1,926,966 $1,709,840 13%
Network fees and other costs 468,733 410,736 14% 926,825 798,149 16%
------- ------- -------
Net revenue(1) 530,031 480,481 10% 1,000,141 911,691 10%
Sales and marketing 168,263 144,844 16% 323,303 280,482 15%
Other operating costs 78,941 73,599 7% 154,865 147,302 5%
General and administrative 50,727 49,120 3% 140,025 93,104 50%
Depreciation and amortization 78,378 65,234 20% 154,464 133,464 16%
------ ------ ------- -------
Income from operations 153,722 147,684 4% 227,484 257,339 (12)%
Interest expense-net (29,750) (26,118) 14% (58,920) (53,847) 9%
Non-operating expenses(2) (3,411) (4,664) (27)% (7,535) (10,316) (27)%
------ ------ ------ -------
Income before applicable income taxes 120,561 116,902 3% 161,029 193,176 (17)%
Income tax expense(3) 33,707 38,441 (12)% 38,874 62,267 (38)%
------ ------ ------ ------
Net income 86,854 78,461 11% 122,155 130,909 (7)%
Less: Net income attributable to non- (18,077) (19,134) (6)% (24,493) (31,844) (23)%
controlling interests
Net income attributable to Vantiv, Inc. $68,777 $59,327 16% $97,662 $99,065 (1)%
======= ======= ======= =======
Net income per share attributable to
Vantiv, Inc. Class A common stock:
Basic $0.43 $0.38 13% $0.61 $0.64 (5)%
Diluted(4) $0.42 $0.38 11% $0.60 $0.63 (5)%
Shares used in computing net income per share of Class A common stock:
Basic 161,266,692 155,670,267 161,072,513 155,533,813
Diluted 162,510,616 197,258,209 162,483,315 197,018,018
Non Financial Data:
Transactions (in millions) 6,587 6,183 7% 12,862 12,003 7%
(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, 2017 and 2016 primarily relate to the change in fair value of a tax receivable agreement ("TRA") entered into as part of the acquisition of Mercury.
(3) Includes a credit of approximately $5.5 million and $14.1 million for the three and six months ended June 30, 2017, respectively, relating to excess tax benefits as a result of the Company adopting new stock compensation accounting guidance on January 1, 2017 which requires those benefits be recorded in income tax expense.
(4) 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. During the three and six months
ended June 30, 2017, approximately 35.0 million weighted-average Class B units of Vantiv Holding were excluded in computing diluted net income per share because including them would have an antidilutive effect. As the Class B units of Vantiv Holding were not included, the numerator used in the calculation of diluted net income per share was equal to the numerator used in the calculation of
basic net income per share for the three and six months ended June 30, 2017. The components of the diluted net income per share calculation are as follows:
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
Income before
applicable income
taxes $ - $116,902 $ - $193,176
Taxes - 42,085 - 69,543
--- ------ --- ------
Net income $68,777 $74,817 $97,662 $123,633
Diluted shares 162,510,616 197,258,209 162,483,315 197,018,018
Diluted EPS $0.42 $0.38 $0.60 $0.63
Schedule 2
Vantiv, Inc.
Pro Forma Adjusted Net Income
(Unaudited)
(in thousands, except share data)
Three Months Ended June 30, % Change Six Months Ended June 30, % Change
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
(in thousands) (in thousands)
Income before applicable income taxes $120,561 $116,902 3% $161,029 $193,176 (17)%
Non-GAAP Adjustments:
Transition, acquisition and integration costs(1) 13,236 12,408 7% 62,770 19,571 221%
Share-based compensation(2) 10,881 7,940 37% 21,461 16,292 32%
Intangible amortization(3) 54,294 47,242 15% 106,200 94,907 12%
Non-operating expenses(4) 3,411 4,664 (27)% 7,535 10,316 (27)%
----- ----- ----- ------
Non-GAAP Adjusted Income Before Applicable Taxes 202,383 189,156 7% 358,995 334,262 7%
Less: Pro Forma Adjustments
Income tax expense(5) 68,810 68,096 1% 122,058 120,334 1%
Tax adjustments(6) (31,579) (18,070) 75% (63,157) (36,140) 75%
------- ------- ------- -------
Total pro forma tax expense 37,231 50,026 (26)% 58,901 84,194 (30)%
Pro forma tax rate 18% 26% 16% 25%
Other(7) 428 692 (38)% 684 1,227 (44)%
--- --- --- -----
Pro forma adjusted net income $164,724 $138,438 19% $299,410 $248,841 20%
======== ======== ======== ========
Pro forma adjusted net income per share $0.83 $0.70 19% $1.52 $1.26 21%
Adjusted shares outstanding 197,553,442 197,258,209 197,526,141 197,018,018
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:
(1) Represents acquisition and integration costs incurred in connection with our acquisitions, charges related to employee termination benefits and other transition activities. Transition, acquisition and integration costs for the three months ended June 30, 2017 and 2016 include $4,976 and $3,487 in Other operating costs, respectively and $8,260 and $8,921 in General and administrative ("G&A"), respectively. Transition, acquisition and integration
costs for the six months ended June 30, 2017 and 2016 include $8,239 and $5,975 in Other operating costs, respectively and $54,531 and $13,596 in General and administrative ("G&A"), respectively. Included in Transition, acquisition and integration costs in the six months ended June 30, 2017 is a $38 million charge to G&A related to a settlement agreement stemming from legacy litigation of an acquired company.
(2) Share-based compensation is recorded in G&A.
(3) Represents amortization of intangible assets acquired through business combinations and customer portfolio and related asset acquisitions.
(4) Non-operating expenses for the three and six months ended June 30, 2017 and 2016 primarily relate to the change in the fair value of a TRA entered into as part of the acquisition of Mercury.
(5) Represents adjusted income tax expense to reflect an effective tax rate of 34.0% for 2017 and 36.0% for 2016, respectively, assuming the conversion of the Class B units of Vantiv Holding into shares of Class A common stock, including the tax effect of adjustments described above. The 2017 effective tax rate includes the impact of the excess tax benefits relating to stock compensation as a result of the Company adopting new stock compensation
accounting guidance on January 1, 2017 which requires those benefits to be recorded in income tax expense. The effective tax rate is expected to remain at 34.0% for the remainder of 2017.
(6) Represents 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.
(7) Represents the non-controlling interest, net of pro forma income tax expense discussed in (5) above, associated with a consolidated joint venture.
Schedule 3
Vantiv, Inc.
Segment Information
(Unaudited) (in thousands)
Merchant Services
-----------------
Three Months Ended June 30,
2017 2016 % Change
---- ---- --------
Total revenue $886,675 $762,593 16%
Network fees and other costs 437,532 374,820 17%
------- ------- ---
Net revenue 449,143 387,773 16%
Sales and marketing 162,647 139,108 17%
Segment profit $286,496 $248,665 15%
======== ======== ===
Non-financial data:
Transactions (in millions) 5,673 5,156 10%
Net revenue per transaction $0.0792 $0.0752 5%
Six Months Ended June 30,
2017 2016 % Change
---- ---- --------
Total revenue $1,698,711 $1,457,173 17%
Network fees and other costs 863,676 728,154 19%
------- ------- ---
Net revenue 835,035 729,019 15%
Sales and marketing 311,606 268,444 16%
------- ------- ---
Segment profit $523,429 $460,575 14%
======== ======== ===
Non-financial data:
Transactions (in millions) 11,014 10,003 10%
Net revenue per transaction $0.0758 $0.0729 4%
Financial Institution Services
------------------------------
Three Months Ended June 30,
2017 2016 % Change
---- ---- --------
Total revenue $112,089 $128,624 (13)%
Network fees and other costs 31,201 35,916 (13)%
------ ------ ----
Net revenue 80,888 92,708 (13)%
Sales and marketing 5,616 5,736 (2)%
----- ----- ---
Segment profit $75,272 $86,972 (13)%
======= ======= ====
Non-financial data:
Transactions (in millions) 914 1,027 (11)%
Net revenue per transaction $0.0885 $0.0903 (2)%
Six Months Ended June 30,
2017 2016 % Change
---- ---- --------
Total revenue $228,255 $252,667 (10)%
Network fees and other costs 63,149 69,995 (10)%
------ ------ ----
Net revenue 165,106 182,672 (10)%
Sales and marketing 11,697 12,038 (3)%
------ ------ ---
Segment profit $153,409 $170,634 (10)%
======== ======== ====
Non-financial data:
Transactions (in millions) 1,848 2,000 (8)%
Net revenue per transaction $0.0893 $0.0913 (2)%
Schedule 4
Vantiv, Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited) (in thousands)
June 30, 2017 December 31, 2016
------------- -----------------
Assets
Current assets:
Cash and cash equivalents $119,916 $139,148
Accounts receivable-net 880,289 940,052
Related party receivable 1,830 1,751
Settlement assets 144,964 152,490
Prepaid expenses 54,925 39,229
Other 38,059 15,188
------ ------
Total current assets 1,239,983 1,287,858
Customer incentives 65,426 67,288
Property, equipment and software-net 465,846 348,553
Intangible assets-net 762,520 787,820
Goodwill 4,163,798 3,738,589
Deferred taxes 721,187 771,139
Other assets 26,099 42,760
------
Total assets $7,444,859 $7,044,007
========== ==========
Liabilities and equity
Current liabilities:
Accounts payable and accrued expenses $499,550 $471,979
Related party payable 3,375 3,623
Settlement obligations 834,686 801,381
Current portion of note payable 131,119 131,119
Current portion of tax receivable agreement obligations to related parties 242,143 191,014
Current portion of tax receivable agreement obligations 54,258 60,400
Deferred income 18,731 7,907
Current maturities of capital lease obligations 8,672 7,870
Other 6,961 13,719
----- ------
Total current liabilities 1,799,495 1,689,012
Long-term liabilities:
Note payable 3,384,351 3,089,603
Tax receivable agreement obligations to related parties 288,030 451,318
Tax receivable agreement obligations 39,895 86,640
Capital lease obligations 8,863 13,223
Deferred taxes 94,615 62,148
Other 49,107 44,774
------ ------
Total long-term liabilities 3,864,861 3,747,706
Total liabilities 5,664,356 5,436,718
Commitments and contingencies
Equity:
Total equity(1) 1,780,503 1,607,289
Total liabilities and equity $7,444,859 $7,044,007
========== ==========
(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,
2017 2016
---- ----
Operating Activities:
Net income $122,155 $130,909
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation
and
amortization
expense 154,464 133,464
Amortization
of
customer
incentives 12,975 12,581
Amortization
of debt
issuance
costs 2,308 3,237
Share-
based
compensation
expense 21,461 16,292
Deferred
taxes 40,500 32,400
Excess tax
benefit
from
share-
based
compensation - (8,067)
Tax
receivable
agreements
non-cash
items 7,553 10,252
Other 1,284 382
Change in operating assets
and liabilities:
Accounts
receivable
and
related
party
receivable 65,591 (41,879)
Net
settlement
assets
and
obligations 40,831 (31,082)
Customer
incentives (13,585) (23,343)
Prepaid
and other
assets (33,989) (1,695)
Accounts
payable
and
accrued
expenses 28,773 17,867
Payable to
related
party (248) (1,304)
Other
liabilities (15,155) (1,528)
Net cash
provided
by
operating
activities 434,918 248,486
------- -------
Investing Activities:
Purchases
of
property
and
equipment (58,901) (62,883)
Acquisition
of
customer
portfolios
and
related
assets
and other (19,570) (883)
Purchase
of
derivative
instruments - (21,523)
Cash used
in
acquisitions,
net of
cash
acquired (531,534) -
-------- ---
Net cash
used in
investing
activities (610,005) (85,289)
-------- -------
Financing Activities:
Borrowings
on
revolving
credit
facility 3,051,000 855,000
Repayment
of
revolving
credit
facility (2,693,000) (855,000)
Repayment
of debt
and
capital
lease
obligations (70,228) (69,521)
Payment of
debt
issuance
costs (1,098) -
Proceeds
from
issuance
of Class
A common
stock
under
employee
stock
plans 10,096 8,538
Repurchase
of Class A
common
stock (to
satisfy
tax
withholding
obligations) (5,691) (5,784)
Settlement
of certain
tax
receivable
agreements (68,804) (41,163)
Payments
under tax
receivable
agreements (55,695) (53,474)
Excess tax
benefit
from
share-
based
compensation - 8,067
Distributions
to non-
controlling
interests (10,725) (4,220)
Other - (12)
Net cash
provided
by (used
in)
financing
activities 155,855 (157,569)
------- --------
Net
(decrease)
increase
in cash
and cash
equivalents (19,232) 5,628
Cash and
cash
equivalents-
Beginning
of period 139,148 197,096
Cash and
cash
equivalents-
End of
period $119,916 $202,724
======== ========
Cash Payments:
Interest $56,587 $50,814
Taxes 20,995 13,443
Schedule 6
Vantiv, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited) (in thousands)
Three Months Ended June 30, % Change Six Months Ended June 30, % Change
2017 2016 2017 2016
---- ---- ---- ----
Net income $86,854 $78,461 11% $122,155 $130,909 (7)%
Income tax expense 33,707 38,441 (12)% 38,874 62,267 (38)%
Non-operating expenses(1) 3,411 4,664 (27)% 7,535 10,316 (27)%
Interest expense-net 29,750 26,118 14% 58,920 53,847 9%
Share-based compensation 10,881 7,940 37% 21,461 16,292 32%
Transition, acquisition and integration costs(2) 13,236 12,408 7% 62,770 19,571 221%
Depreciation and amortization 78,378 65,234 20% 154,464 133,464 16%
------ ------ ------- -------
Adjusted EBITDA $256,217 $233,266 10% $466,179 $426,666 9%
======== ======== ======== ========
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, 2017 and 2016 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. Included in Transition, acquisition and integration costs in the six months ended June 30, 2017 is a $38 million charge related to a settlement agreement stemming from legacy litigation of an acquired company.
Schedule 7
Vantiv, Inc.
Outlook Summary
(Unaudited)
Third Quarter Financial Outlook Full Year Financial Outlook
------------------------------- ---------------------------
Three Months Ended September 30, Year Ended December 31,
2017 Outlook 2016 Actual % Change 2017 Outlook 2016 Actual % Change
------------ ----------- -------- ------------ ----------- --------
GAAP net income per share $0.41 - $0.43 $0.41 $1.31 - $1.36 $1.32
attributable to Vantiv, Inc.
0% - 5% (1%) - 3%
Adjustments to reconcile GAAP $0.47 $0.30 $2.00 $1.41
to non-GAAP pro forma adjusted net
income per share(1) 57% 42%
Pro forma adjusted net income per $0.88 - $0.90 $0.71 $3.31 - $3.36 $2.73
share
24% - 27% 21% - 23%
Non-GAAP and Pro Forma Financial Measures
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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.
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(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, the full year 2017 financial outlook includes a $38 million charge recorded in March 2017 related to a
settlement agreement stemming from legacy litigation of an acquired company; (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 tax rate of 34.0% for the three months ended September 30, 2017 and year ended December 31, 2017, which includes the impact of excess tax benefits relating to stock
compensation as a result of the Company adopting new stock compensation accounting guidance on January 1, 2017 which requires those benefits be recorded in income tax expense and 36.0% for the three months ended September 30, 2016 and year ended December 31, 2016, 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.
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SOURCE Vantiv, Inc.
