Worldpay Reports Fourth Quarter and Full-Year 2017 Results
CINCINNATI and LONDON, Feb. 28, 2018 /PRNewswire/ -- Worldpay, Inc. (NYSE: WP, LSE: WPY) ("Worldpay" or the "Company") today announced financial results for the fourth quarter and full-year financial results for predecessor companies Vantiv, Inc. and Worldpay Group plc for the quarterly and full-year periods ended December 31, 2017. The Company also provided guidance for the combined Company for the first quarter and full-year 2018 and furnished non-GAAP supplemental "historical as if combined" pro forma financial results for 2017 and 2016. Vantiv, Inc.'s acquisition of Worldpay Group plc closed on January 16, 2018.
"Both of our heritage companies performed well during 2017's fourth quarter, creating momentum for Worldpay as the leader in the rapidly expanding global payments industry," said Charles Drucker, chairman and co-chief executive officer.
Philip Jansen, co-chief executive officer at Worldpay, added "Differentiated by our technological capabilities, distribution, scale, and talented colleagues, Worldpay is uniquely able to power global integrated omni-commerce, positioning us to do more for our clients together than either company could have achieved on its own."
Vantiv, Inc. Fourth Quarter and Full-Year 2017 Results
(unaudited)
(in millions, except share data)
-------------------------------
Three Months Ended Year Ended
December 31, December 31, % December 31, December 31, %
2017 2016 Change 2017 2016 Change
---- ---- ---- ----
Total revenue $1,066 $955 12% $4,026 $3,579 13%
Net revenue 569 502 13% 2,123 1,905 11%
Merchant Services 484 412 17% 1,787 1,546 16%
Financial Institution Services 85 90 (5)% 336 359 (6)%
Adjusted EBITDA 282 248 13% 1,018 912 12%
GAAP Net loss per diluted share $(0.37) $0.29 (228)% $0.80 $1.32 (39)%
attributable to Vantiv, Inc.
Adjusted net income per share $0.97 $0.75 29% $3.37 $2.73 23%
Worldpay Group plc Fourth Quarter and Full-Year 2017 Results
(unaudited)
(in millions)
------------
Three Months Ended Year Ended
December 31, December 31, % Foreign December 31, December 31, % Foreign
2017 2016 Change Currency 2017 2016 Change Currency
Neutral Neutral
Total revenue BPS 1,293 BPS 1,235 5% 8% BPS 5,071 BPS 4,541 12% 9%
Net Revenue 317 301 5% 7% 1,221 1,124 9% 7%
Gross Profit 277 266 4% 6% 1,067 985 8% 7%
Global eCom 113 93 21% 21% 424 357 19% 19%
WPUK 104 106 (1)% (1)% 404 397 2% 2%
WPUS 60 67 (10)% (5)% 239 231 3% (2)%
Underlying EBITDA 143 130 10% 11% 520 468 11% 11%
Worldpay, Inc. Combined Company First Quarter and Full-Year Financial Outlook
(in millions, except share data)
-------------------------------
Three Months Ended March 31, Year Ended December 31,
2018 Outlook(1) 2017 Actuals(2) 2018 Outlook(1) 2017 Actuals(2)
-------------- -------------- -------------- --------------
Net revenue $825 - $840 $470 $3,800 - $3,890 $2,123
GAAP Net income per diluted share attributable to $(0.51) - $(0.46) $0.17 $0.56 - $0.71 $0.80
Worldpay, Inc
Adjusted net income per share $0.76 - $0.79 $0.68 $3.66 - $3.76 $3.37
(1) Combined company guidance
excludes Worldpay Group plc
Net Revenue and EPS
contribution for the period
prior to the transaction
closing from January 1, 2018 -
January 15, 2018. Combined
company guidance is based on
an assumed exchange rate of
U.S. dollar/pound sterling of
$1.35.
(2) 2017 actuals include Vantiv,
Inc. results only.
Assuming the transaction closed on January 1, 2017, Net Revenue outlook for three months and full year ended 2018 would have been $890-$905 million and $3,865-$3,955 million, representing revenue growth of 9-11% and 7-9%, respectively.
Supplemental Information
The company is providing non-GAAP supplemental information to illustrate what the combined Vantiv, Inc./Worldpay Group plc adjusted financial results would have been, given the assumptions outlined in the supplemental materials, had the transaction been effective at the beginning of 2016. Refer to the "Supplemental Information" section that begins on page 12.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss the fourth quarter and full-year 2017 financial results today at 8:00 a.m. ET. The conference call can be accessed live over the phone in the U.S. and Canada by dialing (888) 710-4011, in the U.K. by dialing 0800 404 7655, or for international callers (719) 325-4891, and referencing code 5521502. A replay will be available approximately two hours after the call concludes and can be accessed for the U.S. and Canada by dialing (888) 203-1112, in the U.K. by dialing 0808 101 1153, or for international callers (719) 457-0820, and entering replay passcode 5521502. The call will also be webcast live from the Company's investor relations website at http://investor.worldpay.com. Following completion of the call, a recorded replay of the webcast will be available on the website.
About Worldpay, Inc.
Worldpay, Inc. (NYSE: WP; LSE: WPY) is a leading payments technology company with unique capability to power global integrated omni-commerce. With industry-leading scale and an unmatched integrated technology platform, Worldpay offers clients a comprehensive suite of products and services globally, delivered through a single provider.
Worldpay processes over 40 billion transactions annually through more than 300 payment types across 146 countries and 126 currencies. The company's growth strategy includes expanding into high-growth markets, verticals and customer segments, including global eCommerce, Integrated Payments and B2B.
Worldpay, Inc. was formed in 2018 through the combination of the No. 1 merchant acquirers in the U.S. and the U.K. Worldpay, Inc. trades on the New York Stock Exchange as "WP" and the London Stock Exchange as "WPY."
Non-GAAP and Pro Forma Financial Measures
This earnings release presents non-GAAP and pro forma financial information including net revenue, adjusted EBITDA, Underlying EBITDA, adjusted net income, and 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 adjusted 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 successfully integrate the businesses of our predecessor companies; (vii) our ability to identify and complete acquisitions, joint ventures and partnerships; (viii) failure to comply with applicable requirements of Visa, MasterCard or other payment networks or changes in those requirements; (ix) our ability to pass along fee increases; (x) termination of sponsorship or clearing services; (xi) loss of clients or referral partners; (xii) reductions in overall consumer, business and government spending; (xiii) fraud by merchants or others; (xiv) a decline in the use of credit, debit or prepaid cards; (xv) consolidation in the banking and retail industries; (xvi) changes in foreign currency exchange rates; (xvii) the effects of governmental regulation or changes in laws; (xviii) geopolitical, regulatory, tax and business risks associated with our international operations; and (xix) outcomes of future litigation or investigations and our dual-listings with the NYSE and LSE. 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 or Ignatius Njoku
Investor Relations
+1 (866) 254-4811
+1 (513) 900-4811
IR@worldpay.com
Media
Andrew Ciafardini
Corporate Communications
+1 (513) 900-5308
Andrew.Ciafardini@worldpay.com
Schedule 1
Worldpay, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except share data)
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Total revenue $1,065,746 $955,132 12% $4,026,477 $3,578,991 13%
Network fees and other costs 496,807 452,720 10% 1,903,165 1,674,230 14%
------- ------- --------- ---------
Net revenue(1) 568,939 502,412 13% 2,123,312 1,904,761 11%
Sales and marketing 172,424 148,521 16% 669,506 582,251 15%
Other operating costs 84,318 74,771 13% 318,665 294,235 8%
General and administrative 105,469 55,876 89% 295,101 189,707 56%
Depreciation and amortization 81,529 70,504 16% 318,493 270,054 18%
------ ------ ------- -------
Income from operations 125,199 152,740 (18)% 521,547 568,514 (8)%
Interest expense-net (43,220) (28,213) 53% (140,661) (109,534) 28%
Non-operating income (expense)(2) 419,154 (21,307) NM 432,826 (36,256) NM
------- ------- ------- -------
Income before applicable income taxes 501,133 103,220 385% 813,712 422,724 92%
Income tax expense(3) 547,501 40,262 NM 631,020 141,853 345%
------- ------ ------- -------
Net (loss) income (46,368) 62,958 (174)% 182,692 280,871 (35)%
Less: Net income attributable to non- (13,302) (15,111) (12)% (52,582) (67,663) (22)%
controlling interests
Net (loss) income attributable to $(59,670) $47,847 (225)% $130,110 $213,208 (39)%
Worldpay, Inc.
Net (loss) income per share attributable to
Worldpay, Inc. Class A common stock:
Basic $(0.37) $0.30 (223)% $0.81 $1.37 (41)%
Diluted(4) $(0.37) $0.29 (228)% $0.80 $1.32 (39)%
Shares used in computing net (loss) income
per share of Class A common stock:
Basic 161,554,183 157,355,173 161,293,062 156,043,636
Diluted 161,554,183 162,201,382 162,807,146 162,115,549
Non Financial Data:
Transactions (in millions) 6,877 6,700 3% 26,289 24,973 5%
(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 and payment network fees.
(2) Non-operating income for the three
months and year ended December 31,
2017 primarily consists of a gain
of approximately $418.9 million
relating to the impact to the tax
receivable agreement ("TRA")
liability as a result of the Tax
Cuts and Jobs Act ("Tax Reform")
being enacted on December 22, 2017
and an unrealized gain of
approximately $8.7 million for the
three months and $33.1 million for
the year ended, respectively,
relating to the change in fair
value of a deal contingent forward
entered into in connection with
the Worldpay Group plc
acquisition, partially offset by
the change in fair value of a TRA
entered into as part of the
acquisition of Mercury ("Mercury
TRA"). Non-operating expense for
the three months and year ended
December 31, 2016 relates to the
change in fair value of the
Mercury TRA as well as expenses
relating to the refinancing of our
senior secured credit facilities
in October 2016.
(3) Primarily includes an adjustment of
$363.6 million to deferred taxes
for the change in tax rates and
the impact to the TRA discussed in
(2) above, both resulting from the
Tax Reform enacted on December 22,
2017.
(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
months and year ended December 31,
2017, approximately 15.3 million
and 27.2 million weighted-average
dilutive Class B units of Vantiv
Holding were excluded in computing
diluted net income per share
because including them would have
an antidilutive effect. During the
three months and year ended
December 31, 2016, 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 months and year ended
December 31, 2017 and 2016.
Additionally, due to the net loss
for the three months ended
December 31, 2017, any remaining
potentially dilutive securities
were also excluded from the
denominator in computing dilutive
net income per share.
Schedule 2
Worldpay, Inc.
Adjusted Net Income
(Unaudited)
(in thousands, except share data)
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Income before applicable income $501,133 $103,220 385% $813,712 $422,724 92%
taxes
Non-GAAP Adjustments:
Transition, acquisition and 62,260 15,226 309% 130,146 37,558 247%
integration costs(1)(3)
Share-based compensation(3) 12,787 9,979 28% 47,855 35,871 33%
Intangible amortization(2)(3) 56,369 48,118 17% 217,849 190,822 14%
Non-operating (income) (419,154) 21,307 NM (432,826) 36,256 NM
expenses(4)
Non-GAAP adjusted income 213,395 197,850 8% 776,736 723,231 7%
before applicable income taxes
Less: Adjustments
Adjusted tax expense(5) 38,989 50,108 (22)% 133,804 184,203 (27)%
Adjusted tax rate 18% 25% 17% 25%
Other(6) 661 (381) NM 1,804 1,200 50%
---- -----
Adjusted net income $173,745 $148,123 17% $641,128 $537,828 19%
======== ======== ======== ========
Adjusted net income per share $0.97 $0.75 29% $3.37 $2.73 23%
Adjusted shares outstanding(7) 178,625,196 197,244,208 190,052,282 197,158,375
Non-GAAP and Adjusted Financial Measures
This schedule presents non-GAAP and adjusted 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.
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. Included in
Transition, acquisition and
integration costs for the three
months and year ended December 31,
2017 is a charge of $3.5 million
and $41.5 million, respectively,
to G&A related to a settlement
agreement stemming from legacy
litigation of an acquired company.
(2) Represents amortization of
intangible assets acquired through
business combinations and customer
portfolio and related asset
acquisitions.
(3) Below are the adjustments to Other
operating costs, General and
administrative and Depreciation
and amortization.
Three Months Ended December 31, 2017 Three Months Ended December 31, 2016
Transition, Share-Based Amortization Of Transition, Share-Based Amortization Of
Acquisition & Compensation Intangible Assets Acquisition & Compensation Intangible Assets
Integration Integration
----------- -----------
Other operating costs $4,018 $ - $ - $1,133 $ - $ -
General and administrative 58,242 12,787 - 14,093 9,979 -
Depreciation and amortization - - 56,369 - - 48,118
--- --- ------
Total adjustments $62,260 $12,787 $56,369 $15,226 $9,979 $48,118
======= ======= ======= ======= ====== =======
Year Ended December 31, 2016
Year Ended December 31, 2017
Transition, Share-Based Amortization Of Transition, Share-Based Amortization Of
Acquisition & Compensation Intangible Assets Acquisition & Compensation Intangible
Integration Integration Assets
----------- ----------- ------
Other operating costs $14,864 $ - $ - $8,877 $ - $ -
General and administrative 115,282 47,855 - 28,681 35,871 -
Depreciation and amortization - - 217,849 - - 190,822
--- --- -------
Total adjustments $130,146 $47,855 $217,849 $37,558 $35,871 $190,822
======== ======= ======== ======= ======= ========
(4) Non-operating (income) expense for
the three months and year ended
December 31, 2017 and 2016
primarily consists of the
following:
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
Impact of Tax Reform to TRA liability $(418,858) $ - $(418,858) $ -
Unrealized gain related to change in fair value of deal (8,743) - (33,108) -
contingent forward
Change in fair value of Mercury TRA 3,263 4,594 13,971 19,474
Expenses related to refinancing of senior secured credit 5,184 16,713 5,169 16,782
facilities and other
Non-operating (income) expense $(419,154) $21,307 $(432,826) $36,256
========= ======= ========= =======
(5) Represents adjusted income tax
expense to reflect an effective
tax rate of 34% for 2017 and 36%
for 2016, 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. 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.
(6) Represents the non-controlling
interest, net of pro forma income
tax expense discussed in (5)
above, associated with a
consolidated joint venture.
(7) The adjusted shares outstanding
include 17.1 million and 27.2
million weighted average Class B
units of Vantiv Holding and other
potentially dilutive securities
that are excluded from the GAAP
dilutive net income per share
calculation for the three months
and year ended December 31, 2017,
respectively, because including
them would have an antidilutive
effect. The adjusted shares
outstanding include 35.0 million
weighted-average Class B units
that are excluded from the GAAP
dilutive net income per share
calculation for the three months
and year ended December 31, 2016
because including them would have
an antidilutive effect.
Schedule 3
Worldpay, Inc.
Segment Information
(Unaudited)
(in thousands)
Merchant Services
-----------------
Three Months Ended December 31,
2017 2016 % Change
---- ---- --------
Total revenue $952,192 $831,918 14%
Network fees and other costs 468,640 419,470 12%
------- ------- ---
Net revenue 483,552 412,448 17%
Sales and marketing 166,851 141,835 18%
Segment profit $316,701 $270,613 17%
======== ======== ===
Non-financial data:
Transactions (in millions) 6,031 5,711 6%
Net revenue per transaction $0.0802 $0.0722 11%
Year Ended December 31,
2017 2016 % Change
---- ---- --------
Total revenue $3,567,533 $3,082,951 16%
Network fees and other costs 1,780,179 1,537,072 16%
--------- --------- ---
Net revenue 1,787,354 1,545,879 16%
Sales and marketing 646,479 557,942 16%
------- ---
Segment profit $1,140,875 $987,937 15%
========== ======== ===
Non-financial data:
Transactions (in millions) 22,747 20,955 9%
Net revenue per transaction $0.0786 $0.0738 7%
Financial Institution Services
------------------------------
Three Months Ended December 31,
2017 2016 % Change
---- ---- --------
Total revenue $113,554 $123,214 (8)%
Network fees and other costs 28,167 33,250 (15)%
------ ------ ----
Net revenue 85,387 89,964 (5)%
Sales and marketing 5,573 6,686 (17)%
----- ----- ----
Segment profit $79,814 $83,278 (4)%
======= ======= ===
Non-financial data:
Transactions (in millions) 846 989 (14)%
Net revenue per transaction $0.1009 $0.091 11%
Year Ended December 31,
2017 2016 % Change
---- ---- --------
Total revenue $458,944 $496,040 (7)%
Network fees and other costs 122,986 137,158 (10)%
------- ------- ----
Net revenue 335,958 358,882 (6)%
Sales and marketing 23,027 24,309 (5)%
------ ------ ---
Segment profit $312,931 $334,573 (6)%
======== ======== ===
Non-financial data:
Transactions (in millions) 3,542 4,018 (12)%
Net revenue per transaction $0.0948 $0.0893 6%
Schedule 4
Worldpay, Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in thousands)
December 31, December 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash equivalents $126,503 $139,148
Accounts receivable-net 985,888 940,052
Related party receivable 736 1,751
Settlement assets 142,010 152,490
Prepaid expenses 33,524 39,229
Other 83,951 15,188
------ ------
Total current assets 1,372,612 1,287,858
Customer incentives 68,365 67,288
Property, equipment and software-net 473,723 348,553
Intangible assets-net 678,532 787,820
Goodwill 4,172,964 3,738,589
Deferred taxes 739,524 771,139
Proceeds from senior unsecured notes 1,135,205 -
Other assets 26,048 42,760
------
Total assets $8,666,973 $7,044,007
========== ==========
Liabilities and equity
Current liabilities:
Accounts payable and accrued expenses $622,871 $471,979
Related party payable 9,013 3,623
Settlement obligations 816,235 801,381
Current portion of note payable 107,897 131,119
Current portion of tax receivable agreement obligations to related parties 190,220 191,014
Current portion of tax receivable agreement obligations 55,324 60,400
Deferred income 18,879 7,907
Current maturities of capital lease obligations 8,044 7,870
Other 5,975 13,719
----- ------
Total current liabilities 1,834,458 1,689,012
Long-term liabilities:
Note payable 5,586,348 3,089,603
Tax receivable agreement obligations to related parties 489,780 451,318
Tax receivable agreement obligations 45,247 86,640
Capital lease obligations 4,456 13,223
Deferred taxes 65,617 62,148
Other 40,413 44,774
------ ------
Total long-term liabilities 6,231,861 3,747,706
Total liabilities 8,066,319 5,436,718
Commitments and contingencies
Equity:
Total equity (1) 600,654 1,607,289
Total liabilities and equity $8,666,973 $7,044,007
========== ==========
(1) Includes equity attributable
to non-controlling
interests.
Schedule 5
Worldpay, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Year Ended
December 31, 2017 December 31, 2016
----------------- -----------------
Operating Activities:
Net income $182,692 $280,871
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 318,493 270,054
Amortization of customer incentives 24,347 25,818
Amortization and write-off of debt issuance costs 5,989 22,584
Unrealized gain on foreign currency forward (33,108) -
Share-based compensation expense 47,855 35,871
Deferred tax expense 596,802 79,668
Excess tax benefit from share-based compensation - (12,167)
Tax receivable agreements non-cash items (421,663) (3,928)
Other 3,966 467
Change in operating assets and liabilities:
Accounts receivable and related party receivable (38,914) (212,862)
Net settlement assets and obligations 25,334 79,719
Customer incentives (24,502) (42,548)
Prepaid and other assets (1,214) 39,636
Accounts payable and accrued expenses 125,103 92,749
Payable to related party 5,390 (1,075)
Other liabilities (31,759) (9,722)
Net cash provided by operating activities 784,811 645,135
------- -------
Investing Activities:
Purchases of property and equipment (110,805) (118,194)
Acquisition of customer portfolios and related assets and other (41,784) (23,627)
Purchase of derivative instruments - (21,523)
Cash used in acquisitions, net of cash acquired (531,534) (406,777)
-------- --------
Net cash used in investing activities (684,123) (570,121)
-------- --------
Financing Activities:
Proceeds from issuance of long-term debt 1,270,000 3,234,375
Proceeds from issuance of senior unsecured notes 1,135,205 -
Repayment of debt and capital lease obligations (143,708) (3,084,922)
Borrowings on revolving credit facility 8,442,000 1,250,000
Repayment of revolving credit facility (8,217,000) (1,250,000)
Payment of debt issuance costs (27,621) (20,115)
Proceeds from issuance of Class A common stock under employee stock plans 14,566 15,389
Purchase and cancellation of Class A common stock (1,268,057) -
Repurchase of Class A common stock - (81,369)
Repurchase of Class A common stock (to satisfy tax withholding obligations) (10,092) (6,248)
Settlement of certain tax receivable agreements (93,902) (149,022)
Payments under tax receivable agreements (46,472) (40,271)
Excess tax benefit from share-based compensation - 12,167
Distribution to non-controlling interests (22,552) (12,934)
Other - (12)
Net cash used in financing activities 1,032,367 (132,962)
--------- --------
Net decrease in cash and cash equivalents 1,133,055 (57,948)
Cash and cash equivalents-Beginning of period 139,148 197,096
Cash and cash equivalents-End of period $1,272,203 $139,148
========== ========
Cash Payments:
Interest $123,056 $102,695
Income taxes 45,801 51,140
Non-cash Items:
Issuance of tax receivable agreements to related parties $647,507 $171,162
Schedule 6
Worldpay, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited)
(in thousands)
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Net (loss) income $(46,368) $62,958 (174) % $182,692 $280,871 (35)%
Income tax expense(1) 547,501 40,262 NM 631,020 141,853 345%
Non-operating (income) expenses(2) (419,154) 21,307 NM (432,826) 36,256 NM
Interest expense-net 43,220 28,213 53% 140,661 109,534 28%
Share-based compensation 12,787 9,979 28% 47,855 35,871 33%
Transition, acquisition and integration costs(3) 62,260 15,226 309% 130,146 37,558 247%
Depreciation and amortization 81,529 70,504 16% 318,493 270,054 18%
------ ------ ------- -------
Adjusted EBITDA $281,775 $248,449 13% $1,018,041 $911,997 12%
======== ======== ========== ========
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) See note (3) in Schedule
1.
(2) See note (4) in Schedule
2.
(3) See note (3) in Schedule
2.
Schedule 7
Worldpay, Inc.
Outlook Summary
(Unaudited)
First Quarter Financial Outlook Full Year Financial Outlook
------------------------------- ---------------------------
Three Months Ended March 31, Year Ended December 31,
2018 Outlook(1) 2017 Actual(2) 2018 Outlook(1) 2017 Actual(2)
-------------- -------------- -------------- --------------
GAAP net income per share attributable to Worldpay, ($0.51) - ($0.46) $0.17 $0.56 - $0.71 $0.80
Inc.
Adjustments to reconcile GAAP to non-GAAP $1.27 - $1.25 $0.51 $3.10 - $3.05 $2.57
adjusted net income per share(3)
Adjusted net income per share $0.76 - $0.79 $0.68 $3.66 - $3.76 $3.37
============= ===== ============= =====
Non-GAAP and Adjusted Financial Measures
This schedule presents non-GAAP and adjusted 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) Combined company guidance excludes Worldpay
Group plc EPS contribution for the period
prior to the transaction closing from
January 1, 2018 to January 15, 2018.
Combined company guidance is based on an
assumed exchange rate of U.S. dollar/pound
sterling of $1.35.
(2) 2017 actuals include Vantiv, Inc. results
only.
(3) Represents estimated ranges of 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 is
primarily associated with the change in the
fair value of a TRA entered into as part of
the acquisition of Mercury and a realized
gain of approximately $56 million relating
to the settlement of a deal contingent
forward entered into in connection with the
acquisition of Worldpay Group plc (e)
adjustments to income tax expense to reflect
an effective tax rate for the three months
ended March 31, 2018 and the full year 2018
based on Tax Reform and a new tax structure,
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
(f) 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.
PRELIMINARY ADJUSTED COMBINED SUPPLEMENTAL INFORMATION
We are providing this preliminary supplemental non-GAAP (Generally Accepted Accounting Principles) information to illustrate what the combined Vantiv, Inc./Worldpay Group plc (Company renamed Worldpay, Inc.) would have been had the transactions been effective at the beginning of 2016 with the new segment reporting structure, given the assumptions contained therein.
Management uses the preliminary adjusted combined non-GAAP supplemental information for purposes of evaluating business unit and consolidated company performance. The company therefore believes that the non-GAAP measures presented provide useful information to investors by allowing them to view the company's businesses through the eyes of management, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its businesses.
The company uses the preliminary adjusted combined non-GAAP supplemental information to supplement the financial information presented for Vantiv, Inc. on a GAAP historical basis. This non-GAAP supplemental information is not to be considered in isolation from or as a substitute for the related GAAP measures and should be read only in conjunction with financial information presented on a GAAP basis.
The preliminary historical adjusted combined financial information contained in the following supplemental information is for informational purposes only. These results do not necessarily reflect what the historical results of Worldpay, Inc. would have been if the acquisition of Worldpay Group plc had occurred on January 1, 2016. Nor is this information necessarily indicative of the future results of operations of Worldpay, Inc. The preparation of the preliminary adjusted combined financial information includes the use of estimates that may not have been accurate and assumptions that may not have been valid had the transactions occurred on January 1, 2016. However management believes them to be reasonable.
The preliminary historical adjusted combined financial information is not pro forma information prepared in accordance with Article 11 of SEC regulation S-X, and the preparation of information in accordance with Article 11 would result in a significantly different presentation.
The preliminary historical adjusted combined financial information constitutes forward-looking information and is subject to certain risks and uncertainties that could cause actual amounts to differ materially from those anticipated. See "Risk Factors" and "Cautionary Statements Regarding Forward Looking Information" included in our 2017 Annual Report on Form 10-K or as amended in subsequent filings.
The preliminary historical adjusted combined amounts reflect the historical combined results of Vantiv, Inc. and Worldpay Group plc., including information for the following combined company segments.
Merchant Solutions
Merchant Solutions primarily consists of Vantiv, Inc.'s Direct, Independent Sales Organizations (ISOs), Merchant Bank sales channels and Worldpay Group plc's U.S. and U.K segments.
Technology Solutions
Technology Solutions primarily consists of Vantiv, Inc.'s eCommerce, Paymetric, Integrated Payments sales channels and Worldpay Group plc's Global eCommerce segments.
Issuer Solutions
Issuer Solutions primarily consists of Vantiv, Inc.'s Financial Institutions Services segment.
Supplemental Schedule 1
Worldpay, Inc.
Combined Consolidated Statements of Income
(Unaudited)
(in thousands)
2017 2016
---- ----
Q1 Q2 Q3 Q4 YTD YTD
--- --- --- --- --- ---
Total revenue $1,417,254 $1,535,796 $1,575,587 $1,634,324 $6,162,961 $5,565,711
Network fees and other costs 602,123 627,102 640,888 670,901 2,541,014 2,193,627
------- ------- ------- ------- --------- ---------
Net revenue(1) 815,131 908,694 934,699 963,423 3,621,947 3,372,084
Sales and marketing 251,479 263,350 267,866 261,404 1,044,099 988,555
Other operating costs(2) 134,030 144,498 148,113 149,961 576,602 528,789
General and administrative(3) 79,660 70,071 76,706 79,720 306,157 310,730
Depreciation and amortization(4) 35,246 37,191 41,771 39,342 153,550 126,744
------ ------ ------ ------ ------- -------
Income from operations 314,716 393,584 400,243 432,996 1,541,539 1,417,266
Interest expense-net 75,628 78,524 83,700 88,844 326,696 310,892
------ ------ ------ ------ ------- -------
Income before applicable income taxes 239,088 315,060 316,543 344,152 1,214,843 1,106,374
Income tax expense(5) 37,440 59,602 58,713 66,046 221,801 267,176
Tax rate(5) 16% 19% 19% 19% 18% 24%
Other(6) (256) (428) (459) (661) (1,804) (1,200)
---- ---- ---- ---- ------ ------
Adjusted net income $201,392 $255,030 $257,371 $277,445 $991,238 $837,998
======== ======== ======== ======== ======== ========
Non-GAAP and Adjusted Financial Measures
This schedule presents non-GAAP and adjusted 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 and payment network fees.
(2) Excludes transition, acquisition,
and integration costs and Worldpay
Group plc separately disclosed
items ("SDIs").
(3) Excludes transition, acquisition,
and integration costs, share-
based compensation and Worldpay
Group plc SDIs.
(4) Excludes amortization of intangible
assets acquired through business
combinations and customer
portfolio and related asset
acquisitions.
(5) Represents adjusted income tax
expense 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. Also includes
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.
(6) Represents the non-controlling
interest, net of pro forma income
tax expense discussed in (2)
above, associated with a
consolidated joint venture.
Supplemental Schedule 2
Worldpay, Inc.
Combined Segment Information
(Unaudited)
(in thousands)
2017 2016
Q1 Q2 Q3 Q4 YTD YTD
--- --- --- --- --- ---
Net revenue:
Merchant Solutions(1) $445,720 $494,142 $487,252 $507,204 $1,934,318 $1,896,274
Technology Solutions(2) 283,283 331,722 360,163 369,270 1,344,438 1,107,786
Issuer Solutions(3) 86,128 82,830 87,284 86,949 343,191 368,024
------ ------ ------ ------ ------- -------
Total net revenue 815,131 908,694 934,699 963,423 3,621,947 3,372,084
Sales and marketing 251,479 263,350 267,866 261,404 1,044,099 988,555
------- ------- ------- --------- -------
Segment profit $563,652 $645,344 $666,833 $702,019 $2,577,848 $2,383,529
======== ======== ======== ======== ========== ==========
(1) Merchant Solutions primarily
consists of Vantiv, Inc.'s
Direct, ISOs, Merchant Bank
sales channels and Worldpay
Group plc's U.S. and U.K
segments.
(2) Technology Solutions primarily
consists of Vantiv, Inc.'s
eCommerce, Paymetric,
Integrated Payments sales
channels and Worldpay Group
plc's Global eCommerce
segments.
(3) Issuer Solutions primarily
consists of Vantiv, Inc.'s
Financial Institutions Services
segment.
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SOURCE Worldpay, Inc.
