UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2013
Vantiv, Inc.
(Exact name of registrant as specified in its charter)
Delaware (State of incorporation) | 001-35462 (Commission File Number) | 26-4532998 (IRS Employer Identification No.) |
8500 Governor's Hill Drive Symmes Township, Ohio 45249 (Address of principal executive offices, including zip code) | ||
(513) 900-5250 (Registrant's telephone number, including area code) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On May 6, 2013, Vantiv, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2013. A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated herein by reference.
The information furnished on this Form 8-K, including the exhibit attached, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |
99.1 | Press Release dated May 6, 2013 | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
VANTIV, INC. | ||||
Dated: May 6, 2013 | By: | /S/ MARK L. HEIMBOUCH | ||
Name: | Mark L. Heimbouch | |||
Title: | Chief Financial Officer | |||
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EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated May 6, 2013 | |
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Exhibit 99.1
Vantiv Reports First Quarter 2013 Results
Net Revenue Grew 17% to $272.9 Million as Transactions Increased 18% to 4.0 Billion
Adjusted EBITDA Margin Expanded Approximately 160 Basis Points
Pro Forma Adjusted Net Income Increased 59% to $67.4 Million
Pro Forma Adjusted Net Income per Share Increased 55% to $0.31
CINCINNATI - May 6, 2013 - Vantiv, Inc. (NYSE: VNTV) (“Vantiv” or “the Company”) today announced financial results for the first quarter ended March 31, 2013. Revenue increased 15% to $498.0 million in the first quarter as compared to $432.8 million in the prior year period. Net revenue increased 17% to $272.9 million in the first quarter as compared to $232.6 million in the prior year period. Transaction growth was 18% for the first quarter, which was primarily due to transaction growth in the Merchant Services segment of 23%. On a GAAP basis, net income attributable to Vantiv, Inc. was $26.1 million or $0.18 per diluted share during the first quarter, compared with a loss of ($18.4) million, or ($0.38) per diluted share, in the prior year period. Pro forma adjusted net income increased 59% in the first quarter to $67.4 million as compared to $42.4 million in the prior year period. Pro forma adjusted net income per share increased 55% to $0.31 for the first quarter as compared to $0.20 in the prior year period. (See Schedule 2 for pro forma adjusted net income and Schedule 6 for GAAP net income reconciliation to pro forma adjusted net income.)
Vantiv's scale and efficiency continued to support superior profitability as shown by the Company's first quarter adjusted EBITDA margin of 45.9%, which reflected approximately 160 basis points in margin expansion over the prior year period. (See Schedule 7 for reconciliation from GAAP net income to adjusted EBITDA.)
“I am pleased to report another strong quarter that demonstrates our continued focus on execution and ability to win market share,” said Charles Drucker, president and chief executive officer at Vantiv. “Our strong financial performance is a testament to our dedicated employees, our commitment to execution, and our focus on our clients. Looking forward, we will continue to generate above market growth by broadening distribution within our traditional business as well as expanding through technology into high-growth segments and verticals, like ecommerce and PayFac™.”
Merchant Services
Net revenue increased 22% to $191.6 million in the first quarter as compared to $157.5 million in the prior year period, primarily due to a 23% increase in transactions, including the recent acquisition of Litle & Co. (“Litle”). Litle continued to generate superior growth during the first quarter with a 39% increase in sales volume year-over-year, due primarily to strong new sales and organic growth. Consistent with the prior three quarters, net revenue per transaction declined as compared to the prior year period due principally to the addition of a large national processing contract in the second quarter of 2012. Excluding the impact of this contract, net revenue per transaction increased year-over-year, due primarily to beneficial changes in the Company's customer mix and increased ecommerce net revenue. Sales and marketing expenses increased to $70.2 million in the first quarter from $66.7 million in the prior period.
Financial Institution Services
Net revenue increased 8% to $81.3 million in the first quarter as compared to $75.1 million in the prior year period. Sales and marketing expenses fell by 4% in the first quarter to $5.8 million from $6.1 million in the prior year period.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss first quarter 2013 financial results and an update to its prior guidance for the remainder of 2013 today at 5:00 PM ET. Hosting the call will be Charles Drucker, president and chief executive officer and Mark Heimbouch, chief financial officer. The conference call can be accessed live over the phone by dialing (888) 218-8170, or for international callers (913) 312-9321, and referencing conference code 8007675. 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 pass code 8007675. The replay will be available through Monday, May 20, 2013. The call will be webcast live from the Company's investor relations website at http://investors.vantiv.com.
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About Vantiv, Inc.
Vantiv, Inc. (NYSE: VNTV) is a leading, integrated payment processor differentiated by a single, proprietary technology platform. Vantiv offers a comprehensive suite of traditional and innovative payment processing and technology solutions to merchants and financial institutions of all sizes in the U.S., 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 third 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 payment segments, such as ecommerce, payment facilitation (PayFac™), mobile, prepaid and information solutions, and attractive industry verticals, such as petroleum, business-to-business, government, healthcare, gaming and education. For more information, visit www.vantiv.com.
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 information. 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 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.
Net revenue is revenue, less network fees and other costs. Pro forma adjusted net income includes adjustments to exclude amortization of intangible assets acquired in business combinations and customer portfolio and related asset acquisitions, share-based compensation, transition costs associated with our separation from Fifth Third Bank, integration costs incurred in connection with acquisitions, cash tax adjustments, and conversion of non-controlling interests into shares of Class A common stock. (See Schedule 6 for a reconciliation from GAAP net income to pro forma adjusted net income.)
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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 risk factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission and include, but are not limited to: (i) the ability to keep pace with rapid developments and change in our industry and provide new services to our clients; (ii) competition within our industry; (iii) disclosure of unauthorized data and security breaches that expose us to liability, litigation and reputational damage; (iv) failures of our systems or systems of our third party providers; (v) our inability to expand our market share in existing markets or expand into new markets; (vi) our ability to identify acquisition, joint venture and partnership candidates and finance or integrate businesses, services or technologies that we acquire; (vii) failure to comply with applicable requirements of Visa, MasterCard or other payment networks; (viii) changes in payment network rules or standards; (ix) our ability to pass fee increases along to merchants; (x) termination of sponsorship or clearing services provided to us; (xi) increased attrition of our merchants, independent sales organizations, or ISOs, or referral partners; (xii) inability to successfully renew or renegotiate agreements with our clients or ISOs; (xiii) reductions in overall consumer, business and government spending; (xiv) fraud by merchants or others; (xv) a decline in the use of credit, debit or prepaid cards; (xvi) consolidation in the banking and retail industries; and (xvii) the effects of governmental regulation, changes in laws and 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.
Any forward-looking statement made by us in this release speaks only as of the date on which we make it. 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
Senior Vice President, Investor Relations
(866) 254-4811
(513) 900-4811
IR@vantiv.com
Media
Andrew Ciafardini
Director of Public Relations
(513) 900-5308
Andrew.Ciafardini@vantiv.com
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Schedule 1
Vantiv, Inc.
Consolidated Statements of Income (Loss)
(Unaudited)
(in thousands, except share data)
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
2013 | 2012 | % Change | |||||||||
Revenue | $ | 497,966 | $ | 432,789 | 15 | % | |||||
Network fees and other costs | 225,065 | 200,208 | 12 | % | |||||||
Net revenue | 272,901 | 232,581 | 17 | % | |||||||
Sales and marketing | 75,976 | 72,757 | 4 | % | |||||||
Other operating costs | 50,560 | 39,009 | 30 | % | |||||||
General and administrative | 31,099 | 28,597 | 9 | % | |||||||
Depreciation and amortization | 43,296 | 38,895 | 11 | % | |||||||
Income from operations | 71,970 | 53,323 | 35 | % | |||||||
Interest expense—net | (9,694 | ) | (24,450 | ) | (60 | )% | |||||
Non-operating expenses(1) | — | (91,836 | ) | NM | |||||||
Income (loss) before applicable income taxes | 62,276 | (62,963 | ) | NM | |||||||
Income tax expense (benefit) | 17,811 | (20,035 | ) | NM | |||||||
Net income (loss) | 44,465 | (42,928 | ) | NM | |||||||
Less: Net (income) loss attributable to non-controlling interests | (18,346 | ) | 24,564 | NM | |||||||
Net income (loss) attributable to Vantiv, Inc. | $ | 26,119 | $ | (18,364 | ) | NM | |||||
Net income (loss) per share attributable to Vantiv, Inc. Class A common stock: | |||||||||||
Basic | $ | 0.19 | $ | (0.20 | ) | NM | |||||
Diluted(2) | $ | 0.18 | $ | (0.38 | ) | NM | |||||
Shares used in computing net income (loss) per share of Class A common stock: | |||||||||||
Basic | 137,084,276 | 93,018,506 | |||||||||
Diluted | 214,584,791 | 102,377,931 | |||||||||
Non Financial Data: | |||||||||||
Transactions (in millions) | 3,974 | 3,367 | 18 | % | |||||||
(1) Non-operating expenses primarily consist of charges incurred with the refinancing of our debt and the termination of our interest rate swaps in March 2012.
(2) 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 (loss) per share calculation is adjusted to reflect our income tax expense (benefit) at an expected effective tax rate of 38.5% assuming the conversion of the Class B units of Vantiv Holding into shares of our Class A common stock. The components of the diluted net income (loss) per share calculation are as follows:
Three Months Ended | |||||||
March 31, | March 31, | ||||||
2013 | 2012 | ||||||
Income (loss) before applicable income taxes | $ | 62,276 | $ | (62,963 | ) | ||
Taxes @ 38.5% | 23,976 | (24,241 | ) | ||||
Net income | $ | 38,300 | $ | (38,722 | ) | ||
Diluted shares | 214,584,791 | 102,377,931 | |||||
Diluted EPS | $ | 0.18 | $ | (0.38 | ) | ||
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Schedule 2
Vantiv, Inc.
Pro Forma Adjusted Net Income
(Unaudited)
(in thousands, except share data)
See schedule 6 for a reconciliation of GAAP net income to pro forma adjusted net income.
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
2013 | 2012 | % Change | |||||||||
Revenue | $ | 497,966 | $ | 432,789 | 15 | % | |||||
Network fees and other costs | 225,065 | 200,208 | 12 | % | |||||||
Net revenue | 272,901 | 232,581 | 17 | % | |||||||
Sales and marketing | 75,976 | 72,757 | 4 | % | |||||||
Other operating costs | 48,549 | 38,557 | 26 | % | |||||||
General and administrative | 23,149 | 18,327 | 26 | % | |||||||
Adjusted EBITDA(1) | 125,227 | 102,940 | 22 | % | |||||||
Depreciation and amortization | 12,836 | 9,606 | 34 | % | |||||||
Adjusted income from operations | 112,391 | 93,334 | 20 | % | |||||||
Interest expense—net | (9,694 | ) | (24,450 | ) | (60 | )% | |||||
Non-GAAP adjusted income before applicable income taxes | 102,697 | 68,884 | 49 | % | |||||||
Pro Forma Adjustments: | |||||||||||
Income tax expense (at an effective tax rate of 38.5%)(2) | 39,538 | 26,520 | 49 | % | |||||||
Tax adjustments(3) | (4,242 | ) | — | NM | |||||||
Pro forma adjusted net income(4) | $ | 67,401 | $ | 42,364 | 59 | % | |||||
Pro forma adjusted net income per share(5) | $ | 0.31 | $ | 0.20 | 55 | % | |||||
Adjusted shares outstanding(6) | 214,584,791 | 212,304,534 | |||||||||
Non Financial Data: | |||||||||||
Transactions (in millions) | 3,974 | 3,367 | 18 | % | |||||||
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 net income, and such measures may not be comparable to those reported by other companies.
Pro forma adjusted net income is derived from GAAP net income, adjusting for the following items: (a) amortization of intangible assets acquired in business combinations and customer portfolio and related asset acquisitions; (b) non-operating expenses primarily associated with the refinancing of our debt and the termination of our interest rate swaps in March 2012; (c) adjustments to income tax expense assuming conversion of non-controlling interests into shares of Class A common stock; (d) share-based compensation; (e) acquisition and integration costs incurred in connection with our acquisitions and costs associated with our separation from Fifth Third Bank; and (f) tax benefits due to the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, including Litle, 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 established at the time of our initial public offering.
(1) See schedule 7 for a reconciliation of GAAP net income to adjusted EBITDA.
(2) Represents adjustments to income tax expense to reflect an effective tax rate of 38.5%, 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.
(3) Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, including Litle, 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 established at the time of our initial public offering.
(4) Pro forma adjusted net income assumes the conversion of non-controlling interests into shares of Class A common stock.
(5) Pro forma adjusted net income per share is calculated as pro forma adjusted net income divided by adjusted shares outstanding.
(6) Shares for the three months ended March 31, 2012 are pro forma and weighted assuming the equity structure was in place January 1, 2012.
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Schedule 3
Vantiv, Inc.
Segment Information
(Unaudited)
(in thousands)
Three Months Ended March 31, 2013 | ||||||||||||||||
Financial Institution | General | |||||||||||||||
Merchant Services | Services | Corporate/Other | Total | |||||||||||||
Total revenue | $ | 385,584 | $ | 112,382 | $ | — | $ | 497,966 | ||||||||
Network fees and other costs | 193,996 | 31,069 | — | 225,065 | ||||||||||||
Net revenue | 191,588 | 81,313 | — | 272,901 | ||||||||||||
Sales and marketing | 70,150 | 5,826 | — | 75,976 | ||||||||||||
Segment profit | $ | 121,438 | $ | 75,487 | $ | — | $ | 196,925 | ||||||||
Non-financial data: | ||||||||||||||||
Transactions (in millions) | 3,123 | 851 | 3,974 | |||||||||||||
Net revenue per transaction | $ | 0.0613 | $ | 0.0955 | $ | 0.0687 | ||||||||||
Three Months Ended March 31, 2012 | ||||||||||||||||
Financial Institution | General | |||||||||||||||
Merchant Services | Services | Corporate/Other | Total | |||||||||||||
Total revenue | $ | 322,978 | $ | 109,811 | $ | — | $ | 432,789 | ||||||||
Network fees and other costs | 165,526 | 34,682 | — | 200,208 | ||||||||||||
Net revenue | 157,452 | 75,129 | — | 232,581 | ||||||||||||
Sales and marketing | 66,699 | 6,058 | — | 72,757 | ||||||||||||
Segment profit | $ | 90,753 | $ | 69,071 | $ | — | $ | 159,824 | ||||||||
Non-financial data: | ||||||||||||||||
Transactions (in millions) | 2,544 | 823 | 3,367 | |||||||||||||
Net revenue per transaction | $ | 0.0619 | $ | 0.0913 | $ | 0.0691 | ||||||||||
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Schedule 4
Vantiv, Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in thousands)
March 31, 2013 | December 31, 2012 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 141,740 | $ | 67,058 | ||||
Accounts receivable—net | 401,297 | 397,664 | ||||||
Related party receivable | 5,125 | 4,415 | ||||||
Settlement assets | 130,111 | 429,377 | ||||||
Prepaid expenses | 17,287 | 10,629 | ||||||
Other | 11,851 | 11,934 | ||||||
Total current assets | 707,411 | 921,077 | ||||||
Customer incentives | 29,207 | 28,927 | ||||||
Property and equipment—net | 176,629 | 174,940 | ||||||
Intangible assets—net | 853,187 | 884,536 | ||||||
Goodwill | 1,807,775 | 1,804,592 | ||||||
Deferred taxes | 141,361 | 141,361 | ||||||
Other assets | 23,126 | 24,096 | ||||||
Total assets | $ | 3,738,696 | $ | 3,979,529 | ||||
Liabilities and equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 211,977 | $ | 215,998 | ||||
Related party payable | 2,705 | 1,625 | ||||||
Settlement obligations | 319,551 | 542,564 | ||||||
Current portion of note payable | 52,500 | 92,500 | ||||||
Current portion of tax receivable agreement obligations to related parties | 31,595 | — | ||||||
Deferred income | 11,716 | 9,667 | ||||||
Current maturities of capital lease obligations | 4,889 | 5,505 | ||||||
Other | 222 | 1,609 | ||||||
Total current liabilities | 635,155 | 869,468 | ||||||
Long-term liabilities: | ||||||||
Note payable | 1,150,730 | 1,163,605 | ||||||
Tax receivable agreement obligations to related parties | 453,105 | 484,700 | ||||||
Capital lease obligations | 7,611 | 8,275 | ||||||
Deferred taxes | 8,207 | 8,207 | ||||||
Other | 1,039 | 1,039 | ||||||
Total long-term liabilities | 1,620,692 | 1,665,826 | ||||||
Total liabilities | 2,255,847 | 2,535,294 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Total equity (1) | 1,482,849 | 1,444,235 | ||||||
Total liabilities and equity | $ | 3,738,696 | $ | 3,979,529 | ||||
(1) Includes equity attributable to non-controlling interests.
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Schedule 5
Vantiv, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2013 | 2012 | |||||||
Operating Activities: | ||||||||
Net income (loss) | $ | 44,465 | $ | (42,928 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization expense | 43,296 | 38,895 | ||||||
Amortization of customer incentives | 2,475 | 1,234 | ||||||
Amortization and write-off of debt issuance costs | 1,001 | 56,352 | ||||||
Share-based compensation expense | 6,740 | 8,663 | ||||||
Change in operating assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable and related party receivable | (4,344 | ) | 15,984 | |||||
Increase (decrease) in net settlement assets and obligations | 76,253 | (69,789 | ) | |||||
Increase in customer incentives | (5,815 | ) | (1,422 | ) | ||||
Increase in prepaid and other assets | (6,232 | ) | (26,764 | ) | ||||
Decrease in accounts payable and accrued expenses | (4,516 | ) | (29,754 | ) | ||||
Increase (decrease) in payable to related party | 1,080 | (2,864 | ) | |||||
Increase in other liabilities | 2,049 | 1,719 | ||||||
Net cash provided by (used in) operating activities | 156,452 | (50,674 | ) | |||||
Investing Activities: | ||||||||
Purchases of property and equipment | (12,342 | ) | (15,614 | ) | ||||
Acquisition of customer portfolios and related assets | (32 | ) | (2,829 | ) | ||||
Purchase of investments | (124 | ) | — | |||||
Net cash used in investing activities | (12,498 | ) | (18,443 | ) | ||||
Financing Activities: | ||||||||
Proceeds from initial public offering, net of offering costs of $39,091 | — | 460,913 | ||||||
Proceeds from follow-on offering, net of offering costs of $1,951 | — | 33,512 | ||||||
Proceeds from issuance of long-term debt | — | 1,248,750 | ||||||
Repayment of debt and capital lease obligations | (56,681 | ) | (1,761,784 | ) | ||||
Payment of debt issuance costs | — | (28,949 | ) | |||||
Purchase of Class B units in Vantiv Holding from Fifth Third Bank | — | (33,512 | ) | |||||
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (9,402 | ) | (11,929 | ) | ||||
Tax benefit from employee share-based compensation | 3,607 | 10,244 | ||||||
Distribution to funds managed by Advent International Corporation | — | (40,086 | ) | |||||
Distribution to non-controlling interests | (6,796 | ) | (22,229 | ) | ||||
Net cash used in financing activities | (69,272 | ) | (145,070 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 74,682 | (214,187 | ) | |||||
Cash and cash equivalents—Beginning of period | 67,058 | 370,549 | ||||||
Cash and cash equivalents—End of period | $ | 141,740 | $ | 156,362 | ||||
Cash Payments: | ||||||||
Interest | $ | 8,570 | $ | 32,559 | ||||
Taxes | 13,465 | 773 | ||||||
Non-cash Items: | ||||||||
Issuance of tax receivable agreements | $ | — | $ | 333,000 | ||||
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Schedule 6
Vantiv, Inc.
Reconciliation of GAAP Net Income to Pro Forma Adjusted Net Income
(Unaudited)
(in thousands)
Three Months Ended March 31, 2013 | |||||||||||||||||||||||||||
Non-GAAP Adjustments | Pro Forma Adjustments | ||||||||||||||||||||||||||
GAAP | Transition, Acquisition and Integration(1) | Share-Based Compensation | Amortization of Intangible Assets | Non-Operating Expenses | Tax Adjustments | Pro Forma Adjusted Net Income | |||||||||||||||||||||
Revenue | $ | 497,966 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 497,966 | |||||||||||||
Network fees and other costs | 225,065 | — | — | — | — | — | 225,065 | ||||||||||||||||||||
Net revenue | 272,901 | — | — | — | — | — | 272,901 | ||||||||||||||||||||
Sales and marketing | 75,976 | — | — | — | — | — | 75,976 | ||||||||||||||||||||
Other operating costs | 50,560 | (2,011 | ) | — | — | — | — | 48,549 | |||||||||||||||||||
General and administrative | 31,099 | (1,210 | ) | (6,740 | ) | — | — | — | 23,149 | ||||||||||||||||||
Depreciation and amortization | 43,296 | — | — | (30,460 | ) | (2) | — | — | 12,836 | ||||||||||||||||||
Income from operations | 71,970 | 3,221 | 6,740 | 30,460 | — | — | 112,391 | ||||||||||||||||||||
Interest expense—net | (9,694 | ) | — | — | — | — | — | (9,694 | ) | ||||||||||||||||||
Non-operating expenses | — | — | — | — | — | — | — | ||||||||||||||||||||
Income before applicable income taxes | 62,276 | 3,221 | 6,740 | 30,460 | — | — | 102,697 | ||||||||||||||||||||
Income tax expense | 17,811 | — | — | — | — | 21,727 | (4) | 39,538 | |||||||||||||||||||
Tax adjustments(5) | — | — | — | — | — | (4,242 | ) | (4,242 | ) | ||||||||||||||||||
Net income | $ | 44,465 | $ | 3,221 | $ | 6,740 | $ | 30,460 | $ | — | $ | (17,485 | ) | $ | 67,401 | ||||||||||||
Three Months Ended March 31, 2012 | |||||||||||||||||||||||||||
Non-GAAP Adjustments | Pro Forma Adjustments | ||||||||||||||||||||||||||
GAAP | Transition, Acquisition and Integration(1) | Share-Based Compensation | Amortization of Intangible Assets | Non-Operating Expenses | Tax Adjustments | Pro Forma Adjusted Net Income | |||||||||||||||||||||
Revenue | $ | 432,789 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 432,789 | |||||||||||||
Network fees and other costs | 200,208 | — | — | — | — | — | 200,208 | ||||||||||||||||||||
Net revenue | 232,581 | — | — | — | — | — | 232,581 | ||||||||||||||||||||
Sales and marketing | 72,757 | — | — | — | — | — | 72,757 | ||||||||||||||||||||
Other operating costs | 39,009 | (452 | ) | — | — | — | — | 38,557 | |||||||||||||||||||
General and administrative | 28,597 | (1,607 | ) | (8,663 | ) | — | — | — | 18,327 | ||||||||||||||||||
Depreciation and amortization | 38,895 | — | — | (29,289 | ) | (2) | — | — | 9,606 | ||||||||||||||||||
Income from operations | 53,323 | 2,059 | 8,663 | 29,289 | — | — | 93,334 | ||||||||||||||||||||
Interest expense—net | (24,450 | ) | — | — | — | — | — | (24,450 | ) | ||||||||||||||||||
Non-operating expenses | (91,836 | ) | — | — | — | 91,836 | (3) | — | — | ||||||||||||||||||
Income (loss) before applicable income taxes | (62,963 | ) | 2,059 | 8,663 | 29,289 | 91,836 | — | 68,884 | |||||||||||||||||||
Income tax expense (benefit) | (20,035 | ) | — | — | — | — | 46,555 | (4) | 26,520 | ||||||||||||||||||
Tax adjustments(5) | — | — | — | — | — | — | — | ||||||||||||||||||||
Net income (loss) | $ | (42,928 | ) | $ | 2,059 | $ | 8,663 | $ | 29,289 | $ | 91,836 | $ | (46,555 | ) | $ | 42,364 | |||||||||||
Pro Forma Financial Measures
This schedule presents 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 net income, and such measures may not be comparable to those reported by other companies.
(1) Represents acquisition and integration costs incurred in connection with our acquisitions and costs associated with our separation from Fifth Third Bank.
(2) Represents amortization of intangible assets acquired through business combinations and customer portfolio and related asset acquisitions.
(3) Represents non-operating expenses primarily associated with the refinancing of our debt and the termination of our interest rate swaps in March 2012.
(4) Represents adjustments to income tax expense to reflect an effective tax rate of 38.5%, 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.
(5) Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, including Litle, 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 established at the time of our initial public offering.
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Schedule 7
Vantiv, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited)
(in thousands)
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
2013 | 2012 | % Change | |||||||||
Net income (loss) | $ | 44,465 | $ | (42,928 | ) | NM | |||||
Income tax expense (benefit) | 17,811 | (20,035 | ) | NM | |||||||
Non-operating expenses(1) | — | 91,836 | NM | ||||||||
Interest expense—net | 9,694 | 24,450 | (60 | )% | |||||||
Share-based compensation | 6,740 | 8,663 | (22 | )% | |||||||
Transition, acquisition and integration costs(2) | 3,221 | 2,059 | 56 | % | |||||||
Depreciation and amortization | 43,296 | 38,895 | 11 | % | |||||||
Adjusted EBITDA | $ | 125,227 | $ | 102,940 | 22 | % | |||||
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) Represents non-operating expenses primarily associated with the refinancing of our debt and the termination of our interest rate swaps in March 2012.
(2) Represents acquisition and integration costs incurred in connection with our acquisitions and costs associated with our separation from Fifth Third Bank.
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