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 10, 2018
Worldpay, 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2018, Worldpay, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2018. An investor presentation discussing these results is furnished as Exhibit 99.2 to this current report and is also incorporated herein by reference.
The information furnished on this Form 8-K, including the exhibits attached, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 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, 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 10, 2018 | |
99.2 | Investor Presentation dated May 10, 2018 | |
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EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
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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.
WORLDPAY, INC. | ||||
May 10, 2018 | By: | /s/ NELSON F. GREENE | ||
Name: | Nelson F. Greene | |||
Title: | Chief Legal Officer and Corporate Secretary | |||
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Exhibit 99.1
Worldpay Reports First Quarter 2018 Results
Reports Strong Results for its First Quarter as a Combined Company
CINCINNATI and LONDON, May 10, 2018 - Worldpay, Inc. (NYSE: WP, LSE: WPY) (“Worldpay” or the “Company”) today announced financial results for the first quarter ended March 31, 2018. Worldpay, Inc. was formed on January 16, 2018 through Vantiv Inc.’s previously announced acquisition of Worldpay Group plc. Net revenue for Worldpay, Inc. increased 81% to $850.7 million as compared to $470.1 million in the prior year period. On a GAAP basis, net (loss) income per diluted share attributable to Worldpay, Inc. decreased (312)% to $(0.36) as compared to $0.17 in the prior year period. The GAAP loss is primarily due to acquisition and integration costs as well as amortization of intangible assets incurred in connection with the acquisition. Adjusted net income per share increased 19% to $0.81 as compared to $0.68 in the prior year period. (See Schedule 1 for net income per diluted share attributable to Worldpay, Inc. and Schedule 2 for adjusted net income per share.)
“Our first quarter results exceeded our expectations. It’s rewarding to see our combined companies come together to create strong results so quickly,” said Charles Drucker, chairman and co-chief executive officer and Philip Jansen, co-chief executive officer at Worldpay. “Worldpay’s scale, unrivaled technology offerings and dedicated people enable us to provide superior outcomes for our clients, positioning us to continue to win in the payments industry.”
Worldpay, Inc. First Quarter 2018 Results (unaudited) (in millions, except share data) | ||||||||||
Three Months Ended | ||||||||||
March 31, 2018 (1) | March 31, 2017 | % Change | ||||||||
Net revenue | $ | 850.7 | $ | 470.1 | 81% | |||||
Technology Solutions | 336.4 | 162.2 | 107% | |||||||
Merchant Solutions | 432.2 | 223.7 | 93% | |||||||
Issuer Solutions | 82.1 | 84.2 | (2)% | |||||||
Adjusted EBITDA | 374.1 | 210.0 | 78% | |||||||
Adj. EBITDA Margin | 44.0 | % | 44.7 | % | ||||||
GAAP Net (loss) income attributable to Worldpay, Inc. | $ | (97.6 | ) | $ | 28.9 | (438)% | ||||
GAAP Net (loss) income per diluted share attributable to Worldpay, Inc. | $ | (0.36 | ) | $ | 0.17 | (312)% | ||||
Adjusted net income | $ | 236.7 | $ | 134.7 | 76% | |||||
Adjusted net income per share | $ | 0.81 | $ | 0.68 | 19% | |||||
(1) | Excludes contribution from Worldpay Group plc results for the period prior to the transaction closing (January 1 - January 15, 2018). |
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Worldpay, Inc. Second Quarter and Full-Year Financial Outlook (in millions, except share data) | |||||||
Second Quarter Financial Outlook | Full Year Financial Outlook | ||||||
Three Months Ended June 30, | Year Ended December 31, | ||||||
2018 Outlook | 2017 Actual (2) | 2018 Outlook (1) | 2017 Actual (2) | ||||
Net revenue | $960 - $980 | $530 | $3,810 - $3,900 | $2,123 | |||
GAAP Net income per diluted share attributable to Worldpay, Inc. | $0.22 - $0.29 | $0.42 | $0.53 - $0.75 | $0.80 | |||
Adjusted net income per share | $0.93 - $0.96 | $0.83 | $3.71 - $3.81 | $3.37 | |||
(1) | Combined company guidance excludes Worldpay Group plc net revenue and EPS contribution for the period from January 1, 2018 - January 15, 2018, prior to the completion of its previously announced acquisition by Vantiv, Inc. on January 16, 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. |
ASC 606
Worldpay adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2018. Under ASC 606, Network fees and other costs are now netted against Revenue and no longer appear as an expense between Revenue and Net revenue as they were shown in prior periods. As a result, Revenue and Net revenue are now equivalent. This change in presentation reduces Revenue by the amount of Network fees and other costs to an amount equivalent to Net revenue, but has no impact on Net income, Adjusted net income, or Adjusted EBITDA.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss the first quarter 2018 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 (877) 397-0286, in the U.K. by dialing 0808 101 7162, or for international callers +1 (719) 325-4758, and referencing code 5629577. 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 +1 (719) 457-0820, and entering replay passcode 5629577. 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 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.
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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 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
(866) 254-4811
(513) 900-4811
IR@worldpay.com
Media
Andrew Ciafardini
Corporate Communications
(513) 900-5308
Andrew.Ciafardini@worldpay.com
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Schedule 1
Worldpay, Inc.
Consolidated Statements of Income
(Unaudited)
(in millions, except share data)
Three Months Ended | ||||||||||
March 31, | March 31, | |||||||||
2018 | 2017 | % Change | ||||||||
Revenue | $ | 850.7 | $ | 928.2 | (8 | )% | ||||
Network fees and other costs | — | 458.1 | NM | |||||||
Net Revenue(1) | 850.7 | 470.1 | 81 | % | ||||||
Sales and marketing | 266.0 | 155.0 | 72 | % | ||||||
Other operating costs | 155.1 | 75.9 | 104 | % | ||||||
General and administrative | 250.1 | 89.3 | 180 | % | ||||||
Depreciation and amortization | 207.2 | 76.1 | 172 | % | ||||||
(Loss) Income from operations | (27.7 | ) | 73.8 | (138 | )% | |||||
Interest expense—net | (75.2 | ) | (29.2 | ) | 158 | % | ||||
Non-operating expense(2) | (8.6 | ) | (4.1 | ) | 110 | % | ||||
(Loss) income before applicable income taxes | (111.5 | ) | 40.5 | (375 | )% | |||||
Income tax (benefit) expense(3) | (13.2 | ) | 5.2 | (354 | )% | |||||
Net (loss) income | (98.3 | ) | 35.3 | (378 | )% | |||||
Less: Net loss (income) attributable to non-controlling interests | 0.7 | (6.4 | ) | (111 | )% | |||||
Net (loss) income attributable to Worldpay, Inc. | $ | (97.6 | ) | $ | 28.9 | (438 | )% | |||
Net (loss) income per share attributable to Worldpay, Inc. Class A common stock: | ||||||||||
Basic | $ | (0.36 | ) | $ | 0.18 | (300 | )% | |||
Diluted(4) | $ | (0.36 | ) | $ | 0.17 | (312 | )% | |||
Shares used in computing net (loss) income per share of Class A common stock: | ||||||||||
Basic | 274,098,480 | 160,876,177 | ||||||||
Diluted | 274,098,480 | 197,496,680 | ||||||||
(1) | Based on the Company’s adoption of Accounting Standard Update 2014-09, Revenue From Contracts With Customers (Topic 606) (“ASC 606”) effective January 1, 2018, Network fees and other costs are now netted against Revenue. For the three months ended March 31, 2018, Revenue is equivalent to Net revenue as a result of the company’s adoption of ASC 606. For the three months ended March 31, 2017, Net revenue is equivalent to Revenue less Network fees and other costs. |
(2) | Non-operating expense during the three months ended March 31, 2018 primarily consists of expenses relating to the Company’s financing arrangements entered into in connection with the Legacy Worldpay acquisition and the change in fair value of the Mercury tax receivable agreement (“TRA”), partially offset by a gain on the settlement of a deal contingent forward entered into in connection with the Company’s acquisition of Legacy Worldpay. Non-operating expenses for the three months ended March 31, 2017 primarily relate to the change in fair value of the Mercury TRA. |
(3) | Includes a credit of approximately $6.6 million and $8.6 million for three months ended March 31, 2018 and 2017 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. |
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(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 the Company’s 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 ended March 31, 2018, approximately 15.3 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. 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 ended March 31, 2018. Additionally, due to the net loss for the three months ended March 31, 2018, any remaining potentially dilutive securities were also excluded from the denominator in computing dilutive net income per share.
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(Loss) income before applicable income taxes | $ | — | $ | 40.5 | ||||
Taxes | — | 6.0 | ||||||
Net (loss) income | $ | (97.6 | ) | $ | 34.5 | |||
Diluted shares | 274,098,480 | 197,496,680 | ||||||
Diluted EPS | $ | (0.36 | ) | $ | 0.17 | |||
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Schedule 2
Worldpay, Inc.
Adjusted Net Income
(Unaudited)
(in millions, except share data)
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
2018 | 2017 | % Change | |||||||||
Income before applicable income taxes | $ | (111.5 | ) | $ | 40.5 | (375 | )% | ||||
Non-GAAP Adjustments: | |||||||||||
Transition, acquisition and integration costs(1) (3) | 177.4 | 49.5 | 258 | % | |||||||
Share-based compensation(3) | 17.2 | 10.6 | 62 | % | |||||||
Intangible amortization(2) (3) | 172.8 | 51.9 | 233 | % | |||||||
Non-operating expense(4) | 8.6 | 4.1 | 110 | % | |||||||
Non-GAAP adjusted income before applicable income taxes | 264.5 | 156.6 | 69 | % | |||||||
Less: Adjustments | |||||||||||
Adjusted tax expense(5) | 27.5 | 21.7 | 27 | % | |||||||
Adjusted tax rate | 10 | % | 14 | % | |||||||
Other (6) | 0.3 | 0.2 | 50 | % | |||||||
Adjusted net income | $ | 236.7 | $ | 134.7 | 76 | % | |||||
Adjusted net income per share | $ | 0.81 | $ | 0.68 | 19 | % | |||||
Adjusted shares outstanding(7) | 290,880,798 | 197,496,680 | |||||||||
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 in the three months ended March 31, 2017 is a $38 million charge 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 March 31, 2018 | Three Months Ended March 31, 2017 | ||||||||||||||||||
Transition, Acquisition & Integration | Share-Based Compensation | Amortization Of Intangible Assets | Transition, Acquisition & Integration | Share-Based Compensation | Amortization Of Intangible Assets | ||||||||||||||
Other operating costs | $ | 10.2 | $ | — | $ | — | $ | 3.2 | $ | — | $ | — | |||||||
General and administrative | 167.2 | 17.2 | — | 46.3 | 10.6 | — | |||||||||||||
Depreciation and amortization | — | — | 172.8 | — | — | 51.9 | |||||||||||||
Total adjustments | $ | 177.4 | $ | 17.2 | $ | 172.8 | $ | 49.5 | $ | 10.6 | $ | 51.9 | |||||||
(4) | Non-operating expense for the three months ended March 31, 2018 and 2017 primarily consists of expenses relating to the Company’s financing arrangements entered into in connection with the Legacy Worldpay acquisition and the change in fair value of the Mercury tax receivable agreement (“TRA”), partially offset by a gain on the settlement of a deal contingent forward entered into in connection with the Company’s acquisition of Legacy Worldpay. Non-operating expenses for the three months ended March 31, 2017 primarily relate to the change in fair value of the Mercury TRA. |
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(5) | Represents adjusted income tax expense to reflect an effective tax rate of 19.7% for 2018 and 34% for 2017, 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 March 31, 2018 and 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. The effective tax rate is expected to remain at 19.7% for the remainder of 2018. |
(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 15.3 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 ended March 31, 2018, because including them would have an antidilutive effect. |
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Schedule 3
Worldpay, Inc.
Segment Information
(Unaudited)
(in millions)
Technology Solutions
Three Months Ended March 31, | ||||||||||
2018 | 2017 | % Change | ||||||||
Revenue | $ | 336.4 | $ | 271.9 | 24 | % | ||||
Network fees and other costs | — | 109.7 | NM | |||||||
Net Revenue(1) | 336.4 | 162.2 | 107 | % | ||||||
Sales and marketing | 95.9 | 60.2 | 59 | % | ||||||
Segment profit | $ | 240.5 | $ | 102.0 | 136 | % | ||||
Merchant Solutions
Three Months Ended March 31, | ||||||||||
2018 | 2017 | % Change | ||||||||
Revenue | $ | 432.2 | $ | 540.1 | (20 | )% | ||||
Network fees and other costs | — | 316.4 | NM | |||||||
Net Revenue(1) | 432.2 | 223.7 | 93 | % | ||||||
Sales and marketing | 163.8 | 88.8 | 84 | % | ||||||
Segment profit | $ | 268.4 | $ | 134.9 | 99 | % | ||||
Issuer Solutions
Three Months Ended March 31, | ||||||||||
2018 | 2017 | % Change | ||||||||
Revenue | $ | 82.1 | $ | 116.2 | (29 | )% | ||||
Network fees and other costs | — | 32.0 | NM | |||||||
Net Revenue(1) | 82.1 | 84.2 | (2 | )% | ||||||
Sales and marketing | 6.3 | 6.0 | 5 | % | ||||||
Segment profit | $ | 75.8 | $ | 78.2 | (3 | )% | ||||
(1) | Based on the Company’s adoption of ASC 606 effective January 1, 2018, Network fees and other costs are now netted against Revenue. For the three months ended March 31, 2018, Revenue is equivalent to Net revenue as a result of the company’s adoption of ASC 606. For the three months ended March 31, 2017, Net revenue is equivalent to Revenue less Network fees and other costs. |
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Schedule 4
Worldpay, Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in millions)
March 31, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 459.4 | $ | 126.5 | ||||
Accounts receivable—net | 1,491.8 | 986.6 | ||||||
Merchant float | 1,894.3 | — | ||||||
Settlement assets | 3,578.6 | 142.0 | ||||||
Prepaid expenses | 77.1 | 33.5 | ||||||
Other | 562.0 | 84.0 | ||||||
Total current assets | 8,063.2 | 1,372.6 | ||||||
Customer incentives | 68.9 | 68.4 | ||||||
Property, equipment and software—net | 890.0 | 473.7 | ||||||
Intangible assets—net | 3,783.9 | 678.5 | ||||||
Goodwill | 15,188.9 | 4,173.0 | ||||||
Deferred taxes | 764.9 | 739.5 | ||||||
Proceeds from senior unsecured notes | — | 1,135.2 | ||||||
Other assets | 190.2 | 26.1 | ||||||
Total assets | $ | 28,950.0 | $ | 8,667.0 | ||||
Liabilities and equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 1,329.6 | $ | 631.9 | ||||
Settlement obligations | 6,181.9 | 816.2 | ||||||
Current portion of note payable | 223.7 | 107.9 | ||||||
Current portion of tax receivable agreement obligations | 179.1 | 245.5 | ||||||
Deferred income | 32.5 | 18.9 | ||||||
Current maturities of capital lease obligations | 32.8 | 8.0 | ||||||
Other | 571.0 | 6.0 | ||||||
Total current liabilities | 8,550.6 | 1,834.4 | ||||||
Long-term liabilities: | ||||||||
Note payable | 8,051.0 | 5,586.4 | ||||||
Tax receivable agreement obligations | 506.0 | 535.0 | ||||||
Capital lease obligations | 33.1 | 4.5 | ||||||
Deferred taxes | 716.7 | 65.6 | ||||||
Other | 100.4 | 40.5 | ||||||
Total long-term liabilities | 9,407.2 | 6,232.0 | ||||||
Total liabilities | 17,957.8 | 8,066.4 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Total equity (1) | 10,992.2 | 600.6 | ||||||
Total liabilities and equity | $ | 28,950.0 | $ | 8,667.0 | ||||
(1) Includes equity attributable to non-controlling interests.
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Schedule 5
Worldpay, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in millions)
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Operating Activities: | |||||||
Net (loss) income | $ | (98.3 | ) | $ | 35.3 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization expense | 207.2 | 76.1 | |||||
Amortization of customer incentives | 6.2 | 6.7 | |||||
Amortization and write-off of debt issuance costs | 59.9 | 1.2 | |||||
Realized gain on foreign currency forward | (35.9 | ) | — | ||||
Share-based compensation expense | 17.2 | 10.6 | |||||
Deferred tax expense | (25.3 | ) | 20.0 | ||||
Tax receivable agreements non-cash items | (3.6 | ) | (5.1 | ) | |||
Other | 30.4 | 0.1 | |||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 14.0 | 56.5 | |||||
Net settlement assets and obligations | (12.2 | ) | (41.1 | ) | |||
Customer incentives | (7.3 | ) | (7.2 | ) | |||
Prepaid and other assets | (22.9 | ) | (7.0 | ) | |||
Accounts payable and accrued expenses | (17.1 | ) | (8.5 | ) | |||
Other liabilities | (28.2 | ) | (3.2 | ) | |||
Net cash provided by operating activities | 84.1 | 134.4 | |||||
Investing Activities: | |||||||
Purchases of property and equipment | (34.1 | ) | (27.9 | ) | |||
Acquisition of customer portfolios and related assets and other | (37.1 | ) | (4.3 | ) | |||
Proceeds from foreign currency forward | 71.5 | — | |||||
Cash acquired in acquisitions, net of cash used | 1,405.8 | — | |||||
Net cash provided by (used in) investing activities | 1,406.1 | (32.2 | ) | ||||
Financing Activities: | |||||||
Proceeds from issuance of long-term debt | 2,140.0 | — | |||||
Repayment of debt and capital lease obligations | (1,662.2 | ) | (35.6 | ) | |||
Borrowings on revolving credit facility | 1,476.0 | 570.0 | |||||
Repayment of revolving credit facility | (1,701.0 | ) | (570.0 | ) | |||
Payment of debt issuance costs | (86.8 | ) | (1.1 | ) | |||
Proceeds from issuance of Class A common stock under employee stock plans | 7.6 | 6.6 | |||||
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (11.2 | ) | (5.7 | ) | |||
Settlement of certain tax receivable agreements | (25.6 | ) | (15.1 | ) | |||
Payments under tax receivable agreements | (55.3 | ) | (46.5 | ) | |||
Distributions to non-controlling interests | (5.6 | ) | (5.8 | ) | |||
Net cash provided by (used in) financing activities | 75.9 | (103.2 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 1,566.1 | (1.0 | ) | ||||
Cash and cash equivalents—Beginning of period | 1,272.2 | 139.1 | |||||
Effect of exchange rate changes on cash | 31.1 | — | |||||
Cash and cash equivalents—End of period | $ | 2,869.4 | $ | 138.1 | |||
Cash Payments: | |||||||
Interest | $ | 58.2 | $ | 27.5 | |||
Income taxes | 0.6 | 0.3 | |||||
10
Schedule 6
Worldpay, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited)
(in millions)
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
2018 | 2017 | % Change | |||||||||
Net (loss) income | $ | (98.3 | ) | $ | 35.3 | (379 | )% | ||||
Income tax expense(1) | (13.2 | ) | 5.2 | (354 | )% | ||||||
Non-operating expenses(2) | 8.6 | 4.1 | 109 | % | |||||||
Interest expense—net | 75.2 | 29.2 | 158 | % | |||||||
Share-based compensation | 17.2 | 10.6 | 62 | % | |||||||
Transition, acquisition and integration costs(3) | 177.4 | 49.5 | 258 | % | |||||||
Depreciation and amortization | 207.2 | 76.1 | 172 | % | |||||||
Adjusted EBITDA | $ | 374.1 | $ | 210.0 | 78 | % | |||||
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. |
11
Schedule 7
Worldpay, Inc.
Outlook Summary
(Unaudited)
Second Quarter Financial Outlook | Full Year Financial Outlook | ||||||||||
Three Months Ended June 30, | Year Ended December 31, | ||||||||||
2018 Outlook(1) | 2017 Actual(2) | 2018 Outlook(1) | 2017 Actual(2) | ||||||||
GAAP net income per share attributable to Worldpay, Inc. | $0.22 - $0.29 | $ | 0.42 | $0.53 - $0.75 | $ | 0.80 | |||||
Adjustments to reconcile GAAP to non-GAAP adjusted net income per share(3) | $0.71 - $0.67 | $ | 0.41 | $3.18 - $3.06 | $ | 2.57 | |||||
Adjusted net income per share | $0.93 - $0.96 | $ | 0.83 | $3.71 - $3.81 | $ | 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.
The Company adopted ASC 606, effective January 1, 2018. Under ASC 606, Network fees and other costs are now netted against Revenue and no longer appear as an expense between Revenue and Net revenue as they were shown in prior periods. As a result, Revenue and Net revenue are now equivalent. This change in presentation reduces Revenue by the amount of Network fees and other costs to an amount equivalent to Net revenue, but has no impact on Net income, Adjusted net income, or Adjusted EBITDA.
(1) | Combined company guidance excludes Worldpay Group plc EPS contribution for the period prior to the acquisition 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 expenses, (f) adjustments to income tax expense to reflect an effective tax rate based on tax reform and our new tax structure for the three months ended June 30, 2018 and the full year 2018, which includes the impact of the excess tax benefit relating to stock compensation as a result of the Company adopting the new stock compensation accounting guidance in 2017, 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. |
12
Exhibit 99.2 WORLDPAY, INC. 1Q18 Financial Results May 10, 2018 © 2018 Worldpay, Inc. All rights reserved. 1 © 2018 Worldpay, Inc. All rights reserved.
DISCLAIMER No Offer or Solicitation This presentation is provided for informational purposes only and is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities of Worldpay, Inc. (“Worldpay” or the “Company”) or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Neither the contents of Worldpay’s website, nor the contents of any other website accessible from hyperlinks on such websites, is incorporated herein or forms part of this document. Forward-Looking Statements This presentation 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 presentation 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,” “will,” “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 presentation 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) changes in foreign currency exchange rates; (xv) a decline in the use of credit, debit or prepaid cards; (xvi) consolidation in the banking and retail industries; (xvii) geopolitical, regulatory, tax and business risks associated with our international operations; (xviii) the effects of governmental regulation or changes in laws; (xix) outcomes of future litigation or investigations; and (xx) 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 presentation speaks only as of the date of this presentation. 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. 2 © 2018 Worldpay, Inc. All rights reserved.
1Q18 FINANCIAL RESULTS Charles Drucker Philip Jansen Stephanie Ferris Executive Chairman & Co-Chief Executive Officer Chief Financial Officer Co-Chief Executive Officer 3 © 2018 Worldpay, Inc. All rights reserved.
STRONG 1Q18 RESULTS Net Revenue (millions) • Exceeded expectations for net revenue and adjusted 1Q18 $851 net income per share Reported • Strong business momentum 1Q17 $470 81% Growth continued across segments, including Technology 1Q18 Solutions net revenue $915 $915 growth of 20+% YoY on a 1Q18 pro forma basis Pro Forma $815 1Q17 $815 12% • Achieved $10M in cost Growth synergies through 1Q18 seamless execution of our integration plan Adjusted Net Income Per Share • Increasing FY 2018 guidance 1Q18 $0.81 to reflect 1Q outperformance Reported 1Q17 $0.68 19% Growth Pro Forma 1Q18 $0.81 4 © 2018 Worldpay, Inc. All rights reserved.
1Q18 SEGMENT UPDATE Technology Solutions Key Wins & Renewals Pro Forma Net Revenue (Millions) Global E-Commerce: Integrated Payments: 1Q18 $366 IDT Telecom, Paddy Lightspeed Power Betfair, PLAY- Penn Station ASIA.com, Supernova, 1Q17 $283 29% Growth Viva Aerubus Merchant Solutions Key Wins & Renewals US: UK: 1Q18 $466 Arvest, Citizens Bank, Hotel Chocolat, Marston’s, Dominos Next, Reiss 1Q17 $446 5% Growth Issuer Solutions Key Wins & Renewals (4%) Change Lindell Bank & Trust Co., PFCU, 1Q18 $82 Savings Bank of Mendocino County 1Q17 $86 5 © 2018 Worldpay, Inc. All rights reserved.
INTEGRATION UPDATE SEAMLESS EXECUTION DRIVEN BY COMPREHENSIVE EARLY PLANNING Achieved Key Focused on Q1 Milestones FY18/19 Goals • Unified executives into • Complete heritage WP global leadership team U.S. client migrations by UPDATE PHOTO 1H 2019 • Integrated U.S. sales forces • Generate revenue synergies in 2H19 by • Completed successful converting growing beta migration of pipeline of global ecom hundreds of heritage WP clients U.S. clients onto our scaled U.S. platform • Established global strategic eCommerce solutions team On-track to achieve $45 million in cost synergies in 2018; $200 million of cost synergies by the end of the third year post-close 6 © 2018 Worldpay, Inc. All rights reserved.
STRATEGY REVIEW Philip Jansen Co-Chief Executive Officer 7 © 2018 Worldpay, Inc. All rights reserved.
LEADING GLOBAL PAYMENTS TECHNOLOGY COMPANY Leader in large, Investing in Differentiated Compelling expanding global high-growth competitive advantages financial profile payments market segments • Well-positioned in • Global e-commerce • Unmatched • High-growth, recurring large and deep global • Integrated payments global scale revenue stream payments industry • High-growth verticals • Broad and diverse • Superior operating • Market expansion • Geographic distribution leverage driven by adoption of expansion • Leading technology • Highly cash electronic payments capabilities generative at a rapid pace around the world 8 © 2018 Worldpay, Inc. All rights reserved.
LEADER IN LARGE, GLOBAL SECULAR GROWTH MARKET Global payments revenue Leadership positions in US and 1 continues to accelerate 2.25 Europe; strong footholds in emerging 2 • 2011-17: 6% CAGR markets • 2017-21: 7% CAGR 1.74 Payments revenue, $ trillion 1.61 1.54 U.S. & 1.48 Asia Canada Europe Pacific 1.35 1.27 1.20 $5.2tn $3.0tn $11.4tn ~7% CAGR ~9% CAGR ~12% CAGR Middle East / Africa Latin America $0.3tn $0.6tn ~14% CAGR ~8% CAGR ‘15 Purchase Volume ’15-’25 CAGR % 2011 2012 2013 2014 2015 2016 2017 2021 North America Latin America Africa Europe Asia-Pacific 1McKinsey & Company; at fixed 2016 $ exchange rates, for the entire time series 2The Nilson Report (January 2017, issue 1102), McKinsey & Company 9 © 2018 Worldpay, Inc. All rights reserved.
POSITIONED TO LEAD AND TRANSFORM ECOMMERCE eCommerce is fastest-growing Global eCommerce Volume ($tn)2 payments segment • Volumes to double by 2020 at high-teens growth Cross border rate Domestic ~16% CAGR • Strong secular growth powered by online adoption 2x+ 4.0 - 4.5 • Cross-border eCommerce projected to grow at nearly twice as fast as broader eCommerce ~25% CAGR market, at ~25% • Alternative and local payment methods gaining share ~14% 2.0 CAGR Worldpay, Inc. uniquely positioned to win in eCommerce • Worldpay, Inc. #1 in cross-border eCommerce1 • Unrivaled technology and value-added services • One-stop shop for global merchants 2015 2020F 1Illustrative figure based on 2016 pro forma volume for the combined company as compared to select peers 2McKinsey & Co. 10 © 2018 Worldpay, Inc. All rights reserved.
EXPANDING INTEGRATED PAYMENTS Pioneer in integrated payments Compelling growth opportunities • Established leader in US • Reinforce Worldpay’s position as partner of choice for US dealers and developers • Unmatched capabilities − 1,000+ partners • Follow existing US partners expanding overseas − 3,000+ integrations − Strong position in attractive SMB segment • Deepen UK and European presence as demand accelerates • Differentiated products and value-added services 11 © 2018 Worldpay, Inc. All rights reserved.
FINANCIAL REVIEW Stephanie Ferris Chief Financial Officer 12 © 2018 Worldpay, Inc. All rights reserved.
COMPELLING FINANCIAL PROFILE • 40%+ of revenue from high-growth businesses High-growth, • Resilient business with high visibility and predictability recurring • Long-term contracts with diverse client base revenue stream • High client retention rates Significant • Superior cost structure creates industry leading margin profile operating leverage • Scalability and cost efficiency creates opportunities for cost synergies • High free cash flow conversion provides ample flexibility to de-lever, deploy capital strategically, and reinvest in high-growth segments Highly cash • Low capex requirements generative • Capital allocation priority to de-lever to 4x debt to EBITDA over next three to six quarters, invest in organic growth and M&A 13 © 2018 Worldpay, Inc. All rights reserved.
1Q18 HIGHLIGHTS 1Q18 Net Revenue Mix Pro Forma Results Results2 9% $ in millions except EPS 1Q181 1Q17 Growth 1Q18 1Q17 Growth Net Revenue $851 $470 81% $915 $815 12% 40% Technology Solutions $336 $162 107% $366 $283 29% Merchant Solutions $432 $224 93% $466 $446 5% 51% Issuer Solutions $82 $84 (2)% $82 $86 (4%) Adjusted Net Income $237 $135 76% $254 $201 26% Adjusted Net Income per share $0.81 $0.68 19% $0.81 NM NM Technology Solutions Merchant Solutions Issuer Solutions 1. Excludes Net revenue contribution from Worldpay Group plc for 15 days prior to the transaction closing January 16, 2018. Totals may not sum due to rounding. 2. Assumes Worldpay Group plc acquisition closed January 1, 2017 14 © 2018 Worldpay, Inc. All rights reserved.
2Q18 AND FY18 GUIDANCE 2Q 2018 Guidance FY 2018 Guidance Net Revenue (millions) $960 – $980 $3,810 – $3,900 GAAP Net Income Per Share $0.22 – $0.29 $0.53 – $0.75 Adjusted Net Income Per Share $0.93 – $0.96 $3.71 – $3.81 Guidance Assumptions • Excludes heritage Worldpay contribution for the dates prior to the January • Depreciation and amortization excluding intangibles 16, 2018 transaction close (i.e. Jan. 1-15, 2018) of $165-$175 million in 2018 • Combined company guidance is based on an assumed exchange rate of • $340-$350 million in interest expense in 2018 US dollar/pound sterling of $1.35 • Effective tax rate of approximately 13%, including the new company’s tax • $200 million estimated run-rate cost synergies by end of third year post structure and the impact of Tax Reform and Jobs Act of 2017 close; ~$45 million in cost synergies during 2018 • 305-315 million average diluted adjusted shares outstanding • Capex of approximately $350 million, equal to ~9% of total revenue 15 © 2018 Worldpay, Inc. All rights reserved.
THE NEW WORLDPAY • Exceeded expectations for net revenue and adjusted net income per share • Strong business momentum continued across segments, including Technology Solutions net revenue growth of 20+% YoY on a pro forma basis • Achieved $10M in cost synergies through seamless execution of our integration plan • Increasing FY 2018 guidance to reflect 1Q outperformance 16 16 © 2018 Worldpay, Inc. All rights reserved.
Q&A 17 © 2018 Worldpay, Inc. All rights reserved.
18 © 2018 Worldpay, Inc. All rights reserved.
RESULTS RECONCILIATION Pro Forma Pro Forma Results Adjustments1 Results $ in millions except EPS 1Q18 1Q18 Net Revenue $851 $64 $915 Technology Solutions $336 $30 $366 Merchant Solutions $432 $34 $466 Issuer Solutions $82 - $82 Adjusted Net Income $237 $17 $254 Adjusted Net Income per share $0.81 - $0.81 Shares Outstanding (millions) 291 22 313 1. Adjustments to reconcile Worldpay Group plc amounts for the 15 days prior to transaction close on January 16, 2018, include adjustments to Net revenue of $64 million less $47 million in expenses for $17 million in Adjusted net income as well as an increase in the weighted average shares outstanding of 22 million shares. 19 © 2018 Worldpay, Inc. All rights reserved.