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Vantiv Reports Third Quarter 2017 Results
Continues Trend of Superior Execution and Growth

CINCINNATI, Oct. 26, 2017 /PRNewswire/ -- Vantiv, Inc. (NYSE: VNTV) ("Vantiv" or the "company") today announced financial results for the third quarter ended September 30, 2017. Total revenue increased 13% to $1,033.8 million as compared to $914.0 million in the prior year period. Net revenue increased 13% to $554.2 million as compared to $490.7 million in the prior year period. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. increased 39% to $0.57 as compared to $0.41 in the prior year period. Pro forma adjusted net income per share increased 27% to $0.90 as compared to $0.71 in the prior year period. (See Schedule 1 for net income per diluted share attributable to Vantiv, Inc. and Schedule 2 for pro forma adjusted net income per share.)

 "We had a great quarter, which demonstrates our people's ability to execute and to stay focused on our clients while strategically transforming the company," said Charles Drucker, president and chief executive officer at Vantiv. "We are investing in high growth segments of the market, including our combination with Worldpay, which will position us as a global acquirer with a leading position in eCommerce."

Merchant Services

Merchant Services net revenue increased 16% to $468.8 million in the third quarter as compared to $404.4 million in the prior year period, primarily due to a 9% increase in transactions and a 6% increase in net revenue per transaction. On an organic basis, Merchant Services net revenue grew high single digits in the third quarter as compared to the prior year period. Sales and marketing expenses increased 14% to $168.0 million in the third quarter as compared to $147.7 million in the prior year period, primarily due to strong new sales growth in partner channels. (See Schedule 3 for segment information.)

Financial Institution Services

Financial Institution Services net revenue decreased 1% to $85.5 million in the third quarter as compared to $86.2 million in the prior year period. The decrease in net revenue was primarily due to the de-conversion of a major client. Sales and marketing expenses increased 3% to $5.8 million in the third quarter as compared to $5.6 million in the prior year period. (See Schedule 3 for segment information.)

Operating Expenses

Other operating costs increased 10% on a GAAP basis to $79.5 million in the third quarter as compared to $72.2 million in the prior year period. When excluding transition, acquisition and integration costs of $2.6 million, Other operating costs increased 9% on a pro forma basis to $76.9 million in the third quarter as compared to $70.4 million in the prior year period. (See schedule 1 for GAAP financial measures and Schedule 2 for non-GAAP and pro forma adjustments.)

General and administrative expenses increased 22% on a GAAP basis to $49.6 million in the third quarter as compared to $40.7 million in the prior year period. When excluding transition, acquisition and integration costs of $2.5 million as well as share-based compensation of $13.6 million, General and administrative expenses increased 11% on a pro forma basis to $33.5 million in the third quarter as compared to $30.1 million in the prior year period. (See schedule 1 for GAAP financial measures and Schedule 2 for non-GAAP and pro forma adjustments.)

Adjusted EBITDA

Reflecting strong operating leverage and expense control, Adjusted EBITDA increased 14% to $270.1 million or 48.7% of net revenue in the third quarter as compared to $236.9 million or 48.3% of net revenue in the prior year period. (See Schedule 6 for a reconciliation of GAAP net income to adjusted EBITDA.)

Depreciation and Amortization

Depreciation and amortization expense increased 25% on a GAAP basis to $82.5 million in the third quarter as compared to $66.1 million in the prior year period.  Excluding intangible amortization of $55.3 million, depreciation and amortization expense increased 49% on a pro forma basis to $27.2 million in the third quarter as compared to $18.3 million in the prior year period, primarily due to recent acquisitions. (See Schedule 1 for GAAP financial measures and Schedule 2 for non-GAAP and pro forma adjustments.)

Full-Year and Fourth Quarter Financial Outlook

Based on the current level of transactions and trends, for the full-year 2017, net revenue is expected to be $2,110 to $2,120 million, representing an increase of 11% above the prior year. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. is expected to be $1.42 - $1.47 for the full-year 2017. Pro forma adjusted net income per share is expected to be $3.34 - $3.36 for the full-year 2017. (See Schedule 7 for a reconciliation of the outlook for GAAP net income per share attributable to Vantiv, Inc. to pro forma adjusted net income per share.)

For the fourth quarter of 2017, net revenue is expected to be $556 to $566 million, representing an increase of 11% to 13% above the prior year period. On a GAAP basis, net income per diluted share attributable to Vantiv, Inc. is expected to be $0.24 - $0.30 for the fourth quarter of 2017. Pro forma adjusted net income per share is expected to be $0.94 - $0.96 for the fourth quarter of 2017. (See Schedule 7 for a reconciliation of the outlook for GAAP net income per share attributable to Vantiv, Inc. to pro forma adjusted net income per share.)        

Earnings Conference Call and Audio Webcast

The company will host a conference call to discuss the third quarter financial results today at 8:00 a.m. ET. The conference call can be accessed live over the phone by dialing (800) 479-9001, or for international callers (719) 457-2715, and referencing code 7650623. A replay will be available approximately two hours after the call concludes and can be accessed by dialing (866) 375-1919, or for international callers (719) 457-0820, and entering replay passcode 7650623. The call will also be webcast live from the company's investor relations website at http://investors.vantiv.com. Following completion of the call, a recorded replay of the webcast will be available on the website.

ABOUT VANTIV

Vantiv, Inc. (NYSE: VNTV) is a leading payment processor differentiated by an integrated technology platform. Vantiv offers a comprehensive suite of traditional and innovative payment processing and technology solutions to merchants and financial institutions of all sizes, enabling them to address their payment processing needs through a single provider. We build strong relationships with our customers, helping them become more efficient, more secure and more successful. Vantiv is the largest merchant acquirer and the largest PIN debit acquirer based on number of transactions in the U.S. The company's growth strategy includes expanding further into high-growth channels and verticals, including integrated payments, eCommerce, and merchant bank. Visit us at www.vantiv.com, or follow us on Twitter, Facebook, LinkedIn, Google+ and YouTube.

© 2017 Vantiv, LLC. All Rights Reserved. All trademarks, service marks and trade names referenced herein are the property of their respective owners. Vantiv and other Vantiv products and services mentioned herein as well as their respective logos are registered trademarks or trademarks of Vantiv, LLC in the U.S. and other countries.

Non-GAAP and Pro Forma Financial Measures

This earnings release presents non-GAAP and pro forma financial information including net revenue, adjusted EBITDA, pro forma adjusted net income, and pro forma adjusted net income per share. These are important financial performance measures for the company, but are not financial measures as defined by GAAP. The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP and pro forma financial performance measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Reconciliations of these measures to the most directly comparable GAAP financial measures are presented in the attached schedules.

Forward-Looking Statements

This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements including any statements regarding guidance and statements of a general economic or industry specific nature. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this release are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual future performance or results and cause them to differ materially from those anticipated in the forward-looking statements. Certain of these factors and other risks are discussed in the company's filings with the U.S. Securities and Exchange Commission (the "SEC") and include, but are not limited to: (i) our ability to adapt to developments and change in our industry; (ii) competition; (iii) unauthorized disclosure of data or security breaches; (iv) systems failures or interruptions; (v) our ability to expand our market share or enter new markets; (vi) our ability to identify and complete acquisitions, joint ventures and partnerships; (vii) failure to comply with applicable requirements of Visa, MasterCard or other payment networks or changes in those requirements; (viii) our ability to pass along fee increases; (ix) termination of sponsorship or clearing services; (x) loss of clients or referral partners; (xi) reductions in overall consumer, business and government spending; (xii) fraud by merchants or others; (xiii) a decline in the use of credit, debit or prepaid cards; (xiv) consolidation in the banking and retail industries; (xv) the effects of governmental regulation or changes in laws; and (xvi) outcomes of future litigation or investigations. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. More information on potential factors that could affect the company's financial results and performance is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the company's periodic reports filed with the SEC, including the company's most recently filed Annual Report on Form 10-K and its subsequent filings with the SEC.

 

Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

CONTACTS

Investors
Nathan Rozof, CFA
Investor Relations
(866) 254-4811
(513) 900-4811
IR@vantiv.com

Media
Andrew Ciafardini
Corporate Communications
(513) 900-5308
Andrew.Ciafardini@vantiv.com

 

 

Schedule 1

Vantiv, Inc.

Consolidated Statements of Income

(Unaudited)

(in thousands, except share data)



Three Months Ended September 30,



Change


Nine Months Ended September 30,



Change


2017


2016



2017


2016


Total revenue

$

1,033,765



$

914,019



13%


$

2,960,731



$

2,623,859



13%

Network fees and other costs

479,533



423,361



13%


1,406,358



1,221,510



15%

Net revenue(1)

554,232



490,658



13%


1,554,373



1,402,349



11%

Sales and marketing

173,779



153,248



13%


497,082



433,730



15%

Other operating costs

79,482



72,162



10%


234,347



219,464



7%

General and administrative

49,607



40,727



22%


189,632



133,831



42%

Depreciation and amortization

82,500



66,086



25%


236,964



199,550



19%

Income from operations

168,864



158,435



7%


396,348



415,774



(5)%

Interest expense—net

(38,521)



(27,474)



40%


(97,441)



(81,321)



20%

Non-operating income (expenses)(2)

21,207



(4,633)



NM


13,672



(14,949)



NM

Income before applicable income taxes

151,550



126,328



20%


312,579



319,504



(2)%

Income tax expense(3)

44,645



39,324



14%


83,519



101,591



(18)%

Net income

106,905



87,004



23%


229,060



217,913



5%

Less: Net income attributable to non-
controlling interests

(14,787)



(20,708)



(29)%


(39,280)



(52,552)



(25)%

Net income attributable to Vantiv, Inc.

$

92,118



$

66,296



39%


$

189,780



$

165,361



15%













Net income per share attributable to
Vantiv, Inc. Class A common stock:












Basic

$

0.57



$

0.43



33%


$

1.18



$

1.06



11%

Diluted(4)

$

0.57



$

0.41



39%


$

1.17



$

1.04



13%

Shares used in computing net income
per share of Class A common stock:












Basic

161,465,849



155,740,660





161,205,066



155,603,265




Diluted

162,882,396



197,342,169





162,617,782



197,126,571
















Non Financial Data:












Transactions (in millions)

6,550



6,270



4%


19,412



18,273



6%

_______________

(1) Net revenue is revenue, less network fees and other costs which primarily consist of pass through expenses incurred by us in connection with providing processing services to our clients, including Visa and Mastercard network association fees, payment network fees, third party processing expenses, telecommunication charges, postage and card production costs.

(2) Non-operating income for the three and nine months ended September 30, 2017 consists of an unrealized gain of approximately $24.4 million relating to the change in fair value of a deal contingent forward entered into in connection with the pending Worldpay Group plc ("Worldpay") acquisition, partially offset by the change in fair value of a tax receivable agreement ("TRA") entered into as part of the acquisition of Mercury. Non-operating expenses for the three and nine months ended September 30, 2016 primarily relate to the change in fair value of a TRA entered into as part of the acquisition of Mercury.

(3) Includes a credit of approximately $1.9 million and $16.0 million for the three and nine months ended September 30, 2017, respectively, relating to excess tax benefits as a result of the Company adopting new stock compensation accounting guidance on January 1, 2017 which requires those benefits be recorded in income tax expense.

(4) Due to our structure as a C corporation and Vantiv Holding's structure as a pass-through entity for tax purposes, the numerator in the diluted net income per share calculation is adjusted to reflect our income tax expense at an expected effective tax rate assuming the conversion of the Class B units of Vantiv Holding into shares of our Class A common stock. During the three months and nine months ended September 30, 2017, approximately 23.6 million and 31.2 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 nine months ended September 30, 2017. The components of the diluted net income per share calculation are as follows:

 


Three Months Ended September 30,


Nine Months Ended September 30,


2017


2016


2017


2016

Income before applicable income taxes

$



$

126,328



$



$

319,504


Taxes





45,478







115,021


Net income

$

92,118



$

80,850



$

189,780



$

204,483


Diluted shares


162,882,396




197,342,169




162,617,782




197,126,571


Diluted EPS

$

0.57



$

0.41



$

1.17



$

1.04



 

Schedule 2
Vantiv, Inc.
Pro Forma Adjusted Net Income
(Unaudited)
(in thousands, except share data




Three Months Ended September 30,


%
Change


Nine Months Ended September 30,


%
Change



2017


2016



2017


2016




(in thousands)




(in thousands)



Income before applicable income taxes


$

151,550



$

126,328



20%


$

312,579



$

319,504



(2)%

Non-GAAP Adjustments:













Transition, acquisition and integration costs(1)


5,116



2,761



85%


67,886



22,332



204%

Share-based compensation(2)


13,607



9,600



42%


35,068



25,892



35%

Intangible amortization(3)


55,280



47,797



16%


161,480



142,704



13%

Non-operating (income) expenses(4)


(21,207)



4,633



NM


(13,672)



14,949



NM

    Non-GAAP Adjusted Income
    Before Applicable Taxes


204,346



191,119



7%


563,341



525,381



7%

Less: Pro Forma Adjustments













Income tax expense(5)


69,478



68,803



1%


191,536



189,137



1%

Tax adjustments(6)


(33,564)



(18,902)



78%


(96,721)



(55,042)



76%

Total pro forma tax expense


35,914



49,901



(28)%


94,815



134,095



(29)%

Pro forma tax rate


18%



26%





17%



26%

















Other(7)


459



354



30%


1,143



1,581



(28)%

Pro forma adjusted net income


$

167,973



$

140,864



19%


$

467,383



$

389,705



20%














Pro forma adjusted net income per share


$

0.90



$

0.71



27%


$

2.41



$

1.98



22%

djusted shares outstanding


186,524,461



197,342,169





193,860,354



197,126,571




 

 

 

Non-GAAP and Pro Forma Financial Measures

This schedule presents non-GAAP and pro forma financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP.  Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.

_______________

Pro forma adjusted net income is derived from GAAP income before applicable income taxes and adjusted for the following items described below:


(1) Represents acquisition and integration costs incurred in connection with our acquisitions, charges related to employee termination benefits and other transition activities. Transition, acquisition and integration costs for the three months ended September 30, 2017 and 2016 include $2,609 and $1,769 in Other operating costs, respectively and $2,507 and $992 in General and administrative ("G&A"), respectively. Transition, acquisition and integration costs for the nine months ended September 30, 2017 and 2016 include $10,846 and $7,744 in Other operating costs, respectively and $57,040 and $14,588 in G&A, respectively. Included in Transition, acquisition and integration costs in the nine months ended September 30, 2017 is a $38 million charge to G&A related to a settlement agreement stemming from legacy litigation of an acquired company.

(2) Share-based compensation is recorded in G&A.

(3) Represents amortization of intangible assets acquired through business combinations and customer portfolio and related asset acquisitions.

(4) Non-operating income for the three and nine months ended September 30, 2017 consists of an unrealized gain of approximately $24.4 million relating to the change in fair value of a deal contingent forward entered into in connection with the pending Worldpay acquisition, partially offset by the change in fair value of a TRA entered into as part of the acquisition of Mercury. Non-operating expenses for the three and nine months ended September 30, 2016 primarily relate to the change in fair value of a TRA entered into as part of the acquisition of Mercury.

(5) Represents adjusted income tax expense to reflect an effective tax rate of 34.0% for 2017 and 36.0% for 2016, respectively, assuming the conversion of the Class B units of Vantiv Holding into shares of Class A common stock, including the tax effect of adjustments described above. The 2017 effective tax rate includes the impact of the excess tax benefits relating to stock compensation as a result of the Company adopting new stock compensation accounting guidance on January 1, 2017 which requires those benefits to be recorded in income tax expense. The effective tax rate is expected to remain at 34.0% for the remainder of 2017.

(6) Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, and to the tax basis step up associated with our separation from Fifth Third Bank and the purchase or exchange of Class B units of Vantiv Holding, net of payment obligations under tax receivable agreements.

(7) Represents the non-controlling interest, net of pro forma income tax expense discussed in (5) above, associated with a consolidated joint venture.


 

 

Schedule 3

Vantiv, Inc.

Segment Information

(Unaudited)

(in thousands)


Merchant Services



Three Months Ended September 30,




2017


2016


% Change

Total revenue

$

916,630



$

793,860



15%

Network fees and other costs

447,863



389,448



15%

Net revenue

468,767



404,412



16%

Sales and marketing

168,022



147,663



14%

Segment profit

$

300,745



$

256,749



17%







Non-financial data:






Transactions (in millions)

5,702



5,241



9%

Net revenue per transaction

$

0.0822



$

0.0772



6%






Nine Months Ended September 30,




2017


2016


% Change

Total revenue

$

2,615,341



$

2,251,033



16%

Network fees and other costs

1,311,539



1,117,602



17%

Net revenue

1,303,802



1,133,431



15%

Sales and marketing

479,628



416,107



15%

Segment profit

$

824,174



$

717,324



15%







Non-financial data:






Transactions (in millions)

16,716



15,244



10%

Net revenue per transaction

$

0.0780



$

0.0744



5%



Financial Institution Services


Three Months Ended September 30,




2017


2016


% Change

Total revenue

$

117,135



$

120,159



(3)%

Network fees and other costs

31,670



33,913



(7)%

Net revenue

85,465



86,246



(1)%

Sales and marketing

5,757



5,585



3%

Segment profit

$

79,708



$

80,661



(1)%







Non-financial data:






Transactions (in millions)

848



1,029



(18)%

Net revenue per transaction

$

0.1008



$

0.0838



20%






Nine Months Ended September 30,




2017


2016


% Change

Total revenue

$

345,390



$

372,826



(7)%

Network fees and other costs

94,819



103,908



(9)%

Net revenue

250,571



268,918



(7)%

Sales and marketing

17,454



17,623



(1)%

Segment profit

$

233,117



$

251,295



(7)%







Non-financial data:






Transactions (in millions)

2,696



3,029



(11)%

Net revenue per transaction

$

0.0929



$

0.0888



5%

 

 

Schedule 4

Vantiv, Inc.

Condensed Consolidated Statements of Financial Position

(Unaudited)

(in thousands)




September 30, 2017


December 31, 2016

Assets





Current assets:





Cash and cash equivalents


$

92,638



$

139,148


Accounts receivable—net


899,389



940,052


Related party receivable


1,639



1,751


Settlement assets


135,043



152,490


Prepaid expenses


48,073



39,229


Other


118,664



15,188


    Total current assets


1,295,446



1,287,858







  Customer incentives


64,023



67,288


  Property, equipment and software—net


470,308



348,553


  Intangible assets—net


732,431



787,820


  Goodwill


4,180,307



3,738,589


  Deferred taxes


1,322,679



771,139


  Other assets


24,740



42,760


Total assets


$

8,089,934



$

7,044,007







Liabilities and equity





Current liabilities:





Accounts payable and accrued expenses


$

528,473



$

471,979


Related party payable


3,037



3,623


Settlement obligations


788,261



801,381


Current portion of note payable


140,654



131,119


Current portion of tax receivable agreement obligations to related parties


261,844



191,014


Current portion of tax receivable agreement obligations


54,798



60,400


Deferred income


19,349



7,907


Current maturities of capital lease obligations


8,000



7,870


Other


6,790



13,719


    Total current liabilities


1,811,206



1,689,012


Long-term liabilities:





Note payable


4,591,619



3,089,603


Tax receivable agreement obligations to related parties


876,434



451,318


Tax receivable agreement obligations


42,510



86,640


Capital lease obligations


6,666



13,223


Deferred taxes


98,097



62,148


Other


46,297



44,774


    Total long-term liabilities


5,661,623



3,747,706


Total liabilities


7,472,829



5,436,718







Commitments and contingencies





Equity:





Total equity(1)


617,105



1,607,289


Total liabilities and equity


$

8,089,934



$

7,044,007


_______________

(1) Includes equity attributable to non-controlling interests.


 

 

Schedule 5

Vantiv, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



Nine Months Ended September 30,


2017


2016

Operating Activities:




Net income

$

229,060



$

217,913


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization expense

236,964



199,550


Amortization of customer incentives

18,648



18,508


Amortization of debt issuance costs

3,941



4,818


Unrealized gain on deal contingent forward

(24,365)




Share-based compensation expense

35,068



25,892


Deferred taxes

60,000



49,900


Excess tax benefit from share-based compensation



(11,193)


Tax receivable agreements non-cash items

10,708



14,880


Other

2,304



433


Change in operating assets and liabilities:




Accounts receivable and related party receivable

46,682



(67,938)


Net settlement assets and obligations

4,327



(16,558)


Customer incentives

(17,703)



(30,808)


Prepaid and other assets

(82,916)



6,183


Accounts payable and accrued expenses

22,924



24,859


Payable to related party

(586)



(1,331)


Other liabilities

(17,390)



(4,713)


    Net cash provided by operating activities

527,666



430,395


Investing Activities:




Purchases of property and equipment

(81,882)



(93,822)


Acquisition of customer portfolios and related assets and other

(38,165)



(2,179)


Purchase of derivative instruments



(21,523)


  Cash used in acquisitions, net of cash acquired

(531,534)




    Net cash used in investing activities

(651,581)



(117,524)


Financing Activities:




Proceeds from issuance of long-term debt

1,270,000




Borrowings on revolving credit facility

5,405,000



1,180,000


Repayment of revolving credit facility

(5,046,000)



(1,180,000)


Repayment of debt and capital lease obligations

(107,969)



(98,019)


Payment of debt issuance costs

(24,148)




Proceeds from issuance of Class A common stock under employee stock plans

10,847



12,340


Purchase and cancellation of Class A common stock

(1,268,057)



(25,008)


Repurchase of Class A common stock (to satisfy tax withholding obligations)

(9,187)



(6,036)


Settlement of certain tax receivable agreements

(84,878)



(158,115)


Payments under tax receivable agreements

(55,695)



(53,474)


Excess tax benefit from share-based compensation



11,193


Distributions to non-controlling interests

(12,508)



(9,018)


Other



(12)


    Net cash provided by (used in) financing activities

77,405



(326,149)


Net decrease in cash and cash equivalents

(46,510)



(13,278)


Cash and cash equivalents—Beginning of period

139,148



197,096


Cash and cash equivalents—End of period

$

92,638



$

183,818


Cash Payments:




Interest

$

94,318



$

76,404


Taxes

31,585



35,709


 

 

Schedule 6

Vantiv, Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(Unaudited)

(in thousands)



Three Months Ended September 30,



Change


Nine Months Ended September 30,



Change


2017


2016



2017


2016


Net income

$

106,905



$

87,004



23%


$

229,060



$

217,913



5%

Income tax expense

44,645



39,324



14%


83,519



101,591



(18)%

Non-operating (income) expenses(1)

(21,207)



4,633



NM


(13,672)



14,949



NM

Interest expense—net

38,521



27,474



40%


97,441



81,321



20%

Share-based compensation

13,607



9,600



42%


35,068



25,892



35%

Transition, acquisition and integration costs(2)

5,116



2,761



85%


67,886



22,332



204%

Depreciation and amortization

82,500



66,086



25%


236,964



199,550



19%

Adjusted EBITDA

$

270,087



$

236,882



14%


$

736,266



$

663,548



11%

 

 

Non-GAAP Financial Measures

This schedule presents adjusted EBITDA, which is an important financial performance measure for the Company, but is not a financial measure as defined by GAAP.  Such financial measure should not be considered as an alternative to GAAP net income, and such measure may not be comparable to those reported by other companies.

_______________

(1) Non-operating income for the three and nine months ended September 30, 2017 consists of an unrealized gain of approximately $24.4 million relating to the change in fair value of a deal contingent forward entered into in connection with the pending Worldpay acquisition, partially offset by the change in fair value of a TRA entered into as part of the acquisition of Mercury. Non-operating expenses for the three and nine months ended September 30, 2016 primarily relate to the change in fair value of a TRA entered into as part of the acquisition of Mercury.

(2) Represents acquisition and integration costs incurred in connection with our acquisitions, charges related to employee termination benefits and other transition activities.  Included in Transition, acquisition and integration costs in the nine months ended September 30, 2017 is a $38 million charge related to a settlement agreement stemming from legacy litigation of an acquired company.

 

 

Schedule 7

Vantiv, Inc.

Outlook Summary

(Unaudited)



Fourth Quarter Financial Outlook


Full Year Financial Outlook


Three Months Ended December 31,




Year Ended December 31,




2017 Outlook


2016 Actual


% Change


2017 Outlook


2016 Actual


% Change

GAAP net income per share
attributable to Vantiv, Inc.

$0.24 - $0.30


$0.29


(17%) - 3%


$1.42 - $1.47


$1.32


8% - 11%

Adjustments to reconcile GAAP
to non-GAAP pro forma adjusted
net income per share(1)

$0.70 - $0.66


$0.46


52% - 43%


$1.92 - $1.89


$1.41


36% - 34%

Pro forma adjusted net income
per share

$0.94 - $0.96


$0.75


25% - 28%


$3.34 - $3.36


$2.73


22% - 23%

 

 

Non-GAAP and Pro Forma Financial Measures 
This schedule presents non-GAAP and pro forma financial measures, which are important financial performance measures for the Company, but are not financial measures as defined by GAAP.  Such financial measures should not be considered as alternatives to GAAP, and such measures may not be comparable to those reported by other companies.

_______________

(1) Represents 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, the full year 2017 financial outlook includes a $38 million charge recorded in March 2017 related to a settlement agreement stemming from legacy litigation of an acquired company; (b) share-based compensation;  (c) amortization of intangible assets acquired in business combinations and customer portfolio and related asset acquisitions; (d) non-operating income (expense) is primarily associated with the change in the fair value of a TRA entered into as part of the acquisition of Mercury and an unrealized gain of approximately $24.4 million through the nine months ended September 30, 2017 relating to the change in fair value of a deal contingent forward entered into in connection with the pending Worldpay transaction, but excludes any estimate of unrealized gains or losses on the deal contingent forward for the period of October 1 - December 31, 2017; (e) non-controlling interest; (f) adjustments to income tax expense to reflect an effective tax rate of 34.0% for the three months and year ended December 31, 2017, which includes the impact of excess tax benefits relating to stock compensation as a result of the Company adopting new stock compensation accounting guidance on January 1, 2017 which requires those benefits be recorded in income tax expense and 36.0% for the three months and year ended December 31, 2016, assuming conversion of the Fifth Third Bank non-controlling interests into shares of Class A common stock, including the tax effect of adjustments described above; and (g) tax benefits due to the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, and to the tax basis step up associated with our separation from Fifth Third Bank and the purchase or exchange of Class B units of Vantiv Holding, net of payment obligations under tax receivable agreements.

 


 

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SOURCE Vantiv, Inc.