Vantiv Reports Fourth Quarter and Full-Year 2013 Results
Fourth Quarter Net Revenue Increased 14% to $309 Million and Pro Forma Adjusted Net Income per Share Increased 18% to $0.45
Full-Year 2013 Net Revenue Increased 15% to $1,173 Million and Pro Forma Adjusted Net Income per Share Increased 28% to $1.56
Board Authorizes New $300 Million Share Repurchase Program
CINCINNATI, Feb. 13, 2014 - Vantiv, Inc. (NYSE: VNTV) ("Vantiv" or the "Company") today announced financial results for the fourth quarter and full-year ended December 31, 2013. Revenue increased 13% to $558.4 million in the fourth quarter as compared to $494.1 million in the prior year period. Net revenue increased 14% to $308.6 million in the fourth quarter as compared to $271.2 million in the prior year period. On a GAAP basis, net income attributable to Vantiv, Inc. was $42.8 million or $0.26 per diluted share during the fourth quarter, compared with $28.8 million or $0.22 per diluted share in the prior year period. Pro forma adjusted net income increased 11% in the fourth quarter to $90.4 million as compared to $81.6 million in the prior year period. Pro forma adjusted net income per share increased 18% to $0.45 for the fourth quarter as compared to $0.38 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.)
For the full-year, revenue increased 13% to $2,108.1 million as compared to $1,863.2 million in the prior year. Net revenue increased 15% to $1,172.6 million in 2013 as compared to $1,022.6 million in the prior year. On a GAAP basis, net income attributable to Vantiv, Inc. in 2013 was $133.6 million, or $0.87 per diluted share, compared with $57.6 million, or $0.47 per diluted share, in the prior year. Pro forma adjusted net income increased 23% in 2013 to $320.5 million as compared to $260.0 million in the prior year. Pro forma adjusted net income per share increased 28% to $1.56 for the full-year 2013 as compared to $1.22 in the prior year period. (See Schedule 2 for pro forma adjusted net income and Schedule 7 for GAAP net income reconciliation to pro forma adjusted net income.)
Transaction growth was 8% and 10% for the fourth quarter and full-year, respectively; primarily due to strong transaction growth in the Merchant Services segment of 9% and 12% during the same periods. The Financial Institutions Services segment also experienced strong transaction growth with a 5% increase for both the fourth quarter and full-year.
Vantiv's scale and superior cost structure continue to drive high levels of profitability as reflected by the Company's fourth quarter adjusted EBITDA margin of 50.9%. Adjusted EBITDA increased to $157.0 million in the fourth quarter from $144.0 million in the prior year period. Adjusted EBITDA increased to $583.1 million in the full-year 2013 from $509.8 million in the prior year. (See Schedule 8 for a reconciliation of GAAP net income to adjusted EBITDA.)
"Our double-digit growth in the fourth quarter and full-year 2013 demonstrates the strength of our business model," said Charles Drucker, president and chief executive officer at Vantiv. "Our single integrated processing platform, comprehensive suite of solutions, and diverse distribution channels are competitive advantages that have consistently enabled us to win market share. As we enter 2014, we will continue to win new business and invest for growth, including expansion into strategic channels and high-growth segments and verticals. We finished the year strong and look forward to continued success in 2014."
Net revenue increased 20% to $225.6 million in the fourth quarter as compared to $188.4 million in the prior year period, primarily due to a 9% increase in transactions and a 10% expansion in net revenue per transaction. On a full-year basis, net revenue increased 20% to $837.7 million as compared to $699.8 million in the prior year, primarily due to a 12% increase in transactions and a 7% increase in net revenue per transaction. Expansion in net revenue per transaction during 2013 primarily reflects beneficial changes in customer mix and increased net revenue from strategic channels, including ecommerce, merchant bank and technology partner channels. Sales and marketing expenses increased to $73.2 million in the fourth quarter from $62.5 million in the prior year period and to $286.2 million for the full-year from $255.9 million in the prior year, principally driven by growth in net revenue and expansion in strategic channels.
Financial Institution Services
Fourth quarter net revenue of $83.1 million was flat with prior year period net revenue of $82.8 million as a 5% increase in transactions was largely offset by a shift in the mix of our client portfolio that resulted in a lower average rate per transaction. On a full-year basis, net revenue increased 4% to $334.9 million, primarily due to a 5% increase in transactions. Sales and marketing expenses increased to $6.9 million in the fourth quarter from $5.6 million in the prior year period and to $25.8 million for the full-year from $24.8 million in the prior year.
Newly Authorized $300 Million Share Repurchase Program
Vantiv's Board of Directors authorized the return of up to $300 million to shareholders through a share repurchase program. This $300 million repurchase program is in addition to the $137 million share repurchase program authorized by the Board of Directors in October 2013. As of December 31, 2013, Vantiv had utilized $103 million of the prior authorization to repurchase shares.
"Strategic capital allocation is a priority," said chief financial officer Mark Heimbouch. "Since going public, we have strategically deployed over $1 billion of capital through strategic acquisitions, TRA terminations, and share repurchases. The Board's authorization of an additional $300 million share repurchase program reflects our confidence in Vantiv's future. These actions underscore our commitment to driving shareholder value."
First Quarter and Full-Year 2014 Financial Outlook
Based on the current level of transaction trends and new business activity, including recent impacts from inclement weather conditions across several regions of the country as well as impacts from the Easter holiday moving into the second quarter during 2014 as compared to the first quarter during 2013, net revenue for the first quarter of 2014 is expected to be $285 to $291 million, representing growth of 5 to 7 percent above the prior year period. Pro forma adjusted net income per share for the first quarter of 2014 is expected to be $0.36 to $0.37, an increase of 16 to 19 percent above the prior year period. GAAP net income per share attributable to Vantiv, Inc. is expected to be $0.16 to $0.18 for the first quarter of 2014.
For the full-year, net revenue is expected to be $1,255 to $1,285 million, representing growth of 7 to 10 percent year-over-year. Pro forma adjusted net income per share is expected to be $1.77 to $1.83 for 2014, an increase of 14 to 17 percent. GAAP net income per share attributable to Vantiv, Inc. is expected to be $1.01 to $1.07 for the full-year.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss fourth quarter and full-year 2013 financial results today at 8:00 AM 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) 686-9705, or for international callers (913) 312-1489, and referencing conference code 8519813. 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 8519813. The replay will be available through Thursday, February 27, 2014. The call will be webcast live from the Company's investor relations website at http://investors.vantiv.com.
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 (PayFacTM), mobile, prepaid and information solutions, and attractive industry verticals such as business-to-business, ecommerce, healthcare, gaming, government and education. For more information, visit www.vantiv.com.
© Copyright Vantiv, LLC. All rights reserved. Vantiv, the Vantiv logo, and all other Vantiv product or service names and logos are registered trademarks or trademarks of Vantiv, LLC in the USA and other countries. ® indicates USA registration.
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.
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 or referral partners; (xii) inability to successfully renew or renegotiate agreements with our clients or referral partners; (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. 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 Form 10-K for the year ended December 31, 2013 to be filed with the SEC 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.
Nathan Rozof, CFA
Senior Vice President, Investor Relations
Director of Corporate Communications
4Q AND FULL-YEAR 2013 EARNINGS RELEASE SCHEDULES ACCESSIBLE AT THE LINK BELOW