Vantiv Reports Second Quarter 2014 Results
Second Quarter Net Revenue Increased 12% to $331 Million and Pro Forma Adjusted Net Income Per Share Increased 18% to $0.47
Achieved Several Notable Milestones in the Execution of its Corporate Strategy, Including the Acquisition of Mercury
Increased Full-Year 2014 Guidance for Net Revenue and Pro Forma Adjusted Net Income per Share
CINCINNATI, July 31, 2014 - Vantiv, Inc. (NYSE: VNTV) ("Vantiv" or the "Company") today announced financial results for the second quarter ended June 30, 2014. Revenue increased 17% to $608.7 million as compared to $519.4 million in the prior year period. Net revenue increased 12% to $331.3 million as compared to $296.9 million in the prior year period, primarily due to a 15% increase in transactions. Vantiv incurred $70.9 million in non-recurring charges during the second quarter including costs related to the acquisition of Mercury, associated financing costs, and other noncash items, resulting in a GAAP net loss attributable to Vantiv, Inc. of ($1.4) million or ($0.01) per diluted share, compared with GAAP net income attributable to Vantiv, Inc. of $28.9 million or $0.20 per diluted share in the prior year period. Pro forma adjusted net income increased 12% in the second quarter to $92.7 million as compared to $82.7 million in the prior year period. Pro forma adjusted net income per share increased 18% to $0.47 as compared to $0.40 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.)
"The second quarter marks an exciting time at Vantiv," said Charles Drucker, president and chief executive officer at Vantiv. "We delivered another solid quarter of growth, and we executed on many of our strategic initiatives. By investing in high-growth channels, we have positioned Vantiv as a leader in the industry that will win share as the market evolves."
Several notable successes were achieved in the Merchant Services segment during the second quarter, including the completion of efforts to support Walmart U.S. stores and Sam's Club debit and credit processing, expanding our relationship with People's United Bank to include a significant partnership in the Merchant Bank channel, and completing the acquisition of Mercury Payment Systems. Net revenue increased 16% to $245.6 million in the second quarter as compared to $210.8 million in the prior year period, primarily due to an 18% increase in transactions, less a 1% decrease in net revenue per transaction. Sales and marketing expenses increased 19% from the prior year period, to $84.0 million.
Financial Institution Services
The Financial Institutions Services segment also had several notable new wins, contributing to continued strong transaction growth. Second quarter net revenue of $85.8 million was flat with prior year period net revenue of $86.1 million as a 6% increase in transactions was offset by a shift in the mix of our client portfolio, which resulted in lower average net revenue per transaction. Sales and marketing expenses increased 7% from the prior year period, to $6.5 million.
Third Quarter and Full-Year 2014 Financial Outlook
Based on the current level of transaction trends and new business activity as well as the recent acquisition of Mercury Payment Systems, Vantiv net revenue for the full-year of 2014 is now expected to be $1,390 to $1,410 million, representing growth of 19% to 20% above the prior year, and above our prior expectation of $1,255 to $1,285 million. Pro forma adjusted net income per share is now expected to be $1.85 to $1.90, representing growth of 19% to 22% above the prior year, and above our prior expectation of $1.77 to $1.83. GAAP net income per share attributable to Vantiv, Inc. is expected to be $0.62 to $0.67 for the full-year of 2014, including the impact of the non-recurring charges incurred during the second quarter of 2014 related to the acquisition of Mercury, financing costs, and other noncash items.
For the third quarter of 2014, net revenue is expected to be $376 to $382 million, representing growth of 28% to 30% above the prior year period. Pro forma adjusted net income per share is expected to be $0.47 to $0.49, an increase of 18% to 23% above the prior year period. GAAP net income per share attributable to Vantiv, Inc. is expected to be $0.18 to $0.20 for the third quarter of 2014.
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss second quarter 2014 financial results today at 8:00 AM EDT. The conference call can be accessed live over the phone by dialing (888) 267-6301, or for international callers (719) 457-2665, and referencing conference code 2759980. 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 passcode 2759980. The replay will be available through Thursday, Aug. 14, 2014. 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.
Nathan Rozof, CFA
Senior Vice President, Investor Relations
Director of Corporate Communications
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 integrated payments, 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.
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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 and its subsequent filings with the SEC.
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