Blackhawk Network Holdings, Inc. (NASDAQ:HAWK) today announced
financial results for the first quarter ended March 24, 2018.
Merger Agreement – On January 15, 2018, Silver
Lake and P2 Capital Partners agreed to acquire Blackhawk in an
all-cash transaction for a total consideration of approximately
$3.5 billion, which includes Blackhawk’s debt. Under the terms of
the merger agreement, Blackhawk stockholders will receive $45.25
per share in cash upon closing of the transaction. Blackhawk
currently expects the transaction, which is subject to stockholder
and regulatory approvals, and other customary closing conditions,
to close mid-2018. For further information on the transaction and
related merger agreement, please refer to Blackhawk’s Current
Report on Form 8-K filed with the U.S. Securities and Exchange
Commission (the “SEC”) on January 16, 2018, and Blackhawk’s
definitive proxy statement on Schedule 14A filed with the SEC on
March 2, 2018 (the “Proxy Statement”).
|
|
|
|
|
|
|
$ in millions
except per share amounts |
|
Q1'18 |
|
Q1'17 |
|
% Change |
(unaudited) |
|
|
|
|
|
|
Operating Revenues |
|
$ |
429.2 |
|
|
$ |
386.4 |
|
|
11 |
% |
Net Income (Loss) |
|
$ |
(15.8 |
) |
|
$ |
(17.5 |
) |
|
(10 |
)% |
Diluted Earnings (Loss)
Per Share |
|
$ |
(0.28 |
) |
|
$ |
(0.31 |
) |
|
(10 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures (see Table 2)
$ in millions
except per share amounts |
|
Q1'18 |
|
Q1'17 |
|
% Change |
(unaudited) |
|
|
|
|
|
|
Adjusted Operating
Revenues |
|
$ |
193.6 |
|
|
$ |
195.9 |
|
|
(1 |
)% |
Adjusted EBITDA |
|
$ |
22.3 |
|
|
$ |
13.1 |
|
|
71 |
% |
Adjusted Net Income
(Loss) |
|
$ |
1.7 |
|
|
$ |
(2.8 |
) |
|
N/M |
Adjusted Diluted
Earnings (Loss) Per Share |
|
$ |
0.03 |
|
|
$ |
(0.05 |
) |
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
GAAP and Non-GAAP results in the tables above include Cardpool
for both Q1 2018 and Q1 2017 and include Grass Roots Meetings and
Events results for Q1 2017. In December 2017, the Grass Roots
Meetings and Events business was sold for a total consideration of
$45.2 million. Cardpool remains an asset held for sale which
the Company intends to divest in 2018.
Cardpool Results
For Q1 2018, Cardpool contributed $14.7 million of operating
revenues, $1.8 million of pre-tax loss and a $1.8 million adjusted
EBITDA loss. For Q1 2017, Cardpool contributed $20.0 million of
operating revenues, $1.6 million of pre-tax loss and a $1.3 million
adjusted EBITDA loss.
Grass Roots Meetings & Events Results
For Q1 2017, Grass Roots Meetings & Events contributed $15.1
million of operating revenues, $0.6 million of pre-tax loss and
$0.5 million of adjusted EBITDA loss.
GAAP financial results for the first quarter of 2018
compared to the first quarter of 2017
- Operating revenues totaled $429.2 million, an increase of 11%
from $386.4 million for the quarter ended March 25,
2017. This increase was due to a 17% increase in operating
revenues from the U.S. Retail segment driven by the addition of
Target as a distribution partner, the acquisition of CashStar and
growth in original content; a 3% increase in operating revenues
from the international segment driven by growth across all regions,
partially offset by the lost revenue related to the sale of Grass
Roots Meetings and Events; and an 8% increase in operating revenues
from the incentives and rewards segment primarily due to growth in
Achievers and the loyalty business.
- Net loss totaled $15.8 million compared to net loss of $17.5
million for the quarter ended March 25, 2017. The net
loss was driven primarily by an increase in partner distribution
expense related to transaction dollar volume generated by
distribution partners with higher commission share and higher
transition and acquisition costs, partially offset by processing
and services expense savings.
- Net loss per diluted share was $0.28 compared to a net loss per
diluted share of $0.31 for the quarter ended March 25,
2017. Diluted shares outstanding increased 1.0% to 56.5
million.
Non-GAAP financial results for the first quarter of 2018
compared to the first quarter of 2017 (see Table 2 for
Reconciliation of Non-GAAP Measures)
- Adjusted operating revenues totaled $193.6 million, a 1%
decrease from $195.9 million for the quarter ended March 25,
2017. The decline was driven by higher partner distribution
expense related to transaction dollar volume generated by
distribution partners with higher commission share, lost revenue
related to the sale of Grass Roots Meetings and Events and lower
Cardpool revenue. These declines were partially offset by a
$7.1 million one-time benefit due to a contractual amendment
related to an open loop product, the addition of CashStar, growth
in original content, as well as growth in Achievers and the loyalty
business.
- Adjusted EBITDA totaled $22.3 million, an increase of 71% from
$13.1 million for the quarter ended March 25, 2017. The
increase was primarily driven by a $7.1 million one-time benefit
due to a contractual amendment related to an open loop
product.
- Adjusted net income totaled $1.7 million, compared to an
adjusted net loss of $2.8 million for the quarter ended
March 25, 2017.
- Adjusted diluted EPS was $0.03, compared to an adjusted diluted
loss per share of $0.05 for the quarter ended March 25,
2017.
Conference Call
As a result of the proposed merger, the Company will not host an
earnings conference call, provide earnings guidance or publish
supplemental earnings presentation slides.
About Blackhawk Network
Blackhawk Network Holdings, Inc. (NASDAQ:HAWK) is a global
financial technology company and a leader in connecting brands and
people through branded value solutions. Blackhawk platforms and
solutions enable the management of stored value products,
promotions and incentive programs in retail, ecommerce, financial
services and mobile wallets. Blackhawk's Hawk Commerce division
offers technology solutions to businesses and direct to consumers.
The Hawk Incentives division offers enterprise, SMB and reseller
partners an array of platforms and branded value products to incent
and reward consumers, employees and sales channels. Headquartered
in Pleasanton, Calif., Blackhawk operates in the United States and
26 other countries. For more information, please visit
blackhawknetwork.com, hawkcommerce.com, hawkincentives.com or our
product websites giftcards.com, giftcardmall.com, cardpool.com,
giftcardlab.com, omnicard.com and CashStar.com.
Non-GAAP Financial Measures
Blackhawk regards the non-GAAP financial measures provided in
this press release as useful measures of the operational and
financial performance of its business. Adjusted EBITDA, Adjusted
net income and Adjusted diluted earnings per share measures are
prepared and presented to eliminate the effect of items from
EBITDA, Net income and Diluted earnings per share that the Company
does not consider indicative of its core operating performance
within the period presented. Adjusted operating revenues are
prepared and presented to offset the distribution commissions paid
and other compensation to distribution partners and business
clients. Adjusted EBITDA margin represents Adjusted EBITDA as a
percentage of Adjusted operating revenues. Adjusted operating
revenues, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net
income and Adjusted diluted earnings per share may not be
comparable to similarly titled measures of other organizations
because other organizations may not calculate these measures in the
same manner as Blackhawk. Investors are encouraged to evaluate our
adjustments and the reasons we consider them appropriate.
The Company believes Adjusted operating revenues, EBITDA,
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income,
Adjusted diluted earnings per share and Reduction in income taxes
payable are useful to evaluate the Company's operating performance
for the following reasons:
- Adjusting operating revenues for distribution commissions paid
and other compensation to retail distribution partners and business
clients is useful to understanding the Company's operating
margin;
- Adjusting operating revenues for marketing revenue and other
pass-through revenues, which has offsetting expense, is useful for
understanding the Company's operating margin;
- EBITDA and Adjusted EBITDA are widely used by investors and
securities analysts to measure a company’s operating performance
without regard to items that can vary substantially from company to
company and from period to period depending upon their financing,
accounting and tax methods, the book value of their assets, their
capital structures and the method by which their assets were
acquired;
- Adjusted EBITDA margin provides a measure of operating
efficiency based on Adjusted operating revenues and without regard
to items that can vary substantially from company to company and
from period to period depending upon their financing, accounting
and tax methods, the book value of their assets, their capital
structures and the method by which their assets were acquired;
- in a business combination, a company records an adjustment to
reduce the carrying values of deferred revenue and deferred
expenses to their fair values and reduces the company’s revenues
and expenses from what it would have recorded otherwise, and as
such the Company does not believe is indicative of its core
operating performance;
- non-recurring expenses related to Blackhawk's pending merger
with Silver Lake is not reflective of our core operating
performance;
- intangible asset amortization expenses can vary substantially
from company to company and from period to period depending upon
the applicable financing and accounting methods, the fair value and
average expected life of the acquired intangible assets, the
capital structure and the method by which the intangible assets
were acquired and, as such, the Company does not believe that these
adjustments are reflective of its core operating performance;
- non-cash fair value adjustments to contingent business
acquisition liability do not directly reflect how the Company is
performing at any particular time and the related expense
adjustment amounts are not key measures of the Company's core
operating performance;
- reduction in income taxes payable from the step-up in tax basis
of our assets resulting from the Section 336(e) election due to our
Spin-Off and the Safeway Merger and reduction in income taxes
payable from amortization of goodwill and other intangibles or
utilization of net operating loss carryforwards from business
acquisitions represent significant tax savings that are useful for
understanding the Company's overall operating results; and
- reduction in income taxes payable resulting from the tax
deductibility of stock-based compensation is useful for
understanding the Company's overall operating results. The Company
generally realizes these tax deductions when restricted stock vest,
an option is exercised, and, in the case of warrants, after the
warrant is exercised but amortized over remaining service period,
and such timing differs from the GAAP treatment of expense
recognition
Additional Information and Where to Find It
In connection with the proposed merger, the Company filed the
Proxy Statement on March 2, 2018. The Proxy Statement and a form of
proxy were mailed to the Company’s stockholders on or about March
2, 2018. The Company also plans to file other relevant materials
with the SEC regarding the proposed merger. This communication is
not a substitute for the Proxy Statement or any other document that
the Company may file with the SEC or send to its stockholders in
connection with the proposed merger. Investors and security holders
will be able to obtain the documents (when available) free of
charge at the SEC’s website, http://www.sec.gov, and the Company’s
website, www.blackhawknetwork.com. In addition, the documents (when
available) may be obtained free of charge by directing a request to
Patrick Cronin by email at patrick.cronin@bhnetwork.com or by
calling (925) 226-9939.
Cautionary Statements Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are indicated by words or
phrases such as “guidance,” “believes,” “expects,” “intends,”
“forecasts,” “can,” “could,” “may,” “anticipates,” “estimates,”
“plans,” “projects,” “seeks,” “should,” “targets,” “will,”
“would,” “outlook,” “continuing,” “ongoing,” and similar words or
phrases and the negative of such words and phrases. Forward-looking
statements are based on our current plans and expectations and
involve risks and uncertainties which are, in many instances,
beyond our control, and which could cause actual results to differ
materially from those included in or contemplated or implied by the
forward-looking statements. Such risks and uncertainties include
the following: the occurrence of any event, change or other
circumstance that could give rise to the termination of the merger
agreement; the failure to obtain certain required regulatory
approvals to the completion of the transaction or the failure to
satisfy any of the other conditions to the completion of the
transaction; the effect of the announcement of the transaction on
our ability to retain and hire key personnel and maintain
relationships with our partners, clients, customers, providers,
advertisers, and others with whom we do business, or on our
operating results and businesses generally; risks associated with
the disruption of management’s attention from ongoing business
operations due to the transaction; our ability to meet expectations
regarding the timing and completion of the merger; our ability to
grow adjusted operating revenues and adjusted net income as
anticipated; our ability to grow at historic rates or at all; the
consequences should we lose one or more of our top distribution
partners, fail to maintain or renew existing relationships with our
distribution partners on the same or similar economic terms or fail
to attract new distribution partners to our network or if the
financial performance of our distribution partners’ businesses
decline; our reliance on our content providers; the demand for
their products and our exclusivity arrangements with them; our
reliance on relationships with card issuing banks; the consequences
to our future growth if our distribution partners fail to actively
and effectively promote our products and services; changes in
consumer behavior away from our distribution partners or our
products resulting from limits or controls implemented by our
distribution partners during their transition to EMV compliance;
our ability to successfully integrate our acquisitions; our ability
to generate adequate taxable income to enable us to fully utilize
the tax benefits referred to in this release; changes in applicable
tax law that preclude us from fully utilizing the tax benefits
referred to in this release; the requirement that we comply with
applicable laws and regulations, including increasingly stringent
anti-money laundering rules and regulations; and other risks and
uncertainties described in our reports and filings with the SEC.
These risks, as well as other risks associated with the proposed
merger, are more fully discussed in Item 1A under the heading Risk
Factors in our Annual Report on Form 10-K for the year ended
December 30, 2017, our Quarterly Report on Form 10-Q for the
fiscal quarter ended on March 24, 2018 which is expected to be
filed on or prior to May 3, 2018 and other subsequent periodic
reports we file with the SEC. We undertake no obligation to
update forward-looking statements to reflect developments or
information obtained after the date hereof and disclaim any
obligation to do so other than as may be required by law. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.
|
INVESTORS/ANALYSTS: |
Patrick
Cronin |
(925)
226-9939 |
patrick.cronin@bhnetwork.com |
|
|
BLACKHAWK NETWORK HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(LOSS)(In thousands, except per share
amounts)(Unaudited) |
|
12 weeks ended |
|
March 24, 2018 |
|
March 25, 2017 |
OPERATING
REVENUES: |
|
|
|
Commissions and fees |
$ |
288,626 |
|
|
$ |
249,525 |
|
Program
and other fees |
101,402 |
|
|
95,865 |
|
Marketing |
14,367 |
|
|
14,281 |
|
Product
sales |
24,813 |
|
|
26,741 |
|
Total
operating revenues |
429,208 |
|
|
386,412 |
|
OPERATING
EXPENSES: |
|
|
|
Partner
distribution expense |
218,449 |
|
|
175,123 |
|
Processing and services |
92,949 |
|
|
101,021 |
|
Sales and
marketing |
64,181 |
|
|
62,658 |
|
Costs of
products sold |
24,256 |
|
|
27,849 |
|
General
and administrative |
29,322 |
|
|
29,025 |
|
Transition and acquisition |
4,927 |
|
|
451 |
|
Amortization of acquisition intangibles |
14,107 |
|
|
12,562 |
|
Change in
fair value of contingent consideration |
100 |
|
|
1,040 |
|
Total
operating expenses |
448,291 |
|
|
409,729 |
|
OPERATING INCOME
(LOSS) |
(19,083 |
) |
|
(23,317 |
) |
OTHER INCOME
(EXPENSE): |
|
|
|
Interest
income and other income (expense), net |
(224 |
) |
|
836 |
|
Interest
expense |
(7,786 |
) |
|
(6,943 |
) |
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE (BENEFIT) |
(27,093 |
) |
|
(29,424 |
) |
INCOME TAX EXPENSE
(BENEFIT) |
(11,505 |
) |
|
(12,082 |
) |
NET INCOME (LOSS)
BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS |
(15,588 |
) |
|
(17,342 |
) |
Loss
(income) attributable to non-controlling interests, net of tax |
(179 |
) |
|
(123 |
) |
NET INCOME (LOSS)
ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. |
$ |
(15,767 |
) |
|
$ |
(17,465 |
) |
EARNINGS (LOSS) PER
SHARE: |
|
|
|
Basic |
$ |
(0.28 |
) |
|
$ |
(0.31 |
) |
Diluted |
$ |
(0.28 |
) |
|
$ |
(0.31 |
) |
Weighted
average shares outstanding—basic |
56,477 |
|
|
55,904 |
|
Weighted
average shares outstanding—diluted |
56,477 |
|
|
55,904 |
|
|
|
|
|
|
|
|
BLACKHAWK NETWORK HOLDINGS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands)(Unaudited) |
|
March 24, 2018 |
|
December 30, 2017 |
|
March 25, 2017 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
351,099 |
|
|
$ |
1,096,195 |
|
|
$ |
214,536 |
|
Restricted cash |
69,781 |
|
|
135,345 |
|
|
56,832 |
|
Settlement receivables, net |
416,633 |
|
|
1,038,347 |
|
|
319,557 |
|
Accounts
receivable, net |
152,262 |
|
|
185,741 |
|
|
259,138 |
|
Other
current assets |
158,301 |
|
|
142,737 |
|
|
165,898 |
|
Total
current assets |
1,148,076 |
|
|
2,598,365 |
|
|
1,015,961 |
|
Property, equipment and
technology, net |
172,132 |
|
|
172,607 |
|
|
173,403 |
|
Intangible assets,
net |
417,946 |
|
|
430,978 |
|
|
338,672 |
|
Goodwill |
565,913 |
|
|
563,405 |
|
|
570,313 |
|
Deferred income
taxes |
235,860 |
|
|
235,797 |
|
|
361,981 |
|
Other assets |
185,739 |
|
|
121,667 |
|
|
91,166 |
|
TOTAL ASSETS |
$ |
2,725,666 |
|
|
$ |
4,122,819 |
|
|
$ |
2,551,496 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Settlement payables |
$ |
683,027 |
|
|
$ |
2,074,673 |
|
|
$ |
547,179 |
|
Consumer
and customer deposits |
321,970 |
|
|
326,685 |
|
|
269,026 |
|
Accounts
payable and accrued operating expenses |
125,073 |
|
|
156,182 |
|
|
143,430 |
|
Contract
liabilities |
54,088 |
|
|
60,607 |
|
|
46,867 |
|
Note
payable, current portion |
14,912 |
|
|
10,662 |
|
|
7,390 |
|
Notes
payable to Safeway |
3,941 |
|
|
3,941 |
|
|
2,909 |
|
Bank line
of credit |
— |
|
|
— |
|
|
14,415 |
|
Other
current liabilities |
56,453 |
|
|
102,823 |
|
|
85,651 |
|
Total
current liabilities |
1,259,464 |
|
|
2,735,573 |
|
|
1,116,867 |
|
Deferred income
taxes |
29,648 |
|
|
29,085 |
|
|
28,796 |
|
Note payable |
258,315 |
|
|
202,441 |
|
|
130,560 |
|
Convertible notes
payable |
444,707 |
|
|
441,655 |
|
|
431,941 |
|
Other liabilities |
44,967 |
|
|
38,877 |
|
|
53,635 |
|
Total
liabilities |
2,037,101 |
|
|
3,447,631 |
|
|
1,761,799 |
|
Stockholders’
equity: |
|
|
|
|
|
Preferred
stock |
— |
|
|
— |
|
|
— |
|
Common
stock |
57 |
|
|
56 |
|
|
56 |
|
Additional paid-in capital |
670,756 |
|
|
649,546 |
|
|
612,328 |
|
Treasury
stock |
(40,023 |
) |
|
(40,023 |
) |
|
— |
|
Accumulated other comprehensive loss |
(8,362 |
) |
|
(16,121 |
) |
|
(42,967 |
) |
Retained
earnings |
62,097 |
|
|
77,864 |
|
|
216,001 |
|
Total
Blackhawk Network Holdings, Inc. equity |
684,525 |
|
|
671,322 |
|
|
785,418 |
|
Non-controlling interests |
4,040 |
|
|
3,866 |
|
|
4,279 |
|
Total
stockholders’ equity |
688,565 |
|
|
675,188 |
|
|
789,697 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
2,725,666 |
|
|
$ |
4,122,819 |
|
|
$ |
2,551,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLACKHAWK NETWORK HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)(Unaudited) |
|
12 weeks ended |
|
52 weeks ended |
|
March 24, 2018 |
|
March 25, 2017 |
|
March 24, 2018 |
|
March 25, 2017 |
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
Net
income (loss) before allocation to non-controlling interests |
$ |
(15,588 |
) |
|
$ |
(17,342 |
) |
|
$ |
(152,990 |
) |
|
$ |
(14,146 |
) |
Adjustments to reconcile net income (loss) to net cash used in
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization of property, equipment and
technology |
12,148 |
|
|
11,600 |
|
|
55,967 |
|
|
50,064 |
|
Goodwill
impairment |
— |
|
|
— |
|
|
77,500 |
|
|
— |
|
Amortization of intangibles |
15,951 |
|
|
13,755 |
|
|
68,174 |
|
|
58,534 |
|
Amortization of deferred program and contract costs |
7,905 |
|
|
7,397 |
|
|
31,092 |
|
|
29,246 |
|
Amortization of deferred financing costs and debt discount |
2,860 |
|
|
3,162 |
|
|
13,535 |
|
|
9,668 |
|
Loss on
property, equipment and technology disposal/write-down |
16 |
|
|
108 |
|
|
6,710 |
|
|
9,946 |
|
Employee
stock-based compensation expense |
8,062 |
|
|
8,401 |
|
|
32,369 |
|
|
32,993 |
|
Change in
fair value of contingent consideration |
100 |
|
|
1,040 |
|
|
(15,877 |
) |
|
3,140 |
|
Deferred
income taxes |
— |
|
|
(2,307 |
) |
|
111,957 |
|
|
(14,660 |
) |
Other |
2,942 |
|
|
1,605 |
|
|
(468 |
) |
|
6,219 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
Settlement receivables |
634,105 |
|
|
330,177 |
|
|
(46,210 |
) |
|
24,531 |
|
Settlement payables |
(1,401,302 |
) |
|
(1,080,989 |
) |
|
90,935 |
|
|
11,342 |
|
Accounts
receivable, current and long-term |
29,788 |
|
|
(7,666 |
) |
|
81,564 |
|
|
(38,731 |
) |
Other
current assets |
(3,273 |
) |
|
(7,146 |
) |
|
(4,899 |
) |
|
(15,996 |
) |
Other
assets |
(63,174 |
) |
|
(3,037 |
) |
|
(101,421 |
) |
|
(24,524 |
) |
Consumer
and customer deposits |
(13,424 |
) |
|
32,018 |
|
|
16,699 |
|
|
19,396 |
|
Accounts
payable and accrued operating expenses |
(27,065 |
) |
|
(4,645 |
) |
|
(13,717 |
) |
|
7,944 |
|
Contract
liabilities |
(6,673 |
) |
|
2,980 |
|
|
(3,911 |
) |
|
48,647 |
|
Other
current and long-term liabilities |
(21,820 |
) |
|
635 |
|
|
21,249 |
|
|
6,254 |
|
Income
taxes, net |
(14,642 |
) |
|
(9,944 |
) |
|
599 |
|
|
2,869 |
|
Net
cash (used in) provided by operating activities |
(853,084 |
) |
|
(720,198 |
) |
|
268,857 |
|
|
212,736 |
|
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
Expenditures for property, equipment and technology |
(15,819 |
) |
|
(16,697 |
) |
|
(63,721 |
) |
|
(59,869 |
) |
Business
acquisitions, net of cash acquired |
— |
|
|
(10,881 |
) |
|
(152,587 |
) |
|
(118,372 |
) |
Investments in unconsolidated entities |
— |
|
|
(5,200 |
) |
|
(1,001 |
) |
|
(15,741 |
) |
Proceeds
from divestiture in business |
— |
|
|
— |
|
|
13,779 |
|
|
— |
|
Other |
(1,000 |
) |
|
— |
|
|
(4,244 |
) |
|
1,408 |
|
Net cash
(used in) provided by investing activities |
(16,819 |
) |
|
(32,778 |
) |
|
(207,774 |
) |
|
(192,574 |
) |
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
Payments
for acquisition liability |
(2,000 |
) |
|
— |
|
|
(7,503 |
) |
|
— |
|
Repayment
of debt assumed in business acquisitions |
— |
|
|
— |
|
|
(8,585 |
) |
|
— |
|
Proceeds
from issuance of note payable |
75,000 |
|
|
— |
|
|
150,000 |
|
|
150,000 |
|
Repayment
of note payable |
(15,000 |
) |
|
(10,000 |
) |
|
(15,000 |
) |
|
(436,250 |
) |
Payments
of financing costs |
— |
|
|
— |
|
|
(1,025 |
) |
|
(16,544 |
) |
Borrowings under revolving bank line of credit |
127,536 |
|
|
667,936 |
|
|
2,470,870 |
|
|
3,016,981 |
|
Repayments on revolving bank line of credit |
(127,536 |
) |
|
(653,521 |
) |
|
(2,485,285 |
) |
|
(3,117,238 |
) |
Repayment
on notes payable to Safeway |
— |
|
|
(254 |
) |
|
1 |
|
|
(1,144 |
) |
Proceeds
from issuance of common stock from exercise of employee stock
options and employee stock purchase plans |
10,924 |
|
|
3,700 |
|
|
24,006 |
|
|
13,570 |
|
Other
stock-based compensation related |
(18,254 |
) |
|
(8,897 |
) |
|
(19,908 |
) |
|
(9,429 |
) |
Repurchase of common stock |
— |
|
|
— |
|
|
(40,023 |
) |
|
(34,843 |
) |
Proceeds
from convertible debt |
— |
|
|
— |
|
|
— |
|
|
500,000 |
|
Payments
for note hedges |
— |
|
|
— |
|
|
— |
|
|
(75,750 |
) |
Proceeds
from warrants |
— |
|
|
— |
|
|
— |
|
|
47,000 |
|
Other |
— |
|
|
— |
|
|
(343 |
) |
|
(156 |
) |
Net cash
(used in) provided by financing activities |
50,670 |
|
|
(1,036 |
) |
|
67,205 |
|
|
36,197 |
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
8,573 |
|
|
6,462 |
|
|
21,224 |
|
|
(1,126 |
) |
Increase (decrease) in
cash, cash equivalents and restricted cash |
(810,660 |
) |
|
(747,550 |
) |
|
149,512 |
|
|
55,233 |
|
Cash, cash equivalents
and restricted cash—beginning of period |
1,231,540 |
|
|
1,018,918 |
|
|
271,368 |
|
|
216,135 |
|
Cash, cash equivalents
and restricted cash—end of period |
$ |
420,880 |
|
|
$ |
271,368 |
|
|
$ |
420,880 |
|
|
$ |
271,368 |
|
|
|
|
|
|
|
|
|
NONCASH FINANCING AND
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Forgiveness of notes
receivable and accrued interest as part of business
acquisition |
$ |
— |
|
|
|
|
$ |
973 |
|
|
$ |
5,445 |
|
Financing of business
acquisition with contingent consideration |
$ |
— |
|
|
$ |
2,000 |
|
|
$ |
(360 |
) |
|
$ |
2,000 |
|
Intangible assets
recognized for issuance of fully vested warrants |
$ |
— |
|
|
$ |
— |
|
|
$ |
20,000 |
|
|
$ |
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLACKHAWK NETWORK HOLDINGS, INC. |
SUPPLEMENTAL INFORMATION |
(Tables 1 & 2 in thousands except
percentages and per share amounts) |
(Unaudited) |
|
TABLE 1: OTHER OPERATIONAL DATA |
|
12 weeks ended |
|
March 24, 2018 |
|
March 25, 2017 |
Prepaid and processing
revenues |
$ |
390,028 |
|
$ |
345,390 |
Partner distribution
expense as a % of prepaid and processing revenues |
56.0% |
|
50.7% |
TABLE 2: RECONCILIATION OF NON-GAAP MEASURES |
|
12 weeks ended |
|
March 24, 2018 |
|
March 25, 2017 |
Prepaid and
processing revenues: |
|
|
|
Commissions and
fees |
$ |
288,626 |
|
$ |
249,525 |
Program and other
fees |
101,402 |
|
95,865 |
Total prepaid and
processing revenues |
$ |
390,028 |
|
$ |
345,390 |
Adjusted
operating revenues: |
|
|
|
Total operating
revenues |
$ |
429,208 |
|
$ |
386,412 |
Revenue
adjustment from purchase accounting |
520 |
|
1,574 |
Marketing
and other pass-through revenues |
(17,708) |
|
(16,980) |
Partner
distribution expense |
(218,449) |
|
(175,123) |
Adjusted operating
revenues |
$ |
193,571 |
|
$ |
195,883 |
Adjusted
EBITDA: |
|
|
|
Net income (loss)
before allocation to non-controlling interests |
$ |
(15,588) |
|
$ |
(17,342) |
Interest
and other (income) expense, net |
224 |
|
(836) |
Interest
expense |
7,786 |
|
6,943 |
Income
tax expense (benefit) |
(11,505) |
|
(12,082) |
Depreciation and amortization |
28,099 |
|
25,356 |
EBITDA |
9,016 |
|
2,039 |
Adjustments to
EBITDA: |
|
|
|
Employee
stock-based compensation |
8,062 |
|
8,401 |
Acquisition-related employee compensation expense |
248 |
|
139 |
Revenue
adjustment from purchase accounting, net |
490 |
|
1,467 |
Merger-related expense |
4,400 |
|
— |
Change in
fair value of contingent consideration |
100 |
|
1,040 |
Adjusted EBITDA |
$ |
22,316 |
|
$ |
13,086 |
Adjusted EBITDA
margin: |
|
|
|
Total operating
revenues |
429,208 |
|
386,412 |
Operating income
(loss) |
(19,083) |
|
(23,317) |
Operating margin |
(4.4)% |
|
(6.0)% |
Adjusted operating
revenues |
$ |
193,571 |
|
$ |
195,883 |
Adjusted EBITDA |
$ |
22,316 |
|
$ |
13,086 |
Adjusted EBITDA
margin |
11.5% |
|
6.7% |
|
|
|
|
TABLE 2: RECONCILIATION OF NON-GAAP MEASURES
(continued) |
|
12 weeks ended |
|
March 24, 2018 |
|
March 25, 2017 |
Adjusted net
income: |
|
|
|
Income (loss) before
income tax expense |
$ |
(27,093 |
) |
|
$ |
(29,424 |
) |
Employee
stock-based compensation |
8,062 |
|
|
8,401 |
|
Acquisition-related employee compensation expense |
248 |
|
|
139 |
|
Revenue
adjustment from purchase accounting, net |
490 |
|
|
1,467 |
|
Merger-related expense |
4,400 |
|
|
— |
|
Change in
fair value of contingent consideration |
100 |
|
|
1,040 |
|
Amortization of intangibles |
15,951 |
|
|
14,218 |
|
Adjusted income (loss)
before income tax expense |
$ |
2,158 |
|
|
$ |
(4,159 |
) |
Income tax expense
(benefit) |
$ |
(11,505 |
) |
|
$ |
(12,082 |
) |
Tax expense on
adjustments |
11,817 |
|
|
10,648 |
|
Adjusted income tax
expense |
$ |
312 |
|
|
$ |
(1,434 |
) |
Adjusted net income
before allocation to non-controlling interests |
$ |
1,846 |
|
|
$ |
(2,725 |
) |
Net loss (income)
attributable to non-controlling interests, net of tax |
(179 |
) |
|
(123 |
) |
Adjusted net income
attributable to Blackhawk Network Holdings, Inc. |
$ |
1,667 |
|
|
$ |
(2,848 |
) |
Adjusted
diluted earnings per share: |
|
|
|
Net income (loss)
available for common shareholders |
$ |
(15,767 |
) |
|
$ |
(17,465 |
) |
Diluted weighted
average shares outstanding |
56,477 |
|
|
55,904 |
|
Diluted earnings (loss)
per share |
$ |
(0.28 |
) |
|
$ |
(0.31 |
) |
Adjusted net income
available for common shareholders |
$ |
1,667 |
|
|
$ |
(2,848 |
) |
Diluted
weighted-average shares outstanding |
56,477 |
|
|
55,904 |
|
Increase in common
share equivalents |
1,613 |
|
|
— |
|
Adjusted diluted
weighted-average shares outstanding |
58,090 |
|
|
55,904 |
|
Adjusted diluted
earnings per share |
$ |
0.03 |
|
|
$ |
(0.05 |
) |
Reduction in
income taxes payable: |
|
|
|
Reduction in income
taxes payable resulting from amortization of spin-off tax basis
step-up |
$ |
4,077 |
|
|
$ |
6,597 |
|
Reduction in cash taxes
payable from amortization of acquisition intangibles and
utilization of acquired NOLs |
1,017 |
|
|
2,592 |
|
Reduction in cash taxes
payable from deductible stock-based compensation and convertible
debt |
7,176 |
|
|
9,604 |
|
Reduction in income
taxes payable |
$ |
12,270 |
|
|
$ |
18,793 |
|
Adjusted diluted
weighted average shares outstanding |
58,090 |
|
|
55,904 |
|
Reduction in income
taxes payable per share |
$ |
0.21 |
|
|
$ |
0.34 |
|
BLACKHAWK NETWORK HOLDINGS, INC (NASDAQ:HAWK)
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BLACKHAWK NETWORK HOLDINGS, INC (NASDAQ:HAWK)
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