U.S. Markets closed
  • S&P 500

    4,266.49
    +24.65 (+0.58%)
     
  • Dow 30

    34,196.82
    +322.58 (+0.95%)
     
  • Nasdaq

    14,369.71
    +97.98 (+0.69%)
     
  • Russell 2000

    2,333.62
    +30.15 (+1.31%)
     
  • Crude Oil

    73.28
    -0.02 (-0.03%)
     
  • Gold

    1,776.30
    -0.40 (-0.02%)
     
  • Silver

    26.01
    -0.03 (-0.13%)
     
  • EUR/USD

    1.1939
    +0.0006 (+0.0478%)
     
  • 10-Yr Bond

    1.4870
    0.0000 (0.00%)
     
  • Vix

    15.97
    -0.35 (-2.14%)
     
  • GBP/USD

    1.3921
    -0.0043 (-0.3076%)
     
  • USD/JPY

    110.8600
    -0.1020 (-0.0919%)
     
  • BTC-USD

    34,645.95
    +1,127.59 (+3.36%)
     
  • CMC Crypto 200

    837.58
    +50.96 (+6.48%)
     
  • FTSE 100

    7,109.97
    +35.91 (+0.51%)
     
  • Nikkei 225

    28,875.23
    +0.34 (+0.00%)
     

Priority Technology Holdings, Inc. Announces First Quarter 2021 Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·17 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Strong First Quarter Performance with Ongoing Growth and Further Deleveraging

Pending Acquisition of Finxera Positions Significant Business Expansion

Capital Refinancing Strengthens the Balance Sheet and Liquidity

ALPHARETTA, Ga., May 12, 2021 /PRNewswire/ -- Priority Technology Holdings, Inc. (NASDAQ: PRTH) ("Priority" or the "Company"), a leading payments technology company helping customers collect, store and send money, today announced its first quarter 2021 financial results.

Highlights of Consolidated Results

First Quarter 2021, Compared with First Quarter 2020

The first quarter 2020 includes results of the RentPayment business sold to MRI Software in September 2020. Financial highlights of first quarter 2021 compared with first quarter 2020, are as follows (gross profit, gross profit margin, and adjusted EBITDA are non-GAAP measures1):

  • Revenue of $113.3 million increased 16.9% from $96.9 million.

  • Gross profit of $31.4 million increased 2.8% from $30.6 million.

  • Gross profit margin of 27.7% decreased from 31.5%.

  • Income from operations of $4.5 million increased 27.2% from $3.6 million, including non-recurring expenses of $3.6 million and $1.4 million in first quarter 2021 and 2020, respectively.

  • Diluted loss per share of $0.04 compares with a diluted loss per share of $0.09.

  • Adjusted EBITDA of $18.0 million increased 13.9% from $15.8 million.

  • Total net leverage ratio of 5.44x at March 31, 2021 decreased from 5.85x at December 31, 20201.

The first quarter 2021 results compared with first quarter 2020 results, excluding the RentPayment business sold in September 2020 and non-recurring expenses from both quarters2,3, are as follows:

  • Revenue of $113.3 million increased 21.7% from $93.1 million.

  • Gross profit of $31.4 million increased 16.0% from $27.1 million.

  • Gross profit margin of 27.7% decreased 140 basis points from 29.1%.

  • Income from operations of $8.2 million increased 132.9% from $3.5 million.

  • Adjusted EBITDA of $18.0 million increased 37.0% from $13.1 million.

The Company announced during first quarter 2021 that it entered into an agreement to acquire Finxera Holdings, Inc. ("Finxera"). That acquisition is expected to close in third quarter 2021. In first quarter 2021, Finxera generated revenue of $16.8 million, gross profit of $15.6 million, and Adjusted EBITDA of $11.7 million. On a pro forma basis4, including first quarter results of Finxera, together with the April 2021 tuck-in reseller acquisition, first quarter 2021 financial results (excluding revenue and cost synergies) are as follows:

  • Revenue of $130.1 million.

  • Gross profit of $50.9 million.

  • Gross profit margin of 39.2%.

  • Adjusted EBITDA of $33.5 million.

(1) See "Non-GAAP Financial Measures" and the reconciliations of Gross Profit, Gross Profit Margin, and Adjusted EBITDA to their most comparable GAAP measures, and the calculation of Total Net Leverage Ratio as of March 31, 2021 provided below for additional information.
(2) See "Results With and Without RentPayment" for a summary of the results for the three months ended March 31, 2020, excluding the actual results of the RentPayment business sold in September 2020.
(3) See "Non-GAAP Financial Measures" for the details of non-recurring expenses for the three months ended March 31, 2021 and 2020.
(4) See "Pro Forma Results" for a presentation of first quarter 2021 results including the actual first quarter 2021 results of Finxera and the April 2021 acquisition.

"Our consistent focus on solving payment pain points for our customers and partners has driven us to achieve another powerful quarter on the heels of an excellent finish to 2020," said Tom Priore, Chairman and Chief Executive Officer of Priority. "With the pending Finxera acquisition, we continue to build momentum towards fulfilling our mission to be the premier platform to collect, store and send money with a full breadth of payment and virtual banking capabilities. The future of digital commerce will be won by those with complete control of the payment rails for payment authorization, settlement, account ledgering and disbursement. We are well equipped to deploy those capabilities to activate new solutions, including payment facilitation, in new market segments quickly and at scale."

Conference Call

Priority Technology Holdings, Inc.'s leadership will host a conference call on Thursday, May 13, 2021 at 11:00 a.m. EDT to discuss its first quarter financial results and business developments. Participants can access the call by Phone: US/Canada: (877) 501-3161 or International: (786) 815-8443.

Internet webcast link and accompanying slide presentation can be accessed at https://edge.media-server.com/mmc/p/8k5v6qka and will also be posted in the "Investor Relations" section of the Company's website at www.PRTH.com.

An audio replay of the call will be available shortly after the conference call until May 16, 2021 at 1:30 pm Eastern Time. To listen to the audio replay, dial (855) 859-2056 or (404) 537-3406 and enter conference ID number 4385375. Alternatively, you may access the webcast replay in the "Investor Relations" section of the Company's website at www.PRTH.com.

Non-GAAP Financial Measures

This communication includes certain non-GAAP financial measures that we regularly review to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions. We believe these non-GAAP measures help to illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals. However, these non-GAAP measures are not superior to or a substitute for prominent measurements calculated in accordance with GAAP. Rather, the non-GAAP measures are meant to be a complement to understanding measures prepared in accordance with GAAP.

Gross Profit and Gross Profit Margin

The Company's non-GAAP gross profit metric represents revenues less costs of services. Gross profit margin is gross profit divided by revenues. We review these non-GAAP measures to evaluate our underlying profit trends. The reconciliation of gross profit to its most comparable GAAP measure is provided below:


(in thousands)


Three Months Ended March 31,


2021


2020





Revenues

$

113,297



$

96,933

Costs of Services

(81,863)



(66,364)

Gross Profit

$

31,434



$

30,569





Gross Profit Margin

27.7

%


31.5

%









EBITDA, Adjusted EBITDA and Consolidated Adjusted EBITDA

EBITDA and adjusted EBITDA are performance measures. EBITDA is earnings before interest, income tax, and depreciation and amortization expenses ("EBITDA"). Adjusted EBITDA begins with EBITDA but further excludes certain non-cash costs, such as stock-based compensation and the write-off of the carrying value of investments or other assets, as well as debt extinguishment and modification expenses and other expenses and income items considered non-recurring, such as acquisition integration expenses, certain professional fees, and litigation settlements. Consolidated adjusted EBITDA, which is a liquidity measure used in determining our total net leverage ratio, is adjusted EBITDA further adjusted for items specified in the definition of consolidated adjusted EBITDA within our debt agreements, which include the pro-forma impact of acquisitions and dispositions and other specified adjustments. We review the non-GAAP adjusted EBITDA measure to evaluate our business and trends, measure our performance, prepare financial projections, allocate resources, and make strategic decisions.

We review the non-GAAP consolidated adjusted EBITDA to evaluate compliance with our total net leverage ratio at each measurement period. The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below:


(in thousands)


Three Months Ended March 31,


2021


2020

Net loss (GAAP)

$

(2,679)



$

(5,869)


Interest expense

9,168



10,315


Income tax benefit

(2,231)



(1,233)


Depreciation and amortization

9,070



10,272


EBITDA (Non-GAAP)

13,328



13,485


Non-cash stock-based compensation

558



338


Selling, general and administrative

3,627



1,394


Debt modification expenses



376


Write-off of equity-method investment



211


Other non-operating expense

488




Adjusted EBITDA (Non-GAAP)

$

18,001



$

15,804






Reconciliation of Adjusted EBITDA to Consolidated Adjusted EBITDA for the last twelve months ended March 31,
2021 and the calculation of the Total Net Leverage Ratio at March 31, 2021 are provided below:





Adjusted EBITDA (Non-GAAP)

$

72,530




Allowable Board fee add-back

1,500




Other adjustments

160




RentPayment adjusted EBITDA

(5,553)




Consolidated Adjusted EBITDA (Non-GAAP)

$

68,637








Consolidated Total Debt at March 31, 2021:




Current portion of long-term debt

24,302




Long-term debt, net

350,667




Unamortized discounts and costs

4,135





379,104




Less unrestricted cash

(5,827)




Consolidated Net Debt

$

373,277








Total Net Leverage Ratio

5.44x




Further detail of certain of these adjustments, and where these items are recorded in our consolidated statements of operations, is provided below:


(in thousands)




Three Months Ended March 31,




2021


2020


Segment







Selling, general and administrative expense:






Litigation settlement costs

$



$

2



Corporate

Certain legal fees and expenses

1,843



472



Corporate

Professional, accounting and consulting fees

1,784



24



Corporate

Acquisition transition services



896



Integrated Partners


$

3,627



$

1,394










Salary and employee benefit expense:






Non-cash stock-based compensation

$

95



$

107



Consumer

Non-cash stock-based compensation

30



34



Commercial

Non-cash stock-based compensation

433



197



Corporate


$

558



$

338










Other expenses, net






Debt modification expenses

$



$

376




Write-off of equity-method investment



211




Other non-operating expense

488







$

488



$

587




Priority does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, stock-based compensation expense would be difficult to estimate because it depends on the Company's future hiring and retention needs, as well as the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. As a result, the Company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the Company's outlook.

Pro-Forma Results

On a pro forma basis, including first quarter results of Finxera, together with the April 2021 tuck-in reseller acquisition, first quarter 2021 financial results (excluding revenue and cost synergies) are as follows:


(in thousands)


Three Months Ended March 31, 2021 (a)


Priority


Finxera


Tuck-in
Acquisition


Pro Forma

Revenues

$

113,297



$

16,769



$



$

130,066









Gross Profit

$

31,434



$

15,647



$

3,855



$

50,936

Gross Profit Margin

27.7

%


93.3

%




39.2

%









Adjusted EBITDA

$

18,001



$

11,680



$

3,855



$

33,536









(a) Actual first quarter 2021 results of Priority, Finxera and the April 2021 tuck-in reseller acquisition.

















About Priority Technology Holdings, Inc.

Priority is a leading provider of merchant acquiring, integrated payment software and commercial payment solutions, offering unique product and service capabilities to its merchant network and distribution partners. Priority's enterprise operates from a purpose-built business platform that includes tailored customer service offerings and bespoke technology development, allowing the Company to provide end-to-end solutions for payment and payment-adjacent opportunities. Additional information can be found at www.PRTH.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements identified by words such as "may," "will," "should," "anticipates," "believes," "expects," "plans," "future," "intends," "could," "estimate," "predict," "projects," "targeting," "potential" or "contingent," "guidance," "outlook" or words of similar meaning. These forward-looking statements include, but are not limited to, expected timing of the closing of Priority Technology Holdings, Inc.'s ("Priority", "we", "our", or "us") merger with Finxera Holdings, Inc. ("Finxera") and our 2021 outlook and statements regarding our market and growth opportunities. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive risks, trends and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking statements. These forward-looking statements may include, but are not limited to, statements about the effects of the COVID-19 pandemic on our revenues and financial operating results. Our actual results could differ materially, and potentially adversely, from those discussed or implied herein.

We caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our SEC filings, including our most recent Annual Report on Form 10-K filed with the SEC on March 31, 2021. These filings are available online at www.sec.gov or www.PRTH.com.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

PRIORITY TECHNOLOGY HOLDINGS, INC.

Condensed Consolidated Statements of Operations

Unaudited


(in thousands, except per share amounts)

Three Months Ended March 31,


2021


2020

REVENUES

$

113,297



$

96,933






OPERATING EXPENSES:




Costs of services

81,863



66,364


Salary and employee benefits

9,548



10,129


Depreciation and amortization

9,070



10,272


Selling, general and administrative

8,289


6,609


Total operating expenses

108,770



93,374






Income from operations

4,527



3,559






OTHER EXPENSES:




Interest expense

(9,168)



(10,315)


Other expenses, net

(269)



(346)


Total other expenses, net

(9,437)



(10,661)






Loss before income taxes

(4,910)



(7,102)






Income tax benefit

(2,231)



(1,233)






Net loss

$

(2,679)



$

(5,869)






Loss per common share:




Basic and diluted

$

(0.04)



$

(0.09)






Weighted-average common shares outstanding:




Basic and diluted

67,543



67,061


PRIORITY TECHNOLOGY HOLDINGS, INC.

Condensed Consolidated Balance Sheets


(in thousands)

Unaudited




March 31, 2021


December 31, 2020

ASSETS




Current assets:




Cash

$

5,827



$

9,241


Restricted cash

58,933



78,879


Accounts receivable, net of allowance

50,886



41,321


Prepaid expenses and other current assets

4,083



3,500


Current portion of notes receivable, net of allowance

1,829



2,190


Settlement assets

1,220



753


Total current assets

122,778



135,884






Notes receivable, less current portion

5,084



5,527


Property, equipment, and software, net

23,791



22,875


Goodwill

106,832



106,832


Intangible assets, net

91,062



98,057


Deferred income taxes, net

48,996



46,697


Other non-current assets

1,949



1,957


Total assets

$

400,492



$

417,829






LIABILITIES AND STOCKHOLDERS' DEFICIT




Current liabilities:




Accounts payable and accrued expenses

$

29,880



$

29,821


Accrued residual commissions

30,300



23,824


Customer deposits and advance payments

5,488



2,883


Current portion of long-term debt

24,302



19,442


Settlement obligations

50,820



72,878


Total current liabilities

140,790



148,848






Long-term debt, net of current portion, discounts and debt issuance costs

350,667



357,873


Other non-current liabilities

8,790



9,672


Total long-term liabilities

359,457



367,545






Total liabilities

500,247



516,393






Stockholders' deficit:




Preferred stock




Common stock

68



68


Additional paid-in capital

7,257



5,769


Treasury stock, at cost

(2,388)



(2,388)


Accumulated deficit

(104,692)



(102,013)


Total stockholders' deficit

(99,755)



(98,564)






Total liabilities and stockholders' deficit

$

400,492



$

417,829


PRIORITY TECHNOLOGY HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

Unaudited


(in thousands)

Three Months Ended March 31,


2021


2020

Cash flows from operating activities:




Net loss

$

(2,679)



$

(5,869)


Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation and amortization of assets

9,070



10,272


Equity-classified and liability-classified stock-based compensation

558



338


Amortization of debt issuance costs and discounts

590



460


Deferred income tax benefit, net of change in allowance

(2,299)



(1,233)


Payment-in-kind interest

1,924



1,391


Other non-cash items, net

(64)



208


Change in operating assets and liabilities:




Accounts receivable

(9,575)



631


Settlement assets and obligations, net

(22,526)



(7,047)


Prepaid expenses and other current assets

(583)



390


Notes receivable

862



(927)


Accounts payable and other accrued liabilities

8,633



(3,541)


Customer deposits and advance payments

2,604



(1,647)


Other assets and liabilities, net

59



(680)


Net cash used in operating activities

(13,426)



(7,254)






Cash flows from investing activities:




Additions to property, equipment, and software

(2,754)



(2,281)


Acquisitions of intangible assets

(2,937)



(948)


Net cash used in investing activities

(5,691)



(3,229)






Cash flows from financing activities:




Repayment of long-term debt

(4,860)



(1,002)


Debt modification costs paid



(2,749)


Borrowings under revolving credit facility



3,500


Proceeds from exercise of stock options

617




Net cash used in financing activities

(4,243)



(251)






Net change in cash and restricted cash:




Net decrease in cash and restricted cash

(23,360)



(10,734)


Cash and restricted cash at beginning of period

88,120



50,465


Cash and restricted cash at end of period

$

64,760



$

39,731


PRIORITY TECHNOLOGY HOLDINGS, INC.

Reportable Segments' Results

Unaudited


(in thousands)


Three Months Ended March 31,



2021


2020

Consumer Payments:





Revenue


$

108,393



$

86,031


Operating expenses


95,030



78,879


Income from operations


$

13,363



$

7,152


Operating margin


12.3

%


8.3

%

Depreciation and amortization


$

8,579



$

8,583







Key indicators:





Merchant bankcard processing dollar value


$

11,871,939



$

10,386,748


Merchant bankcard transaction volume


127,488



119,431







Commercial Payments:





Revenue


$

3,500



$

6,368


Operating expenses


3,909



5,604


(Loss) income from operations


$

(409)



$

764


Operating margin


(11.7)

%


12.0

%

Depreciation and amortization


$

74



$

76







Key indicators:





Merchant bankcard processing dollar value


$

63,477



$

72,677


Merchant bankcard transaction volume


38



25







Integrated Partners:





Revenue


$

1,404



$

4,534


Operating expenses


1,312



4,166


Income from operations


$

92



$

368


Operating margin


6.6

%


8.1

%

Depreciation and amortization


$

129



$

1,311







Key indicators:





Merchant bankcard processing dollar value


$

11,372



$

124,518


Merchant bankcard transaction volume


95



448







Income from operations of reportable segments


$

13,046



$

8,284


Less: Corporate expense


(8,519)



(4,725)


Consolidated income from operations


$

4,527



$

3,559


Corporate depreciation and amortization


$

288



$

302







Key indicators:





Merchant bankcard processing dollar value


$

11,946,788



$

10,583,943


Merchant bankcard transaction volume


127,621



119,904


PRIORITY TECHNOLOGY HOLDINGS, INC.

Results With and Without RentPayment

Unaudited




(in thousands)



First Quarter 2020



Consolidated


RentPayment


Excl RentPayment








Revenues


$

96,933



$

3,844



$

93,089









Operating Expenses:







Costs of services


66,364



374



65,990


Salary and employee benefits


10,129



539



9,590


Depreciation and amortization


10,272



1,216



9,056


Selling, general and administrative


6,609



1,159



5,450


Total operating expenses


93,374



3,288



90,086









Income from operations


3,559



556



3,003









Depreciation and amortization


10,272



1,216



9,056


Other income, net


241





241


Non-cash stock-based compensation


338





338


Legal and professional fees


496





496


Legal settlements


2





2


Acquisition integration services


896



896











Adjusted EBITDA


$

15,804



$

2,668



$

13,136


Cision
Cision

View original content:http://www.prnewswire.com/news-releases/priority-technology-holdings-inc-announces-first-quarter-2021-financial-results-301290346.html

SOURCE Priority Technology Holdings, Inc.