Delaware (State or Other Jurisdiction of Incorporation or Organization) | ||
001-35882 | 43-2099257 | |
(Commission File Number) | (I.R.S. Employer Identification No.) | |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
99.1 | Press release dated October 11, 2016 |
BLACKHAWK NETWORK HOLDINGS, INC. | |||||
Date: October 11, 2016 | By: | /s/ Jerry Ulrich | |||
Name: | Jerry Ulrich | ||||
Title: | Chief Financial Officer and Chief Administrative Officer |
Exhibit No. | Description | |
99.1 | Press release dated October 11, 2016 |
INVESTORS/ANALYSTS: | MEDIA: |
Patrick Cronin | Teri Llach |
(925) 226-9973 | (925) 226-9028 |
investor.relations@bhnetwork.com | teri.llach@bhnetwork.com |
$ in millions except per share amounts | Q3’16 | Q3’15 | % Change | |||||||
(unaudited) | ||||||||||
Operating Revenues | $ | 361.6 | $ | 352.7 | 3% | |||||
Net Income (Loss) | $ | (5.1 | ) | $ | (3.6 | ) | (42)% | |||
Diluted Earnings (Loss) Per Share | $ | (0.09 | ) | $ | (0.07 | ) | (29)% |
$ in millions except per share amounts | Q3’16 | Q3’15 | % Change | |||||||
(unaudited) | ||||||||||
Adjusted Operating Revenues | $ | 168.9 | $ | 177.1 | (5)% | |||||
Adjusted EBITDA | $ | 26.5 | $ | 28.6 | (7)% | |||||
Adjusted Net Income | $ | 7.8 | $ | 9.7 | (20)% | |||||
Adjusted Diluted EPS | $ | 0.14 | $ | 0.17 | (18)% |
• | Operating revenues totaled $361.6 million, an increase of 3% from $352.7 million for the quarter ended September 12, 2015. This increase was due to a 7% increase in commissions and fees driven primarily by higher international sales volume; a 6% increase in program and other fees due to higher incentive open loop gift card sales from Achievers and the addition of extrameasures and Giftcards.com; a 30% decline in product sales primarily due to Cardpool, partially offset by product sales growth at Achievers; and a 10% increase in marketing revenues due to higher international promotional revenues. |
• | Net loss totaled $5.1 million compared to net loss of $3.6 million for the quarter ended September 12, 2015. The decrease was driven primarily by lower sales of U.S. retail open loop gift cards due to EMV restrictions, higher non-cash acquisition-related expenses, higher non-cash stock compensation expense, higher depreciation and increased interest expense. |
• | Net loss per diluted share was $0.09 compared to a net loss per diluted share of $0.07 for the quarter ended September 12, 2015. Diluted shares outstanding increased 2% to 55.7 million. |
• | Adjusted operating revenues totaled $168.9 million, a 5% decline from $177.1 million for the quarter ended September 12, 2015. The decrease was primarily in U.S. retail due to EMV-related sales restrictions on U.S. retail open loop gift card sales and lower Cardpool revenues, partially offset by revenue from the incentives segment including the acquisitions of extrameasures and Giftcards.com, and growth in the international segment. |
• | Adjusted EBITDA totaled $26.5 million, a decrease of 7% from $28.6 million for the quarter ended September 12, 2015. Lower open loop gift card sales offset growth in the incentives and international segments. |
• | Adjusted net income totaled $7.8 million, a decrease of 19% from $9.7 million for the quarter ended September 12, 2015. The decrease was driven by lower revenues due to EMV-related sales restrictions, higher interest expense and higher depreciation expense. Income tax on adjusted income before taxes was 20% for the third quarter 2016 compared to 31% for the comparable 2015 period due to the annual provision-to-return true-up. |
• | Adjusted diluted EPS was $0.14, a decrease of 18% from $0.17 for the quarter ended September 12, 2015. |
$ in millions except per share amounts | 2016 Guidance | 2015 Actual | % Change | ||||||
Operating Revenues | $1,950 to $2,014 | $ | 1,801 | 8% to 12% | |||||
Net Income | $13 to $25 | $ | 46 | -72% to -46% | |||||
Diluted EPS | $0.22 to $0.41 | $ | 0.81 | -73% to -49% |
$ in millions except per share amounts | 2016 Guidance | 2015 Actual | % Change | ||||||||
Adjusted Operating Revenues | $897 to $926 | $ | 829 | 8% to 12% | |||||||
Adjusted EBITDA | $200 to $218 | $ | 194 | 3% to 12% | |||||||
Adjusted Net Income | $83 to $94 | $ | 90 | -8% to 4% | |||||||
Adjusted Diluted EPS | $1.45 to $1.64 | $ | 1.59 | -9% to 3% | |||||||
Reduction in income taxes payable | $ | 61 | $ | 55 | 11% | ||||||
Reduction in income taxes payable per share (diluted) | $ | 1.07 | $ | 0.98 | 9% |
• | 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, which has offsetting marketing 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-cash equity grants made to employees and distribution partners at a certain price and point in time do not necessarily reflect how the Company's business is performing at any particular time and the related expenses are not key measures of the Company's core operating performance; |
• | the net gain on the transaction to transition our program-managed GPR business to another program manager and the gain on the sale of our member interest in Visa Europe 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; |
• | 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; and |
• | Adjusted free cash flow - the Company receives funds from consumers or business clients for prepaid products that the Company issues or holds on their behalf prior to the issuance of prepaid products. The Company views this cash flow as temporary and not indicative of the cash flows generated by its operating activity, and therefore excludes it from calculations of Adjusted free cash flow. Adjusted free cash flow provides information regarding the cash that the Company generates without the fluctuations resulting from the timing of cash inflows and outflows from these settlement activities, which is useful to understanding the Company's business and its ability to fund capital expenditures and repay amounts borrowed under its term loan. The Company also may use Adjusted free cash flow for, among other things, making investment decisions and managing its capital structure. |
BLACKHAWK NETWORK HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
12 weeks ended | 36 weeks ended | ||||||||||||||
September 10, 2016 | September 12, 2015 | September 10, 2016 | September 12, 2015 | ||||||||||||
OPERATING REVENUES: | |||||||||||||||
Commissions and fees | $ | 248,138 | $ | 231,492 | $ | 750,693 | $ | 709,339 | |||||||
Program and other fees | 64,857 | 61,416 | 207,718 | 171,942 | |||||||||||
Marketing | 17,943 | 16,311 | 52,098 | 59,112 | |||||||||||
Product sales | 30,622 | 43,446 | 108,719 | 104,251 | |||||||||||
Total operating revenues | 361,560 | 352,665 | 1,119,228 | 1,044,644 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Partner distribution expense | 178,363 | 161,852 | 541,749 | 494,193 | |||||||||||
Processing and services | 75,090 | 68,246 | 224,331 | 198,272 | |||||||||||
Sales and marketing | 52,327 | 49,954 | 166,176 | 156,653 | |||||||||||
Costs of products sold | 29,122 | 40,577 | 103,163 | 97,593 | |||||||||||
General and administrative | 22,501 | 22,136 | 70,130 | 62,186 | |||||||||||
Transition and acquisition | 2,574 | 5,275 | 4,160 | 6,091 | |||||||||||
Amortization of acquisition intangibles | 10,376 | 6,875 | 35,533 | 18,352 | |||||||||||
Change in fair value of contingent consideration | 1,300 | — | 2,100 | (7,567 | ) | ||||||||||
Total operating expenses | 371,653 | 354,915 | 1,147,342 | 1,025,773 | |||||||||||
OPERATING INCOME (LOSS) | (10,093 | ) | (2,250 | ) | (28,114 | ) | 18,871 | ||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest income and other income (expense), net | 2,360 | (1,421 | ) | 3,258 | (1,938 | ) | |||||||||
Interest expense | (5,684 | ) | (3,231 | ) | (13,868 | ) | (8,566 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (13,417 | ) | (6,902 | ) | (38,724 | ) | 8,367 | ||||||||
INCOME TAX EXPENSE (BENEFIT) | (8,357 | ) | (3,290 | ) | (18,884 | ) | 4,435 | ||||||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | (5,060 | ) | (3,612 | ) | (19,840 | ) | 3,932 | ||||||||
Loss (income) attributable to non-controlling interests, net of tax | (42 | ) | (3 | ) | (152 | ) | 63 | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ | (5,102 | ) | $ | (3,615 | ) | $ | (19,992 | ) | $ | 3,995 | ||||
EARNINGS (LOSS) PER SHARE: | |||||||||||||||
Basic | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.36 | ) | $ | 0.07 | ||||
Diluted | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.36 | ) | $ | 0.07 | ||||
Weighted average shares outstanding—basic | 55,668 | 54,467 | 55,851 | 53,941 | |||||||||||
Weighted average shares outstanding—diluted | 55,668 | 54,467 | 55,851 | 55,994 |
BLACKHAWK NETWORK HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||||||
September 10, 2016 | January 2, 2016 | September 12, 2015 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 300,349 | $ | 914,576 | $ | 214,722 | |||||
Restricted cash | 2,500 | 3,189 | 43,043 | ||||||||
Settlement receivables, net | 275,471 | 626,077 | 240,273 | ||||||||
Accounts receivable, net | 199,552 | 241,729 | 188,912 | ||||||||
Other current assets | 123,919 | 103,319 | 107,950 | ||||||||
Total current assets | 901,791 | 1,888,890 | 794,900 | ||||||||
Property, equipment and technology, net | 168,865 | 159,357 | 154,085 | ||||||||
Intangible assets, net | 293,034 | 240,898 | 230,213 | ||||||||
Goodwill | 508,607 | 402,489 | 382,803 | ||||||||
Deferred income taxes | 352,683 | 339,558 | 361,284 | ||||||||
Other assets | 69,039 | 81,764 | 78,294 | ||||||||
TOTAL ASSETS | $ | 2,294,019 | $ | 3,112,956 | $ | 2,001,579 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Settlement payables | $ | 522,133 | $ | 1,605,021 | $ | 469,590 | |||||
Consumer and customer deposits | 115,085 | 84,761 | 102,633 | ||||||||
Accounts payable and accrued operating expenses | 103,920 | 119,087 | 112,753 | ||||||||
Deferred revenue | 113,867 | 113,458 | 91,474 | ||||||||
Note payable, current portion | 9,846 | 37,296 | 37,378 | ||||||||
Notes payable to Safeway | 3,239 | 4,129 | 13,129 | ||||||||
Bank line of credit | — | — | 100,000 | ||||||||
Other current liabilities | 48,630 | 57,342 | 43,320 | ||||||||
Total current liabilities | 916,720 | 2,021,094 | 970,277 | ||||||||
Deferred income taxes | 19,930 | 18,652 | 14,735 | ||||||||
Note payable | 137,848 | 324,412 | 325,151 | ||||||||
Convertible notes payable | 425,833 | — | — | ||||||||
Other liabilities | 25,429 | 14,700 | 4,867 | ||||||||
Total liabilities | 1,525,760 | 2,378,858 | 1,315,030 | ||||||||
Stockholders’ equity: | |||||||||||
Preferred stock | — | — | — | ||||||||
Common stock | 55 | 56 | 55 | ||||||||
Additional paid-in capital | 594,739 | 561,939 | 547,230 | ||||||||
Accumulated other comprehensive loss | (34,398 | ) | (40,195 | ) | (31,535 | ) | |||||
Retained earnings | 203,791 | 207,973 | 166,370 | ||||||||
Total Blackhawk Network Holdings, Inc. equity | 764,187 | 729,773 | 682,120 | ||||||||
Non-controlling interests | 4,072 | 4,325 | 4,429 | ||||||||
Total stockholders’ equity | 768,259 | 734,098 | 686,549 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,294,019 | $ | 3,112,956 | $ | 2,001,579 |
BLACKHAWK NETWORK HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||||||||||
36 weeks ended | 52 weeks ended | 53 weeks ended | |||||||||||||
September 10, 2016 | September 12, 2015 | September 10, 2016 | September 12, 2015 | ||||||||||||
OPERATING ACTIVITIES: | |||||||||||||||
Net income (loss) before allocation to non-controlling interests | $ | (19,840 | ) | $ | 3,932 | $ | 22,037 | $ | 46,765 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization of property, equipment and technology | 33,096 | 27,765 | 46,314 | 38,362 | |||||||||||
Amortization of intangibles | 38,988 | 21,634 | 49,720 | 31,803 | |||||||||||
Amortization of deferred program and contract costs | 18,805 | 20,032 | 27,764 | 26,704 | |||||||||||
Employee stock-based compensation expense | 24,865 | 19,856 | 35,139 | 25,452 | |||||||||||
Distribution partner mark-to-market expense | — | — | — | 1,400 | |||||||||||
Change in fair value of contingent consideration | 2,100 | (7,567 | ) | 2,100 | (11,289 | ) | |||||||||
Deferred income taxes | — | 13,371 | 16,439 | 1,546 | |||||||||||
Other | 5,780 | 5,496 | 8,032 | 6,692 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Settlement receivables | 359,398 | 274,941 | (27,221 | ) | 16,171 | ||||||||||
Settlement payables | (1,091,151 | ) | (906,181 | ) | 46,692 | 13,942 | |||||||||
Accounts receivable, current and long-term | 44,585 | (3,573 | ) | (9,013 | ) | (46,292 | ) | ||||||||
Other current assets | 3,940 | (20,562 | ) | 7,292 | (24,292 | ) | |||||||||
Other assets | (9,299 | ) | (9,996 | ) | (19,737 | ) | (16,909 | ) | |||||||
Consumer and customer deposits | 13,963 | (31,140 | ) | (9,299 | ) | (2,586 | ) | ||||||||
Accounts payable and accrued operating expenses | (28,775 | ) | (9,695 | ) | (22,068 | ) | 4,592 | ||||||||
Deferred revenue | 2,703 | (8,105 | ) | 25,171 | 16,075 | ||||||||||
Other current and long-term liabilities | (24,912 | ) | 4,385 | (12,420 | ) | 11,914 | |||||||||
Income taxes, net | (13,883 | ) | (15,492 | ) | (1,000 | ) | (9,870 | ) | |||||||
Net cash provided by (used in) operating activities | (639,637 | ) | (620,899 | ) | 185,942 | 130,180 | |||||||||
INVESTING ACTIVITIES: | |||||||||||||||
Expenditures for property, equipment and technology | (33,522 | ) | (37,310 | ) | (48,950 | ) | (51,059 | ) | |||||||
Business acquisitions, net of cash acquired | (144,284 | ) | (78,394 | ) | (181,371 | ) | (301,840 | ) | |||||||
Investments in unconsolidated entities | (3,901 | ) | — | (9,778 | ) | — | |||||||||
Change in restricted cash | 689 | (38,043 | ) | 40,543 | (38,043 | ) | |||||||||
Other | 4,000 | (561 | ) | 4,463 | (1,060 | ) | |||||||||
Net cash used in investing activities | (177,018 | ) | (154,308 | ) | (195,093 | ) | (392,002 | ) |
BLACKHAWK NETWORK HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (In thousands) (Unaudited) | |||||||||||||||
36 weeks ended | 52 weeks ended | 53 weeks ended | |||||||||||||
September 10, 2016 | September 12, 2015 | September 10, 2016 | September 12, 2015 | ||||||||||||
FINANCING ACTIVITIES: | |||||||||||||||
Payments for acquisition liability | — | (1,811 | ) | — | (1,811 | ) | |||||||||
Repayment of debt assumed in business acquisitions | (8,964 | ) | — | (8,964 | ) | (34,510 | ) | ||||||||
Proceeds from issuance of note payable | 250,000 | — | 250,000 | 200,000 | |||||||||||
Repayment of note payable | (463,750 | ) | (11,250 | ) | (463,750 | ) | (11,250 | ) | |||||||
Payments of financing costs | (15,926 | ) | (724 | ) | (17,265 | ) | (2,056 | ) | |||||||
Borrowings under revolving bank line of credit | 1,959,749 | 1,536,083 | 2,897,195 | 1,751,083 | |||||||||||
Repayments on revolving bank line of credit | (1,959,749 | ) | (1,436,083 | ) | (2,997,195 | ) | (1,651,083 | ) | |||||||
Proceeds from convertible debt | 500,000 | — | 500,000 | — | |||||||||||
Payments for bond hedges | (75,750 | ) | — | (75,750 | ) | — | |||||||||
Proceeds from warrants | 47,000 | — | 47,000 | — | |||||||||||
Proceeds from notes payable to Safeway | — | — | — | 19,205 | |||||||||||
Repayment on notes payable to Safeway | (890 | ) | (6,320 | ) | (8,855 | ) | (6,320 | ) | |||||||
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans | 4,491 | 8,055 | 10,253 | 11,240 | |||||||||||
Other stock-based compensation related | (2,135 | ) | (675 | ) | (3,189 | ) | (887 | ) | |||||||
Repurchase of common stock | (34,845 | ) | — | (34,845 | ) | — | |||||||||
Other | (155 | ) | (1,494 | ) | (155 | ) | (1,494 | ) | |||||||
Net cash provided by financing activities | 199,076 | 85,781 | 94,480 | 272,117 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 3,352 | (7,467 | ) | 298 | (15,424 | ) | |||||||||
Increase (decrease) in cash and cash equivalents | (614,227 | ) | (696,893 | ) | 85,627 | (5,129 | ) | ||||||||
Cash and cash equivalents—beginning of period | 914,576 | 911,615 | 214,722 | 219,851 | |||||||||||
Cash and cash equivalents—end of period | $ | 300,349 | $ | 214,722 | $ | 300,349 | $ | 214,722 | |||||||
NONCASH FINANCING AND INVESTING ACTIVITIES | |||||||||||||||
Net deferred tax assets recognized for tax basis step-up with offset to Additional paid-in capital | $ | — | $ | 366,306 | $ | — | $ | 366,306 | |||||||
Note payable to Safeway contributed to Additional paid-in capital | $ | — | $ | 8,229 | $ | — | $ | 8,229 | |||||||
Financing of business acquisition with contingent consideration | $ | 20,100 | $ | — | $ | 20,100 | $ | — | |||||||
Intangible assets recognized for warrants issued | $ | — | $ | 3,147 | $ | — | $ | 3,147 |
TABLE 1: OTHER OPERATIONAL DATA | |||||||||||||||
12 weeks ended | 36 weeks ended | ||||||||||||||
September 10, 2016 | September 12, 2015 | September 10, 2016 | September 12, 2015 | ||||||||||||
Transaction dollar volume | $ | 3,212,272 | $ | 3,167,719 | $ | 9,770,803 | $ | 9,660,243 | |||||||
Prepaid and processing revenues | $ | 312,995 | $ | 292,908 | $ | 958,411 | $ | 881,281 | |||||||
Prepaid and processing revenues as a % of transaction dollar volume | 9.7 | % | 9.2 | % | 9.8 | % | 9.1 | % | |||||||
Partner distribution expense as a % of prepaid and processing revenues | 57.0 | % | 55.3 | % | 56.5 | % | 56.1 | % |
TABLE 2: RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||
12 weeks ended | 36 weeks ended | ||||||||||||||
September 10, 2016 | September 12, 2015 | September 10, 2016 | September 12, 2015 | ||||||||||||
Prepaid and processing revenues: | |||||||||||||||
Commissions and fees | $ | 248,138 | $ | 231,492 | $ | 750,693 | $ | 709,339 | |||||||
Program and other fees | 64,857 | 61,416 | 207,718 | 171,942 | |||||||||||
Total prepaid and processing revenues | $ | 312,995 | $ | 292,908 | $ | 958,411 | $ | 881,281 | |||||||
Adjusted operating revenues: | |||||||||||||||
Total operating revenues | $ | 361,560 | $ | 352,665 | $ | 1,119,228 | $ | 1,044,644 | |||||||
Revenue adjustment from purchase accounting | 3,666 | 2,606 | 11,875 | 2,606 | |||||||||||
Marketing revenues | (17,943 | ) | (16,311 | ) | (52,098 | ) | (59,112 | ) | |||||||
Partner distribution expense | (178,363 | ) | (161,852 | ) | (541,749 | ) | (494,193 | ) | |||||||
Adjusted operating revenues | $ | 168,920 | $ | 177,108 | $ | 537,256 | $ | 493,945 | |||||||
Adjusted EBITDA: | |||||||||||||||
Net income (loss) before allocation to non-controlling interests | $ | (5,060 | ) | $ | (3,612 | ) | $ | (19,840 | ) | $ | 3,932 | ||||
Interest and other (income) expense, net | (2,360 | ) | 1,421 | (3,258 | ) | 1,938 | |||||||||
Interest expense | 5,684 | 3,231 | 13,868 | 8,566 | |||||||||||
Income tax expense (benefit) | (8,357 | ) | (3,290 | ) | (18,884 | ) | 4,435 | ||||||||
Depreciation and amortization | 22,941 | 17,927 | 72,084 | 49,399 | |||||||||||
EBITDA | 12,848 | 15,677 | 43,970 | 68,270 | |||||||||||
Adjustments to EBITDA: | |||||||||||||||
Employee stock-based compensation | 8,293 | 7,117 | 24,865 | 19,856 | |||||||||||
Acquisition-related employee compensation expense | 420 | 3,218 | 620 | 3,218 | |||||||||||
Revenue adjustment from purchase accounting, net | 3,665 | 2,606 | 11,114 | 2,606 | |||||||||||
Other gains | — | — | (754 | ) | — | ||||||||||
Change in fair value of contingent consideration | 1,300 | — | 2,100 | (7,567 | ) | ||||||||||
Adjusted EBITDA | $ | 26,526 | $ | 28,618 | $ | 81,915 | $ | 86,383 | |||||||
Adjusted EBITDA margin: | |||||||||||||||
Total operating revenues | $ | 361,560 | $ | 352,665 | $ | 1,119,228 | $ | 1,044,644 | |||||||
Operating income (loss) | $ | (10,093 | ) | $ | (2,250 | ) | $ | (28,114 | ) | $ | 18,871 | ||||
Operating margin | (2.8 | )% | (0.6 | )% | (2.5 | )% | 1.8 | % | |||||||
Adjusted operating revenues | $ | 168,920 | $ | 177,108 | $ | 537,256 | $ | 493,945 | |||||||
Adjusted EBITDA | $ | 26,526 | $ | 28,618 | $ | 81,915 | $ | 86,383 | |||||||
Adjusted EBITDA margin | 15.7 | % | 16.2 | % | 15.2 | % | 17.5 | % |
12 weeks ended | 36 weeks ended | ||||||||||||||
September 10, 2016 | September 12, 2015 | September 10, 2016 | September 12, 2015 | ||||||||||||
Adjusted net income: | |||||||||||||||
Income (loss) before income tax expense | $ | (13,417 | ) | $ | (6,902 | ) | $ | (38,724 | ) | $ | 8,367 | ||||
Employee stock-based compensation | 8,293 | 7,117 | 24,865 | 19,856 | |||||||||||
Acquisition-related employee compensation expense | 420 | 3,218 | 620 | 3,218 | |||||||||||
Revenue adjustment from purchase accounting, net | 3,665 | 2,606 | 11,114 | 2,606 | |||||||||||
Other gains | (1,944 | ) | — | (2,698 | ) | — | |||||||||
Change in fair value of contingent consideration | 1,300 | — | 2,100 | (7,567 | ) | ||||||||||
Amortization of intangibles | 11,529 | 8,106 | 38,988 | 21,634 | |||||||||||
Adjusted income before income tax expense | $ | 9,846 | $ | 14,145 | $ | 36,265 | $ | 48,114 | |||||||
Income tax expense (benefit) | (8,357 | ) | (3,290 | ) | (18,884 | ) | 4,435 | ||||||||
Tax expense on adjustments | 10,336 | 7,743 | 30,105 | 12,625 | |||||||||||
Adjusted income tax expense | 1,979 | 4,453 | 11,221 | 17,060 | |||||||||||
Adjusted net income before allocation to non-controlling interests | 7,867 | 9,692 | 25,044 | 31,054 | |||||||||||
Net loss (income) attributable to non-controlling interests, net of tax | (42 | ) | (3 | ) | (152 | ) | 63 | ||||||||
Adjusted net income attributable to Blackhawk Network Holdings, Inc. | $ | 7,825 | $ | 9,689 | $ | 24,892 | $ | 31,117 | |||||||
Adjusted diluted earnings per share: | |||||||||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ | (5,102 | ) | $ | (3,615 | ) | $ | (19,992 | ) | $ | 3,995 | ||||
Distributed and undistributed earnings allocated to participating securities | — | — | (15 | ) | (46 | ) | |||||||||
Net income (loss) available for common shareholders | $ | (5,102 | ) | $ | (3,615 | ) | $ | (20,007 | ) | $ | 3,949 | ||||
Diluted weighted average shares outstanding | 55,668 | 54,467 | 55,851 | 55,994 | |||||||||||
Diluted earnings (loss) per share | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.36 | ) | $ | 0.07 | ||||
Adjusted net income attributable to Blackhawk Network Holdings, Inc. | $ | 7,825 | $ | 9,689 | $ | 24,892 | $ | 31,117 | |||||||
Adjusted distributed and undistributed earnings allocated to participating securities | (7 | ) | (20 | ) | (44 | ) | (112 | ) | |||||||
Adjusted net income available for common shareholders | $ | 7,818 | $ | 9,669 | $ | 24,848 | $ | 31,005 | |||||||
Diluted weighted-average shares outstanding | 55,668 | 54,467 | 55,851 | 55,994 | |||||||||||
Increase in common share equivalents | 1,304 | 2,006 | 1,496 | — | |||||||||||
Adjusted diluted weighted-average shares outstanding | 56,972 | 56,473 | 57,347 | 55,994 | |||||||||||
Adjusted diluted earnings per share | $ | 0.14 | $ | 0.17 | $ | 0.43 | $ | 0.55 | |||||||
Reduction in income taxes payable: | |||||||||||||||
Reduction in income taxes payable resulting from amortization of spin-off tax basis step-up | $ | 6,580 | $ | 6,903 | $ | 19,767 | $ | 20,139 | |||||||
Reduction in income taxes payable from amortization of acquisition intangibles, utilization of acquired NOLs, deductible stock-based compensation and convertible debt | 6,919 | 4,330 | 24,009 | 18,341 | |||||||||||
Reduction in income taxes payable | $ | 13,499 | $ | 11,233 | $ | 43,776 | $ | 38,480 | |||||||
Adjusted diluted weighted average shares outstanding | 56,972 | 56,473 | 57,347 | 55,994 | |||||||||||
Reduction in income taxes payable per share | $ | 0.24 | $ | 0.20 | $ | 0.76 | $ | 0.69 |
52 weeks ended | 53 weeks ended | ||||||
September 10, 2016 | September 12, 2015 | ||||||
Net cash flow provided by operating activities | $ | 185,942 | $ | 130,180 | |||
Changes in settlement payables and consumer and customer deposits, net of settlement receivables | (10,172 | ) | (27,527 | ) | |||
Benefit from settlement timing | 18,859 | 57,871 | |||||
Adjust for: Safeway cash tax payment reimbursed (refunded) | (8,855 | ) | 12,885 | ||||
Adjusted net cash flow provided by operating activities | 185,774 | 173,409 | |||||
Expenditures for property, equipment and technology | (48,950 | ) | (51,059 | ) | |||
Adjusted free cash flow | $ | 136,824 | $ | 122,350 | |||
Reconciliation of Adjusted EBITDA to Adjusted free cash flow | |||||||
Adjusted EBITDA | $ | 189,481 | $ | 182,778 | |||
Less: Expenditures for property, equipment and technology | (48,950 | ) | (51,059 | ) | |||
Less: Interest paid | (13,881 | ) | (10,996 | ) | |||
Less: Cash taxes (paid)/refunded | 2,958 | (25,630 | ) | ||||
Less: Revenue adjustment from purchase price accounting, net | (15,581 | ) | (2,606 | ) | |||
Change in working capital and other | 3,938 | (28,008 | ) | ||||
Cash benefit from settlement timing | 18,859 | 57,871 | |||||
Adjusted free cash flow | $ | 136,824 | $ | 122,350 |
(In millions except per share amounts) | |||||||
Adjusted operating revenues: | Low | High | |||||
Total operating revenues | $ | 1,950 | $ | 2,014 | |||
Marketing revenues | (89 | ) | (89 | ) | |||
Partner distribution expense | (977 | ) | (1,012 | ) | |||
Revenue adjustment from purchase accounting | 13 | 13 | |||||
Adjusted operating revenues | $ | 897 | $ | 926 | |||
Adjusted EBITDA: | |||||||
Net income before allocation to non-controlling interests | $ | 13 | $ | 25 | |||
Interest (income) expense and other (income) expense, net | 20 | 22 | |||||
Income tax expense | 6 | 10 | |||||
Depreciation and amortization | 109 | 109 | |||||
EBITDA | 148 | 166 | |||||
Adjustments to EBITDA: | |||||||
Employee stock-based compensation | 36 | 36 | |||||
Other adjustments | 16 | 16 | |||||
Adjusted EBITDA | $ | 200 | $ | 218 | |||
Adjusted net income: | |||||||
Income before income tax expense | $ | 19 | $ | 34 | |||
Employee stock-based compensation | 36 | 36 | |||||
Amortization of intangibles | 59 | 59 | |||||
Other | 14 | 14 | |||||
Adjusted income before income tax expense | 128 | 143 | |||||
Income tax expense | 6 | 10 | |||||
Tax expense on adjustments | 39 | 39 | |||||
Adjusted income tax expense | 45 | 49 | |||||
Adjusted net income | $ | 83 | $ | 94 | |||
Adjusted diluted earnings per share: | |||||||
Diluted earnings per share | $ | 0.22 | $ | 0.41 | |||
Employee stock-based compensation | 0.42 | 0.42 | |||||
Amortization of intangibles | 0.65 | 0.65 | |||||
Other | 0.16 | 0.16 | |||||
Adjusted diluted earnings per share | $ | 1.45 | $ | 1.64 |