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NetSpend Holdings, Inc. Reports Fourth Quarter 2010 Results

Stocks in this article: NTSP

Net income was $6.3 million, an increase of 80% over net income of $3.5 million for the quarter ended December 31, 2009. NetSpend's net income for the quarter ended December 31, 2010 includes an aggregate amount of $6.5 million of net interest expense, income tax expense, and depreciation and amortization. NetSpend's net income for the quarter ended December 31, 2010 also includes approximately $2.9 million in stock-based compensation expense. For the quarter ended December 31, 2009, the comparable amount of net interest expense, income tax expense, and depreciation and amortization was $6.8 million, and we incurred approximately $1.1 million in stock-based compensation.

2011 Outlook

NetSpend reported that it expects full year 2011 revenue to be between $323 and $333 million, its adjusted EBITDA to fall between $85 and $90 million and its adjusted net income per fully diluted share to be between $0.44 and $0.49.

The foregoing expectations reflect the following assumptions:

  • An effective tax rate of approximately 40%;
  • Non-cash equity compensation of between approximately $9.5 and $10.5 million;
  • Cash outlays for capital expenditures for the full year of between approximately $7 and 9 million;
  • An effective cost of debt capital of approximately 3.5%; and
  • Fully diluted shares outstanding for the full year of approximately 95 million. 

Investor Conference Call and Webcast

NetSpend will host an investor conference call to discuss its fourth quarter 2010 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (877) 853-5634 or for international callers (707) 287-9375. A replay will be available two hours after the call and can be accessed by dialing (800) 642-1687 or (706) 645-9291 for international callers; the conference ID is 39853991. The call will be webcast live from NetSpend's website at http://investor.netspend.com.

Non-GAAP Financial Information

To supplement NetSpend's consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), this press release includes EBITDA, Adjusted EBITDA and Adjusted Net Income. EBITDA, Adjusted EBITDA and Adjusted Net Income are not measures of financial performance under GAAP. Accordingly, they should not be considered a substitute for net income, operating income or other income or cash flow data prepared in accordance with GAAP. These non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. We believe that the presentation of these non-GAAP financial measures provides useful information to management and investors regarding underlying trends in NetSpend's business and provides improved comparability between periods in different years. Reconciliations between GAAP measures and non-GAAP measures and between actual results and adjusted results are provided at the end of this press release.

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