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NetSpend Holdings, Inc. Reports Third Quarter Financial Results

Net income was $4.4 million for the quarter ended September 30, 2012, compared to net income of $8.3 million for the quarter ended September 30, 2011. NetSpend’s net income for the quarter ended September 30, 2012 includes an aggregate of $16.9 million of net interest expense, income tax expense, depreciation and amortization and other losses, which includes pre-tax litigation related losses of $10.3 million. Net income for the quarter ended September 30, 2012 also includes approximately $2.8 million in stock-based compensation expense. For the quarter ended September 30, 2011, the comparable amount of net interest expense, income tax expense and depreciation and amortization and other losses was $10.1 million. Net income for the quarter ended September 30, 2011 also includes approximately $2.9 million in stock-based compensation expense.

2012 Outlook

NetSpend reported that it now expects full year 2012 revenue to be between $348 and $352 million, its adjusted EBITDA to fall between $95 and $97 million and its adjusted net income per diluted share to be between $0.56 and $0.58.

The foregoing expectations reflect the following assumptions:

  • An effective tax rate of approximately 40%;
  • Non-cash equity compensation of between approximately $10.5 and $11.5 million;
  • Cash outlays for capital expenditures for the full year of between approximately $13 and $14 million;
  • An effective cost of debt capital of approximately 3.5%; and
  • Diluted shares outstanding for the full year of approximately 84 million.

Investor Conference Call and Webcast

NetSpend will host an investor conference call to discuss its second quarter 2012 results today, November 1, 2012, at 5:30 p.m. EDT. The conference call can be accessed live over the phone by dialing (877) 853-5634 or (707) 287-9375 for international callers. A replay will be available until November 8, 2012 at (855) 859-2056 or (404) 537-3406 for international callers; the conference ID is 44013024. 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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