Green Dot Corporation (NYSE:GDOT) announced that it is revising its 2014 financial outlook based on the acquisition of Santa Barbara Tax Products Group (“TPG”), which was announced today, and updated year-to-date trends in the Company's core business. For 2014, Green Dot now expects the following 1:
- Adjusted EBITDA to be between $122 million and $126 million for the full year, which reflects an estimated increase of approximately $6 million in operating expenses related to consolidating TPG’s results post-closing. The Company's previous guidance was $128 million to $132 million.
- Non-GAAP diluted earnings per share to be between $1.25 and $1.29 for the full year, which reflects an estimated decline of approximately $0.12 per share as a result of increased operating costs and issued shares related to the TPG acquisition. The Company's previous guidance was $1.37 to $1.41 per share.
- Non-GAAP total operating revenues of $610 million to $620 million for the full year, with no meaningful impact from the TPG acquisition. The Company's previous guidance was $640 million to $650 million.
Green Dot's updated outlook is based on a number of assumptions that Green Dot believes are reasonable at the time of this earnings release. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Green Dot's filings with the Securities and Exchange Commission.
|1||Reconciliations of forward-looking guidance for the following non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures are provided in the tables below.|
About Green DotGreen Dot Corporation and its wholly owned subsidiary bank, Green Dot Bank, are focused exclusively on serving Low and Moderate Income American families with modern, fair and feature-rich financial products and services, including prepaid cards, checking accounts and cash processing services distributed through a network of some 95,000 retail stores, neighborhood financial service centers and via digital channels. The Company is headquartered in Pasadena, California with Green Dot Bank located in Provo, Utah. GREEN DOT CORPORATION Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Total Operating Revenue (1) (Unaudited)
|Total operating revenues||$||602||$||612|
|Stock-based retailer incentive compensation (2)*||8||8|
|Non-GAAP total operating revenues||$||610||$||620|
|*||Assumes the Company's right to repurchase lapses on 36,810 shares per month during 2014 of the Company's Class A common stock at $18.46 per share, our market price on September 16, 2014. A $1.00 change in the Company's Class A common stock price represents an annual change of $441,720 in stock-based retailer incentive compensation.|
|Non-GAAP total operating revenues||$||620||$||610|
|Adjusted EBITDA / Non-GAAP total operating revenues (Adjusted EBITDA margin)||20||%||21||%|
|(In millions, except per share data)|
|Non-GAAP net income||$||60||$||62|
|Diluted earnings per share*|
|Diluted weighted-average shares issued and outstanding|
|*||Reconciliations between GAAP and non-GAAP diluted weighted-average shares issued and outstanding are provided in the next table.|
|Diluted weighted-average shares issued and outstanding*||42||42|
|Assumed conversion of weighted-average shares of preferred stock||6||6|
|Weighted-average shares subject to repurchase||—||—|
|Non-GAAP diluted weighted-average shares issued and outstanding||48||48|
|*||Assumes the Company will issue 6.133 million shares of Class A common stock on October 1, 2014 in conjunction with its acquisition of TPG. Accordingly, the diluted weighted-average shares issued and outstanding reflects these shares as outstanding for only three months of 2014.|
The Company believes that the non-GAAP financial measures it presents are useful to investors in evaluating the Company’s operating performance for the following reasons:
- stock-based retailer incentive compensation is a non-cash GAAP accounting charge that is an offset to the Company’s actual revenues from operations as the Company has historically calculated them. This charge results from the monthly lapsing of the Company’s right to repurchase a portion of the 2,208,552 shares it issued to its largest distributor, Walmart, in May 2010. By adding back this charge to the Company’s GAAP 2010 and future total operating revenues, investors can make direct comparisons of the Company’s revenues from operations prior to and after May 2010 and thus more easily perceive trends in the Company’s core operations. Further, because the monthly charge is based on the then-current fair market value of the shares as to which the Company’s repurchase right lapses, adding back this charge eliminates fluctuations in the Company’s operating revenues caused by variations in its stock price and thus provides insight on the operating revenues directly associated with those core operations;
- the Company records employee stock-based compensation from period to period, and recorded employee stock-based compensation expenses of approximately $4.7 million and $3.6 million for the three months ended June 30, 2014 and 2013, respectively. By comparing the Company’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share in different historical periods, investors can evaluate the Company’s operating results without the additional variations caused by employee stock-based compensation expense, which may not be comparable from period to period due to changes in the fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers) and is not a key measure of the Company’s operations;
- adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as interest expense, income tax expense, depreciation and amortization, employee stock-based compensation expense, stock-based retailer incentive compensation expense and impairment charges, that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; and
- securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies.
- as measures of operating performance, because they exclude the impact of items not directly resulting from the Company’s core operations;
- for planning purposes, including the preparation of the Company’s annual operating budget;
- to allocate resources to enhance the financial performance of the Company’s business;
- to evaluate the effectiveness of the Company’s business strategies; and
- in communications with the Company’s board of directors concerning the Company’s financial performance.
- that these measures do not reflect the Company’s capital expenditures or future requirements for capital expenditures or other contractual commitments;
- that these measures do not reflect changes in, or cash requirements for, the Company’s working capital needs;
- that these measures do not reflect interest expense or interest income;
- that these measures do not reflect cash requirements for income taxes;
- that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and that other companies in the Company’s industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.
(3) These amounts represent estimated adjustments for net interest income, income taxes, depreciation and amortization, employee stock-based compensation expense, stock-based retailer incentive compensation expense, and the amortization attributable to the Company's acquired intangible assets. Employee stock-based compensation expense and stock-based retailer incentive compensation expense include assumptions about the future fair market value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).