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//: PRESS RELEASES

Priority Technology Holdings, Inc. Announces Second Quarter 2022 Financial Results

Strong Second Quarter Revenue Growth Across all Business Segments

ALPHARETTA, Ga.--(BUSINESS WIRE)--Aug. 9, 2022-- 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 second quarter 2022 financial results including strong quarter-over-quarter diversified revenue growth.

Highlights of Consolidated Results

Second Quarter 2022, Compared with Second Quarter 2021

Financial highlights of the second quarter of 2022 compared with the second quarter of 2021, are as follows:

  • Revenue of $166.4 million increased 33.1% from $125.0 million.
  • Gross profit (a non-GAAP measure1) of $55.7 million increased 58.2% million from $35.2 million.
  • Gross profit margin (a non-GAAP measure1) of 33.5% increased 540 basis points from 28.1%.
  • Operating income of $13.1 million increased 77.0% from $7.4 million.
  • Adjusted EBITDA (a non-GAAP measure1) of $33.9 million increased 61.4% from $21.0 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 provided below for additional information.

"We delivered another strong quarter of top- and bottom-line growth, driven by increasing demand for our products and services," said Tom Priore, Chairman and CEO of Priority. "Priority's financial performance demonstrates that our unified commerce product vision continues to win in the marketplace. We have built with intention to perform in varying economic climates and our numbers back up our ability to deliver."

Full Year 2022 Financial Guidance

Priority's outlook remains strong and we are reaffirming our full-year 2022 guidance.

  • Revenue is forecasted to range between $650 million to $665 million, a growth rate of 26% to 29%.
  • Adjusted EBITDA (a non-GAAP measure) is forecasted to range between $145 million to $150 million, a growth rate of 51% to 56%.

Conference Call

Priority Technology Holdings, Inc.'s leadership will host a conference call on Tuesday, August 9, 2022 at 11:00 a.m. EDT to discuss its second quarter 2022 financial results. Participants can access the call by phone in the U.S. or Canada at (833) 636-1319 or internationally at (412) 902-4286.

The Internet webcast link and accompanying slide presentation can be accessed at https://edge.media-server.com/mmc/p/fgpa38jm 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 August 16, 2022 at 2:00 p.m. EDT. To listen to the audio replay, dial (877) 344-7529 or (412) 317-0088 and enter conference ID number 4629057. 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 June 30,

 

2022

 

2021

Revenues

$

166,430

 

 

$

125,014

 

Costs of services

 

(110,749

)

 

 

(89,831

)

Gross profit

$

55,681

 

 

$

35,183

 

Gross profit margin

 

33.5

%

 

 

28.1

%

EBITDA and 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. 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.

The reconciliation of adjusted EBITDA to its most comparable GAAP measure is provided below:

 

(in thousands)

 

Three Months Ended June 30,

 

2022

 

2021

Net income (loss)

$

287

 

$

(9,477

)

Interest expense

 

12,335

 

 

7,285

 

Income tax expense

 

467

 

 

1,490

 

Depreciation and amortization

 

17,505

 

 

10,723

 

EBITDA

 

30,594

 

 

10,021

 

Debt extinguishment and modification

 

 

 

8,322

 

Selling, general and administrative

 

1,743

 

 

1,834

 

Non-cash stock-based compensation

 

1,542

 

 

856

 

Other non-operating expense

 

 

 

(17

)

Adjusted EBITDA

 

33,879

 

 

21,016

 

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 June 30,

 

2022

 

2021

Selling, general and administrative expenses:

 

 

 

Certain legal fees

$

213

 

$

1,587

Professional, accounting and consulting fees

 

373

 

 

247

IRS penalty for 2014 and 2015

 

703

 

 

General ledger transition expenses

 

96

 

 

Other expenses

 

358

 

 

Write-down of note receivable

 

 

 

 

$

1,743

 

$

1,834

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.

About Priority Technology Holdings, Inc.

Priority is a payments powerhouse driving the convergence of payments and banking. The company has built a single platform to collect, store, and send money that operates at scale. We help our customers take and make payments while managing business and consumer operating accounts to monetize payment networks. Our tailored, agile technology powers high-value, payments products bolstered by our industry-leading personalized support. 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, our 2022 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. 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 17, 2022. 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.

Unaudited Consolidated Statements of Operations

(in thousands, except per share amounts)

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

Revenues

$

166,430

 

 

$

125,014

 

 

$

319,669

 

 

$

238,311

 

Operating expenses

 

 

 

 

 

 

 

Cost of revenue

 

110,749

 

 

 

89,831

 

 

 

212,229

 

 

 

171,694

 

Salary and employee benefits

 

15,770

 

 

 

10,351

 

 

 

31,847

 

 

 

19,899

 

Depreciation and amortization

 

17,505

 

 

 

10,723

 

 

 

34,858

 

 

 

19,793

 

Selling, general and administrative

 

9,346

 

 

 

6,704

 

 

 

16,849

 

 

 

14,993

 

Total operating expenses

 

153,370

 

 

 

117,609

 

 

 

295,783

 

 

 

226,379

 

Operating income

 

13,060

 

 

 

7,405

 

 

 

23,886

 

 

 

11,932

 

Other (expense) income

 

 

 

 

 

 

 

Interest expense

 

(12,335

)

 

 

(7,285

)

 

 

(23,870

)

 

 

(16,453

)

Debt extinguishment and modification costs

 

 

 

 

(8,322

)

 

 

 

 

 

(8,322

)

Other income (expense), net

 

29

 

 

 

215

 

 

 

80

 

 

 

(54

)

Total other expense, net

 

(12,306

)

 

 

(15,392

)

 

 

(23,790

)

 

 

(24,829

)

Income (loss) before income taxes

 

754

 

 

 

(7,987

)

 

 

96

 

 

 

(12,897

)

Income tax expense (benefit)

 

467

 

 

 

1,490

 

 

 

142

 

 

 

(741

)

Net income (loss)

 

287

 

 

 

(9,477

)

 

 

(46

)

 

 

(12,156

)

Less: Dividends and accretion attributable to redeemable senior preferred stockholders

 

(8,549

)

 

 

(3,911

)

 

 

(16,949

)

 

 

(3,911

)

Less: NCI preferred unit redemptions

 

 

 

 

(10,777

)

 

 

 

 

 

(10,777

)

Net loss attributable to common stockholders

 

(8,262

)

 

 

(24,165

)

 

$

(16,995

)

 

$

(26,844

)

 

 

 

 

 

 

 

 

Loss per common share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.11

)

 

$

(0.35

)

 

$

(0.22

)

 

$

(0.39

)

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic and diluted

 

78,603

 

 

 

69,496

 

 

 

78,600

 

 

 

68,525

 

 

 

 

 

 

 

 

 

Priority Technology Holdings, Inc.

Unaudited Consolidated Balance Sheets

 

(in thousands)

 

 

 

 

June 30, 2022

 

December 31, 2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

22,162

 

 

$

20,300

 

Restricted cash

 

11,717

 

 

 

28,859

 

Accounts receivable, net of allowances

 

70,437

 

 

 

58,423

 

Prepaid expenses and other current assets

 

18,200

 

 

 

15,807

 

Current portion of notes receivable

 

781

 

 

 

272

 

Settlement assets and customer account balances

 

504,132

 

 

 

479,471

 

Total current assets

 

627,429

 

 

 

603,132

 

Notes receivable, less current portion

 

2,049

 

 

 

105

 

Property, equipment and software, net

 

26,749

 

 

 

25,233

 

Goodwill

 

365,740

 

 

 

365,740

 

Intangible assets, net

 

316,964

 

 

 

340,211

 

Deferred income taxes, net

 

11,319

 

 

 

8,265

 

Other noncurrent assets

 

11,053

 

 

 

9,256

 

Total assets

$

1,361,303

 

 

$

1,351,942

 

Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

55,200

 

 

$

42,523

 

Accrued residual commissions

 

34,513

 

 

 

29,532

 

Customer deposits and advance payments

 

1,065

 

 

 

5,021

 

Current portion of long-term debt

 

6,200

 

 

 

6,200

 

Settlement and customer account obligations

 

506,691

 

 

 

500,291

 

Total current liabilities

 

603,669

 

 

 

583,567

 

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

 

602,224

 

 

 

604,105

 

Other noncurrent liabilities

 

15,533

 

 

 

18,349

 

Total noncurrent liabilities

 

617,757

 

 

 

622,454

 

Total liabilities

 

1,221,426

 

 

 

1,206,021

 

Redeemable senior preferred stock

 

220,031

 

 

 

210,158

 

Stockholders' deficit:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

78

 

 

 

77

 

Additional paid-in capital

 

26,042

 

 

 

39,835

 

Treasury stock, at cost

 

(6,170

)

 

 

(4,091

)

Accumulated deficit

 

(100,104

)

 

 

(100,058

)

Total stockholders' deficit

 

(80,154

)

 

 

(64,237

)

Total liabilities, redeemable senior preferred stock and stockholders' deficit

$

1,361,303

 

 

$

1,351,942

 

Priority Technology Holdings, Inc.

Unaudited Consolidated Statements of Cash Flows

 

(in thousands)

Six Months Ended June 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net loss

$

(46

)

 

$

(12,156

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization of assets

 

34,858

 

 

 

19,793

 

Stock-based compensation

 

3,100

 

 

 

1,414

 

Amortization of debt issuance costs and discounts

 

1,719

 

 

 

1,158

 

Write-off of deferred loan costs and discount

 

 

 

 

3,006

 

Deferred income tax benefit

 

(3,053

)

 

 

(881

)

PIK interest

 

 

 

 

(23,715

)

Other non-cash items, net

 

 

 

 

(39

)

Change in operating assets and liabilities:

 

 

 

Accounts receivable

 

(12,015

)

 

 

(9,115

)

Prepaid expenses and other current assets

 

(4,445

)

 

 

(3,232

)

Income taxes (receivable) payable

 

(304

)

 

 

1,606

 

Notes receivable

 

297

 

 

 

198

 

Accounts payable and other accrued liabilities

 

14,792

 

 

 

10,490

 

Customer deposits and advance payments

 

(3,957

)

 

 

1,385

 

Other assets and liabilities, net

 

(612

)

 

 

307

 

Net cash provided by (used in) operating activities

 

30,334

 

 

 

(9,781

)

Cash flows from investing activities:

 

 

 

Acquisitions of businesses, net of cash acquired

 

 

 

 

(34,507

)

Additions to property, equipment and software

 

(6,011

)

 

 

(5,222

)

Notes receivable loan funding

 

(2,750

)

 

 

 

Acquisitions of intangible assets

 

(3,724

)

 

 

(43,353

)

Other investing activities

 

(250

)

 

 

 

Net cash used in investing activities

 

(12,735

)

 

 

(83,082

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt, net of issue discount

 

 

 

 

293,619

 

Debt issuance and modification costs paid

 

 

 

 

(7,597

)

Repayments of long-term debt

 

(3,100

)

 

 

(358,325

)

Borrowings under revolving credit facility

 

12,000

 

 

 

30,000

 

Repayments of borrowings under revolving credit facility

 

(12,500

)

 

 

 

Proceeds from the issuance of redeemable senior preferred stock, net of discount

 

 

 

 

145,000

 

Redeemable senior preferred stock issuance fees and costs

 

 

 

 

(5,472

)

Repurchases of common stock and shares withheld for taxes

 

(2,079

)

 

 

 

Dividends paid to redeemable senior preferred stockholders

 

(7,076

)

 

 

(1,575

)

Settlement and customer accounts obligations, net

 

15,180

 

 

 

(61,570

)

Contingent consideration for business combinations and asset acquisitions

 

(1,863

)

 

 

 

Other financing activities

 

 

 

 

6

 

Net cash provided by financing activities

 

562

 

 

 

34,086

 

Net change in cash and cash equivalents, and restricted cash:

 

 

 

Net increase (decrease) in cash and cash equivalents, and restricted cash

 

18,161

 

 

 

(58,777

)

Cash and cash equivalents, and restricted cash at beginning of period

 

518,093

 

 

 

88,120

 

Cash and cash equivalents, and restricted cash equivalents at end of period

$

536,254

 

 

$

29,343

 

 

 

 

 

Reconciliation of cash and cash equivalents, and restricted cash:

 

 

 

Cash and cash equivalents

$

22,162

 

 

$

11,111

 

Restricted cash

 

11,717

 

 

 

18,232

 

Customer account balances

 

502,375

 

 

 

 

Total cash and cash equivalents, and restricted cash

$

536,254

 

 

$

29,343

 

Priority Technology Holdings, Inc.

Reportable Segments' Results

 

(in thousands)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

SMB Payments:

 

 

 

 

 

 

 

 

Revenue

 

$

142,506

 

 

$

120,311

 

 

$

272,465

 

 

$

229,412

 

Operating expenses

 

 

128,511

 

 

 

105,867

 

 

 

245,984

 

 

 

201,679

 

Operating income

 

$

13,995

 

 

$

14,444

 

 

$

26,481

 

 

$

27,733

 

Operating margin

 

 

9.8

%

 

 

12.0

%

 

 

9.7

%

 

 

12.1

%

Depreciation and amortization

 

$

10,980

 

 

$

10,373

 

 

$

21,804

 

 

$

19,081

 

Key indicators:

 

 

 

 

 

 

 

 

Merchant bankcard processing dollar value

 

$

15,402,560

 

 

$

13,888,861

 

 

$

29,479,407

 

 

$

25,772,028

 

Merchant bankcard transaction volume

 

 

164,341

 

 

 

150,733

 

 

 

310,289

 

 

 

278,316

 

B2B Payments:

 

 

 

 

 

 

 

 

Revenue

 

$

5,295

 

 

$

4,041

 

 

$

11,220

 

 

$

7,541

 

Operating expenses

 

 

4,632

 

 

 

4,020

 

 

 

10,148

 

 

 

7,929

 

Operating income (loss)

 

$

663

 

 

$

21

 

 

$

1,072

 

 

$

(388

)

Operating margin

 

 

12.5

%

 

 

0.5

%

 

 

9.6

%

 

 

(5.1

) %

Depreciation and amortization

 

$

73

 

 

$

73

 

 

$

146

 

 

$

147

 

Key indicators:

 

 

 

 

 

 

 

 

Merchant bankcard processing dollar value

 

$

155,462

 

 

$

75,289

 

 

$

263,869

 

 

$

138,939

 

Merchant bankcard transaction volume

 

 

88

 

 

 

48

 

 

 

176

 

 

 

87

 

Enterprise Payments:

 

 

 

 

 

 

 

 

Revenue

 

$

18,629

 

 

$

662

 

 

$

35,984

 

 

$

1,358

 

Operating expenses

 

 

12,931

 

 

 

491

 

 

 

25,792

 

 

 

1,023

 

Operating income

 

 

5,698

 

 

 

171

 

 

$

10,192

 

 

$

335

 

Operating margin

 

 

30.6

%

 

 

25.8

%

 

 

28.3

%

 

 

24.7

%

Depreciation and amortization

 

$

6,199

 

 

$

 

 

$

12,396

 

 

$

 

Key indicators:

 

 

 

 

 

 

 

 

Merchant bankcard processing dollar value

 

$

387,253

 

 

$

 

 

$

603,652

 

 

$

 

Merchant bankcard transaction volume

 

 

842

 

 

 

 

 

 

1,214

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income of reportable segments

 

$

20,356

 

 

$

14,636

 

 

$

37,745

 

 

$

27,680

 

Less: Corporate expense

 

 

(7,296

)

 

 

(7,231

)

 

 

(13,859

)

 

 

(15,748

)

Consolidated operating income

 

$

13,060

 

 

$

7,405

 

 

$

23,886

 

 

$

11,932

 

Corporate depreciation and amortization

 

$

253

 

 

$

277

 

 

$

512

 

 

$

565

 

Key indicators:

 

 

 

 

 

 

 

 

Merchant bankcard processing dollar value

 

$

15,945,275

 

 

$

13,964,150

 

 

$

30,346,928

 

 

$

25,910,967

 

Merchant bankcard transaction volume

 

 

165,271

 

 

 

150,781

 

 

 

311,680

 

 

 

278,403

 

 

Priority Investor Inquiries:
Chris Kettmann
[email protected]
(773) 497-7575

Source: Priority Technology Holdings, Inc.

If your issue is unresolved by Finxera, Inc. dba CFTPay; Crossroads Financial Technologies, 1-888-348-4543, please submit formal complaints with the State of Alaska, Division of Banking & Securities.
Please download the form here: https://www.commerce.alaska.gov/web/portals/3/pub/DBSGeneralComplaintFormupdated.pdf

Submit formal complaint form with supporting documents:

Division of Banking & Securities PO Box 110807 Juneau, AK 99811-0807

If you are an Alaska resident with questions regarding formal complaints, please email us at [email protected] or call Nine Zero Seven Four Six Five Two Five Two One