NEW HAVEN, Conn.--(BUSINESS WIRE)--Higher One Holdings, Inc. (NYSE:ONE) (“Higher One” or the “Company”), today announced financial results for the fourth quarter and full year 2013. The Company reported fourth quarter 2013 revenue of $56.6 million, an increase of 13.7% from $49.8 million reported in the fourth quarter of 2012. Full year 2013 revenue came in at $211.1 million, as compared to $197.7 million in 2012. Revenue growth was driven by organic growth in the SmartPay and CASHNet® suite of payment products, as well as revenue from the acquisition of Campus Solutions.
Mark Volchek, Chief Executive Officer, said, “I am pleased with the strides we have made in the past quarter, as well as in the full year of 2013. Our revenue continues to show year-over-year growth, aided by a combination of organic growth and contribution from the Campus Solutions acquisition. Our OneDisburse sales continued at an impressive pace by adding over 256,000 new SSE in the quarter and 547,000 SSE for the full year. We are seeing further growth in non-refund deposits. We believe that these factors as well as the investments we are making into the business are positioning the company for long-term growth.”
Volchek added, ‘We continue to operate in a difficult and complex operating environment due in part to our relationships with multiple bank partners that are overseen by different regulators. On a related note, the Department of Education has established a negotiated rulemaking committee that will convene next week and I am pleased to announce that Casey McGuane, our Chief Operating Officer, has been selected as a primary negotiator to the rulemaking committee on behalf of third-party servicers.”
Non-GAAP adjusted net income, which excludes certain non-recurring or non-cash items, was $8.1 million in fourth quarter 2013, which compares to non-GAAP adjusted net income of $9.2 million in fourth quarter 2012. Fourth quarter 2013 non-GAAP adjusted diluted EPS was $0.17, as compared to $0.17 for the same period a year ago. In the fourth quarter of 2013, non-GAAP adjusted EBITDA was $16.0 million, as compared to $16.4 million last year. Non-GAAP adjusted diluted EPS was $0.60 for the year. Non-GAAP adjusted EBITDA was $57.8 million for 2013. The Company reported fourth quarter 2013 GAAP net income of $6.3 million compared to GAAP net income of $12.1 million in fourth quarter 2012. GAAP diluted EPS was $0.13 in the quarter, as compared to $0.22 in the fourth quarter of 2012. GAAP diluted EPS was $0.29 for 2013, which compares to $0.65 in 2012.
Total enrollment at higher education clients that have signed an agreement for OneDisburse services increased to 5.0 million, an increase of approximately 358,000 from 4.6 million at the end of the fourth quarter of 2012. Total enrollment at higher education clients that have signed up for at least one of our OneDisburse, CASHNet, Campus Labs or Campus Solutions modules totals approximately 13 million.
The number of OneAccounts at the end of the fourth quarter of 2013 was approximately 2.2 million, up 9% from the fourth quarter of 2012.
Conference Call Information
Higher One will host a conference call at 8:30 a.m. ET today to discuss fourth quarter results. The dial in phone number is (877) 415-3183 for domestic listeners and (857) 244-7326 for international listeners. The conference ID number is 81320870. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures can be accessed through Higher One’s investor relations website at http://www.ir.higherone.com. In addition, an archive of the webcast will be available for 90 days through the same link.
About Higher One Holdings
Higher One Holdings, Inc. (NYSE: ONE) partners with colleges and universities to lower their administrative costs and to improve graduation rates. We provide a broad array of payment, refund disbursement and data analytics and management tools to institutions that help them save money and enhance institutional effectiveness. And for students, we offer financial literacy programs and convenient, flexible and affordable transaction options to help them manage their finances. Higher One is a leader in higher education, supporting more than 1,900 schools and 13 million enrolled students. More information about Higher One can be found at www.ir.higherone.com.
Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Management’s projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied. Forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should” or similar words intended to identify information that is not historical in nature. Forward-looking statements contained herein include, among others, statements concerning bank partners, the regulatory environment, banking fees, litigation, sales, and the expected benefits of acquisitions, and such statements are based on the current beliefs and expectations of Higher One management, as applicable, and are subject to known and unknown risks and uncertainties. There are a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. These statements speak only as of the date they are made, and the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. For further information regarding the risks associated with Higher One’s business, please refer to Higher One’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the most recent fiscal year end, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Use of Non-GAAP Financial Measures
This release includes certain metrics presented on a non-GAAP basis, including non-GAAP adjusted EBITDA, non-GAAP adjusted net income, and non-GAAP adjusted EPS. We believe that these non-GAAP measures, which exclude amortization of intangibles, stock-based compensation, and certain non-recurring or non-cash impacts to our results, all net of taxes, provide useful information regarding normalized trends relating to the company’s financial condition and results of operations. Reconciliations of these non-GAAP measures to their closest comparable GAAP measure are included in this press release.
Higher One Holdings, Inc. | ||||||||||||||||||
Consolidated Income Statement | ||||||||||||||||||
(In thousands of dollars, except share and per share amounts) | ||||||||||||||||||
Three Months | Year Ended | |||||||||||||||||
Ended December 31, | December 31, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
Revenue: | ||||||||||||||||||
Account revenue | $ | 33,306 | $ | 37,912 | $ | 135,847 | $ | 150,715 | ||||||||||
Payment transaction revenue | 13,707 | 5,325 | 41,109 | 23,168 | ||||||||||||||
Higher education institution revenue | 9,281 | 6,419 | 33,155 | 21,016 | ||||||||||||||
Other revenue | 314 | 143 | 1,012 | 2,821 | ||||||||||||||
Revenue | 56,608 | 49,799 | 211,123 | 197,720 | ||||||||||||||
Cost of revenue | 23,631 | 19,977 | 88,824 | 80,280 | ||||||||||||||
Gross margin | 32,977 | 29,822 | 122,299 | 117,440 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
General and administrative | 15,486 | 12,116 | 58,555 | 46,321 | ||||||||||||||
Product development | 2,144 | 1,850 | 9,305 | 5,221 | ||||||||||||||
Sales and marketing | 4,335 | 3,289 | 17,058 | 12,284 | ||||||||||||||
Litigation settlement | - | - | 16,320 | - | ||||||||||||||
Merger and acquisition related expenses | - | (6,870 | ) | (4,791 | ) | (5,828 | ) | |||||||||||
Total operating expenses | 21,965 | 10,385 | 96,447 | 57,998 | ||||||||||||||
Income from operations | 11,012 | 19,437 | 25,852 | 59,442 | ||||||||||||||
Interest income | 30 | 22 | 88 | 109 | ||||||||||||||
Interest expense | (830 | ) | (565 | ) | (3,082 | ) | (967 | ) | ||||||||||
Other income | 61 | 78 | 622 | 310 | ||||||||||||||
Net income before income taxes | 10,273 | 18,972 | 23,480 | 58,894 | ||||||||||||||
Income tax expense | 4,012 | 6,860 | 9,352 | 22,024 | ||||||||||||||
Net income | $ | 6,261 | $ | 12,112 | $ | 14,128 | $ | 36,870 | ||||||||||
Net income available to common stockholders: | ||||||||||||||||||
Basic | $ | 6,261 | $ | 12,112 | $ | 14,128 | $ | 36,870 | ||||||||||
Diluted | $ | 6,261 | $ | 12,112 | $ | 14,128 | $ | 36,870 | ||||||||||
Weighted average shares outstanding | ||||||||||||||||||
Basic | 46,975,571 | 50,998,605 | 46,717,359 | 53,877,879 | ||||||||||||||
Diluted | 48,391,409 | 54,056,539 | 48,368,365 | 56,728,807 | ||||||||||||||
Net income available to common stockholders per common share: | ||||||||||||||||||
Basic | $ | 0.13 | $ | 0.24 | $ | 0.30 | $ | 0.68 | ||||||||||
Diluted | $ | 0.13 | $ | 0.22 | $ | 0.29 | $ | 0.65 |
Higher One Holdings, Inc. | ||||||||||
Consolidated Balance Sheet | ||||||||||
(In thousands of dollars, except share and per share amounts) | ||||||||||
December 31, | December 31, | |||||||||
2013 | 2012 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 6,268 | $ | 13,031 | ||||||
Investments in marketable securities | 247 | 247 | ||||||||
Accounts receivable | 8,747 | 4,860 | ||||||||
Income receivable | 6,680 | 7,466 | ||||||||
Deferred tax assets | 5,895 | 37 | ||||||||
Prepaid expenses and other current assets | 10,890 | 10,890 | ||||||||
Restricted cash | 250 | 2,000 | ||||||||
Total current assets | 38,977 | 38,531 | ||||||||
Deferred costs | 4,373 | 4,665 | ||||||||
Fixed assets, net | 49,888 | 52,686 | ||||||||
Intangible assets, net | 57,524 | 38,143 | ||||||||
Goodwill | 66,548 | 47,000 | ||||||||
Loan receivable related to New Markets Tax Credit financing | 7,633 | 7,633 | ||||||||
Other assets | 4,940 | 740 | ||||||||
Restricted cash | 2,500 | 1,500 | ||||||||
Total assets | $ | 232,383 | $ | 190,898 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 3,787 | $ | 3,756 | ||||||
Accrued expenses | 30,322 | 12,526 | ||||||||
Contingent consideration, current portion | - | 2,230 | ||||||||
Deferred tax liabilities | - | 356 | ||||||||
Deferred revenue | 22,392 | 16,027 | ||||||||
Total current liabilities | 56,501 | 34,895 | ||||||||
Deferred revenue and other non-current liabilities | 2,342 | 2,517 | ||||||||
Loan payable and deferred contribution related to New Markets Tax Credit financing | 9,181 | 9,490 | ||||||||
Debt | 89,000 | 80,000 | ||||||||
Contingent consideration, non-current portion | - | 3,520 | ||||||||
Deferred tax liabilities | 2,393 | 2,764 | ||||||||
Total liabilities | 159,417 | 133,186 | ||||||||
Stockholders' equity: | ||||||||||
Common stock, $.001 par value; 200,000,000 shares authorized;
59,028,810 |
60 | 59 | ||||||||
Additional paid-in capital | 181,339 | 174,218 | ||||||||
Treasury stock, 11,913,026 and 11,384,623 shares at December 31, 2013 and 2012, respectively | (137,899 | ) | (131,903 | ) | ||||||
Retained earnings | 29,466 | 15,338 | ||||||||
Total stockholders' equity | 72,966 | 57,712 | ||||||||
Total liabilities and stockholders' equity | $ | 232,383 | $ | 190,898 |
Higher One Holdings, Inc. | |||||||||||
Consolidated Cash Flow Statement | |||||||||||
(In thousands of dollars, except share and per share amounts) | |||||||||||
Twelve months ended | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 14,128 | $ | 36,870 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 14,620 | 10,250 | |||||||||
Amortization of deferred finance costs | 452 | 213 | |||||||||
Non-cash fair value adjustment of contingent consideration | (5,750 | ) | (7,250 | ) | |||||||
Stock-based compensation | 4,144 | 4,093 | |||||||||
Deferred income taxes | (6,587 | ) | 1,856 | ||||||||
Income tax benefit related to exercise of stock options | (1,512 | ) | (4,655 | ) | |||||||
Other income | (309 | ) | (313 | ) | |||||||
Loss on disposal of fixed assets | 28 | 44 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (3,117 | ) | 1,220 | ||||||||
Income receivable | 786 | (1,505 | ) | ||||||||
Deferred costs | (1,392 | ) | (903 | ) | |||||||
Prepaid expenses and other current assets | 6,768 | 13,262 | |||||||||
Other assets | (355 | ) | (267 | ) | |||||||
Accounts payable | 31 | 757 | |||||||||
Accrued expenses | 19,384 | (3,256 | ) | ||||||||
Deferred revenue | 6,190 | 3,181 | |||||||||
Net cash provided by operating activities | 47,509 | 53,597 | |||||||||
Cash flows from investing activities | |||||||||||
Purchases of available for sale investment securities | - | (11,230 | ) | ||||||||
Proceeds from sales and maturities of available for sale investment securities | - | 26,728 | |||||||||
Purchases of fixed assets, net of changes in payables of ($163) and ($11,799), respectively | (6,761 | ) | (23,495 | ) | |||||||
Cash paid for businesses acquired | (47,250 | ) | (37,280 | ) | |||||||
Additions to internal use software | (2,725 | ) | (2,854 | ) | |||||||
Investment in real estate entity | (3,856 | ) | - | ||||||||
Amounts received from restricted cash | 2,000 | - | |||||||||
Deposits to restricted cash | (1,250 | ) | (2,250 | ) | |||||||
Proceeds from development related subsidies | - | 330 | |||||||||
Net cash used in investing activities | (59,842 | ) | (50,051 | ) | |||||||
Cash flows from financing activities | |||||||||||
Proceeds from line of credit | 52,000 | 80,000 | |||||||||
Repayments of line of credit | (43,000 | ) | - | ||||||||
Tax benefit related to exercise of stock options | 1,514 | 4,655 | |||||||||
Proceeds from exercise of stock options | 1,303 | 3,077 | |||||||||
Payment of deferred financing costs | (251 | ) | (1,637 | ) | |||||||
Purchases of common stock | (5,996 | ) | (115,695 | ) | |||||||
Net cash used in (provided by) financing activities | 5,570 | (29,600 | ) | ||||||||
Net change in cash and cash equivalents | (6,763 | ) | (26,054 | ) | |||||||
Cash and cash equivalents at beginning of period | 13,031 | 39,085 | |||||||||
Cash and cash equivalents at end of period | $ | 6,268 | $ | 13,031 |
Higher One Holdings, Inc. | ||||||||||||
Unaudited Supplemental Operating Data | ||||||||||||
(in thousands) | ||||||||||||
Three Months Ended | ||||||||||||
December 31, | March 31, | June 30, | September 30, | December 31, | ||||||||
2012 | 2013 | 2013 | 2013 | 2013 | ||||||||
OneDisburse SSE (1) | 4,642 | 4,709 | 4,798 | 4,752 | 5,000 | |||||||
y/y growth | 11% | 9% | 7% | 4% | 8% | |||||||
Ending OneAccounts (2) | 2,004 | 2,161 | 2,165 | 2,194 | 2,192 | |||||||
y/y growth | 0% | 2% | 14% | 5% | 9% |
(1) | OneDisburse SSE is defined as the number of students enrolled at institutions that have signed contracts to use the OneDisburse service by the end of a given period as of the date the contract is signed (using the most up-to-date IPEDS data at that point in time) | ||
(2) | Ending OneAccounts is defined as the number of accounts with a non-zero balance at the end of a given period |
Higher One Holdings, Inc. | ||||||||||||||||||||
Unaudited Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
Net income | $ | 6,261 | $ | 12,112 | $ | 14,128 | $ | 36,870 | ||||||||||||
Interest income | (30 | ) | (22 | ) | (88 | ) | (109 | ) | ||||||||||||
Interest expense | 830 | 565 | 3,082 | 967 | ||||||||||||||||
Income tax expense | 4,012 | 6,860 | 9,352 | 22,024 | ||||||||||||||||
Depreciation and amortization | 4,033 | 2,914 | 14,620 | 10,250 | ||||||||||||||||
EBITDA | 15,106 | 22,429 | 41,094 | 70,002 | ||||||||||||||||
Merger and acquisition related | - | (6,870 | ) | (4,791 | ) | (5,828 | ) | |||||||||||||
Litigation settlement and bank partner transition | - | - | 17,326 | - | ||||||||||||||||
Stock-based compensation expense | 883 | 867 | 4,144 | 4,093 | ||||||||||||||||
Adjusted EBITDA | $ | 15,989 | $ | 16,426 | $ | 57,773 | $ | 68,267 | ||||||||||||
Unaudited Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Adjusted Net Income and Adjusted Diluted EPS | ||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
Net income | $ | 6,261 | $ | 12,112 | $ | 14,128 | $ | 36,870 | ||||||||||||
Merger and acquisition related | - | (6,870 | ) | (4,791 | ) | (5,828 | ) | |||||||||||||
Litigation settlement and bank partner transition | - | - | 17,326 | - | ||||||||||||||||
Stock-based compensation expense - incentive stock option grants | 438 | 474 | 1,896 | 1,964 | ||||||||||||||||
Stock-based compensation expense - non-qualified stock option grants | 445 | 393 | 2,248 | 2,129 | ||||||||||||||||
Amortization of intangibles | 1,782 | 964 | 6,209 | 3,350 | ||||||||||||||||
Amortization of deferred finance costs | 120 | 111 | 452 | 213 | ||||||||||||||||
Total pre-tax adjustments | 2,785 | (4,928 | ) | 23,340 | 1,828 | |||||||||||||||
Tax rate | 38.5 | % | 38.2 | % | 38.5 | % |
38.2 |
% |
||||||||||||
Tax adjustment | 904 | (2,064 | ) | 8,256 | (52 | ) | ||||||||||||||
Adjusted net income | $ | 8,142 | $ | 9,248 | $ | 29,212 | $ | 38,750 | ||||||||||||
Diluted weighted average shares outstanding | 48,391,409 | 54,056,539 | 48,368,365 | 56,728,807 | ||||||||||||||||
GAAP net income per share | $ | 0.13 | $ | 0.22 | $ | 0.29 | $ | 0.65 | ||||||||||||
Non-GAAP adjusted net income per share | $ | 0.17 | $ | 0.17 | $ | 0.60 | $ | 0.68 | ||||||||||||