ATLANTA--(BUSINESS WIRE)--Repay Holdings Corporation (NASDAQ: RPAY) (“REPAY” or the “Company”), a leading provider of vertically-integrated payment solutions, today reported financial results for its third quarter and nine months ended September 30, 2019.
“We are proud of our third quarter results, which included positive contributions from our TriSource acquisition, resulting in year-over-year growth in card payment volume and gross profit of 40% and 39%, respectively,” said John Morris, CEO of REPAY. “We are also thrilled to have recently entered the B2B payments space with the previously-announced acquisition of APS Payments.”
Three Months Ended September 30, 2019 Highlights
- Card payment volume was $2.6 billion, an increase of 40% over the third quarter of 2018
- Total revenue on a combined basis1 was $41.1 million, an increase of 27% over the third quarter of 2018
- Gross profit was $19.4 million, an increase of 39% over the third quarter of 2018
- Pro forma net loss1 was ($41.4) million, as compared to net income of $3.7 million in the third quarter 2018
- Adjusted EBITDA was $11.9 million, an increase of 29% over the third quarter of 2018
- Adjusted Net Income was $10.4 million, an increase of 49% over the third quarter of 2018
- Adjusted Net Income per share was $0.18
Nine Months Ended September 30, 2019 Highlights
- Card payment volume was $7.3 billion, an increase of 33% over the first three quarters of 2018
- Total revenue on a combined basis was $116.5 million, an increase of 21% over the first three quarters of 2018
- Gross profit was $54.4 million, an increase of 34% over the first three quarters of 2018
- Pro forma net loss was ($32.4) million, as compared to net income of $8.4 million over the first three quarters of 2018
- Adjusted EBITDA was $33.7 million, an increase of 24% over the first three quarters of 2018
- Adjusted Net Income was $27.1 million, an increase of 31% over the first three quarters of 2018
- Adjusted Net Income per share was $0.47
Gross profit represents total revenue less interchange and network fees and other costs of services. Adjusted EBITDA is a non-GAAP financial measure that represents net income (loss) adjusted for interest expense, tax expense, depreciation and amortization and certain other non-cash charges and non-recurring items. Adjusted Net Income is a non-GAAP financial measure that represents net income (loss) adjusted for amortization of acquisition-related intangibles and certain other non-cash charges and non-recurring items. Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the number of shares of Class A common stock outstanding (on as-converted basis) on September 30, 2019 (excluding certain shares that were subject to forfeiture on September 30, 2019). See “Non-GAAP Financial Measures” and the reconciliations of Adjusted EBITDA and Adjusted Net Income to their most comparable GAAP measure provided below for additional information.
____________________________
1 Please refer to “Basis of Presentation” below for an explanation of the presentation of this information.
Business Combination
The Company was formed upon closing of the merger (the “Business Combination”) of Hawk Parent Holdings LLC (together with Repay Holdings, LLC and its other subsidiaries, “Hawk Parent”) with a subsidiary of Thunder Bridge Acquisition, Ltd, (“Thunder Bridge”), a special purpose acquisition company, on July 11, 2019 (the “Closing Date”). On the Closing Date, Thunder Bridge changed its name to Repay Holdings Corporation.
Basis of Presentation
As a result of the Business Combination, the Company was identified as the acquirer for accounting purposes, and Hawk Parent, which owned the business conducted prior to the closing of the Business Combination, is the acquiree and accounting “Predecessor.” The Company is the “Successor” for periods after the Closing Date, which includes consolidation of the Hawk Parent business subsequent to the Closing Date. The Company’s financial statement presentation reflects the Hawk Parent business as the “Predecessor” for periods through the Closing Date. Where we discuss results for any period ended September 30, 2019, we are referring to the combined results of the Predecessor for the periods from either January 1, 2019 or July 1, 2019 through July 10, 2019 and the Successor for the period from the Closing Date through September 30, 2019. The combined basis of presentation reflects a simple arithmetic combination of the Predecessor and Successor periods. The acquisition was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of net assets acquired. As a result of the application of the acquisition method of accounting as of the effective time of the Business Combination, the financial statements for the Predecessor period and for the Successor period are presented on different bases. When information is noted as being “pro forma” in this press release, it means that the financial statements were adjusted to remove the effects of purchase accounting adjustments related to the Business Combination. The historical financial information of Thunder Bridge prior to the Business Combination has not been reflected in the Predecessor period financial statements.
Subsequent Events
On October 1, 2019, as required under the terms of the Business Combination, REPAY issued 3,750,000 additional Class A units in Hawk Parent as a result of the volume-weighted average trading price of REPAY’s Class A common stock exceeding $12.50 for twenty out of thirty consecutive trading days during the first twelve months following the closing of the Business Combination. Beginning on the six-month anniversary of the Business Combination, these Class A units in Hawk Parent may be exchanged for REPAY’s Class A common stock on a one-for-one basis. Also, as a result of the achievement of similar share price triggers, 1,482,500 shares of REPAY’s Class A common stock held by Thunder Bridge Acquisition, LLC were released from escrow on October 2, 2019 and are no longer subject to forfeiture.
On October 1, 2019, in connection with the post-closing adjustment mechanism for the Business Combination, 39,674 Class A units in Hawk Parent, the parent of the Predecessor, were cancelled and 20,326 Class A units in Hawk Parent were released from escrow and are no longer subject to forfeiture.
On October 1, 2019, the Company entered into a swap transaction with Regions Bank. On a quarterly basis, commencing on December 31, 2019 up to and including the termination date of July 11, 2024, the Company will make fixed payments on a beginning notional amount of $140,000,000. On a quarterly basis, commencing on December 31, 2019 up to and including the termination date of July 11, 2024, the counterparty will make floating rate payments based on the 3 month LIBOR on the beginning notional amount of $140,000,000.
On October 14, 2019, REPAY announced the acquisition of APS Payments for up to $60 million, which includes a $30 million performance-based earnout. The closing of the acquisition was financed with a combination of cash on hand and proceeds from borrowings under REPAY’s existing credit facility.
2019 Outlook
The addition of APS Payments is expected to contribute the following to the remainder of 2019:
- $500 million in card payment volume
- $3.5 million in total revenue
- $2.8 million in gross profit
- $1.5 million in Adjusted EBITDA
REPAY now expects the below financial results for full year 2019, which reflects expected contributions from APS Payments. The difference between the Previous Guidance and the Updated Guidance is solely related to the contributions from APS.
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Full Year 2019 Outlook |
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Previous Guidance |
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Updated Guidance |
Card Payment Volume |
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$9.6 - 9.75 billion |
|
$10.1 – 10.25 billion |
Total Revenue |
|
$157.0 - 162.0 million |
|
$160.5 – 165.5 million |
Gross Profit |
|
$74.0 - 76.0 million |
|
$76.8 – 78.8 million |
Adjusted EBITDA |
|
$45.3 - 46.8 million |
|
$46.8 – 48.3 million |
Revenue information for the full year 2019 outlook is presented in accordance with Accounting Standards Codification (“ASC”) 605. REPAY expects to adopt a new standard, ASC 606, when financial results for the full year ended December 31, 2019 are reported, and is continuing to evaluate the impact of that standard. In addition, REPAY does not provide quantitative reconciliation of forward-looking, non-GAAP financial measures such as forecasted 2019 Adjusted EBITDA to the most directly comparable GAAP financial measure because it is difficult to reliably predict or estimate the relevant components without unreasonable effort due to future uncertainties that may potentially have significant impact on such calculations, and providing them may imply a degree of precision that would be confusing or potentially misleading.
Conference Call
REPAY will host a conference call to discuss third quarter 2019 financial results today at 5:00 pm ET. Hosting the call will be John Morris, CEO, and Tim Murphy, CFO. The conference call can be accessed live over the phone by dialing (877) 407-3982, or for international callers (201) 493-6780. A replay will be available one hour after the call and can be accessed by dialing 844-512-2921 or (412) 317-6671 for international callers; the conference ID is 13695820. The call will be webcast live from REPAY’s investor relations website and the replay will be available at https://investors.repay.com/investor-relations.
Non-GAAP Financial Measures
This communication includes certain non-GAAP financial measures that REPAY’s management uses to evaluate its operating business, measure its performance and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure that represents net income prior to interest expense, tax expense, depreciation and amortization, as adjusted to add back certain non-cash and non-recurring charges, such as loss on extinguishment of debt, non-cash change in fair value of contingent consideration, share-based compensation charges, transaction expenses, management fees, legacy commission related charges, employee recruiting costs, loss on disposition of property and equipment, other taxes, strategic initiative related costs and other non-recurring charges. Adjusted Net Income is a non-GAAP financial measure that represents net income prior to amortization of acquisition-related intangibles, as adjusted to add back certain non-cash and non-recurring charges, such as loss on extinguishment of debt, non-cash change in fair value of contingent consideration, transaction expenses, share-based compensation expense, management fees, legacy commission related charges, employee recruiting costs, loss on disposition of property and equipment, strategic initiative related costs and other non-recurring charges. Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible amortization supplements GAAP financial measures because it allows for greater comparability of operating performance. Although we exclude amortization from acquisition-related intangibles from our non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation. Adjusted Net Income per share is a non-GAAP financial measure that represents Adjusted Net Income divided by the number of shares of Class A common stock outstanding (on as-converted basis) on September 30, 2019 (excluding certain shares that were subject to forfeiture on September 30, 2019). REPAY believes that Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share provide useful information to investors and others in understanding and evaluating its operating results in the same manner as management. However, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating profit, or any other operating performance measure calculated in accordance with GAAP. Using these non-GAAP financial measures to analyze REPAY’s business has material limitations because the calculations are based on the subjective determination of management regarding the nature and classification of events and circumstances that investors may find significant. In addition, although other companies in REPAY’s industry may report measures titled Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per share or similar measures, such non-GAAP financial measures may be calculated differently from how REPAY calculates its non-GAAP financial measures, which reduces their overall usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share alongside other financial performance measures, including net income and REPAY’s other financial results presented in accordance with GAAP. You should be aware of additional limitations with respect to Adjusted Net Income per share because the GAAP presentation of net loss per share is only reflected for the Successor period.
Forward-Looking Statements
This communication 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, REPAY’s plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “guidance,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, REPAY’s estimated future results, APS’s contributions, and the updated full year 2019 outlook. Such forward-looking statements are based upon the current beliefs and expectations of REPAY’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
In addition to factors previously disclosed in prior reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: a delay or failure to realize the expected benefits from the Thunder Bridge business combination; a delay or failure to integrate and realize the benefits of the TriSource acquisition and any difficulties associated with operating in the back-end processing markets in which REPAY does not have any experience; a delay or failure to integrate and realize the benefits of the APS Payments acquisition and any difficulties associated with marketing products and services in the B2B vertical market in which REPAY does not have any experience; changes in the payment processing market in which REPAY competes, including with respect to its competitive landscape, technology evolution or regulatory changes; changes in the vertical markets that REPAY targets; risks relating to REPAY’s relationships within the payment ecosystem; risk that REPAY may not be able to execute its growth strategies, including identifying and executing acquisitions; risks relating to data security; changes in accounting policies applicable to REPAY; and the risk that REPAY may not be able to develop and maintain effective internal controls.
Actual results, performance or achievements may differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond REPAY’s control. All information set forth herein speaks only as of the date hereof in the case of information about REPAY or the date of such information in the case of information from persons other than REPAY, and REPAY disclaims any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. Forecasts and estimates regarding REPAY’s industry and end markets are based on sources it believes to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
About REPAY
REPAY provides integrated payment processing solutions to verticals that have specific transaction processing needs. REPAY’s proprietary, integrated payment technology platform reduces the complexity of electronic payments for merchants, while enhancing the overall experience for consumers.
Consolidated Statement of Operations (Unaudited) |
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|
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Successor |
|
|
Predecessor |
||||||
(in $ thousands) |
|
July 11, 2019 through September 30, 2019 |
|
|
July 1, 2019 through July 10, 2019 |
|
January 1, 2019 through July 10, 2019 |
|
Three Months Ended September 30, 2018 |
|
Nine Months Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
Processing and service fees |
|
$24,609 |
|
|
$2,431 |
|
$49,401 |
|
$20,317 |
|
$60,785 |
Interchange and network fees |
|
12,546 |
|
|
1,476 |
|
29,989 |
|
11,975 |
|
35,370 |
Total Revenue |
|
$37,156 |
|
|
$3,907 |
|
$79,390 |
|
$32,292 |
|
$96,155 |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Interchange and network fees |
|
$12,546 |
|
|
$1,476 |
|
$29,989 |
|
$11,975 |
|
$35,370 |
Other costs of services |
|
7,051 |
|
|
565 |
|
12,574 |
|
6,332 |
|
20,302 |
Selling, general and administrative |
|
21,003 |
|
|
34,069 |
|
51,201 |
|
6,104 |
|
21,009 |
Depreciation and amortization |
|
10,703 |
|
|
333 |
|
6,223 |
|
2,666 |
|
7,580 |
Change in fair value of contingent
|
|
- |
|
|
- |
|
- |
|
- |
|
(1,000) |
Total operating expenses |
|
$51,302 |
|
|
$36,444 |
|
$99,987 |
|
$27,077 |
|
$83,261 |
Income (loss) from operations |
|
($14,147) |
|
|
($32,536) |
|
($20,597) |
|
$5,215 |
|
$12,894 |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
(2,686) |
|
|
(227) |
|
(3,145) |
|
(1,488) |
|
(4,501) |
Change in fair value of tax receivable liability |
|
(451) |
|
|
- |
|
- |
|
- |
|
- |
Other income (expenses) |
|
(1,316) |
|
|
- |
|
- |
|
- |
|
(1) |
Total other income (expenses) |
|
(4,453) |
|
|
(227) |
|
(3,145) |
|
(1,488) |
|
(4,502) |
Income (loss) before income tax
|
|
(18,599) |
|
|
(32,763) |
|
(23,743) |
|
3,727 |
|
8,392 |
Income tax benefit (expense) |
|
2,719 |
|
|
- |
|
- |
|
- |
|
- |
Net income (loss) |
|
($15,880) |
|
|
($32,763) |
|
($23,743) |
|
$3,727 |
|
$8,392 |
Net income (loss) attributable to
|
|
(7,399) |
|
|
- |
|
- |
|
- |
|
- |
Net income (loss) attributable to the
|
|
($8,481) |
|
|
($32,763) |
|
($23,743) |
|
$3,727 |
|
$8,392 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of Class
|
|
34,326,127 |
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|
|
|
|
|
|
|
|
Net income (loss) per Class A share
|
|
($0.25) |
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|
|
|
|
|
|
|
|
Consolidated Balance Sheets |
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|
Successor |
|
|
Predecessor |
(in $ thousands) |
|
September 30, 2019 (Unaudited) |
|
|
December 31, 2018 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
$45,494 |
|
|
$13,285 |
Accounts receivable |
|
12,636 |
|
|
5,979 |
Prepaid expenses and other |
|
4,076 |
|
|
817 |
Total current assets |
|
$62,206 |
|
|
$20,082 |
|
|
|
|
|
|
Property, plant and equipment, net |
|
$1,485 |
|
|
$1,247 |
Restricted cash |
|
11,556 |
|
|
9,977 |
Customer relationships, net of amortization |
|
234,444 |
|
|
62,529 |
Software, net of amortization |
|
65,523 |
|
|
5,171 |
Intangible assets, net of accumulated amortization |
|
23,677 |
|
|
523 |
Goodwill |
|
369,928 |
|
|
119,529 |
Total noncurrent assets |
|
$706,613 |
|
|
$198,976 |
Total assets |
|
$768,818 |
|
|
$219,058 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Accounts payable |
|
$8,742 |
|
|
$2,909 |
Accrued expenses |
|
18,638 |
|
|
12,838 |
Current maturities of long-term debt |
|
5,250 |
|
|
4,900 |
Current tax receivable agreement |
|
2,232 |
|
|
- |
Total current liabilities |
|
$34,862 |
|
|
$20,647 |
|
|
|
|
|
|
Long-term debt, net of current maturities |
|
$198,908 |
|
|
$85,815 |
Line of credit |
|
- |
|
|
3,500 |
Tax receivable agreement |
|
64,106 |
|
|
- |
Deferred tax liability |
|
2,858 |
|
|
- |
Oher liabilities |
|
17 |
|
|
17 |
Total noncurrent liabilities |
|
$265,889 |
|
|
$89,332 |
Total liabilities |
|
$300,751 |
|
|
$109,979 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Class A common stock, $0.0001 par value; 2,000,000,000 shares
|
|
4 |
|
|
- |
Class V common stock, $0.0001 par value; 1,000 shares authorized and
|
|
- |
|
|
- |
Additional paid-in capital |
|
300,343 |
|
|
- |
Accumulated deficit |
|
(46,138) |
|
|
- |
Total stockholders' equity |
|
$254,209 |
|
|
$109,078 |
|
|
|
|
|
|
Total Noncontrolling interests |
|
$213,858 |
|
|
$0 |
|
|
|
|
|
|
Total liabilities and equity |
|
$768,818 |
|
|
$219,058 |
Key Operating and Non-GAAP Financial Data
We believe that adjusting the key operating and non-GAAP measures for comparability between the Predecessor, Successor and Pro Forma periods is useful to the user of our financial statements.
The unaudited non-GAAP pro forma results of operations data for the three and nine month periods ended September 30, 2019 included in the discussion below are based on our historical financial statements, adjusted to remove the effects of purchase accounting adjustments related to the Business Combination. The pro forma results included herein have not been prepared in accordance with Article 11 of Regulation S-X.
Unless otherwise stated, all results compare pro forma third quarter and nine-month 2019 results to third quarter and nine-month 2018 results from continuing operations for the period ended September 30, respectively.
The following tables and related notes reconcile these Non-GAAP measures and the Pro Forma Measures to GAAP information for the three and nine month periods ended September 30, 2019 and 2018:
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|
Three months ended September 30, |
|
Nine months ended September 30, |
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(in $ thousands) |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Card payment volume |
|
$2,618,561 |
|
$1,874,247 |
|
40% |
|
$7,274,579 |
|
$5,463,627 |
|
33% |
Gross profit1 |
|
$19,425 |
|
$13,985 |
|
39% |
|
$54,386 |
|
$40,483 |
|
34% |
Adjusted EBITDA2 |
|
$11,910 |
|
$9,201 |
|
29% |
|
$33,695 |
|
$27,087 |
|
24% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Gross profit represents total revenue less interchange and network fees and other costs of services.
(2) Adjusted EBITDA is a non-GAAP financial measure that represents net income adjusted for interest expense, depreciation and amortization and certain other non-cash charges and non-recurring items. See “Non-GAAP Financial Measures” above and the reconciliation of Adjusted EBITDA to its most comparable GAAP measure below.
Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA For the three months ended September 30, 2019 and 2018 (Unaudited) |
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|
|
Successor |
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
(in $ thousands) |
|
July 11, 2019 through September 30, 2019 |
|
July 1, 2019 through July 10, 2019 |
|
|
Combined |
|
|
Adjustments(o) |
|
|
Pro Forma Three months ended September 30, 2019 |
|
|
Three months ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing and service fees |
|
$24,609 |
|
$2,431 |
|
|
$27,041 |
|
|
|
|
|
$27,041 |
|
|
$20,317 |
Interchange and network fees |
|
12,546 |
|
1,476 |
|
|
14,022 |
|
|
|
|
|
14,022 |
|
|
11,975 |
Total Revenue |
|
$37,156 |
|
$3,907 |
|
|
$41,063 |
|
|
|
|
|
$41,063 |
|
|
$32,292 |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interchange and network fees |
|
$12,546 |
|
$1,476 |
|
|
$14,022 |
|
|
|
|
|
$14,022 |
|
|
$11,975 |
Other costs of services |
|
7,051 |
|
565 |
|
|
7,616 |
|
|
|
|
|
7,616 |
|
|
6,332 |
Selling, general and administrative |
|
21,003 |
|
34,069 |
|
|
55,072 |
|
|
|
|
|
55,072 |
|
|
6,104 |
Depreciation and amortization |
|
10,703 |
|
333 |
|
|
11,036 |
|
|
(7,253) |
|
|
3,783 |
|
|
2,666 |
Change in fair value of contingent
|
|
- |
|
- |
|
|
- |
|
|
|
|
|
- |
|
|
- |
Total operating expenses |
|
$51,302 |
|
$36,444 |
|
|
$87,746 |
|
|
|
|
|
$80,493 |
|
|
$27,077 |
Income (loss) from operations |
|
($14,147) |
|
($32,536) |
|
|
($46,683) |
|
|
|
|
|
($39,430) |
|
|
$5,215 |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
(2,686) |
|
(227) |
|
|
(2,913) |
|
|
|
|
|
(2,913) |
|
|
(1,488) |
Change in fair value of tax receivable liability |
|
(451) |
|
- |
|
|
(451) |
|
|
|
|
|
(451) |
|
|
- |
Other income (expenses) |
|
(1,316) |
|
- |
|
|
(1,316) |
|
|
|
|
|
(1,316) |
|
|
- |
Total other income (expenses) |
|
(4,453) |
|
(227) |
|
|
(4,679) |
|
|
|
|
|
(4,679) |
|
|
(1,488) |
Income (loss) before income tax
|
|
(18,599) |
|
(32,763) |
|
|
(51,362) |
|
|
|
|
|
(44,109) |
|
|
3,727 |
Income tax benefit (expense) |
|
2,719 |
|
- |
|
|
2,719 |
|
|
|
|
|
2,719 |
|
|
- |
Net income (loss) |
|
($15,880) |
|
($32,763) |
|
|
($48,643) |
|
|
|
|
|
($41,390) |
|
|
$3,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
2,913 |
|
|
1,488 |
Depreciation and amortization(a) |
|
|
|
|
|
|
|
|
|
|
|
|
3,783 |
|
|
2,666 |
Income tax (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
(2,719) |
|
|
- |
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
($37,414) |
|
|
$7,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt (b) |
|
|
|
|
|
|
|
|
|
|
|
|
1,316 |
|
|
- |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
451 |
|
|
- |
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
10,409 |
|
|
199 |
Transaction expenses(f) |
|
|
|
|
|
|
|
|
|
|
|
|
35,017 |
|
|
995 |
Management Fees(g) |
|
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
100 |
Legacy commission related
|
|
|
|
|
|
|
|
|
|
|
|
|
1,877 |
|
|
- |
Employee recruiting costs(i) |
|
|
|
|
|
|
|
|
|
|
|
|
18 |
|
|
- |
Loss on disposition of property and
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
Other taxes(j) |
|
|
|
|
|
|
|
|
|
|
|
|
32 |
|
|
7 |
Strategic initiative costs(k) |
|
|
|
|
|
|
|
|
|
|
|
|
80 |
|
|
7 |
Other non-recurring charges(l) |
|
|
|
|
|
|
|
|
|
|
|
|
114 |
|
|
12 |
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
$11,910 |
|
|
$9,201 |
Reconciliations of GAAP Net Income to Non-GAAP Adjusted EBITDA For the nine months ended September 30, 2019 and 2018 (Unaudited) |
||||||||||||||||
|
|
Successor |
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
(in $ thousands) |
|
July 11, 2019 through September 30, 2019 |
|
January 1, 2019 through July 10, 2019 |
|
|
Combined |
|
|
Adjustments(o) |
|
|
Pro Forma Nine months ended September 30, 2019 |
|
|
Nine months ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing and service fees |
|
$24,609 |
|
$49,401 |
|
|
$74,010 |
|
|
|
|
|
$74,010 |
|
|
$60,785 |
Interchange and network fees |
|
12,546 |
|
29,989 |
|
|
42,535 |
|
|
|
|
|
42,535 |
|
|
35,370 |
Total Revenue |
|
$37,156 |
|
$79,390 |
|
|
$116,546 |
|
|
|
|
|
$116,546 |
|
|
$96,155 |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interchange and network fees |
|
$12,546 |
|
$29,989 |
|
|
$42,535 |
|
|
|
|
|
$42,535 |
|
|
$35,370 |
Other costs of services |
|
7,051 |
|
12,574 |
|
|
19,625 |
|
|
|
|
|
19,625 |
|
|
20,302 |
Selling, general and administrative |
|
21,003 |
|
51,201 |
|
|
72,204 |
|
|
|
|
|
72,204 |
|
|
21,009 |
Depreciation and amortization |
|
10,703 |
|
6,223 |
|
|
16,926 |
|
|
(7,253) |
|
|
9,673 |
|
|
7,580 |
Change in fair value of
|
|
- |
|
- |
|
|
- |
|
|
|
|
|
- |
|
|
(1,000) |
Total operating expenses |
|
$51,302 |
|
$99,987 |
|
|
$151,290 |
|
|
|
|
|
$144,036 |
|
|
$83,261 |
Income (loss) from operations |
|
($14,147) |
|
($20,597) |
|
|
($34,744) |
|
|
|
|
|
($27,491) |
|
|
$12,894 |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
(2,686) |
|
(3,145) |
|
|
(5,831) |
|
|
|
|
|
(5,831) |
|
|
(4,501) |
Change in fair value of tax receivable liability |
|
(451) |
|
- |
|
|
(451) |
|
|
|
|
|
(451) |
|
|
- |
Other income (expenses) |
|
(1,316) |
|
- |
|
|
(1,316) |
|
|
|
|
|
(1,316) |
|
|
(1) |
Total other income (expenses) |
|
(4,453) |
|
(3,145) |
|
|
(7,598) |
|
|
|
|
|
(7,598) |
|
|
(4,502) |
Income (loss) before income
|
|
(18,599) |
|
(23,743) |
|
|
(42,342) |
|
|
|
|
|
(35,089) |
|
|
8,392 |
Income tax benefit (expense) |
|
2,719 |
|
- |
|
|
2,719 |
|
|
|
|
|
2,719 |
|
|
- |
Net income (loss) |
|
($15,880) |
|
($23,743) |
|
|
($39,623) |
|
|
|
|
|
($32,369) |
|
|
$8,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
5,831 |
|
|
4,501 |
Depreciation and amortization(a) |
|
|
|
|
|
|
|
|
|
|
|
|
9,673 |
|
|
7,580 |
Income tax (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
(2,719) |
|
|
0 |
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
($19,585) |
|
|
$20,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316 |
|
|
1 |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
(1,000) |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
451 |
|
|
- |
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
10,660 |
|
|
630 |
Transaction expenses(f) |
|
|
|
|
|
|
|
|
|
|
|
|
37,513 |
|
|
2,155 |
Management Fees(g) |
|
|
|
|
|
|
|
|
|
|
|
|
211 |
|
|
300 |
Legacy commission related
|
|
|
|
|
|
|
|
|
|
|
|
|
2,427 |
|
|
4,168 |
Employee recruiting costs(i) |
|
|
|
|
|
|
|
|
|
|
|
|
33 |
|
|
146 |
Loss on disposition of property
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
Other taxes(j) |
|
|
|
|
|
|
|
|
|
|
|
|
259 |
|
|
201 |
Strategic initiative costs(k) |
|
|
|
|
|
|
|
|
|
|
|
|
296 |
|
|
79 |
Other non-recurring charges(l) |
|
|
|
|
|
|
|
|
|
|
|
|
114 |
|
|
(67) |
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
$33,695 |
|
|
$27,087 |
Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income For the three months ended September 30, 2019 and 2018 (Unaudited) |
||||||||||||||||
|
|
Successor |
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
(in $ thousands) |
|
July 11, 2019 through September 30, 2019 |
|
July 1, 2019 through July 10, 2019 |
|
|
Combined |
|
|
Adjustments(o) |
|
|
Pro Forma three months ended September 30, 2019 |
|
|
Three months ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing and service fees |
|
$24,609 |
|
$2,431 |
|
|
$27,041 |
|
|
|
|
|
$27,041 |
|
|
$20,317 |
Interchange and network fees |
|
12,546 |
|
1,476 |
|
|
14,022 |
|
|
|
|
|
14,022 |
|
|
11,975 |
Total Revenue |
|
$37,156 |
|
$3,907 |
|
|
$41,063 |
|
|
|
|
|
$41,063 |
|
|
$32,292 |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interchange and network fees |
|
$12,546 |
|
$1,476 |
|
|
$14,022 |
|
|
|
|
|
$14,022 |
|
|
$11,975 |
Other costs of services |
|
7,051 |
|
565 |
|
|
7,616 |
|
|
|
|
|
7,616 |
|
|
6,332 |
Selling, general and
|
|
21,003 |
|
34,069 |
|
|
55,072 |
|
|
|
|
|
55,072 |
|
|
6,104 |
Depreciation and amortization |
|
10,703 |
|
333 |
|
|
11,036 |
|
|
(7,253) |
|
|
3,783 |
|
|
2,666 |
Change in fair value of
|
|
- |
|
- |
|
|
- |
|
|
|
|
|
- |
|
|
- |
Total operating expenses |
|
$51,302 |
|
$36,444 |
|
|
$87,746 |
|
|
|
|
|
$80,493 |
|
|
$27,077 |
Income (loss) from operations |
|
($14,147) |
|
($32,536) |
|
|
($46,683) |
|
|
|
|
|
($39,430) |
|
|
$5,215 |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
(2,686) |
|
(227) |
|
|
(2,913) |
|
|
|
|
|
(2,913) |
|
|
(1,488) |
Change in fair value of tax receivable liability |
|
(451) |
|
- |
|
|
(451) |
|
|
|
|
|
(451) |
|
|
- |
Other income (expenses) |
|
(1,316) |
|
- |
|
|
(1,316) |
|
|
|
|
|
(1,316) |
|
|
- |
Total other income (expenses) |
|
(4,453) |
|
(227) |
|
|
(4,679) |
|
|
|
|
|
(4,679) |
|
|
(1,488) |
Income (loss) before income
|
|
(18,599) |
|
(32,763) |
|
|
(51,362) |
|
|
|
|
|
(44,109) |
|
|
3,727 |
Income tax benefit (expense) |
|
2,719 |
|
- |
|
|
2,719 |
|
|
|
|
|
2,719 |
|
|
- |
Net income (loss) |
|
($15,880) |
|
($32,763) |
|
|
($48,643) |
|
|
|
|
|
($41,390) |
|
|
$3,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
2,525 |
|
|
1,980 |
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316 |
|
|
- |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
451 |
|
|
- |
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
10,409 |
|
|
199 |
Transaction expenses(f) |
|
|
|
|
|
|
|
|
|
|
|
|
35,017 |
|
|
995 |
Management Fees(g) |
|
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
100 |
Legacy commission related
|
|
|
|
|
|
|
|
|
|
|
|
|
1,877 |
|
|
- |
Employee recruiting costs(i) |
|
|
|
|
|
|
|
|
|
|
|
|
18 |
|
|
- |
Loss on disposition of property
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
Strategic initiative costs(k) |
|
|
|
|
|
|
|
|
|
|
|
|
80 |
|
|
7 |
Other non-recurring charges(l) |
|
|
|
|
|
|
|
|
|
|
|
|
114 |
|
|
12 |
Adjusted Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
$10,428 |
|
|
$7,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of Class A common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
57,531,359 |
|
|
|
Adjusted Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
$0.18 |
|
|
|
Reconciliations of GAAP Net Income to Non-GAAP Adjusted Net Income For the nine months ended September 30, 2019 and 2018 (Unaudited) |
||||||||||||||||
|
|
Successor |
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
(in $ thousands) |
|
July 11, 2019 through September 30, 2019 |
|
January 1, 2019 through July 10, 2019 |
|
|
Combined |
|
|
Adjustments(o) |
|
|
Pro Forma nine months ended September 30, 2019 |
|
|
Nine months ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing and service fees |
|
$24,609 |
|
$49,401 |
|
|
$74,010 |
|
|
|
|
|
$74,010 |
|
|
$60,785 |
Interchange and network fees |
|
12,546 |
|
29,989 |
|
|
42,535 |
|
|
|
|
|
42,535 |
|
|
35,370 |
Total Revenue |
|
$37,156 |
|
$79,390 |
|
|
$116,546 |
|
|
|
|
|
$116,546 |
|
|
$96,155 |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interchange and network fees |
|
$12,546 |
|
$29,989 |
|
|
$42,535 |
|
|
|
|
|
$42,535 |
|
|
$35,370 |
Other costs of services |
|
7,051 |
|
12,574 |
|
|
19,625 |
|
|
|
|
|
19,625 |
|
|
20,302 |
Selling, general and administrative |
|
21,003 |
|
51,201 |
|
|
72,204 |
|
|
|
|
|
72,204 |
|
|
21,009 |
Depreciation and amortization |
|
10,703 |
|
6,223 |
|
|
16,926 |
|
|
(7,253) |
|
|
9,673 |
|
|
7,580 |
Change in fair value of
|
|
- |
|
- |
|
|
- |
|
|
|
|
|
- |
|
|
(1,000) |
Total operating expenses |
|
$51,302 |
|
$99,987 |
|
|
$151,290 |
|
|
|
|
|
$144,036 |
|
|
$83,261 |
Income (loss) from operations |
|
($14,147) |
|
($20,597) |
|
|
($34,744) |
|
|
|
|
|
($27,491) |
|
|
$12,894 |
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
(2,686) |
|
(3,145) |
|
|
(5,831) |
|
|
|
|
|
(5,831) |
|
|
(4,501) |
Change in fair value of tax
|
|
(451) |
|
- |
|
|
(451) |
|
|
|
|
|
(451) |
|
|
- |
Other income (expenses) |
|
(1,316) |
|
- |
|
|
(1,316) |
|
|
|
|
|
(1,316) |
|
|
(1) |
Total other income (expenses) |
|
(4,453) |
|
(3,145) |
|
|
(7,598) |
|
|
|
|
|
(7,598) |
|
|
(4,502) |
Income (loss) before income
|
|
(18,599) |
|
(23,743) |
|
|
(42,342) |
|
|
|
|
|
(35,089) |
|
|
8,392 |
Income tax benefit (expense) |
|
2,719 |
|
- |
|
|
2,719 |
|
|
|
|
|
2,719 |
|
|
- |
Net income (loss) |
|
($15,880) |
|
($23,743) |
|
|
($39,623) |
|
|
|
|
|
($32,369) |
|
|
$8,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
6,485 |
|
|
5,939 |
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316 |
|
|
1 |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
(1,000) |
Non-cash change in fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
451 |
|
|
- |
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
10,660 |
|
|
630 |
Transaction expenses(f) |
|
|
|
|
|
|
|
|
|
|
|
|
37,513 |
|
|
2,155 |
Management Fees(g) |
|
|
|
|
|
|
|
|
|
|
|
|
211 |
|
|
300 |
Legacy commission related charges(h) |
|
|
|
|
|
|
|
|
|
|
|
|
2,427 |
|
|
4,168 |
Employee recruiting costs(i) |
|
|
|
|
|
|
|
|
|
|
|
|
33 |
|
|
146 |
Loss on disposition of property
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
Strategic initiative costs(k) |
|
|
|
|
|
|
|
|
|
|
|
|
296 |
|
|
79 |
Other non-recurring charges(l) |
|
|
|
|
|
|
|
|
|
|
|
|
114 |
|
|
(67) |
Adjusted Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
$27,136 |
|
|
$20,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of Class A common stock outstanding (on an as-converted basis)(n) |
|
|
|
|
|
|
|
|
|
|
|
|
57,531,359 |
|
|
|
Adjusted Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
$0.47 |
|
|
|
(a) See footnote (m) for details on our amortization and depreciation expenses.
(b) Reflects write-offs of debt issuance costs relating to Hawk Parent’s term loans and prepayment penalties relating to its previous debt facilities.
(c) Reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the most recent balance sheet date.
(d) Reflects the changes in management’s estimates of the fair value of the liability relating to the Tax Receivable Agreement
(e) Represents compensation expense associated with Hawk Parent’s equity compensation plans, totaling $908,977 in the Predecessor period from January 1, 2019 to July 10, 2019 inclusive of charges from accelerated vesting due to a change of control triggered by the Business Combination, and $9,750,821 as a result of new grants made in the Successor period.
(f) Primarily consists of (i) during the three and nine months ended September 30, 2019, professional service fees and other costs in connection with the Business Combination, the acquisition of TriSource Solutions, and the subsequently announced acquisition of APS Payments, and (ii) during the three and nine months ended September 30, 2018, additional transaction related expenses in connection with the acquisitions of PaidSuite, Inc. and PaidMD, LLC (together, “PaidSuite”) and Paymaxx Pro, LLC (“Paymaxx”), which transactions closed in 2017.
(g) Reflects management fees paid to Corsair Investments, L.P. pursuant to the management agreement, which terminated upon the completion of the Business Combination.
(h) Represents payments made to certain employees in connection with significant restructuring of their commission structures. These payments represented commission structure changes which are not in the ordinary course of business.
(i) Represents payments made to third-party recruiters in connection with a significant expansion of our personnel, which REPAY expects will become more moderate in subsequent periods.
(j) Reflects franchise taxes and other non-income based taxes.
(k) Consulting fees relating to REPAY’s processing services and other operational improvements that were not in the ordinary course, in the aggregate amount of $124,000, and $55,000 as well as one-time fees relating to special projects for new market expansion that are not anticipated to continue in the ordinary course of business are reflected in the nine months ended September 30, 2019 and 2018, respectively. Additionally, one-time expenses related to the creation of a new entity in connection with equity arrangements for the members of Hawk Parent in connection with the Business Combination are reflected in the nine months ended September 30, 2019.
(l) For the nine months ended September 30, 2018 reflects reversal of adjustments over the prior and current periods made for legal expenses incurred related to a dispute with a former customer, for which we were reimbursed in the current period as a result of its settlement. For the three months ended September 30, 2018 and the nine months ended September 30, 2019, reflects expenses incurred related to other one-time legal and compliance matters. Additionally, for the three months ended September 30, 2019 reflects a one-time credit issued to a customer which was not in the ordinary course of business.
(m) For the three and nine months ended September 30, 2018, reflects amortization of customer relationships intangibles acquired through Hawk Parent’s acquisitions of PaidSuite and Paymaxx during the year ended December 31, 2017 and the recapitalization transaction in 2016, through which Hawk Parent was formed in connection with the acquisition of a majority interest in Repay Holdings, LLC by certain investment funds sponsored by, or affiliated with, Corsair Capital LLC. For the three and nine months ended September 30, 2019 reflects amortization of the customer relationships intangibles described previously, as well as customer relationships, non-compete agreement, software, and channel relationship intangibles acquired through the Business Combination, and customer relationships, non compete agreement, and software intangibles acquired through Repay Holdings, LLC’s acquisition of TriSource Solutions, LLC. This adjustment excludes the amortization of other intangible assets which were acquired in the regular course of business, such as capitalized internally developed software and purchased software. See additional information below for an analysis of our amortization expenses:
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||
(in $ thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Acquisition-related intangibles |
|
$2,525 |
|
$1,980 |
|
$6,485 |
|
$5,939 |
Software |
|
1,064 |
|
563 |
|
2,698 |
|
1,327 |
Reseller buyouts |
|
15 |
|
15 |
|
44 |
|
43 |
Amortization |
|
$3,604 |
|
$2,557 |
|
$9,226 |
|
$7,310 |
Depreciation |
|
179 |
|
109 |
|
446 |
|
271 |
Total Depreciation and amortization1 |
|
$3,783 |
|
$2,666 |
|
$9,673 |
|
$7,580 |
- Adjusted Net Income is adjusted to exclude amortization of all acquisition-related intangibles as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustments in the reconciliation of net income to Adjusted Net Income presented above). Management believes that the adjustment of acquisition-related intangible amortization supplements GAAP financial measures because it allows for greater comparability of operating performance. Although REPAY excludes amortization from acquisition-related intangibles from our non-GAAP expenses, management believes that it is important for investors to understand that such intangibles were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangibles that relate to past acquisitions will recur in future periods until such intangibles have been fully amortized. Any future acquisitions may result in the amortization of additional intangibles.
(n) Represents the total number of outstanding shares of Class A common stock on September 30, 2019 and not otherwise subject to vesting or forfeiture restrictions on such date, together with the total number of outstanding shares of Class A common issuable upon exchange of the total number of outstanding Class A units in Hawk Parent on September 30, 2019 (without regard to the restriction on exchanges prior to the six-month anniversary of the Business Combination). This amount does not take into the issuances, releases and cancellations of shares and units described in “Subsequent Events” above.
(o) Adjustment for incremental depreciation and amortization recorded due to fair-value adjustments under ASC 805 in the Successor Period.