Priority Technology Holdings, Inc. · NASDAQ:PRTH
Priority Technology — Q4 2021 Earnings Presentation
24 slides from Priority Technology's earnings presentation, Mar 17, 2022
Slide 1: Supplemental Slides: Fourth Quarter 2021 Earnings Call
PRIORITY TECHNOLOGY HOLDINGS Priority (Nasdaq: PRTH) Supplemental Slides: Fourth Quarter 2021 Earnings Call March 17, 2022
Slide 2: Disclaimer
DISCLAIMER Important Notice Regarding Forward-Looking Statements and Non-GAAP Measures This presentation 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 financia
Slide 3: Priority – The Payments Powerhouse
PRIORITY – THE PAYMENTS POWERHOUSE PRIORITY OVERVIEW PRIORITY AT A GLANCE ■ Priority Technology Holdings, Inc. (NASDAQ:PRTH), is a payments technology REVENUE ADJUSTED EBITDA 65% of In Millions In Millions Gross Profit company that leverages a purpose-built platform to enable clients to collect, sto
Slide 4: Strong Financial Performance with Peer Valuation Discount
STRONG FINANCIAL PERFORMANCE with PEER VALUATION DISCOUNT ENTERPRISE VALUE MULTIPLE 1 PRTH KEY 2021 PERFORMANCE METRICS 3 ■ Revenue CAGR2 : 18% ■ Adj. EBITDA CAGR2 : 31% ■ Adj. EBITDA as % of Gross Profit: 62% ■ Gross Profit Margin: 30.1% PRIORITY TECHNOLOGY HOLDINGS ■ Free Cash Flow Conversion4 ~55
Slide 5: Priority
PRIORITY MISSION: Build innovative payment solutions that collect, store & send money to power modern commerce Direct | ISV | Reseller Direct | ISV | Reseller Direct | ISV SMB B 2B E NT E RP RIS E PAYMENTS PAYMENTS PAYMENTS MX Merchant MX Connect CPX FI’s (ACH.com) CFTPay CFTConnect e|tab LandlordSt
Slide 6: Passport Architecture
PA S S P O R T A R C H I T EC T U R E SMB B2B ENTERPRISE PAYMENTS PAYMENTS PAYMENTS SIMPLE Choose Your Own Adventure… ⎻ Simple APIs that are Functionally Rich PASSPORT APIs ⎻ Component Design Allows for Configuration at Level You Want ⎻ Pick & Choose Services You Need SERVICES MERCHANT ACQUIRING TRE
Slide 7: MX Connect
MX™ CONNECT SMB PAYMENTS Enterprise Operating System Monetizing Merchant Networks and Driving Operational Efficiency 1,250+ PARTNER / RESELLER Overview ACCOUNTS MX™ Connect is Priority’s powerful reseller CRM and business operating system for partners, powered through web and mobile applications • S
Slide 8: MX Merchant Suite
MX™ MERCHANT SUITE 240K+ SMB PAYMENTS MERCHCANT ACCOUNTS The MX™ Merchant platform offers full-service payment processing and payment-enabled solutions for B2C transactions Overview 666M+ MX™ Merchant Suite provides core processing and business solutions to SMB ANNUAL TOTAL clients, which help bette
Slide 9: Commercial Payments Exchange (CPX)
C o m m e rc i a l Pay m e n t s E xc h a n ge ( C PX ) 75K B2B PAYMENTS SUPPLIERS ENROLLED CPX provides market-leading A/P automation solutions to corporations, software partners and industry leading financial institutions Overview $26B CPX offers a robust suite of payments solutions which helps to
Slide 10: Enterprise Payments: Passport Platform Solutions
E N T E R P R I S E PAY M E N T S P R I O R I T Y VA L U E PROPOSITION PASSPORT PLATFORM SOLUTIONS • Passport provides a simple and integrated banking and payments infrastructure for the merchants’ ecosystem. It features banking service APIs and a complete, end-to-end solution to collect, store and
Slide 11: Fourth Quarter 2021 Highlights
Fourth Quarter 2021 Highlights • Revenue of $144.0 million increased 35.7% from $106.1 million in Q4 2020 • Gross profit of $48.7 million increased 49.8% from $32.5 million in Q4 2020 • Gross profit margin of 33.8% increased 320 basis points from 30.6% in Q4 2020 • Operating income of $12.9 million
Slide 12: Revenue
Revenue SMB Revenue of $121.5 million increased 19.7% from $101.5 million • SMB revenue key growth drivers included: ➢ Bankcard Volume of $13.848 billion increased $2.777 billion, or 25.1%, from $11.071 billion ➢ Bankcard Transactions of 147.1 million increased 26.8 million, or 22.3%, from 120.3 mil
Slide 13: Revenue
Revenue B2B Revenue of $5.4 million increased 38.5% from $3.9 million Enterprise Revenue of $17.1 million increased $16.4 million from $0.7 million • B2B revenue key growth drivers included: ➢ CPX increased 73.3% to $2.6 million from $1.5 million driven by volume and customer growth ➢ Managed Servic
Slide 14: Gross Profit
Gross Profit Gross Profit of $48.7 million increased 49.8% from $32.5 million • SMB gross profit of $30.5 million increased 0.7% from $30.3 million in Q4 2020 ➢ Specialized Merchant Acquiring (SMA) gross profit of $1.5 million declined $5.8 million from $7.3 million in Q4 2020 due to a temporary pul
Slide 15: Gross Profit Margin
Gross Profit Margin Gross Profit Margin of 33.8% increased 320 basis points from 30.6% • SMB gross profit margin decline was driven by the temporary pullback in SMA • Enterprise gross profit margin overcame the SMB decline and drove overall margin expansion PRIORITY TECHNOLOGY HOLDINGS 15
Slide 16: Other Operating Expenses
Other Operating Expenses Other Operating Expenses of $35.8 million increased 36.6% from $26.2 million • Salaries and Benefits of $12.0 million increased 22.4% from $9.8 million in Q4 2020 ➢ Growth driven by Finxera acquisition and headcount growth • SG&A of $6.2 million decreased 4.6% from $6.5 mill
Slide 17: Operating Income
Operating Income Operating Income of $12.9 million increased 108.1% from $6.2 million • SMB operating income of $10.5 million decreased $2.1 million from $12.6 million in Q4 2020 ➢ Specialized Merchant Acquiring (SMA) gross profit decline $5.8 million ➢ SMB operating income increased $3.7 million, e
Slide 18: Adjusted EBITDA
Adjusted EBITDA Strong Adjusted EBITDA Growth in Q4 and Full Year • Q4 Adjusted EBITDA of $32.9 million increased 80.8% from $18.2 million • Full Year Adjusted EBITDA of $96.3 million increased 37.0% from $70.3 million (dollars in millions) EBITDA Walk 2021 2020 Q1 Q2 Q3 Q4 Year Q4 Year Consolidated
Slide 19: Other Income (Expense)
Other Income (Expense) Components of Q4 and Full Year 2021 and 2020 Other Income (Expense) • Other income of $7.8 million in Q4 2021 includes a $7.6 million net gain on disposition of an investment Fourth Quarter YTD 2021 2020 2021 2020 (dollars in Millions) Other Income (Expense): Debt extinguishme
Slide 20: Interest Expense
Interest Expense Components of Q4 and Full Year 2021 and 2020 Interest Expense • Interest expense of $11.9 million increased $2.5 million from $9.4 million in Q4 2020 ➢ Total outstanding debt of $631.9 million at December 31, 2021 increased $249.9 million from $382.0 million at December 31, 2020 due
Slide 21: Outstanding Debt Walk
Outstanding Debt Walk Declining Debt Balances • Total Debt of $631.9 million decreased $16.6 million from $648.5 million at September 30, 2021 ➢ Net Debt of $611.6 million decreased by $19.9 million from $631.5 million at September 30, 2021 Q4 2021 Q3 2021 Change Debt: Long-term portion, net $604.1
Slide 22: Senior Preferred Stock Walk
Senior Preferred Stock Walk Senior Preferred Stock of $210.2 million, Net of $23.5 million of Unaccreted Discounts and Issuance Costs • Fourth quarter and full year dividends and accretion is as follows: (dollars in millions) Q4 Year Dividend: Payment-in-Kind $4.0 $8.7 Cash 3.4 7.5 7.4 16.2 Accretio
Slide 23: 2022 Financial Guidance
2022 Financial Guidance • The Company’s outlook for full year 2022 is follows: ➢ Revenue is forecast to range between $650 to $665 million, a growth rate of 26% to 29%, and ➢ Adjusted EBITDA is forecast to range between $145 to $150 million, a growth rate of 51% to 56% o EBITDA is forecast to streng
Slide 24: Built to Power Modern Commerce
BUILT TO POWER MODERN COMMERCE ■ Built for the Future of Payments – Large Global Market Opportunity ■ Scalable, Innovative Technology Platform – Low Capital Spending Needs ■ Strong Revenue Growth & Significant Operating Leverage ■ Diversified Payment Revenue Sources Balanced with Countercyclical and
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