i3 Verticals(US:IIIV)2025-02-07 21:17Financial Position - As of December 31, 2024, the company had $85.6 million in cash and cash equivalents and $450.0 million available under its 2023 Senior Secured Credit Facility, maintaining compliance with financial covenants with a consolidated interest coverage ratio of 3.7x and total leverage ratio of 0.1x[248]. - Cash and cash equivalents as of December 31, 2024, were $85.6 million, with available borrowing capacity of $450.0 million under the 2023 Senior Secured Credit Facility[281]. - The company expects cash flow from operations and available borrowing capacity to be sufficient to fund cash needs for at least the next twelve months[282]. - As of December 31, 2024, total material cash requirements amount to $41.975 million, with $31.253 million due within one year[309]. - The 2023 Senior Secured Credit Facility provides for aggregate commitments of $450 million in the form of a senior secured revolving credit facility[292]. - The 2023 Senior Secured Credit Facility consists of a $450 million revolving credit facility, with no borrowings outstanding as of December 31, 2024[323]. - The company is in compliance with financial covenants, maintaining a minimum consolidated interest coverage ratio of 3.0 to 1.0 and a maximum total leverage ratio of 5.0 to 1.0[323]. Revenue and Growth - Annualized recurring revenue (ARR) from continuing operations for the three months ended December 31, 2024, was $193.3 million, an 8% increase from $179.6 million in the same period of 2023[264]. - Revenue increased by $6.6 million, or 12.1%, to $61.7 million for the three months ended December 31, 2024, compared to $55.1 million for the same period in 2023[268]. - Revenue within the Public Sector increased by $5.3 million, or 12.2%, to $48.8 million for the three months ended December 31, 2024[269]. - Revenue within Healthcare increased by $1.6 million, or 13.7%, to $13.2 million for the three months ended December 31, 2024[270]. Profitability - Net income attributable to i3 Verticals, Inc. was $2.1 million for the three months ended December 31, 2024, compared to $1.1 million for the same period in 2023, representing an increase of 87.2%[267]. - The company's net income increased from $1.5 million for the three months ended December 31, 2023, to $3.1 million for the same period in 2024[288]. - Adjusted EBITDA margin for the public sector segment was 39% for the three months ended December 31, 2024, compared to 40% for the same period in 2023[265]. - Adjusted EBITDA margin for the healthcare segment increased to 28% for the three months ended December 31, 2024, from 24% for the same period in 2023[265]. Expenses and Cash Flow - Interest expense decreased by $6.0 million, or 89.8%, to $0.7 million for the three months ended December 31, 2024, from $6.7 million for the same period in 2023[275]. - Other income was $1.8 million for the three months ended December 31, 2024, compared to other expense of $0.1 million for the same period in 2023[276]. - Net cash provided by operating activities decreased by $2.9 million to $11.5 million for the three months ended December 31, 2024, compared to $14.4 million for the same period in 2023[288]. - Net cash used in investing activities decreased by $5.8 million to $1.4 million for the three months ended December 31, 2024, from $7.2 million for the same period in 2023[289]. - Net cash used in financing activities increased by $1.9 million to $10.5 million for the three months ended December 31, 2024, compared to $8.6 million for the same period in 2023[290]. Strategic Initiatives - The company completed the sale of its Merchant Services Business for approximately $438 million on September 20, 2024, which included the equity interests of certain subsidiaries and associated proprietary technology[249]. - The company emphasizes a disciplined approach to acquisitions as a core component of its growth strategy, enhancing its proprietary payment facilitator platform and software solutions[250]. - The company has reclassified certain expenses to align with its new business model following the disposal of the Merchant Services Business, impacting the presentation of costs in its financial statements[255][256]. - The company anticipates using net proceeds from the sale of its Merchant Services Business for general corporate purposes, including share repurchases[284]. Risks and Challenges - Economic uncertainties, including inflation and elevated interest rates, may impact the company's financial results, although the extent of this impact is difficult to predict[247]. - The company faces various risks, including cybersecurity threats, competition, and regulatory challenges, which could affect its ability to achieve its strategic goals[242]. Share Repurchase and Debt - The company has a share repurchase program authorized for up to $50.0 million of Class A common stock, set to expire on August 8, 2025[313]. - During the three months ended December 31, 2024, the company repurchased 496,785 shares of Class A Common Stock at an average price of $22.49[315]. - The company paid $87.4 million to repurchase $90.8 million in aggregate principal amount of its Exchangeable Notes on January 18, 2024[307]. - As of December 31, 2024, $26.2 million of the original aggregate principal amount of $138.0 million of Exchangeable Notes was outstanding[306][308]. - The total amount due under the Tax Receivable Agreement as of December 31, 2024, is $39.2 million, with expected payments ranging from $0 to $9.9 million per year over the next 22 years[317]. Other Information - A 10% change in foreign currency exchange rates would not have had a material impact on the company's consolidated results for the three months ended December 31, 2024[324]. - The company utilizes a Monte Carlo simulation to assess the fair value of contingent consideration related to acquisitions[311].