Repay (RPAY) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements for Repay Holdings Corporation as of June 30, 2022, including balance sheets, statements of operations, comprehensive income, changes in equity, and cash flows Consolidated Balance Sheets As of June 30, 2022, total assets decreased slightly to $1.64 billion from $1.69 billion at year-end 2021, driven by reductions in intangible assets and tax receivable liability, while total equity increased to $930.2 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $1,641,281 | $1,685,839 | | Cash and cash equivalents | $60,375 | $50,049 | | Intangible assets, net | $535,796 | $577,694 | | Goodwill | $827,802 | $824,082 | | Total Liabilities | $711,067 | $772,803 | | Long-term debt | $449,896 | $448,485 | | Tax receivable agreement | $201,924 | $245,828 | | Total Equity | $930,215 | $913,036 | Consolidated Statements of Operations Revenue for Q2 2022 grew 39.3% to $67.4 million, and for the six-month period, revenue increased 40.7% to $135.0 million, resulting in a net income of $11.5 million primarily due to a $44.1 million positive change in the fair value of the tax receivable liability Statement of Operations Summary (in thousands) | Metric | Q2 2022 | Q2 2021 | YoY Change | H1 2022 | H1 2021 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $67,435 | $48,412 | +39.3% | $134,999 | $95,932 | +40.7% | | Loss from operations | ($16,567) | ($12,330) | -34.4% | ($23,475) | ($21,119) | -11.2% | | Net Income (Loss) | ($1,353) | ($13,350) | +89.9% | $11,534 | ($31,331) | +136.8% | | Net Income (Loss) attributable to Company | $9 | ($12,269) | +100.1% | $13,663 | ($28,063) | +148.7% | | Diluted EPS | $0.00 | ($0.15) | N/A | $0.12 | ($0.36) | N/A | Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $27.1 million for the six months ended June 30, 2022, while net cash used in investing activities was $16.6 million and financing activities used $7.2 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $27,061 | $16,867 | | Net cash used in investing activities | ($16,649) | ($286,510) | | Net cash (used in) provided by financing activities | ($7,222) | $303,676 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's performance, highlighting a 34% year-over-year increase in card payment volume to $6.2 billion in Q2 2022, strong revenue growth, and robust liquidity Results of Operations Revenue for Q2 2022 increased by $19.0 million (39.3%) to $67.4 million, with acquisitions contributing approximately $14.2 million, while expenses rose due to acquisition-related costs and increased compensation - Total card payment volume grew approximately 34% to $6.2 billion for the three months ended June 30, 2022, compared to the same period in 2021[116] - For Q2 2022, incremental revenues of approximately $14.2 million are attributable to the acquisitions of BillingTree, Kontrol and Payix[127] - Selling, general and administrative expenses increased by $9.6 million (32.5%) in Q2 2022, primarily due to a $6.1 million increase in compensation expenses and a $1.9 million increase in software and technological services expenses related to integrating acquired businesses[129] Non-GAAP Financial Measures The company reported strong growth in non-GAAP metrics, with Q2 2022 Adjusted EBITDA increasing 35.5% to $27.6 million and Adjusted Net Income growing 15.0% to $16.1 million, driven by organic growth and acquisitions Non-GAAP Performance Summary (in millions) | Metric | Q2 2022 | Q2 2021 | YoY Change | H1 2022 | H1 2021 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $27.6 | $20.4 | +35.5% | $57.0 | $40.9 | +39.4% | | Adjusted Net Income | $16.1 | $14.0 | +15.0% | $34.5 | $29.1 | +18.6% | - Adjusted Net Income per share was $0.17 for Q2 2022, compared to $0.16 in Q2 2021[161] Liquidity and Capital Resources As of June 30, 2022, the company maintained a solid liquidity position with $60.4 million in cash and cash equivalents and $165.0 million available under its Amended Credit Agreement, alongside a $50 million share repurchase program - The company's liquidity as of June 30, 2022, included $60.4 million of cash and cash equivalents and $165.0 million of available borrowing capacity[173] - A $50 million share repurchase program was approved on May 16, 2022, under which 100,803 shares were repurchased for approximately $1.15 million during Q2 2022[176] - Total outstanding debt as of June 30, 2022, consisted of $440.0 million in 0.00% Convertible Senior Notes due 2026 and $20.0 million drawn on the revolving credit facility[83][188][189] Quantitative and Qualitative Disclosures About Market Risk The company identifies interest rate risk as its primary market risk due to variable-rate debt, noting the upcoming transition away from LIBOR, while inflation and foreign currency risks are not currently significant - The company is exposed to market risk from changes in interest rates on its floating-rate debt, with borrowings under the Amended Credit Agreement accruing interest based on rates such as LIBOR[197] - The company is monitoring the planned phase-out of LIBOR by June 30, 2023, which may cause unpredictable effects on its interest payment obligations[200] Controls and Procedures Based on management's evaluation, including the CEO and CFO, the company's disclosure controls and procedures were effective as of June 30, 2022, with ongoing integration of acquired business controls - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[203] PART II – OTHER INFORMATION Legal Proceedings The company states that while involved in various legal actions, no currently pending proceedings are expected to have a material adverse effect on its business or financial condition - The company does not believe any currently pending legal proceeding will have a material adverse effect on its business, prospects, financial condition, cash flows or results of operations[206] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes have occurred with respect to the risk factors disclosed in the company's 2021 Form 10-K[207] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities during Q2 2022, with 151,597 shares purchased at an average price of $11.34, including 100,803 shares under the new $50 million program, leaving approximately $49 million available Share Repurchases for Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased Under Program | Remaining Value Under Program | | :--- | :--- | :--- | :--- | :--- | | Total Q2 2022 | 151,597 | $11.34 | 100,803 | $49,000,000 | Other Items (3, 4, 5, 6) The company reported no defaults upon senior securities, no mine safety disclosures, and no other information requiring disclosure under Item 5, with Item 6 listing filed exhibits including officer certifications - The company reported "None" for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[209][210][211]