News Column

Higher One Holdings, Inc. Reports Fourth Quarter and Full Year 2013 Financial Results

February 13, 2014

  • Fourth quarter revenue up 13.7% year-over-year to $56.6 million
  • OneDisburse total sales of 256,000 Signed School Enrollment (SSE) in fourth quarter
  • Over 392,000 SSE and 31 clients signed from Campus Solutions to OneDisburse since acquisition


    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 MonthsYear Ended
    Ended December 31,December 31,
    2013201220132012
    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,
    20132012
    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

    shares issued and 47,115,784 shares outstanding at December 31, 2013;

    58,045,404 shares issued and 46,660,781 shares outstanding at December 31, 2012

    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,
    20132012
    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 EndedYear Ended
    December 31,December 31,
    2013201220132012
    (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 EndedYear Ended
    December 31,December 31,
    2013201220132012
    (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
     





    Higher One Holdings, Inc.

    Investor Relations:

    Kevin LeBlanc, 203-776-7776 x4296

    kevin.leblanc@higherone.com

    or

    Media Relations:

    Shoba Lemoine, 203-776-7776 x 4503

    slemoine@higherone.com



    Source: Higher One Holdings, Inc.


  • For more stories on investments and markets, please see HispanicBusiness' Finance Channel



    Source: Business Wire


    Story Tools