On July 11, 2019 (the "Closing Date"), Thunder Bridge Acquisition Ltd. ("Thunder Bridge") and Hawk Parent Holdings LLC ("Hawk Parent") completed their previously announced business combination under which Thunder Bridge acquired Hawk Parent, upon which Thunder Bridge changed its name to Repay Holdings Corporation ("REPAY" or the "Company"). Unless otherwise indicated, information provided in this presentation (a) that relates to any periods ended prior to the Closing Date reflect that of Hawk Parent prior to the Business Combination, (b) that relates to any period ended December 31, 2019 reflect the combination of (i) Hawk Parent for the periods from January 1, 2019 through July 10, 2019 and (ii) REPAY for the period from the Closing Date through December 31, 2019. Such combination reflects a simple arithmetic addition of the relevant periods. The historical financial information of Thunder Bridge prior to the Business Combination has not been reflected in any financial information of Hawk Parent.
The Company's filings with the Securities and Exchange Commission ("SEC"), which you may obtain for free at the SEC's website at http://www.sec.gov, discuss some of the important risk factors that may affect REPAY's business, results of operations and financial condition.
This presentation (the "Presentation") contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are generally identified by use of words such as "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, statements our industry and market sizes, future opportunities for us and our estimated future results. Such forward-looking statements are based upon the current beliefs and expectations of our 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, 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 integrate and realize the benefits of the acquisition of TriSource Solutions, L.L.C. 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 acquisition of APS Payments and any difficulties associated with marketing products and services in the B2B vertical market in which REPAY does not have any experience; a delay or failure to integrate and realize the benefits of the acquisition of Ventanex and any difficulties associated with marketing products and services in the mortgage or B2B healthcare 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; exposure to economic conditions and political risk affecting the consumer loan market and consumer and commercial spending; the impacts of the recent COVID-19 coronavirus outbreak (which are highly uncertain and cannot be reasonably estimated or predicted at this time); 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. All information set forth herein speaks only as of the date hereof in the case of information about us or the date of such information in the case of information from persons other than us, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this prospectus. Forecasts and estimates regarding our industry and end markets are based on sources we believe 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.
Industry and Market Data
The information contained herein also includes information provided by third parties, such as market research firms. In particular, REPAY has commissioned independent research reports from Stax Inc. ("Stax") and Ernst &Young LLP ("EY" or "EY Parthenon") for market and industry information to be used by REPAY. Neither of REPAY nor its affiliates and any third parties that provide information to REPAY, such as market research firms, guarantee the accuracy, completeness, timeliness or availability of any information. Neither REPAY nor its affiliates and any third parties that provide information to REPAY, such as market research firms, such as Stax and EY, are responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or the results obtained from the use of such content. Neither REPAY nor its affiliates give any express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use, and they expressly disclaim any responsibility or liability for direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including lost income or profits and opportunity costs) in connection with the use of the information herein.
Non-GAAP Financial Measures
This Presentation 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. Organic gross profit growth is a non-GAAP financial measure that represents the year-on-year gross profit growth that excludes gross profit attributed to acquisitions made in 2019. REPAY believes that Adjusted EBITDA and organic gross profit growth provide useful information to investors and others in understanding and evaluating its operating results in the same manner as management. However, Adjusted EBITDA and organic gross profit growth 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, organic gross profit 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 and organic gross profit growth alongside other financial performance measures, including net income and REPAY's other financial results presented in accordance with GAAP.
No Offer or Solicitation
This Presentation is for informational purposes only and is neither an offer to sell or purchase, nor a solicitation of an offer to sell, buy or subscribe for any securities, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.
2) Volume retention for YTD period as of December 31, 2019 calculated as 1 - (Lost Volume / Total Volume Processed in Prior Year Period); "Lost Volume" represents volume realized in prior year period from merchants that have since ended their relationship with REPAY. Volume retention for full-year 2018A was 98%. Calculation excludes TriSource and APS Payments
3) 2019A Cash Flow Conversion calculated as Adjusted EBITDA - Capex / Adjusted EBITDA. Capex includes PP&E, new software development and new 3rdparty software assets. Other companies may calculate capex and related measures differently and you should consider how that reduces the usefulness of this metric. Capex was 5% of total revenue (unadjusted for impact of adoption of ASC 606) in 2019.
SHAREHOLDER RETURN DRIVEN BY
Secular Trends Away From
Deepen Presence in
Cash and Check Toward
(e.g. Automotive, B2B, Credit Unions,
$2.3Tn TAM Creates Long
Revenue Cycle Management, Canada)
Runway for Growth
Deep Presence in Key
Transaction Growth in
Expand into New
Extending Broader Solution Suite
Source: Stax - REPAY Market Sizing Report (January 2018), EY Parthenon - ERP Market Report (September 2019), and EY Parthenon - Ventanex Market Report (February 2020). Firm prepared surveys, secondary research, and analysis. B2B TAM represents payment volumes from ERP platforms with which APS is currently integrated. Healthcare and mortgage TAM
represents payment volumes for segments of healthcare and mortgage servicer clients with non-standard payments with need for Ventanex solutions.
Our Strong Execution and Momentum
Executing Our Vision...
At Initial Business Combination (IBC)
# of ISV Integrations
...And Delivering Superior Results
FY 2019 Update
Organic Gross Profit Growth
As of March 2020.
Management estimate, includes TriSource, APS, and Ventanex
Inclusive of $1.1Bn B2B TAM; Source: Stax - REPAY Market Sizing Report (January 2018), EY
Includes B2B integrations from APS acquisition
Parthenon - ERP Market Report (September 2019), and EY Parthenon - Ventanex Market
Per management estimates; organic gross profit growth is a non-GAAP financial measure that
Report (February 2020). Firm prepared surveys, secondary research, and analysis. B2B TAM
represents the year-on-year gross profit growth that excludes gross profit attributed to
represents payment volumes from ERP platforms with which APS is currently integrated.
acquisitions made in 2019
Healthcare and mortgage TAM represents payment volumes for segments of healthcare and
mortgage servicer clients with non-standard payments with need for Ventanex solutions.
REPAY Investment Highlights
REPAY's Business Strengths and Strategies
1 |FAST GROWING AND UNDERPENETRATED MARKET OPPORTUNITY
3 |KEY SOFTWARE INTEGRATIONS ENABLING UNIQUE DISTRIBUTION MODEL
A Leading, Omni-Channel
4 |HIGHLY STRATEGIC AND DIVERSE CLIENT BASE
5 |MULTIPLE AVENUES FOR LONG-TERM GROWTH
6 |EXPERIENCED BOARD WITH DEEP PAYMENTS EXPERTISE
1We Are Capitalizing on Large, Underserved Market Opportunities
REPAY's three existing verticals plus the new B2B
REPAY's key end markets have been underserved
vertical represent ~$2.3Tn(1)of projected annual total
by payment technology and service providers due
payment volume by 2020
to unique market dynamics
End Market Opportunities
2020 Projected Payment Volumes
Loan repayment and B2B markets have lagged other industry verticals in moving to electronic payments
Credit cards are not permitted in loan repayment which has resulted in overall low card penetration
B2B payments (including AP and AR) have traditionally been made via check or ACH
Merchants serving REPAY'smarkets-spanning consumer and business payments-are facing increasing demand from customers for electronic and omnichannel payment solutions
LTM Card Payment Volume (2)
Source: Stax - REPAY Market Sizing Report (January 2018), EY Parthenon - ERP Market Report (September 2019), and EY Parthenon - Ventanex Market Report (February 2020). Firm prepared surveys, secondary research, and analysis. B2B TAM represents payment volumes from ERP platforms with which APS is currently integrated. Healthcare and mortgage TAM represents payment
volumes for segments of healthcare and mortgage servicer clients with non-standard payments with need for Ventanex solutions.
2) Source: Management metric for LTM period as of December 31, 2019. Calculation includes TriSource and APS for post-acquisition periods
1Card and Debit Payments Underpenetrated in Our Verticals
Loan Repayment and B2B Payments Lag Other Markets in Migrating to Card Payments
Card Payment Penetration Across Industries...
...And in REPAY's Verticals
Credit Card Penetration
Debit Card Penetration
Note: Credit generally not accepted as payment option in REPAY's legacy end markets.
Source: The Nilson Report - December 2018. Represents debit and credit as a percentage of all U.S. consumer payment systems, including various forms of paper, card, and electronic payment methods
Source: EY/Parthenon Project Mesa Report - September 2019
EY/Parthenon Project Viking Report - January 2020
Stax - REPAY Market Sizing Report. January 2018
2REPAY Has Built a Leading Next- Gen Software Platform
Proprietary, Integrated Payment Technology Platform Reduces Complexity For a Unified Commerce Experience
Businesses and Consumers
Accelerated payment cycle (ability to lend more / faster) through card processing
Faster access to funds to help businesses with working capital
24 / 7 payment acceptance through "always open"omni-channel offering
Direct software integrations into loan, dealer, and business management systems reduces operational complexity for merchant
Improved regulatory compliance through fewer ACH returns
Self-servicecapabilities through ability to pay anywhere, any way and any time, 24 / 7
Option to makereal-time payments through use of card transactions
Immediate feedback that payment has been processed
Demonstrated ability to source, acquire and integrate
various targets across different verticals
Dedicated team to manage robust M&A pipeline
5Multiple Levers to Continue to Drive Growth
REPAY's Leading Platform & Attractive Market Opportunity Position It To Build On Its Record Of Growth &
Majority of growth derived from further penetration of existing client base
Expand Usage and
BROADEN ADDRESSABLE MARKET
EXECUTE ON EXISTING BUSINESS
6Experienced Board with Deep Payments Expertise
9-Member Board Of Directors Comprised Of Industry Veterans And Influential Leaders In The Financial Services And Payment Industries
CEO & Co-Founder
President & Co-Founder
Former SVP, Mastercard /
Former Managing Director,
Board Member, Global Payments
of CheckFree /
and Green Dot
REPAY Financial Overview
REPAY's Unique Model Translates Into A Highly Attractive Financial Profile
Historical Card Payment
Volume CAGR (3)
Profit CAGR (3)
EBITDA CAGR (3)
Low volume attrition and low risk portfolio (4)
Deeply integrated with customer base
Differentiated technology platform & ecosystem
Recurring transaction / volume based revenue
Volume retention for YTD period as of December 31, 2019 calculated as 1 - (Lost Volume / Total Volume Processed in Prior Year Period); "Lost Volume" represents volume realized in prior year period from merchants that have since ended their relationship with REPAY. Volume retention forfull-year 2018A was 98%. Calculation excludes TriSource and APS
2019A Cash Flow Conversion calculated as Adjusted EBITDA - Capex / Adjusted EBITDA. Capex includes PP&E, new software development and new 3rdparty software assets. Other companies may
calculate capex and related measures differently and you should consider how that reduces the usefulness of this metric. Capex was 5% of total revenue (unadjusted for impact of adoption of ASC 606)
3) CAGR is from 2017A - 2019A
Significant Volume and Revenue Growth...
Total Card Payment Volume ($Bn)
Total Revenue ($MM)
REPAY has generated strong, consistent volume growth, resulting
REPAY's revenue growth has been strong, resulting in a 33% (1)
in ~$10.7Bn in annual card processing volume in 2019
CAGR from 2017A - 2019A
33% CAGR (1)
Processing & Services Fees
Interchange & Network Fees
1) CAGR is calculated using Processing and Service Fees, unadjusted for the impact of the adoption of ASC 606
...Translating into Accelerating Profitability
Gross Profit (1)
Adjusted EBITDA (2)
Gross margins are improving due to a decrease in
Highly scalable platform with
Gross Profit is defined as Total Revenue less Interchange and Network Fees and Other Cost of Services; all items unadjusted for the impact of the adoption of ASC 606
See "Adjusted EBITDA Reconciliation" on slide 21
As a % of Processing and Services Fees, unadjusted for the impact of the adoption of ASC 606
Adjusted EBITDA Reconciliation - Historical
($ in millions)
Net Income (Loss)
Depreciation and Amortization
Income Tax Expense (Benefit)(1)
Loss on Extinguishment of Debt(2)
Non-cash Change in FV Contingent Consideration(3)Non-cash Change in FV of Tax Receivable Liability(4)Share-based Compensation Expense(5)
Transaction Expenses(6)Management Fees(7)
Legacy Commission Related Charges(8)Employee Recruiting Costs(9)
Loss on Disposition of Property and Equipment Other Taxes(10)
Prior to the Business Combination REPAY was not a taxable entity so there are no taxes to add back in calculating EBITDA for these periods.
Reflectswrite-offs of debt issuance costs relating to REPAY's term loans and prepayment penalties relating to its previous debt facilities.
Reflects the changes in management's estimates of future cash consideration to be paid in connection with prior acquisitions.
Reflects the changes in management's estimates of the fair value of the liability relating to the Tax Receivable Agreement.
Represents compensation expense associated with equity compensation plans, including accelerated vesting and new grants made in connection with the Business Combination.
Primarily consists of the professional service fees and other costs in connection with (1) the Business Combination, and the acquisitions of TriSource and APS in the period ended December 31, 2019, (2) the Business Combination and a potential acquisition by Repay that was abandoned during the year ended December 31, 2018, (3) financing transactions and the acquisitions of (i) PaidSuite, Inc. and PaidMD, LLC and (ii) Paymaxx Pro, LLC during the year ended December 31, 2017
Reflects management fees paid to Corsair Investments LP which have been terminated.
Represents payments made to certain employees in connection with transition from REPAY's legacy commission structure to its current commission structure.
Represents payments made tothird-party recruiters in connection with a significant expansion of REPAY personnel.
Reflects franchise taxes and othernon-income based taxes.
Consists of consulting fees relating to processing services not in the ordinary course of business and other operational improvements,one-time payment to vendor for additional merchant data,
one-time payment relating to special projects for new market expansion and legal expanses relating to review of potential compliance matters.
12) Represents other non-recurring items that REPAY's management believes are not representative of its ongoing operations, including litigation-related adjustments.
Repay Holdings Corporation published this content on 16 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 March 2020 21:30:11 UTC