Post Earnings Coverage as Blackhawk Earnings Tumble on Impact of EMV

LONDON, UK / ACCESSWIRE / October 13, 2016 / Active Wall St. announces its post-earnings coverage on Blackhawk Network Holdings, Inc. (NASDAQ: HAWK). The company posted its financial results for the third quarter fiscal 2016 on October 11th, 2016.  The Pleasanton, California-based gift and prepaid card company’s net loss increased 41%, hampered by EMV impact on revenues along with increased acquisition related expenses. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on HAWK. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=HAWK.

Earnings Reviewed

For the three months ended on September 10th, 2016, Blackhawk reported operating revenues of $361.6 million, an increase of 3% from $352.7 million in Q3 2015. The increase was attributed to a 7% increase in commissions and fees driven primarily by higher international sales volume; a 6% increase in program and other fees due to higher incentive open loop gift card sales from Achievers and the addition of extra measures and Giftcards.com; a 30% decline in product sales primarily due to Cardpool, partially offset by product sales growth at Achievers; and a 10% increase in marketing revenues due to higher international promotional revenues.

For Q3 2016, Blackhawk’s net loss totaled $5.1 million compared to net loss of $3.6 million for the year ago quarter. The decrease was driven primarily by lower sales of U.S. retail open loop gift cards due to EMV restrictions, higher non-cash acquisition-related expenses, higher non-cash stock compensation expense, higher depreciation, and increased interest expense. Net loss per diluted share was $0.09 compared to a net loss per diluted share of $0.07 for Q3 2015. On an adjusted basis, the company reported earnings of $0.14 per share, below market expectations of $0.33 per share.

Segment Results

The company’s U.S. retail segment’s operating profit and adjusted EBITDA declined 18% and 17%, respectively, during Q3 2016, reflecting the impact of EMV. During Q3 2016, Incentives segment’s revenues and adjusted operating revenues grew 19% and 17%, respectively, while International revenues and adjusted operating revenues grew 20% and 12%, respectively, during the reported quarter primarily driven by growth in Europe. Operating profit and adjusted EBITDA growth in the international segment was 28% and 33%, respectively, and 99% and 53%, respectively, in the incentives segment.

Balance Sheet

Blackhawk reported cash and cash equivalents balance of $300.35 million as of September 10th, 2016, above $214.72 million as on close of books on September 12th, 2015, but lower than cash and cash equivalents balance of $914.58 as of January 2nd, 2016. The company reported notes payable worth $137.85 million as of September 10th, 2016, compared to $325.14 million of notes payable as on September 12th, 2015. The company ended Q3 2016 with a debt to adjusted EBITDA leverage ratio of 3.30 against its bank facility covenant of a maximum of 4.0.

Outlook

Blackhawk expects FY16 earnings in the range of $1.45 per share to $1.64 per share. The company also expects to generate revenue in the range of $897 million to $926 million.

Stock Performance

On Wednesday, October 12, 2016, Blackhawk Network Holdings’ shares jumped 6.76%, finishing the day at $34.09. A total trading volume of 3.05 million shares exchanged hands by the close of the session, which was higher than the 3-month average volume of 930.32 thousand shares. Shares of the company have a PE ratio of 86.74 and a market cap of $1.91 billion.

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