Worldpay gets down to 3.9x net leverage, shoots for 3.5x by mid-2019

By Devika Patel

Knoxville, Tenn., Feb. 26 – Worldpay, Inc. plans to keep deleveraging its balance sheet, having reduced its net leverage to 3.9x by the end of 2018.

The company expects it can deleverage to 3.5x by the middle of 2019, using its high levels of free cash flow.

“We generated substantial interest expense savings by optimizing our capital structure, including actively managing cash, making $180 million in voluntary debt payments and repricing and hedging on our remaining debt [in 2018],” chief financial officer Stephanie Ferris said Tuesday on the company’s earnings conference call for the fourth quarter and year ended Dec. 31.

“We committed to reducing leverage to 4x by mid-2019. We achieved this target more than six months ahead of schedule.

“Even after repurchasing $150 million in shares, we ended the fourth quarter at 4x gross leverage and 3.9x net.

“Given that our business is highly cash generative, we still have ample room to continue to de-lever in 2019.

“In January, we voluntarily repaid $520 million in debt by retiring the remaining portion of our term B-3 [loan].

“Together with our consistent cash flow generation, this gives us line of sight to 3.5x leverage towards the middle of this year.”

The company expects to be able to deleverage using free cash flow.

“Our business model generates high levels of free cash flow,” executive chairman and chief executive officer Charles Drucker said on the call.

“We expect to achieve over $1 billion in free cash flow during 2019, which will enable us to de-lever.”

Cash and cash equivalents were $196.5 million as of Dec. 31, compared with $126.5 million as of Dec. 31, 2017.

Worldpay is a Cincinnati-based provider of payment processing services. It was formed on Jan. 16, 2018 through Vantiv, Inc.'s acquisition of Worldpay Group plc.

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