Planet Payment's (PLPM) CEO Carl Williams on Q2 2016 Results - Earnings Call Transcript

| About: Planet Payment, (PLPM)
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Planet Payment, Inc. (NASDAQ:PLPM) Q2 2016 Earnings Conference Call August 3, 2016 5:00 PM ET

Executives

Ray D’Aponte - Chief Financial Officer

Carl Williams - Chairman and Chief Executive Officer

Robert Cox - President and Chief Operating Officer

Analysts

Gary Prestopino - Barrington Research

Matt Blazei - Lake Street Capital Markets

George Sutton - Craig-Hallum

Operator

Greetings and welcome to the Planet Payment Second Quarter 2016 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ray D’Aponte, Chief Financial Officer. Thank you, Mr. D’Aponte. You may now begin.

Ray D’Aponte

Thank you, operator. Good afternoon, everyone. With me on today’s call are Carl Williams, our Chairman and CEO and Robert Cox, our President and Chief Operating Officer. By now, you should have access to our second quarter 2016 press release. It can also be found at www.planetpayment.com under the Investor Relations section.

Throughout this conference call, we will also be presenting non-GAAP financial information. This information is not calculated in accordance with GAAP and maybe calculated differently from other companies similarly titled non-GAAP information. Quantitative reconciliations of our non-GAAP financial information to their most directly comparable GAAP financial information appear in today’s press release.

Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. Such forward-looking statements do not guarantee future performance and therefore you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today’s press release. Others are discussed in our Form 10-Q, which is available at www.sec.gov as well as on our website. These forward-looking statements, include guidance provided during this call are valid only as of today’s date and we assume no obligation to publicly update these forward-looking statements.

Today, we are going to provide a brief summary of the company’s activities, discuss some of our key business metrics and growth drivers for our business and give an overview of results for the second quarter. We will then open the call up for questions you might have.

With that, I would now like to turn the call over to Carl Williams, our Chairman and CEO. Carl?

Carl Williams

Thank you, Ray and thank you all for joining us this afternoon. We appreciate your continued interest in our company. We are pleased to be reporting our results for the second quarter, which marks our ninth consecutive quarter of profitability. These past few years of hard work and our focus on sustained growth were formerly recognized this past quarter as Planet Payment was added to the Russell 2000 Index. The Russell 2000 is made up of the 2,000 largest U.S. stocks ranked by total market capitalization. Our addition to the Russell 2000 is an important milestone for the company and reflects our continued positive momentum and our ongoing efforts to increase shareholder value.

While our numbers remain profitable and our prospects bright, I would like to address the confluence of negative factors that we have experienced during the quarter. To start with some of the more apparent factors, travel-related security concerns are at a high as recent terror attacks in Brussels, Orlando, Nice, Munich and Istanbul are fueling further fear and causing hesitation to travel internationally. In addition to security concerns, the Zika epidemic has also had a negative impact on international travel, specifically to Latin America. There has been significant news coverage on Zika impacting travel, including around how it’s likely to affect Olympic Games in Brazil this month. This is in addition to other safety and political concerns in the region. Our hopes are that with an event as high caliber as the Olympics, the impact of these games will not be too detrimental.

Lastly, the strong U.S. dollar has continued to provide for a challenging environment for foreign travel in the markets we do business. International travel like any discretionary expenditure is impacted when costs increase. A recent example has been the decrease in Russian travel spending beginning with the decline of the Russian ruble against major currencies throughout 2015. At this quarter end, we saw this challenge in another major currency as the UK vote to exit the European Union led to a subsequent decline of more than 10% in the value of the British pound against the dollar. With many of our markets U.S. dollar based or pegged including Hong Kong and Dubai, the strong dollar can be a concerning factor for our business. Despite these adverse global conditions, we have been able to grow revenue and make the second quarter a profitable one. We are pleased to have several new and exciting developments to discuss with you.

Beginning with the Americas, in June, we launched our Pay in Your Currency solution with Moneris to its substantial base of merchants in Canada. Foreign spending in Canada continues to increase and we look forward to the merchant rollout and to the growth of this partnership. Our e-commerce Multi-Currency Pricing solution with Moneris is also expected to launch later this year. We recently announced our entry into a new market in South America in that of Colombia. Our partner, Redeban, is a leading electronic payment processor in that market. Redeban will be offering our Pay in Your Currency solution to their merchants throughout the region as well as DCC at ATM. The Pay in Your Currency solution is currently in pilot and is expected to launch during the third quarter. With the large and growing number of foreign visitors to Colombia, we are excited to open this new market.

Moving on to Brazil, we are highly engaged with Cielo, the largest acquirer in Latin America ensuring that all aspects of Pay in Your Currency are ready in preparation for the influx of foreign tours expected to come to the Olympics. Rigorously marketing the solution from advertising to merchant training, both Planet and Cielo are gearing up for successful summer games. We expect that these coordinated marketing and training efforts should continue to yield positive results long after the games have ended.

Shifting to EMEA, Planet Payment and Absa, one of South Africa’s largest financial groups recently announced the launch of Multi-Currency Pricing with Xpressa, an online payment gateway and point-of-sale solution provider. With this new implementation, Absa continues to expand their offering of our Multi-Currency Pricing solution. Xpressa will be offering this solution to their significant portfolio of e-commerce merchants across the region. In Asia, we continue to exceed expectations with our DCC at ATM product launched with CIMB Bank in Malaysia in March. CIMB Bank operates the largest 24-hour ATM network in Malaysia.

Turning now to our processing initiatives, let’s start with Visa. We continue to focus on new initiatives and expansion into new markets. Our current solutions in Mexico and Myanmar are constantly evolving geared towards enhancing value to Visa acquirers and customers with the addition of new transaction types and technology. In regards to the UnionPay e-commerce product, we continue to explore the distribution of our product offering through various channels, including our partnership with PAY.ON, an ACI Worldwide company. As we announced earlier this year, Planet Payment can now support UnionPay e-commerce payments on ACI’s PAY.ON gateway. This past June, the Senior Vice President of our e-commerce business spoke at the ACI Disruption Opportunity Executive Summit participating in a cross-border opportunity panel. This provided an excellent opportunity to get out the message on the importance of UnionPay acceptance for e-commerce merchants to ACI’s large customer base, which consists of over 5,000 financial institutions across the globe.

Our relationship with UnionPay continues to strengthen and grow. Our UnionPay license has recently been expanded to include the Caribbean and we intend to continue to expand our direct acquiring capability with UnionPay to other regions as business needs arise. Planet Payment remains one of the few providers that can deliver a complete turnkey processing solution with all of the components necessary to accept UnionPay credit, debit and bank transfers to e-commerce merchants in U.S., Canada, and now across the Caribbean.

In short, our sales-centric approach focusing on cross-selling additional products to existing customers and developing a solid pipeline of new acquirers and processors in new and existing geographies has allowed us to continue on a path of profitability. This past quarter saw several significant milestones such as the expansion of our service into a new market in South America, the launch of new solutions with partners in Canada and South Africa, and continued to diligently explore new opportunities with Visa and UnionPay.

As you can see in the second quarter, we continued to build on our significant momentum despite experiencing multiple external headwinds. We remain committed to the execution of our strategic plan which has laid the ground work for us future of strong and predictable revenue growth and increasing profitability to our shareholders. To that end, we are pleased to announce that the Board of Directors has authorized additional funding for our stock repurchase program. Ray will give you details around the program later in the call.

With that, I will hand the call over to Bob who will provide detail around some of our operational highlights for Q2. Robert?

Robert Cox

Thank you, Carol. We are pleased to see that our continued profitability affirms that we are on a steady, stable path for long-term growth. Focusing on high margin, multi-currency and processing initiatives, our operations and development teams are dedicated to providing sales with the support they need to achieve current and future success. During the recent periods we have made significant progress with each of our products within our multi-currency product suite including our Pay in Your Currency, our DCC at ATM and our Multi-Currency Pricing e-commerce products. We recently launched Pay in Your Currency in Canada with Moneris, in Colombia with Redeban and expect to launch soon with HDFC in India, the largest acquirer in the region.

Our multi-currency e-commerce solution has gained traction with our launch with Absa in South Africa and the upcoming launch with Moneris in Canada. Our DCC at ATM solution, the newest component of our multi-currency product suite continues to show significant growth and promise. From our perspective the ATM presents an ideal channel for dynamic currency conversion for a number of reasons. ATM devices typically involve larger screens which afford more space to present a DCC offer to the consumer in multiple languages. Additionally, the fact that the process is completely automated eliminates the need for any human involvement in the offer which eliminates the need for training. Additionally, since certain implementations are completely host driven, our partners can launch and make any necessary updates remotely through a single release.

Our first implementation of DCC at ATM was with Vantiv who has been a longstanding partner. Following this first successful implementation we then launched the solution with Payment Alliance and Columbus Data Systems, two of the largest independent ATM processors in the United States who are currently offering DCC via tens of thousands of ATMs across their respective networks. Building on this success, we had our first implementation of DCC at ATM outside of the United States with Scotiabank who launched this solution across their ATM in state in Mexico just over a year ago. With this momentum we were able to cross-sell this solution to two existing acquirer Pay in Your Currency customers that expanded DCC to their ATM operations.

Initially MashreqBank implemented this solution in Dubai marking our first implementation in the EMEA region and then most recently CIMB launched DCC at ATM in Malaysia expanding the reach of our solution into Asia Pacific. To support these various ATM initiatives, Planet Payment supports DCC through some of the world’s largest ATM manufacturers including Diebold, Triton, Hyosung and GenMega. For certain ATM manufacturers the upfront work to embed our DCC solution within the common core application of these ATMs eliminates the front end development needed to support future customers. Additionally, recognizing that our customers have different processing models, Planet Payment has built the capability to drive ATMs directly or to support a solution by interfacing directly to the bank’s existing ATM hosts.

Planet also recently enhanced our processing capabilities to support a new industry vertical. As we detailed on prior calls, Planet Payment implemented our DCC solution with a leading provider of cash advance services to the casino industry allowing international casino patrons to complete their cash advance at participating properties in their home currencies. To support this initiative Planet Payment enhanced our processing systems to support what are known in the industry as Quasi Cash transactions. The delivery of casino cash advance involves a complicated metrics of point of sale devices and processes. In support of the initiative we worked with our partners to ensure that the DCC solution operated seamlessly across their portfolios whether their transaction was completed at a standalone point of sale device or at a kiosk on a casino floor or at a casino cage. Our solutions are now live across multiple casino properties across the Americas with discussions continuing around expanding the service into new markets. With casinos attracting a large number of international visitors, we remain confident in the long-term success of this initiative.

Turning then to our processing initiatives we continue to collaborate with Visa on expanding our existing implementations in Mexico and Myanmar. During the past quarters, we have further enhanced the product offering with new transaction types and better technologies, all with the goal of improving the merchant and card holder value proposition in driving additional transaction volume. While still in its early phase, we also continue to work with Visa on our latest endeavor to deliver processing solutions to new emerging and frontier markets. Finally, just a quick update on our UnionPay e-commerce solution, as Carl mentioned this past quarter we were able to expand the geographic reach of our direct UnionPay membership. Planet now has the ability to provide multi-currency UnionPay acceptance to e-commerce merchants located in the U.S. and Canada as well as membership that has been newly established in the Caribbean.

We will look forward to continuing to expand our agreement with the UnionPay as business needs arise. In addition, our product set with UnionPay has expanded as well with our support of the new UnionPay ExpressPay solution. ExpressPay is a new iteration of the UnionPay e-commerce product which offers card holders a more seamless user experience.

And now I will pass the call on to Ray for a second quarter financial overview.

Ray D’Aponte

Thank you, Bob. As Carl mentioned at the start of this call, a challenging global environment we are able to record our ninth consecutive quarter of profitability. Total revenue for the quarter increased 3% to $13.1 million. Multi-currency processing revenue for the quarter was $8 million which is consistent with the prior year. We earned an average net markup fee on the value of multi-currency transactions processed of 120 basis points, sequentially up from 119 basis points earned during the first quarter of this year. The increase in average net markup is a function of customer, product and pricing mix.

Next, I would like to spend a few moments highlighting to you the financial impacts related to both the external challenges we are facing as well as specific events that impacted the comparability on multi-currency revenue for the second quarter. In Asia Pacific the average net markup fee earned during the second quarter decreased to 107 basis points from 119 basis points a year ago. The decrease in net markup is primarily due to our 5 year contract extension and expansion with Global Payments announced in May of 2015. The contract anniversaried on June 1 which will allow for better comparability in these reads going forward. Our expectation for the remainder of the year is that Asia Pacific’s average net markup should be approximately 110 basis points. In addition to the impact on average net markup Asia Pacific foreign volume continues to be impacted by reduced travel to the region in part due to the strong U.S. dollar.

In EMEA, our acquiring partners in the region were negatively impacted more than expected due to reduced travel specifically as it relates to the strong dollar and the timing of Ramadan. As we mentioned previously the second quarter of 2016 was impacted by our entire month of Ramadan where as in prior year the impact was spread out between the second and third quarters. In the Americas, we continue to see positive impacts on volume and net markup fee from the growth in our business in Brazil as well as our growth in ATM and Quasi Cash offerings. Settled volume for the quarter decreased 40% and our net markup fee increased to 209 basis points from 188 basis points a year ago.

Payment processing services revenue increased 11% in the quarter to $5.1 million while we expanded our payment processing service margin to 47% from 44% a year ago. These positive results are due to increases in UnionPay acquiring volume, increase in the number of financial transactions being processed with Visa in emerging markets as well as our continued focus on optimizing the overall profitability of our processing portfolios which has resulted in the loss of some low margin revenue.

On a GAAP basis, our net income for the quarter was $1.3 million compared to $1.9 million in the prior year. The decrease in net income for the quarter is primarily due to the increase in stock-based compensation as well as restructuring expense we recorded during the quarter. Adjusted EBITDA for the quarter was $2.8 million. Our adjusted EBITDA margin for the quarter was 22%. Both of which are comparable to the second quarter of last year.

Our management relies on certain key performance indicators such as active merchant locations and settled dollar volume processed to manage and assess our business. These key performance indicators which are explained in Table 2 of our press release help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies. We believe that improvements in these metrics will result in improvements in our financial performance over time.

Our total active merchant locations increased to approximately $178,000 compared to approximately $103,000 from a year ago. A significant portion of the growth in active merchants in the quarter, were in the Brazilian market. As a reminder, the company considers a merchant location to be active as of the date if the merchant complete at least one revenue generating transactions at the location during the 9-day period ending on such date.

Next, I am pleased to announce that given to new profitability and strong cash flow, our Board of Directors reinstated the company’s share repurchase program and expanded the authorization by an incremental $4 million bringing its total current authorization to $6 million. Through the date of this release, we have repurchased a total of 8.8 million shares of Planet Payment’s stock for an aggregate purchase price of $25.7 million as a result of our stock repurchase program and our Dutch auction tender offer. Lastly, our guidance for the full year 2016 as provided on May 4, 2016 remains unchanged.

With that, operator, we would like to open the call to questions. Thank you.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And with that, we have our first question coming from the line of Gary Prestopino with Barrington Research. Please proceed with your question.

Gary Prestopino

Hey, good afternoon everyone.

Carl Williams

Hi, Gary.

Gary Prestopino

Hey, just on Visa, have they given you any indication of what, when and how the rollout to new markets would go? I mean, are they anticipating that we are going to do one new market every six months or one a year or how should we think about that?

Robert Cox

So, Gary, it’s Bob. There are – they have given us some thoughts around a number of markets. I think the right way to think about it is it relates to the products in the emerging markets as that will be more of a 2017 initiative as it relates to Planet. We are hopeful that we can get something in the works, in the first part of the year. So, stay tuned, you will hear more about it, but we are excited about it, we just can’t get out in front of Visa on the specifics.

Carl Williams

So, Gary, this is Carl. I just want to add some color to that. You realized that Visa is kind of working on closing the European acquisition. They haven’t closed it. So, working on the European acquisition which was a massive deal for them kind of took a lot of their resources away from some of the stuff that we are working on which is understandable, because it was otherwise $21 billion acquisition. So, that kind of moves some of our stuff off the front burner for a while, and that’s why this project has moved into 2017.

Gary Prestopino

Okay. And then just on some numbers, it looks like the stock comp was elevated again as it was in Q1, is that a number about $500,000, $600,000 per quarter good for the back half of the year as well?

Ray D’Aponte

So, Gary, it’s Ray. You have our total stock comp for the year in our reconciliation of guidance. So, the way I would think about is kind of in the back half was ever remaining, it should be split pretty equally. So, it’s something in that $500,000, but if you take that number and spread it out even.

Gary Prestopino

Okay, I am sorry, I didn’t see that. And then lastly just given the environment that you are operating in now obviously you can’t control terrorist attack and the strength of the dollar, what gives you the conviction to be able to maintain your guidance ranges here?

Carl Williams

Well, because Gary, there are still markets around the world that aren’t feeling the same pain. I mean, when we talk about terrorism and we talk about Zika and we talk about strong dollar. Fortunately, it’s not the entire world. And as you know, we are fairly diversified around the world. I mean, obviously when Ramadan occurs in one month, that impacts our business, but after that, some businesses return to normal after some incidents happened. So, we have a lot of new business as you know and there is a lot of new activity. So, we are still feeling very confident about the remainder of the year. And by the way, the Olympics are starting on Friday and we have no reason not to believe that Rio and the rest of Brazil are going to be productive.

Gary Prestopino

Okay. And then just lastly and I will jump off, when will Moneris be totally rolled out?

Ray D’Aponte

So, they are going to rollout in progression and we will see some substantial progress by the end of the year, but we won’t be fully rolled out by the end of the year, but look bottom line, there is Gary we are happy with the initial REITs here within I guess the first month or month and a half. We are doing quite well. So, we are pleased with that and we are looking forward to that further rollout, a good portion of which will happen throughout the rest of the year and the early part of next year.

Gary Prestopino

Okay, thank you.

Ray D’Aponte

Thanks, Gary.

Operator

Thank you. And the next question comes from the line of Matt Blazei with Lake Street Capital Markets. Please proceed with your question.

Carl Williams

Hey, Matt.

Matt Blazei

Hello. Hey, to follow-up on Gary’s question, I mean to hit your guidance, you are going to have to have double-digit revenue growth in the back half, which is going to require Multi-Currency to at least be double-digit. And I mean that’s quite a leap of faith simply just put the flat quarter given the fact that many of those issues that you talked about like the strong dollar, etcetera, I doubt have gone away. So again, I guess I am just – I am curious about your confidence there?

Carl Williams

Well, first of all, it’s not any different than last year in terms of the double-digit growth in the back half of the year. So, with the nature of our business, the second quarter is not typically a robust quarter for us. So, like I said to Gary, we have a lot of interesting new business as well as a lot of interesting existing business that we all feel very confident about for the remainder of the year by the way. We do this everyday and we study these numbers pretty closely and we survey our partners around the world. Ray just got back from Dubai last week and spent a lot of time with our partners in the Middle East. So, we got a pretty good read on what’s happening in our markets and that’s why we have reaffirmed guidance.

Matt Blazei

Okay. And did I hear numbers saying down 40% of transactions in Multi-Currency, was that correct?

Robert Cox

That was a mistake by me. It increased 40% in the Americas. That was a mistake I made, sorry.

Matt Blazei

Okay. One of the things that has obviously been on the people’s minds for a long time now is sort of how your take rates at Cielo have picked up as we head into the Olympics here, do you have any sort of range that you feel you are going to Olympics with in terms of take rates, which I think you may have been in low double-digits?

Robert Cox

So we do, as you know the story we were at one point at low single-digits at the beginning of this program with them. We then moved into higher single-digits. And then we moved I want to say last November into double-digits. And since then we have stayed in that particular territory, I mean it’s moved up or down in any given month. But it stayed in the mid double-digits. And by the way and as we said in the script there has been a lot of training, a lot of emphasis on training, a lot of hard work put into focus and making sure everybody understands how this works at the point of sale. We obviously have – they made this slight change to the terminal towards the end of last year. So we are pretty – we are feeling pretty good that the number should be okay for the Olympics.

Matt Blazei

Alright. Thank you, guys.

Robert Cox

Thanks. Best of luck.

Operator

Thank you. And our next question comes from the line of George Sutton with Craig-Hallum. Please proceed with your question.

George Sutton

Thank you. First, I just want to clarify a couple of things. First relative to Ramadan that’s something you told us a quarter ago would impact Q2 by losing about a month, so could you just help us quantify how much that might have impacted you in Q2 and extensively, you will pick that back up in Q3, correct?

Carl Williams

So yes, that’s correct George, it’s probably about 10% in volume, I will say. And it’s just not EMEA, it also impacts Asia as well, Asia Pacific. So I would say it’s about 10% volume.

Ray D’Aponte

Yes. Specifically there George in our Indonesian and Malaysian markets not exclusively, but certainly those are the two of the bigger markets in Asia Pacific that are impacted.

George Sutton

Okay. And relative to Visa, Carl you had there was a little discussion in the Q&A on that pushing out a lot of the projects pushing out to 2017 given the fact that they are going through this European acquisition that’s not new, correct, that’s something you talked about a quarter ago, I just – I wanted to see if there has been any incremental change relative to Visa?

Carl Williams

No, that’s not new, you are right. That’s correct.

George Sutton

Okay. As we look forward several quarters, because you have got a lot of different things rolling out currently right now and obviously some that will come at points of time, as we look at that kind of time period how important will those rollouts to be relative to new things in your pipeline as we look at your potential growth rate. And I am asking is it predominantly things that you are – you have already signed that will simply be rolling out?

Carl Williams

So, well no, by the way it’s a combination of every thing, meaning that you can’t – my existing base business is also growing because we are spending a lot more time than we have in the past making sure that we are mining more merchants from the existing portfolios. And it’s just that we have gotten extra vigilant about the new deals making sure that they come up properly, timely with the right kind of training. We are just getting better at a lot of parts of the equation and emphasizing that we don’t want to have happened – what has happened to some extent in the past where you get a deal up, you announce it. And three months later you are disappointed because of the volume when in fact you really didn’t do a great job getting everybody trained and onboard. We are getting much better at that and our partners are recognizing that when we do it the right way, everybody is pleased a whole lot faster. So if that makes sense to you, George it’s not – we have an unbelievable group of existing acquirers. And naturally we are excited about the new ones that we have added in Canada and India and the Americas. So there is a lot of excitement around the new deals, but I am equally as excited about the existing stuff.

George Sutton

One partner you didn’t spend much time on today was Global Payments, I am just curious again incrementally over the last quarter moving towards additional rollouts there could you just give us a quick update?

Carl Williams

Sure. So the big markets for me with Global are first of all Canada where we have an existing a small existing footprint. We had some challenges up there with the terminals which we have done a much better job on getting the terminals fixed. And Global has recognizes the value not that they didn’t previously, but they are much more engaged and focused on developing the big markets of Vancouver and Toronto and Montreal. So Canada is important from a Global perspective – Global Payments perspective. The UK is very important, I mean from Global Payments perspective. They had some migration issues there as well as some legacy contracts with some competitors of mine, so that had to kind of wash through and it hasn’t completely washed through. However, we are in development talks with them. We are getting their guys, their management up to speed with our expectations and that is the big portfolio that UK business is a big portfolio for us. And the other one is their U.S. business as you go – as you might know they have a fairly large gaming business which is very attractive to us. And by the way that’s also not going to be a 2016 deal, but we are pretty excited about the prospects of it for 2017. So and Global as you know just closed the Heartland acquisition. And Heartland has a lot of vertical markets that Global didn’t previously have which is why the acquisition is so complementary to Global. So we are talking to them about getting involved in the Heartland stuff. So George don’t let us misrepresent in terms of our comments Global remains a very critical partner to us and we are working on a lot of fronts with them.

George Sutton

Perfect. Thanks guys.

Carl Williams

Yes. Thank you, George.

Operator

Thank you. And the last question comes from the line of Mike Grondahl with Northland Securities. Please proceed with your question.

Unidentified Analyst

Thanks. Hi, this is Mike Pei [ph] on for Mike Grondahl.

Carl Williams

Hi Mike.

Unidentified Analyst

Just a question on, so Board’s reinstating the buyback, can you give us an idea what you guys think between spending on the repurchase and on other initiatives?

Carl Williams

Say that again Mike.

Ray D’Aponte

The forward looking Mike is that the how much we intend to, is that the question?

Unidentified Analyst

Just sort of the not necessarily the number, but between buying back stock and other areas you want to spend on, obviously…?

Ray D’Aponte

Look, we have got as we speak I think at the end of the quarter we had a little over $10 million in cash on the balance sheet. We also had a little over $10 million in capacity on our line of credit. We do need to keep some dry powder as far as working capital, so call that between $5 million to $10 million if I got it right and we have got $6 million authorization with a pretty low CapEx requirement for the rest of the year. So we are going to as we always been with the repurchase programs, we are going to be opportunistic and buy when the buying is good I guess. So we are looking forward to getting back – getting involved again.

Robert Cox

And Mike our CapEx normally runs between and $2 million and $3 million a year and I think it’s about $1 million through the first year.

Ray D’Aponte

Reasonably evenly split, right. Did that help Mike?

Unidentified Analyst

Yes. Thanks. And then just quick on the Colombia and I think it’s – with HDFC in India you are expecting that to go online pretty soon is that like third or fourth quarter you are looking at like 2017…?

Robert Cox

Well. So Colombia is in pilot as we speak on the point of sale activities. So that’s going well and if it continues to go well we should get some benefit here in the back half of the year. HDFC, we are hopeful will enter pilot this quarter. So there is a little bit of TBD on how quick we can rollout, that’s all dependent on how the pilot goes. But we definitely intend to be in pilot before the end of the third quarter here. So we are looking forward to both big opportunities in new markets and they can’t come quick enough, sorry.

Unidentified Analyst

Okay. And then just one last one on the Brazil merchants, should we look at that to continue to ramp up on the merchant account growth a year or is it more kind of like steady growth from that and then seen the dollar volume increased, how should we look at that between those two?

Carl Williams

So yes, Mike. For the rest of the year we would expect that number to continue to grow not necessarily at that rate, but incrementally it should continue to grow. But that doesn’t necessarily translate into the volume as far as what we expect for the rest of the year as we are still working through training and working with these merchants. So we expect it grow, but volume will eventually fall.

Unidentified Analyst

Sure. Thanks guys.

Carl Williams

Thank you.

Operator

Thank you. And this concludes our question-and-answer session. At this time, we would also like to thank everybody for participating on the conference as we will close up this call. Thank you everybody. Have a great day.

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