Euronet Worldwide Reports Second Quarter 2018 Financial Results
- Revenues of
$622.2 million , a 16% increase from$536.6 million (11% increase on a constant currency(1) basis). - Operating income of
$90.4 million , a 36% increase from$66.7 million (27% increase on a constant currency basis). - Adjusted operating income(2) of
$90.4 million , a 26% increase from$71.5 million (18% increase on a constant currency basis). - Adjusted EBITDA(3) of
$121.2 million , a 22% increase from$99.1 million (15% increase on a constant currency basis). - Net income attributable to
Euronet of$43.7 million or$0.82 diluted earnings per share, compared with net income of$51.4 million or$0.93 diluted earnings per share. - Adjusted earnings per share(4) of
$1.32 , a 21% increase from$1.09 . - Transactions of 968 million, an 8% increase from 898 million.
"I am pleased we delivered double-digit growth across most all of our consolidated financial metrics," stated
See the reconciliation of non-GAAP items in the attached financial schedules.
Segment and Other Results
The EFT Processing Segment reports the following results for the second quarter 2018 compared with the same period or date in 2017:
- Revenues of
$194.9 million , a 25% increase from$156.0 million (18% increase on a constant currency basis). - Operating income of
$52.9 million , a 35% increase from$39.3 million (26% increase on a constant currency basis). - Adjusted operating income of
$52.9 million , a 27% increase from$41.6 million (19% change on a constant currency basis). - Adjusted EBITDA of
$69.3 million , a 26% increase from$54.8 million (19% increase on a constant currency basis). - Transactions of 677 million, an 18% increase from 574 million.
- Operated 41,205 ATMs as of June 30, 2018, a 10% increase from 37,383.
Double-digit second quarter constant currency revenue, operating income and adjusted EBITDA growth was largely the result of a 10% year-over-year increase in active ATMs and an 18% increase in transactions. The increase in transactions was primarily from growth in
The year-over-year increase in ATM count was due to the deployment of approximately 3,200 high-value ATMs across
The epay Segment reports the following results for the second quarter 2018 compared with the same period or date in 2017:
- Revenues of
$166.5 million , a 1% increase from$164.1 million (3% decrease on a constant currency basis). - Operating income of
$16.3 million , a 10% increase from$14.8 million (4% increase on a constant currency basis). - Adjusted EBITDA of
$18.2 million , a 4% increase from$17.5 million (2% decrease on a constant currency basis). - Transactions of 264 million, a 12% decrease from 300 million.
- Point-of-sale ("POS") terminals of approximately 695,000 as of June 30, 2018, a 3% increase from approximately 673,000.
- Retailer locations of approximately 332,000 as of June 30, 2018, an 8% increase from approximately 306,000.
In
Adjusted for the adoption of the revenue recognition standard, epay second quarter constant currency revenue and operating income growth was primarily the result of increased sales of non-mobile products, partially offset by certain mobile transaction declines as well as a benefit from certain intangible assets becoming fully amortized in late 2017. Consistent with previous quarters, the 12% decline in transactions was largely the result of the loss of a high-volume, low-margin mobile customer in the
The Money Transfer Segment reports the following results for the second quarter 2018 compared with the same period or date in 2017:
- Revenues of
$261.7 million , a 21% increase from$217.1 million (17% increase on a constant currency basis). - Operating income of
$32.7 million , a 31% increase from$24.9 million (25% increase on a constant currency basis). - Adjusted EBITDA of
$40.7 million , a 26% increase from$32.2 million (20% increase on a constant currency basis). - Total transactions of 26.9 million, an 18% increase from 22.8 million.
- Network locations of approximately 355,000 as of June 30, 2018, a 10% increase from approximately 324,000.
Double-digit constant currency revenue, operating income and adjusted EBITDA growth was driven by growth across most sectors of the Ria business. Moreover, double-digit operating income and adjusted EBITDA growth in the second quarter reflects the anniversary of the rate reductions included in the
Second quarter money transfers grew 18% and non-transfer transactions, such as currency exchange and check cashing, grew 21%, resulting in total transaction growth of 18%.
Corporate and Other reports
Balance Sheet and Financial Position
Unrestricted cash on hand was
Total indebtedness was
Guidance
The Company currently expects adjusted earnings per share for the third quarter 2018, assuming foreign currency exchange rates and the Company's share price remain stable through the end of the quarter, to be approximately
Non-GAAP Measures
In addition to the results presented in accordance with U.S. GAAP, the Company presents non-GAAP financial measures, such as constant currency financial measures, adjusted operating income, adjusted EBITDA and adjusted earnings per share. These measures should be used in addition to, and not a substitute for, revenues, net income, operating income and earnings per share computed in accordance with U.S. GAAP. We believe that these non-GAAP measures provide useful information to investors regarding the Company's performance and overall results of operations. These non-GAAP measures are also an integral part of the Company's internal reporting and performance assessment for executives and senior management. The non-GAAP measures used by the Company may not be comparable to similarly titled non-GAAP measures used by other companies. The attached schedules provide a full reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure.
The Company does not provide a reconciliation of its forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for GAAP and the related GAAP to non-GAAP reconciliation, including adjustments that would be necessary for currency exchange rate fluctuations and other charges reflected in the Company's reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
(1) Constant currency financial measures are computed as if foreign currency exchange rates did not change from the prior period. This information is provided to illustrate the impact of changes in foreign currency exchange rates on the Company's results when compared to the prior period.
(2) Adjusted operating income is defined as operating income excluding expenses related to the 2017 proposed
(3) Adjusted EBITDA is defined as net income excluding interest, income tax expense, depreciation, amortization, share-based compensation, expenses related to the 2017 proposed
(4) Adjusted earnings per share is defined as diluted U.S. GAAP earnings per share excluding, to the extent incurred in the period, the tax-effected impacts of: a) foreign currency exchange gains or losses, b) goodwill and intangible asset impairment charges, c) gains or losses from the early retirement of debt, d) share-based compensation, e) acquired intangible asset amortization, f) expenses related to the 2017 proposed
Conference Call and Slide Presentation
A webcast replay will be available beginning approximately one hour after the event at http://ir.euronetworldwide.com and will remain available for one year.
About
Statements contained in this news release that concern
EURONET WORLDWIDE, INC. | ||||||||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||||||||
(in millions) | ||||||||||||||||||
As of June 30, 2018 (unaudited) |
As of December 31, 2017 |
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ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 1,163.4 | $ | 819.1 | ||||||||||||||
Restricted cash | 72.9 | 81.4 | ||||||||||||||||
Trade accounts receivable, net | 697.0 | 744.9 | ||||||||||||||||
Prepaid expenses and other current assets | 231.8 | 244.8 | ||||||||||||||||
Total current assets | 2,165.1 | 1,890.2 | ||||||||||||||||
Property and equipment, net | 274.7 | 268.3 | ||||||||||||||||
Goodwill and acquired intangible assets, net | 854.8 | 867.9 | ||||||||||||||||
Other assets, net | 112.4 | 113.6 | ||||||||||||||||
Total assets | $ | 3,407.0 | $ | 3,140.0 | ||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable and other current liabilities | $ | 1,214.4 | $ | 1,361.0 | ||||||||||||||
Short-term debt obligations | 624.1 | 46.7 | ||||||||||||||||
Total current liabilities | 1,838.5 | 1,407.7 | ||||||||||||||||
Debt obligations, net of current portion | 372.0 | 404.0 | ||||||||||||||||
Capital lease obligations, net of current portion | 9.1 | 9.8 | ||||||||||||||||
Deferred income taxes | 54.0 | 55.0 | ||||||||||||||||
Other long-term liabilities | 62.9 | 64.0 | ||||||||||||||||
Total liabilities | 2,336.5 | 1,940.5 | ||||||||||||||||
Equity | 1,070.5 | 1,199.5 | ||||||||||||||||
Total liabilities and equity | $ | 3,407.0 | $ | 3,140.0 | ||||||||||||||
EURONET WORLDWIDE, INC. | ||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||
(unaudited - in millions, except share and per share data) | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
June 30, |
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2018 | 2017 | |||||||||||||||||||||
Revenues | $ | 622.2 | $ | 536.6 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Direct operating costs | 361.5 | 317.3 | ||||||||||||||||||||
Salaries and benefits | 91.7 | 78.6 | ||||||||||||||||||||
Selling, general and administrative | 52.3 | 48.5 | ||||||||||||||||||||
Impairment of acquired intangible assets | — | 2.3 | ||||||||||||||||||||
Depreciation and amortization | 26.3 | 23.2 | ||||||||||||||||||||
Total operating expenses | 531.8 | 469.9 | ||||||||||||||||||||
Operating income | 90.4 | 66.7 | ||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||
Interest income | 0.4 | 0.5 | ||||||||||||||||||||
Interest expense | (10.1 | ) | (8.3 | ) | ||||||||||||||||||
Foreign currency exchange (loss) gain | (20.7 | ) | 11.1 | |||||||||||||||||||
Total other (expense) income, net | (30.4 | ) | 3.3 | |||||||||||||||||||
Income before income taxes | 60.0 | 70.0 | ||||||||||||||||||||
Income tax expense | (16.4 | ) | (18.6 | ) | ||||||||||||||||||
Net income | 43.6 | 51.4 | ||||||||||||||||||||
Net loss attributable to noncontrolling interests | 0.1 | — | ||||||||||||||||||||
Net income attributable to Euronet Worldwide, Inc. | $ | 43.7 | $ | 51.4 | ||||||||||||||||||
Earnings per share attributable to Euronet | ||||||||||||||||||||||
Worldwide, Inc. stockholders - diluted | $ | 0.82 | $ | 0.93 | ||||||||||||||||||
Diluted weighted average shares outstanding | 53,492,835 | 55,210,993 | ||||||||||||||||||||
EURONET WORLDWIDE, INC. | |||||||||||||||||||
Reconciliation of Net Income to Operating Income (Expense) and Adjusted EBITDA | |||||||||||||||||||
(unaudited - in millions) | |||||||||||||||||||
Three months ended June 30, 2018 |
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EFT Processing |
epay |
Money Transfer |
Corporate Services |
Consolidated |
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Net income | $ | 43.6 | |||||||||||||||||
Add: Income tax expense | 16.4 | ||||||||||||||||||
Add: Total other expense, net | 30.4 | ||||||||||||||||||
Operating income (expense) | $ | 52.9 | $ | 16.3 | $ | 32.7 | $ | (11.5 | ) | $ | 90.4 | ||||||||
Add: Depreciation and amortization | 16.4 | 1.9 | 8.0 | — | 26.3 | ||||||||||||||
Add: Share-based compensation | — | — | — | 4.5 | 4.5 | ||||||||||||||
Earnings (expense) before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) (2) | $ | 69.3 | $ | 18.2 | $ | 40.7 | $ | (7.0 | ) | $ | 121.2 | ||||||||
Three months ended June 30, 2017 | |||||||||||||||||||
EFT Processing |
epay | Money Transfer |
Corporate Services |
Consolidated | |||||||||||||||
Net income | $ | 51.4 | |||||||||||||||||
Add: Income tax expense | 18.6 | ||||||||||||||||||
Deduct: Total other income, net | (3.3 | ) | |||||||||||||||||
Operating income (expense) | $ | 39.3 | $ | 14.8 | $ | 24.9 | $ | (12.3 | ) | $ | 66.7 | ||||||||
Add: Impairment charges | 2.3 | — | — | — | 2.3 | ||||||||||||||
Add: Expenses incurred for proposed acquisition of MoneyGram | — | — | — | 2.5 | 2.5 | ||||||||||||||
Adjusted operating income (expense) (1) | 41.6 | 14.8 | 24.9 | (9.8 | ) | 71.5 | |||||||||||||
Add: Depreciation and amortization | 13.2 | 2.7 | 7.3 | — | 23.2 | ||||||||||||||
Add: Share-based compensation | — | — | — | 4.4 | 4.4 | ||||||||||||||
Earnings (expense) before interest, taxes, depreciation, amortization, proposed transaction expenses and share-based compensation (Adjusted EBITDA) (2) | $ | 54.8 | $ | 17.5 | $ | 32.2 | $ | (5.4 | ) | $ | 99.1 | ||||||||
(1) Adjusted operating income excludes costs related to the proposed acquisition of
(2) Adjusted EBITDA is a non-GAAP measure that should be considered in addition to, and not a substitute for, net income computed in accordance with U.S. GAAP.
EURONET WORLDWIDE, INC. | ||||||||||||||||||||||||
Reconciliation of Adjusted Earnings per Share | ||||||||||||||||||||||||
(unaudited - in millions, except share and per share data) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2018 |
2017 |
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Net income attributable to Euronet Worldwide, Inc. | $ | 43.7 | $ | 51.4 | ||||||||||||||||||||
Foreign currency exchange loss (gain) | 20.7 | (11.1 | ) | |||||||||||||||||||||
Intangible asset amortization(1) | 5.8 | 6.3 | ||||||||||||||||||||||
Share-based compensation(2) | 4.5 | 4.4 | ||||||||||||||||||||||
Expenses incurred for proposed acquisition of MoneyGram(3) | — | 2.5 | ||||||||||||||||||||||
Impairment of acquired intangible assets | — | 2.3 | ||||||||||||||||||||||
Non-cash interest accretion(4) | 2.9 | 2.7 | ||||||||||||||||||||||
Income tax effect of above adjustments(5) | (8.1 | ) | 0.4 | |||||||||||||||||||||
Non-cash GAAP tax expense(6) | 1.3 | 1.7 | ||||||||||||||||||||||
Adjusted earnings(7) | $ | 70.8 | $ | 60.6 | ||||||||||||||||||||
Adjusted earnings per share - diluted(7) | $ | 1.32 | $ | 1.09 | ||||||||||||||||||||
Diluted weighted average shares outstanding (GAAP) | 53,492,835 | 55,210,993 | ||||||||||||||||||||||
Effect of unrecognized share-based compensation on diluted shares outstanding | 236,325 | 306,911 | ||||||||||||||||||||||
Adjusted diluted weighted average shares outstanding | 53,729,160 | 55,517,904 | ||||||||||||||||||||||
(1) Intangible asset amortization of
(2) Share-based compensation of
(3) Expenses incurred for the proposed acquisition of
(4) Non-cash interest accretion of
(5) Adjustment is the aggregate U.S. GAAP income tax effect on the preceding adjustments determined by applying the applicable statutory U.S. federal, state and/or foreign income tax rates.
(6) Adjustment is the U.S. GAAP tax expense recognized on certain items that will not be realized in cash in the current period. The most significant items are utilization of certain material net deferred tax assets and amortization of U.S. indefinite-lived intangible assets.
(7) Adjusted earnings and adjusted earnings per share are non-GAAP measures that should be considered in addition to, and not as a substitute for, net income and earnings per share computed in accordance with U.S. GAAP.
Contact:
+1-913-327-4200
Source: Euronet Worldwide, Inc.