Euronet Worldwide Reports Third Quarter 2014 Financial Results
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Revenues of
$453.4 million , a 26% increase from$360.6 million (25% increase on a constant currency(1) basis). -
Operating income of
$50.7 million , an 8% decrease from$55.3 million (9% decrease on a constant currency basis). -
Adjusted operating income(2) of
$50.7 million , a 41% increase from$36.0 million (40% increase on a constant currency basis). -
Adjusted EBITDA(3) of
$73.1 million , a 36% increase from$53.8 million (35% increase on a constant currency basis). -
Net income attributable to
Euronet of$35.0 million or$0.64 diluted earnings per share, compared with net income of$47.9 million or$0.92 diluted earnings per share. -
Adjusted cash earnings per share(4) of
$0.80 , a 43% increase from$0.56 . - Transactions of 655 million, a 13% increase from 582 million.
See the reconciliation of non-GAAP items in the attached financial schedules.
Third quarter 2013 operating income reflects a
"Our third quarter earnings exceeded our expectations, underscored by a new record quarterly adjusted cash EPS of
Segment and Other Results
The EFT Processing Segment reports the following results for the third quarter 2014 compared with the same period or date in 2013:
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Revenues of
$107.5 million , a 29% increase from$83.6 million (28% increase on a constant currency basis). -
Operating income of
$34.2 million , a 23% decrease from$44.6 million (24% decrease on a constant currency basis). -
Adjusted operating income of
$34.2 million , a 35% increase from$25.3 million (34% increase on a constant currency basis). -
Adjusted EBITDA of
$42.4 million , a 34% increase from$31.6 million (33% increase on a constant currency basis). - Transactions of 321 million, a 6% increase from 304 million.
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Operated 19,808 ATMs as of
September 30, 2014 , an 11% increase from 17,795.
Revenue, adjusted EBITDA and adjusted operating income growth in the quarter was the result of an 11% expansion of the ATM networks in
Revenue, adjusted EBITDA and adjusted operating income growth outpaced transaction and ATM growth due to higher sales of value added products which earn a higher margin per transaction relative to other EFT products. Transactions grew 6%, primarily from growth spread across
The epay Segment reports the following results for the third quarter 2014 compared with the same period or date in 2013:
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Revenues of
$195.1 million , a 7% increase from$182.6 million (6% increase on a constant currency basis). -
Operating income of
$12.4 million , a 2% increase from$12.1 million (2% increase on a constant currency basis). -
Adjusted EBITDA of
$16.4 million , a 2% increase from$16.1 million (1% increase on a constant currency basis). - Transactions of 320 million, a 19% increase from 269 million.
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Point of sale ("POS") terminals of approximately 667,000 as of
September 30, 2014 , a 5% increase from approximately 636,000. -
Retailer locations of approximately 295,000 as of
September 30, 2014 , a 1% increase from approximately 291,000.
epay revenue, operating income and adjusted EBITDA growth was primarily the result of increased sales of non-mobile products, partially offset by certain mobile content transaction declines. Revenue growth outpaced operating income and adjusted EBITDA growth as a result of higher SG&A costs in preparation for the seasonally higher fourth quarter sales and higher incentive expense, partially offset by cost-saving measures implemented in certain markets.
The increase in transactions was largely driven by growth in
The Money Transfer Segment reports the following results for the third quarter 2014 compared with the same period or date in 2013:
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Revenues of
$151.2 million , a 59% increase from$95.3 million (58% increase on a constant currency basis). -
Operating income of
$12.6 million , a 68% increase from$7.5 million (68% increase on a constant currency basis). -
Adjusted EBITDA of
$19.8 million , a 65% increase from$12.0 million (64% increase on a constant currency basis). - Total transactions of 13.9 million, a 56% increase from 8.9 million.
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Network locations of approximately 241,000 as of
September 30, 2014 , a 16% increase from approximately 207,000.
Money transfer revenues, operating income, adjusted EBITDA and transactions increased as a result of organic growth across the existing Ria business and full quarter contributions from the Walmart-2-Walmart product and the
Corporate and Other reports
Balance Sheet and Financial Position
Unrestricted cash on hand was
Guidance
The Company currently expects adjusted cash earnings per share for the fourth quarter 2014, assuming foreign currency exchange rates 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, adjusted operating income, adjusted EBITDA and adjusted cash earnings per share financial measures. These measures should be used in addition to, and not a substitute for, 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.
(1) Constant currency 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 goodwill and acquired intangible asset impairment charges, changes in the value of acquisition contingent consideration and non-recurring items that are considered expenses under U.S. GAAP.
(3)Adjusted EBITDA is defined as net income excluding interest, income tax expense, depreciation, amortization, share-based compensation and other non-operating or non-recurring items that are considered expenses under U.S. GAAP.
(4) Adjusted cash earnings per share is defined as diluted U.S. GAAP earnings per share excluding the tax-effected impacts of: a) foreign currency exchange gains or losses, b) goodwill impairment charges, c) gains or losses from the early retirement of debt, d) share-based compensation, e) acquired intangible asset amortization, f) non-cash interest expense, g) non-cash income tax expense, and h) other non-operating or non-recurring items. Adjusted cash earnings per share represents a performance measure and is not intended to represent a liquidity measure.
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
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| Consolidated Statements of Income | ||
| (unaudited - in millions, except share and per share data) | ||
| Three Months Ended | ||
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| 2014 | 2013 | |
| Revenues | $ 453.4 | $ 360.6 |
| Operating expenses: | ||
| Direct operating costs | 274.8 | 223.6 |
| Salaries and benefits | 64.6 | 52.9 |
| Selling, general and administrative | 44.0 | 33.2 |
| Acquisition-related contingent consideration gain | — | (19.3) |
| Depreciation and amortization | 19.3 | 14.9 |
| Total operating expenses | 402.7 | 305.3 |
| Operating income | 50.7 | 55.3 |
| Other income (expense): | ||
| Interest income | 0.8 | 0.5 |
| Interest expense | (3.1) | (2.8) |
| Other income | — | 2.8 |
| Foreign currency exchange (loss) gain | (0.7) | 2.9 |
| Total other (expense) income, net | (3.0) | 3.4 |
| Income before income taxes | 47.7 | 58.7 |
| Income tax expense | (12.8) | (10.7) |
| Net income | 34.9 | 48.0 |
| Net (income) loss attributable to noncontrolling interests | 0.1 | (0.1) |
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Net income attributable to |
$ 35.0 | $ 47.9 |
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Earnings per share attributable to |
$ 0.64 | $ 0.92 |
| Diluted weighted average shares outstanding | 54,619,793 | 52,200,472 |
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| Condensed Consolidated Balance Sheets | ||
| (in millions) | ||
| As of | ||
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As of | |
| 2014 |
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| (unaudited) | 2013 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 451.2 | $ 209.8 |
| Restricted cash | 59.2 | 78.0 |
| Inventory - PINs and other | 68.8 | 92.8 |
| Trade accounts receivable, net | 321.4 | 390.6 |
| Prepaid expenses and other current assets | 103.8 | 69.2 |
| Total current assets | 1,004.4 | 840.4 |
| Property and equipment, net | 123.4 | 116.2 |
| Goodwill and acquired intangible assets, net | 789.5 | 591.4 |
| Other assets, net | 48.7 | 50.1 |
| Total assets | $ 1,966.0 | $ 1,598.1 |
| LIABILITIES AND EQUITY | ||
| Current liabilities: | ||
| Accounts payable and other current liabilities | $ 801.5 | $ 718.7 |
| Short-term debt obligations | 11.7 | 13.3 |
| Total current liabilities | 813.2 | 732.0 |
| Debt obligations, net of current portion | 364.9 | 188.5 |
| Capital lease obligations, net of current portion | 1.9 | 2.9 |
| Deferred income taxes | 37.9 | 17.7 |
| Other long-term liabilities | 17.8 | 18.6 |
| Total liabilities | 1,235.7 | 959.7 |
| Equity | 730.3 | 638.4 |
| Total liabilities and equity | $ 1,966.0 | $ 1,598.1 |
| EURONET WORLDWIDE, INC. | |||||
| Reconciliation of Net Income to Adjusted Operating Income and Adjusted EBITDA | |||||
| (unaudited - in millions) | |||||
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Three months ended |
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| EFT Processing | epay | Money Transfer | Corporate Services | Consolidated | |
| Net income | $ 34.9 | ||||
| Add: Income tax expense | 12.8 | ||||
| Add: Total other expense, net | 3.0 | ||||
| Operating income (expense) | $ 34.2 | $ 12.4 | $ 12.6 | $ (8.5) | $ 50.7 |
| Add: Depreciation and amortization | 8.0 | 4.0 | 7.2 | 0.1 | 19.3 |
| Add: Share-based compensation | 0.2 | — | — | 2.9 | 3.1 |
| Earnings (expense) before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) (1) | $ 42.4 | $ 16.4 | $ 19.8 | $ (5.5) | $ 73.1 |
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Three months ended |
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| EFT Processing | epay | Money Transfer | Corporate Services | Consolidated | |
| Net income | $ 48.0 | ||||
| Add: Income tax expense | 10.7 | ||||
| Deduct: Total other income, net | (3.4) | ||||
| Operating income (expense) | $ 44.6 | $ 12.1 | $ 7.5 | $ (8.9) | $ 55.3 |
| Deduct: Acquisition-related contingent consideration gain | (19.3) | — | — | — | (19.3) |
| Adjusted operating income (expense) (1) | $ 25.3 | $ 12.1 | $ 7.5 | $ (8.9) | $ 36.0 |
| Add: Depreciation and amortization | 6.3 | 4.0 | 4.5 | 0.1 | 14.9 |
| Add: Share-based compensation | — | — | — | 2.9 | 2.9 |
| Earnings (expense) before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) (1) | $ 31.6 | $ 16.1 | $ 12.0 | $ (5.9) | $ 53.8 |
| (1) Adjusted EBITDA and adjusted operating income are non-GAAP measures that should be considered in addition to, and not a substitute for, net income and operating income computed in accordance with U.S. GAAP. | |||||
| EURONET WORLDWIDE, INC. | ||
| Reconciliation of Adjusted Cash Earnings per Share | ||
| (unaudited - in millions, except share and per share data) | ||
| Three Months Ended | ||
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| 2014 | 2013 | |
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Net income attributable to |
$ 35.0 | $ 47.9 |
| Foreign currency exchange loss (gain) | 0.7 | (2.9) |
| Intangible asset amortization | 7.2 | 4.2 |
| Share-based compensation | 3.1 | 2.9 |
| Acquisition-related contingent consideration gain | — | (19.3) |
| Income tax effect of above adjustments | (2.4) | (0.9) |
| Gain on sale of investment | — | (2.8) |
| Non-cash GAAP tax expense | 0.3 | 0.3 |
| Adjusted cash earnings(1) | $ 43.9 | $ 29.4 |
| Adjusted cash earnings per share - diluted(1) | $ 0.80 | $ 0.56 |
| Diluted weighted average shares outstanding (GAAP) | 54,619,793 | 52,200,472 |
| Effect of unrecognized share-based compensation on diluted shares outstanding | 315,848 | 547,746 |
| Adjusted diluted weighted average shares outstanding | 54,935,641 | 52,748,218 |
| (1) Adjusted cash earnings and adjusted cash 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:Euronet Worldwide, Inc. Stephanie Taylor +1-913-327-4200
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