|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
|
|||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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As of
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|
|||||
September 30,
2022 |
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December 31,
2021
|
|
||||
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(unaudited)
|
|
|||||
ASSETS
|
|
|
|||||
Current assets:
|
|
|
|||||
Cash and cash equivalents
|
$
|
|
$
|
|
|||
ATM cash
|
|
|
|||||
Restricted cash
|
|
|
|||||
Settlement assets
|
|
|
|||||
Trade accounts receivable, net of credit losses of $
|
|
|
|||||
Prepaid expenses and other current assets
|
|
|
|||||
Total current assets
|
|
|
|||||
Operating right of use lease assets
|
|
|
|||||
Property and equipment, net of accumulated depreciation of $
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|
|
|||||
Goodwill
|
|
|
|||||
Acquired intangible assets, net of accumulated amortization of $
|
|
|
|||||
Other assets, net of accumulated amortization of $
|
|
|
|||||
Total assets
|
$
|
|
$
|
|
|||
LIABILITIES AND EQUITY
|
|
|
|||||
Current liabilities:
|
|
|
|||||
Settlement obligations
|
$
|
|
$
|
|
|||
Trade accounts payable
|
|
|
|||||
Accrued expenses and other current liabilities
|
|
|
|||||
Current portion of operating lease liabilities
|
|
|
|||||
Short-term debt obligations and current maturities of long-term debt obligations
|
|
|
|||||
Income taxes payable
|
|
|
|||||
Deferred revenue
|
|
|
|||||
Total current liabilities
|
|
|
|||||
Debt obligations, net of current portion
|
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|
|||||
Operating lease obligations, net of current portion
|
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|
|||||
Deferred income taxes
|
|
|
|||||
Other long-term liabilities
|
|
|
|||||
Total liabilities
|
|
|
|||||
Equity:
|
|
|
|||||
Euronet Worldwide, Inc. stockholders’ equity:
|
|
|
|||||
Preferred Stock, $
|
|
|
|||||
Common Stock, $
|
|
|
|||||
Additional paid-in-capital
|
|
|
|||||
Treasury stock, at cost, shares issued
|
(
|
) |
(
|
)
|
|||
Retained earnings
|
|
|
|||||
Accumulated other comprehensive loss
|
(
|
) |
(
|
)
|
|||
Total Euronet Worldwide, Inc. stockholders’ equity
|
|
|
|||||
Noncontrolling interests
|
(
|
) |
|
||||
Total equity
|
|
|
|||||
Total liabilities and equity
|
$
|
|
$
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|||||||||||
|
|
2022
|
|
|
|
2021
|
|
|
2022
|
|
2021
|
|
|||
Revenues
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
|
Operating expenses:
|
|||||||||||||||
Direct operating costs, exclusive of depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Salaries and benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
|
(
|
) |
|
|
(
|
)
|
|
(
|
) |
(
|
)
|
|||
Foreign currency exchange gain (loss), net
|
|
(
|
) |
|
|
(
|
) |
|
(
|
) |
(
|
)
|
|||
Other gains, net
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expense, net
|
|
(
|
) |
|
|
(
|
)
|
|
(
|
) |
(
|
)
|
|||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense
|
|
(
|
) |
|
|
(
|
)
|
|
(
|
) |
(
|
)
|
|||
Net income
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to Euronet Worldwide, Inc.
|
$
|
|
|
|
$
|
|
|
|
$
|
|
$
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
|
|||||||||||||||
Basic
|
$
|
|
|
|
$
|
|
|
$
|
|
$
|
|
|
|||
Diluted
|
$
|
|
|
|
$
|
|
|
$
|
|
$
|
|
|
|||
Weighted average shares outstanding:
|
|||||||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|||||||||||
|
|
2022
|
|
|
|
2021
|
|
|
2022
|
|
2021
|
|
|||
Net income
|
$
|
|
|
|
$
|
|
|
$
|
|
$
|
|
||||
Translation adjustment
|
|
(
|
) |
|
|
(
|
) |
|
(
|
) |
(
|
) | |||
Comprehensive income (loss)
|
|
(
|
) |
|
|
|
(
|
) |
|
||||||
Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|||||||
Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
|
$
|
(
|
) |
|
$
|
|
|
$
|
(
|
) |
$
|
|
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
||||||||||||
Balance as of December 31, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||||
Net (loss) income
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
(
|
)
|
||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of March 31, 2021
|
|
|
|
(
|
)
|
||||||||||
Net (loss) income
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of June 30, 2021
|
|
|
|
(
|
) | ||||||||||
Net income
|
|
|
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Balance as of September 30, 2021
|
|
|
|
(
|
) |
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
|
|||||||||||
Balance as of December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
) | |||||||
Net income (loss)
|
|||||||||||||||
Other comprehensive loss
|
|||||||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
||||||||||||||
Repurchase of shares
|
) | ) | |||||||||||||
Adoption of ASU 2020-06
|
(
|
) | |||||||||||||
Balance as of March 31, 2022
|
|
|
|
(
|
) | ||||||||||
Net income (loss)
|
|
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
||||||||||||
Stock issued under employee stock plans
|
|
|
|
(
|
) | ||||||||||
Share-based compensation
|
|
|
|
||||||||||||
Repurchase of shares
|
( |
) |
|
|
(
|
) | |||||||||
Balance as of June 30, 2022
|
|
|
|
(
|
) | ||||||||||
Net income
|
|
|
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|||||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Repurchase of shares
|
|
|
|
|
|||||||||||
Balance as of September 30, 2022
|
|
|
|
(
|
) |
Retained Earnings
|
|
Accumulated Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
|
||||||||
Balance as of December 31, 2020
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||
Net income (loss)
|
(
|
) |
|
(
|
) | ||||||||||
Other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
Stock issued under employee stock plans
|
|
||||||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of March 31, 2021
|
|
(
|
)
|
|
|
||||||||||
Net income (loss)
|
|
(
|
) |
|
|||||||||||
Other comprehensive loss
|
|
|
|
||||||||||||
Stock issued under employee stock plans
|
|
||||||||||||||
Share-based compensation
|
|
||||||||||||||
Balance as of June 30, 2021
|
|
(
|
) |
|
|
||||||||||
Net income
|
|
|
(
|
) |
|
||||||||||
Other comprehensive income
|
|
(
|
) |
(
|
) |
(
|
) | ||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Balance as of September 30, 2021
|
|
(
|
) |
|
|
Retained Earnings
|
|
Accumulated Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
|
||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
(
|
) |
$
|
|
$
|
|
||||||
Net income (loss)
|
|
(
|
) |
|
|||||||||||
Other comprehensive loss
|
(
|
) |
(
|
) |
(
|
) | |||||||||
Stock issued under employee stock plans
|
|
||||||||||||||
Share-based compensation
|
|
||||||||||||||
Repurchase of shares
|
(
|
) | |||||||||||||
Adoption of ASU 2020-06
|
(
|
) | |||||||||||||
Balance as of March 31, 2022
|
|
(
|
) |
(
|
) |
|
|||||||||
Net income (loss)
|
|
|
(
|
) |
|
||||||||||
Other comprehensive loss
|
|
(
|
) |
(
|
) |
(
|
) | ||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Repurchase of shares
|
|
|
|
(
|
) | ||||||||||
Balance as of June 30, 2022
|
|
(
|
) |
(
|
) |
|
|||||||||
Net income (loss)
|
|
|
(
|
) |
|
||||||||||
Other comprehensive loss
|
|
(
|
) |
(
|
) |
(
|
) | ||||||||
Stock issued under employee stock plans
|
|
|
|
|
|||||||||||
Share-based compensation
|
|
|
|
|
|||||||||||
Repurchase of shares
|
|
|
|
|
|||||||||||
Balance as of September 30, 2022
|
|
(
|
) |
(
|
) |
|
|
Nine Months Ended September 30,
|
|
|||||
|
2022
|
|
2021
|
|
|||
Net income
|
$
|
|
$
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||
Depreciation and amortization
|
|
|
|||||
Share-based compensation
|
|
|
|||||
Unrealized foreign exchange loss, net
|
|
|
|||||
Deferred income taxes
|
|
|
|||||
Accretion of convertible debt discount and amortization of debt issuance costs
|
|
|
|||||
Changes in working capital, net of amounts acquired:
|
|||||||
Income taxes payable, net
|
|
|
|||||
Trade accounts receivable, including amounts in settlement assets
|
|
|
|||||
Prepaid expenses and other current assets, including amounts in settlement assets
|
(
|
) |
|
||||
Trade accounts payable, including amounts in settlement obligations
|
(
|
) |
(
|
) | |||
Deferred revenue
|
(
|
) |
(
|
) | |||
Accrued expenses and other current liabilities, including amounts in settlement obligations
|
|
|
|||||
Changes in noncurrent assets and liabilities
|
|
|
|||||
Net cash provided by operating activities
|
|
|
|||||
Cash flows from investing activities:
|
|||||||
Acquisitions, net of cash acquired
|
(
|
) |
|
||||
Purchases of property and equipment
|
(
|
) |
(
|
)
|
|||
Purchases of other long-term assets
|
(
|
) |
(
|
)
|
|||
Other, net
|
|
|
|||||
Net cash used in investing activities
|
(
|
) |
(
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Proceeds from issuance of shares
|
|
|
|||||
Repurchase of shares
|
(
|
) |
(
|
)
|
|||
Borrowings from revolving credit agreements
|
|
|
|||||
Repayments of revolving credit agreements
|
(
|
) |
(
|
)
|
|||
Net borrowings (repayments) from short-term debt obligations
|
|
|
|||||
Other, net
|
(
|
) |
(
|
) | |||
Net cash provided by (used in) financing activities
|
|
(
|
) | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
(
|
) |
(
|
) | |||
Increase (decrease) in cash and cash equivalents and restricted cash
|
(
|
) |
(
|
) | |||
Cash and cash equivalents and restricted cash at beginning of period
|
|
|
|||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
|||
Supplemental disclosure of cash flow information:
|
|||||||
Interest paid during the period
|
$
|
|
$
|
|
|||
Income taxes paid during the period
|
$
|
|
$
|
|
Euronet’s EFT Processing Segment normally experiences its heaviest demand for DCC services during the third quarter of the fiscal year, normally coinciding with the tourism season. Epay Segment is normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Also, epay sells large loyalty rewards campaigns to retailers, which could be deployed in any given quarter and will impact the activity in that quarter accordingly. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.
7 |
(3) ACQUISITIONS
On March 15, 2022 we completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes
The purchase price was €
The initial accounting for this acquisition is not complete as of September 30, 2022. The purchase price was preliminarily allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective provisional fair values at the date of acquisition. Additional time is needed to refine and review the results of the valuation of assets and liabilities. The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.
8 |
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date.
(in thousands)
|
As of March 15, 2022 | ||
Other current assets |
$
|
|
|
Settlement assets |
|
|
|
Property and equipment |
|
|
|
Acquired intangible assets |
|
|
|
Total assets acquired |
$
|
|
|
Trade accounts payable |
$
|
|
|
Settlement liabilities |
|
|
|
Accrued expenses and other current liabilities |
|
|
|
Deferred revenue |
|
|
|
Other long-term liabilities |
|
|
|
Total liabilities assumed |
$
|
|
|
Goodwill |
|
|
|
Net assets acquired
|
$
|
|
|
Assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date. The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others.
We acquired a customer relationship intangible asset with a preliminary fair value of $
Goodwill, with a preliminary value of $
The results of PBMA operations are included in our consolidated results of operation, as part of our EFT Processing business segment, beginning on March 16, 2022. For the three and nine months ended September 30, 2022, PBMA had $
9 |
As of
|
||||||||
(in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Settlement assets:
|
||||||||
Settlement cash and cash equivalents
|
$
|
|
$
|
|
||||
Settlement restricted cash
|
|
|
||||||
Accounts receivable, net of credit losses of $
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total settlement assets
|
$
|
|
$
|
|
||||
Settlement obligations:
|
||||||||
Trade account payables
|
$
|
|
$
|
|
||||
Accrued expenses and other current liabilities
|
|
|
||||||
Total settlement obligations
|
$
|
|
$
|
|
As of
|
||||||||||||||||
(in thousands)
|
September 30,
2022
|
December 31,
2021
|
September 30,
2021
|
December 31,
2020
|
||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Restricted cash
|
|
|
|
|
||||||||||||
ATM cash
|
|
|
|
|
||||||||||||
Settlement cash and cash equivalents
|
|
|
|
|
||||||||||||
Settlement restricted cash
|
|
|
|
|
||||||||||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
(5) STOCKHOLDERS' EQUITY
Earnings (Loss) Per Share
Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase our common stock, assumed vesting of restricted stock and the assumed conversion of our convertible debt, if such conversion would be dilutive.
10 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|||||
Computation of diluted earnings:
|
||||||||||||
Net income (loss)
|
$ |
|
$ |
|
$
|
|
$
|
|
||||
Add: Interest expense from assumed conversion of convertible notes, net of tax
|
|
|
|
|
|
|
|
|||||
Net income (loss) for diluted earnings per share calculation
|
$ |
|
$
|
|
$
|
|
$
|
|
||||
Computation of diluted weighted average shares outstanding:
|
||||||||||||
Basic weighted average shares outstanding
|
|
|
|
|
|
|
|
|||||
Incremental shares from assumed exercise of stock options and vesting of restricted stock
|
|
|
|
|
|
|
|
|||||
Incremental shares from assumed conversion of convertible debt
|
|
|
|
|
|
|
||||||
Diluted weighted average shares outstanding
|
|
|
|
|
|
|
|
The table includes all stock options and restricted stock that are dilutive to our weighted average common shares outstanding during the period. The calculation of diluted earnings (loss) per share excludes stock options or shares of restricted stock that are anti-dilutive to our weighted average common shares outstanding of approximately
We issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. Our Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of our common stock or a combination thereof, at our option. We have stated our intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes shall be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, our Convertible Notes were included in the calculation of diluted earnings (loss) per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $
Share repurchases
On February 26, 2020, we put a repurchase program in place to repurchase up to $
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. We recorded foreign currency translation losses of $
11 |
(in thousands)
|
Acquired
Intangible
Assets
|
Goodwill
|
Total
Intangible
Assets
|
|||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
||||||
Increases (decreases):
|
|
|
|
|||||||||
Acquisition
|
|
|
|
|||||||||
Amortization
|
(
|
) |
|
(
|
) | |||||||
Foreign currency exchange rate changes
|
(
|
) |
(
|
) |
(
|
) | ||||||
Balance as of September 30, 2022
|
$
|
|
$
|
|
$
|
|
Of the total goodwill balance of $
As of
|
||||||||
(in thousands)
|
September 30,
2022
|
December 31, 2021
|
||||||
Accrued expenses
|
$
|
|
$
|
|
||||
Derivative liabilities
|
|
|
||||||
Accrued payroll expenses |
|
|
||||||
Current portion of finance lease obligations
|
|
|
||||||
Total
|
$
|
|
$
|
|
12 |
As of
|
|
|||||||
(in thousands)
|
September 30,
2022
|
|
December 31, 2021
|
|
||||
Credit Facility:
|
||||||||
Revolving credit agreement
|
$
|
|
$
|
|
||||
|
|
|
|
|
||||
Uncommitted credit agreement
|
|
|
|
|
||||
Convertible Debt:
|
||||||||
|
|
|
||||||
|
|
|
||||||
Other obligations
|
|
|
||||||
Total debt obligations
|
|
|
||||||
Unamortized debt issuance costs
|
(
|
) |
(
|
)
|
||||
Carrying value of debt
|
|
|
||||||
Short-term debt obligations and current maturities of long-term debt obligations
|
(
|
) |
(
|
)
|
||||
Long-term debt obligations
|
$
|
|
$
|
|