Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ:EEFT),
a leading electronic payments provider, reports first quarter 2017
financial results.
Euronet reports the following
consolidated results for the first quarter 2017 compared with the
same period of 2016:
- Revenues of $473.4 million, an 8% increase from $437.9 million
(10% increase on a constant currency(1) basis).
- Operating income of $41.3 million, a 1% decrease from $41.9
million (essentially flat on a constant currency basis).
- Adjusted operating income(2) of $42.5 million, a 1% increase
from $41.9 million (3% increase on a constant currency basis).
- Adjusted EBITDA(3) of $67.8 million, a 4% increase from $64.9
million (7% increase on a constant currency basis).
- Net income attributable to Euronet of $28.1 million or $0.51
diluted earnings per share, compared with net income of $29.1
million or $0.53 diluted earnings per share.
- Adjusted earnings per share(4) of $0.73, a 6% increase from
$0.69.
- Transactions of 865 million, a 13% increase from 765
million.
Note: Costs related to the proposed MoneyGram
transaction are included in Corporate expense and are excluded from
adjusted operating income, adjusted EBITDA and adjusted EPS.
See the reconciliation of non-GAAP items in the attached financial
schedules.
"I am pleased that we continued to deliver
double-digit consolidated constant currency revenue growth in the
first quarter," stated Michael J. Brown, Euronet's Chairman and
Chief Executive Officer. "Due to the seasonal nature of our
business, the first quarter is our lowest quarter because we
continue to deploy assets that will produce seasonally stronger
results in the second and third quarters. The EFT and Money
Transfer segment's businesses started the year with strong revenue
growth despite the first quarter being our seasonally lowest
quarter and we expect improvements from epay as we move through the
year. ATM deployments continued at a nice pace, money
transfers remain strong at double-digit growth rates and we
continue to add more non-mobile content in epay. All-in-all,
we're off to a great start for 2017 and well positioned to deliver
another year of double-digit consolidated growth."
Segment and Other Results
The EFT Processing Segment
reports the following results for the first quarter 2017 compared
with the same period or date in 2016:
- Revenues of $105.8 million, a 22% increase from $86.6 million
(24% increase on a constant currency basis).
- Operating income of $11.0 million, a 17% decrease from $13.3
million (15% decrease on a constant currency basis).
- Adjusted EBITDA of $22.8 million, a 3% increase from $22.1
million (5% increase on a constant currency basis).
- Transactions of 537 million, a 27% increase from 424
million.
- Operated 35,145 ATMs as of March 31, 2017, a 42% increase
from 24,761.
First quarter constant currency revenue and
adjusted EBITDA growth was a result of a 42% year-over-year
increase in ATMs and a 27% increase in transactions, primarily from
Europe, India and the October 2016 acquisition of YourCash.
In the first quarter, the EFT segment continued to deliver strong
ATM deployment levels, adding 570 high-value ATMs, primarily in
Europe and India, 250 low-margin ATMs in India and re-activating
351 ATMs in Europe.
The decline in operating income is the result of
anticipated income impacts from the cash demonetization constraints
of the India network and higher first quarter operating costs on
the recently deployed ATMs, which is more pronounced this year as a
result of the increased costs related to the success of deploying
approximately 16% more high-value ATMs in 2016 compared to prior
years. The impact of these two factors to the first quarter
operating income was approximately $4.0 million, without which,
adjusted EBITDA would have grown in-line with revenue growth.
For the first quarter, transaction growth
outpaced changes in revenue and operating income as a result of a
large number of low-value debit card transactions from low-margin
processing agreements signed in India.
The epay Segment reports the
following results for the first quarter 2017 compared with the same
period or date in 2016:
- Revenues of $164.1 million, a 4% decrease from $170.1 million
(1% decrease on a constant currency basis).
- Operating income of $13.9 million, a 12% decrease from $15.8
million (9% decrease on a constant currency basis).
- Adjusted EBITDA of $16.4 million, a 13% decrease from $18.9
million (11% decrease on a constant currency basis).
- Transactions of 308 million, a 4% decrease from 322
million.
- Point-of-sale ("POS") terminals of approximately 666,000 as of
March 31, 2017, a 1% increase from approximately 658,000.
- Retailer locations of approximately 308,000 as of
March 31, 2017, a 2% increase from approximately 301,000.
epay constant currency revenue declines were
primarily the result of certain mobile transaction declines,
largely offset by increased sales of non-mobile products.
Similar to prior years, epay segment first quarter revenues
declined year-over-year, largely as a result of declines in the
mobile product which is less seasonal throughout the year, while
non-mobile products are more heavily weighted to the fourth
quarter. Accordingly, the declines in the first quarter are
expected to be covered by growth in the non-mobile products as we
move through to the fourth quarter.
Operating income and adjusted EBITDA declined at
a faster rate than revenue due to favorable expense items in the
prior year and increased advertising costs related to certain
non-mobile customer campaigns and product launches.
The Money Transfer Segment
reports the following results for the first quarter 2017 compared
with the same period or date in 2016:
- Revenues of $204.0 million, a 12% increase from $181.6 million
(14% increase on a constant currency basis).
- Operating income of $26.1 million, a 21% increase from $21.5
million (22% increase on a constant currency basis).
- Adjusted EBITDA of $33.4 million, a 16% increase from $28.8
million (18% increase on a constant currency basis).
- Total transactions of 20.7 million, an 11% increase from 18.7
million.
- Network locations of approximately 321,000 as of March 31,
2017, a 4% increase from approximately 310,000.
Double-digit money transfer revenue, operating
income, adjusted EBITDA and transaction growth was driven by growth
across all sectors of Ria's business together with continued
expansion of the HiFX and XE international payments businesses.
First quarter money transfers grew 12% and
non-transfer transactions, such as currency exchange and check
cashing, grew 1%, resulting in total transaction growth of 11%.
Corporate and Other reports
$9.7 million of expense for the first quarter 2017 compared with
$8.7 million for the first quarter 2016. Excluding costs
related to the proposed MoneyGram transaction, adjusted operating
expense would have been $8.5 million for the first quarter 2017
compared with $8.7 million for the first quarter 2016.
Balance Sheet and Financial
PositionUnrestricted cash on hand was $763.6 million as of
March 31, 2017, compared to $734.4 million as of December 31,
2016. Cash increased primarily as a result of free cash flows
generated from operations offset by cash paid for capital
expenditures. Total indebtedness was $604.9 million as of
March 31, 2017, compared to $604.2 million as of December 31,
2016.
GuidanceThe Company currently
expects adjusted earnings per share for the second quarter 2017,
assuming foreign currency exchange rates remain stable through the
end of the quarter, to be approximately $1.09.
Non-GAAP MeasuresIn 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 potential
MoneyGram acquisition.
(3)Adjusted EBITDA is defined as net income
excluding interest, income tax expense, depreciation, amortization,
share-based compensation, expenses related to the potential
MoneyGram acquisition and other non-operating or non-recurring
items that are considered expenses or income under U.S. GAAP.
Adjusted EBITDA represents a performance measure and is not
intended to represent a liquidity measure.
(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 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 potential MoneyGram
acquisition, g) non-cash interest expense, h) non-cash income tax
expense, and i) other non-operating or non-recurring items.
Adjusted earnings per share represents a performance measure and is
not intended to represent a liquidity measure.
Conference Call and Slide
PresentationEuronet Worldwide will host an analyst
conference call on April 26, 2017, at 9:00 a.m. Eastern Time to
discuss these results. The call may also include discussion of
company developments, forward-looking information and other
material information about business and financial matters. To
listen to the call via telephone, dial 877-303-6313 (USA) or
+1-631-813-4734 (outside the USA). The conference call will also be
available via webcast at http://ir.euronetworldwide.com.
Participants should go to the website at least five minutes prior
to the scheduled start time of the event to register. A slideshow
will be included in the webcast.
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 Euronet Worldwide,
Inc.Euronet Worldwide is an industry leader in processing
secure electronic financial transactions. The Company offers
payment and transaction processing solutions to financial
institutions, retailers, service providers and individual
consumers. These services include comprehensive ATM, POS and card
outsourcing services, card issuing and merchant acquiring services,
software solutions, cash-based and online-initiated
consumer-to-consumer and business-to-business money transfer
services, and electronic distribution of prepaid mobile phone time
and other prepaid products.
Euronet's global payment network is extensive -
including 35,145 ATMs, approximately 176,000 EFT POS terminals and
a growing portfolio of outsourced debit and credit card services
which are under management in 53 countries; card software
solutions; a prepaid processing network of approximately 666,000
POS terminals at approximately 308,000 retailer locations in 35
countries; and a global money transfer network of approximately
321,000 locations serving 146 countries. With corporate
headquarters in Leawood, Kansas, USA, and 61 worldwide offices,
Euronet serves clients in approximately 160 countries. For more
information, please visit the Company's website at
www.euronetworldwide.com.
Statements contained in this news release that
concern Euronet's or its management's intentions, expectations, or
predictions of future performance, are forward-looking statements.
Euronet's actual results may vary materially from those anticipated
in such forward-looking statements as a result of a number of
factors, including: conditions in world financial markets and
general economic conditions, including the effects in Europe of the
recent Brexit vote and economic conditions in specific countries or
regions; the effects of demonetization in India; technological
developments affecting the market for the Company's products and
services; foreign currency exchange rate fluctuations; the effects
of any breaches in the security of our computer systems or those of
our customers or vendors; the Company's ability to renew existing
contracts at profitable rates; changes in fees payable for
transactions performed for cards bearing international logos or
over switching networks such as card transactions on ATMs; changes
in the Company's relationship with, or in fees charged by, the
Company's business partners; competition; the outcome of claims and
other loss contingencies affecting the Company; and changes in laws
and regulations affecting the Company's business, including
immigration laws. These risks and other risks are described in the
Company's filings with the Securities and Exchange Commission,
including our Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. Copies of these filings may
be obtained via the SEC's Edgar website or by contacting the
Company or the SEC. Any forward-looking statements made in this
release speak only as of the date of this release. Except as may be
required by law, Euronet does not intend to update these
forward-looking statements and undertakes no duty to any person to
provide any such update under any circumstances. The Company
regularly posts important information to the investor relations
section of its website.
EURONET WORLDWIDE, INC. |
Condensed Consolidated Balance
Sheets |
(in millions) |
|
|
|
|
|
|
|
|
|
As of |
|
|
|
March 31, |
|
As of |
|
2017 |
|
December 31, |
|
(unaudited) |
|
2016 |
|
|
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and
cash equivalents |
$ |
763.6 |
|
|
$ |
734.4 |
|
Restricted cash |
100.0 |
|
|
77.7 |
|
Inventory
- PINs and other |
44.0 |
|
|
78.1 |
|
Trade
accounts receivable, net |
370.9 |
|
|
503.0 |
|
Prepaid
expenses and other current assets |
166.7 |
|
|
191.8 |
|
|
|
|
|
|
|
Total
current assets |
1,445.2 |
|
|
1,585.0 |
|
|
|
|
|
Property
and equipment, net |
217.9 |
|
|
202.1 |
|
Goodwill
and acquired intangible assets, net |
859.6 |
|
|
855.0 |
|
Other
assets, net |
75.1 |
|
|
70.8 |
|
|
|
|
|
Total
assets |
$ |
2,597.8 |
|
|
$ |
2,712.9 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and other current liabilities |
$ |
973.4 |
|
|
$ |
1,143.6 |
|
Short-term debt obligations |
34.1 |
|
|
35.5 |
|
|
|
|
|
Total
current liabilities |
1,007.5 |
|
|
1,179.1 |
|
|
|
|
|
Debt
obligations, net of current portion |
562.2 |
|
|
561.7 |
|
Capital
lease obligations, net of current portion |
8.6 |
|
|
7.0 |
|
Deferred
income taxes |
44.4 |
|
|
44.1 |
|
Other
long-term liabilities |
21.4 |
|
|
20.5 |
|
|
|
|
|
Total
liabilities |
1,644.1 |
|
|
1,812.4 |
|
|
|
|
|
Equity |
953.7 |
|
|
900.5 |
|
|
|
|
|
Total liabilities and equity |
$ |
2,597.8 |
|
|
$ |
2,712.9 |
|
|
|
|
|
EURONET WORLDWIDE, INC. |
Consolidated Statements of
Income |
(unaudited - in millions, except share
and per share data) |
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
2017 |
|
2016 |
|
|
|
|
Revenues |
$ |
473.4 |
|
|
$ |
437.9 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Direct
operating costs |
296.6 |
|
|
271.6 |
|
Salaries
and benefits |
71.9 |
|
|
67.2 |
|
Selling,
general and administrative |
42.0 |
|
|
37.9 |
|
Depreciation and amortization |
21.6 |
|
|
19.3 |
|
Total
operating expenses |
432.1 |
|
|
396.0 |
|
Operating
income |
41.3 |
|
|
41.9 |
|
|
|
|
|
Other income
(expense): |
|
|
|
Interest
income |
1.2 |
|
|
0.5 |
|
Interest
expense |
(7.2 |
) |
|
(6.4 |
) |
Foreign
currency exchange gain |
1.7 |
|
|
2.2 |
|
Total
other expense, net |
(4.3 |
) |
|
(3.7 |
) |
Income
before income taxes |
37.0 |
|
|
38.2 |
|
|
|
|
|
Income
tax expense |
(9.0 |
) |
|
(9.1 |
) |
Net
income |
28.0 |
|
|
29.1 |
|
Net loss
attributable to noncontrolling interests |
0.1 |
|
|
— |
|
|
|
|
|
|
|
Net
income attributable to Euronet Worldwide, Inc. |
$ |
28.1 |
|
|
$ |
29.1 |
|
|
|
|
|
|
|
|
|
Earnings
per share attributable to Euronet |
|
|
|
Worldwide, Inc. stockholders - diluted |
$ |
0.51 |
|
|
$ |
0.53 |
|
Diluted
weighted average shares outstanding |
54,921,779 |
|
|
54,529,588 |
|
|
|
|
|
EURONET WORLDWIDE, INC. |
Reconciliation of Net Income to Adjusted
Operating Income (Expense) and Adjusted EBITDA |
(unaudited - in millions) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2017 |
|
|
|
|
|
|
|
|
|
|
|
EFT Processing |
|
epay |
|
Money Transfer |
|
Corporate Services |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
$ |
28.0 |
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax
expense |
|
|
|
|
|
|
|
|
9.0 |
|
Add: Total other
expense, net |
|
|
|
|
|
|
|
|
4.3 |
|
|
|
|
|
|
|
|
|
|
|
Operating income
(expense) |
$ |
11.0 |
|
|
$ |
13.9 |
|
|
$ |
26.1 |
|
|
$ |
(9.7 |
) |
|
$ |
41.3 |
|
|
|
|
|
|
|
|
|
|
|
Add: Expenses incurred
for proposed acquisition of MoneyGram |
— |
|
|
— |
|
|
— |
|
|
1.2 |
|
|
1.2 |
|
Adjusted operating
income (expense) (1) |
11.0 |
|
|
13.9 |
|
|
26.1 |
|
|
(8.5 |
) |
|
42.5 |
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation and
amortization |
11.8 |
|
|
2.5 |
|
|
7.3 |
|
|
— |
|
|
21.6 |
|
Add: Share-based
compensation |
— |
|
|
— |
|
|
— |
|
|
3.7 |
|
|
3.7 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (expense)
before interest, taxes, depreciation, amortization, proposed
transaction expenses and share-based compensation (Adjusted EBITDA)
(2) |
$ |
22.8 |
|
|
$ |
16.4 |
|
|
$ |
33.4 |
|
|
$ |
(4.8 |
) |
|
$ |
67.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2016 |
|
|
|
|
|
|
|
|
|
|
|
EFT Processing |
|
epay |
|
Money Transfer |
|
Corporate Services |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
$ |
29.1 |
|
|
|
|
|
|
|
|
|
|
|
Add: Income tax
expense |
|
|
|
|
|
|
|
|
9.1 |
|
Add: Total other
expense, net |
|
|
|
|
|
|
|
|
3.7 |
|
|
|
|
|
|
|
|
|
|
|
Operating income
(expense) |
$ |
13.3 |
|
|
$ |
15.8 |
|
|
$ |
21.5 |
|
|
$ |
(8.7 |
) |
|
$ |
41.9 |
|
|
|
|
|
|
|
|
|
|
|
Add: Depreciation and
amortization |
8.8 |
|
|
3.1 |
|
|
7.3 |
|
|
0.1 |
|
|
19.3 |
|
Add: Share-based
compensation |
— |
|
|
— |
|
|
— |
|
|
3.7 |
|
|
3.7 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (expense)
before interest, taxes, depreciation, amortization and share-based
compensation (Adjusted EBITDA) (2) |
$ |
22.1 |
|
|
$ |
18.9 |
|
|
$ |
28.8 |
|
|
$ |
(4.9 |
) |
|
$ |
64.9 |
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted operating income excludes costs related to
the potential acquisition of MoneyGram and 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.
(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 |
|
March 31, |
|
2017 |
|
2016 |
|
|
|
|
Net income attributable
to Euronet Worldwide, Inc. |
$ |
28.1 |
|
|
$ |
29.1 |
|
|
|
|
|
Foreign currency
exchange gain |
(1.7 |
) |
|
(2.2 |
) |
Intangible asset
amortization |
6.3 |
|
|
6.4 |
|
Share-based
compensation |
3.7 |
|
|
3.7 |
|
Expenses incurred
for proposed acquisition of MoneyGram |
1.2 |
|
|
— |
|
Income tax effect
of above adjustments |
(1.6 |
) |
|
(1.9 |
) |
Non-cash interest
accretion |
2.7 |
|
|
2.6 |
|
Non-cash GAAP tax
expense |
1.8 |
|
|
— |
|
|
|
|
|
Adjusted
earnings(1) |
$ |
40.5 |
|
|
$ |
37.7 |
|
|
|
|
|
Adjusted earnings
per share - diluted(1) |
$ |
0.73 |
|
|
$ |
0.69 |
|
|
|
|
|
Diluted weighted
average shares outstanding (GAAP) |
54,921,779 |
|
|
54,529,588 |
|
|
|
|
|
Effect of unrecognized
share-based compensation on diluted shares outstanding |
284,102 |
|
|
233,357 |
|
|
|
|
|
|
|
Adjusted diluted
weighted average shares outstanding |
55,205,881 |
|
|
54,762,945 |
|
|
|
|
|
(1) 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:
Euronet Worldwide, Inc.
Stephanie Taylor
+1-913-327-4200
Euronet Worldwide (NASDAQ:EEFT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Euronet Worldwide (NASDAQ:EEFT)
Historical Stock Chart
From Sep 2023 to Sep 2024