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Euronet Worldwide Reports Third Quarter 2013 Financial Results

Stocks in this article: EEFT

Euronet's global payment network is extensive - including 17,795 ATMs, approximately 68,000 EFT POS terminals and a growing portfolio of outsourced debit and credit card services which are under management in 43 countries; card software solutions; a prepaid processing network of approximately 636,000 POS terminals at approximately 291,000 retailer locations in 35 countries; and a consumer-to-consumer money transfer network of approximately 207,000 locations serving 134 countries. With corporate headquarters in Leawood, Kansas, USA, and 52 worldwide offices, Euronet serves clients in approximately 155 countries. For more information, please visit the Company's website at .

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 economic conditions in specific countries or regions; technological developments affecting the market for the Company's products and services; foreign currency exchange rate fluctuations; the effects of any potential future computer security breaches; 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. 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.

Consolidated Statements of Operations
(unaudited - in millions, except share and per share data)
  Three Months Ended
  September 30,
  2013 2012
Revenues  $ 360.6  $ 316.4
Operating expenses:    
Direct operating costs 223.6 200.4
Salaries and benefits 52.9 45.6
Selling, general and administrative 33.2 30.0
Acquisition-related contingent consideration gain (19.3)
Depreciation and amortization 14.9 16.2
Total operating expenses 305.3 292.2
Operating income 55.3 24.2
Other income (expense):    
Interest income 0.5 0.9
Interest expense (2.8) (5.6)
Income from unconsolidated affiliates 0.2
Gain on sale of investment 2.8
Foreign currency exchange gain 2.9 1.4
Total other income (expense), net 3.4 (3.1)
Income before income taxes 58.7 21.1
Income tax expense (10.7) (6.8)
Net income 48.0 14.3
Net (income) loss attributable to noncontrolling interests (0.1) 0.3
Net income attributable to Euronet Worldwide, Inc.  $ 47.9  $ 14.6
Earnings per share attributable to Euronet Worldwide, Inc. stockholders - diluted  $ 0.92  $ 0.28
Diluted weighted average shares outstanding 52,200,472 51,597,319
Condensed Consolidated Balance Sheets
(in millions)
  As of
  September 30, As of
  2013 December 31,
  (unaudited) 2012
Current assets:    
Cash and cash equivalents  $ 244.5  $ 201.4
Restricted cash 63.1 71.7
Inventory - PINs and other 61.3 101.2
Trade accounts receivable, net 317.9 370.8
Other current assets, net 58.2 68.1
Total current assets 745.0 813.2
Property and equipment, net 111.9 115.5
Goodwill and acquired intangible assets, net 608.2 565.2
Other assets, net 49.4 57.6
Total assets  $ 1,514.5  $ 1,551.5
Current liabilities:    
Accounts payable and other current liabilities  $ 614.5  $ 686.7
Short-term debt obligations 11.4 10.0
Total current liabilities 625.9 696.7
Debt obligations, net of current portion 235.3 286.7
Capital lease obligations, net of current portion 3.4 4.6
Deferred income taxes 20.3 22.0
Other long-term liabilities 16.1 14.9
Total liabilities 901.0 1,024.9
Equity 613.5 526.6
Total liabilities and equity  $ 1,514.5  $ 1,551.5
Reconciliation of Net Income to Adjusted Operating Income (Expense) and Adjusted EBITDA
(unaudited - in millions)
  Three months ended September 30, 2013
  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
  Three months ended September 30, 2012
  EFT Processing epay Money Transfer Corporate Services Consolidated
Net income          $ 14.3
Add: Income tax expense         6.8
Add: Total other expense, net         3.1
Operating income (expense)  $ 14.5  $ 10.1  $ 6.2 $ (6.6) 24.2
Add: Depreciation and amortization 6.4 5.0 4.7 0.1 16.2
Add: Share-based compensation 2.2 2.2
Earnings (expense) before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) (1)  $ 20.9  $ 15.1  $ 10.9 $ (4.3)  $ 42.6
(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.
Reconciliation of Adjusted Cash Earnings per Share
(unaudited - in millions, except share and per share data)
  Three Months Ended
  September 30,
  2013 2012
Net income attributable to Euronet Worldwide, Inc. $ 47.9 $ 14.6
3.5% convertible debt interest and amortization of issuance costs, net of tax (1) 3.7
Earnings applicable for common shareholders --- cash earnings per share 47.9 18.3
Foreign currency exchange gain, net of tax (2.8) (1.4)
Intangible asset amortization, net of tax 3.4 4.4
Share-based compensation, net of tax 2.7 2.0
Acquisition-related contingent consideration gain (19.3)
Gain on sale of investment (2.8)
Non-cash GAAP tax expense 0.3 0.4
 Adjusted cash earnings (2) $ 29.4 $ 23.7
 Adjusted cash earnings per share - diluted (2) $ 0.56 $ 0.42
Diluted weighted average shares outstanding 52,200,472 51,597,319
Effect of assumed conversion of convertible debentures (1) 4,235,136
Effect of unrecognized share-based compensation on diluted shares outstanding 547,746 673,037
Adjusted diluted weighted average shares outstanding 52,748,218 56,505,492
(1) As required by U.S. GAAP, the interest cost and amortization of the convertible debt issuance cost are excluded from income for the purpose of calculating diluted earnings per share for any period when the convertible debentures, if converted, would be dilutive to earnings per share. Further, the convertible shares are treated as if all were outstanding for the period. Although the assumed conversion of the convertible debentures was not dilutive to the Company's GAAP earnings for the three months ended September 30, 2012, it was dilutive to the Company's adjusted cash earnings per share. Accordingly, the interest cost is excluded from income and the convertible shares are treated as if all were outstanding for the period.
(2) 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

Euronet Worldwide, Inc. logo

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