UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
Form 8-K
_______________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 19, 2023
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(Commission file number)
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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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(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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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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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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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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ITEM 2.02. Results of Operations and Financial Condition.
On October 19, 2023, Euronet Worldwide, Inc. issued a press release to report its financial results for the quarter ended September 30, 2023. The press release is attached hereto as Exhibit 99.1.
The information in Item 2.02 to this Current Report, including without limitation Exhibit 99.1, is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934 except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
Number
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Description
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99.1
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Euronet Worldwide, Inc.
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By:
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___________________
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Rick L. Weller
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Chief Financial Officer
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Date: October 19, 2023
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Contact:
Euronet Worldwide, Inc.
Genese Hill
+1-913-327-4200
Euronet Worldwide Reports Third Quarter 2023 Financial Results
LEAWOOD, KANSAS, USA - October 19, 2023 - Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ: EEFT), a leading global financial technology solutions and payments provider, reports third quarter 2023 financial results.
Euronet reports the following consolidated results for the third quarter 2023 compared with the same period of 2022:
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Revenues of $1,004.0 million, an 8% increase from $931.3 million (3% increase on a constant currency1 basis).
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Operating income of $167.0 million, a 1% decrease from $168.5 million (6% decrease on a constant currency basis).
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Adjusted EBITDA2 of $212.5 million, consistent with $211.6 million (4% decrease on a constant currency basis).
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Net income attributable to Euronet of $104.2 million, or $2.05 diluted earnings per share, compared with $97.7 million, or $1.87 diluted earnings per share.
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Adjusted earnings per share3 of $2.72, a 1% decrease from $2.74.
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Euronet's cash and cash equivalents were $1,074.4 million and ATM cash was $603.5 million, totaling $1,677.9 million as of September 30, 2023, and availability under its revolving credit facilities was approximately $1,080 million.
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See the reconciliation of non-GAAP items in the attached financial schedules.
"I am pleased that we were able to deliver our first one billion dollar revenue quarter. This third quarter is a great reminder of how our product and geographical diversity provides consistency in our earnings despite the geopolitical and economic challenges across the world. Moreover, with the current share price dislocation, we took the opportunity to make a substantial share repurchase, the benefit to adjusted EPS was largely offset by the weakening of foreign currencies versus the US dollar," stated Michael J. Brown, Euronet's Chairman and CEO.
Taking into consideration recent trends in the business and the global economy, and historical seasonal patterns, the Company anticipates that its fourth quarter 2023 adjusted EPS will be $1.75. Moreover, the Company anticipates its 2024 adjusted EPS will grow 10-15% year-over-year, consistent with its 10 and 20 year compounded annualized growth rates. This outlook does not include any changes that may develop in foreign exchange rates, interest rates or other unforeseen factors.
Segment and Other Results
The EFT Processing Segment reports the following results for the third quarter 2023 compared with the same period or date in 2022:
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Revenues of $345.8 million, an 8% increase from $319.5 million (2% increase on a constant currency1 basis).
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Operating income of $104.8 million, a 10% decrease from $116.4 million (15% decrease on a constant currency basis).
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Adjusted EBITDA of $128.7 million, an 8% decrease from $139.5 million (12% decrease on a constant currency basis).
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Transactions of 2,231 million, a 29% increase from 1,733 million.
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Total of 53,272 installed ATMs as of September 30, 2023, a 4% increase from 51,437. Operated 51,496 active ATMs as of September 30, 2023, a 4% increase from 49,617 as of September 30, 2022.
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Revenue growth in the third quarter 2023 was driven by continued growth in our POS acquiring business and growth in Asia as we expand into new markets. The decreases in adjusted EBITDA and operating income were the result of decreases in our most profitable international transactions driven by a decline in Croatia due to the switch from kuna to the euro at the beginning of the year and inflationary pressures on travel budgets in Europe.
Transaction growth outpaced revenue growth due to continued growth in high-volume low-value transactions in India.
The EFT Segment's total installed ATMs grew 4% from the addition of 495 Euronet-owned ATMs, 388 new outsourcing ATMs and the addition of 952 low-margin ATMs in India. The difference between installed and active ATMs relates to ATMs that have been seasonally deactivated.
The epay Segment reports the following results for the third quarter 2023 compared with the same period or date in 2022:
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Revenues of $264.5 million, a 6% increase from $248.9 million (1% increase on a constant currency basis).
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Operating income of $28.3 million, a 3% decrease from $29.1 million (6% decrease on a constant currency basis).
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Adjusted EBITDA of $30.1 million, a 1% decrease from $30.5 million (5% decrease on a constant currency basis).
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Transactions of 925 million, a 1% increase from 915 million.
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POS terminals of approximately 810,000 as of September 30, 2023, a 4% increase from approximately 777,000.
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Retailer locations of approximately 348,000 as of September 30, 2023, a 1% decrease from approximately 352,000.
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Revenue and transaction growth was driven by continued digital media and mobile growth. This growth was offset by declines in promotional campaigns delivered on behalf of our retail partners that were recognized in the prior year that did not repeat in the third quarter this year and continued declines from challenges in India, and inflationary pressures impacting operating expenses.
The Money Transfer Segment reports the following results for the third quarter 2023 compared with the same period or date in 2022:
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Revenues of $395.9 million, an 8% increase from $364.9 million (6% increase a constant currency basis).
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Operating income of $53.7 million, a 32% increase from $40.7 million (27% increase on a constant currency basis).
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Adjusted EBITDA of $60.7 million, a 24% increase from $48.9 million (20% increase on a constant currency basis).
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Total transactions of 40.6 million, an 8% increase from 37.7 million.
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Network locations of approximately 540,000 as of September 30, 2023, a 6% increase from approximately 509,000.
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Third quarter constant currency revenue, operating income and adjusted EBITDA growth was the result of 7% growth in U.S.-outbound transactions, 10% growth in international-originated money transfers - which included 12% growth from Americas outside the US, 8% growth in transfers initiated largely in Europe and 7% growth in transfers initiated in the Middle East and Asia - and 18% growth in xe transactions. These transaction growth rates include 20% growth in direct-to-consumer digital transactions.
Corporate and Other reports $19.8 million of expense for the third quarter 2023 compared with $17.7 million for the third quarter 2022. The increase is primarily due to an increase in long-term compensation expense based on company performance.
Balance Sheet and Financial Position
Unrestricted cash and cash equivalents on hand was $1,074.4 million as of September 30, 2023, compared to $1,137.5 million as of June 30, 2023. The decrease in unrestricted cash and cash equivalents is mainly due to approximately $300 million in share repurchases and working capital fluctuations, partially offset by cash generated from operations of $146 million and $173ATM cash returned as the peak tourist season winds down.
Total indebtedness was $1,717.3 million as of September 30, 2023, compared to $1,760.8 million as of June 30, 2023. Availability under the Company's revolving credit facilities was approximately $1,080 million as of September 30, 2023.
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 EBITDA, and adjusted earnings per share. These measures should be used in addition to, and not a substitute for, revenues, net 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 and non-GAAP reconciliation, including adjustments that would be necessary for foreign 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 EBITDA is defined as net income excluding, to the extent incurred in the period, interest expense, income tax expense, depreciation, amortization, share-based compensation, non-cash gain 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.
(3) 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) share-based compensation, c) acquired intangible asset amortization, d) non-cash income tax expense, e) other non-operating or non-recurring items and g) dilutive shares relate to the Company's convertible bonds. Adjusted earnings per share represents a performance measure and is not intended to represent a liquidity measure.
Conference Call and Slide Presentation
Euronet Worldwide will host an analyst conference call on October 20, 2023, at 9:00 a.m. Eastern Time to discuss these results. The call may also include discussion of Company developments on the Company's operations, forward-looking information, and other material information about business and financial matters. To listen to the call via telephone please register at Euronet Worldwide Third Quarter 2023 Earnings Call. The conference call will also be available via webcast at http://ir.euronetworldwide.com. Participants should register at least five minutes prior to the scheduled start time of the event. 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.
Starting in Central Europe in 1994 and growing to a global real-time digital and cash payments network with millions of touchpoints today, Euronet now moves money in all the ways consumers and businesses depend upon. This includes money transfers, credit/debit card processing, ATMs, POS services, branded payments, foreign currency exchange and more. With products and services in more than 200 countries and territories provided through its own brand and branded business segments, Euronet and its financial technologies and networks make participation in the global economy easier, faster and more secure for everyone.
A leading global financial technology solutions and payments provider, Euronet has developed an extensive global payments network that includes 53,272 installed ATMs, approximately 637,000 EFT POS terminals and a growing portfolio of outsourced debit and credit card services which are under management in 66 countries; card software solutions; a prepaid processing network of approximately 810,000 POS terminals at approximately 348,000 retailer locations in 61 countries; and a global money transfer network of approximately 540,000 locations serving 194 countries and territories. Euronet serves clients from its corporate headquarters in Leawood, Kansas, USA, and 67 worldwide offices. 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 impacts from the COVID-19 or other pandemics; inflation; the war in the Ukraine; military conflicts in the Middle East, and the related economic sanctions; our ability to successfully integrate any acquired operations; economic conditions in specific countries and regions; technological developments affecting the market for our products and services; our ability to successfully introduce new products and services; foreign currency exchange rate fluctuations; the effects of any breach of our computer systems or those of our customers or vendors, including our financial processing networks or those of other third parties; interruptions in any of our systems or those of our vendors or other third parties; our 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; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection and privacy; changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including dynamic currency conversion transactions; changes in our relationships with, or in fees charged by, our business partners; competition; the outcome of claims and other loss contingencies affecting Euronet; the cost of borrowing (including fluctuations in interest rates), availability of credit and terms of and compliance with debt covenants; and renewal of sources of funding as they expire and the availability of replacement funding. 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. 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.
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EURONET WORLDWIDE, INC.
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Condensed Consolidated Balance Sheets
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(in millions)
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As of
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September 30,
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As of
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2023
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December 31,
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(unaudited)
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2022
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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1,074.4
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$
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1,131.2
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ATM cash
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603.5
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515.6
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Restricted cash
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14.1
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7.4
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Settlement assets
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1,242.3
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1,442.7
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Trade accounts receivable, net
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300.6
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270.8
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Prepaid expenses and other current assets
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301.5
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359.0
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Total current assets
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3,536.4
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3,726.7
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Property and equipment, net
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327.9
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336.6
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Right of use lease asset, net
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140.0
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149.7
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Goodwill and acquired intangible assets, net
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985.2
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1,016.6
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Other assets, net
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173.4
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174.0
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Total assets
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$
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5,162.9
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$
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5,403.6
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LIABILITIES AND EQUITY
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Current liabilities:
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Settlement obligations
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$
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1,242.3
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$
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1,442.7
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Accounts payable and other current liabilities
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825.5
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858.1
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Current portion of operating lease liabilities
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49.1
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50.2
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Short-term debt obligations
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451.9
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3.1
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Total current liabilities
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2,568.8
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2,354.1
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Debt obligations, net of current portion
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1,263.0
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1,609.1
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Operating lease liabilities, net of current portion
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95.1
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102.6
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Capital lease obligations, net of current portion
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2.4
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1.3
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Deferred income taxes
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28.5
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28.4
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Other long-term liabilities
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62.9
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63.7
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Total liabilities
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4,020.7
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4,159.2
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Equity
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1,142.2
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1,244.4
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Total liabilities and equity
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$
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5,162.9
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$
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5,403.6
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EURONET WORLDWIDE, INC.
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Consolidated Statements of Operations
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(unaudited - in millions, except share and per share data)
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Three Months Ended
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September 30,
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2023
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2022
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Revenues
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$
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1,004.0
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$
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931.3
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Operating expenses:
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Direct operating costs
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576.7
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526.0
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Salaries and benefits
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153.6
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134.4
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Selling, general and administrative
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73.9
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69.6
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Depreciation and amortization
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32.8
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32.8
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Total operating expenses
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837.0
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762.8
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Operating income
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167.0
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168.5
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Other income (expense):
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Interest income
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4.0
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0.6
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Interest expense
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(15.0
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(11.7
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Foreign currency exchange loss
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(8.8
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) |
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(15.8
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Total other expense, net
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(19.8
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) |
(26.9
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Income before income taxes
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147.2
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141.6
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Income tax expense
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(43.0
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) |
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(44.0
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Net income
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104.2
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97.6
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Net loss attributable to noncontrolling interests
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—
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0.1
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Net income attributable to Euronet Worldwide, Inc.
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$
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104.2
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$
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97.7
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Add: Interest expense from assumed conversion of convertible notes, net of tax
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1.1
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1.1
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Net income for diluted earnings per share calculation
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$
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105.3
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$
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98.8
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Earnings per share attributable to Euronet
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Worldwide, Inc. stockholders - diluted
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$ |
2.05
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$
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1.87
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Diluted weighted average shares outstanding
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51,470,603
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52,751,304
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EURONET WORLDWIDE, INC.
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Reconciliation of Net Income to Operating Income (Expense) and Adjusted EBITDA
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(unaudited - in millions)
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Three months ended September 30, 2023
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EFT Processing
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epay
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Money Transfer
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Corporate Services
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Consolidated
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|||||||||||||||
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Net income
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$
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104.2
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Add: Income tax expense
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43.0
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Add: Total other expense, net
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19.8
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Operating income (expense)
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$
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104.8
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$
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28.3
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$
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53.7
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$
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(19.8
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) |
$
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167.0
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|
|||||
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Add: Depreciation and amortization
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23.9
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|
1.8
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|
7.0
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|
0.1
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|
32.8
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Add: Share-based compensation
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—
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—
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—
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12.7
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|
12.7
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Earnings before interest, taxes, depreciation, amortization, share-based compensation (Adjusted EBITDA) (1)
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$
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128.7
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$
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30.1
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$
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60.7
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$
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(7.0
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) |
$
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212.5
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Three months ended September 30, 2022
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EFT Processing
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epay
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Money Transfer
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Corporate Services
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Consolidated
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|||||||||||||||
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Net income
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$
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97.6
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|||||||||||||||||
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Add: Income tax expense
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44.0
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||||||||||||||||||
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Add: Total other expense, net
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26.9
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|
|||||||||||||||||
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Operating income (expense)
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$
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116.4
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$
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29.1
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|
$
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40.7
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$
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(17.7
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) |
$
|
168.5
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|||||||
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Add: Depreciation and amortization
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23.1
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|
1.4
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|
8.2
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|
0.1
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|
32.8
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Add: Share-based compensation
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—
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—
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—
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10.3
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10.3
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Earnings before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) (1)
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$
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139.5
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$
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30.5
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$
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48.9
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|
$
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(7.3
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) |
$
|
211.6
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|
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(1) 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.
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EURONET WORLDWIDE, INC.
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|||||||
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Reconciliation of Adjusted Earnings per Share
|
|||||||
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(unaudited - in millions, except share and per share data)
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|||||||
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Three Months Ended
|
|||||||
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September 30,
|
|||||||
|
2023
|
2022
|
||||||
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Net income attributable to Euronet Worldwide, Inc.
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$
|
104.2
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$
|
97.7
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Foreign currency exchange loss
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8.8
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15.8
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|||||
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Intangible asset amortization(1)
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5.5
|
|
6.8
|
|
|||
|
Share-based compensation(2)
|
12.7
|
|
10.3
|
|
|||
|
Income tax effect of above adjustments(3)
|
(4.7
|
) |
5.6
|
||||
|
Non-cash GAAP tax expense(4)
|
6.2
|
|
1.1
|
|
|||
|
Adjusted earnings(5)
|
$
|
132.7
|
|
$
|
137.3
|
|
|
|
Adjusted earnings per share - diluted(5)
|
$
|
2.72
|
|
$
|
2.74
|
|
|
|
Diluted weighted average shares outstanding (GAAP)
|
|
51,470,603
|
|
52,751,304
|
|
||
|
Effect of adjusted EPS dilution of convertible notes
|
|
(2,781,818 | ) | (2,781,818 | ) | ||
|
Effect of unrecognized share-based compensation on diluted shares outstanding
|
185,073
|
|
160,357
|
|
|||
|
Adjusted diluted weighted average shares outstanding
|
|
48,873,858
|
|
50,129,843
|
|
||
|
|
|
|
|
|
|||
(1) Intangible asset amortization of $5.5 million and $6.8 million are included in depreciation and amortization expense of $32.8 million for both the three months ended September 30, 2023and September 30, 2022, in the consolidated statements of operations.
(2) Share-based compensation of $12.7 million and $10.3 million are included in salaries and benefits expense of $153.6 million and $134.4 million for the three months ended September 30, 2023 and September 30, 2022, respectively, in the consolidated statements of operations.
(3) 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.
(4) Adjustment is the non-cash GAAP tax impact recognized on certain items such as the utilization of certain material net deferred tax assets and amortization of indefinite-lived intangible assets.
(5) 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.