Euronet grows revenues in Q1

Euronet reports the following consolidated results for the first quarter 2012:

Revenues of $297.6 million, a 13% increase from $262.6 million for the first quarter 2011 (16% increase on a constant currency(1) basis).
Operating income of $15.8 million, an 8% decrease from $17.2 million for the first quarter 2011 (5% decrease on a constant currency basis).
Adjusted EBITDA(2) of $35.4 million, a 5% increase from $33.6 million for the first quarter 2011 (10% increase on a constant currency basis).
Net income attributable to Euronet of $13.2 million or $0.26 diluted earnings per share, compared with income of $17.3 million or $0.33 diluted earnings per share for the first quarter 2011.
Adjusted cash earnings per share(3) of $0.33, compared with $0.30 for the first quarter 2011.
Transactions of 539 million, compared with 454 million for the first quarter 2011.

See the reconciliation of non-GAAP items in the attached financial schedules.

"I am pleased with the double-digit revenue and transaction growth delivered by each of our segments," stated Michael J. Brown, Euronet's Chairman and Chief Executive Officer. "This revenue and transaction growth was the leading contributor to the double-digit increase in adjusted cash earnings per share. I am excited about the momentum in each segment and feel we are well positioned to continue this growth in the coming quarters."

Segment and Other Results

The EFT Processing Segment reports the following results for the first quarter 2012:

Revenues of $49.9 million, a 12% increase from $44.4 million for the first quarter 2011 (22% increase on a constant currency basis).
Operating income of $6.0 million, a 2% decrease from $6.1 million for the first quarter 2011 (5% increase on a constant currency basis).
Adjusted EBITDA of $12 million, a 9% increase from $11.0 million for the first quarter 2011 (17% increase on a constant currency basis).
Transactions of 266 million, compared with 206 million s of 266 million, compared with 206 million for the first quarter 2011.
ATMs operated of 15,614 as of March 31, 2012, compared with 11,055 as of March 31, 2011.

Revenue expansion in the quarter is attributable to a 41% growth in ATMs under management, transaction growth in nearly all EFT markets, sales of value added products and acquisitions made in the fourth quarter in Poland and Romania, together with the purchase of 51% of the outstanding shares of the Euronet Middle East (ENME) joint venture during the current quarter. Partially offsetting these revenue gains was the first quarter 2011 recognition of previously deferred revenue related to a customer discontinuing a certain product in Greece. The impact of this prior year item accounted for operating income growing at a lower rate than revenue when adjusted for FX.

Transaction growth of 29% was primarily attributable to the Company's European cross-border acquiring product and Indian, Chinese, Pakistani, Polish, and Romanian operations. Transaction growth outpaced revenue growth due to a greater contribution of lower yielding transactions in India, China, Pakistan and the European cross-border acquiring business. ATM growth is primarily the result of ATMs acquired in Poland and Romania, independently deployed ATMs in Europe and new agreements in India.

The epay Segment reports the following results for the first quarter 2012:

Revenues of $176.4 million, a 14% increase from $155.1 million for the first quarter 2011 (16% increase on a constant currency basis).
Operating income of $13.2 million, a 1% increase from $13.1 million for the first quarter 2011 (2% increase on a constant currency basis).
Adjusted EBITDA of $18.3 million, a 4% increase from $17.6 million for the first quarter 2011 (6% increase on a constant currency basis).
Transactions of 266 million, compared with 243 million for the first quarter 2011.
Point of sale ("POS") terminals of approximately 607,000 as of March 31, 2012, compared with approximately 562,000 as of March 31, 2011.
Retailer locations of approximately 294,000 as of March 31, 2012, compared with approximately 278,000 as of March 31, 2011.

The epay Segment's revenue growth was largely the result of last year's cadooz acquisition. Operating income was positively impacted by increased volume of prepaid products in the U.S. market, continued demand for non-mobile content in Germany, and the cadooz acquisition. These increases were offset by previously announced declines in Brazil due to a change in mobile operator distribution strategy in that market and in Australia where certain large retailers entered into direct agreements with two mobile operators last year. The percentage growth in revenue outpaced operating income largely because of the cadooz acquisition, where vouchers sold are generally recognized at their face value.

The Money Transfer Segment reports the following results for the first quarter 2012:

Revenues of $71.4 million, a 13% increase from $63.2 million for the first quarter 2011 (15% increase on a constant currency basis).
Operating income of $4.3 million, a 54% increase from $2.8 million for the first quarter 2011 (57% increase on a constant currency basis).
Adjusted EBITDA of $9.0 million, a 10% increase from $8.2 million for the first quarter 2011 (12% increase on a constant currency basis).
Total transactions of 6.7 million, compared with 5.3 million for the first quarter 2011.
Network locations of approximately 155,000 as of March 31, 2012, compared with approximately 107,000 as of March 31, 2011.

Revenue, operating income and Adjusted EBITDA compared to the same quarter in the prior year expanded as a result of an overall increase of 26% in total transactions, with growth in virtually every corridor. U.S.-based transactions grew 15% compared with the first quarter last year, with transactions to Mexico growing 17%. Transactions originated outside the U.S. increased 12% despite tough economic conditions in Europe. The segment continued to see strong growth in non-money transfer transactions which increased 113% over the same quarter last year. Increased operating profit is attributed to momentum gained from network expansion, which increased 45% in total locations over the same quarter last year. Operating income also reflects the benefit of certain intangible assets being fully amortized.

Corporate and other reported $7.7 million of expense for the first quarter 2012 compared with $4.8 million for the first quarter 2011. The increase in year-over-year corporate expense is primarily attributable to higher stock-based incentive compensation expense related to improved Company performance.

Balance Sheet and Financial Position

The Company's unrestricted cash on hand was $180.7 million as of March 31, 2012, compared to $170.7 million as of December 31, 2011 and total indebtedness was $337.2 million as of March 31, 2012, compared to $338.8 million as of December 31, 2011. The $10.0 million increase in cash is the result of operating free cash flows produced during the first quarter 2012, offset by the acquisition of 51% of ENME and debt payments on the term loan and revolving credit facility.

Guidance

The Company currently expects adjusted cash earnings per share for the second quarter 2012 to be approximately $0.39, assuming foreign currency rates remain stable through the end of the quarter.