Euronet Worldwide, Inc., a leading electronic payments provider, reports second quarter 2013 financial results.
Euronet reports the following consolidated results for the second quarter 2013 compared with the same period of 2012:
- Revenues of $341.5 million, a 13% increase from $302.4 million (13% increase on a constant currency(1) basis).
- Operating income of $27.8 million, a 40% increase from $19.9 million (38% increase on a constant currency basis).
- Adjusted EBITDA(2) of $47.7 million, a 22% increase from $39.0 million (21% increase on a constant currency basis).
- Net income attributable to Euronet of $18.1 million or $0.35 diluted earnings per share, compared with net income of $5.7 million or $0.11 diluted earnings per share.
- Adjusted cash earnings per share(3) of $0.48, a 23% increase from $0.39.
- Transactions of 587 million, a 3% increase from 570 million.
See the reconciliation of non-GAAP items in the attached financial schedules.
"Overall, this was another exceptional quarter for our business with 23% year-over-year growth in cash earnings per share for the second quarter," stated Michael J. Brown, Chairman and Chief Executive Officer. "All three segments contributed to our double-digit growth in consolidated revenue, adjusted EBITDA and operating income. EFT and Money Transfer growth remained strong, driven by network expansion and increased demand for value added products. epay continued its improvement, led by increased sales of non-mobile products and prepaid mobile growth in the U.S. With tailwinds in all three segments, we are well positioned to continue this strong momentum into the second half of the year."
Segment and Other Results
The EFT Processing Segment reports the following results for the second quarter 2013 compared with the same period of 2012:
- Revenues of $72.2 million, a 24% increase from $58.3 million (23% increase on a constant currency basis).
- Operating income of $15.0 million, a 46% increase from $10.3 million (43% increase on a constant currency basis).
- Adjusted EBITDA of $22.7 million, a 37% increase from $16.6 million (34% increase on a constant currency basis).
- Transactions of 296 million, a 2% increase from 291 million.
- Operated 17,242 ATMs as of June 30, 2013, a 1% increase from 17,048.
Revenue, operating income and adjusted EBITDA growth in the quarter was the result of an increase in sales of value added products, improved performance from brown label ATMs in India and ATM network expansion.
Transactions grew 2%, led by growth in Serbia, Euronet Middle East, Pakistan, Romania and Poland. ATM growth of 1% was primarily attributable to expansion in Poland, Euronet Middle East and China. Partially offsetting transaction and ATM growth were declines stemming from the previously announced contract termination by a government bank in India, which represented a substantial number of ATMs and transactions, but produced minimal revenue or operating profit. Excluding the impact of the contract termination in India, transaction and ATM growth would have been 9% and 11%, respectively.
Revenue grew more than transactions and ATMs after adjusting for the lost contract described above due to the growth in sales of value added products, improved rates on the Indian brown label ATMs and the January 2013 acquisition of Pure Commerce. Adjusted EBITDA and operating income growth exceeded revenue growth as a result of leverage obtained from the business.
The epay Segment reports the following results for the second quarter 2013 compared with the same period of 2012:
- Revenues of $176.6 million, a 6% increase from $166.7 million (6% increase on a constant currency basis).
- Operating income of $12.4 million, a 23% increase from $10.1 million (23% increase on a constant currency basis).
- Adjusted EBITDA of $16.3 million, a 7% increase from $15.3 million (7% increase on a constant currency basis).
- Transactions of 282 million, a 4% increase from 272 million.
- Point of sale ("POS") terminals of approximately 689,000 as of June 30, 2013, a 12% increase from approximately 617,000.
- Retailer locations of approximately 348,000 as of June 30, 2013, a 17% increase from approximately 297,000.
Revenue, operating income and adjusted EBITDA expansion in the quarter resulted from growth of non-mobile product sales, particularly in Germany, increased prepaid mobile sales in the U.S. and the November 2012 acquisition of ezi-pay in New Zealand. Partially offsetting this growth were declines in Australia as well as start-up expenses in Russia and Turkey. The increase in operating income also reflects the benefit of lower intangible expense in Spain, Brazil and Germany due to the net book value of certain intangible assets in those countries being fully amortized; excluding these benefits, operating income growth was consistent with revenue and adjusted EBITDA growth.
The Money Transfer Segment reports the following results for the second quarter 2013 compared with the same period of 2012:
- Revenues of $93.4 million, a 21% increase from $77.5 million (20% increase on a constant currency basis).
- Operating income of $8.8 million, a 31% increase from $6.7 million (30% increase on a constant currency basis).
- Adjusted EBITDA of $13.3 million, an 18% increase from $11.3 million (17% increase on a constant currency basis).
- Total transactions of 8.9 million, a 20% increase from 7.4 million.
- Network locations of approximately 204,000 as of June 30, 2013, a 29% increase from approximately 158,000.
Revenue, adjusted EBITDA and operating income growth in the quarter was driven by a 20% increase in total transactions. Transaction growth was attributable to continued sales successes, economic recovery in certain markets and expansion of the network, which grew 29% over the same quarter last year. Money transfer transactions increased 22%. U.S.-initiated transfers increased 26% year-over-year, including a 27% increase in transfers to Mexico. Non-U.S. initiated transfers increased 15%.
Corporate and Other reports $8.4 million of expense for the second quarter 2013 compared with $7.2 million for the second quarter 2012. The increase in Corporate expense is primarily attributable to long-term stock-based incentive compensation expense related to improved Company performance.
Balance Sheet and Financial Position
Unrestricted cash on hand was $189.9 million as of June 30, 2013, compared to $161.5 million as of March 31, 2013. Cash increased primarily as a result of cash flows generated from operations. Total indebtedness was $295.5 million as of June 30, 2013, compared to $291.1 million as of March 31, 2013.
The Company currently expects adjusted cash earnings per share for the third quarter 2013, assuming foreign currency exchange rates remain stable through the end of the quarter, to be approximately $0.54. This strong adjusted cash earnings per share guidance reflects developments in the business, which now produces seasonally higher third quarter results more consistent with the Company's historically higher fourth quarter earnings.