☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
to
|
Delaware
|
74-2806888
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
11400 Tomahawk Creek Parkway, Suite 300
|
|
|
Leawood,
|
Kansas
|
66211
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock
|
EEFT
|
Nasdaq Global Select Market
|
1.375% Senior Notes due 2026
|
EEFT26
|
Nasdaq Global Market
|
Large accelerated filer
|
þ
|
Accelerated filer
|
o
|
|
Non-accelerated filer
|
o
|
|||
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
|
|
As of
|
|
|||||
September 30,
2023 |
|
December 31,
2022
|
|
||||
|
(unaudited)
|
|
|||||
ASSETS
|
|
|
|||||
Current assets:
|
|
|
|||||
Cash and cash equivalents
|
$
|
1,074.4
|
$
|
1,131.2
|
|||
ATM cash
|
603.5
|
515.6
|
|||||
Restricted cash
|
14.1
|
7.4
|
|||||
Settlement assets
|
1,242.3
|
1,442.7
|
|||||
Trade accounts receivable, net of credit losses of $3.7 and $4.0
|
300.6
|
270.8
|
|||||
Prepaid expenses and other current assets
|
301.5
|
359.0
|
|||||
Total current assets
|
3,536.4
|
3,726.7
|
|||||
Operating right of use lease assets
|
140.0
|
149.7
|
|||||
Property and equipment, net of accumulated depreciation of $620.1 and $576.4
|
327.9
|
336.6
|
|||||
Goodwill
|
817.8
|
828.3
|
|||||
Acquired intangible assets, net of accumulated amortization of $202.4 and $199.2
|
167.4
|
188.3
|
|||||
Other assets, net of accumulated amortization of $73.5 and $68.0
|
173.4
|
174.0
|
|||||
Total assets
|
$
|
5,162.9
|
$
|
5,403.6
|
|||
LIABILITIES AND EQUITY
|
|
|
|||||
Current liabilities:
|
|
|
|||||
Settlement obligations
|
$
|
1,242.3
|
$
|
1,442.7
|
|||
Trade accounts payable
|
207.0
|
222.4
|
|||||
Accrued expenses and other current liabilities
|
469.1
|
505.8
|
|||||
Current portion of operating lease liabilities
|
49.1
|
50.2
|
|||||
Short-term debt obligations and current maturities of long-term debt obligations
|
450.1
|
0.1
|
|||||
Income taxes payable
|
96.5
|
67.5
|
|||||
Deferred revenue
|
54.7
|
65.4
|
|||||
Total current liabilities
|
2,568.8
|
2,354.1
|
|||||
Debt obligations, net of current portion
|
1,263.0
|
1,609.1
|
|||||
Operating lease obligations, net of current portion
|
95.1
|
102.6
|
|||||
Deferred income taxes
|
28.5
|
28.4
|
|||||
Other long-term liabilities
|
65.3
|
65.0
|
|||||
Total liabilities
|
4,020.7
|
4,159.2
|
|||||
Equity:
|
|
|
|||||
Euronet Worldwide, Inc. stockholders’ equity:
|
|
|
|||||
Preferred Stock, $0.02 par value. 10,000,000 shares authorized; none issued
|
—
|
—
|
|||||
Common Stock, $0.02 par value. 90,000,000 shares authorized; shares issued 64,205,802 and 64,091,387
|
1.3
|
1.3
|
|||||
Additional paid-in-capital
|
1,293.6
|
1,251.8
|
|||||
Treasury stock, at cost, shares issued 18,044,759 and 14,269,645
|
(1,429.7
|
) |
(1,105.8
|
) | |||
Retained earnings
|
1,558.7
|
1,348.3
|
|||||
Accumulated other comprehensive loss
|
(281.1
|
) |
(251.0
|
) | |||
Total Euronet Worldwide, Inc. stockholders’ equity
|
1,142.8
|
1,244.6
|
|||||
Noncontrolling interests
|
(0.6
|
) |
(0.2
|
) | |||
Total equity
|
1,142.2
|
1,244.4
|
|||||
Total liabilities and equity
|
$
|
5,162.9
|
$
|
5,403.6
|
1 |
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
|
|
2023
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2022
|
|
Revenues
|
$
|
1,004.0
|
|
|
$
|
931.3
|
|
|
$
|
2,730.3
|
|
|
$
|
2,493.1
|
|
Operating expenses:
|
|||||||||||||||
Direct operating costs, exclusive of depreciation
|
|
576.7
|
|
|
|
526.0
|
|
|
|
1,626.4
|
|
|
|
1,484.9
|
|
Salaries and benefits
|
|
153.6
|
|
|
|
134.4
|
|
|
|
444.9
|
|
|
|
392.5
|
|
Selling, general and administrative
|
|
73.9
|
|
|
|
69.6
|
|
|
|
224.4
|
|
|
|
207.6
|
|
Depreciation and amortization
|
|
32.8
|
|
|
|
32.8
|
|
|
|
99.4
|
|
|
|
101.8
|
|
Total operating expenses
|
|
837.0
|
|
|
|
762.8
|
|
|
|
2,395.1
|
|
|
|
2,186.8
|
|
Operating income
|
|
167.0
|
|
|
|
168.5
|
|
|
|
335.2
|
|
|
|
306.3
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
4.0
|
|
|
|
0.6
|
|
|
|
10.1
|
|
|
|
0.9
|
|
Interest expense
|
|
(15.0
|
) |
|
|
(11.7
|
) |
|
|
(39.1
|
) |
|
|
(26.6 |
)
|
Foreign currency exchange loss, net
|
|
(8.8
|
) |
|
|
(15.8
|
) | (3.6 | ) | (36.0 | ) | ||||
Other (losses) gains, net
|
|
—
|
|
|
—
|
|
|
|
(0.1
|
) |
|
|
0.2
|
|
|
Other expense, net
|
|
(19.8
|
) |
|
|
(26.9
|
) |
|
|
(32.7
|
) |
|
|
(61.5
|
) |
Income before income taxes
|
|
147.2
|
|
|
|
141.6
|
|
|
|
302.5
|
|
|
|
244.8
|
|
Income tax expense
|
|
(43.0
|
) |
|
|
(44.0
|
) |
|
|
(92.5
|
) |
|
|
(81.9
|
)
|
Net income
|
|
104.2
|
|
|
|
97.6
|
|
|
|
210.0
|
|
|
|
162.9
|
|
Net loss attributable to noncontrolling interests
|
|
—
|
|
|
|
0.2
|
|
|
|
0.4
|
|
|
|
0.4
|
|
Net income attributable to Euronet Worldwide, Inc.
|
$
|
104.2
|
|
|
$
|
97.8
|
|
|
$
|
210.4
|
|
|
$
|
163.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Euronet Worldwide, Inc. stockholders:
|
|||||||||||||||
Basic
|
$
|
2.15
|
|
|
$
|
1.97 |
|
|
$
|
4.27
|
|
|
$
|
3.24
|
|
Diluted
|
$
|
2.05
|
|
|
$
|
1.87 |
|
|
$
|
4.07
|
|
|
$
|
3.10
|
|
Weighted average shares outstanding:
|
|||||||||||||||
Basic
|
|
48,406,473
|
|
|
|
49,583,317
|
|
|
|
49,285,143
|
|
|
|
50,345,293
|
|
Diluted
|
|
51,470,603
|
|
|
|
52,751,304
|
|
|
|
52,446,292
|
|
|
|
53,688,800
|
|
2 |
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
|
|
2023
|
|
|
|
2022
|
2023 | 2022 | |||||||
Net income
|
$
|
104.2
|
|
|
$
|
97.6
|
$ | 210.0 | $ | 162.9 | |||||
Translation adjustment
|
|
(61.0
|
) |
|
|
(100.5
|
) | (30.1 | ) | (209.9 | ) | ||||
Comprehensive income (loss)
|
|
43.2
|
|
|
(2.9 | ) | 179.9 | (47.0 | ) | ||||||
Comprehensive income attributable to noncontrolling interests
|
|
(0.1
|
) |
|
|
(0.3
|
) | (0.4 | ) | (0.6 | ) | ||||
Comprehensive income (loss) attributable to Euronet Worldwide, Inc.
|
$
|
43.1
|
|
$
|
(3.2
|
) | $ | 179.5 | $ | (47.6 | ) |
3 |
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
||||||||||||
Balance as of December 31, 2021
|
51,147,884
|
$
|
1.3
|
$
|
1,274.1
|
$
|
(931.2
|
)
|
|||||||
Net income (loss)
|
— | — | |||||||||||||
Other comprehensive loss
|
— | — | |||||||||||||
Stock issued under employee stock plans
|
40,173
|
0.0
|
2.0
|
0.2
|
|
||||||||||
Share-based compensation
|
9.8
|
— | |||||||||||||
Repurchase of shares
|
) |
—
|
(70.4 | ) | |||||||||||
Adoption of ASU 2020-06
|
(74.1
|
) | — | ||||||||||||
Balance as of March 31, 2022
|
50,548,522
|
1.3
|
1,211.8
|
(1,001.4
|
)
|
||||||||||
Net income (loss)
|
—
|
—
|
—
|
—
|
|
||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
|
||||||||||
Stock issued under employee stock plans
|
31,233
|
0.0
|
1.3
|
(0.1
|
)
|
||||||||||
Share-based compensation
|
—
|
—
|
10.2
|
—
|
|
||||||||||
Repurchase of shares
|
(1,000,000
|
) |
—
|
—
|
(104.6
|
)
|
|||||||||
Balance as of June 30, 2022
|
49,579,755
|
1.3
|
1,223.3
|
(1,106.1
|
) | ||||||||||
Net income (loss)
|
—
|
—
|
—
|
—
|
|||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
|||||||||||
Stock issued under employee stock plans
|
13,398
|
—
|
0.5
|
0.2
|
|||||||||||
Share-based compensation
|
—
|
—
|
10.3
|
—
|
|||||||||||
Balance as of September 30, 2022
|
49,593,153
|
$ |
1.3
|
$ |
1,234.1
|
$ |
(1,105.9
|
) |
Number of
Shares Outstanding
|
Common
Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
|
|||||||||||
Balance as of December 31, 2022
|
49,822,707
|
$
|
1.3
|
$
|
1,251.8
|
$
|
(1,105.8
|
) | |||||||
Net income (loss)
|
— | — |
— | ||||||||||||
Other comprehensive income
|
— | — | — | ||||||||||||
Stock issued under employee stock plans
|
79,859
|
—
|
0.5
|
0.5
|
|||||||||||
Share-based compensation
|
— |
14.3
|
— | ||||||||||||
Repurchase of shares
|
) | — | — | ) | |||||||||||
Balance as of March 31, 2023
|
49,626,166
|
1.3
|
1,266.6
|
(1,133.6
|
) | ||||||||||
Net income (loss)
|
—
|
—
|
—
|
—
|
|||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
|||||||||||
Stock issued under employee stock plans
|
30,188
|
—
|
1.3
|
—
|
|||||||||||
Share-based compensation
|
—
|
—
|
12.4
|
—
|
|||||||||||
Repurchase of shares
|
(810
|
) |
—
|
—
|
(0.1
|
) | |||||||||
Balance as of June 30, 2023
|
49,655,544
|
1.3
|
1,280.3
|
(1,133.7
|
) | ||||||||||
Net income (loss)
|
—
|
—
|
—
|
—
|
|||||||||||
Other comprehensive income
|
—
|
—
|
—
|
—
|
|||||||||||
Stock issued under employee stock plans
|
12,548
|
—
|
0.6
|
0.1
|
|||||||||||
Share-based compensation
|
—
|
—
|
12.7
|
—
|
|||||||||||
Repurchase of shares
|
(3,507,049
|
) |
—
|
—
|
(296.1
|
) | |||||||||
Balance as of September 30, 2023
|
46,161,043
|
$ |
1.3
|
$ |
1,293.6
|
$ |
(1,429.7
|
) |
4 |
Retained Earnings
|
|
Accumulated Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
|
||||||||
Balance as of December 31, 2021
|
$
|
1,083.9
|
$
|
(172.6
|
)
|
$
|
—
|
$
|
1,255.5
|
||||||
Net income (loss)
|
8.3
|
— |
—
|
8.3
|
|||||||||||
Other comprehensive loss
|
— |
(21.1
|
)
|
—
|
|
(21.1
|
)
|
||||||||
Stock issued under employee stock plans
|
— | — |
|
|
— |
2.2
|
|||||||||
Share-based compensation
|
— | — |
|
|
— |
9.8
|
|||||||||
Repurchase of shares
|
— |
— |
|
|
— |
(70.4
|
) | ||||||||
Adoption of ASU 2020-06
|
33.4 | — |
|
— |
(40.7
|
) | |||||||||
Balance as of March 31, 2022
|
1,125.6
|
(193.7
|
)
|
—
|
1,143.6
|
||||||||||
Net income (loss)
|
57.3
|
—
|
|
(0.2
|
) |
57.1
|
|||||||||
Other comprehensive loss
|
—
|
(88.2
|
)
|
(0.1
|
) |
(88.3
|
) | ||||||||
Stock issued under employee stock plans
|
— |
|
— |
|
|
— |
1.2
|
||||||||
Share-based compensation
|
— |
|
— |
|
|
— |
10.2
|
||||||||
Repurchase of shares
|
— |
|
— |
|
|
— |
(104.6
|
) | |||||||
Balance as of June 30, 2022
|
1,182.9
|
(281.9
|
) |
(0.3
|
) |
1,019.2
|
|||||||||
Net income (loss)
|
97.8
|
—
|
(0.2
|
) |
97.6
|
||||||||||
Other comprehensive loss
|
—
|
(100.4
|
) |
(0.1
|
) |
(100.5
|
) | ||||||||
Stock issued under employee stock plans
|
—
|
—
|
—
|
0.7
|
|||||||||||
Share-based compensation
|
—
|
—
|
—
|
10.3
|
|||||||||||
Repurchase of shares
|
—
|
—
|
—
|
—
|
|||||||||||
Balance as of September 30, 2022
|
$ |
1,280.7
|
$ |
(382.3
|
) | $ |
(0.6
|
) | $ |
1,027.3
|
Retained Earnings
|
|
Accumulated Other
Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
|
|
||||||||
Balance as of December 31, 2022
|
$
|
1,348.3
|
$
|
(251.0
|
) |
$
|
(0.2
|
) |
$
|
1,244.4
|
|||||
Net income (loss)
|
20.1
|
— |
(0.3
|
) |
19.8
|
||||||||||
Other comprehensive income
|
— |
20.8
|
0.1
|
20.9
|
|||||||||||
Stock issued under employee stock plans
|
— | — | — |
1.0
|
|||||||||||
Share-based compensation
|
— | — | — |
14.3
|
|||||||||||
Repurchase of shares
|
— | — | — |
(28.3
|
) | ||||||||||
Balance as of March 31, 2023
|
1,368.4
|
(230.2
|
) |
(0.4
|
) |
1,272.1
|
|||||||||
Net income (loss)
|
86.1
|
—
|
(0.1
|
) |
86.0
|
||||||||||
Other comprehensive income
|
—
|
10.0
|
—
|
10.0
|
|||||||||||
Stock issued under employee stock plans
|
—
|
—
|
—
|
1.3
|
|||||||||||
Share-based compensation
|
—
|
—
|
—
|
12.4
|
|||||||||||
Repurchase of shares
|
—
|
—
|
—
|
(0.1
|
) | ||||||||||
Balance as of June 30, 2023
|
1,454.5
|
(220.2
|
) |
(0.5
|
) |
1,381.7
|
|||||||||
Net income
|
104.2
|
—
|
—
|
104.2
|
|||||||||||
Other comprehensive income
|
—
|
(60.9
|
) |
(0.1
|
) |
(61.0
|
) | ||||||||
Stock issued under employee stock plans
|
—
|
—
|
—
|
0.7
|
|||||||||||
Share-based compensation
|
—
|
—
|
—
|
12.7
|
|||||||||||
Repurchase of shares
|
—
|
—
|
—
|
(296.1
|
) | ||||||||||
Balance as of September 30, 2023
|
$ |
1,558.7
|
$ |
(281.1
|
) | $ |
(0.6
|
) | $ |
1,142.2
|
5 |
|
Nine Months Ended September 30,
|
|
|||||
|
2023
|
2022
|
|
||||
Net income
|
$
|
210.0
|
$
|
162.9
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||
Depreciation and amortization
|
99.4
|
101.8
|
|||||
Share-based compensation
|
39.5
|
30.3
|
|||||
Unrealized foreign exchange loss, net
|
3.6
|
36.0
|
|||||
Deferred income taxes
|
(5.9
|
) |
12.2
|
||||
Amortization of debt issuance costs
|
3.0
|
2.4
|
|||||
Changes in working capital, net of amounts acquired:
|
|||||||
Income taxes payable, net
|
29.7
|
9.2
|
|||||
Trade accounts receivable, including amounts in settlement assets
|
157.1
|
6.1
|
|||||
Prepaid expenses and other current assets, including amounts in settlement assets
|
73.8
|
(205.4
|
) | ||||
Trade accounts payable, including amounts in settlement obligations
|
(200.0
|
) |
(107.1
|
) | |||
Deferred revenue
|
(10.7
|
) |
(11.0
|
) | |||
Accrued expenses and other current liabilities, including amounts in settlement obligations
|
110.3
|
400.9
|
|||||
Changes in noncurrent assets and liabilities
|
(2.4
|
) |
10.4
|
||||
Net cash provided by operating activities
|
507.4
|
448.7
|
|||||
Cash flows from investing activities:
|
|||||||
Acquisitions, net of cash acquired
|
0.2
|
(331.4
|
) | ||||
Purchases and proceeds of property and equipment
|
(69.1
|
) |
(79.4
|
)
|
|||
Purchases of other long-term assets
|
(6.3
|
) |
(5.8
|
)
|
|||
Other, net
|
0.6
|
0.5
|
|||||
Net cash used in investing activities
|
(74.6
|
) |
(416.1
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Proceeds from issuance of shares
|
3.1
|
4.4
|
|||||
Repurchase of shares
|
(325.4
|
) |
(175.3
|
)
|
|||
Borrowings from credit agreements
|
6,294.1
|
5,924.1
|
|||||
Repayments of credit agreements
|
(6,177.9
|
) |
(5,581.2
|
)
|
|||
Net borrowings (repayments) from short-term debt obligations |
—
|
4.6
|
|||||
Other, net
|
(2.2
|
) |
(3.1
|
) | |||
Net cash provided by financing activities
|
(208.3
|
) |
173.5
|
||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
(172.0
|
) |
(413.7
|
) | |||
Increase/(decrease) in cash and cash equivalents and restricted cash
|
52.5
|
(207.6
|
) | ||||
Cash and cash equivalents and restricted cash at beginning of period
|
1,990.8
|
2,086.1
|
|||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
2,043.3
|
$
|
1,878.5
|
|||
Supplemental disclosure of cash flow information:
|
|||||||
Interest paid during the period
|
$
|
39.2
|
$
|
21.7
|
|||
Income taxes paid during the period
|
$
|
62.0
|
$
|
65.7
|
6 |
Euronet’s EFT Processing Segment normally experiences its heaviest demand for dynamic currency conversion ("DCC") services during the third quarter of the fiscal year, normally coinciding with the tourism season. The epay Segment is normally impacted by seasonality during the fourth quarter and first quarter of each year due to higher transaction levels during the holiday season and lower levels following the holiday season. Also, epay sells large loyalty rewards campaigns to retailers, which could be deployed in any given quarter and will impact the activity in that quarter accordingly. Seasonality in the Money Transfer Segment varies by region of the world. In most markets, Euronet usually experiences increased demand for money transfer services from the month of May through the fourth quarter of each year, coinciding with the increase in worker migration patterns and various holidays, and its lowest transaction levels during the first quarter of the year.
7 |
(3) ACQUISITIONS
In accordance with ASC 805, the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on fair values. Any excess purchase price over those fair values is recorded as goodwill. The fair value assigned to intangible assets acquired is supported by valuations using estimates and assumptions provided by management. For certain large acquisitions, management engages an appraiser to assist in the valuation process.
On March 15, 2022, the Company completed the acquisition of the Merchant Acquiring Business of Piraeus Bank ("PBMA"). The acquisition includes 205,000 POS terminals at 170,000 merchants throughout Greece, as well as Piraeus Bank’s online merchant acquiring business and expands Euronet’s omnichannel payments strategy where the Company uses its proprietary technology to provide cash, card-based acquiring solutions, alternative payment acquiring, online acquiring, tokenized payment services and other payment products. Additionally, the acquisition includes a long-term commercial framework agreement between Piraeus Bank and Euronet which includes collaborative product distribution, processing and customer referrals.
The purchase price was €317.8 million, or approximately $350.6 million, which includes $331.0 million cash paid at closing, $4.4 million cash paid for surplus working capital and $15.2 million of estimated contingent consideration for a ten-year earn out contingent on performance targets outlined in the commercial framework agreement. The contingent consideration is related to a percentage of the net fee income received during the ten-year period of the commercial framework agreement and there is no contractual maximum amount of consideration under this agreement.
The acquisition has been accounted for as a business combination in accordance with U.S. GAAP and the results of operations have been included from the date of acquisition in the EFT Processing Segment.
The following table presents the final fair value that was allocated to PBMA's Euronet Merchant Services' (EMS) assets and liabilities based upon fair values as determined by the Company. The valuation process to determine the fair values is complete. For the year ended December 31, 2022, the Company made measurement period adjustments to reflect facts and circumstances in existence as of the effective time of the acquisition. These adjustments primarily included an adjustment to the accrued expenses and other current liabilities related to the surplus working capital of $4.4 million and some other immaterial adjustments.
8 |
(in millions) |
|
As of March 15, 2022 |
||
Other current assets |
|
$ |
1.8 |
|
Settlement assets |
|
77.6 | ||
Property and equipment |
|
5.7 | ||
Intangible assets |
|
122.5 | ||
Total assets acquired |
|
$ |
207.6 |
|
|
|
|
||
Trade accounts payable |
|
$ |
(2.1 |
) |
Settlement liabilities |
(65.9 |
) | ||
Accrued expenses and other current liabilities |
(1.3 |
) | ||
Deferred revenue |
(0.3 |
) | ||
Other long-term liabilities |
|
(0.1 |
) | |
Total liabilities assumed |
|
$ |
69.7 |
|
|
|
|
||
Goodwill |
|
212.7 |
||
|
|
|
||
Net assets acquired |
|
$ |
350.6 |
The fair value measurements of intangible assets were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy. Level 3 inputs include discount rates that would be used by a market participant in valuing these assets, projections of revenues and cash flows, and customer attrition rates, among others.
The Company acquired a customer relationship intangible asset with a fair value of $112.2 million that is being amortized on a straight-line basis over 15 years and a contract related intangible asset of $10.3 million that is being amortized on a straight-line basis over 10 years.
Goodwill, with a value of $212.7 million, arising from the acquisition was included in the EFT Processing Segment. The factors that make up goodwill include synergies from combining PBMA operations and intangible assets that do not qualify for separate recognition. Goodwill and intangible assets associated with this acquisition are deductible for tax purposes.
The results of PBMA operations are included in the Company's consolidated results of operation, as part of the EFT Processing business segment, beginning on March 16, 2022. For the period beginning on the acquisition date through September 30, 2022, PBMA had $63.8 million in revenue. PBMA had $42.3 million and $98.5 million in revenue for the three and nine months ended September 30, 2023. The PBMA business is impacted by higher transaction volumes during the tourism season in the second and third quarters.
9 |
As of
|
||||||||
(in millions)
|
September 30,
2023
|
December 31,
2022
|
||||||
Settlement assets:
|
||||||||
Settlement cash and cash equivalents
|
$
|
274.9
|
$
|
242.6
|
||||
Settlement restricted cash
|
76.4
|
94.0
|
||||||
Accounts receivable, net of credit losses of $39.4 and $33.0
|
690.9
|
887.6
|
||||||
Prepaid expenses and other current assets
|
200.1
|
218.5
|
||||||
Total settlement assets
|
$
|
1,242.3
|
$
|
1,442.7
|
||||
Settlement obligations:
|
||||||||
Trade account payables
|
$
|
465.0
|
$
|
655.1
|
||||
Accrued expenses and other current liabilities
|
777.3
|
787.6
|
||||||
Total settlement obligations
|
$
|
1,242.3
|
$
|
1,442.7
|
As of
|
|
|||||||||||||||
(in millions)
|
September 30,
2023
|
|
December 31,
2022
|
|
September 30,
2022
|
|
December 31,
2021
|
|
||||||||
Cash and cash equivalents
|
$
|
1,074.4
|
$
|
1,131.2
|
$
|
967.1
|
$
|
1,260.5
|
||||||||
Restricted cash
|
14.1
|
7.4
|
8.4
|
3.7
|
||||||||||||
ATM cash
|
603.5
|
515.6
|
646.1
|
543.4
|
||||||||||||
Settlement cash and cash equivalents
|
274.9
|
242.6
|
210.8
|
203.6
|
||||||||||||
Settlement restricted cash
|
76.4
|
94.0
|
46.1
|
74.9
|
||||||||||||
Cash and cash equivalents and restricted cash at end of period
|
$
|
2,043.3
|
$
|
1,990.8
|
$
|
1,878.5
|
$
|
2,086.1
|
(5) STOCKHOLDERS' EQUITY
Earnings (Loss) Per Share
Basic earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings (loss) per share has been computed by dividing earnings (loss) available to common stockholders by the weighted average shares outstanding during the respective period, after adjusting for the potential dilution of options to purchase the Company’s common stock, assumed vesting of restricted stock units and the assumed conversion of the Company’s convertible debt, if such conversion would be dilutive.
10 |
(in millions) | Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||
|
2023
|
|
2022
|
|
|
|
2023
|
|
|
|
2022
|
||||
Computation of diluted earnings:
|
|||||||||||||||
Net income
|
$ |
104.2
|
$ |
97.8
|
|
|
$
|
210.4
|
|
|
$
|
163.3
|
|||
Add: Interest expense from assumed conversion of convertible notes, net of tax
|
1.1
|
|
1.1
|
|
|
|
3.1
|
|
|
|
3.3
|
||||
Net income for diluted earnings per share calculation
|
$ |
105.3
|
$
|
98.9
|
|
|
$
|
213.5
|
|
|
$
|
166.6
|
|||
Computation of diluted weighted average shares outstanding:
|
|||||||||||||||
Basic weighted average shares outstanding
|
48,406,473
|
|
49,583,317
|
|
|
|
49,285,143
|
|
|
|
50,345,293
|
||||
Incremental shares from assumed exercise of stock options and vesting of restricted stock units
|
282,312
|
|
386,169
|
|
|
|
379,331
|
|
|
|
561,689
|
||||
Incremental shares from assumed conversion of convertible debt
|
2,781,818 |
|
2,781,818
|
|
|
|
2,781,818
|
|
|
|
2,781,818
|
||||
Diluted weighted average shares outstanding
|
51,470,603
|
|
52,751,304
|
|
|
|
52,446,292
|
|
|
|
53,688,800
|
The table includes all stock options and restricted stock units that are dilutive to the Company's weighted average common shares outstanding during the period. The calculation of diluted earnings per share excludes stock options or shares of restricted stock units that are anti-dilutive to the Company's weighted average common shares outstanding of approximately 3.6 million and 2.7 million for the three and nine months ended September 30, 2023 and 3.3 million and 2.8 million for the three and nine months ended September 30, 2022, respectively.
Euronet issued Convertible Senior Notes ("Convertible Notes") due March 2049 on March 18, 2019. The Convertible Notes currently have a settlement feature requiring us upon conversion to settle the principal amount of the debt and any conversion value in excess of the principal value ("conversion premium"), for cash or shares of Euronet's common stock or a combination thereof, at the Company's option. The Company has stated its intent to settle any conversion of these notes by paying cash for the principal value and issuing common stock for any conversion premium; however, after adopting ASU 2020-06, 2.8 million incremental shares assumed for conversion of convertible notes is required to be included in the dilutive earnings per share calculation, if dilutive, regardless of whether the market price trigger has been met. Therefore, the Convertible Notes were included in the calculation of diluted earnings per share if their inclusion was dilutive. The dilutive effect increases the more the market price exceeds the conversion price of $188.73 per share. See Note 9, Debt Obligations, to the consolidated financial statements for more information about the Convertible Notes.
Share repurchases
On December 8, 2021, the Company put a repurchase program in place to repurchase up to $300 million in value, but not more than 5.0 million shares of common stock through December 8, 2023. On September 13, 2022, the Company put a repurchase program in place to repurchase up to $350 million in value, but not more than 7.0 million shares of common stock through September 13, 2024. On September 13, 2023, the Company put a repurchase program in place to repurchase up to $350 million in value, but not more than 7.0 million shares of common stock through September 13, 2025. Under the repurchase programs, we repurchased $296.1 million and $324.5 million of stock, for the three and nine months ended September 30, 2023 and we repurchased $175.0 million of stock for the nine months ended September 30, 2022. We did not repurchase any stock during the three months ended September 30, 2022. Repurchases under the current program may take place in the open market or in privately negotiated transactions, including derivative transactions, and may be made under a Rule 10b5-1 plan.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists entirely of foreign currency translation adjustments. The Company recorded foreign currency translation adjustments of ($61.0) million and ($30.1) million for the three and nine months ended September 30, 2023 and ($100.5) million and ($209.9) million for the three and nine months ended September 30, 2022, respectively. There were no reclassifications of foreign currency translation adjustments into the consolidated statements of income for the three and nine months ended September 30, 2023 and 2022.
11 |
(in millions)
|
Acquired
Intangible
Assets
|
Goodwill
|
Total
Intangible
Assets
|
|||||||||
Balance as of December 31, 2022
|
$
|
188.3
|
$
|
828.3
|
$
|
1,016.6
|
||||||
Increases (decreases):
|
|
|
|
|||||||||
Acquisition
|
—
|
—
|
—
|
|||||||||
Amortization
|
(18.9
|
) |
—
|
(18.9
|
) | |||||||
Foreign currency exchange rate changes
|
(2.0
|
) |
(10.5
|
) |
(12.5
|
) | ||||||
Balance as of September 30, 2023
|
$
|
167.4
|
$
|
817.8
|
$
|
985.2
|
Of the total goodwill balance of $817.8 million as of September 30, 2023, $378.2 million relates to the Money Transfer Segment, $317.9 million relates to the EFT Processing Segment and the remaining $121.7 million relates to the epay Segment. Estimated amortization expense on acquired intangible assets with finite lives as of September 30, 2023, is expected to total $5.3 million for the remainder of 2023, $17.5 million for 2024, $14.2 million for 2025, $13.9 million for 2026, $12.6 million for 2027 and $12.2 million for 2028.
As of
|
||||||||
(in millions)
|
September 30,
2023
|
December 31, 2022
|
||||||
Accrued expenses
|
$
|
294.0
|
$
|
311.9
|
||||
Derivative liabilities
|
39.2
|
42.3
|
||||||
Other tax payables |
69.2
|
80.6
|
||||||
Accrued payroll expenses |
64.9
|
68.0
|
||||||
Current portion of capital lease obligations
|
1.8
|
3.0
|
||||||
Total
|
$
|
469.1
|
$
|
505.8
|
The Company records deferred revenues when cash payments are received or due in advance of the Company's performance. The decrease in the deferred revenue balance for the nine months ended September 30, 2023 is the result of $134.4 million of cash payments received in the current year for which the Company has not yet satisfied the performance obligations, offset by $145.1 million of revenues recognized.
12 |
As of
|
|
|||||||
(in millions)
|
September 30, 2023
|
|
December 31, 2022
|
|
||||
Credit Facility:
|
||||||||
Revolving credit agreement
|
$
|
113.5
|
$
|
454.8
|
||||
Notes:
|
||||||||
0.75% Convertible Notes, unsecured, due 2049
|
525.0
|
525.0
|
||||||
1.375% Senior Notes, due 2026
|
634.2
|
642.1
|
||||||
Uncommitted credit agreements
|
450.0 |
—
|
||||||
|
|
|
||||||
Other obligations
|
0.2 |
0.2
|
||||||
Total debt obligations
|
1,722.9
|
1,622.1
|
||||||
Unamortized debt issuance costs
|
(9.8
|
) |
(12.9
|
)
|
||||
Carrying value of debt
|
1,713.1
|
1,609.2
|
||||||
Short-term debt obligations and current maturities of long-term debt obligations
|
(450.1
|
) |
(0.1
|
)
|
||||
Long-term debt obligations
|
$
|
1,263.0
|
$
|
1,609.1
|
The revolving credit facility contains a sublimit of up to $250 million, with $150 million committed, for the issuance of letters of credit and a $75 million sublimit for U.S. dollar swingline loans and a $75 million sublimit for swingline loans in euros or British pounds sterling. The Credit Facility allows for borrowings in British pounds sterling, euro and U.S. dollars. Subject to certain conditions, the Company has the option to increase the credit facility by up to an additional $500 million by requesting additional commitments from existing or new lenders. Fees and interest on borrowings vary based upon the Company's corporate credit rating and will be based, in the case of letter of credit fees, on a margin, and in the case of interest, on a margin over a secured overnight financing rate, as defined in the agreement, with a margin, including the facility fee, ranging from 1.00% to 1.625% or the base rate, as selected by the Company. The applicable margin for borrowings under the credit facility, based on the Company's current credit rating is 1.25% including the facility fee.
The Agreement contains customary affirmative and negative covenants, events of default and financial covenants, including (all as defined in the Credit Facility): (i) a Consolidated Total Leverage Ratio, depending on certain circumstances defined in the Credit Facility, not to exceed a range between 3.5 to 1.0 and 4.5 to 1.0; and (ii) a Consolidated Interest Coverage Ratio of not less than 3.0 to 1.0. Subject to meeting certain customary covenants (as defined in the Credit Facility), the Company is permitted to repurchase common stock and debt. The Company was in compliance with all debt covenants as of September 30, 2023.
13 |
On June 27, 2023, the Company entered into an Uncommitted Credit Agreement for $300 million, fully drawn and outstanding at September 30, 2023, for the sole purpose of providing vault cash for ATMs, that expires no later than November 30, 2023. The loan bears interest at the rate per annum equal to the secured overnight financing rate (“SOFR”) plus 1.125%. The weighted-average interest rate from the loan inception date to September 30, 2023 was 6.33%.
On June 26, 2023, the Company entered into an Uncommitted Loan Agreement for $150 million, fully drawn and outstanding at September 30, 2023, for the sole purpose of providing vault cash for ATMs, that expires no later than June 21, 2024. The loan is a Prime rate loan, a Bloomberg Short-term Bank Yield ("BSBY") rate loan plus 0.95% or bears interest at the rate agreed to by the Bank and the Company at the time such loan is made. The weighted-average interest rate from the loan inception date to September 30, 2023 was 6.24%.
14 |
(10) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to foreign currency exchange risk resulting from (i) the collection of funds or the settlement of money transfer transactions in currencies other than the U.S. Dollar, (ii) derivative contracts written to its customers in connection with providing cross-currency money transfer services and (iii) certain foreign currency denominated other asset and liability positions. The Company enters into foreign currency derivative contracts, primarily foreign currency forwards and cross-currency swaps, to minimize its exposure related to fluctuations in foreign currency exchange rates. As a matter of Company policy, the derivative instruments used in these activities are economic hedges and are not designated as hedges under ASC 815, primarily due to either the relatively short duration of the contract term or the effects of fluctuations in currency exchange rates are reflected concurrently in earnings for both the derivative instrument and the transaction and have an offsetting effect.
Foreign currency exchange contracts - Ria Operations and Corporate
In the United States, the Company uses short-duration foreign currency forward contracts, generally with maturities up to 14 days, to offset the fluctuation in foreign currency exchange rates on the collection of money transfer funds between initiation of a transaction and its settlement. Due to the short duration of these contracts and the Company’s credit profile, the Company is generally not required to post collateral with respect to these foreign currency forward contracts. Most derivative contracts executed with counterparties in the U.S. are governed by an International Swaps and Derivatives Association agreement that includes standard netting arrangements; therefore, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity. The Company had foreign currency forward contracts outstanding in the U.S. with a notional value of $426.0 million and $398.6 million as of September 30, 2023 and December 31, 2022, respectively. The foreign currency forward contracts consist primarily in Australian dollars, Canadian dollars, British pounds sterling, euros and Mexican pesos.
In addition, the Company uses forward contracts, typically with maturities from a few days to less than one year, to offset foreign exchange rate fluctuations on certain short-term borrowings that are payable in currencies other than the U.S dollar. The Company had foreign currency forward contracts outstanding with a notional value of $325.5 million and $228.4 million as of September 30, 2023 and December 31, 2022, respectively, primarily in euro.
15 |
Foreign currency exchange contracts - xe Operations
xe writes derivative instruments, primarily foreign currency forward contracts and cross-currency swaps, mostly with counterparties comprised of individuals and small-to-medium size businesses and derives a currency margin from this activity as part of its operations. xe aggregates its foreign currency exposures arising from customer contracts and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties. Foreign exchange revenues from xe's total portfolio of positions were $22.2 million and $63.8 million for the three and nine months ended September 30, 2023, respectively, and $22.3 million and $66.5 million for the same periods in 2022, respectively. All of the derivative contracts used in the Company's xe operations are economic hedges and are not designated as hedges under ASC 815. The duration of these derivative contracts is generally less than one year.
The fair value of xe's total portfolio of positions can change significantly from period to period based on, among other factors, market movements and changes in customer contract positions. xe manages counterparty credit risk (the risk that counterparties will default and not make payments according to the terms of the agreements) on an individual counterparty basis. It mitigates this risk by entering contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. xe does not expect any significant losses from counterparty defaults.
The aggregate equivalent U.S. dollar notional amount of foreign currency derivative customer contracts held by the Company in its xe operations as of September 30, 2023 and December 31, 2022 was $1.0 billion and $1.0 billion, respectively. The significant majority of customer contracts are written in major currencies such as the euro, U.S. dollar, British pounds sterling, Australian dollar and New Zealand dollar.
Asset Derivatives
|
Liability Derivatives
|
|||||||||||||||||||
Fair Value
|
Fair Value
|
|||||||||||||||||||
(in millions)
|
Balance Sheet Location
|
September 30, 2023
|
December 31, 2022
|
Balance Sheet Location
|
September 30, 2023
|
December 31, 2022
|
||||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||||||
Foreign currency exchange contracts
|
Other current assets
|
$
|
43.6
|
|
$
|
50.3
|
|
Other current liabilities |
$
|
(39.2
|
) |
$
|
(42.3
|
)
|
As of September 30, 2023
|
Gross Amounts of Recognized Assets
|
Gross Amounts Offset in the Consolidated Balance Sheet
|
Net Amounts Presented in the Consolidated Balance Sheet
|
Derivatives Not Offset in the Consolidated Balance Sheet
|
Net Amounts
|
|||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
43.6
|
|
$
|
—
|
|
$
|
43.6
|
|
$
|
(29.7
|
) |
$
|
13.9
|
|
|||||
As of December 31, 2022
|
||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
50.3
|
|
$
|
—
|
|
$
|
50.3
|
|
$
|
(32.0
|
)
|
$
|
18.3
|
|
16 |
As of September 30, 2023
|
Gross Amounts of Recognized Liabilities
|
Gross Amounts Offset in the Consolidated Balance Sheet
|
Net Amounts Presented in the Consolidated Balance Sheet
|
Derivatives Not Offset in the Consolidated Balance Sheet
|
Net Amounts
|
|||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
(39.2
|
) |
$
|
—
|
|
$
|
(39.2
|
) |
$
|
28.7
|
|
$
|
(10.5
|
) | |||||
As of December 31, 2022
|
||||||||||||||||||||
Derivatives subject to a master netting arrangement or similar agreement
|
$
|
(42.3
|
)
|
$
|
—
|
|
$
|
(42.3
|
)
|
$
|
32.1
|
|
$
|
(10.2
|
)
|
Amount of (Loss) Recognized in Income on Derivative Contracts (a)
|
|
|||||||||||||||||
Location of Gain (Loss) Recognized in Income on Derivative Contracts
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
||||||||||||||
(in millions)
|
2023
|
2022
|
|
2023
|
|
2022
|
|
|||||||||||
Foreign currency exchange contracts - Ria Operations
|
Foreign currency exchange (loss), net
|
$
|
(3.2
|
) |
$
|
(7.4
|
) | $ | (6.9 | ) | $ | (0.7 | ) |
|
17 |
|
As of September 30, 2023
|
|||||||||||||||||
(in millions)
|
Balance Sheet Classification
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current assets
|
$
|
—
|
|
$
|
43.6
|
|
$
|
—
|
|
$
|
43.6
|
|
|||||
Liabilities
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current liabilities
|
$
|
—
|
|
$
|
(39.2
|
) |
$
|
—
|
|
$
|
(39.2
|
) |
|
As of December 31, 2022
|
|||||||||||||||||
(in millions)
|
Balance Sheet Classification
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current assets
|
$
|
—
|
|
$
|
50.3
|
|
$
|
—
|
|
$
|
50.3
|
|
|||||
Liabilities
|
||||||||||||||||||
Foreign currency exchange contracts
|
Other current liabilities
|
$
|
—
|
|
$
|
(42.3
|
)
|
$
|
—
|
|
$
|
(42.3
|
)
|
Our reportable operating segments have been determined in accordance with ASC Topic 280, Segment Reporting ("ASC 280"). The Company currently operates in the following three reportable operating segments:
1) Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East, Africa, Asia Pacific and the United States. Euronet provides comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, dynamic currency conversion, domestic and international surcharges and other value added services. Through this segment, the Company also offers a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
18 |
2) Through the epay Segment, Euronet provides distribution, processing and collection services for electronic payment products, and prepaid mobile airtime through a network of POS terminals in Europe, the Middle East, Asia Pacific, South America and North America. The epay Segment also provides vouchers and physical gift fulfillment services in Europe.
3) Through the Money Transfer Segment, Euronet provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME, AFEX, and xe, and global account-to-account money transfer services under the brand name xe. The Company offers services under the brand names Ria and IME through a network of sending agents, Company-owned stores, Company-owned websites, and mobile applications, disbursing money transfers through a worldwide correspondent network. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites. The Company also offers customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Furthermore, xe provides cash management solutions and foreign currency risk management services to small-to-medium sized businesses.
In addition, the Company accounts for non-operating activity, share-based compensation expense, certain intersegment eliminations and the costs of providing corporate and other administrative services in the administrative division, "Corporate Services, Eliminations and Other." These services are not directly identifiable with the Company’s reportable operating segments.
|
For the Three Months Ended September 30, 2023
|
|||||||||||||||||||
(in millions)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
345.8
|
$
|
264.5
|
$
|
395.9
|
$
|
(2.2
|
) |
$
|
1,004.0
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
165.7
|
201.3
|
211.9
|
(2.2
|
) |
576.7
|
||||||||||||||
Salaries and benefits
|
35.2
|
23.4
|
77.6
|
17.4
|
153.6
|
|||||||||||||||
Selling, general and administrative
|
16.2
|
9.7
|
45.7
|
2.3
|
73.9
|
|||||||||||||||
Depreciation and amortization
|
23.9
|
1.8
|
7.0
|
0.1
|
32.8
|
|||||||||||||||
Total operating expenses
|
241.0
|
236.2
|
342.2
|
17.6
|
837.0
|
|||||||||||||||
Operating income (loss)
|
$
|
104.8
|
$
|
28.3
|
$
|
53.7
|
$
|
(19.8
|
) |
$
|
167.0
|
For the Three Months Ended September 30, 2022
|
||||||||||||||||||||
(in millions)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
319.5
|
$
|
248.9
|
$
|
364.9
|
$
|
(2.0
|
)
|
$
|
931.3
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
137.8
|
190.1
|
200.1
|
(2.0
|
)
|
526.0
|
||||||||||||||
Salaries and benefits
|
30.0
|
19.8
|
69.6
|
15.0
|
134.4
|
|||||||||||||||
Selling, general and administrative
|
12.2
|
8.5
|
46.3
|
2.6
|
69.6
|
|||||||||||||||
Depreciation and amortization
|
23.1
|
1.4
|
8.2
|
0.1
|
32.8
|
|||||||||||||||
Total operating expenses
|
203.1
|
219.8
|
324.2
|
15.7
|
762.8
|
|||||||||||||||
Operating income (loss)
|
$
|
116.4
|
$
|
29.1
|
$
|
40.7
|
$
|
(17.7
|
)
|
$
|
168.5
|
19 |
|
For the Nine Months Ended September 30, 2023
|
|||||||||||||||||||
(in millions)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
820.4
|
$
|
765.7
|
$
|
1,150.1
|
$
|
(5.9
|
) |
$
|
2,730.3
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
426.8
|
583.6
|
621.9
|
(5.9
|
) |
1,626.4
|
||||||||||||||
Salaries and benefits
|
93.5
|
66.8
|
230.4
|
54.2
|
444.9
|
|||||||||||||||
Selling, general and administrative
|
48.9
|
27.6
|
140.7
|
7.2
|
224.4
|
|||||||||||||||
Depreciation and amortization
|
70.4
|
5.1
|
23.6
|
0.3
|
99.4
|
|||||||||||||||
Total operating expenses
|
639.6
|
683.1
|
1,016.6
|
55.8
|
2,395.1
|
|||||||||||||||
Operating income (loss)
|
$
|
180.8
|
$
|
82.6
|
$
|
133.5
|
$
|
(61.7
|
) |
$
|
335.2
|
|
For the Nine Months Ended September 30, 2022
|
|||||||||||||||||||
(in millions)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Corporate Services,
Eliminations
and Other
|
Consolidated
|
|||||||||||||||
Total revenues
|
$
|
714.1
|
$
|
712.4
|
$
|
1,072.4
|
$
|
(5.8
|
) |
$
|
2,493.1
|
|||||||||
Operating expenses:
|
||||||||||||||||||||
Direct operating costs, exclusive of depreciation
|
354.9
|
542.1
|
593.6
|
(5.7
|
) |
1,484.9
|
||||||||||||||
Salaries and benefits
|
82.9
|
59.8
|
204.9
|
44.9
|
392.5
|
|||||||||||||||
Selling, general and administrative
|
40.3
|
26.2
|
133.6
|
7.5
|
207.6
|
|||||||||||||||
Depreciation and amortization
|
71.1
|
4.7
|
25.7
|
0.3
|
101.8
|
|||||||||||||||
Total operating expenses
|
549.2
|
632.8
|
957.8
|
47.0
|
2,186.8
|
|||||||||||||||
Operating income (loss)
|
$
|
164.9
|
$
|
79.6
|
$
|
114.6
|
$
|
(52.8
|
) |
$
|
306.3
|
Total Assets as of
|
|||||||
(in millions)
|
September 30, 2023
|
December 31, 2022
|
|||||
EFT Processing
|
$
|
2,296.9
|
$
|
2,150.7
|
|||
epay
|
825.5
|
1,173.3
|
|||||
Money Transfer
|
1,714.4
|
1,795.8
|
|||||
Corporate Services, Eliminations and Other
|
326.1
|
283.8
|
|||||
Total
|
$
|
5,162.9
|
$
|
5,403.6
|
|
20 |
Revenues for the Three Months Ended September 30, 2023
|
Revenues for the Nine Months Ended September 30, 2023
|
|||||||||||||||||||||||||||||||
(in millions)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
||||||||||||||||||||||||
Europe
|
$
|
285.7
|
$
|
171.6
|
$
|
165.1
|
$
|
622.4
|
$
|
644.2
|
$
|
498.9
|
$
|
480.5
|
$
|
1,623.6
|
||||||||||||||||
North America
|
18.6
|
45.2
|
187.4
|
251.2
|
53.9
|
125.6
|
539.8
|
719.3
|
||||||||||||||||||||||||
Asia Pacific
|
39.4
|
33.9
|
27.2
|
100.5
|
116.7
|
101.1
|
81.7
|
299.5
|
||||||||||||||||||||||||
Other
|
2.1
|
13.8
|
16.2
|
32.1
|
5.6
|
40.1
|
48.1
|
93.8
|
||||||||||||||||||||||||
Eliminations
|
—
|
—
|
—
|
(2.2
|
) |
—
|
—
|
—
|
(5.9
|
) | ||||||||||||||||||||||
Total
|
$
|
345.8
|
$
|
264.5
|
$
|
395.9
|
$
|
1,004.0
|
$
|
820.4
|
$
|
765.7
|
$
|
1,150.1
|
$
|
2,730.3
|
Revenues for the Three Months Ended September 30, 2022
|
Revenues for the Nine Months Ended September 30, 2022
|
|||||||||||||||||||||||||||||||
(in millions)
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
EFT
Processing
|
epay
|
Money
Transfer
|
Total
|
||||||||||||||||||||||||
Europe
|
$
|
267.0
|
$
|
167.0
|
$
|
144.0
|
$
|
578.0
|
$
|
563.5
|
$
|
457.7
|
$
|
432.7
|
$
|
1,453.9
|
||||||||||||||||
North America
|
17.2
|
32.9
|
180.8
|
230.9
|
51.0
|
98.5
|
519.2
|
668.7
|
||||||||||||||||||||||||
Asia Pacific
|
34.1
|
36.9
|
27.0
|
98.0
|
96.8
|
118.6
|
80.7
|
296.1
|
||||||||||||||||||||||||
Other
|
1.2
|
12.1
|
13.1
|
26.4
|
2.8
|
37.6
|
39.8
|
80.2
|
||||||||||||||||||||||||
Eliminations
|
—
|
—
|
—
|
(2.0
|
) |
—
|
—
|
—
|
(5.8
|
) | ||||||||||||||||||||||
Total
|
$
|
319.5
|
$
|
248.9
|
$
|
364.9
|
$
|
931.3
|
$
|
714.1
|
$
|
712.4
|
$
|
1,072.4
|
$
|
2,493.1
|
The Company's effective income tax rate was 29.2% and 30.6% for the three and nine months ended September 30, 2023 respectively, compared to 31.1% and 33.5% for the three and nine months ended September 30, 2022, respectively. The Company's effective income tax rate for the three and nine months ended September 30, 2023 was higher than the applicable statutory income tax rate of 21% mainly as a result of our U.S. deferred tax activity and certain foreign earnings being subject to higher local statutory tax rates and our U.S. deferred tax activity.
(14) COMMITMENTS
21 |
22 |
Most leases include an option to renew, with renewal terms that can extend the lease terms. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease terms. The Company also has a unilateral termination right for most of the ATM site leases. Since the Company is not reasonably certain not to exercise termination options, payments for ATM site leases with termination options subject to the short-term lease exemption are expensed in the period incurred and corresponding leases are excluded from the right of use lease asset and lease liability balances. Certain of the Company's lease agreements include variable rental payments based on revenues generated from the use of the leased location and certain leases include rental payments adjusted periodically for inflation. Variable lease payments are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs and are excluded from the right of use assets and lease liabilities balances. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Future minimum lease payments
Future minimum lease payments under non-cancelable operating leases (with initial lease terms in excess of one year) as of September 30, 2023 are:
As of September 30, 2023
|
|||
Maturity of Lease Liabilities (in millions)
|
Operating Leases (1)
|
||
Remainder of 2023
|
$
|
12.3
|
|
2024
|
42.5
|
||
2025
|
32.1
|
||
2026
|
23.5
|
||
2027
|
16.4
|
||
Thereafter
|
20.6
|
||
Total lease payments
|
$
|
147.4
|
|
Less: imputed interest
|
(7.7
|
) | |
Present value of lease liabilities
|
$
|
139.7
|
(1) Operating lease payments reflect the Company's current fixed obligations under the operating lease agreements.
23 |
Lease Expense
(in millions)
|
Income Statement Classification
|
||||||||||||||||
Operating lease expense
|
Selling, general and administrative and Direct operating costs
|
$ | 37.6 | $ | 38.8 | ||||||||||||
Short-term and variable lease expense
|
Selling, general and administrative and Direct operating costs
|
124.7 | 107.3 | ||||||||||||||
Total lease expense
|
$ | 162.3 | $ | 146.1 |
Lease Term and Discount Rate of Operating Leases
|
As of September 30, 2023
|
||
Weighted- average remaining lease term (years)
|
4.4
|
||
Weighted- average discount rate
|
2.5
|
%
|
Other Information (in millions)
|
Nine Months Ended
September 30, 2023
|
Nine Months Ended
September 30, 2022
|
|
|||||
Cash paid for amounts included in the measurement of lease liabilities (a)
|
$
|
37.5
|
$
|
37.9
|
|
|||
Supplemental non-cash information on lease liabilities arising from obtaining ROU assets:
|
||||||||
ROU assets obtained in exchange for new operating lease liabilities
|
$
|
83.4
|
$
|
26.5
|
|
24 |
25 |
Euronet is a leading global financial technology solutions and payments provider. We offer payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. Our primary product offerings include comprehensive ATM, point-of-sale ("POS"), card outsourcing, card issuing and merchant acquiring services, software solutions, electronic distribution of prepaid mobile airtime, managed services and other electronic payment products, foreign currency exchange services and global money transfer services. We operate in the following three segments:
1) The EFT Processing Segment processes transactions for a network of 51,496 ATMs and approximately 637,000 POS terminals across Europe, the Middle East, Africa, Asia Pacific, and the United States. We provide comprehensive electronic payment solutions consisting of ATM cash withdrawal and deposit services, ATM network participation, outsourced ATM and POS management solutions, credit, debit and prepaid card outsourcing, DCC, domestic and international surcharges and other value added services. Through this segment, we also offer a suite of integrated electronic financial transaction software solutions for electronic payment and transaction delivery systems.
2) The epay Segment, which provides distribution, processing and collection services for electronic payment products and prepaid mobile airtime through a network of approximately 810,000 POS terminals in Europe, the Middle East, Asia Pacific, North America and South America. We also provide vouchers and physical gift fulfillment services in Europe.
3) The Money Transfer Segment, which provides global consumer-to-consumer money transfer services, primarily under the brand names Ria, IME, AFEX, and xe and global account-to-account money transfer services under the brand name xe. We offer services under the brand names Ria and IME through a network of sending agents, Company-owned stores, our websites and mobile applications, disbursing money transfers through a worldwide correspondent network that includes approximately 540,000 locations. xe is a provider of foreign currency exchange information and offers money transfer services on its currency data websites. In addition to money transfers, we also offer customers bill payment services (primarily in the U.S.), payment alternatives such as money orders and prepaid debit cards, comprehensive check cashing services for a wide variety of issued checks, along with competitive foreign currency exchange services and prepaid mobile top-up. Through our xe brand, we offer cash management solutions and foreign currency risk management services to small-to-medium-sized businesses.
We have six processing centers in Europe, five in Asia Pacific and two in North America. We have 36 principal offices in Europe, 14 in Asia Pacific, 10 in North America, three in the Middle East, two in South America and one in Africa. Our executive offices are located in Leawood, Kansas, USA. With approximately 75% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in foreign currency exchange rates will likely have a significant impact on our results of operations (for a further discussion, see Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022).
SOURCES OF REVENUES AND CASH FLOW
Euronet earns revenues and income primarily from ATM management fees, transaction fees, commissions and foreign currency exchange margin. Each operating segment’s sources of revenues are described below.
EFT Processing Segment — Revenues in the EFT Processing Segment, which represented approximately 35% and 30% of total consolidated revenues for the three and nine months ended September 30, 2023 are derived from fees charged for transactions made by cardholders on our proprietary network of ATMs, fixed management fees and transaction fees we charge to customers for operating ATMs and processing debit and credit cards under outsourcing and cross-border acquiring agreements, foreign currency exchange margin on DCC transactions, domestic and international surcharge, foreign currency dispensing and other value added services such as advertising, prepaid telecommunication recharges, bill payment, and money transfers provided over ATMs. Revenues in this segment are also derived from cardless payment, banknote recycling, tax refund services, license fees, professional services and maintenance fees for proprietary application software and sales of related hardware.
26 |
27 |
28 |
|
Revenues for the Three Months Ended
September 30,
|
Year-over-Year Change
|
Revenues for the Nine Months Ended September 30, |
Year-over-Year Change | |||||||||||||||||||||||||||
(dollar amounts in millions)
|
2023
|
2022
|
Increase
Amount
|
Increase
Percent
|
2023 | 2022 |
Increase
Amount
|
Increase
(Decrease)
Percent
|
|||||||||||||||||||||||
EFT Processing
|
$
|
345.8
|
$
|
319.5
|
$
|
26.3
|
8
|
%
|
$ | 820.4 | $ | 714.1 | $ | 106.3 | 15 | % | |||||||||||||||
epay
|
264.5
|
248.9
|
15.6
|
6
|
% | 765.7 |
712.4 | 53.3 | 7 | % | |||||||||||||||||||||
Money Transfer
|
395.9
|
364.9
|
31.0
|
8
|
%
|
1,150.1 |
1,072.4 |
77.7 |
7 | % | |||||||||||||||||||||
Total
|
1,006.2
|
933.3
|
72.9
|
8
|
% | 2,736.2 |
2,498.9 | 237.3 |
9 |
% | |||||||||||||||||||||
Corporate services, eliminations and other
|
(2.2
|
) |
(2.0
|
) |
(0.2
|
) |
10
|
%
|
(5.9 | ) | (5.8 | ) | (0.1 | ) | 2 | % | |||||||||||||||
Total
|
$
|
1,004.0
|
$
|
931.3
|
$
|
72.7
|
8
|
%
|
$ | 2,730.3 | $ | 2,493.1 | $ | 237.2 |
10 |
% |
|
Operating Income (Loss) for the Three Months Ended September 30,
|
Year-over-Year Change
|
Operating Income (Loss) for the Nine Months Ended September 30, | Year-over-Year Change | |||||||||||||||||||||||||||
(dollar amounts in millions)
|
2023
|
2022
|
Increase (Decrease)
Amount
|
Increase (Decrease)
Percent
|
2023 | 2022 |
Increase (Decrease)
Amount
|
Increase
Percent
|
|||||||||||||||||||||||
EFT Processing
|
$
|
104.8
|
$
|
116.4
|
$
|
(11.6
|
) |
(10)
|
%
|
$ | 180.8 | $ | 164.9 | $ | 15.9 | 10 | % | ||||||||||||||
epay
|
28.3
|
29.1
|
(0.8
|
) |
(3)
|
% | 82.6 | 79.6 | 3.0 | 4 |
% | ||||||||||||||||||||
Money Transfer
|
53.7
|
40.7
|
13.0
|
32
|
%
|
133.5 |
114.6 | 18.9 |
16 | % | |||||||||||||||||||||
Total
|
186.8
|
186.2
|
0.6
|
0
|
%
|
396.9 | 359.1 |
37.8 | 11 | % | |||||||||||||||||||||
Corporate services, eliminations and other
|
(19.8
|
) |
(17.7
|
) |
(2.1
|
) |
12
|
%
|
(61.7 | ) | (52.8 | ) |
(8.9 |
) | 17 | % | |||||||||||||||
Total
|
$
|
167.0
|
$
|
168.5
|
$
|
(1.5
|
) |
(1)
|
%
|
$ | 335.2 | $ | 306.3 | $ | 28.9 |
9 | % |
29 |
Average Translation Rate
Nine Months Ended September 30,
|
|||||||||||||||||||||||
Currency (dollars per foreign currency)
|
2023 |
2022 |
Increase
(Decrease)
Percent
|
||||||||||||||||||||
Australian dollar
|
$ | 0.6687 | $ | 0.7074 | (5) |
% | |||||||||||||||||
British pounds sterling
|
$ | $ | $ | 1.2440 |
$ | 1.2585 |
(1) | % | |||||||||||||||
Canadian dollar
|
$ | $ | $ | 0.7433 | $ | 0.7798 | (5) | % | |||||||||||||||
euro
|
$ | $ | $ | 1.0829 | $ | 1.0650 | 2 | % | |||||||||||||||
Hungarian forint
|
$ | $ | $ | 0.0028 | $ | 0.0028 | 2 | % | |||||||||||||||
Indian rupee
|
$ | $ | $ | 0.0121 | $ | 0.0129 | (6) | % | |||||||||||||||
Malaysian ringgit
|
$ | $ | $ | 0.2219 | $ | 0.2307 | (4) | % | |||||||||||||||
New Zealand dollar
|
$ | $ | $ | 0.6174 | $ | 0.6469 | (5) | % | |||||||||||||||
Polish zloty
|
$ | $ | 14 | $ | 0.2366 | $ | 0.2286 | 3 | % |
30 |
|
Three Months Ended September 30,
|
Year-over-Year Change
|
Nine Months Ended September 30, |
Year-over-Year Change | |||||||||||||||||||||||||||
(dollar amounts in millions)
|
2023
|
2022
|
Increase
(Decrease)
Amount
|
Increase
(Decrease) Percent
|
2023 | 2022 |
Increase
(Decrease)
Amount
|
Increase
(Decrease) Percent
|
|||||||||||||||||||||||
Total revenues
|
$
|
345.8
|
$
|
319.5
|
$
|
26.3
|
8
|
%
|
$ | 820.4 | $ | 714.1 | $ | 106.3 | 15 | % | |||||||||||||||
Operating expenses:
|
|
|
|||||||||||||||||||||||||||||
Direct operating costs
|
165.7
|
137.8
|
27.9
|
20
|
%
|
426.8 | 354.9 |
71.9 |
20 | % | |||||||||||||||||||||
Salaries and benefits
|
35.2
|
30.0
|
5.2
|
17
|
%
|
93.5 |
82.9 |
10.6 |
13 | % | |||||||||||||||||||||
Selling, general and administrative
|
16.2
|
12.2
|
4.0
|
33
|
%
|
48.9 | 40.3 |
8.6 |
21 | % | |||||||||||||||||||||
Depreciation and amortization
|
23.9
|
23.1
|
0.8
|
3
|
%
|
70.4 | 71.1 |
(0.7 |
) | (1) | % | ||||||||||||||||||||
Total operating expenses
|
241.0
|
203.1
|
37.9
|
19
|
%
|
639.6 | 549.2 |
90.4 |
16 | % | |||||||||||||||||||||
Operating income
|
$
|
104.8
|
$
|
116.4
|
$
|
(11.6
|
) |
(10)
|
% | $ | 180.8 | $ | 164.9 | $ | 15.9 | 10 | % | ||||||||||||||
Transactions processed (millions)
|
2,231
|
1,733
|
498
|
29
|
%
|
6,103 | 4,634 |
1,469 |
32 | % | |||||||||||||||||||||
Active ATMs as of September 30,
|
51,496
|
49,617
|
1,879
|
4
|
%
|
51,496 | 49,617 |
1,879 |
4 | % | |||||||||||||||||||||
Average Active ATMs
|
51,865
|
50,411
|
1,454
|
3
|
%
|
49,479 | 47,581 |
1,898 |
4 | % |
31 |
32 |
|
Three Months Ended September 30,
|
Year-over-Year Change
|
Nine Months Ended September 30, | Year-over-Year Change | |||||||||||||||||||||||||||
(dollar amounts in millions)
|
2023
|
2022
|
Increase (Decrease) Amount
|
Increase
(Decrease) Percent
|
2023 | 2022 |
Increase (Decrease) Amount |
Increase
(Decrease) Percent
|
|||||||||||||||||||||||
Total revenues
|
$
|
264.5
|
$
|
248.9
|
$
|
15.6
|
6
|
%
|
$ | 765.7 | $ | 712.4 | $ | 53.3 | 7 | % | |||||||||||||||
Operating expenses:
|
|
|
|||||||||||||||||||||||||||||
Direct operating costs
|
201.3
|
190.1
|
11.2
|
6
|
%
|
583.6 |
542.1 | 41.5 |
8 | % | |||||||||||||||||||||
Salaries and benefits
|
23.4
|
19.8
|
3.6
|
18
|
%
|
66.8 | 59.8 | 7.0 |
12 | % | |||||||||||||||||||||
Selling, general and administrative
|
9.7
|
8.5
|
1.2
|
14
|
%
|
27.6 |
26.2 | 1.4 |
5 | % | |||||||||||||||||||||
Depreciation and amortization
|
1.8
|
1.4
|
0.4
|
29
|
%
|
5.1 | 4.7 | 0.4 |
9 | % | |||||||||||||||||||||
Total operating expenses
|
236.2
|
219.8
|
16.4
|
7
|
%
|
683.1 |
632.8 | 50.3 |
8 | % | |||||||||||||||||||||
Operating income
|
$
|
28.3
|
$
|
29.1
|
$
|
(0.8
|
) |
(3)
|
% | $ | 82.6 | $ | 79.6 |
$ | 3.0 | 4 | % | ||||||||||||||
Transactions processed (millions)
|
925
|
915
|
10
|
1
|
%
|
2,883 |
2,895 | (12 | ) | (0) | % |
33 |
34 |
|
Year-over-Year Change | Nine Months Ended September 30, | Year-over-Year Change | ||||||||||||||||||||||||||||
(dollar amounts in millions)
|
2022 | 2023 | 2022 | Increase (Decrease) Amount | Increase (Decrease) Percent | ||||||||||||||||||||||||||
Total revenues
|
$ | 1,150.1 | $ | 1,072.4 | $ | 77.7 | 7 | % | |||||||||||||||||||||||
Operating expenses:
|
|||||||||||||||||||||||||||||||
Direct operating costs
|
211.9 | 200.1 | 11.8 | 621.9 |
593.6 |
28.3 |
5 | % | |||||||||||||||||||||||
Salaries and benefits
|
8.0 | 230.4 |
204.9 |
25.5 |
12 |
% | |||||||||||||||||||||||||
Selling, general and administrative
|
(0.6 | ) | 140.7 |
133.6 |
7.1 |
5 |
% | ||||||||||||||||||||||||
Depreciation and amortization
|
(1.2 | ) | 23.6 |
25.7 |
(2.1 |
) | (8) |
% | |||||||||||||||||||||||
Total operating expenses
|
18.0 | 1,016.6 |
957.8 |
58.8 |
6 |
% | |||||||||||||||||||||||||
Operating income
|
$ | 133.5 |
$ | 114.6 |
$ | 18.9 | 16 |
% | |||||||||||||||||||||||
Transactions processed (millions)
|
2.9 | 119.2 |
108.5 |
10.7 |
10 |
% |
35 |
Three Months Ended September 30,
|
|
Year-over-Year Change
|
|
Nine Months Ended September 30, |
|
|
Year-over-Year Change |
|
|
|||||||||||||||||||||||
(dollar amounts in millions)
|
2023 | 2022 |
Increase (Decrease)
Amount
|
Increase (Decrease)
Percent
|
|
2023
|
|
|
2022
|
|
|
Increase (Decrease)
Amount
|
|
|
Increase (Decrease)
Percent
|
|
|
|||||||||||||||
Salaries and benefits
|
$
|
17.4
|
$
|
15.0
|
|
$
|
2.4
|
16
|
% | $ | 54.2 | $ | 45.0 | $ | 9.2 | 20 | % | |||||||||||||||
Selling, general and administrative
|
2.3
|
|
2.6
|
|
(0.3
|
) |
(12)
|
% | 7.2 |
7.5 | (0.3 | ) | (4 | ) | ||||||||||||||||||
Depreciation and amortization
|
0.1
|
|
0.1
|
|
—
|
—
|
0.3 |
0.3 |
— | — | ||||||||||||||||||||||
Total operating expenses
|
$
|
19.8
|
|
$
|
17.7
|
|
$
|
2.1
|
12
|
% | $ | 61.7 | $ | 52.8 | $ | 8.9 | 17 | % |
36 |
|
Three Months Ended September 30,
|
|
Year-over-Year Change
|
|
|
Nine Months Ended September 30,
|
|
|
Year-over-Year Change
|
|
|
||||||||||||||||||||
(dollar amounts in millions)
|
2023 | 2022 |
Increase (Decrease) Amount
|
|
Increase
(Decrease) Percent
|
|
|
2023
|
|
|
|
2022
|
|
|
|
Increase (Decrease) Amount
|
|
|
Increase
(Decrease) Percent
|
|
|
||||||||||
Interest income
|
$
|
4.0
|
|
$
|
0.6
|
|
$
|
3.4
|
567
|
% | $ | 10.1 | $ | 0.9 | $ | 9.2 | 1,022 | % | |||||||||||||
Interest expense
|
(15.0
|
) |
(11.7
|
) |
(3.3
|
) |
28
|
% | (39.1 |
) | (26.6 |
) | (12.5 | ) | 47 | % | |||||||||||||||
Foreign currency exchange gain (loss), net
|
(8.8
|
) |
(15.8
|
) |
7.0
|
|
(44)
|
% | (3.6 |
) | (36.0 |
) | 32.4 | (90) | % | ||||||||||||||||
Other gains (losses)
|
—
|
|
—
|
|
—
|
N/A
|
(0.1 |
) | 0.2 |
(0.3 |
) | (150) | % | ||||||||||||||||||
Other expense, net
|
$
|
(19.8
|
) |
$
|
(26.9
|
) |
$
|
7.1
|
|
(26)
|
% | $ | (32.7 |
) | $ | (61.5 | ) | $ | 28.8 | (47) | % |
Interest income
The Company's effective income tax rate was 29.2% and 30.6% for the three and nine months ended September 30, 2023, compared to 31.1% and 33.5% for the same periods ended September 30, 2022. The Company's effective income tax rate for the three and nine months ended September 30, 2023 was higher than the applicable statutory income tax rate of 21% as a result of certain foreign earnings being subject to higher local statutory tax rates and the Company’s U.S. deferred tax activity.
37 |
Subsidiary
|
Percent Owned
|
Segment - Country
|
||
Movilcarga
|
95%
|
epay - Spain
|
||
Euronet China
|
85%
|
EFT - China
|
||
Euronet Pakistan
|
70%
|
EFT - Pakistan
|
||
Euronet Infinitium Solutions
|
65%
|
EFT - India
|
38 |
Nine Months Ended September 30,
|
|||||||
Liquidity
|
2023
|
2022
|
|||||
Cash and cash equivalents and restricted cash provided by (used in):
|
|||||||
Operating activities
|
$
|
507.4
|
$
|
448.7
|
|||
Investing activities
|
(74.6
|
) |
(416.1
|
) | |||
Financing activities
|
(208.3
|
) |
173.5
|
||||
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash
|
(172.0
|
) |
(413.7
|
) | |||
Increase/(decrease) in cash and cash equivalents and restricted cash
|
$
|
52.5
|
$
|
(207.6
|
) |
As of September 30, 2023, we had $113.5 million of borrowings and $56.3 million of stand-by letters of credit outstanding under the Credit Facility. The remaining $1,080.2 million under the Credit Facility was available for borrowing.
39 |
Other uses of capital
Capital expenditures and needs - Total capital expenditures for the nine months ended September 30, 2023 were $69.1 million. These capital expenditures were primarily for the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the epay and Money Transfer Segments, and office, data center and company store computer equipment and software. Total capital expenditures for 2023 are currently estimated to range from approximately 100 million to $110 million. At current and projected cash flow levels, we anticipate that cash generated from operations, together with cash on hand and amounts available under our Credit Facility and other existing and potential future financing will be sufficient to meet our debt (including our uncommitted credit facilities), leasing, and capital expenditure obligations. If our capital resources are not sufficient to meet these obligations, we will seek to refinance our debt and/or issue additional equity under terms acceptable to us. However, we can offer no assurances that we will be able to obtain favorable terms for the refinancing of any of our debt or other obligations or for the issuance of additional equity.
Inflation and functional currencies
Historically, the countries in which we operate have experienced low and stable inflation. Therefore, the local currency in each of these markets is the functional currency. We have seen indications that the current inflationary period will put pressure on our results of operations and our financial position. We have seen some signs of inflation impacting discretionary spend items, such as gaming products, in our epay business, discretionary travel expenditures in EFT, as well as some pressure on send amounts in money transfer. As a consequence of this inflationary period, we expect to see increasing expenses forthcoming. We continually review inflation and the functional currency in each of the countries where we operate.
OFF BALANCE SHEET ARRANGEMENTS.
On occasion, we grant guarantees of the obligations of our subsidiaries, and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of September 30, 2023, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2022. To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of September 30, 2023. See also Note 14, Commitments, to the unaudited consolidated financial statements included elsewhere in this report.
CONTRACTUAL OBLIGATIONS
As of September 30, 2023, there have been no material changes outside the ordinary course of business in our future contractual obligations from the amounts reported within our Annual Report on Form 10-K for the year ended December 31, 2022.
40 |
41 |
42 |
Except as otherwise described herein, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC.
The following table provides information with respect to shares of the Company's common stock that were purchased by the Company during the three months ended September 30, 2023.
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (in millions) (1)
|
||||||||||
July 1 - July 31, 2023
|
70,320
|
$
|
88.86
|
70,320
|
$
|
440.4
|
||||||||
August 1 - August 31 , 2023
|
1,865,215
|
85.87
|
1,865,215
|
280.2
|
||||||||||
September 1 - September 30, 2023
|
1,571,514
|
82.53
|
1,571,514
|
$
|
500.5
|
|||||||||
Total
|
3,507,049
|
$
|
84.43
|
3,507,049
|
During the fiscal quarter ended September 30, 2023, none of the Company’s directors or "officers," as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K.
43 |
Exhibit
|
|
Description
|
31.1*
|
|
|
31.2*
|
|
|
32.1**
|
|
|
32.2**
|
|
|
101*
|
|
The following materials from Euronet Worldwide, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2023 (unaudited) and December 31, 2022, (ii) Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2023 and 2022, (iv) Consolidated Statements of Changes in Equity (unaudited) for the three and nine months ended September 30, 2023 and 2022 (v) Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2023 and 2022, and (vi) Notes to the Unaudited Consolidated Financial Statements.
|
104*
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
44 |
November 3, 2023
By:
|
/s/ MICHAEL J. BROWN
|
|
|
Michael J. Brown
|
|
|
Chief Executive Officer
|
|
|
||
|
||
By:
|
/s/ RICK L. WELLER
|
|
|
Rick L. Weller
|
|
|
Chief Financial Officer
|
45 |
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Michael J. Brown, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of Euronet Worldwide, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 3, 2023
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/s/ MICHAEL J. BROWN |
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Michael J. Brown |
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Chief Executive Officer |
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EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Rick L. Weller, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of Euronet Worldwide, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 3, 2023
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/s/ RICK L. WELLER |
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Rick L. Weller |
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Chief Financial Officer |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Euronet Worldwide, Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ MICHAEL J. BROWN |
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Michael J. Brown |
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Chief Executive Officer |
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November 3, 2023
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Euronet Worldwide, Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ RICK L. WELLER |
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Rick L. Weller |
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Chief Financial Officer |
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November 3, 2023