Financial results exceed expectations on double-digit earnings growth in epay and Money Transfer, combined with significantly better than anticipated results in EFT as transactions respond favorably upon lifting of certain restrictions
LEAWOOD, Kan., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ: EEFT), a leading electronic payments provider, reports third quarter 2020 financial results.
Euronet reports the following consolidated results for the third quarter 2020 compared with the same period of 2019:
- Revenues of $664.4 million, a 16% decrease from $787.0 million (17% decrease on a constant currency1 basis).
- Operating income of $66.1 million, a 66% decrease from $194.0 million (67% decrease on a constant currency basis).
- Adjusted operating income2 of $67.6 million (excluding a $1.5 million impairment of intangible assets), a 65% decrease from $194.0 million (66% decrease on a constant currency basis).
- Adjusted EBITDA3 of $105.0 million, a 54% decrease from $227.3 million (55% decrease on a constant currency basis).
- Net income attributable to Euronet of $40.2 million or $0.76 diluted earnings per share, compared with net income of $137.6 million or $2.46 diluted earnings per share.
- Adjusted earnings per share4 of $1.12, a 61% decrease from $2.84.
- Euronet's cash and cash equivalents was $1,008.2 million and ATM cash was $409.7 million, totaling $1,417.9 million as of September 30, 2020, and availability under its revolving credit facilities was approximately $950 million.
See the reconciliation of non-GAAP items in the attached financial schedules.
"I am extremely pleased that we appreciably exceeded our third quarter adjusted EBITDA expectations as we benefitted from double-digit earnings growth in the epay and Money Transfer segments as well as the apparent resilience of travel in EFT, as movement restrictions were eased across the world," stated Michael J. Brown, Euronet's Chairman and CEO. "As we entered the third quarter, certain markets were beginning to open while others remained closed and there were fears of people being unwilling to touch and use cash. As we moved through the quarter, we were pleasantly surprised by how resilient people were in returning to their normal behaviors, including continuing to use cash and taking advantage of vacations. These patterns resulted in an immediate increase in domestic and international cash withdrawal transactions, with international transactions improving faster in countries accessible by automobile. epay's double digit earnings growth resulted from continued strong sales of digital media content as well as mobile transaction growth initiated in digital channels in certain markets. Money Transfer continued to deliver double-digit earnings results which included double-digit U.S.-outbound and international money transfer growth as well as triple-digit growth in digital transactions initiated on riamoneytransfer.com or the mobile app. And, despite the continued impacts of COVID-19 to our EFT business, we continued to strengthen our balance sheet while also continuing to develop our leading industry technology and invest in opportunities that will allow us to drive our business forward."
Contributing to Euronet's seasonally strong third quarter revenue and adjusted EBITDA results was more than $30 million in expense savings primarily in the EFT Segment. These expense savings were nearly $15 million lower than anticipated as the Company curtailed certain planned reductions due to robust results in the epay and Money Transfer segments together with the accelerated opening of ATMs it had temporarily closed and the deployment of more ATMs as travel began to increase. As the third quarter came to a close, we continued to see strong year-over-year growth in epay and money transfer transactions. Epay continues to see demand for digital media products and strong mobile top-up sales through digital channels; Money Transfer transactions remained strong as immigrants continue to prioritize sending money home and the Company's network continues to expand. Finally, EFT transactions trended better throughout much of the third quarter, softening in the last few weeks as certain governmental imposed lock-down restrictions began to increase as the second wave of the COVID-19 pandemic increased across Europe and will likely remain depressed through the rest of the year as these restrictions are likely to remain in place. Despite the impact of COVID-19 on the EFT results, the Company remains in a strong financial position with approximately $1.4 billion in available cash, approximately $950 million availability on its revolving credit facility and no debt maturities for approximately four and a half years.
Recognizing the current trends in the business, the Company remains cautiously optimistic about the prospects for the fourth quarter and beyond. To that end, with improving trends in Money Transfer and epay, and continued cost reductions and careful expense management actions, the Company anticipates based on recent trends and current global COVID-19 management mandates that its fourth quarter adjusted EBITDA will be in the range of approximately $70 million to $80 million.
Segment and Other Results
The EFT Processing Segment reports the following results for the third quarter 2020 compared with the same period or date in 2019:
- Revenues of $144.1 million, a 54% decrease from $316.2 million (55% decrease on a constant currency basis).
- Operating income of $6.2 million, a 96% decrease from $150.9 million (96% decrease on a constant currency basis).
- Adjusted EBITDA of $27.7 million, an 84% decrease from $168.9 million (84% decrease on a constant currency basis).
- Transactions of 910 million, a 14% increase from 800 million.
- Operated 43,956 ATMs as of September 30, 2020, a 7% decrease from 47,209.
Revenue, operating income, and adjusted EBITDA declines in the third quarter 2020 were driven by the impact of fewer high-value cross-border transactions in Europe and Asia Pacific related to the COVID-19 pandemic-driven governmentally-imposed border closures and shelter-in-place orders. Partially offsetting the high-value transaction declines, the EFT segment realized marginal benefit from a significant volume increase in low-value point-of-sale transactions in Europe and low-value payment processing transactions for an Asia Pacific customer's bank wallet and e-commerce site together with realized cost savings exceeding $30 million in the third quarter 2020.
The EFT Segment's active ATMs were lower than the prior year due to temporary closures of approximately 3,500 ATMs in Europe to limit the impact caused by COVID-19, the removal of 450 YourCash ATMs and the loss of 580 low-margin, low-value ATMs in India, partially offset by nearly 1,000 new high-value deployed ATMs and 300 new outsourcing ATMs.
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