Euronet Worldwide(EEFT) - 2023 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for Euronet Worldwide, Inc. as of March 31, 2023, and for the three months ended March 31, 2023 and 2022 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in millions) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $5,010.6 | $5,403.6 | | Total Current Assets | $3,341.5 | $3,726.7 | | Goodwill | $834.3 | $828.3 | | Total Liabilities | $3,738.5 | $4,159.2 | | Total Current Liabilities | $1,905.3 | $2,354.1 | | Debt obligations, net | $1,642.7 | $1,609.1 | | Total Equity | $1,272.1 | $1,244.4 | Consolidated Statements of Operations Statement of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Revenues | $787.2 | $718.5 | | Total operating expenses | $741.6 | $681.8 | | Operating income | $45.6 | $36.7 | | Net income | $19.8 | $8.2 | | Net income attributable to Euronet | $20.1 | $8.2 | | Diluted EPS | $0.39 | $0.16 | Consolidated Statements of Cash Flows Cash Flow Summary (in millions) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3.3 | $5.7 | | Net cash used in investing activities | ($18.1) | ($356.9) | | Net cash provided by (used in) financing activities | ($4.4) | $235.3 | | Increase (decrease) in cash | ($53.1) | ($153.4) | Notes to the Unaudited Consolidated Financial Statements - The company's business is seasonal. The EFT segment sees highest demand in Q3 (tourism), epay in Q4 and Q1 (holidays), and Money Transfer from May through Q4 (worker migration and holidays)[28] - On March 15, 2022, the company acquired the Merchant Acquiring Business of Piraeus Bank (PBMA) for approximately $350.6 million. This acquisition is included in the EFT Processing Segment[31][32][33] - As of March 31, 2023, total goodwill was $834.3 million, allocated as follows: Money Transfer ($385.1M), EFT Processing ($325.0M), and epay ($124.2M)[51] - Total debt obligations stood at $1,654.6 million as of March 31, 2023, consisting primarily of a revolving credit facility, 0.75% convertible notes due 2049, and 1.375% senior notes due 2026[55] - The company uses foreign currency derivative contracts to minimize exposure to currency fluctuations, primarily for its Ria and xe operations. As of March 31, 2023, the notional value of these contracts was substantial[66][67][70] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2023 financial results, with revenue up 10% to $787.2 million and operating income up 24% to $45.6 million, led by EFT Processing Q1 2023 vs Q1 2022 Segment Performance (in millions) | Segment | Q1 2023 Revenue | Q1 2022 Revenue | % Change | Q1 2023 Operating Income | Q1 2022 Operating Income | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | EFT Processing | $192.2 | $145.6 | 32% | $6.9 | ($6.3) | (210)% | | epay | $237.4 | $235.8 | 1% | $27.5 | $26.2 | 5% | | Money Transfer | $359.4 | $339.0 | 6% | $32.6 | $33.3 | (2)% | | Total | $787.2 | $718.5 | 10% | $45.6 | $36.7 | 24% | - The EFT Processing segment's revenue grew 32% YoY, driven by increased domestic and international cash withdrawal transactions as travel restrictions eased across Europe[135] - The Money Transfer segment's revenue increased 6% YoY, fueled by growth in international-originated money transfers and direct-to-consumer digital transactions[158] - The company had working capital of $1,436.2 million as of March 31, 2023. It maintains access to $715.9 million under its Credit Facility, with no significant long-term debt principal payments due until March 2025[175][176] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from variable-rate debt and foreign currency volatility, with significant non-U.S. dollar revenues, mitigated by derivatives - As of March 31, 2023, 29% of the company's total debt was variable-rate, primarily under its Credit Facility, exposing it to interest rate risk[194] - For Q1 2023, 74.1% of revenues were generated in non-U.S. dollar currencies. The company is particularly vulnerable to fluctuations in the euro, British pound, Australian dollar, and Polish zloty[196][197] - A hypothetical 10% fluctuation in key foreign currency exchange rates is estimated to have an annualized effect on reported net income and working capital of approximately $125 million to $135 million[197] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2023, with no material internal control changes beyond PBMA integration - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[204] - No material changes were made to internal controls over financial reporting in Q1 2023, except for the integration of the acquired PBMA business[205] PART II—OTHER INFORMATION Legal Proceedings Management believes no current legal or regulatory proceedings would materially adversely affect the company's financial condition or operations - There are currently no legal or regulatory proceedings that management believes would have a material adverse effect on the company's financial condition or operations[208] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to risk factors were reported compared to the 2022 Form 10-K[209] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2023, the company repurchased 276,400 shares for $28.3 million, with $446.7 million remaining for future repurchases Share Repurchases in Q1 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2023 | — | $— | | Feb 2023 | — | $— | | Mar 2023 | 276,400 | $102.46 | | Total | 276,400 | $102.46 | - As of March 31, 2023, the company had $446.7 million remaining under its share repurchase authorizations[211] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits filed with this report include Section 302 and 906 certifications by the CEO and CFO, as well as XBRL financial data[213]