Euronet Worldwide(EEFT) - 2024 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents Euronet's unaudited consolidated financial statements for Q1 2024, including balance sheets, operations, equity, cash flows, and notes Consolidated Balance Sheets Balance Sheet Metrics | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | Change (in millions) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :------------------- | :--------- | | Total Assets | $5,693.6 | $5,894.4 | $(200.8) | (3.4)% | | Total Liabilities | $4,450.0 | $4,644.7 | $(194.7) | (4.2)% | | Total Equity | $1,243.6 | $1,249.7 | $(6.1) | (0.5)% | | Cash and cash equivalents | $1,236.2 | $1,254.2 | $(18.0) | (1.4)% | | Short-term debt obligations | $675.2 | $150.3 | $524.9 | 349.2% | - Total assets decreased by $200.8 million, primarily driven by a decrease in settlement assets and cash, partially offset by an increase in ATM cash[10] - Current liabilities saw a significant increase in short-term debt obligations, rising from $150.3 million to $675.2 million, reflecting a reclassification of debt[10] Consolidated Statements of Operations Statements of Operations Metrics | Metric | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | Change (in millions) | Change (%) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------- | :--------- | | Revenues | $857.0 | $787.2 | $69.8 | 8.9% | | Operating Income | $64.0 | $45.6 | $18.4 | 40.4% | | Net Income | $26.2 | $19.8 | $6.4 | 32.3% | | Basic EPS | $0.57 | $0.40 | $0.17 | 42.5% | | Diluted EPS | $0.55 | $0.39 | $0.16 | 41.0% | - Revenues increased by 8.9% year-over-year, driven by growth across all segments[12] - Operating income saw a substantial increase of 40.4%, indicating improved operational efficiency[12] - Net income attributable to Euronet Worldwide, Inc. increased by 30% to $26.2 million, and diluted EPS rose by 41% to $0.55[12][166] Consolidated Statements of Comprehensive Income (Loss) Comprehensive Income Metrics | Metric | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net income | $26.2 | $19.8 | | Translation adjustment | $(45.0) | $20.8 | | Comprehensive income (loss) | $(18.8) | $40.6 | | Comprehensive income (loss) attributable to Euronet Worldwide, Inc. | $(18.8) | $40.7 | - The company reported a comprehensive loss of $18.8 million for Q1 2024, primarily due to a negative foreign currency translation adjustment of $45.0 million, a significant shift from a positive adjustment in Q1 2023[15][38] Consolidated Statements of Changes in Equity Changes in Equity Metrics | Equity Component | Balance as of Dec 31, 2023 (in millions) | Net Income (Loss) (in millions) | Other Comprehensive Income (in millions) | Stock Issued (in millions) | Share-based Compensation (in millions) | Balance as of Mar 31, 2024 (in millions) | | :----------------------- | :------------------------------------- | :------------------------------ | :--------------------------------------- | :------------------------- | :------------------------------------- | :------------------------------------- | | Common Stock | $1.3 | — | — | — | — | $1.3 | | Additional Paid-in Capital | $1,311.6 | — | — | $0.7 | $12.5 | $1,324.8 | | Treasury Stock | $(1,487.7) | — | — | $(0.5) | — | $(1,488.2) | | Retained Earnings | $1,627.9 | $26.2 | — | — | — | $1,654.1 | | Accumulated Other Comprehensive Loss | $(203.2) | — | $(45.0) | — | — | $(248.2) | | Total Equity | $1,249.7 | $26.2 | $(45.0) | $0.2 | $12.5 | $1,243.6 | - Total equity decreased slightly from $1,249.7 million to $1,243.6 million, primarily due to a significant accumulated other comprehensive loss of $45.0 million, offsetting the net income of $26.2 million[17] Consolidated Statements of Cash Flows Cash Flow Activities | Cash Flow Activity | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | Change (in millions) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------- | | Net cash provided by operating activities | $30.0 | $3.3 | $26.7 | | Net cash used in investing activities | $(96.8) | $(18.1) | $(78.7) | | Net cash provided by (used in) financing activities | $81.3 | $(4.4) | $85.7 | | Decrease in cash and cash equivalents and restricted cash | $(32.7) | $(53.1) | $20.4 | - Operating cash flow significantly increased to $30.0 million in Q1 2024 from $3.3 million in Q1 2023, driven by higher net income and favorable working capital changes[19][171] - Investing activities used $96.8 million, primarily due to the $70.0 million acquisition of Infinitium Group and increased purchases of property and equipment[19][172] - Financing activities provided $81.3 million, a substantial improvement from a $4.4 million outflow in Q1 2023, mainly due to net borrowings from credit agreements to fund ATM cash and acquisitions[19][173] Notes to the Unaudited Consolidated Financial Statements (1) General - Euronet Worldwide, Inc. is a leading electronic payments provider, offering ATM, POS, card outsourcing, prepaid mobile airtime, and international payment services[21] - The financial statements are prepared in conformity with U.S. GAAP and include normal recurring adjustments. Management uses estimates for income taxes, asset impairment, purchase price allocation, and revenue recognition[22][23] - The company experiences seasonality: EFT Processing peaks in Q3 (tourism), epay in Q4/Q1 (holidays), and Money Transfer from May through Q4 (worker migration/holidays)[24] (2) Recently Issued Accounting Pronouncements - New FASB standards on segment reporting (effective 2025 for interim) and income tax disclosures (effective 2025 for annual) are being evaluated for potential impact on the Company's disclosures[26][27] (3) Acquisitions - On February 1, 2024, Euronet acquired Infinitium Group, a payments authentication solutions provider, for $70.0 million cash and $5.0 million in common stock[28] - The acquisition's purchase consideration was preliminarily allocated: $51.0 million to customer relationships, $5.6 million to acquired net assets, and $18.4 million to goodwill[28] (4) Settlement Assets and Obligations - Settlement assets (funds from agents/merchants for unsettled transactions) and corresponding settlement obligations (amounts to be paid to transferees/agents/content providers) are recorded[29][30] Settlement Assets and Obligations Summary | Category | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :-------------------------- | :----------------------------- | :------------------------------ | | Total Settlement Assets | $1,413.5 | $1,681.5 | | Total Settlement Obligations | $1,413.5 | $1,681.5 | - Settlement cash and cash equivalents decreased from $327.4 million to $250.8 million, while settlement restricted cash also decreased from $125.0 million to $111.8 million[31] (5) Stockholders' Equity Earnings Per Share and Shares Outstanding | EPS Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic Earnings Per Share | $0.57 | $0.40 | | Diluted Earnings Per Share | $0.55 | $0.39 | | Basic Weighted Average Shares Outstanding | 45,816,943 | 49,811,368 | | Diluted Weighted Average Shares Outstanding | 48,962,583 | 52,974,800 | - Diluted EPS calculation includes 2.8 million incremental shares from assumed conversion of convertible notes, if dilutive, regardless of market price trigger[35][36] - The company has two share repurchase programs in place, with approximately $96.6 million remaining under the 2022 program and $350 million available under the 2023 program as of March 31, 2024[37][203] - Accumulated other comprehensive loss increased by $45.0 million in Q1 2024, entirely due to negative foreign currency translation adjustments[38] (6) Goodwill and Acquired Intangible Assets, Net Goodwill and Acquired Intangible Assets Summary | Asset Category | Balance as of Dec 31, 2023 (in millions) | Acquisition (in millions) | Amortization (in millions) | FX Rate Changes (in millions) | Balance as of Mar 31, 2024 (in millions) | | :----------------------- | :------------------------------------- | :------------------------ | :------------------------- | :---------------------------- | :------------------------------------- | | Acquired Intangible Assets | $167.6 | $51.0 | $(5.5) | $(4.2) | $208.9 | | Goodwill | $847.5 | $18.4 | — | $(17.1) | $848.8 | | Total | $1,015.1 | $69.4 | $(5.5) | $(21.3) | $1,057.7 | - Goodwill increased to $848.8 million, with $18.4 million added from the Infinitium acquisition. The Money Transfer segment holds the largest portion of goodwill ($382.4 million)[40] - Estimated amortization expense for acquired intangible assets with finite lives is projected to be $12.4 million for the remainder of 2024 and $14.3 million for 2025[40] (7) Convertible Notes Receivable - Euronet loaned $60.0 million to Koin Mobile, LLC and Marker Trax, LLC, with interest accruing at 2% per annum, due October 18, 2028[41] - These notes are convertible into preferred equity of the borrowers upon certain events, including qualified equity financing, change in control, profitability, or at maturity[42] (8) Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities Summary | Category | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :-------------------------- | :----------------------------- | :------------------------------ | | Accrued expenses | $297.7 | $254.8 | | Derivative liabilities | $26.3 | $39.1 | | Other tax payables | $19.1 | $69.1 | | Accrued payroll expenses | $57.6 | $74.4 | | Current capital lease obligations | $1.6 | $1.6 | | Total | $402.3 | $439.0 | - Total accrued expenses and other current liabilities decreased from $439.0 million to $402.3 million, primarily due to decreases in other tax payables and accrued payroll expenses[43] (9) Deferred Revenues - Deferred revenues increased slightly, with $71.4 million recognized and $70.6 million in new cash payments received for unfulfilled performance obligations during Q1 2024[44] (10) Debt Obligations Debt Obligations Summary | Debt Type | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Revolving credit agreement | $619.5 | $536.9 | | 0.75% Convertible Notes, due 2049 | $525.0 | $525.0 | | 1.375% Senior Notes, due 2026 | $646.9 | $662.2 | | Uncommitted credit agreements | $150.0 | $150.0 | | Total Debt Obligations | $1,941.6 | $1,874.4 | | Short-term debt obligations | $675.2 | $150.3 | | Long-term debt obligations | $1,258.8 | $1,715.4 | - Total debt obligations increased to $1,941.6 million. A significant portion of debt, including Convertible Notes, was reclassified to short-term, increasing current maturities from $150.3 million to $675.2 million[45][167] - The Credit Facility was amended in October 2022, increasing to $1.25 billion and extending expiration to October 2027. As of March 31, 2024, $579.0 million was available for borrowing[46][176] - Convertible Senior Notes of $525.0 million mature in March 2049, with a conversion price of $188.73 per share. Holders have repurchase options on specific dates, starting March 15, 2025[50][177] - Senior Notes of €600.0 million ($646.9 million) accrue interest at 1.375% and are due in May 2026[52][178] (11) Derivative Instruments and Hedging Activities - Euronet uses foreign currency derivative contracts (forwards, cross-currency swaps) as economic hedges to minimize exposure to foreign currency exchange risk, primarily in Ria and xe operations[57][191] - Ria Operations use short-duration forward contracts (up to 14 days) with a notional value of $400.8 million as of March 31, 2024, to offset FX fluctuations on money transfer funds[58][192] - xe Operations write derivative instruments to customers and hedge net currency risks with offsetting contracts. The aggregate notional amount of customer contracts was $1.1 billion as of March 31, 2024[61][63][193] Derivative Instruments Summary | Derivative Type | Balance Sheet Location | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :-------------------------- | :--------------------- | :----------------------------- | :------------------------------ | | Foreign currency exchange contracts (Assets) | Other current assets | $27.5 | $50.0 | | Foreign currency exchange contracts (Liabilities) | Other current liabilities | $(26.3) | $(39.1) | - The company recorded a net foreign currency exchange loss of $1.6 million from Ria Operations derivative contracts for the three months ended March 31, 2024[68] (12) Fair Value Measurements - Fair value measurements are categorized into a three-level hierarchy based on input observability, with Level 1 for unadjusted quoted prices in active markets, Level 2 for observable inputs, and Level 3 for unobservable inputs[70][72] Fair Value of Financial Instruments | Financial Instrument | Classification | Level 2 Fair Value (March 31, 2024, in millions) | | :-------------------------- | :------------- | :--------------------------------------------- | | Foreign currency exchange contracts (Assets) | Other current assets | $27.5 | | Foreign currency exchange contracts (Liabilities) | Other current liabilities | $(26.3) | - The fair values of Convertible Notes and Senior Notes are estimated using Level 2 inputs (quoted prices in inactive markets). As of March 31, 2024, their fair values were $538.0 million and $609.0 million, respectively[74] (13) Segment Information - Euronet operates in three reportable segments: EFT Processing (ATM/POS services, software), epay (electronic payment products, prepaid mobile airtime, digital content), and Money Transfer (global consumer-to-consumer and account-to-account money transfers via Ria, IME, AFEX, xe, and Dandelion)[75][77][78] Segment Performance Overview | Segment | Q1 2024 Revenues (in millions) | Q1 2023 Revenues (in millions) | YoY Change (%) | Q1 2024 Operating Income (in millions) | Q1 2023 Operating Income (in millions) | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :------------------------------------- | :------------------------------------- | :------------- | | EFT Processing | $217.2 | $192.2 | 13% | $21.5 | $6.9 | 212% | | epay | $257.1 | $237.4 | 8% | $26.6 | $27.5 | (3)% | | Money Transfer | $384.6 | $359.4 | 7% | $37.2 | $32.6 | 14% | | Consolidated Total | $857.0 | $787.2 | 9% | $64.0 | $45.6 | 40% | Segment Assets | Segment | Total Assets as of March 31, 2024 (in millions) | Total Assets as of December 31, 2023 (in millions) | | :-------------------------- | :-------------------------------------------- | :----------------------------------------------- | | EFT Processing | $2,554.3 | $2,442.0 | | epay | $1,008.0 | $1,204.9 | | Money Transfer | $1,829.4 | $1,921.2 | | Corporate Services, Eliminations and Other | $301.9 | $326.3 | | Total | $5,693.6 | $5,894.4 | - Revenues are disaggregated by segment and region, with Europe being the largest revenue contributor ($474.9 million in Q1 2024), followed by North America ($237.8 million) and Asia Pacific ($104.9 million)[81][82] (14) Income Taxes Effective Income Tax Rate | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Effective Income Tax Rate | 37.9% | 46.5% | - The effective income tax rate for Q1 2024 was 37.9%, higher than the 21% statutory rate, mainly due to U.S. deferred tax activity and higher local statutory tax rates in foreign jurisdictions[83][163] - The company does not expect a material impact from OECD Pillar 2 global minimum tax guidelines in 2024 based on current enacted legislation[84] (15) Commitments - As of March 31, 2024, Euronet had $80.0 million in stand-by letters of credit/bank guarantees, with $3.9 million collateralized by cash deposits[85] - Off-balance sheet guarantees include $10.7 million for ATM network cash and $73.3 million in performance guarantees for customer agreements[86] - The company provides various indemnifications in commercial agreements, including for ATM damage/theft, computer system breaches, intellectual property infringement, and acquisition-related claims[87][92] (16) Litigation and Contingencies - Euronet is periodically involved in legal and regulatory proceedings but currently believes no individual or aggregate proceedings would have a material adverse effect on its financial condition or results of operations[90][199] - Liabilities are recorded when probable and estimable, and are reviewed quarterly[90][199] (17) Leases - The company primarily uses operating leases for ATM sites, office spaces, retail stores, and equipment, recognizing right-of-use assets and lease liabilities based on the present value of lease payments[93][94] Operating Lease Maturity Schedule | Lease Maturity | Operating Leases (in millions) | | :-------------------- | :----------------------------- | | Remainder of 2024 | $36.3 | | 2025 | $38.3 | | 2026 | $28.9 | | 2027 | $19.7 | | 2028 | $11.2 | | Thereafter | $17.4 | | Total Lease Payments | $151.8 | | Present Value of Lease Liabilities | $143.4 | Lease Expense Breakdown | Lease Expense Type | Q1 2024 (in millions) | Q1 2023 (in millions) | | :-------------------------- | :-------------------- | :-------------------- | | Operating lease expense | $12.6 | $12.5 | | Short-term and variable lease expense | $36.8 | $35.3 | | Total Lease Expense | $49.4 | $47.8 | - The weighted-average remaining lease term for operating leases is 4.4 years, with a weighted-average discount rate of 2.7% as of March 31, 2024[98] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Euronet's Q1 2024 financial condition, operations, revenue drivers, segment performance, liquidity, capital, and market risks CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS - The report contains forward-looking statements about business plans, financial requirements, trends, capital adequacy, debt repayment, capital expenditures, potential outcomes of loss contingencies, acquisitions, business strategy, regulatory actions, accounting changes, technological advances, and projected costs and revenues[101][104] - Investors are cautioned that actual results may differ materially due to various factors, including global economic conditions, inflation, geopolitical conflicts, integration risks, technological developments, foreign currency fluctuations, system breaches, regulatory changes, competition, and cost of borrowing[103] OVERVIEW - Euronet is a global financial technology and payments provider operating in EFT Processing, epay, and Money Transfer segments, with 74% of revenues denominated in non-U.S. dollar currencies[106][109] - Revenue sources include ATM management fees, transaction fees, commissions, and foreign currency exchange margin across its segments[110] - Key opportunities include expanding market presence through physical and digital assets, developing value-added products, and leveraging cross-selling. Challenges include intense competition, regulatory compliance, managing growth, and inflationary pressures[115][116][118][119][120] SEGMENT SUMMARY RESULTS OF OPERATIONS Segment Summary Results of Operations | Segment | Q1 2024 Revenues (in millions) | Q1 2023 Revenues (in millions) | YoY Change (%) | Q1 2024 Operating Income (in millions) | Q1 2023 Operating Income (in millions) | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :------------------------------------- | :------------------------------------- | :------------- | | EFT Processing | $217.2 | $192.2 | 13% | $21.5 | $6.9 | 212% | | epay | $257.1 | $237.4 | 8% | $26.6 | $27.5 | (3)% | | Money Transfer | $384.6 | $359.4 | 7% | $37.2 | $32.6 | 14% | | Consolidated Total | $857.0 | $787.2 | 9% | $64.0 | $45.6 | 40% | - EFT Processing showed the strongest operating income growth at 212%, while epay experienced a slight decline of 3%[122] - Fluctuations in foreign currency exchange rates significantly impact reported revenues and expenses, with a stronger U.S. dollar negatively affecting earnings from non-U.S. operations[123] COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 EFT PROCESSING SEGMENT EFT Processing Segment Performance | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------- | | Total Revenues | $217.2 | $192.2 | 13% | | Operating Income | $21.5 | $6.9 | 212% | | Transactions Processed | 2,503 | 1,837 | 36% | | Active ATMs (as of March 31) | 49,290 | 47,430 | 4% | - Revenue growth was primarily driven by increased domestic and international cash withdrawal transactions due to higher tourism, and growth in low-value POS and payment processing transactions in Europe and Asia Pacific[126][130] - Operating income surged by 212% to $21.5 million, with operating margin increasing from 3.6% to 9.9%, largely due to a decrease in professional fees and a duty fee refund[134] EPAY SEGMENT epay Segment Performance | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------- | | Total Revenues | $257.1 | $237.4 | 8% | | Operating Income | $26.6 | $27.5 | (3)% | | Transactions Processed | 953 | 973 | (2)% | - Revenue increased by 8% to $257.1 million, driven by continued expansion in mobile and digital branded payments, despite a 2% decrease in transactions processed[137][138] - Operating income decreased by 3% to $26.6 million, and operating margin declined from 11.6% to 10.3%, primarily due to a shift in transaction mix and reduced promotional campaign activity compared to the prior year[145] MONEY TRANSFER SEGMENT Money Transfer Segment Performance | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------- | | Total Revenues | $384.6 | $359.4 | 7% | | Operating Income | $37.2 | $32.6 | 14% | | Transactions Processed | 40.6 | 37.5 | 8% | - Revenue increased by 7% to $384.6 million, driven by growth in international-originated, U.S. outbound, and direct-to-consumer digital transactions, despite a slight decrease in revenue per transaction due to mix shift[148] - Operating income grew by 14% to $37.2 million, with operating margin improving from 9.1% to 9.7%, attributed to effective cost management[155] CORPORATE SERVICES Corporate Services Operating Expenses | Expense Category | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :------------- | | Salaries and benefits | $18.1 | $18.7 | (3)% | | Selling, general and administrative | $3.1 | $2.6 | 19% | | Depreciation and amortization | $0.1 | $0.1 | 0% | | Total Operating Expenses | $21.3 | $21.4 | (0)% | - Total Corporate operating expenses remained relatively stable at $21.3 million, showing a slight decrease of $0.1 million year-over-year[157] OTHER EXPENSE, NET Other Expense, Net Breakdown | Expense Category | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :------------- | | Interest income | $5.7 | $2.6 | 119% | | Interest expense | $(14.9) | $(10.1) | 48% | | Foreign currency exchange loss, net | $(12.5) | $(1.1) | 1,036% | | Other expense, net | $(21.8) | $(8.6) | 153% | - Interest income more than doubled to $5.7 million due to higher interest rates on bank accounts[159] - Interest expense increased by 48% to $14.9 million, driven by higher interest rates on the Credit Facility and uncommitted credit facility[160] - Net foreign currency exchange losses significantly increased to $12.5 million from $1.1 million, reflecting fluctuations in the U.S. dollar against other currencies[162] INCOME TAX EXPENSE Income Tax Expense Rates | Metric | Q1 2024 | Q1 2023 | | :-------------------- | :------ | :------ | | Effective Income Tax Rate | 37.9% | 46.5% | - The effective income tax rate decreased to 37.9% from 46.5%, but remained higher than the 21% statutory rate due to foreign earnings subject to higher local tax rates and U.S. deferred tax activity[163] NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS - Noncontrolling interests represent the minority shareholders' portion of net income or loss from consolidated subsidiaries that are not wholly owned, such as Movilcarga (epay - Spain), Euronet China (EFT - China), Euronet Pakistan (EFT - Pakistan), and Euronet Infinitium Solutions (EFT - India)[165] NET INCOME (LOSS) ATTRIBUTABLE TO EURONET Net Income Attributable to Euronet | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Net Income Attributable to Euronet | $26.2 | $20.1 | $6.1 | 30% | - The 30% increase in net income was primarily driven by a $69.8 million increase in revenues, leading to a $27.7 million increase in gross profit, partially offset by higher salaries and benefits and increased foreign exchange losses[166] LIQUIDITY AND CAPITAL RESOURCES Liquidity and Capital Resources Summary | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :-------------------------- | :----------------------------- | :------------------------------ | | Working Capital | $970.7 | $1,462.1 | | Current Assets to Liabilities Ratio | 1.33 | 1.54 | | Unrestricted Cash | $1,236.2 | $1,254.2 | | ATM Cash | $599.7 | $525.2 | | Available under Credit Facility | $579.0 | N/A | - Working capital decreased by $491.4 million to $970.7 million, primarily due to the reclassification of convertible debt to current liabilities and the Infinitium acquisition[167] - Cash provided by operating activities significantly increased to $30.0 million in Q1 2024 from $3.3 million in Q1 2023[170][171] - Cash used in investing activities increased to $96.8 million, mainly due to the $70.0 million Infinitium acquisition and $23.8 million in property and equipment purchases[170][172] - Cash provided by financing activities was $81.3 million, a substantial improvement from a $4.4 million outflow in Q1 2023, driven by net borrowings to fund ATM cash and the Infinitium acquisition[170][173] - Capital expenditures for 2024 are estimated to range from $90 million to $100 million, primarily for ATM installations, POS terminals, and IT equipment[181] - Inflation is increasing the company's cost structure and impacting discretionary spending in epay and EFT segments, as well as send amounts in money transfer[182] Item 3. Quantitative and Qualitative Disclosures About Market Risk Details Euronet's exposure to market risks, specifically interest rate and foreign currency exchange rate risks, and mitigation strategies Interest Rate Risk - As of March 31, 2024, total debt outstanding was $1,941.6 million. Approximately 27% ($525.0 million) is fixed-rate Convertible Notes, 32% ($619.5 million) is variable-rate Credit Facility borrowings, 33% ($646.9 million) is fixed-rate Senior Notes, and 8% ($150.0 million) is variable-rate uncommitted credit agreements[185] - A 1% increase in the applicable interest rate on variable-rate borrowings (Credit Facility) would result in approximately $12.5 million in additional annual interest expense[185] - Excess cash is invested in short-term instruments, meaning earnings on these investments fluctuate with underlying short-term interest rates[186] Foreign Currency Exchange Rate Risk - Approximately 74% of Q1 2024 revenues were generated in non-U.S. dollar countries, making the company vulnerable to fluctuations in exchange rates, particularly for the euro, British pound, Australian dollar, Polish zloty, Indian rupee, New Zealand dollar, Malaysian ringgit, and Hungarian forint[187][188] - A 10% fluctuation in these foreign currency exchange rates is estimated to have a combined annualized effect of $120 million to $130 million on reported net income and working capital[188] - The company uses derivatives, primarily foreign currency forward and cross-currency swap contracts, as economic hedges to minimize exposure to foreign currency exchange rates, especially in its money transfer and xe operations[191][192][193] Item 4. Controls and Procedures Confirms effectiveness of Euronet's disclosure controls and procedures, with no material changes in internal control over financial reporting for Q1 2024 - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2024, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[195] - There have been no material changes in internal control over financial reporting during the three months ended March 31, 2024[196] PART II—OTHER INFORMATION Item 1. Legal Proceedings Euronet is involved in ordinary course legal and regulatory proceedings, with no material adverse effect expected on financials or operations - The company is a party to legal or regulatory proceedings arising in the ordinary course of business[198] - Management believes there are no current legal or regulatory proceedings that would have a material adverse effect on the company's consolidated financial condition or results of operations[199] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[201] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Euronet did not repurchase common stock under its publicly announced programs during Q1 2024 Share Repurchase Program Summary | 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) | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :-------------------------------------------------------------------------------------- | | January 1 - March 31, 2024 | - | $ - | - | $446.6 | - As of March 31, 2024, approximately $96.6 million in value remained available under the 2022 repurchase program, and $350 million was available under the 2023 repurchase program[203] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2024 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2024[204] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including certifications and XBRL data, noting agreements are for informational purposes only - Exhibits include Section 302 and 906 certifications from the CEO and CFO, and XBRL formatted financial statements and notes[205] - Agreements referenced as exhibits are filed to provide information regarding their terms and are not intended to provide other factual information about the company or its business[207] Signatures Contains required signatures of Euronet's CEO and CFO, certifying the report filing - The report is signed by Michael J. Brown, Chief Executive Officer, and Rick L. Weller, Chief Financial Officer, on May 3, 2024[211][212]