Euronet Worldwide, Inc. (NASDAQ:EEFT) Q1 2019 Earnings Conference Call Transcript

Apr 30, 2019 • 09:00 am ET


Euronet Worldwide, Inc. (NASDAQ:EEFT) Q1 2019 Earnings Conference Call Transcript


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Rick L. Weller

between 5% and 10%, with some of the minor currencies changing nearly three times that amount. To normalize the impact of these currency fluctuations, we have presented our results adjusted for currency on the next slide.

I'm now on Slide 8. EFT delivered a strong start to the year with constant currency revenue growth of 16%, operating income growth of 54%, and adjusted EBITDA growth of 29%. The double-digit growth rates were the result of a 10% increase in our ATM network and an 11% increase in transactions, primarily from Europe and India. This transaction growth increase includes an increase of our core domestic withdrawal transactions as well as value-added transactions on ATMs and point-of-sale terminals, including dynamic currency conversion, domestic and international surcharge, and foreign currency dispensing. Revenue and gross profit per transaction remained relatively constant year-over-year, while operating margins expanded nicely.

Epay began the year with constant currency revenue growth of 6%, operating income growth of 15%, and adjusted EBITDA growth of 13%. These strong profit growth rates were driven by continued expansion of our digital media products. Gross profit per transaction came in slightly as we continued to see stronger mix of mobile top-up transactions from India. The incremental benefit of the large volume of India transactions together with continued growth from our higher-margin digital media products continued to nicely expand the epay operating margins on a year-over-year basis.

Money transfer delivered constant currency revenue, operating income, and adjusted EBITDA of 11%, 22%, and 18%, respectively. These excellent growth rates were driven by 10% money transfer growth, which included contributions across most areas of the business. Transaction growth together with improved revenue and gross profit per transaction drove expansion of operating margins by more than a 100 basis points.

So in summary, this was an excellent start to 2019 where all segments posted double-digit operating income and adjusted EBITDA growth rate in our seasonally weakest quarter, as well as improved operating margins.

Now let's go to Slide 9 and a few comments on the balance sheet. Here on Slide 9 you can see that we continued to strengthen our balance sheet. As you may recall, in mid-March we successfully issued $525 million of 0.75% convertible bonds, and with that transaction we repurchased $49 million par value of our existing 1.5% convertible bonds for $94 million. With this in mind, the issuance of these bonds contributed to the increase in both cash and debt. In addition to cash received from the new bonds, cash increased from cash generated from operations, partially offset by the partial repurchase I just mentioned of the Company's 1.5% convertible bonds and repayment in full of the balance outstanding on our revolving credit facility.

As you know, we have issued the redemption notice for the remaining $352 million of 1.5% convertible bonds outstanding. We are currently in the 40-day measurement period to determine the final settlement price of those bonds and the redemption is planned to be completed on May 28, 2019. We will