Euronet Worldwide Inc. (EEFT) reported second-quarter net operating earnings of 44 cents per share, beating the Zacks Consensus Estimate of 41 cents by 7.3%. Results also surpassed the year-ago adjusted earnings of 25 cents by 76%.
Net income of Euronet came in at $18.1 million or 35 cents per share as against an income of $5.7 million or 11 cents per share in the prior-year quarter.
Operational Update
During the second quarter of 2013, total revenues of Euronet Worldwide grossed $341.5 million, up 13% year over year as well as 13% on a constant currency basis. Total revenue surpassed the Zacks Consensus Estimate of $337 million. Improvement in all the three segments contributed to the top line growth during the quarter.
Total operating expenses of Euronet for the second quarter amounted to $313.7 million, increasing 11% year over year, primarily due to increases in operating costs and salaries and benefits.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of Euronet during the second quarter of 2013 increased 22% year over year to $47.7 million. Adjusted EBITDA increased 21% year over year on a constant currency basis.
Operating earnings for Euronet were $27.8 million in the reported quarter, 40% higher than $19.9 million recorded in the second quarter of 2012. Operating earnings increased 38% over the prior-year period on a constant currency basis. Total transactions for Euronet climbed 3% year over year to 587 million in the second quarter of 2013 from 570 million in the year-ago quarter, driven by contribution from all segments.
Segment Details
The EFT Processing Segment reported total revenue of $72.2 million, increasing 24% over the prior-year quarter and 23% on a constant currency basis. Its operating income surged 46% to $15 million over the second quarter of 2012 and increased 43% on a constant currency basis.
The improved performance came on the back of substantial growth in sales of value added products, improved performance from brown label ATMs in India and ATM network expansion.
Transactions in this segment surged 2% year over year to 296 million due to higher contribution from the segment’s operations in Serbia, Middle East, Pakistan, Romania and Poland.
The epay Segment reported total revenue of $176.6 million, increasing 6% over the prior-year quarter and 6% on a constant currency basis. Operating income amounted to $12.4 million in the second quarter, up 23% year over year and as well as on a constant currency basis.
The improvement came on the back of higher non-mobile product sales, mainly in Germany, higher prepaid mobile sales in the U.S. and the acquisition of ezi-pay in New Zealand in Nov 2012. These improvements were partially offset by poor performance in Australia and start-up expenses in Russia and Turkey. Operating expense improvement was also favorably impacted by lower intangible expense in Spain, Brazil and Germany.
Total transactions during the second quarter of 2013 increased 4% year over year to 282 million.
The Money Transfer Segment’s total revenues improved 21% year over year and 20% on a constant currency basis to $93.4 million in the quarter under review. Operating income surged 31% year over year and 30% on a constant currency basis to $8.8 million in the second quarter of 2013.
A surge in total transactions contributed to the expansion of revenue and operating income. Total transactions increased 20% over the year-ago quarter to 8.9 million in the second quarter of 2013. Growth in transactions came from consistent sales success, economic recovery in some markets and network expansion.
The company’s Corporate and Other Segment reported total expenses of $8.4 million in the reported quarter, increasing 16.7% from $7.2 million in the second quarter of 2012. The increase was attributable to higher long-term stock-based incentive compensation expenses.
Financial Position
Euronet Worldwide exited the second quarter of 2013 with cash and cash equivalents of $189.9 million, decreasing from $201.4 million as of Dec 31, 2012.
Total assets of Euronet as of Jun 30, 2013 were $1.49 billion compared to $1.55 billion as of Dec 31, 2012.
Long-term debt obligation in Euronet’s books amounted to $280.7 million, decreasing from $286.7 million as of Dec 31, 2012. Shareholders equity amounted to $537.7 million at Jun 30, 2013 compared to $526.6 million at 2012-end. Debt to capital ratio of Euronet as of Jun 30, 2013 was 35.2% representing an improvement of 80 basis points over 36% at Dec 31, 2012.
Guidance
With the assumption of a constant foreign currency exchange rate, Euronet expects the third-quarter 2013 adjusted cash earnings to be around 54 cents per share.
Performance of Others in the Industry
American Express Co. (AXP), also known as AmEx, reported its second-quarter 2013 operating earnings per share of $1.27. The result outpaced both the Zacks Consensus Estimate of $1.21 and the year-ago quarter of $1.15 per share.
CIT Group Inc.’s (CIT) second quarter 2013 earnings of 91 cents per share came in line with the Zacks Consensus Estimate. Moreover, this is significantly better than the year-ago loss of 36 cents per share, which included debt refinancing charges related to the redemption of high-cost debt.
Zacks Rank
Euronet currently carries a Zacks Rank #3 (Hold). Among other companies in the financial sector, SS&C Technologies Holdings Inc. (SSNC) carrying a favorable Zacks Rank #2 (Buy) is scheduled to release its second quarter results on Aug 1, 2013 after the closing bell.
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