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February 21, 2006
21 February 2006 Euronet Worldwide Reports 2005
Earnings Growth of 61%
LEAWOOD, KANSAS,
USA-February 21, 2006-Euronet Worldwide, Inc. (NASDAQ:
EEFT), a leading electronic payments provider, today announced
its full year and fourth quarter 2005 financial results.
Euronet's full year 2005 results
were as follows:
Annual consolidated revenues of $531.2 million, an increase of
39% over 2004 revenues of $381.1 million.
* Adjusted EBITDA (operating income plus
depreciation and amortization) of $75.2 million, a 47% increase
over 2004 Adjusted EBITDA of $51.1 million.
* Operating income of $52.8 million, a 50% increase
over 2004 operating income of $35.3 million.
* Net income of $27.4 million, or $0.74 diluted
earnings per share, compared to $18.4 million, or $0.55 diluted
earnings per share, for 2004.
* Net income, excluding the effects of foreign
exchange losses and losses on discontinued operations for the
final liquidation of the company's French subsidiary, of $35.5
million, or $0.95 diluted earnings per share,
a 61% increase, compared to $19.8 million, or $0.59 diluted earnings
per share, for 2004, excluding the effects of
foreign exchange losses and losses on the early retirement of
debt.
The company's fourth quarter
2005 financial highlights included:
Consolidated revenues of $144.3 million, compared to $113.1 million
for the fourth quarter 2004 revenues.
* Adjusted EBITDA of $20.6 million, compared
to $16.1 million for the fourth quarter 2004.
* Operating income of $14.7 million, compared
to $11.5 million in the fourth quarter 2004.
* Net income of $8.5 million, or $0.22 diluted
earnings per share, compared to net income for the fourth quarter
2004 of $4.8 million, or $0.14 per share.
* The fourth quarter 2005 net income included
a foreign exchange loss of $0.8 million and a $0.6 million loss
on discontinued operations. Excluding these losses, diluted earnings
per share were $0.25, or $10.7 million, for the fourth quarter
2005. The fourth quarter 2004 net income included a foreign exchange
loss of $1.4 million and a $0.8 million loss on the early retirement
of debt; excluding these losses, earnings per share were $0.20,
or $7.0 million.
Segment
Results and Other
The EFT Processing Segment reported the following results:
Annual revenues for 2005 of $105.6 million, an increase of $28.0
million, or 36%, over 2004 revenues of $77.6 million.
* Adjusted EBITDA for the year 2005 of $35.0 million, compared
to $23.4 million for the year 2004.
* Operating income for the year 2005 of $25.6 million, compared
to $15.0 million for the year 2004.
* Fourth quarter 2005 revenues of $29.3 million, up 24% over
fourth quarter 2004 revenues of $23.7 million.
* Fourth quarter 2005 Adjusted EBITDA of $9.5 million, compared
to fourth quarter 2004 Adjusted EBITDA of $8.2
million.
* Fourth quarter 2005 operating income of $7.2 million, compared
to $5.8million reported in the fourth quarter
2004.
The year-over-year increases in revenue, operating income and
Adjusted EBITDA were largely attributable to a 26% increase in
ATMs undermanagement and the full year impact of the implementation
of ATMoutsourcing agreements in India, Romania and Poland.
The segment completed the year with 7,211 ATMs owned or operated,compared
to 5,742 ATMs at the end of the 2004. The segment processed 361million
transactions for the full year 2005 and 103.0 million transactions
in the fourth quarter 2005, compared to 232 million and73.4 million
transactions for the same periods last year, respectively. These
improved results are largely attributable to the continued growth
in ATMs under management, primarily in the Indian, Polish and
Romanian markets, together with transaction growth from those
ATMs. Euronet owns and/or operates ATMs in Hungary, Poland, Germany,
Croatia, the Czech Republic, U.K., Greece, Romania, Slovakia,
Albania, Serbia & Montenegro,
India and China among others.
The Prepaid Processing Segment
reported the following results:
* Annual revenues for 2005 of $411.3 million, an increase of $121.5
million, or 42%, over 2004 revenues of $289.8
million.
* Adjusted EBITDA for 2005 of $46.5 million, compared to $34.6
million for 2004.
* Annual operating income for 2005 was $34.7 million, compared
to the prior year's results of $28.3 million.
* Fourth quarter 2005 revenues of $111.7 million, up 30% compared
to the $85.9 million reported for the fourth
quarter 2004.
* Fourth quarter 2005 Adjusted EBITDA of $12.6 million, compared
to $9.8 million reported in the fourth quarter
2004.
* Fourth quarter 2005 operating income of $9.3 million, compared
to $7.9 million reported in the fourth quarter
2004.
Total transactions processed by the Prepaid Processing Segment during
2005 increased to 348 million, compared to 229 million for 2004.
Total transactions processed increased to 100.0 million for the
fourth quarter 2005 compared to fourth quarter 2004 transactions
of 65.8 million. The Prepaid Processing Segment processes electronic
point-of-sale prepaid transactions at more than 237,000 point-of-sale
terminals across more than 127,000 retailer locations in Europe,
Asia Pacific, Africa and the U.S. As previously announced, the company
intends to expand its Prepaid Processing Segment both domestically
and internationally through internal sales and promotional efforts
as well as, if appropriate, acquisitions.
The Prepaid Processing Segment's year-over-year revenue improvements
were the result of a continuation of growth across all markets,
transaction growth from the full year impact of 2004 acquisitions
and the partial year impact of 2005 acquisitions. During 2005, Euronet
expanded its prepaid business in the U.S. through the March 2005
acquisition of Dynamic Telecom, Inc., a prepaid wireless top-up
company, and the July 2005 acquisition of TelecommUSA, a licensed
money transfer and bill payment company, and in Europe through the
March 2005 acquisitions of Telerecarga S.A., a Spanish prepaid wireless
top-up company and U.K.- based ATX Software Ltd., in which it increased
its ownership from 10% to 51% by acquiring an additional 41% of
the shares of that company. The annual 2005 results included approximately
$6.2 million in amortization of acquired intangible assets in the
Prepaid Processing Segment.
Corporate and Other had $11.0 million of operating expenses for
2005, compared to $9.8 million for 2004. For the fourth quarter
2005, Corporate and Other expenses were $2.6 million, compared to
$2.8 million in the fourth quarter 2004. The quarter-over-quarter
decrease was largely attributable to professional fees in support
of merger and acquisition activity.
Combining all segments, transactions processed in 2005 were 709
million compared to 461 million processed in 2004, a 54% increase.
In the fourth quarter 2005, again all segments combined, the company
processed 203 million transactions compared to fourth quarter 2004
processed transactions of 139 million, a 46% increase. These increases
were primarily due to the full year impact of the EFT Processing
Segment's implementation of ATM outsourcing agreements in India,
Romania and Poland, combined with continued growth and acquisitions
in the Prepaid Processing Segment.
The company's unrestricted cash on hand was $219.9 million as of
December 31, 2005 as compared to $124.2 million at December 31,
2004. The increase in unrestricted cash was due to $169.9 million
in net proceeds from the October 2005 issuance of 3.5% convertible
bonds together with $75.2 million in Adjusted EBITDA offset by an
aggregate $149.4 million for acquisitions, capital expenditures,
interest, taxes paid and other items. Euronet's total indebtedness
was $355.6 million as of December 31, 2005, compared to $166.2 million
at December 31, 2004. The change in indebtedness included additions
of $175.0 million for the 3.5% convertible debentures, assumed acquisition
indebtedness and short-term borrowings to support seasonal working
capital requirements.
The company's total assets as of December 31, 2005 were $894.4 million,
compared to $618.5 million, as of December 31, 2004. The increase
in total assets was largely the result of investments made in acquisitions,
increased restricted cash and accounts receivable related to the
prepaid business, and cash held at year-end 2005 related to unused
proceeds of the 3.5% convertible bonds. Stockholders' equity was
$206.4 million at December 31, 2005, compared to $141.9 million
at the end of 2004. The increase in stockholders' equity was largely
related to the generation of net income in 2005 of $27.4 million,
together with the issuance of common stock in connection with acquisitions.
The company announces the January 2006 acquisition of the assets
of Essentis Limited, a U.K. company that owns a leading card issuing
and merchant acquiring software package. These assets were purchased
out of an administration proceeding for a nominal purchase price
of approximately $3.0 million, including assumption of certain
liabilities. The Essentis software product constitutes a significant
addition to the company's outsourcing and software offerings to
banks. The company expects Essentis to generate operating losses
of approximately $0.01 per share in each of the first two quarters
of 2006, with improving results in the last two quarters.
The company also announced that it expects earnings per share
for the first quarter 2006 to be approximately $0.24, excluding
the effects of foreign exchange gains or losses, discontinued
operations, stock-based compensation charges, and or other non-operating
or unusual items that cannot be accurately projected. These expected
earnings reflect a seasonal reduction in transactions during the
first quarter, as well as operating losses from Essentis. The
company intends to commence accounting for stock-based compensation
in accordance with Statement of Financial Accounting Standards
No. 123R ("SFAS 123R") in the first quarter, as required.
The company estimates that stock-based compensation charges in
the first quarter 2006 will be approximately $1.6 million, or
$0.04 per share. The company intends to adopt SFAS 123R using
the "modified retrospective application" method and,
accordingly, it will restate all prior periods for comparability.
In December 2004, the company issued $140 million in convertible
debentures that, if converted, would have a dilutive effect on
the company's stock. The debentures are potentially convertible
into approximately 4.2 million shares of common stock, subject
to adjustment. As required by EITF 04-8, "The Effect of Contingently
Convertible Debt on Diluted Earnings per Share," regardless
of whether the conditions upon which the debentures would be convertible
into shares of the company's common stock have been met, if dilutive,
the impact of the contingently issuable shares is included in
the calculation of diluted earnings per share under the "if
converted" method. As in third quarter 2005, the assumed
conversion of the debentures was dilutive for the fourth quarter
2005. Accordingly, for the fourth quarter 2005, 4.2 million contingently
issuable shares have been assumed to be outstanding for the period
and $0.8 million in interest charges and amortization of debt
issuance costs have been excluded from income available to common
shareholders to determine diluted earnings per share. These convertible
debentures were not dilutive when determining the full year per
share earnings. The company expects these debentures to continue
to be dilutive in future periods.
In October 2005, the company completed the sale of $175 million
aggregate principal amount of its 3.50% Convertible Debentures
due 2025 to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended. Euronet will continue
to use the net proceeds of the offering for general corporate
purposes, which may include general operations, share repurchases,
acquisitions or other strategic investments. The assumed conversion
of the debentures was not dilutive for the fourth quarter 2005,
or for the full year. The impact on future earnings per share
may be dilutive if earnings per share continue to increase, and,
accordingly, 4.3 million shares would be included, and approximately
$6.9 million in annual interest charges and amortization of debt
issuance costs would be excluded from income available to common
shareholders to determine diluted earnings per share.
We believe that Adjusted EBITDA provides useful information to
investors because it is an indicator of the strength and performance
of our ongoing business operations, including our ability to fund
capital expenditures, acquisitions and operations and to incur
and service debt. While depreciation and amortization are considered
operating costs under generally accepted accounting principles,
these expenses primarily represent non-cash current period allocation
of costs associated with long-lived assets acquired in prior periods.
Adjusted EBITDA is a calculation commonly used as a basis for
investors, analysts and credit rating agencies to evaluate and
compare the periodic and future operating performance and value
of companies within the payment processing industry. Management
analyzes historical results adjusted for certain items that are
non-operational or not necessarily ongoing in nature and that
are incremental to the baseline of the business. Generally, these
items include gains or losses associated with the sale of business
assets or operations, market development costs, foreign exchange
translations, discontinued operations, early debt retirement and
other similar items as discussed in this press release; management
believes the exclusion of these items provides a better basis
for evaluating the underlying business unit performance. The attached
schedules provide a full reconciliation of any such non-GAAP financial
measures.
Euronet Worldwide will host an analyst conference call on Wednesday,
February 22, 2006, at 10:00 a.m. U.S. Eastern Time to discuss these
results. The conference call will be broadcast on the Internet and
can be accessed via the Euronet Worldwide Internet site at www.euronetworldwide.com
or via Vcall at http://www.vcall.com/IC/CEPage.asp?ID=99771.
Participants should go to the web site at least 15 minutes before
this event to download and install any necessary audio software.
For those without Internet access, the conference call-in number
is +1-877-407-9210 (USA) or +1-201-689-8049 (non-USA). The password
is "Euronet."
For those unable to attend the live broadcast, a replay will be
available beginning approximately one hour after the event at http://www.vcall.com/IC/CEPage.asp?ID=99771
as well as via phone. To dial in for the replay, the call-in number
is +1-877-660-6853 (USA) or +1-201-612-7415 (non-USA). The account
number is 286 and the conference ID number is 187110. The call and
webcast replay will be available for one month. You can also access
the Earnings presentation at www.euronetworldwide.com/investors/library/presentations.asp
No fees are charged to access any event.
About Euronet Worldwide
Euronet Worldwide is an industry leader in processing secure electronic
financial transactions. The company offers outsourcing and consulting
services, integrated EFT software, network gateways, electronic
prepaid top-up services to financial institutions, mobile operators
and retailers, as well as electronic consumer money transfer and
bill payment services. Euronet operates and services the largest
pan-European group of ATMs and operates the largest Indian shared
ATM network. Euronet is also one of the largest providers of prepaid
processing, or top-up services, for prepaid mobile airtime. The
company is a licensed electronic money transmitter and bill payment
company via Euronet Payments and Remittance, Inc. The company has
processing centers located in the U.S., Europe and Asia, and processes
electronic top-up transactions at more than 237,000 point-of-sale
terminals across more than 127,000 retailers in Europe, Asia Pacific,
Africa and the U.S. With corporate headquarters in Leawood, Kansas,
USA, and 23 worldwide offices, Euronet serves clients in more than
80 countries. Visit the company's web site at www.euronetworldwide.com.
Any statements contained in this news release that concern the
company's or management's intentions, expectations, or predictions
of future performance, are forward-looking statements. Euronet's
actual results may vary materially from those anticipated in such
forward-looking statements as a result of a number of factors,
including: technological developments affecting the market for
the company's products and services; foreign exchange fluctuations;
and changes in laws and regulations affecting the company's business.
These risks and other risks are described in the company's periodic
filings with the Securities and Exchange Commission, including
but not limited to Euronet's Form 10-K for the year ended December
31, 2004 and its Form 10-Q for the periods ended March 31, 2005,
June 30, 2005 and September 30, 2005. Copies of these filings
may be obtained by contacting the company or the SEC. Euronet
does not intend to update these forward-looking statements and
undertakes no duty to any person to provide any such update under
any circumstances.
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