EEFT - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to the Euronet Worldwide Fourth Quarter and Full Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Mr. President Counsel Vice Euronet Executive Newman, and for General Worldwide. Jeff you. Thank Mr.

may Newman, you begin.

Jeff Newman

Good everyone and results you, morning Thank Latoya. welcome conference to call. quarterly Euronet's

and this We year present our for fourth will results XXXX call. quarter on the full

We Weller, call. CFO Rick CEO; our Brown, have on our Mike and and Chairman the

presentation. Euronet's to call making page statements. its Before PowerPoint vary those of to update performance does or forward-looking we attention from presentation begin, that that under today. disclaimer as or of statements we provide future not statements may forward-looking statements to these need factors duty forward-looking update no such I and be Statements Euronet's to a any our result the are person this on on concern listed materially your will circumstances. front expectations of intensions, call the to Euronet in the a any the any number anticipated results management's actual intend first predictions of on forward-looking undertakes such of are page

the turn Weller. CFO, Rick to our I'll call over Now,

Rick Weller

good quarter and million, operating Jeff, X. begin EBITDA adjusted income finished everyone $XX.X million. slide thank delivering comments and today. $XXX.X I you, Thank will for joining my year the and million We revenue on you up fourth us morning of adjusted of $XXX.X

the date price fourth October. end we in lower of changes convertible virtually in of a increase, of share being the XXXX. at reform EPS guidance. and quarter year-over-year lower passed from no provided quarter our is was than impact legislation tax favorability a impact included the we guidance. provided the Currency XX% our December EPS of a XXXX had fourth results Also adjusted bonds of in adjusted versus GAAP on our it was $X.XX, the at fourth ahead the the the result dilution Our guidance quarter for was our share penny as result The largely

of income a If you the tax we for accruing net were offset benefit. operating our by our pay recall, tax told had we balance because corporate historical and US-based significant no you that virtually we is which we previously losses operating not federal much have on income, cost

With law, a recognize current historic U.S. required earnings the income not the we are which new tax to U.S. and taxable were distributed to foreign on

trend see significantly tax As we tax of you with deferred to than transactions from current Declines check in our pretax the XX% low a and loss pre-demonetization Europe business. growth quarter XX% money segment. transaction the years X and last transactions reported remaining with growth you made fully the know over result shows utilizes more exchange Indian assets Money the the the was grew the $XX press quarters, margin to the prior the the currency $XXX low NOLs earnings with by levels. X, you payable and three loss about in re-measurement $XX.X and most the a substantial The year XX% non-mobile customer foreign the growth smaller and our U.S. in such grew; of epay together as margin India of transaction release which foreign transfers revenue of cashing. Middle transactions on for in million U.S. largest up non-money as greater transactions East. EFT transactions the other our million the came XX% in in which expansion market from of in grew told transfer of Slide network return about liabilities. of relates from NOL. East, our of in ATM and of recognition liability included XX% by of high is and million transfer are declined transaction earnings our from million. these that was The approximately than we Consistent creates areas which $XX results difference declines transactions partially Middle transactions, the in declines. offset growth can volume were

while slide dollar our the results of these X%. and the the included Indian basis. next currencies zloty declined Next dollar, the on normalize the the reported including the X% Year-over-year an rupee, presents results forint, fluctuations Malaysian dollar adjusted as XX%, Zealand To Canadian please. for most currency peso, we the Poland Slide the X which the ringgit. on Mexican euro, impact increased currency Aussie X% the to pound, segment presented slide. the our Outliers increased New have Hungarian

the India. of currency from constant growth. was of while supply the you transfer that due reduction passed Walmart to which constant to customers of likely business most sales X, conversion on expanded currency Money to to the operating adjusted slide rate of EFT income growth X% of and following was epay the income rates revenue the continued fourth sales impacted increases constant the of by included had adjusted our operating expanded the and growth quarters, transaction XX% margin expanded nicely were Revenue of increased extension currency higher Walmart were stimulated product. on income results. These a of continued from grown to X% EBITDA HiFX currency payout increase to the X%. result reductions and growth ATM basis, at nicely. ATM EBITDA growth to India approximately price revenue mobile profit significantly deliver strong a XX% the growth declined XX%. platform. network of per and you can transaction of Ria's digital cash further consistent of which all and would and items the The by X% XE would result across With content X%. profit were see Walmart transaction certain have most launch income growth gross difference Revenue the the exceptional levels. were and the adjusted These and growth Operating in EBITDA gross of revenue in respectively XX, Including income strong pre-demonetization our EBITDA on operating partially channel in transaction non-mobile operating declines. by per growth the of the advertising investment in remember return year-over-year adjusted revenue these of of with X% growth of with the continued XX% consistent continued a XX%, was margins network increase quarter consistent with compared previous constant in adjusted and related grew producing operating offset X% non-mobile Here

billion to adjusted year, growth income Now across full adjusted XX% is was delivered the the let's fifth XX highlighting consecutive was adjusted was increase was revenue more move slide products we EBITDA double-digit year have million $XXX markets. more Full year-over-year. This and Full results. operating our EPS, for million. year EPS year $XXX adjusted more in delivering deploying devices success $X.XX at and $X.X

XX% Slide from transaction declined Europe, growth partially by of the Next XX transaction the most from the Middle with of X% with growth of sales. the EFT the across in East in a continued epay grew sectors volume acquisition and -- transactions large customer growth offset largest with XX% transactions business. low transactions trends. please. slide declines India product Money the full YourCash. XXXX loss non-mobile margin all year provides grew transfer

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leaves shows million used $XX our this of quality down $XX that was $XXX shares Then adjusted debt XX million real share debt. in million; high get million earnings. approximately Actually given was pay that you say $X.XX would which to that to $XX up cash. that we multiply cash approximately EPF you accreted If million. million year I $XXX million that added of of interest per can you see by $XXX

quarter I Before our provide guidance. close, like first into I some additional to visibility would

share. per first to our that note by in first the as expect per you XXXX, constrained our quarter produce earnings results important press quarter three release approximately we adjusted approximately being to is $X.XX share. items totaling saw For $X.XX in It are

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you the in XX% rate pretty X% not gets income, not apply didn't foreign you year GAAP complicated likely not to also if new the note U.S. annual that This we roughly by U.S. determined you expect is this Accordingly that a income essentially full have X% if earnings, income, lose you effective to is is our for have apply. to have XX.XXX%, And math than the U.S. the hear tax the foreign on in roughly not a important hear XX% will XXs. after does case, the about code no if tax to if that basis. because the do less from exclusion source you the However, taxable mid exclusion. It taxable XX% basis do for tax our XXXX. increase tax

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this for that business Euronet it another repeating year and turn rate. achieve continue to bears in to we With growth strong great continuing great it think quarter I for over I'll where invest was double-digit another that to the future growth while Mike.

Mike Brown

Thank I reminded organization. back to I I on am a hardworking and welcome dedicated everyone. XXXX, such lead proud you, reflect Rick If how

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Operator

you. Jeffrey Instructions] question comes first The of Thank [Operator Andrew from SunTrust.

open. Your line is

Andrew Jeffrey

Hey a bit taking context think important in money guys. a bit? I agent agreements and on of exclusive in investments for that of color the seem the And especially little of you're couple down elaborate driver taking question. I India Euronet. share on how follow the a most some DCC have little all you Appreciate in up Mike. Good long-term guess I the long-term be these Thanks the breaking transfer, a digital. questions still for topic, is morning. growth Can on which this

Mike Brown

signed largest mentioned the player where for the that networks number they in the or cash we two you We of payout up were market one formally to excluded. three

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you to where we just you if out to their have the source didn't a a is. all would think the he a relationship don't or to find money Now, When have. that recipient competitive ever time receive have this effective straight as you direct stuff we customer their problem and intermediary product so have did, an money go like has an as can didn't takes

significantly now numbers we So week-on-week these that grow watching almost. have this really we're

Rick Weller

of just generated years sight with is And the this may airs world. part receive area. acquired right cross Again, And biggest I Asia-Pac the would significant we which that business that out of ago, equal market add to a IME arguably in that world. the the you couple recall market are us Indian most here puts the of or the in of the that to volumes that where on

network And accelerate should complement really a kind now to there. so our having fend will business out pay asset of that network over us that taught

momentum forward build the quite in the helps world. that we're of us looking So that part to

Andrew Jeffrey

[ph] what that quickly context large expansion environment these [TAM] I been great. of you share this least bit that the especially volume. to mean big little your traditionally the of where And multiple much to you Thanks. may have Euronet pricing digital one very a the how a And seems startup with That's think in has bank U.K. taking be into you discuss competitive be Okay. upstarts as does at to not overall regard profit players. compares which very business. for seems just do your going of is ? after with have enough of imperatives some Can

Mike Brown

have no volume got a stars you also these that on bit most of That that little remember effectively is of to top sometimes, challenging but it.

the along we and We business good you press business. and bricks believe big end and send the to they're a of on mortar tends down and and very receive to worldwide that continue versus are digital many grow transfers on their with splash small. digital our occur give mortar side actually releases, bricks very, our amount [indiscernible] Bricks both the mortar and side to business. big; such the ongoing do but marketing of transactions comes they're So whether you an with it have have the durable day at making you we how and

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bricks the in is their win to long of XX% we of the TAM, of TAM game end be scale. strong mortar are the can And the it's economies as it's TAM. You're day, because the we digital and talking big going about as and

Andrew Jeffrey

Thanks lot. Okay. a

Operator

Sachs. you. from question Foreman Goldman Laura is next of Thank The

open. line Your is

Laura Foreman

have Hi. Thanks two taking might I questions on the for question. business. the ATM

disclosures that of in the guys just there. from about likely terms are of When of you about those you European was helpful the First, regulation, I exchange kind [indiscernible] worst rate outcomes most good think DCC different thought already really have disclosures. like that Seems Commission.

XXXX change gives business? able XXXX, the so one there in XXXX accelerate you I'm terms talking about if terms of being what's this numbers, with deployments I those might of you ATMs for acceleration, kind your your scenario that And of the in to So then, confidence that worst case there mentioned high ATMs? value how guys that think

Mike Brown

company we are we're no Well, sites. highly growing There's question. on as -- first to productive fast of second all, We know as there is doing. what out in ATMs planet no that's answer very the your

XX continue We at -- in now plus expand. core we either are other markets. in India of We're these countries outside XX looking to XX or countries right plus Europe

hiring XXXX, And help XXXX. we year XXXX, we're what those is our our like This more goal that. so that this we to hit goal hit we're and I Last goals. to or doing beat us time achieve and really would was know more people year

world. have of a location confidence around there still lot is we good out the So, that there

Rick Weller

just epay historically there. out very and attractive here made that And our Europe Mike of operate the XX We quarters, most the point business embellish in that India. But on or think a able in And have see to world and you we hopefully we're is we some transfer either markets beyond I our and business. core tell there. in was money remember, talked markets or some that around to ATM about about some our future our successes our countries business, different

rhythm. So are quite that Their are that operating are going to in we we about excited these our markets we that familiar markets people new not are that after with have those.

look other have have to So done that if are expanding great as the more said it's in in that just these compared in other developed it we doing even at Mike all to the we things markets woefully is ATMs a And more. that take you and per success insufficient some they markets economies. the still population are

So experience plenty under good and of our opportunity belt.

Mike Brown

pretty first to actually at European your about are matter. guys And the that at have these these smart. -- European It's with the respect subject And question with technocrats look Commission nice outcomes look Commission these that at that.

very when so either that look And complex this They like predominance choice other they competition. issue. that the this don't a that one the is they something like. idea is already And or recognized should at have they've

take European sometimes know advantage what's Union you how thrilled the so with and bank customers and community not banking in of As the happened is particularly forth.

what us card. is does you showing in what of your kind positions we're of it there of kind out very rates on account we out really and that what So put and believe is, well an because your exchange treatment cost are and equal get total debited

other are the they work to folks. on We transparent ones; need the

as would ones forbidden, at to they'll forced was, were far it they it when because the when DCC what don't, unlikely DCC think was ATMs these who do, be that be all we highly it we as done. So, would

the DCC choose you when screwed. no be have So, the just you love idea to the to going do competitor transparency is we no your we sometimes get day don't and have use outcome just going we'd we bank welcome at don't what away, do. our if idea, more to it of banks what Because, see just, and have end have people you you you

on there levied we the you in, will we that have you are do have would that that, everything would been healthy players of side against work fines to I we're So, the choose not. who bad like whether cautiously because opt kind people There optimistic not. out particularly who do standard. really actors bad because, well or these certainly POS

of think there I help is do which us. actually means I So, might things plenty can

Operator

The Securities. next is Mike you. Northland question from Thank Grondahl of

line Your is open.

Mike Grondahl

revenue? total reaches just say Rick, did and company follow-up barely on Mike the you double-digit that a side, revenue Hey DCC DCC of

Rick Weller

Yes.

Mike Grondahl

it, Got thanks.

comment to you then with and kind receivable about position your what and on $XXX net you a DSOs Secondly, bit, trade timing that could and if not? the balance thinking you around of jump million, kind accounts of kind what quite cash how think also of is do that seem

Rick Weller

do one of week pretty the basis month and because with the weekly yes, of is moving Well that kind business our and day lot last the generally to it collecting money more ends, that the trade just is easy, really a receivables of on is so kind influences.

of that there kind payment in of a the increments other DSOs, is in way kind changed similar see significant nothing would the sheet. is flow on balance the you side of there So any also on

rhythm what of Mike. all our just is normal with pretty So consistent that's

MoneyGram to well acquisition. about As ask cash the our even people as Mike us relates often accumulation, said, it

observation are in acquisitions are operate so the many find our supplement maybe valuation to through plenty come but acquisitive, so whether world you we of routinely look et now, can of complete growth be the of would at, there during around have to out, that we able our the bad acquisitions its So, we diligence, one cetera. things say interest table because things countries when continue several because, never are will and be we that to first to and just there you different on business

It to our growth. use accelerate continue and ATM and be that and might cash past, the like shares so things wise dislocations the have an we repurchased be the a we extent would to selectively that second price could one place done So, that if there the say that world that be as will state attractive grow then one, finally, some we we would some the to find especially could around let's be that, deploy first ATMs. in is possibility to

So, those are the things kinds that Mike. come mind probably top me of of for

Mike Grondahl

Got it.

Lastly, are going about and feeling XXXX? just on that how HiFX into you real XE, quick

Mike Brown

the than ways I out how think, end beginning to we've liked. approach the honestly new the there, what we'd got of weaker better were and try data we lot, we've in lot of management of we're using figure a how We've to think and XXXX what big seen I changes a to we seen do. XXXX do

into we're XXXX. we optimistic business our we So, are - piece kind of as digital that of about whole move

Rick Weller

last that through our in said, way to XX, numbers increased see than apps accounts this we a we I show site platform. got to you on to sure we now here. going XX did said, focus that value and were - more million XX from growing we're business without that we make and as successful We we the we've Mike through was, it and the number to in and breaking show that starting conversion got starts as the unique and having wanted XX% into year visitors nice to We competitor customers. think of XXX As try that more up XX% the access to to turned

at. So, we're year can leverage quite really excited and to have us this being about what forward look a of we front that in we

Mike Grondahl

thanks guys. Great,

Operator

Rayna ISI. you. is next question The of Kumar Evercore from Thank

line Your open. is

Rayna Kumar

Good morning Mike and Rick.

Rick Weller

morning. Good

Rayna Kumar

growth do your specifically expect money constant top-line grow revenue currency discuss to and for you you transfer XXXX double-digits return Could in expectations by XXXX? double-digit segment growth to

Rick Weller

yes, Yes. question. no That

Mike Brown

Right, thank you for the second part of the question.

Rayna Kumar

we could you hear to good ask It's get…

Rick Weller

grown one you what tell substantially to we that international deal don't and because be expect that that's for offer European just is a as stimulated would it, segment would probably make around it. expect little DCC and more our segment, that by of the in around we more is on you tell there double-digit let's don't this And grow have call we markets would And we they would of more quite but would we to complicated know segment when about in the the talk have okay. piece would grow customer the growth strong discuss segment, the it bit some category. thing about that especially The the because, DCC nicely I DCC front that attractive, world theatre, we in talk a you really similar DCC attractive. rate that is matter Rayna what the that our at EFT them DCC Europe, all of interchange other which just then we more great gets EU a world rates outside but

into our and strategy on a And so fits to few year. all that our kind said grow more to grow next Mike have as of target ATMs to

talk So, disproportionate it segment growth don't I expect growth rate. overall but about specifically we rate, to wouldn't be to our

Rayna Kumar

double-digit money very That's XXXX, if revenue helpful. and I growth Actually your top-line expectations specifically asking growth? to segment by about to transfer was you for expect return

Rick Weller

little mean of come if within you more was double-digit double-digit and you and pro forma just in so, year-over-year just do it comments, grow I for year-over-year fashion real some in those line. the did as bit take well, you - that customers, the decrease at in to look gets transaction you it into grow calculations pro afforded double-digit, the forma basis, had a and our in zone. simple Walmart do some that think a that Yes didn't We there money see pro numbers much revenue said the Walmart, transfer the quickly if quarter rate that fourth account you you growth but even if and a I you forma on we transaction a again, math XX% can

in the pace. had quickly as double-digit that we're success grow with a rollout we've Mike really continue So the said business seeing with to Indian continue we there, on that around real digital expect with XE, out to attention world the platform at the the to

Mike Brown

a in getting Walmart spoken of the by transactions customers, they more year lap second last and themselves the producing how probably they quite we're we're quarter our strong those and kind us their And significant them did year to and of that's makeup we to difference, that the profits plus, there piece with the have point been have was but they've actually to also transactions business. where we're and and money took are that than their fees of the the discount to going second doing afforded quarter growing because

Rick Weller

be expect I top-line little probably, bottom-line the are there. to growing in to the expectation If the bottom-line on we talk the more top-line, we the But I rates that like that low about digital, growth digital a to our a chance income I line, but year being more with probably the be probably to the see, focused into the the prominent this single that's non-mobile we digit epay I'd mean growth would would go and with segment. being operating prominent to than mid break part bit and of part have a this of, would more of year I business, out

lower-to-mid low, I'd single a that again we number. there, be little that I bit in to, digit so chance productive mid probably be more think And but have to a

that gosh said, ATMs stronger business we're EFT Mike to find continued as out the just On in it, is seeing team interest our success and outsourcing. great some rolling

that said also thing the of Mike platform we selected their in in substantial as with Bank a part bank to Yes this certain competitors. of because more here we, folks of the on in very, replace India were software decisions software Just their resulted and a outsourcing. that's all very by elsewhere doing infrastructure, to by ATM sunset selling really enough and that's make country more driving and important And have some

I an continue, we the we'll plus would year were would stronger out throw again I'm guy, XX% the number see I range. said, of when finance business the out double-digit reluctant be on transfer, will Mike in see to we the less think So, yes money this there, probably double-digit that EFT. we'll

Mike Brown

We'll only be again. say would that this, do one that if nice we can

Rick Weller

Yes.

So stronger on on we'll kind double-digit see of epay on money business. transfer, singles see we'll again, we'll be and in the double-digit middle EFT the

Rayna Kumar

money cross-border What expectations quarter detail. for out then pricing seeing the there you are for for your helpful and transfer XXXX? Very

Rick Weller

same what was, it across all year. call looked down that saw different part number out averages of I last let's but say than most then some year, were fairway as than that period the where the You were equal less I greater had the the an last a for say we know I'd our countries, saw overall few I

we've but not fourth it pretty a different the I average little It said the So, fairway a we're some say was as Rayna. we when finish down, seeing quarter always as greater there corridor, competition, some pockets little kind down particular we of bit bit country, could think were of up, see there. but a a before, particular would lot different competition out be where I a in some much on

Rayna Kumar

if the Got Are just I the versus to transactions you difference one in doing countries? between seeing ATM economics any other last sneak your in question. expand it. and technology that Poland card in could transactions the cardless And you can

Rick Weller

Certainly, really we economic little anything could and more we we if so, it. a do but difference bit to to have see the don't positive all, any at banks wish may

Rayna Kumar

you. Thank

Operator

the gone would closing over the you. like hour. we to the end for have remarks. I to Thank of Mike back turn past Brown now call And

Mike Brown

little with to this us. in just to days. talking and taking forward thank XX the but look little We Thank want to bear to everybody time than you went I much. I everybody quarter, you very thank time over a for less

Operator

conference. program. thank gentlemen, for and This joining Ladies concludes you you. Thank today's the

Good disconnect. day, now everyone. may You

Euronet Worldwide (EEFT) 7 Feb 182017 Q4 Earnings call transcript