EVO Payments, Inc. (NASDAQ: EVOP) (“EVO” or “EVO Payments” or
the “Company”) today announced its third quarter 2022 financial
results.
For the quarter ended September 30, 2022, reported revenue was
$138.7 million compared to $135.0 million in the prior year, an
increase of 3%. Adjusted revenue for the quarter was $145.6
million, an increase of 16%. On a GAAP basis for the quarter, net
income was $3.8 million compared to $7.1 million in the prior year,
a decrease of 46%. Adjusted EBITDA increased 11% to $57.2 million
for the quarter, and on a constant currency basis, adjusted EBITDA
increased 21%.
For the nine months ended September 30, 2022, reported revenue
was $403.3 million compared to $363.5 million in the prior year, an
increase of 11%. Adjusted revenue for the nine months ended
September 30, 2022 increased 19%. On a GAAP basis for the nine
months ended September 30, 2022, net income was $20.2 million
compared to $11.1 million in the prior year, an increase of 83%.
Adjusted EBITDA increased 16% to $148.9 million for the nine months
ended September 30, 2022, and on a constant currency basis,
adjusted EBITDA increased 23%.
“EVO’s solid third quarter performance reflects the strong
growth from our international markets coupled with the expansion of
our U.S. tech-enabled businesses,” stated James G. Kelly, Chief
Executive Officer of EVO. “We continued to make progress obtaining
necessary regulatory approvals and satisfying customary closing
conditions related to our previously announced merger with Global
Payments and continue to expect to complete the transaction no
later than the first quarter of 2023.”
Third Quarter Highlights
- Adjusted international revenue grew 30% and now represents 65%
of total revenue.
- Europe’s adjusted revenue increased 40% and DCC revenue
increased 35% as cross border activity exceeded pre-pandemic
levels.
- Latin America’s revenue increased 11% on a constant currency
basis driven by 7% growth in the merchant portfolio.
- Signed new integrated referral partners across all markets,
expanding EVO’s tech-enabled referral network.
- Adjusted net income per share increased 26% compared to last
year to $0.34 per share.
- Leverage as of September 30, 2022 was 1.7 times, an improvement
from 2.2 times as of September 30, 2021.
Update on Pending Acquisition by Global Payments
EVO previously announced it has entered into a definitive merger
agreement with Global Payments Inc. (“Global Payments”) under which
Global Payments will acquire EVO for $34.00 per share in cash in a
transaction that represents an enterprise value for EVO of $4.0
billion. The transaction was approved by EVO stockholders on
October 26, 2022. In addition, the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
with respect to the transaction expired on October 17, 2022. The
transaction is expected to close in the first quarter of 2023.
Completion of the transaction is subject to the satisfaction of the
remaining closing conditions. Due to the pending merger
transaction, EVO will not provide guidance or host a conference
call or webcast to review the third quarter 2022 financial
results.
Forward-Looking Statements
This release contains statements about future events and
expectations that constitute forward-looking statements.
Forward-looking statements are often identified by words such as
“anticipates,” “believes,” “continues,” “estimates,” “expects,”
“goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,”
“potential,” “near-term,” “long-term,” “projections,”
“assumptions,” “projects,” “guidance,” “forecasts,” “outlook,”
“target,” “trends,” “should,” “could,” “would,” “will” and similar
expressions. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements contained in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements are based on our current
beliefs, assumptions, estimates, and expectations, taking into
account the information currently available to us, and are not
guarantees of future results or performance. Forward-looking
statements are not statements of historical fact. Forward-looking
statements involve risks and uncertainties that may cause our
actual results to differ materially from the expectations of future
results we express or imply in any forward-looking statements, and
you should not place undue reliance on such statements. Factors
that could contribute to these differences include the following:
(1) disruption to our business caused by the proposed acquisition
of us by Global Payments Inc. (“Global Payments”); (2) our ability
to consummate the proposed transaction with Global Payments within
the contemplated timeframe, or at all, including risks and
uncertainties related to securing the necessary regulatory
approvals and the satisfaction of other closing conditions; (3) the
impact on our stock price, business, financial condition and
results of operations if the proposed transaction with Global
Payments is not consummated; (4) costs, charges and expenses
relating to the proposed transaction with Global Payments; (5) the
continuing uncertainties regarding the ultimate scope and
trajectory of the COVID-19 pandemic (including its variant strains)
on our business and our merchants, including the impact of social
distancing, shelter-in-place, shutdowns of non-essential businesses
and similar measures imposed or undertaken by governments; (6) our
ability to anticipate and respond to changing industry trends and
the needs and preferences of our customers and consumers; (7) the
impact of substantial and increasingly intense competition; (8) the
impact of changes in the competitive landscape, including
disintermediation from other participants in the payments chain;
(9) the effects of global economic, political, market, health and
other conditions, including the continuing impact of the COVID-19
pandemic and the evolving situation with Ukraine and Russia; (10)
our compliance with governmental regulations and other legal
obligations, particularly related to privacy, data protection,
information security, and consumer protection laws; (11) our
ability to protect our systems and data from continually evolving
cybersecurity risks or other technological risks; (12) failures in
our processing systems, software defects, computer viruses, and
development delays; (13) degradation of the quality of the products
and services we offer, including support services; (14) our ability
to recruit, retain and develop qualified personnel; (15) risks
associated with our ability to successfully complete, integrate and
realize the expected benefits of acquisitions; (16) continued
consolidation in the banking and payment services industries,
including the impact of the combination of Banco Popular and Grupo
Santander and the related bank branch consolidation; (17) increased
customer, referral partner, or sales partner attrition; (18) the
incurrence of chargebacks; (19) failure to maintain or collect
reimbursements; (20) fraud by merchants or others; (21) the failure
of our third-party vendors to fulfill their obligations; (22)
failure to maintain merchant and sales relationships or financial
institution alliances; (23) ineffective risk management policies
and procedures; (24) our inability to retain smaller-sized
merchants and the impact of economic fluctuations on such
merchants, (25) damage to our reputation, or the reputation of our
partners; (26) seasonality and volatility; (27) geopolitical and
other risks associated with our operations outside of the United
States, such as the conflict between Russia and Ukraine; (28) any
decline in the use of cards as a payment mechanism or other adverse
developments with respect to the card industry in general; (29)
increases in card network fees; (30) failure to comply with card
networks requirements; (31) a requirement to purchase the equity
interests of our eService subsidiary in Poland held by our JV
partner; (32) changes in foreign currency exchange rates; (33)
future impairment charges; (34) risks relating to our indebtedness,
including our ability to raise additional capital to fund our
operations on economized terms or at all and exposure to interest
rate risks; (35) the phase out of LIBOR and the transition to other
benchmarks; (36) restrictions imposed by our credit facilities and
outstanding indebtedness; (37) participation in accelerated funding
programs; (38) failure to enforce and protect our intellectual
property rights; (39) failure to comply with, or changes in, laws,
regulations and enforcement activities, including those relating to
corruption, anti-money laundering, data privacy, and financial
institutions; (40) impact of new or revised tax regulations; (41)
legal proceedings, including the impact of potential litigation
relating to the proposed transaction with Global Payments,
including litigation that seeks to prevent the merger from being
consummated within the contemplated timeframe, or at all; (42) our
dependence on distributions from EVO Investco, LLC to pay our taxes
and expenses, including certain payments to the Continuing LLC
Owners (as defined our public filings) and, in the event that any
tax benefits are disallowed, our inability to be reimbursed for
payments made to the Continuing LLC Owners; (43) our organizational
structure, including benefits available to the Continuing LLC
Owners that are not available to holders of our Class A common
stock to the same extent; (44) the risk that we could be deemed an
investment company under the Investment Company Act of 1940, as
amended; (45) the significant influence the Continuing LLC Owners
continue to have over us, including control over decisions that
require the approval of stockholders; (46) certain provisions of
Delaware law and antitakeover provisions in our organizational
documents could delay or prevent a change of control; (47) certain
provisions in our organizational documents, including those that
provide Delaware as the exclusive forum for litigation matters and
that renounce the doctrine of corporate opportunity; (48) our
ability to maintain effective internal control over financial
reporting and disclosure (48) changes in our stock price, including
relating to downgrades, analyst reports, and future sales by us or
by existing stockholders; and (49) the other risks and
uncertainties included from time to time in our filings with the
SEC, including those listed under Item 1A “Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2021 and
our Quarterly Report on Form 10-Q for the quarter ended June 30,
2022.
We qualify any forward-looking statements entirely by the
cautionary factors listed above, among others. Other risks,
uncertainties and factors, not listed above, could also cause our
actual results to differ materially from those projected in any
forward-looking statements we make. Except as may be required by
any applicable securities laws, we assume no obligation to update
or revise these forward-looking statements for any reason, or to
update the reasons actual results could differ materially from
those anticipated in these forward-looking statements, even if new
information becomes available in the future.
Non-GAAP financial measures
EVO Payments, Inc. has supplemented revenue, segment profit, net
income (loss), earnings per share information and weighted average
common shares determined in accordance with GAAP by providing these
and other measures on an adjusted basis in this release. The
non-GAAP financial measures presented herein should not be
considered in isolation of, as a substitute for, or superior to,
financial information prepared in accordance with GAAP, and such
measures may not be comparable to those reported by other
companies. Management uses these adjusted financial performance
measures for financial and operational decision making and as a
means to facilitate period-to-period comparisons. Management also
uses these non-GAAP financial measures, together with other
metrics, to set goals for and measure the performance of the
business and to determine incentive compensation. The Company
believes that these adjusted measures provide useful information to
investors about the Company’s ongoing underlying operating
performance and enhance the overall understanding of the financial
performance of the Company’s core business by presenting the
Company’s results without giving effect to non-operational items
such as equity-based compensation and costs related to transition,
acquisition and integration matters, and giving effect to a
normalized effective tax rate for the Company. This release also
contains information on various financial measures presented on a
currency-neutral basis. The Company believes these currency-neutral
measures provide useful information to investors about the
Company’s performance by excluding fluctuations caused solely by
movements in currency exchange rates in the non-U.S. jurisdictions
where the Company operates. Reconciliations of each non-GAAP
measure to the most directly comparable GAAP measure are included
in the schedules to this release.
Among other non-GAAP financial measures presented, this release
contains a presentation of our adjusted revenue, adjusted EBITDA,
adjusted net income, and adjusted net income per share information.
These measures do not purport to be an alternative to cash flows
from operating activities as a measure of liquidity, and are not
intended to be a measure of free cash flow available for
management’s discretionary use as they do not consider certain cash
requirements such as tax payments and, in the case of adjusted
EBITDA, interest payments and debt service requirements. Further,
adjusted EBITDA does not purport to be an alternative to net income
as a measure of operating performance. These measures, or measures
similar to them, are frequently used by analysts, investors, and
other interested parties to evaluate companies in our industry.
Adjusted revenue is defined as revenue adjusted for constant
currency and includes operating income in the form of liquidated
damages resulting from the termination of the bank partner
marketing alliance agreement during the fiscal quarter. Such
liquidated damages are in lieu of future merchant referrals and
revenue that the Company would have otherwise earned.
Adjusted EBITDA is defined as net income (loss) before provision
for income taxes, net interest expense, and depreciation and
amortization, excluding the impact of net income attributable to
non-controlling interests in consolidated entities (including
related depreciation and amortization and income taxes),
share-based compensation, gain (loss) on investment in equity
securities, financing costs, currency exchange impacts, and
transition, acquisition and integration costs.
Adjusted net income is defined as net income (loss) adjusted to
exclude income taxes, the impact of net income attributable to
non-controlling interests in consolidated entities (including
related depreciation and amortization and income taxes),
share-based compensation, gain (loss) on investment in equity
securities, financing costs, currency exchange impacts, transition,
acquisition and integration costs, and amortization of acquisition
intangibles and subsequently adjusted to give effect to a
normalized tax rate for the Company.
The calculation of adjusted EBITDA and adjusted net income have
limitations as analytical tools, including: (a) they do not reflect
the Company’s cash expenditures, or future requirements for capital
expenditures, or contractual commitments; (b) they do not reflect
changes in, or cash requirements for, the Company’s working capital
needs; (c) in the case of adjusted EBITDA, it does not reflect the
interest expense or the cash requirements necessary to service
interest or principal payments on the Company’s indebtedness; (d)
they do not reflect the Company’s tax expense or the cash
requirements to pay the Company’s taxes; and (e) although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in
the future and these measures do not reflect any cash requirements
for such replacements.
Adjusted net income per share is defined as adjusted net income
divided by pro forma weighted average shares. On May 25, 2021, all
32,163,538 outstanding shares of the Company’s Class B common stock
were automatically cancelled for no consideration and each
outstanding share of the Company’s Class C common stock was
automatically converted into one share of Class D common stock.
Prior to May 25, 2021, pro forma weighted average shares is defined
as GAAP common weighted average shares (equal to our weighted
average Class A common shares) plus our weighted average Class B
common shares, weighted average Class C common shares, weighted
average Class D common shares, dilutive equity awards measured
under the treasury stock method, and weighted average preferred
shares (including paid-in-kind dividends). Following May 25, 2021,
pro forma weighted average shares is defined as GAAP common
weighted average shares (equal to our weighted average Class A
common shares), plus weighted average Blueapple common shares
(formerly Class B common shares), weighted average Class D common
shares (which include converted weighted average Class C common
shares), dilutive equity awards measured under the treasury stock
method, and weighted average preferred shares (including
paid-in-kind dividends). Weighted average preferred shares is
defined as the weighted average shares of Class A common stock
issuable upon a voluntary conversion of the Company’s Series A
convertible preferred stock by its holder. Blueapple common shares
(formerly Class B common shares) is defined as the weighted average
Class A common shares issuable upon the exercise by Blueapple,
Inc., a Delaware corporation which is controlled by entities
affiliated with the Company’s founder and Chairman of the board of
directors (“Blueapple”), of its right to cause the Company to use
its commercially reasonable best efforts to pursue a public
offering of up to 32,163,538 Class A common shares and use the net
proceeds therefrom to purchase an equivalent number of the units of
EVO Investco, LLC held by Blueapple.
Net Debt to LTM Adjusted EBITDA ratio, which we refer to as our
Leverage Ratio, is a non-GAAP measure defined as total long-term
debt less available cash (cash on the balance sheet and cash in
transit less certain merchant settlement account balances and
merchant reserves) divided by the trailing twelve month Adjusted
EBITDA. This ratio is frequently used by investors, and management
believes this measure provides relevant and useful information.
About EVO Payments, Inc.
EVO Payments, Inc. (NASDAQ: EVOP) is a leading payment
technology and services provider. EVO offers an array of
innovative, reliable, and secure payment solutions to merchants
ranging from small and mid-size enterprises to multinational
companies and organizations across the globe. As a fully integrated
merchant acquirer and payment processor in over 50 markets and 150
currencies worldwide, EVO provides competitive solutions that
promote business growth, increase customer loyalty, and enhance
data security in the international markets it serves.
EVO PAYMENTS, INC. AND
SUBSIDIARIES Schedule 1 - Condensed Consolidated
Statements of Operations (unaudited) (in thousands,
except share and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
% change
2022
2021
% change
Revenue
$
138,663
$
135,041
3
%
$
403,260
$
363,456
11
%
Operating expenses: Cost of services and products
21,831
19,121
14
%
66,278
54,276
22
%
Selling, general and administrative
81,453
71,982
13
%
224,668
198,050
13
%
Depreciation and amortization
21,136
21,941
(4
%)
60,453
63,562
(5
%)
Total operating expenses
124,420
113,044
10
%
351,399
315,888
11
%
Other operating income
6,939
-
NM
6,939
-
NM
Income from operations
21,182
21,997
(4
%)
58,800
47,568
24
%
Other income (expense): Interest income
769
454
69
%
2,229
1,024
118
%
Interest expense
(4,260
)
(6,123
)
30
%
(12,634
)
(18,282
)
31
%
Gain (loss) on investment in equity securities
4,425
(1,298
)
NM
2,122
968
119
%
Other income (expense), net
228
379
(40
%)
(658
)
(340
)
(94
%)
Total other income (expense)
1,162
(6,588
)
118
%
(8,941
)
(16,630
)
46
%
Income before income taxes
22,344
15,409
45
%
49,859
30,938
61
%
Income tax expense
(18,513
)
(8,284
)
(123
%)
(29,614
)
(19,859
)
(49
%)
Net income
3,831
7,125
(46
%)
20,245
11,079
83
%
Less: Net income attributable to non-controlling interests in
consolidated entities
3,845
3,259
18
%
9,545
6,484
47
%
Less: Net (loss) income attributable to non-controlling interests
of EVO Investco, LLC
(220
)
1,396
NM
3,558
(196
)
NM
Net income attributable to EVO Payments, Inc.
206
2,470
(92
%)
7,142
4,791
49
%
Less: Accrual of redeemable preferred stock paid-in-kind dividends
2,672
2,511
6
%
7,809
7,338
6
%
Net loss attributable to Class A common stock
$
(2,466
)
$
(41
)
NM
$
(667
)
$
(2,547
)
74
%
Earnings per share Basic
($0.05
)
($0.00
)
($0.01
)
($0.05
)
Diluted
($0.05
)
($0.00
)
($0.01
)
($0.05
)
Weighted average Class A common stock outstanding Basic
48,151,438
47,380,034
47,853,503
46,979,057
Diluted
48,151,438
47,380,034
47,853,503
46,979,057
EVO PAYMENTS, INC. AND
SUBSIDIARIES Schedule 2 - Condensed Consolidated
Balance Sheets (unaudited) (in thousands, except share
data)
September 30,
December 31,
2022
2021
Assets Current assets: Cash and cash equivalents
$
429,760
$
410,368
Accounts receivable, net
16,533
16,065
Other receivables
28,830
18,087
Inventory
7,296
4,210
Settlement processing assets
341,952
311,681
Other current assets
29,134
20,514
Total current assets
853,505
780,925
Equipment and improvements, net
62,410
68,506
Goodwill, net
370,571
385,651
Intangible assets, net
178,506
200,726
Deferred tax assets
245,943
238,261
Operating lease right-of-use assets
36,238
34,704
Investment in equity securities, at fair value
30,627
25,398
Other assets
18,282
19,214
Total assets
$
1,796,082
$
1,753,385
Liabilities and Shareholders' Equity (Deficit)
Current liabilities: Settlement lines of credit
$
3,622
$
7,887
Current portion of long-term debt
14,092
14,058
Accounts payable
7,719
6,889
Accrued expenses and other current liabilities
135,006
127,060
Settlement processing obligations
468,732
422,109
Current portion of operating lease liabilities, inclusive of
related party liability of $1.0 million and $1.3 million at
September 30, 2022 and December 31, 2021, respectively
6,779
7,122
Total current liabilities
635,950
585,125
Long-term debt, net of current portion
558,396
568,632
Deferred tax liabilities
24,105
22,207
Tax receivable agreement obligations, inclusive of related party
liability of $169.7 million and $169.4 million at September 30,
2022 and December 31, 2021, respectively
180,406
180,143
Operating lease liabilities, net of current portion, inclusive of
related party liability of $0.1 million and $1.0 million at
September 30, 2022 and December 31, 2021, respectively
31,363
28,948
Other long-term liabilities
11,169
7,891
Total liabilities
1,441,389
1,392,946
Commitments and contingencies Redeemable non-controlling interests
1,288,210
1,029,090
Redeemable preferred stock (par value, $0.0001 per share),
Authorized, Issued and Outstanding – 152,250 shares at September
30, 2022 and December 31, 2021. Liquidation preference: $175,900
and $168,309 at September 30, 2022 and December 31, 2021,
respectively
171,816
164,007
Shareholders' equity (deficit): Class A common stock (par value
$0.0001), Authorized - 200,000,000 shares, Issued and Outstanding -
48,293,979 and 47,446,061 shares at September 30, 2022 and December
31, 2021, respectively
5
5
Class D common stock (par value $0.0001), Authorized - 32,000,000
shares, Issued and Outstanding - 3,741,074 and 3,783,074 shares at
September 30, 2022 and December 31, 2021.
-
-
Additional paid-in capital
-
-
Accumulated deficit attributable to Class A common stock
(890,378
)
(652,871
)
Accumulated other comprehensive loss
(22,196
)
(9,154
)
Total EVO Payments, Inc. shareholders' deficit
(912,569
)
(662,020
)
Nonredeemable non-controlling interests
(192,764
)
(170,638
)
Total deficit
(1,105,333
)
(832,658
)
Total liabilities, redeemable non-controlling interests,
redeemable preferred stock, and shareholders' deficit
$
1,796,082
$
1,753,385
EVO PAYMENTS, INC. AND
SUBSIDIARIES Schedule 3 - Condensed Consolidated
Statements of Cash Flows (unaudited) (in thousands)
Nine Months Ended September
30,
2022
2021
Cash flows from operating activities: Net income
$
20,245
$
11,079
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
60,453
63,562
Gain on investment in equity securities
(2,122
)
(968
)
Amortization of deferred financing costs
890
2,006
Loss on disposal of equipment and improvements
-
872
Share-based compensation expense
21,947
21,459
Deferred taxes, net
8,090
14,118
Other
(2,541
)
365
Changes in operating assets and liabilities, net of effect of
acquisitions: Accounts receivable, net
(2,908
)
3,048
Other receivables
(12,667
)
3,091
Inventory
(3,966
)
631
Other current assets
971
(1,439
)
Operating lease right-of-use assets
5,878
4,912
Other assets
(3,789
)
(2,777
)
Accounts payable
1,969
3,631
Accrued expenses and other current liabilities
17,814
683
Settlement processing funds, net
22,208
(44,270
)
Operating lease liabilities
(5,676
)
(5,637
)
Other
(1,358
)
(2,310
)
Net cash provided by operating activities
125,438
72,056
Cash flows from investing activities: Acquisition of businesses,
net of cash acquired
(5,254
)
(18,809
)
Purchase of equipment and improvements
(26,774
)
(25,929
)
Acquisition of intangible assets
(18,256
)
(6,871
)
Collections of notes receivable
-
48
Net cash used in investing activities
(50,284
)
(51,561
)
Cash flows from financing activities: Net repayments of settlement
lines of credit
(3,680
)
(1,433
)
Proceeds from long-term debt
11,200
-
Repayments of long-term debt
(22,225
)
(4,945
)
Deferred and contingent consideration paid
(1,593
)
(484
)
Repurchases of shares to satisfy minimum tax withholding
(3,156
)
(4,463
)
Proceeds from exercise of common stock options
7,301
7,668
Distributions to non-controlling interest holders
(9,398
)
(10,914
)
Contribution from non-controlling interest holders
2,133
1,487
Net cash used in financing activities
(19,418
)
(13,084
)
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
(36,088
)
(9,708
)
Net increase (decrease) in cash, cash equivalents, and restricted
cash
19,648
(2,297
)
Cash, cash equivalents, and restricted cash, beginning of period
410,615
418,539
Cash, cash equivalents, and restricted cash, end of period
$
430,263
$
416,242
EVO PAYMENTS, INC. AND
SUBSIDIARIES Schedule 4 - Reconciliation of GAAP to
Non-GAAP Measures (in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
% change
2022
2021
% change
Revenue
$
138,663
$
135,041
3
%
$
403,260
$
363,456
11
%
Liquidated damages payment1
6,939
-
NM
6,939
-
NM
Currency impact2
-
(9,266
)
NM
-
(17,694
)
NM
Adjusted revenue
$
145,601
$
125,775
16
%
$
410,198
$
345,762
19
%
Net income
$
3,831
$
7,125
(46
%)
$
20,245
$
11,079
83
%
Net income attributable to non-controlling interests in
consolidated entities
(3,845
)
(3,259
)
(18
%)
(9,545
)
(6,484
)
(47
%)
Income tax expense
18,513
8,284
123
%
29,614
19,859
49
%
Interest expense, net
3,491
5,669
(38
%)
10,405
17,258
(40
%)
Depreciation and amortization
21,136
21,941
(4
%)
60,453
63,562
(5
%)
(Gain) loss on investment in equity securities
(4,425
)
1,298
NM
(2,122
)
(968
)
(119
%)
Share-based compensation expense
7,237
9,172
(21
%)
21,947
21,459
2
%
Transition, acquisition and integration costs3
11,280
1,132
896
%
17,916
2,113
748
%
Adjusted EBITDA
57,218
51,363
11
%
148,912
127,880
16
%
Currency impact2
-
(3,971
)
NM
-
(6,679
)
NM
Currency-neutral adjusted EBITDA
$
57,218
$
47,392
21
%
$
148,912
$
121,200
23
%
1
Represents the Liberbank
liquidated payment. Recorded as other operating income, but shown
here as the fee reflects a payment for forgone processing
revenues.
2
Represents the impact of currency
shifts by adjusting prior year results to current period average
foreign exchange rates for the currencies in which EVO conducts
operations.
3
For the three months ended
September 30, 2022, earnings adjustments include $11.3 million of
transition, acquisition and integration related costs, inclusive of
$8.7 million of costs associated with the announced merger with
Global Payments Inc.
For the three months ended
September 30, 2021, earnings adjustments include $1.1 million of
transition, acquisition and integration related costs.
For the nine months ended
September 30, 2022, earnings adjustments include $17.9 million of
transition, acquisition and integration related costs, inclusive of
$9.3 million of costs associated with the announced merger with
Global Payments Inc.
For the nine months ended
September 30, 2021, earnings adjustments include $2.1 million of
transition, acquisition and integration related costs.
EVO PAYMENTS, INC. AND
SUBSIDIARIES Schedule 5 - Adjusted Net Income
(unaudited) Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except share and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
% change
2022
2021
% change
Net income
$
3,831
$
7,125
(46
%)
$
20,245
$
11,079
83
%
Net income attributable to non-controlling interests in
consolidated entities
(3,845
)
(3,259
)
(18
%)
(9,545
)
(6,484
)
(47
%)
Share-based compensation expense
7,237
9,172
(21
%)
21,947
21,459
2
%
(Gain) loss on investment in equity securities
(4,425
)
1,298
NM
(2,122
)
(968
)
(119
%)
Income tax expense
18,513
8,284
123
%
29,614
19,859
49
%
Transition, acquisition and integration costs1
11,280
1,132
896
%
17,916
2,113
748
%
Acquisition intangible amortization2
10,359
9,558
8
%
25,873
28,164
(8
%)
Non-GAAP adjusted income before taxes
42,950
33,311
29
%
103,927
75,222
38
%
Income taxes at normalized tax rate3
(9,707
)
(7,528
)
(29
%)
(23,487
)
(17,000
)
(38
%)
Adjusted net income
$
33,243
$
25,783
29
%
$
80,439
$
58,222
38
%
Adjusted net income per share4
$
0.34
$
0.27
26
%
$
0.84
$
0.62
35
%
1 For the three months ended September 30, 2022, earnings
adjustments include $11.3 million of transition, acquisition and
integration related costs, inclusive of $8.7 million of costs
associated with the announced merger with Global Payments Inc. For
the three months ended September 30, 2021, earnings adjustments
includes $1.1 million of transition, acquisition and integration
related costs. For the nine months ended September 30, 2022,
earnings adjustments include $17.9 million of transition,
acquisition and integration related costs, inclusive of $9.3
million of costs associated with the announced merger with Global
Payments Inc. For the nine months ended September 30, 2021,
earnings adjustments includes $2.1 million of transition,
acquisition and integration related costs. 2 Represents
amortization of intangible assets acquired through business
combinations and other merchant portfolio and related asset
acquisitions. 3 Normalized corporate income tax expense calculated
using 22.6% for all periods.
4
Reflects pro forma weighted average shares for the period using
GAAP weighted average common shares (equal to weighted average
Class A common shares), weighted average Blueapple common shares
(formerly Class B common shares), weighted average Class D common
shares which include converted weighted average Class C common
shares, weighted average preferred shares including paid-in-kind
dividends, and dilutive equity awards measured under the treasury
stock method.
Three Months Ended Sept.
30,
Nine Months Ended Sept.
30,
(share count in millions)
2022
2021
2022
2021
Class A (GAAP weighted average common stock)
48.2
47.4
47.9
47.0
Blueapple common shares (formerly Class B)
32.2
32.2
32.2
32.2
Class D
3.8
3.8
3.8
3.9
Stock options, RSUs, RSAs
1.9
1.1
1.0
1.2
Series A convertible preferred (if converted)
11.1
10.4
10.9
10.3
Pro forma weighted average shares
97.0
94.9
95.7
94.5
EVO PAYMENTS, INC. AND
SUBSIDIARIES Schedule 6 - Net Debt to Adjusted EBITDA
Ratio Reconciliation of GAAP to Non-GAAP Measures (in
thousands)
Year Ended 9 Months 9 Months
LTM1 12/31/2021
9/30/2021 9/30/2022 9/30/2022 Net income
$
17,689
$
11,079
$
20,245
$
26,855
Net income attributable to non-controlling interests in
consolidated entities
(9,003
)
(6,484
)
(9,545
)
(12,064
)
Income tax expense
26,376
19,859
29,614
36,131
Interest expense, net
21,510
17,258
10,405
14,657
Depreciation and amortization
83,389
63,562
60,453
80,280
Gain on investment in equity securities
(237
)
(968
)
(2,122
)
(1,391
)
Share-based compensation expense
27,419
21,459
21,947
27,907
Transition, acquisition and integration costs
4,296
2,113
17,916
20,099
Other adjustments
6,587
-
-
6,587
Adjusted EBITDA
$
178,027
$
127,880
$
148,912
$
199,060
Ratio of Net Debt to LTM
Adjusted EBITDA 9/30/2022 Gross debt
$
576,975
Less: available cash2
(230,726
)
Net debt
$
346,249
Leverage Ratio 1.7x
1
Reflects last twelve months
Adjusted EBITDA by taking full year 2021, less the nine months
ended September 30, 2021, plus the nine months ended September 30,
2022 period. Amounts may differ due to rounding.
2
Available cash includes cash in
transit from September 30, 2022 transaction date.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102005052/en/
EVO Payments, Inc. Sarah Jane Schneider Investor Relations &
Corporate Communications Manager 770-709-7365
investor.relations@evopayments.com
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