EVO Reports Third Quarter 2018 Results

ATLANTA, Nov. 07, 2018 (GLOBE NEWSWIRE) -- EVO Payments, Inc. (NASDAQ: EVOP) (“EVO” or the “Company”) today announced its third quarter financial results. For the third quarter ended September 30, 2018, revenue increased 9% to $144.8 million, compared to $132.6 million in the prior year. On a currency-neutral basis, revenue increased 11% over the prior year. On a GAAP basis for the third quarter, net loss attributable to EVO Payments, Inc. was $27.4 million or $1.51 per diluted share.  Adjusted EBITDA defined as earnings before interest, taxes, depreciation, amortization, and the impact of share-based compensation, transition, acquisition-related and integration costs, increased 10% to $38.4 million for the quarter, compared to $35.1 million in the prior year. On a currency-neutral basis, adjusted EBITDA grew 13% over the prior year. 

For the nine months ended September 30, 2018, revenue increased 13% to $413.9 million, compared to $366.2 million in the prior year period. On a currency-neutral basis, revenue increased 10% over the prior year. On a GAAP basis for the year-to-date period, net loss attributable to EVO Payments, Inc. was $10.7 million or $0.60 per diluted share, representing net loss from the initial public offering date forward.  Adjusted EBITDA increased 14% to $104.1 million for the nine months ended September 30, 2018, compared to $91.4 million in the prior year. On a currency-neutral basis, adjusted EBITDA grew 11% for the year-to-date period compared with the same period in the prior year (See Schedule 1 for the Condensed Consolidated Statements of Operations and Schedule 4 for the Reconciliation of GAAP to Non-GAAP measures).

“We are very pleased with our third quarter performance,” said James G. Kelly, Chief Executive Officer of EVO. “Once again, we produced solid growth in both Europe and North America. This was the result of our two-pronged strategy of first, building long-term distribution through alliances with leading financial institutions, ISVs, B2B relationships, and eCommerce partners and second, developing leading products and services to meet our customer needs. This strategy is further strengthened by our focus on our operating leverage and efficiencies.  Since our last earnings release, we have announced a new, 10-year, exclusive partnership with EuroBic in Portugal, expanding our reach into a new market within our European segment.  We also acquired ClearONE out of Europe and Galaxy Pay in the U.S., both of which enhance our tech-enabled offering, and completed two operating and processing integrations. These achievements were all in line with our expectations.”

Outlook
For the full year 2018, we have updated guidance based on recent trends, completed acquisitions, and changes in FX. The Company now expects revenue to range from $561 million to $567 million, reflecting growth of 11% to 12% over 2017 reported results and 10% to 11% over currency-neutral 2017 results. Adjusted EBITDA is now expected to be in a range of $143 million and $146 million, reflecting growth of 12% to 14% over 2017 adjusted EBITDA and 11% to 13% over currency-neutral 2017 adjusted EBITDA.  Adjusted EBITDA margin is now expected to range from 25.5% to 25.7%, reflecting growth of 25 to 45 basis points over 2017 currency-neutral results. Excluding the costs related to our investments in Europe, year-over-year margins would have increased by 95 to 115 basis points. Net loss attributable to EVO per share is now expected to be in a range of ($0.59) to ($0.53), and pro forma adjusted net income is expected to range from $0.47 to $0.52 per adjusted diluted share. 

Conference call
EVO’s management will host a conference call for investors at 8:00 a.m. Eastern Time on Wednesday, November 7 2018 to discuss the results. Participants may access the conference call via the investor relations section of the company’s website at www.evopayments.com, or participants may also dial (877) 356-5729 inside the U.S. and Canada and (629) 228-0718 outside the U.S. and Canada to listen.  The conference ID number is 3158977. A recording of the call will be archived on the company's investor relations website following the live call.

Forward-looking statements

This announcement and the Company’s discussion today both include forward-looking statements. Forward-looking statements are subject to risks and uncertainty.  They are not guarantees of future performance, and the Company’s actual results could differ materially from the expectations expressed or implied in any forward-looking statements. You should not put undue reliance upon them.  Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecast,” “outlook,” “target,” “should,” “could,” “would,” “will” and comparable words are a common way to identify forward-looking statements. Examples of forward-looking statements contained in this release include statements about the Company’s full year 2018 outlook.

Factors that could contribute to differences between the Company’s actual results and the expectations expressed or implied in any forward-looking statements include the following: changing industry trends and changing needs and preferences of our customers and consumers; the impact of substantial and increasingly intense competition; changes in the competitive landscape, including disintermediation from other participants in the payments chain; the impact of global economic, political and other conditions on trends in consumer, business and government spending; compliance with governmental regulations and other legal obligations, particularly related to privacy, data protection and information security, and consumer protection laws; the ability to protect the Company’s systems and data from continually evolving cybersecurity risks or other technological risks; failures in the Company’s processing systems, software defects, computer viruses and development delays; degradation of the quality of the products and services the Company offers; the Company’s ability to successfully complete, integrate and realize the expected benefits of any acquisitions it pursues or has completed; continued consolidation in the banking and payment services industries; increased customer, referral partner or sales partner attrition; the incurrence of chargeback liability; fraud by merchants or others; service failures by third-party vendors providing products and services to the Company; failure to maintain merchant relationships and alliances; ineffective risk management policies and procedures; reputational harm to the Company or its partners; the Company’s ability to recruit, retain and develop qualified personnel; geopolitical and other risks associated with operations outside of the United States; decline in the use of cards as a payment mechanism for consumers or adverse developments with respect to the card industry in general; increases in card network fees; failure to comply with the applicable requirements of card networks; changes in foreign currency exchange rates; inability to raise additional capital to fund the Company’s operations on acceptable terms or at all; failure to protect the Company’s intellectual property rights and defend against potential patent claims; failure to comply with, or changes in, laws, regulations and enforcement activities; future impairment charges; the impact of the Company’s organizational structure; the significant influence of certain of the Company’s stockholders over Company decisions; and the other risks and factors, including the risks listed under “Item 1A. Risk factors,” contained in the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2018.

Non-GAAP financial measures

EVO Payments, Inc. has supplemented revenue, net income/(loss) and earnings per share information determined in accordance with GAAP by providing these and other measures on an adjusted basis in this release to assist with evaluating performance.   Such financial measures should not be considered as an alternative to GAAP revenue or net income/(loss), 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 evaluate 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 operating results and enhance the overall understanding of financial performance of the Company’s core business by presenting the Company’s results without giving effect to equity-based compensation, giving pro forma effect to the Company’s going forward effective tax rate following its Up-C reorganization, costs related to restructuring transactions, acquisition costs and other transitionary costs.  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 without taking into account fluctuations caused by 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.

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 North America and Europe.  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.
Contact:
Sarah Jane Schneider
Investor Relations & Corporate Communications Manager
770-709-7365
investor.relations@evopayments.com 

Adjusted EBITDA is a supplemental measure of the Company’s performance that is not required by, or presented in accordance with, GAAP.  Adjusted EBITDA is not a term defined under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements.

Adjusted EBITDA is included in this release because it is a key metric used by the Company’s management and board of directors to assess the Company’s financial performance. The presentation of adjusted EBITDA is intended to provide additional information to investors about the Company’s results of operations that management utilizes on an ongoing basis to assess the Company’s core operating performance.  Adjusted EBITDA is also frequently used by analysts, investors and other interested parties to evaluate companies in the industry.

Adjusted EBITDA is defined as income before provision for income taxes, net interest expense, and depreciation and amortization, excluding the additional items described in the reconciliation above. Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. The calculation of adjusted EBITDA has limitations as an analytical tool, including: (a) it does not reflect the Company’s cash expenditures, or future requirements for capital expenditures or contractual commitments; (b) it does not reflect changes in, or cash requirements for, the Company’s working capital needs; (c) it does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on the Company’s indebtedness; (d) it does 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 Adjusted EBITDA does not reflect any cash requirements for such replacements.