Press Release Details

ATLANTA, Feb. 27, 2020 (GLOBE NEWSWIRE) -- EVO Payments, Inc. (NASDAQ: EVOP) (“EVO” or the “Company”) today announced its fourth quarter and year-end 2019 financial results.  For the fourth quarter ended December 31, 2019, reported revenue was $129.4 million, compared to $150.8 million in the prior year, which reflects the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019.  As required for comparability purposes in the year of adoption, the Company also reports adjusted revenue to exclude network fees.  Adjusted revenue for the fourth quarter was $160.0 million, compared to $150.8 million in the prior year, an increase of 6%.  On a currency neutral basis, adjusted revenue for the fourth quarter increased 7%.  On a GAAP basis for the fourth quarter, the Company recognized a net loss of $3.2 million, or ($0.09) per share, an improvement of 84% compared to the prior year.  Adjusted EBITDA increased 8% to $48.1 million for the quarter.  On a currency neutral basis, adjusted EBITDA grew 9% over the prior year.

For the twelve months ended December 31, 2019, reported revenue was $485.8 million, compared to $564.8 million in the prior year, which reflects the adoption of ASC 606.  Adjusted revenue for the twelve months ended December 31, 2019 was $598.0 million, compared to $564.8 million in the prior year, an increase of 6%.  On a currency neutral basis, adjusted revenue for the twelve months ended December 31, 2019 increased 8%.  On a GAAP basis for the twelve months ended December 31, 2019, the Company recognized a net loss of $23.4 million, or ($0.31) per share, an improvement of 76% compared to the prior year.  Adjusted EBITDA increased 8% to $160.3 million for the year.  On a currency neutral basis, adjusted EBITDA grew 11% over the prior year.

“We are pleased with our fourth quarter and 2019 financial results,” said James G. Kelly, Chief Executive Officer of EVO.  “Our 2019 results reflect the strong diversification and expanding distribution capabilities of our business.  During 2019, we were able to increase our distribution and deliver growth via our international bank partnerships and our tech-enabled division across all markets.  We augmented our ISV and B2B capabilities in 2019 through acquisitions in Mexico, the U.S., and Europe.  We look forward to expanding our B2B, ISV, and international eCommerce businesses in 2020, as we continue to enable digital payments around the globe.”

Outlook
We are providing 2020 guidance that includes the adoption of ASC 606; going forward, we will report revenue on a basis that includes the adoption of ASC 606.  We expect 2020 full-year GAAP revenue to range from $516 million to $526 million.  On a constant currency basis, we expect revenue growth to be 7% to 9% over 2019 results.  Pre-tax income, on a GAAP basis, is expected to range from $17 million to $22 million compared to a pre-tax loss of $19 million in 2019.  Adjusted EBITDA is expected to be in the range of $173 million to $179 million, reflecting growth of 10% to 13% over currency-neutral 2019 adjusted EBITDA.  The adjusted EBITDA margin is expected to range from 33.5% to 34.0%, reflecting expansion of 80 to 130 basis points over the 2019 currency-neutral adjusted EBITDA margin.

Conference call
EVO’s management will host a conference call for investors at 8:00 a.m. Eastern Time on Thursday, February 27, 2020 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 (866) 209-9657 inside the U.S. and Canada and (825) 312-2290 outside the U.S. and Canada to listen.  The conference ID number is 8497173.  A recording of the call will be archived on the company's investor relations website following the live call.

Forward-Looking Statements
This release and the accompanying earnings conference call contain 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 and Section 21E of the Securities Exchange Act of 1934. 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) our ability to anticipate and respond to changing industry trends and the needs and preferences of our customers and consumers; (2) the impact of substantial and increasingly intense competition; (3) the impact of changes in the competitive landscape, including disintermediation from other participants in the payments chain; (4) the effects of global economic, political, and other conditions; (5) our compliance with governmental regulations and other legal obligations, particularly related to privacy, data protection, and information security, and consumer protection laws; (6) our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks; (7) failures in our processing systems, software defects, computer viruses, and development delays; (8) degradation of the quality of the products and services we offer, including support services; (9) risks associated with our ability to successfully complete, integrate and realize the expected benefits of acquisitions; (10) 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; (11) increased customer, referral partner, or sales partner attrition; (12) the incurrence of chargebacks; (13) failure to maintain or collect reimbursements; (14) fraud by merchants or others; (15) the failure of our third-party vendors to fulfill their obligations; (16) failure to maintain merchant and sales relationships or financial institution alliances; (17) ineffective risk management policies and procedures; (18) our inability to retain smaller-sized merchants and the impact of economic fluctuations on such merchants, (19) damage to our reputation, or the reputation of our partners; (20) seasonality and volatility; (21) our inability to recruit, retain and develop qualified personnel; (22) geopolitical and other risks associated with our operations outside of the United States; (23) any decline in the use of cards as a payment mechanism or other adverse developments with respect to the card industry in general; (24) increases in card network fees; (25) failure to comply with card networks requirements; (26) a requirement to purchase our eService subsidiary in Poland; (27) changes in foreign currency exchange rates; (28) future impairment charges; (29) 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; (30) changes to, or the potential phasing out of, LIBOR and the transition to other benchmarks; (31) restrictions imposed by our credit facilities and outstanding indebtedness; (32) participation in accelerated funding programs; (33) failure to enforce and protect our intellectual property rights; (34) 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; (35) impact of new or revised tax regulations; (36) legal proceedings; (37) our dependence on distributions from EVO Investco, LLC to pay our taxes and expenses, including certain payments to the Continuing LLC Owners (as defined in 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; (38) 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; (39) the risk that we could be deemed an investment company under the Investment Company Act of 1940, as amended; (40) the significant influence the Continuing LLC Owners continue to have over us, including control over decisions that require the approval of stockholders; (41) certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control; (42) 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; (43) our ability to establish and maintain effective internal control over financial reporting and disclosure controls and procedures; (44) changes in our stock price, including relating to downgrades, analyst reports, and future sales by us or by existing stockholders; and (45) the other risks and uncertainties included from time to time in our filings with the SEC, including those listed under “Risk Factors” contained in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019.

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. 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) 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.  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 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 the Company’s ongoing underlying operating performance and enhance the overall understanding of financial performance of the Company’s core business by presenting the Company’s results without giving effect to one or more of the following: equity-based compensation, giving pro forma effect to a normalized effective tax rate for the Company, costs related to transition, acquisition and integration matters.  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.

Adjusted revenue is presented in this release without giving effect to ASC 606, which we adopted effective January 1, 2019.  In accordance with GAAP, during the year of adoption, we are required to report this measure as part of our financial statements in order to allow for comparability with prior periods.  Following this release, we no longer plan to report adjusted revenue without giving effect to ASC 606.  We will, however, continue to report our revenues on a currency-neutral basis for the reasons described above. 

Among other non-GAAP financial measures presented, this release contains a presentation of our adjusted EBITDA and pro forma adjusted net income. Neither of these measures purport to be an alternative to cash flows from operating activities as a measure of liquidity, and neither is 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 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 impact of net income from consolidated subsidiaries (including related depreciation and amortization), share-based compensation, and transition, acquisition and integration costs. Pro forma adjusted net income is defined as GAAP net loss adjusted to exclude income taxes, the impact of net income from consolidated subsidiaries (including related depreciation and amortization), share-based compensation, transition, acquisition and integration costs, and amortization of acquisition intangibles and subsequently adjusted to give pro forma effect to a normalized tax rate for the Company. The calculation of adjusted EBITDA and pro forma 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.

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 Perry
Investor Relations & Corporate Communications Manager
770-709-7365
[email protected]

Source: EVO Payments, Inc.