News Releases

EVO Reports Third Quarter 2018 Results

November 7, 2018

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 

 
 
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,
        2018       2017     % change     2018       2017     % change
                           
  Revenue   $   144,758     $   132,646     9 %   $   413,931     $   366,165     13 %
  Operating expenses:                        
  Cost of services and products, exclusive of depreciation
and amortization shown separately below
      46,949         43,487     8 %       141,826         119,310     19 %
  Selling, general and administrative       67,802         58,333     16 %       242,982         162,870     49 %
  Depreciation and amortization       20,488         19,806     3 %       61,308         55,479     11 %
  Total operating expenses       135,239         121,626     11 %       446,116         337,659     32 %
  Income (loss) from operations       9,519         11,020      (14 %)       (32,185 )       28,506      (213 %)
  Other (expense) income:                        
  Interest income       507         313     62 %       1,622         951     71 %
  Interest expense       (10,583 )       (15,939 )    (34 %)       (47,453 )       (46,516 )   2 %
  (Loss) income from investment in unconsolidated investees       (36 )       (22 )   64 %       725         736      (1 %)
  Gain on acquisition of unconsolidated investee       8,659         -     -         8,659         -     -  
  Other income (expense), net       211         (89 )    (337 %)       (2,963 )       (263 )   1027 %
  Total other expense       (1,242 )       (15,737 )    (92 %)       (39,410 )       (45,092 )    (13 %)
  Income (loss) before income taxes       8,277         (4,717 )    (275 %)       (71,595 )       (16,586 )   332 %
  Income tax expense       (32,155 )       (5,377 )   498 %       (7,974 )       (14,734 )    (46 %)
  Net loss       (23,878 )       (10,094 )   137 %       (79,569 )       (31,320 )   154 %
  Less: Net income attributable to non-controlling interests in consolidated entities       (2,433 )       (2,165 )   12 %       (4,434 )       (5,019 )    (12 %)
  Net loss attributable to EVO Investco, LLC       $   (12,259 )             $   (36,339 )      
  Less: Net (loss) income attributable to non-controlling interests in EVO Investco, LLC     (1,078 )               73,328          
  Net loss attributable to EVO Payments, Inc.   $   (27,389 )           $   (10,675 )        
                           
  Earnings per share                        
  Basic    $   (1.51 )           $   (0.60 )        
  Diluted   $   (1.51 )           $   (0.60 )        
  Weighted average Class A common stock outstanding                        
  Basic        18,163,344                 17,901,484          
  Diluted       18,163,344                 17,901,484          
                           

 

EVO PAYMENTS, INC. AND SUBSIDIARIES 
Schedule 2 - Condensed Consolidated Balance Sheets (unaudited)
           
(in thousands, except share and interest data)
           
      September 30,   December 31,
       2018     2017 
  Assets        
  Current assets:         
  Cash and cash equivalents    $   235,484     $   205,142  
  Accounts receivable, net        10,277         15,881  
  Other receivables        53,083         55,345  
  Due from related parties        2,331         2,625  
  Inventory        7,571         11,210  
  Settlement processing assets        504,029         439,269  
  Other current assets        13,126         20,941  
  Total current assets        825,901         750,413  
  Equipment and improvements, net        101,931         96,587  
  Goodwill        342,095         311,678  
  Intangible assets, net        331,122         313,483  
  Investment in unconsolidated investees        1,372         1,379  
  Due from related parties        923         109  
  Deferred tax asset        63,786         9,057  
  Other assets        24,939         25,592  
  Total assets    $   1,692,069     $   1,508,298  
           
  Liabilities and Shareholders'/Members' Equity (Deficit):         
  Current liabilities:         
  Settlement lines of credit    $   35,131     $   28,563  
  Current portion of long-term debt        7,416         75,008  
  Accounts payable        46,196         61,149  
  Accrued expenses        130,610         94,235  
  Settlement processing obligations        559,302         484,518  
  Due to related parties        4,597         7,847  
  Total current liabilities        783,252         751,320  
  Long-term debt, net of current portion        674,544         760,946  
  Due to related parties        385         675  
  Deferred tax liability        11,494         11,011  
  Tax receivable agreement obligations        42,393         -  
  ISO reserves        2,652         2,611  
  Total liabilities        1,514,720         1,526,563  
  Commitments and contingencies         
  Redeemable non-controlling interests        969,276         148,266  
  Shareholders'/members' equity (deficit):         
  Investco, LLC Units, Outstanding - 0 and 12,371 units at September 30, 2018 and December 31, 2017 respectively.        -         135,166  
  Class A common stock (par value $0.0001), Authorized - 200,000,000 and 0 shares, Issued and Outstanding - 25,370,797 and 0 shares at September 30, 2018 and December 31, 2017 respectively.        3         -  
  Class B common stock (par value $0.0001), Authorized - 40,000,000 and 0 shares, Issued and Outstanding - 35,913,538 and 0 shares at September 30, 2018 and December 31, 2017 respectively.        4         -  
  Class C common stock (par value $0.0001), Authorized - 4,000,000 and 0 shares, Issued and Outstanding - 2,560,955 and 0 shares at September 30, 2018 and December 31, 2017 respectively.        -         -  
  Class D common stock (par value $0.0001), Authorized - 32,000,000 and 0 shares, Issued and Outstanding - 17,282,930 and 0 shares at September 30, 2018 and December 31, 2017 respectively.        1         -  
  Additional paid-in capital        175,843         -  
  Accumulated deficit attributable to Class A common stock        (131,058 )       -  
  Accumulated deficit attributable to members of EVO Investco, LLC        -         (237,330 )
    Accumulated other comprehensive loss        319         (67,679 )
  Total shareholders'/members' equity (deficit)        45,112         (169,843 )
    Nonredeemable non-controlling interests        (837,039 )       3,312  
  Total deficit       (791,927 )       (166,531 )
  Total liabilities and deficit   $   1,692,069     $   1,508,298  
           

 

EVO PAYMENTS, INC. AND SUBSIDIARIES        
Schedule 3 - Condensed Consolidated Statement of Cash Flows (unaudited)    
           
(in thousands)        
           
      Nine months ended September 30,
        2018       2017  
  Cash flow from operating activities:        
  Net loss   $   (79,569 )   $   (31,320 )
  Adjustments to reconcile net loss to net cash provided by        
  operating activities:        
  Depreciation and amortization       61,308         55,479  
  Loss on sale of investments       -         1,308  
  Amortization of deferred financing costs       7,856         2,394  
  Loss on extinguishment of debt       2,055         -  
  Share-based compensation expense       53,893         -  
  Loss on disposal of equipment and improvements       955         -  
  Undistributed earnings (loss) from unconsolidated investees       61         (67 )
  Gain on acquisition of unconsolidated investee       (8,659 )       -  
  Accrued interest expense       (106 )       915  
  Accrued interest income       (78 )       (17 )
  Deferred rent       (359 )       (36 )
  Deferred taxes       504         8,121  
  Loss on payment of contingent consideration       105         -  
  Reserve on uncollectible notes receivable       28         (19 )
  Changes in operating assets and liabilities, net of effect of acquisitions:        
  Accounts receivable, net       5,822         (8,155 )
  Other receivables        3,993         1,044  
  Inventory       3,555         (924 )
  Other current assets       (5,165 )       (5,293 )
  Other assets       53         4,847  
  Related parties       (3,001 )       (14,499 )
  Accounts payable       (16,744 )       (261 )
  Accrued expenses       28,900         11,970  
  Settlement processing funds, net       10,899         (22,304 )
  ISO reserves       42         (260 )
  Net cash provided by operating activities       66,348         2,923  
  Cash flow from investing activities:        
  Restricted cash       -         125,000  
  Acquisition of businesses, net of cash acquired       (48,547 )       (124,964 )
  Purchase of equipment and improvements       (38,963 )       (24,389 )
  Acquisition of intangible assets       (19,893 )       (14,472 )
  Net proceeds from sale of investments       -         205  
  Issuance of notes receivable       (20 )       (7 )
  Collections of notes receivable       91         968  
  Net cash used in investing activities       (107,332 )       (37,659 )
  Cash flow from financing activities:        
  Proceeds from long-term debt       655,732         627,570  
  Repayments of long-term debt       (743,342 )       (645,478 )
  Deferred financing costs paid       (3,899 )       (19 )
  Contingent consideration paid       (1,621 )       -  
  Consideration paid for additional shares in a consolidated subsidiary       -         (3,962 )
  Deferred cash consideration paid       (65,000 )       -  
  Acquisition of additional non-controlling interest       (16,916 )       -  
  IPO proceeds, net of underwriter fees       231,500         -  
  Secondary offering proceeds, net       24,967         -  
  Contributions by members       -         71,250  
  Distribution to members       -         (1,708 )
  Distribution to non-controlling interests holders       (6,136 )       (2,291 )
  Net cash provided by financing activities       75,285         45,362  
  Effect of exchange rate changes on cash and cash equivalents       (3,959 )       13,460  
  Net increase in cash and cash equivalents       30,342         24,086  
  Cash and cash equivalents, beginning of year       205,142         203,324  
  Cash and cash equivalents, end of period   $   235,484     $   227,410  
           

 

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,
          2018       2017     % change     2018       2017     % change
                             
    Revenue   $   144,758     $   132,646     9.1 %   $   413,931     $   366,165     13.0 %
    Currency impact1       -         (2,463 )   N/A         -         9,567     N/A  
    Currency-neutral revenue       144,758         130,183     11.2 %       413,931         375,732     10.2 %
                             
                             
    Net loss       (23,878 )       (10,094 )   136.6 %       (79,569 )       (31,320 )   154.1 %
    Net loss attributable to non-controlling interests in consolidated entities        (2,433 )       (2,165 )   12.4 %       (4,434 )       (5,019 )    (11.7 %)
    Income tax expense / (benefit)       32,155         5,377     498.0 %       7,974         14,734      (45.9 %)
    Interest expense, net       10,076         15,626      (35.5 %)       45,831         45,565     0.6 %
    Depreciation and amortization       20,488         19,806     3.4 %       61,308         55,479     10.5 %
    Share-based compensation2       2,022         -     N/A         53,285         -     N/A  
    Transition, acquisition and integration costs3       (11 )       6,510      (100.2 %)       19,662         12,010     63.7 %
    Adjusted EBITDA       38,419         35,060     9.6 %       104,057         91,449     13.8 %
    Currency impact1       -         (1,054 )   N/A         -         2,387     N/A  
    Currency-neutral adjusted EBITDA   $   38,419     $   34,006     13.0 %   $   104,057     $   93,836     10.9 %
                             
1 Represents the impact of currency shifts by adjusting prior year results to current period average fx rates for the currencies in which EVO conducts operations. 
2 Represents $1.7 million of share-based compensation costs, plus a $0.3 million payroll tax expense for the three months ended September 30, 2018, and $53.9 million in share-based compensation costs for the nine months ended September 30, 2018, largely related to vesting upon completion of the IPO, plus a $0.3 million payroll tax expense less a $0.9 million non-controlling interest component. 
3 For the three months ended September 30, 2018, earnings adjustments include $3.9 million of employee termination benefits, and $4.7 million of acquisition related and integration costs.  These items were offset by an adjustment of an $8.7 million gain related to the fair value mark-up on the acquisition of a previously minority owned subsidiary. 
For the three months ended September 30, 2017, earnings adjustments include $1.1 million of employee termination benefits and $5.4 million of transaction and acquisition related costs. 
For the nine months ended September 30, 2018, earnings adjustments include $6.3 million of employee termination benefits, $4.0 million of a strategic advisory fee, $18.0 million of acquisition related and integration costs and the adjustment of the $8.7 million gain related to the fair value mark-up on the acquisition of a previously minority owned subsidiary. 
For the nine months ended September 30, 2017, earnings adjustments include $4.1 million of employee termination benefits, and $7.9 million of transaction and acquisition related costs. 

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.

EVO PAYMENTS, INC. AND SUBSIDIARIES
Schedule 5 - Segment Information (unaudited)
         
(dollar amount in thousands, transactions in millions)
         
        Three months ended September 30,  
          2018     Adjustments1   2018 Adjusted     2017     Adjustments2   2017 Adjusted   % change  
    Transactions:                              
    North America        244.4                 232.6             5 %  
    Europe        560.6                 460.2             22 %  
    Total       805.1                 692.8             16 %  
                                   
    Segment revenue:                              
    North America    $   79,487     $   -     $   79,487     $   75,042     $   -   $   75,042     6 %  
    Europe        65,271         -         65,271         57,604         -       57,604     13 %  
    Total       144,758         -         144,758         132,646         -       132,646     9 %  
                                   
    Segment profit:                              
    North America        30,962         (5,803 )       25,159         21,372         2,162       23,534     7 %  
    Europe        15,985         2,880         18,865         16,101         687       16,788     12 %  
    Corporate       (8,518 )       2,913         (5,605 )       (8,923 )       3,661       (5,262 )   7 %  
    Total   $   38,429     $   (10 )   $   38,419     $   28,550     $   6,510   $   35,060     10 %  
                                   
1 For the three months ended September 30, 2018, North America segment profit adjustment includes $1.5 million of employee termination benefits, $1.4 million of acquisition and integration related costs and an $8.7 million gain from the fair value markup on the acquisition of a previously minority owned subsidiary. 
Europe segment profit adjustment includes $2.5 million of employee termination benefits, and $0.4 million of integration costs. 
Corporate adjustments include $2.9 million of acquisition and integration charges. 
2 For the three months ended September 30, 2017, North America segment profit adjustment includes $0.6 million of employee termination benefits, and $1.6 million of transaction and acquisition related costs. 
Europe segment profit adjustment includes $0.7 million of transaction and acquisition related costs. 
Corporate and other adjustments include $0.5 million of employee termination benefits and $3.1 million of transaction and acquisition related costs. 
Segment profit excludes share-based compensation. 
                                   
        Nine months ended September 30,  
          2018     Adjustments1   2018 Adjusted     2017     Adjustments2   2017 Adjusted   % change  
    Transactions:                              
    North America        708.6                 677.6             5 %  
    Europe        1,565.9                 1,262.4             24 %  
    Total       2,274.5                 1,940.0             17 %  
                                   
    Segment revenue:                              
    North America    $   232,687     $   -     $   232,687     $   216,956     $   -   $   216,956     7 %  
    Europe        181,244         -         181,244         149,209         -       149,209     21 %  
    Total       413,931         -         413,931         366,165         -       366,165     13 %  
                                   
    Segment profit:                              
    North America        73,616         (74 )       73,542         57,009         4,925       61,934     19 %  
    Europe        42,657         3,100         45,757         41,495         876       42,371     8 %  
    Corporate       (31,879 )       16,637         (15,242 )       (19,065 )       6,209       (12,856 )   19 %  
    Total   $   84,394     $   19,663     $   104,057     $   79,439     $   12,010   $   91,449     14 %  
                                   
1 For the nine months ended September 30, 2018, North America segment profit adjustments include $3.8 million of employee termination benefits and $4.7 million of acquisition and integration related costs, and an $8.7 million gain from the fair value markup on the acquisition of a previously minority owned subsidiary. 
Europe segment profit adjustment includes $2.5 million of employee termination benefits and $0.6 million of acquisition and integration costs.
Corporate adjustments include $16.6 million of acquisition and integration charges.
2 For the nine months ended September 30, 2017, North America segment profit adjustment includes $3.3 million of employee termination benefits, and $1.6 million of transaction and acquisition related costs.
Europe segment earnings adjustment includes $0.7 million of transaction and acquisition related costs.
Corporate and other adjustments include $0.5 million of employee termination benefits and $5.7 million of transaction and acquisition related costs.
Segment profit excludes share-based compensation.

 

EVO PAYMENTS, INC. AND SUBSIDIARIES
Schedule 6 - Pro Forma Adjusted Net Income (unaudited)
                             
(in thousands, except share and per share data)
                             
        Three months ended September 30,   Nine months ended September 30,
          2018       2017     % change     2018       2017     % change
                             
  Net loss   $   (23,878 )   $   (10,094 )   136.6 %   $   (79,569 )   $   (31,320 )   154.1 %
  Net loss attributable to non-controlling interests in consolidated entities       (2,433 )       (2,165 )   12.4 %       (4,434 )       (5,019 )   (11.7 %)
  Non-GAAP adjustments:                        
  Income tax expense       32,155         5,377     498.0 %       7,974         14,734      (45.9 %)
  Share-based compensation1       2,022         -     N/A         53,285         -     N/A  
  Transition, acquisition and integration costs2       (11 )       6,510      (100.2 %)       26,910         12,010     124.1 %
  Acquisition intangible amortization3       10,623         11,507      (7.7 %)       32,213         32,286      (0.2 %)
  Non-GAAP adjusted income before taxes       18,478         11,135     65.9 %       36,379         22,691     60.3 %
  Income taxes at pro forma tax rate4       (4,311 )       (3,975 )   8.4 %       (8,487 )       (8,101 )   4.8 %
  Pro forma adjusted net income   $   14,167     $   7,160     97.9 %   $   27,891     $   14,590     91.2 %
                             
  Pro forma adjusted net income per share5   $   0.17             $ 0.34          
                             
                             
1 Represents $1.7 million of share-based compensation costs incurred with the completion of the initial public offering, plus a $0.3 million payroll tax expense for the three months ended September 30, 2018, and $53.9 million share-based compensation costs for the nine months ended September 30, 2018, plus a $0.3 million payroll tax expense less a $0.9 million non-controlling interest component. 
2 For the three months ended September 30, 2018, earnings adjustments include $3.9 million of employee termination benefits, and $4.7 million of acquisition related and integration costs, and an $8.7 million adjustment of a fair value mark-up of a previously minority owned subsidiary.
For the three months ended September 30, 2017, earnings adjustments include $1.1 million of employee termination benefits and $5.4 million of transaction and acquisition related costs.
For the nine months ended September 30, 2018, earnings adjustments include $6.3 million of employee termination benefits, $4.0 million of a strategic advisory fee, $7.2 million of debt extinguishment costs, $18.0 million of acquisition related and integration costs and an $8.7 million adjustment of a fair value mark-up of a previously minority owned subsidiary.
For the nine months ended September 30, 2017, earnings adjustments include $4.1 million of employee termination benefits, and $7.9 million of transaction and acquisition related costs.
3 Represents amortization of intangible assets acquired through business combinations and other merchant portfolio and related asset acquisitions. 
4 Pro forma corporate income tax expense calculated using 23.3% and 35.7% for 2018 and 2017, respectively, based on blended federal and state tax rates and utilizing the Tax Reform Act for 2018 federal rates. 
5 Uses adjusted shares outstanding including an additional 55.8 million Class B, C, D shares, unvested restricted units, and unvested options that are excluded from the GAAP diluted share count. 
                             

 

EVO PAYMENTS, INC. AND SUBSIDIARIES        
Schedule 7 - Outlook summary (unaudited)  
         
(in millions, except per share data)    
         
         
        2018 Outlook   2017 Actual
             
    Revenue   $561 - $567   $505 
             
    GAAP net loss per share attributable to EVO  ($0.59) - ($0.53)   N/A
    Adjustments1   $1.06 - $1.05   N/A
    Pro forma adjusted net income per share   $0.47 - $0.52   N/A
             
    GAAP net loss attributable to EVO and predecessor ($13) - ($11)   ($40)
    Adjustments1   $156 - $157   $168 
    Adjusted EBITDA   $143 - $146   $128 
             
         
1Represents estimated ranges for (a) acquisition and integration costs in connection with our acquisitions, charges related to employee termination benefits and other transition activities; (b) share-based compensation costs; (c) amortization of intangible assets acquired in business combinations and other customer portfolio and related asset acquisitions; and (d) adjustments to income tax expense/(benefit) to reflect an effective corporate tax rate based on tax reform legislation. GAAP net loss per share uses Class A share counts and pro forma adjusted net income per share uses adjusted share counts as the denominator including an additional 55.8 million shares inclusive of Class B, C, D, unvested restricted units, and unvested options that are excluded from the GAAP basic share count. Currency assumptions based on year-to-date actual rates and current spot rates forward from November through December.

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Source: EVO Payments, Inc.