evop_Current Folio_10Q

 

   

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

OR

              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

Commission file number: 001-38504

EVO Payments, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware

 

82-1304484

State or Other Jurisdiction of

Incorporation or Organization

 

I.R.S. Employer Identification No.

 

 

 

Ten Glenlake Parkway

South Tower, Suite 950

Atlanta, Georgia

 

30328

Address of Principal Executive Offices

 

Zip Code

(516) 479-9000

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐    No ☒

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

EVOP

NASDAQ

As of April 25, 2019, the number of shares outstanding of the registrant was 32,275,414 shares of the Class A common stock, par value $0.0001 per share, 35,413,538 shares of the Class B Common Stock, par value $0.0001 per share, 2,445,055 shares of the Class C Common Stock, par value $0.0001 per share, and 11,794,116 shares of the Class D Common Stock, par value $0.0001 per share.

 

 

 

 

 

 

 


 

Table of Contents

 

EVO PAYMENTS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

 

 

 

    

Page

PART I. FINANCIAL INFORMATION 

 

4

Item 1.

Unaudited Condensed Consolidated Financial Statements

 

 

 

Unaudited Condensed Consolidated Balance Sheets

 

5

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

 

6

 

Unaudited Condensed Consolidated Statement of Changes in Equity

 

7

 

Unaudited Condensed Consolidated Statements of Cash Flows

 

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

10

Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

36

Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

 

44

Item 4.  

Controls and Procedures

 

45

PART II. OTHER INFORMATION 

 

45

Item 1.  

Legal Proceedings

 

45

Item 1A. 

Risk Factors

 

45

Item 2.  

Unregistered Sales of Equity Securities and Use of Proceeds

 

45

Item 3.  

Defaults Upon Senior Securities

 

46

Item 4.  

Mine Safety Disclosures

 

46

Item 5.  

Other Information

 

46

Item 6.  

Exhibits

 

46

 

Signatures

 

46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Table of Contents

 

Forward-Looking Statements

This quarterly report on Form 10-Q contains statements about future events and expectations that constitute forward-looking statements. 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. None of the forward-looking statements in this quarterly report on Form 10-Q are 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; (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 and 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; (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, LLC (as defined in Part I – Financial Information—“Financial Statements Introductory Note”) to pay our taxes and expenses, including certain payments to the Continuing LLC Owners (as defined in Note 18,  “Shareholders’ Equity,” in the notes to the accompanying unaudited condensed consolidated financial statements) 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 1940 Act (as defined in Item 1A “Risk Factors”); (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) the effect of the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”) which allows us to reduce our SEC disclosure and postpone compliance with certain laws and regulations intended to protect investors; (43) certain provision in our organizational documents, including those that provide Delaware as the exclusive forum for litigation matters and that renounce the doctrine of corporate opportunity; (44) our ability to establish and maintain effective internal control over financial reporting and disclosure controls and procedures; (45) changes in our stock price, including relating to downgrades, analyst reports, and future sales by us or by existing stockholders; and (46) the other risks and uncertainties listed under “Risk Factors” contained in Part II of this quarterly report on Form 10-Q.

 

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Table of Contents

 

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 are intended to identify such forward-looking statements. 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, even if new information becomes available in the future.

 

 

 

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Table of Contents

PART I - FINANCIAL INFORMATION

 

Financial Statements Introductory Note

 

The unaudited condensed consolidated financial statements and other disclosures contained in this quarterly report on Form 10-Q include those of EVO Payments, Inc. (“we,” “us,” “our,” the “Company” or “EVO, Inc.”), which is the registrant, and those of EVO Investco, LLC, a Delaware limited liability company (“EVO, LLC”), which became the principal operating subsidiary of the Company in a series of reorganization transactions completed on May 25, 2018 (the “Reorganization Transactions”) in connection with the initial public offering of EVO, Inc.’s Class A common stock (the “IPO”). For more information regarding these transactions, see Note 18, “Shareholders’ Equity,” to the unaudited condensed consolidated financial statements contained in this quarterly report on Form 10-Q.

 

EVO, Inc. is the managing member of EVO, LLC and, as of March 31, 2019, was the owner of approximately 32.6% of the outstanding common membership interests of EVO, LLC (“LLC Interests”).

 

On September 25, 2018, EVO, Inc. completed a secondary offering (the “September 2018 Secondary Offering”) of an aggregate 8,075,558 shares of Class A common stock, which consisted of 7,000,000 shares of Class A common stock offered and sold by us, with the net proceeds used to purchase an equivalent number of LLC Interests and shares of Class D common stock (which shares were then canceled) from affiliates of Madison Dearborn Partners, LLC, and 22,225 shares of Class A common stock offered and sold by certain individual selling stockholders. 

 

The unaudited condensed consolidated financial statements contained in this quarterly report on Form 10-Q reflect the historical results of operations and the financial position of the Company, including consolidation of its investment in EVO, LLC, commencing May 23, 2018. Prior to May 23, 2018, the unaudited condensed consolidated financial statements represent the financial statements of EVO, LLC and its subsidiaries (the “Group”). The historical unaudited condensed consolidated financial statements do not reflect the financial position, results of operations or cash flows of the Company or the Group had these companies been stand-alone public companies for the periods presented. Specifically, the historical unaudited condensed consolidated financial statements of the Group prior to May 23, 2018 do not give effect to the following matters:

 

·

Reorganization Transactions or the IPO;

·

U.S. corporate federal income taxes;

·

Non-controlling interests held by other members of EVO, LLC; and

·

The September 2018 Secondary Offering.

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Table of Contents

 

EVO PAYMENTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and interest data)

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

221,083

 

$

350,697

Accounts receivable, net

 

 

12,094

 

 

13,248

Other receivables

 

 

57,650

 

 

56,518

Due from related parties

 

 

1,308

 

 

1,871

Inventory

 

 

9,515

 

 

8,867

Settlement processing assets

 

 

630,744

 

 

248,330

Other current assets

 

 

12,907

 

 

11,817

Total current assets

 

 

945,301

 

 

691,348

Equipment and improvements, net

 

 

98,037

 

 

103,046

Goodwill

 

 

351,806

 

 

353,011

Intangible assets, net

 

 

276,543

 

 

290,139

Investment in unconsolidated investees

 

 

1,896

 

 

1,753

Due from related parties

 

 

797

 

 

915

Deferred tax asset

 

 

74,972

 

 

72,296

Other assets

 

 

20,044

 

 

21,879

Total assets

 

$

1,769,396

 

$

1,534,387

 

 

 

 

 

 

 

Liabilities and Shareholders' Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Settlement lines of credit

 

$

50,329

 

$

41,819

Current portion of long-term debt

 

 

7,723

 

 

7,191

Accounts payable

 

 

51,177

 

 

48,935

Accrued expenses

 

 

108,172

 

 

112,281

Settlement processing obligations

 

 

680,736

 

 

428,328

Due to related parties

 

 

3,690

 

 

4,824

Total current liabilities

 

 

901,827

 

 

643,378

Long-term debt, net of current portion

 

 

677,687

 

 

676,865

Due to related parties

 

 

385

 

 

385

Deferred tax liability

 

 

13,378

 

 

13,519

Tax receivable agreement obligations, inclusive of related party liability of $39.4 million and $40.7 million at March 31, 2019 and December 31, 2018, respectively.

 

 

48,930

 

 

47,221

ISO reserves

 

 

2,710

 

 

2,684

Other long-term liabilities

 

 

2,619

 

 

2,924

Total liabilities

 

 

1,647,536

 

 

1,386,976

Commitments and contingencies

 

 

 

 

 

 

Redeemable non-controlling interests

 

 

1,163,203

 

 

1,010,093

Shareholders' deficit:

 

 

 

 

 

 

Shareholders' deficit:

 

 

 

 

 

 

Class A common stock (par value, $0.0001 per share), Authorized - 200,000,000 shares, Issued and Outstanding - 26,514,112 and 26,025,189 shares at March 31, 2019 and December 31, 2018, respectively

 

 

 3

 

 

 3

Class B common stock (par value, $0.0001 per share), Authorized - 40,000,000 shares, Issued and Outstanding - 35,913,538 and 35,913,538 shares at March 31, 2019 and December 31, 2018, respectively

 

 

 4

 

 

 4

Class C common stock (par value, $0.0001 per share), Authorized - 4,000,000 shares, Issued and Outstanding - 2,449,055 and 2,461,055 shares at March 31, 2019 and December 31, 2018, respectively

 

 

 —

 

 

 —

Class D common stock (par value, $0.0001 per share), Authorized - 32,000,000 shares, Issued and Outstanding - 16,306,954 and 16,785,552 shares at March 31, 2019 and December 31, 2018, respectively

 

 

 1

 

 

 1

Additional paid-in capital

 

 

139,425

 

 

178,176

Accumulated deficit attributable to Class A common stock

 

 

(328,657)

 

 

(223,799)

Accumulated other comprehensive loss

 

 

(4,040)

 

 

(2,993)

Total EVO Payments, Inc. shareholders' deficit

 

 

(193,264)

 

 

(48,608)

Nonredeemable non-controlling interests

 

 

(848,079)

 

 

(814,074)

Total deficit

 

 

(1,041,343)

 

 

(862,682)

Total liabilities and deficit

 

$

1,769,396

 

$

1,534,387

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

Table of Contents

 

EVO PAYMENTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income 

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

      

Three Months Ended March 31, 

 

 

2019

 

2018

Revenue

 

$

111,518

 

$

128,282

Operating expenses:

 

 

 

 

 

 

Cost of services and products, exclusive of depreciation and amortization shown separately below

 

 

24,083

 

 

44,513

Selling, general and administrative

 

 

66,422

 

 

59,613

Depreciation and amortization

 

 

22,745

 

 

19,887

Impairment of intangible assets

 

 

6,632

 

 

 —

Total operating expenses

 

 

119,882

 

 

124,013

(Loss) income from operations

 

 

(8,364)

 

 

4,269

Other (expense) income:

 

 

 

 

 

 

Interest income

 

 

675

 

 

484

Interest expense

 

 

(11,652)

 

 

(15,310)

Income from investment in unconsolidated investees

 

 

216

 

 

515

Other income (expense), net

 

 

1,094

 

 

(555)

Total other expense

 

 

(9,667)

 

 

(14,866)

Loss before income taxes

 

 

(18,031)

 

 

(10,597)

Income tax expense

 

 

(988)

 

 

(4,428)

Net loss

 

 

(19,019)

 

 

(15,025)

Less: Net income attributable to non-controlling interests in consolidated entities

 

 

(582)

 

 

(768)

Net loss attributable to EVO Investco, LLC

 

 

 

 

$

(15,793)

Less: Net loss attributable to non-controlling interests of EVO Investco, LLC

 

 

14,311

 

 

 

Net loss attributable to EVO Payments, Inc.

 

$

(5,290)

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

Basic

 

$

(0.20)

 

 

 

Diluted

 

$

(0.20)

 

 

 

 

 

 

 

 

 

 

Weighted average Class A common stock outstanding

 

 

 

 

 

 

Basic

 

 

26,365,552

 

 

 

Diluted

 

 

26,365,552

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income:

 

 

 

 

 

 

Net loss

 

$

(19,019)

 

$

(15,025)

Unrealized gain on defined benefit plan, net of tax (1)

 

 

 3

 

 

 —

Unrealized (loss) gain on foreign currency translation adjustment, net of tax (2)

 

 

(2,479)

 

 

18,983

Other comprehensive (loss) income

 

 

(2,476)

 

 

18,983

Comprehensive (loss) income

 

 

(21,495)

 

 

3,958

Less: Comprehensive (loss) income attributable to non-controlling interests in consolidated entities

 

 

573

 

 

(2,111)

Comprehensive income attributable to EVO Investco, LLC

 

 

 

 

$

1,847

Less: Other comprehensive loss attributable to non-controlling interests of EVO Investco, LLC

 

 

15,332

 

 

 

Comprehensive loss attributable to EVO Payments, Inc.

 

$

(5,590)

 

 

 

 

(1)

Net of tax benefit of less than $0.1 million for the three months ended March 31, 2019.  

(2)

Net of tax benefit of $0.7 million for the three months ended March 31, 2019

See accompanying notes to unaudited condensed consolidated financial statements.

 

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EVO PAYMENTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Equity

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

EVO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other

 

Payments,

 

Non-redeemable

 

 

 

 

Redeemable

 

 

 

 

 

Class A LLC Units

 

Class B LLC Units

 

Class C LLC Units

 

Class D LLC Units

 

Class E LLC Units

 

 

Accumulated

 

comprehensive

 

Inc.

 

non-controlling

 

Total

 

non-controlling

 

 

 

 

Interests

 

Amounts

 

Interests

 

Amounts

 

Interests

 

Amounts

 

Interests

 

Amounts

 

Interests

 

Amounts

 

 

deficit

 

loss

 

deficit

 

interests

 

deficit

 

interests

 

Total

Balance, January 1, 2018

    

6,374

    

$

54,453

    

3,506

    

$

 —

    

375

    

$

9,463

    

1,107

    

$

 —

    

1,012

    

$

71,250

    

$

(237,330)

    

$

(67,679)

 

$

(169,843)

 

$

3,312

 

$

(166,531)

 

$

148,266

 

$

(18,265)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(15,793)

 

 

 —

 

 

(15,793)

 

 

157

 

 

(15,636)

 

 

611

 

 

(15,025)

Foreign currency translation adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

18,983

 

 

18,983

 

 

 —

 

 

18,983

 

 

1,344

 

 

20,327

Acquisition of additional shares in a consolidated subsidiary

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(20,925)

 

 

 —

 

 

(20,925)

 

 

(1,139)

 

 

(22,064)

 

 

 

 

 

(22,064)

Redeemable non-controlling interests adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(1,602)

 

 

 —

 

 

(1,602)

 

 

 —

 

 

(1,602)

 

 

1,602

 

 

 —

Distributions

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(10)

 

 

 —

 

 

(10)

 

 

(1,169)

 

 

(1,179)

 

 

(2,985)

 

 

(4,164)

Balance, March 31, 2018

 

6,374

 

$

54,453

 

3,506

 

$

 —

 

375

 

$

9,463

 

1,107

 

$

 —

 

1,012

 

$

71,250

 

$

(275,660)

 

$

(48,696)

 

$

(189,190)

 

$

1,161

 

$

(188,029)

 

$

148,838

 

$

(39,191)

 

See accompanying notes to unaudited condensed consolidated financial statements.

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Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

deficit

 

Accumulated

 

EVO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

attributable to

 

other

 

Payments,

 

Nonredeemable

 

 

 

 

Redeemable

 

 

 

 

 

Class A Common Stock

 

Class B Common Stock

 

Class C Common Stock

 

Class D Common Stock

 

paid-in

 

Class A

 

comprehensive

 

Inc. (deficit)

 

non-controlling

 

Total

 

non-controlling

 

 

 

 

Shares

 

Amounts

 

Shares

 

Amounts

 

Shares

 

Amounts

 

Shares

 

Amounts

 

capital

 

common stock

 

loss

 

/equity

 

interests

 

deficit

 

interests

 

Total

Balance, January 1, 2019

 

26,025

 

$

 3

 

35,914

 

$

 4

 

2,461

 

$

 —

 

16,786

 

$

 1

    

$

178,176

    

$

(223,799)

    

$

(2,993)

    

$

(48,608)

    

$

(814,074)

    

$

(862,682)

    

$

1,010,093

    

$

147,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior period adjustment*

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(20,629)

 

 

 —

 

 

 —

 

 

(20,629)

 

 

20,629

 

 

 —

 

 

 —

 

 

 —

Net loss

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(5,290)

 

 

 —

 

 

(5,290)

 

 

(4,797)

 

 

(10,087)

 

 

(8,932)

 

 

(19,019)

Cumulative translation adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,047)

 

 

(1,047)

 

 

404

 

 

(643)

 

 

(2,580)

 

 

(3,223)

Distributions

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(15)

 

 

(15)

 

 

(5,465)

 

 

(5,480)

eService redeemable non-controlling interest fair value adjustment

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(646)

 

 

 —

 

 

(646)

 

 

(457)

 

 

(1,103)

 

 

1,103

 

 

 —

Share-based compensation expense

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

1,845

 

 

 —

 

 

 —

 

 

1,845

 

 

 —

 

 

1,845

 

 

 —

 

 

1,845

Vesting of equity awards

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(129)

 

 

 —

 

 

 —

 

 

(129)

 

 

 —

 

 

(129)

 

 

 —

 

 

(129)

Deferred taxes in connection with share conversions

 

(2)

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

121

 

 

 —

 

 

 —

 

 

121

 

 

 —

 

 

121

 

 

 —

 

 

121

Tax receivable agreement in connection with share conversions

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

334

 

 

 —

 

 

 —

 

 

334

 

 

 —

 

 

334

 

 

 —

 

 

334

Exchange of Class D common stock for Class A common stock

 

491

 

 

 —

 

 —

 

 

 —

 

(12)

 

 

 —

 

(479)

 

 

 —

 

 

(20,293)

 

 

 —

 

 

 —

 

 

(20,293)

 

 

20,293

 

 

 —

 

 

 —

 

 

 —

Blueapple redeemable non-controlling interest

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(98,922)

 

 

 —

 

 

(98,922)

 

 

(70,062)

 

 

(168,984)

 

 

168,984

 

 

 —

Balance, March 31, 2019

 

26,514

 

$

 3

 

35,914

 

$

 4

 

2,449

 

$

 —

 

16,307

 

$

 1

 

$

139,425

 

$

(328,657)

 

$

(4,040)

 

$

(193,264)

 

$

(848,079)

 

$

(1,041,343)

 

$

1,163,203

 

$

121,860

 

See accompanying notes to unaudited condensed consolidated financial statements.

*Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies” for discussion on presentation.

 

 

 

8


 

Table of Contents

 

EVO PAYMENTS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

2019

 

2018

Cash flows from operating activities:

 

 

  

 

 

  

Net loss

 

$

(19,019)

 

$

(15,025)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

  

 

 

  

Depreciation and amortization

 

 

22,745

 

 

19,887

Amortization of deferred financing costs

 

 

673

 

 

848

Fair value of contingent consideration

 

 

1,953

 

 

 —

Share-based compensation expense

 

 

1,845

 

 

 —

Impairment of intangible assets

 

 

6,632

 

 

 —

Deferred taxes

 

 

(544)

 

 

1,787

Other

 

 

449

 

 

342

Changes in operating assets and liabilities, net of effect of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

1,187

 

 

4,884

Other receivables