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EVO Reports Second Quarter 2021 Results

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ATLANTA, August 04, 2021--(BUSINESS WIRE)--EVO Payments, Inc. (NASDAQ: EVOP) ("EVO" or the "Company") today announced its second quarter 2021 financial results. For the quarter ended June 30, 2021, reported revenue was $122.2 million compared to $94.3 million in the prior year, an increase of 30%. On a currency neutral basis, revenue for the quarter increased 23%. On a GAAP basis for the quarter, net income was $6.8 million compared to a net loss of $9.0 million in the prior year. Adjusted EBITDA increased 42% to $42.8 million for the quarter, and on a currency neutral basis, adjusted EBITDA increased 34%.

For the six months ended June 30, 2021, reported revenue was $228.4 million compared to $205.5 million in the prior year, an increase of 11%. On a currency neutral basis, revenue for the six months ended June 30, 2021 increased 7%. On a GAAP basis for the six months ended June 30, 2021, net income was $4.0 million compared to a net loss of $22.6 million in the prior year. Adjusted EBITDA increased 24% to $76.5 million for the six months ended June 30, 2021, and on a currency neutral basis, adjusted EBITDA increased 20%.

"I’m very pleased with our financial and business performance in the second quarter," said James G. Kelly, Chief Executive Officer of EVO. "The Company’s results reflect our strong sales efforts, including new customer and partner signings and tech-enabled acquisitions, as many of our markets experienced solid economic recovery. We look forward to driving additional growth in the second half of the year, leveraging our diversified referral networks, investments in our products and services suite, and the continued macroeconomic tailwinds."

Outlook

We now expect 2021 full-year GAAP revenue to range from $487 million to $496 million, representing growth of 11% to 13% over 2020 results. On a GAAP basis, net income is expected to range from $20 million to $28 million compared to a net loss of $4 million in 2020. Adjusted EBITDA is expected to range from $173 million to $178 million, reflecting growth of 18% to 21% over 2020 adjusted EBITDA. The adjusted EBITDA margin is expected to range from 35.5% to 35.9%, reflecting expansion of 200 to 250 basis points over the 2020 adjusted EBITDA margin.

Conference Call

EVO’s management will host a conference call for investors at 8:00 a.m. Eastern Time on Wednesday, August 4, 2021 to discuss the results. Participants may register for the conference call via the investor relations section of the Company’s website at investor.evopayments.com or at http://www.directeventreg.com/registration/event/4460924. A recording of the call will be archived on the Company's investor relations website following the live call.

Additional Resources

To assist in understanding the impact COVID-19 is having on our business, the Company has posted a summary of its recent payment volume trends on its investor relations website at https://investor.evopayments.com/2Q21paymentvolume.

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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current beliefs, assumptions, estimates, and expectations, taking into account the information currently available to us, and are not guarantees of future results or performance. Forward-looking statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following: (1) the continuing impact of the COVID-19 pandemic (including its variant strains) on our business and our merchants, including the impact of social distancing, shelter-in-place, shutdowns of non-essential businesses and similar measures imposed or undertaken by governments; (2) our ability to anticipate and respond to changing industry trends and the needs and preferences of our customers and consumers; (3) the impact of substantial and increasingly intense competition; (4) the impact of changes in the competitive landscape, including disintermediation from other participants in the payments chain; (5) the effects of global economic, political, market, health and other conditions, including the impact of the COVID-19 pandemic; (6) our compliance with governmental regulations and other legal obligations, particularly related to privacy, data protection, information security, and consumer protection laws; (7) our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks; (8) failures in our processing systems, software defects, computer viruses, and development delays; (9) degradation of the quality of the products and services we offer, including support services; (10) risks associated with our ability to successfully complete, integrate and realize the expected benefits of acquisitions; (11) 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; (12) increased customer, referral partner, or sales partner attrition; (13) the incurrence of chargebacks; (14) failure to maintain or collect reimbursements; (15) fraud by merchants or others; (16) the failure of our third-party vendors to fulfill their obligations; (17) failure to maintain merchant and sales relationships or financial institution alliances; (18) ineffective risk management policies and procedures; (19) our inability to retain smaller-sized merchants and the impact of economic fluctuations on such merchants, (20) damage to our reputation, or the reputation of our partners; (21) seasonality and volatility; (22) our inability to recruit, retain and develop qualified personnel; (23) geopolitical and other risks associated with our operations outside of the United States; (24) any decline in the use of cards as a payment mechanism or other adverse developments with respect to the card industry in general; (25) increases in card network fees; (26) failure to comply with card networks requirements; (27) a requirement to purchase the equity interests of our eService subsidiary in Poland held by our JV partner; (28) changes in foreign currency exchange rates; (29) future impairment charges; (30) 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; (31) the planned phase out of LIBOR and the transition to other benchmarks; (32) restrictions imposed by our credit facilities and outstanding indebtedness; (33) participation in accelerated funding programs; (34) failure to enforce and protect our intellectual property rights; (35) 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; (36) impact of new or revised tax regulations; (37) legal proceedings; (38) 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; (39) 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; (40) the risk that we could be deemed an investment company under the Investment Company Act of 1940, as amended; (41) the significant influence the Continuing LLC Owners continue to have over us, including control over decisions that require the approval of stockholders; (42) certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control; (43) 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; (44) our ability to 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 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, 2020.

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), earnings per share information and weighted average common shares determined in accordance with GAAP by providing these and other measures on an adjusted basis in this release. The non-GAAP financial measures presented herein should not be considered in isolation of, as a substitute for, or superior to, financial information prepared in accordance with GAAP, and such measures may not be comparable to those reported by other companies. Management uses these adjusted financial performance measures for financial and operational decision making and as a means to facilitate period-to-period comparisons. Management also uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. The Company believes that these adjusted measures provide useful information to investors about the Company’s ongoing underlying operating performance and enhance the overall understanding of financial performance of the Company’s core business by presenting the Company’s results without giving effect to non-operational items such as equity-based compensation and costs related to transition, acquisition and integration matters, and giving effect to a normalized effective tax rate for the Company. This release also contains information on various financial measures presented on a currency-neutral basis. The Company believes these currency-neutral measures provide useful information to investors about the Company’s performance by excluding fluctuations caused solely by movements in currency exchange rates in the non-U.S. jurisdictions where the Company operates. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure are included in the schedules to this release.

Among other non-GAAP financial measures presented, this release contains a presentation of our adjusted EBITDA and adjusted net income, and adjusted net income per share information. These measures do not purport to be an alternative to cash flows from operating activities as a measure of liquidity, and are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as tax payments and, in the case of adjusted EBITDA, interest payments and debt service requirements. Further, adjusted EBITDA does not purport to be an alternative to net income as a measure of operating performance. These measures, or measures similar to them, are frequently used by analysts, investors and other interested parties to evaluate companies in the industry. Adjusted EBITDA is defined as net income (loss) before provision for income taxes, net interest expense, and depreciation and amortization, excluding the impact of net income attributable to non-controlling interests in consolidated entities (including related depreciation and amortization), share-based compensation, gain (loss) on investment in equity securities, and transition, acquisition and integration costs.

Adjusted net income is defined as net income (loss) adjusted to exclude income taxes, the impact of net income attributable to non-controlling interests in consolidated entities (including related depreciation and amortization), share-based compensation, gain (loss) on investment in equity securities, transition, acquisition and integration costs, and amortization of acquisition intangibles and subsequently adjusted to give effect to a normalized tax rate for the Company.

The calculation of adjusted EBITDA and adjusted net income have limitations as analytical tools, including: (a) they do not reflect the Company’s cash expenditures, or future requirements for capital expenditures or contractual commitments; (b) they do not reflect changes in, or cash requirements for, the Company’s working capital needs; (c) in the case of adjusted EBITDA, it does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on the Company’s indebtedness; (d) they do not reflect the Company’s tax expense or the cash requirements to pay the Company’s taxes; and (e) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.

Adjusted net income per share is defined as adjusted net income divided by pro forma weighted average shares. Pro forma weighted average shares is defined as GAAP common weighted average shares (equal to our weighted average Class A common shares) plus, our weighted average Class B common shares (for periods ended prior to June 30, 2021), our weighted average Blueapple common shares (for periods ended June 30, 2021), weighted average Class C common shares (for periods ended prior to June 30, 2021), weighted average Class D common shares, dilutive equity awards measured under the treasury stock method, and weighted average preferred shares (including paid-in-kind dividends). Weighted average preferred shares is defined as the weighted average shares of Class A common stock issuable upon a voluntary conversion of the Company’s Series A convertible preferred stock by its holder. Blueapple common shares (formerly Class B common shares) is defined as the weighted average Class A common shares issuable upon the exercise by Blueapple, Inc., a Delaware corporation which is controlled by entities affiliated with the Company’s founder and Chairman of the board of directors ("Blueapple"), of its right to cause the Company to use its commercially reasonable best efforts to pursue a public offering of up to 32,163,538 Class A common shares and use the net proceeds therefrom to purchase an equivalent number of the units of EVO Investco, LLC held by Blueapple. On May 25, 2021 each of the Company’s Class C common shares was automatically converted into one Class D common share. For the quarter ended June 30, 2021, weighted average Class D common shares includes the converted weighted average Class C common shares.

Net Debt to LTM Adjusted EBITDA ratio is a non-GAAP measure defined as total long-term debt less available cash (cash on the balance sheet less certain merchant settlement account balances and merchant reserves) divided by the trailing twelve month Adjusted EBITDA. This ratio is frequently used by investors, and management believes this measure provides relevant and useful information.

About EVO Payments, Inc.

EVO Payments, Inc. (NASDAQ: EVOP) is a leading payment technology and services provider. EVO offers an array of innovative, reliable, and secure payment solutions to merchants ranging from small and mid-size enterprises to multinational companies and organizations across the globe. As a fully integrated merchant acquirer and payment processor in over 50 markets and 150 currencies worldwide, EVO provides competitive solutions that promote business growth, increase customer loyalty, and enhance data security in the international markets it serves.

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 1 - Condensed Consolidated Statements of Operations (unaudited)

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

% change

2021

2020

% change

Revenue

$

122,235

$

94,283

30

%

$

228,415

$

205,452

11

%

Operating expenses:

Cost of services and products

18,028

19,212

(6

%)

35,155

42,341

(17

%)

Selling, general and administrative

65,670

54,608

20

%

126,068

126,911

(1

%)

Depreciation and amortization

20,695

20,525

1

%

41,621

41,949

(1

%)

Impairment of intangible assets

-

782

NM

-

782

NM

Total operating expenses

104,393

95,127

10

%

202,844

211,983

(4

%)

Income (loss) from operations

17,842

(844

)

NM

25,571

(6,531

)

NM

Other expense:

Interest income

329

218

51

%

570

631

(10

%)

Interest expense

(6,061

)

(7,332

)

17

%

(12,159

)

(17,199

)

29

%

Income (loss) from investment in unconsolidated investees

52

175

(70

%)

(111

)

215

NM

Gain on investment in equity securities

2,506

-

NM

2,266

-

NM

Other expense, net

(846

)

(1,756

)

52

%

(608

)

(1,805

)

66

%

Total other expense

(4,020

)

(8,695

)

54

%

(10,042

)

(18,158

)

45

%

Income (loss) before income taxes

13,822

(9,539

)

NM

15,529

(24,689

)

NM

Income tax (expense) benefit

(7,045

)

496

NM

(11,575

)

2,076

NM

Net income (loss)

6,777

(9,043

)

NM

3,954

(22,613

)

NM

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

2,157

1,049

106

%

3,225

2,088

54

%

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

1,457

(6,321

)

NM

(1,592

)

(16,122

)

90

%

Net income (loss) attributable to EVO Payments, Inc.

3,163

(3,771

)

NM

2,321

(8,579

)

NM

Less: Accrual of redeemable preferred stock paid-in-kind dividends

2,445

1,771

38

%

4,827

1,771

173

%

Net income (loss) attributable to Class A common stock

$

718

$

(5,542

)

NM

$

(2,506

)

$

(10,350

)

76

%

Earnings per share

Basic

$0.01

($0.13

)

($0.05

)

($0.25

)

Diluted

$0.01

($0.13

)

($0.05

)

($0.25

)

Weighted average Class A common stock outstanding

Basic

47,038,194

41,398,838

46,775,245

41,329,118

Diluted

47,038,194

41,398,838

46,775,245

41,329,118

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 2 - Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share data)

June 30,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

376,230

$

418,439

Accounts receivable, net

14,563

17,052

Other receivables

17,731

20,128

Due from related parties

756

625

Inventory

5,468

5,221

Settlement processing assets

337,580

285,705

Other current assets

15,754

14,659

Total current assets

768,082

761,829

Equipment and improvements, net

77,638

83,606

Goodwill, net

391,407

383,108

Intangible assets, net

211,135

217,077

Investment in unconsolidated investees

464

839

Deferred tax assets

229,161

234,749

Operating lease right-of-use assets

31,227

35,124

Investment in equity securities, at fair value

27,427

25,526

Other assets

16,519

15,863

Total assets

$

1,753,060

$

1,757,721

Liabilities and Shareholders' Equity (Deficit)

Current liabilities:

Settlement lines of credit

$

11,610

$

13,718

Current portion of long-term debt

4,628

4,628

Accounts payable

6,956

9,482

Accrued expenses

108,358

113,127

Settlement processing obligations

442,533

446,344

Current portion of operating lease liabilities, inclusive of related party liability of $1.2 million and $1.1 million at June 30, 2021 and December 31, 2020, respectively

6,876

6,614

Due to related parties

5,401

5,124

Total current liabilities

586,362

599,037

Long-term debt, net of current portion

577,159

579,162

Due to related parties

185

185

Deferred tax liabilities

21,619

13,957

Tax receivable agreement obligations, inclusive of related party liability of $165.3 million and $164.3 million at June 30, 2021 and December 31, 2020, respectively

175,754

173,890

...

2,827

2,942

Operating lease liabilities, net of current portion, inclusive of related party liability of $1.7 million and $2.2 million at June 30, 2021 and December 31, 2020, respectively

26,484

30,968

Other long-term liabilities

8,205

...

7,047

Total liabilities

1,398,595

1,407,188

Commitments and contingencies

Redeemable non-controlling interests

1,079,798

1,055,633

Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding – 152,250 shares at June 30, 2021 and December 31, 2020. Liquidation preference: $163,380 and $158,647 at June 30, 2021 and December 31, 2020, respectively

158,945

154,118

Shareholders' equity (deficit):

Class A common stock (par value $0.0001), Authorized - 200,000,000 shares, Issued and Outstanding - 47,322,665 and 46,401,607 shares at June 30, 2021 and December 31, 2020, respectively

5

5

Class B common stock (par value $0.0001), Authorized - 40,000,000 shares, Issued and Outstanding - 0 and 32,163,538 shares at June 30, 2021 and December 31, 2020, respectively

-

3

Class C common stock (par value $0.0001), Authorized - 4,000,000 shares, Issued and Outstanding - 0 and 1,720,425 shares at June 30, 2021 and December 31, 2020, respectively

-

-

Class D common stock (par value $0.0001), Authorized - 32,000,000 shares, Issued and Outstanding - 3,822,074 and 2,390,870 shares at June 30, 2021 and December 31, 2020, respectively

-

-

Additional paid-in capital

-

-

Accumulated deficit attributable to Class A common stock

(706,557

)

(675,209

)

Accumulated other comprehensive (loss) income

(2,748

)

1,045

Total EVO Payments, Inc. shareholders' deficit

(709,300

)

(674,156

)

Nonredeemable non-controlling interests

(174,978

)

(185,062

)

Total deficit

(884,278

)

(859,218

)

Total liabilities, redeemable non-controlling interests, redeemable preferred stock, and shareholders' deficit

$

1,753,060

$

1,757,721

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 3 - Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

Six Months Ended June 30,

2021

2020

Cash flows from operating activities:

Net income (loss)

$

3,954

$

(22,613

)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

Depreciation and amortization

41,621

41,949

Unrealized gain on equity securities

(2,266

)

-

Amortization of deferred financing costs

1,337

1,337

Change in fair value of contingent consideration

-

(97

)

Loss on disposal of equipment and improvements

628

1,052

Share-based compensation expense

12,287

9,475

Impairment of intangible assets

-

782

Accrued interest expense

-

(4,133

)

Unrealized gain on forwards

(1,804

)

-

Deferred taxes, net

10,954

(3,411

)

Other

503

(325

)

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

Accounts receivable, net

2,285

1,581

Other receivables

2,653

7,236

Inventory

(293

)

569

Other current assets

568

(512

)

Operating lease right-of-use assets

3,334

3,889

Other assets

(957

)

(482

)

Related parties, net

206

(1,931

)

Accounts payable

1,845

(5,828

)

Accrued expenses

(5,340

)

(13,370

)

Settlement processing funds, net

(56,839

)

26,198

Operating lease liabilities

(3,680

)

(3,849

)

Other

590

(52

)

Net cash provided by operating activities

11,586

37,465

Cash flows from investing activities:

Acquisition of business, net of cash acquired

(14,054

)

-

Purchase of equipment and improvements

(19,959

)

(8,674

)

Acquisition of intangible assets

(4,600

)

(2,921

)

Collections of notes receivable

32

24

Net cash used in investing activities

(38,581

)

(11,571

)

Cash flows from financing activities:

Proceeds from long-term debt

4,197

185,928

Repayments of long-term debt

(9,596

)

(262,107

)

Contingent consideration paid

(320

)

(1,006

)

Deferred cash consideration paid

-

(545

)

Repurchases of shares to satisfy minimum tax withholding

(3,479

)

(1,195

)

Proceeds from issuance of redeemable preferred stock

-

149,250

Redeemable preferred stock issuance costs

-

(1,660

)

Proceeds from exercise of common stock options

7,342

566

Distributions to non-controlling interest holders

(9,476

)

(74

)

Contribution from non-controlling interest holders

488

-

Net cash (used in) provided by financing activities

(10,844

)

69,157

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(4,285

)

(8,395

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

(42,124

)

86,656

Cash, cash equivalents, and restricted cash, beginning of period

418,539

304,089

Cash, cash equivalents, and restricted cash, end of period

$

376,415

$

390,745

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 4 - Reconciliation of GAAP to Non-GAAP measures

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

% change

2021

2020

% change

Revenue

$

122,235

$

94,283

30

%

$

228,415

$

205,452

11

%

Currency impact1

-

5,349

NM

-

7,474

NM

Currency-neutral revenue

$

122,235

$

99,632

23

%

$

228,415

$

212,926

7

%

Net income (loss)

$

6,777

$

(9,043

)

NM

$

3,954

$

(22,613

)

NM

Net income attributable to non-controlling interests in consolidated entities

(2,157

)

(1,049

)

(106

%)

(3,225

)

(2,088

)

(54

%)

Income tax expense (benefit)

7,045

(496

)

NM

11,575

(2,076

)

NM

Interest expense, net

5,733

7,114

(19

%)

11,589

16,568

(30

%)

Depreciation and amortization

20,695

20,525

1

%

41,621

41,949

(1

%)

Gain on investment in equity securities

(2,506

)

-

NM

(2,266

)

-

NM

Share-based compensation

6,489

5,890

10

%

12,287

9,475

30

%

Transition, acquisition and integration costs2

715

7,151

(90

%)

981

20,334

(95

%)

Adjusted EBITDA

42,790

30,092

42

%

76,517

61,549

24

%

Currency impact1

-

1,792

NM

-

2,244

NM

Currency-neutral adjusted EBITDA

$

42,790

$

31,883

34

%

$

76,517

$

63,793

20

%

1

Represents the impact of currency shifts by adjusting prior year results to current period average foreign exchange rates for the currencies in which EVO conducts operations.

2

For the three months ended June 30, 2021, earnings adjustments include $0.7 million of transition, acquisition and integration related costs.

For the three months ended June 30, 2020, earnings adjustments include $2.4 million of employee termination benefits, $4.0 million of transition, acquisition and integration costs and $0.8 million intangible asset impairment of a tradename.

For the six months ended June 30, 2021, earnings adjustments include $1.0 million of transition, acquisition and integration related costs.

For the six months ended June 30, 2020, earnings adjustments include $5.1 million of employee termination benefits, $11.7 million of transition, acquisition and integration costs, $2.7 million adjustment for fx remeasurement losses on intercompany assets and liabilities, and a $0.8 million of intangible asset impairment of a tradename.

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 5 - Segment Information (unaudited)

(dollar amount in thousands, transactions in millions)

Three months ended June 30,

2021

% of Segment
revenue

Adjustments1

2021
Adjusted

2020

% of Segment
revenue

Adjustments2

Foreign
Exchange
impact3

2020
Adjusted

Adjusted
% change

Transactions

Americas

268.5

209.0

28

%

Europe

763.5

552.8

38

%

Total

1,032.0

761.7

35

%

Segment revenue

Americas

$

76,979

63

%

$

-

$

76,979

$

61,952

66

%

$

-

$

2,316

$

64,268

20

%

Europe

45,256

37

%

-

45,256

32,331

34

%

-

3,033

35,364

28

%

Revenue

122,235

100

%

-

122,235

94,283

100

%

-

5,349

99,632

23

%

Segment profit

Americas

37,781

67

37,848

22,820

4,916

1,119

28,855

31

%

Europe

17,055

(2,394

)

14,661

6,794

1,540

673

9,007

63

%

Total segment profit

54,836

(2,327

)

52,509

29,614

6,456

1,792

37,862

39

%

Corporate

(10,255

)

536

(9,719

)

(6,673

)

694

-

(5,979

)

(63

%)

Total

$

44,581

$

(1,792

)

$

42,790

$

22,941

$

7,150

$

1,792

$

31,883

34

%

Segment profit margin - Americas

49.1

%

49.2

%

36.8

%

44.9

%

Segment profit margin - Europe

37.7

%

32.4

%

21.0

%

25.5

%

Margin - Total

36.5

%

35.0

%

24.3

%

32.0

%

1

For the three months ended June 30, 2021, the Americas segment profit include $0.1 million of transition, acquisition and integration costs.

The Europe segment profit adjustments include $0.1 million of transition, acquisition and integration costs, and excludes a gain on an investment in equity securities of $2.5 million.

Corporate adjustments include $0.5 million of transition, acquisition, and integration related costs.

2

For the three months ended June 30, 2020, the Americas segment profit adjustments include $1.7 million of employee termination benefits, $2.4 million of transition, acquisition an integration costs, and $0.8 million intangible asset impairment of a tradename.

The Europe segment profit adjustments include $0.1 million of employee termination benefits, and $1.4 million of transition, acquisition and integration costs.

3

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.

Segment profit and Corporate exclude share-based compensation and therefore is not included in the Adjustments totals.

Segment profit margin is defined as segment profit divided by segment revenue. Total margin includes Corporate expenses.

Six Months Ended June 30,

2021

% of Segment
revenue

Adjustments1

2021
Adjusted

2020

% of Segment
revenue

Adjustments2

Foreign
Exchange
impact3

2020
Adjusted

Adjusted
% change

Transactions

Americas

506.6

475.4

7

%

Europe

1,371.0

1,170.7

17

%

Total

1,877.5

1,646.1

14

%

Segment revenue

Americas

$

147,406

65

%

$

-

$

147,406

$

132,824

65

%

$

-

$

1,720

$

134,544

10

%

Europe

81,009

35

%

-

81,009

72,628

35

%

-

5,753

78,381

3

%

Revenue

228,415

100

%

-

228,415

205,452

100

%

-

7,474

212,926

7

%

Segment profit

Americas

67,757

67

67,824

42,780

9,858

785

53,424

27

%

Europe

26,181

(2,243

)

23,938

15,617

6,696

1,460

23,773

1

%

Total segment profit

93,938

(2,176

)

91,762

58,397

16,554

2,245

77,197

19

%

Corporate

(16,137

)

891

(15,246

)

(17,182

)

3,778

-

(13,404

)

(14

%)

Total

$

77,801

$

(1,285

)

$

76,517

$

41,215

$

20,332

$

2,245

$

63,793

20

%

Segment profit margin - Americas

46.0

%

46.0

%

32.2

%

39.7

%

Segment profit margin - Europe

32.3

%

29.5

%

21.5

%

30.3

%

Margin - Total

34.1

%

33.5

%

20.1

%

30.0

%

1

For the six months ended June 30, 2021, the Americas segment profit adjustments include $0.1 million of transition, acquisition and integration costs.

Europe segment profit excludes a gain on an investment in equity securities of $2.3 million, and includes a $0.1 million adjustment of transition, acquisition and integration costs.

Corporate adjustments includes $0.9 million of transition, acquisition, and integration related costs.

2

For the six months ended June 30, 2020, the Americas segment profit adjustments include $3.1 million of employee termination benefits, $4.3 million of transition, acquisition an integration costs, $1.7 million adjustment for fx remeasurement losses on intercompany assets and liabilities, and $0.8 million intangible asset impairment of a tradename.

The Europe adjustments include $1.3 million in employee termination benefits, $4.4 million of transition, acquisition and integration costs, and $1.0 million adjustment for fx remeasurement losses on intercompany assets and liabilities.

Corporate adjustments include $0.6 million in employee termination benefits and $3.2 million of transition, acquisition and integration costs.

3

Represents the impact of currency shifts by adjusting prior year results to current period average foreign exchange rates for the currencies in which EVO conducts operations.

Segment profit and Corporate exclude share-based compensation which is not included in the Adjustments totals.

Segment profit margin is defined as segment profit divided by segment revenue. Total margin includes Corporate expenses.

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 6 - Adjusted Net Income (unaudited)

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

% change

2021

2020

% change

Net income (loss)

$

6,777

$

(9,043

)

NM

$

3,954

$

(22,613

)

NM

Net income attributable to non-controlling interests in consolidated entities

(2,157

)

(1,049

)

(106

%)

(3,225

)

(2,088

)

(54

%)

Income tax expense (benefit)

7,045

(496

)

NM

11,575

(2,076

)

NM

Gain on investment in equity securities

(2,506

)

-

NM

(2,266

)

-

NM

Share-based compensation

6,489

5,890

10

%

12,287

9,475

30

%

Transition, acquisition and integration costs1

715

7,151

(90

%)

981

20,334

(95

%)

Acquisition intangible amortization2

9,292

10,065

(8

%)

18,605

20,712

(10

%)

Non-GAAP adjusted income before taxes

25,655

12,517

105

%

41,911

23,743

77

%

Income taxes at normalized tax rate3

(5,798

)

(2,829

)

(105

%)

(9,472

)

(5,366

)

(77

%)

Adjusted net income

$

19,857

$

9,688

105

%

$

32,439

$

18,377

77

%

Adjusted net income per share4

$

0.21

$

0.11

91

%

$

0.34

$

0.21

62

%

1

For the three months ended June 30, 2021, earnings adjustments include $0.7 million of transition, acquisition and integration related costs.

For the three months ended June 30, 2020, earnings adjustments include $2.4 million of employee termination benefits, $4.0 million of transition, acquisition and integration costs and $0.8 million intangible asset impairment of a tradename.

For the six months ended June 30, 2021, earnings adjustments include $1.0 million of transition, acquisition and integration related costs.

For the six months ended June 30, 2020, earnings adjustments include $5.1 million of employee termination benefits, $11.7 million of transition, acquisition and integration costs, $2.7 million adjustment for fx remeasurement losses on intercompany assets and liabilities, and $0.8 million intangible asset impairment of a tradename.

2

Represents amortization of intangible assets acquired through business combinations and other merchant portfolio and related asset acquisitions.

3

Normalized corporate income tax expense calculated using 22.6% for all periods.

4

Reflects pro forma weighted average shares for the period using GAAP weighted average common shares (equal to weighted average Class A common shares), plus weighted average Class B shares (for periods ended June 30, 2020), weighted average Blueapple common shares (for periods ended June 30, 2021, formerly Class B common shares), weighted average Class C shares (for periods ended June 30, 2020), weighted average Class D common shares, which for the periods ended June 30, 2021, include converted weighted average Class C common shares, weighted average preferred shares including paid-in-kind dividends, and dilutive equity awards measured under the treasury stock method.

Three Months Ended June 30,

Six Months Ended June 30,

(share count in millions)

2021

2020

2021

2020

Class A (GAAP weighted average common stock)

47.0

41.4

46.8

41.3

Blueapple common shares (formerly Class B)

32.2

34.2

32.2

34.2

Class C

-

2.3

-

2.3

Class D

3.9

4.3

4.0

4.3

Stock options, RSUs, RSAs

1.3

0.4

1.3

0.5

Series A convertible preferred (if converted)

10.3

7.6

10.2

3.8

Pro forma weighted average shares

94.7

90.2

94.4

86.5

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 7 - Net Debt to Adjusted EBITDA Ratio

(in thousands)

Year Ended

6 Months

6 Months

LTM1

12/31/2020

6/30/2020

6/30/2021

6/30/2021

Net (loss) income

$ (4,166)

$ (22,613)

$ 3,954

$ 22,401

Net income attributable to non-controlling interests in consolidating entities

(7,189)

(2,088)

(3,225)

(8,326)

Income tax expense (benefit)

13,122

(2,076)

11,575

26,773

Interest expense, net

28,988

16,568

11,589

24,009

Depreciation and amortization

85,924

41,949

41,621

85,596

Gain on investment in equity securities

(17,574)

-

(2,266)

(19,840)

Share-based compensation

20,664

9,475

12,287

23,476

Transition, acquisition and integration costs

26,832

20,334

981

7,479

Adjusted EBITDA

$ 146,601

$ 61,549

$ 76,517

$ 161,569

Ratio of Net Debt to LTM Adjusted EBITDA

6/30/2021

Gross debt

$ 587,873

Less: available cash2

(175,759)

Net debt

$ 412,114

Leverage Ratio

2.6x

1

Reflects last twelve months Adjusted EBITDA by taking full year 2020, less the six months ended June 30, 2020 period, plus the six months ended June 30, 2021 period. Amounts may differ due to rounding.

2

Available cash includes cash in transit from June 30, 2021 transaction date.

EVO PAYMENTS, INC. AND SUBSIDIARIES

Schedule 8 - 2021 Outlook (unaudited)

($ in millions)

2021 Outlook

2020 Actual

% Change

Revenue

$487 to $496

$439

11% - 13%

GAAP Net income / (loss)

$20 to $28

($4)

Adjustments1

153 to 150

151

Adjusted EBITDA

$173 to $178

$147

18% - 21%

Adjusted EBITDA margin

35.5% to 35.9%

33.4%

200 bps to 250 bps

1

Represents an estimated range of adjustments to reconcile GAAP net income (loss) to adjusted EBITDA, a non-GAAP measure.

These adjustments include a) net income attributable to non-controlling interests in consolidating entities, b) income tax expense, c) net interest expense, d) depreciation and amortization, e) gain on investment in equity securities, f) share-based compensation, and g) costs related to transition, acquisition or integration activities. Differences may exist due to rounding.
Estimates of these adjustments used in the forward-looking measures are subject to variability, complexity and limited visibility of these items.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005281/en/

Contacts

EVO Payments, Inc.
Contact:
Sarah Jane Schneider
Investor Relations & Corporate Communications Manager
770-709-7365
investor.relations@evopayments.com