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Euronet Worldwide Inc. (EEFT - Snapshot Report) reported fourth-quarter adjusted earnings of 44 cents per share, beating the Zacks Consensus Estimate of 42 cents but lagging the year-ago quarter’s earnings of 46 cents. Adjusted earnings include a one-time tax charge of 3 cents per share related to the repurchase of the company's convertible bonds.

Adjusted operating earnings were $26.8 million in the reported quarter, 17% higher than $23.0 million recorded in the fourth quarter of 2011.

Including foreign exchange gain/loss, intangible asset amortization, share-based compensation, impairment of goodwill and acquired intangible assets, non-cash 3.5% convertible debt accretion interest, change in fair value of acquisition contingent consideration, loss on early debt retirement, non-cash GAAP tax expense, other gains and 3.5% convertible debt interest and amortization of issuance costs, the company reported a net loss of $13.0 million or 26 cents per share as against an income of $10.9 million or 21 cents per share in the prior-year quarter.

Operational Update

During the quarter under review, total revenue of Euronet Worldwide grossed $351.2 million, increasing from $319.4 million in the year-ago quarter. Total revenue surpassed the Zacks Consensus Estimate of $338 million.

Total operating expenses for the reported quarter amounted to $353.1 million, increasing from $296.4 million in the prior-year quarter, primarily due to increases in operating costs, salaries and benefits, and impairment of goodwill and acquired intangible assets.

Total operating loss amounted to $1.9 million, compared with operating income of $23 million in the year-ago quarter.

Total transactions for the company climbed 10% to 604 million, driven by contribution from all segments.

Segment Details

The EFT Processing Segment reported total revenue of $64.8 million, increasing 19% over the prior-year quarter. Its operating income surged 53% to $13.6 million over the fourth quarter of 2011.

The improved performance came on the back of substantial growth in its ATMs under management, higher demand for software products and seasonal increases in sales of value-added services. This segment recorded total number of transactions of 297 million against 257 million in the year-ago quarter.

The epay Segment reported total revenue of $199.5 million, increasing 4% over the prior-year quarter, driven by the strong performance of non-mobile products in Germany and prepaid mobiles in the U.S. Operating loss amounted to $13.8 million compared with operating income of $16.9 million in the year-ago quarter due to weak results from Brazil, Australia and Spain, partially offset by improvements in the U.S. and Germany. Total transactions amounted to 298 million, increasing 4% over the prior-year quarter.

The Money Transfer Segment’s total revenue improved 18% over the year-ago quarter to $87.2 million in the quarter under review. Operating income surged 64% to $7.4 million during the reported quarter. A surge in total transactions contributed to the expansion of revenue and operating income. Total transactions increased 28% over the year-ago quarter to 8.6 million in the fourth quarter of 2012.

The company’s Corporate and Other segment reported total expenses of $9.1 million in the reported quarter, increasing from $7.3 million in the fourth quarter of 2011. The increase was attributable to higher long and short-term incentive compensation expenses.

Full Year Results

For full-year 2012, Euronet Worldwide’s adjusted earnings came in at $1.57 per share, beating the Zacks Consensus Estimate of $1.40 as well as the prior-year earnings of $1.48 per share. Adjusted operating earnings were $86.7 million in 2012, up 10% compared with $79.0 million recorded in 2011.

Including all non-recurring items, Euronet Worldwide reported net income of $20.5 million or 40 cents per share, declining from $36.9 million or 71 cents per share in 2011.

Total revenue for 2012 was $1.27 billion, improving from $1.16 billion in 2011. Total operating expenses for 2012 amounted to $1.21 billion, increasing from $1.08 billion in 2011.

Financial Position

Euronet Worldwide exited the fourth quarter of 2012 with cash and cash equivalents of $191.2 million, increasing from $170.7 million as of Dec 31, 2011.

Long-term debt obligation in the company’s books amounted to $286.7 million, increasing from $161.7 million as of Dec 31, 2011. Total assets amounted to $1.55 billion and shareholders equity amounted to $526.6 million at 2012-end.

Guidance

With the assumption of a constant foreign currency exchange rate, the company expects the first-quarter 2013 pre-tax cash earnings to be around 37 cents per share.

Zacks Rank

Euronet Worldwide carries a Zacks Rank #2 (Buy). Other strong performers in the financial sector are Grupo Financiero Banorte, S.A.B. de C.V. (GBOOY) – Zacks Rank #1 (Strong Buy) – CapitalSource Inc. and CIT Group Inc. (CIT - Analyst Report) – Zacks Rank #2 (Buy).

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