EVO Reports Third Quarter 2022 Results

“EVO’s solid third quarter performance reflects the strong growth from our international markets coupled with the expansion of our U.S. tech-enabled businesses,” stated James G. Kelly, Chief Executive Officer of EVO. “We continued to make progress obtaining necessary regulatory approvals and satisfying customary closing conditions related to our previously announced merger with Global Payments and continue to expect to complete the transaction no later than the first quarter of 2023.”

Third Quarter Highlights

Update on Pending Acquisition by Global Payments

EVO previously announced it has entered into a definitive merger agreement with Global Payments Inc. (“Global Payments”) under which Global Payments will acquire EVO for $34.00 per share in cash in a transaction that represents an enterprise value for EVO of $4.0 billion. The transaction was approved by EVO stockholders on October 26, 2022. In addition, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the transaction expired on October 17, 2022. The transaction is expected to close in the first quarter of 2023. Completion of the transaction is subject to the satisfaction of the remaining closing conditions. Due to the pending merger transaction, EVO will not provide guidance or host a conference call or webcast to review the third quarter 2022 financial results.

Forward-Looking Statements

This release contains 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) disruption to our business caused by the proposed acquisition of us by Global Payments Inc. (“Global Payments”); (2) our ability to consummate the proposed transaction with Global Payments within the contemplated timeframe, or at all, including risks and uncertainties related to securing the necessary regulatory approvals and the satisfaction of other closing conditions; (3) the impact on our stock price, business, financial condition and results of operations if the proposed transaction with Global Payments is not consummated; (4) costs, charges and expenses relating to the proposed transaction with Global Payments; (5) the continuing uncertainties regarding the ultimate scope and trajectory 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; (6) our ability to anticipate and respond to changing industry trends and the needs and preferences of our customers and consumers; (7) the impact of substantial and increasingly intense competition; (8) the impact of changes in the competitive landscape, including disintermediation from other participants in the payments chain; (9) the effects of global economic, political, market, health and other conditions, including the continuing impact of the COVID-19 pandemic and the evolving situation with Ukraine and Russia; (10) our compliance with governmental regulations and other legal obligations, particularly related to privacy, data protection, information security, and consumer protection laws; (11) our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks; (12) failures in our processing systems, software defects, computer viruses, and development delays; (13) degradation of the quality of the products and services we offer, including support services; (14) our ability to recruit, retain and develop qualified personnel; (15) risks associated with our ability to successfully complete, integrate and realize the expected benefits of acquisitions; (16) 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; (17) increased customer, referral partner, or sales partner attrition; (18) the incurrence of chargebacks; (19) failure to maintain or collect reimbursements; (20) fraud by merchants or others; (21) the failure of our third-party vendors to fulfill their obligations; (22) failure to maintain merchant and sales relationships or financial institution alliances; (23) ineffective risk management policies and procedures; (24) our inability to retain smaller-sized merchants and the impact of economic fluctuations on such merchants, (25) damage to our reputation, or the reputation of our partners; (26) seasonality and volatility; (27) geopolitical and other risks associated with our operations outside of the United States, such as the conflict between Russia and Ukraine; (28) any decline in the use of cards as a payment mechanism or other adverse developments with respect to the card industry in general; (29) increases in card network fees; (30) failure to comply with card networks requirements; (31) a requirement to purchase the equity interests of our eService subsidiary in Poland held by our JV partner; (32) changes in foreign currency exchange rates; (33) future impairment charges; (34) 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; (35) the phase out of LIBOR and the transition to other benchmarks; (36) restrictions imposed by our credit facilities and outstanding indebtedness; (37) participation in accelerated funding programs; (38) failure to enforce and protect our intellectual property rights; (39) 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; (40) impact of new or revised tax regulations; (41) legal proceedings, including the impact of potential litigation relating to the proposed transaction with Global Payments, including litigation that seeks to prevent the merger from being consummated within the contemplated timeframe, or at all; (42) our dependence on distributions from EVO Investco, LLC to pay our taxes and expenses, including certain payments to the Continuing LLC Owners (as defined 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; (43) 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; (44) the risk that we could be deemed an investment company under the Investment Company Act of 1940, as amended; (45) the significant influence the Continuing LLC Owners continue to have over us, including control over decisions that require the approval of stockholders; (46) certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control; (47) 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; (48) our ability to maintain effective internal control over financial reporting and disclosure (48) changes in our stock price, including relating to downgrades, analyst reports, and future sales by us or by existing stockholders; and (49) the other risks and uncertainties included from time to time in our filings with the SEC, including those listed under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

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. Except as may be required by any applicable securities laws, 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 the 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 revenue, adjusted EBITDA, 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 our industry.

Adjusted revenue is defined as revenue adjusted for constant currency and includes operating income in the form of liquidated damages resulting from the termination of the bank partner marketing alliance agreement during the fiscal quarter. Such liquidated damages are in lieu of future merchant referrals and revenue that the Company would have otherwise earned.

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 and income taxes), share-based compensation, gain (loss) on investment in equity securities, financing costs, currency exchange impacts, 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 and income taxes), share-based compensation, gain (loss) on investment in equity securities, financing costs, currency exchange impacts, 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. On May 25, 2021, all 32,163,538 outstanding shares of the Company’s Class B common stock were automatically cancelled for no consideration and each outstanding share of the Company’s Class C common stock was automatically converted into one share of Class D common stock. Prior to May 25, 2021, 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, weighted average Class C common shares, 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). Following May 25, 2021, pro forma weighted average shares is defined as GAAP common weighted average shares (equal to our weighted average Class A common shares), plus weighted average Blueapple common shares (formerly Class B common shares), weighted average Class D common shares (which include converted weighted average Class C 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.

Net Debt to LTM Adjusted EBITDA ratio, which we refer to as our Leverage Ratio, is a non-GAAP measure defined as total long-term debt less available cash (cash on the balance sheet and cash in transit 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 SUBSIDIARIESSchedule 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,

2022

2021

% change

2022

2021

% change Revenue

$

138,663

$

135,041

3

%

$

403,260

$

363,456

11

%Operating expenses:Cost of services and products

21,831

19,121

14

%

66,278

54,276

22

%Selling, general and administrative

81,453

71,982

13

%

224,668

198,050

13

%Depreciation and amortization

21,136

21,941

(4

%)

60,453

63,562

(5

%)Total operating expenses

124,420

113,044

10

%

351,399

315,888

11

%Other operating income

6,939

-

NM

6,939

-

NM

 Income from operations

21,182

21,997

(4

%)

58,800

47,568

24

%Other income (expense):Interest income

769

454

69

%

2,229

1,024

118

%Interest expense

(4,260

)

(6,123

)

30

%

(12,634

)

(18,282

)

31

%Gain (loss) on investment in equity securities

4,425

(1,298

)

NM

2,122

968

119

%Other income (expense), net

228

379

(40

%)

(658

)

(340

)

(94

%)Total other income (expense)

1,162

(6,588

)

118

%

(8,941

)

(16,630

)

46

%Income before income taxes

22,344

15,409

45

%

49,859

30,938

61

%Income tax expense

(18,513

)

(8,284

)

(123

%)

(29,614

)

(19,859

)

(49

%)Net income

3,831

7,125

(46

%)

20,245

11,079

83

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

3,845

3,259

18

%

9,545

6,484

47

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

(220

)

1,396

NM

3,558

(196

)

NM

 Net income attributable to EVO Payments, Inc.

206

2,470

(92

%)

7,142

4,791

49

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

2,672

2,511

6

%

7,809

7,338

6

%Net loss attributable to Class A common stock

$

(2,466

)

$

(41

)

NM

$

(667

)

$

(2,547

)

74

% Earnings per shareBasic

($0.05

)

($0.00

)

($0.01

)

($0.05

)Diluted

($0.05

)

($0.00

)

($0.01

)

($0.05

)Weighted average Class A common stock outstandingBasic

48,151,438

47,380,034

47,853,503

46,979,057

 Diluted

48,151,438

47,380,034

47,853,503

46,979,057

 EVO PAYMENTS, INC. AND SUBSIDIARIESSchedule 2 - Condensed Consolidated Balance Sheets (unaudited) (in thousands, except share data) 

September 30,

December 31,

2022

2021AssetsCurrent assets:Cash and cash equivalents

$

429,760

$

410,368

 Accounts receivable, net

16,533

16,065

 Other receivables

28,830

18,087

 Inventory

7,296

4,210

 Settlement processing assets

341,952

311,681

 Other current assets

29,134

20,514

 Total current assets

853,505

780,925

 Equipment and improvements, net

62,410

68,506

 Goodwill, net

370,571

385,651

 Intangible assets, net

178,506

200,726

 Deferred tax assets

245,943

238,261

 Operating lease right-of-use assets

36,238

34,704

 Investment in equity securities, at fair value

30,627

25,398

 Other assets

18,282

19,214

 Total assets

$

1,796,082

$

1,753,385

  Liabilities and Shareholders' Equity (Deficit)Current liabilities:Settlement lines of credit

$

3,622

$

7,887

 Current portion of long-term debt

14,092

14,058

 Accounts payable

7,719

6,889

 Accrued expenses and other current liabilities

135,006

127,060

 Settlement processing obligations

468,732

422,109

 Current portion of operating lease liabilities, inclusive of related party liability of $1.0 million and $1.3 million at September 30, 2022 and December 31, 2021, respectively

6,779

7,122

 Total current liabilities

635,950

585,125

 Long-term debt, net of current portion

558,396

568,632

 Deferred tax liabilities

24,105

22,207

 Tax receivable agreement obligations, inclusive of related party liability of $169.7 million and $169.4 million at September 30, 2022 and December 31, 2021, respectively

180,406

180,143

 Operating lease liabilities, net of current portion, inclusive of related party liability of $0.1 million and $1.0 million at September 30, 2022 and December 31, 2021, respectively

31,363

28,948

 Other long-term liabilities

11,169

7,891

 Total liabilities

1,441,389

1,392,946

 Commitments and contingenciesRedeemable non-controlling interests

1,288,210

1,029,090

 Redeemable preferred stock (par value, $0.0001 per share), Authorized, Issued and Outstanding – 152,250 shares at September 30, 2022 and December 31, 2021. Liquidation preference: $175,900 and $168,309 at September 30, 2022 and December 31, 2021, respectively

171,816

164,007

 Shareholders' equity (deficit):Class A common stock (par value $0.0001), Authorized - 200,000,000 shares, Issued and Outstanding - 48,293,979 and 47,446,061 shares at September 30, 2022 and December 31, 2021, respectively

5

5

 Class D common stock (par value $0.0001), Authorized - 32,000,000 shares, Issued and Outstanding - 3,741,074 and 3,783,074 shares at September 30, 2022 and December 31, 2021.

-

-

 Additional paid-in capital

-

-

 Accumulated deficit attributable to Class A common stock

(890,378

)

(652,871

)Accumulated other comprehensive loss

(22,196

)

(9,154

)Total EVO Payments, Inc. shareholders' deficit

(912,569

)

(662,020

)Nonredeemable non-controlling interests

(192,764

)

(170,638

)Total deficit

(1,105,333

)

(832,658

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

$

1,796,082

$

1,753,385

 EVO PAYMENTS, INC. AND SUBSIDIARIESSchedule 3 - Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) 

Nine Months Ended September 30,

2022

2021Cash flows from operating activities:Net income

$

20,245

$

11,079

 Adjustments to reconcile net income to net cash provided byoperating activities:Depreciation and amortization

60,453

63,562

 Gain on investment in equity securities

(2,122

)

(968

)Amortization of deferred financing costs

890

2,006

 Loss on disposal of equipment and improvements

-

872

 Share-based compensation expense

21,947

21,459

 Deferred taxes, net

8,090

14,118

 Other

(2,541

)

365

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

(2,908

)

3,048

 Other receivables

(12,667

)

3,091

 Inventory

(3,966

)

631

 Other current assets

971

(1,439

)Operating lease right-of-use assets

5,878

4,912

 Other assets

(3,789

)

(2,777

)Accounts payable

1,969

3,631

 Accrued expenses and other current liabilities

17,814

683

 Settlement processing funds, net

22,208

(44,270

)Operating lease liabilities

(5,676

)

(5,637

)Other

(1,358

)

(2,310

)Net cash provided by operating activities

125,438

72,056

 Cash flows from investing activities:Acquisition of businesses, net of cash acquired

(5,254

)

(18,809

)Purchase of equipment and improvements

(26,774

)

(25,929

)Acquisition of intangible assets

(18,256

)

(6,871

)Collections of notes receivable

-

48

 Net cash used in investing activities

(50,284

)

(51,561

)Cash flows from financing activities:Net repayments of settlement lines of credit

(3,680

)

(1,433

)Proceeds from long-term debt

11,200

-

 Repayments of long-term debt

(22,225

)

(4,945

)Deferred and contingent consideration paid

(1,593

)

(484

)Repurchases of shares to satisfy minimum tax withholding

(3,156

)

(4,463

)Proceeds from exercise of common stock options

7,301

7,668

 Distributions to non-controlling interest holders

(9,398

)

(10,914

)Contribution from non-controlling interest holders

2,133

1,487

 Net cash used in financing activities

(19,418

)

(13,084

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

(36,088

)

(9,708

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

19,648

(2,297

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

410,615

418,539

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

$

430,263

$

416,242

 EVO PAYMENTS, INC. AND SUBSIDIARIESSchedule 4 - Reconciliation of GAAP to Non-GAAP Measures (in thousands) 

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

% change

2022

2021

% change Revenue

$

138,663

$

135,041

3

%

$

403,260

$

363,456

11

%Liquidated damages payment 1

6,939

-

NM

6,939

-

NM

 Currency impact 2

-

(9,266

)

NM

-

(17,694

)

NM

 Adjusted revenue

$

145,601

$

125,775

16

%

$

410,198

$

345,762

19

% Net income

$

3,831

$

7,125

(46

%)

$

20,245

$

11,079

83

%Net income attributable to non-controlling interests in consolidated entities

(3,845

)

(3,259

)

(18

%)

(9,545

)

(6,484

)

(47

%)Income tax expense

18,513

8,284

123

%

29,614

19,859

49

%Interest expense, net

3,491

5,669

(38

%)

10,405

17,258

(40

%)Depreciation and amortization

21,136

21,941

(4

%)

60,453

63,562

(5

%)(Gain) loss on investment in equity securities

(4,425

)

1,298

NM

(2,122

)

(968

)

(119

%)Share-based compensation expense

7,237

9,172

(21

%)

21,947

21,459

2

%Transition, acquisition and integration costs 3

11,280

1,132

896

%

17,916

2,113

748

%Adjusted EBITDA

57,218

51,363

11

%

148,912

127,880

16

%Currency impact 2

-

(3,971

)

NM

-

(6,679

)

NM

 Currency-neutral adjusted EBITDA

$

57,218

$

47,392

21

%

$

148,912

$

121,200

23

%

1

Represents the Liberbank liquidated payment. Recorded as other operating income, but shown here as the fee reflects a payment for forgone processing revenues.

2

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.

3

For the three months ended September 30, 2022, earnings adjustments include $11.3 million of transition, acquisition and integration related costs, inclusive of $8.7 million of costs associated with the announced merger with Global Payments Inc.

For the three months ended September 30, 2021, earnings adjustments include $1.1 million of transition, acquisition and integration related costs.

For the nine months ended September 30, 2022, earnings adjustments include $17.9 million of transition, acquisition and integration related costs, inclusive of $9.3 million of costs associated with the announced merger with Global Payments Inc.

For the nine months ended September 30, 2021, earnings adjustments include $2.1 million of transition, acquisition and integration related costs.EVO PAYMENTS, INC. AND SUBSIDIARIESSchedule 5 - Adjusted Net Income (unaudited)Reconciliation of GAAP to Non-GAAP Measures(in thousands, except share and per share data) 

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

% change

2022

2021

% change Net income

$

3,831

$

7,125

(46

%)

$

20,245

$

11,079

83

%Net income attributable to non-controlling interests in consolidated entities

(3,845

)

(3,259

)

(18

%)

(9,545

)

(6,484

)

(47

%)Share-based compensation expense

7,237

9,172

(21

%)

21,947

21,459

2

%(Gain) loss on investment in equity securities

(4,425

)

1,298

NM

(2,122

)

(968

)

(119

%)Income tax expense

18,513

8,284

123

%

29,614

19,859

49

%Transition, acquisition and integration costs 1

11,280

1,132

896

%

17,916

2,113

748

%Acquisition intangible amortization 2

10,359

9,558

8

%

25,873

28,164

(8

%)Non-GAAP adjusted income before taxes

42,950

33,311

29

%

103,927

75,222

38

%Income taxes at normalized tax rate 3

(9,707

)

(7,528

)

(29

%)

(23,487

)

(17,000

)

(38

%)Adjusted net income

$

33,243

$

25,783

29

%

$

80,439

$

58,222

38

%Adjusted net income per share 4

$

0.34

$

0.27

26

%

$

0.84

$

0.62

35

%1For the three months ended September 30, 2022, earnings adjustments include $11.3 million of transition, acquisition and integration related costs, inclusive of $8.7 million of costs associated with the announced merger with Global Payments Inc.For the three months ended September 30, 2021, earnings adjustments includes $1.1 million of transition, acquisition and integration related costs.For the nine months ended September 30, 2022, earnings adjustments include $17.9 million of transition, acquisition and integration related costs, inclusive of $9.3 million of costs associated with the announced merger with Global Payments Inc.For the nine months ended September 30, 2021, earnings adjustments includes $2.1 million of transition, acquisition and integration related costs.2Represents amortization of intangible assets acquired through business combinations and other merchant portfolio and related asset acquisitions.3Normalized corporate income tax expense calculated using 22.6% for all periods.

4Reflects pro forma weighted average shares for the period using GAAP weighted average common shares (equal to weighted average Class A common shares), weighted average Blueapple common shares (formerly Class B common shares), weighted average Class D common shares which 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 Sept. 30,

Nine Months Ended Sept. 30,(share count in millions)

2022

2021

2022

2021Class A (GAAP weighted average common stock)

48.2

47.4

47.9

47.0Blueapple common shares (formerly Class B)

32.2

32.2

32.2

32.2Class D

3.8

3.8

3.8

3.9Stock options, RSUs, RSAs

1.9

1.1

1.0

1.2Series A convertible preferred (if converted)

11.1

10.4

10.9

10.3Pro forma weighted average shares

97.0

94.9

95.7

94.5EVO PAYMENTS, INC. AND SUBSIDIARIESSchedule 6 - Net Debt to Adjusted EBITDA RatioReconciliation of GAAP to Non-GAAP Measures(in thousands) Year Ended9 Months9 MonthsLTM 112/31/20219/30/20219/30/20229/30/2022Net income

$

17,689

$

11,079

$

20,245

$

26,855

 Net income attributable to non-controlling interests in consolidated entities

(9,003

)

(6,484

)

(9,545

)

(12,064

)Income tax expense

26,376

19,859

29,614

36,131

 Interest expense, net

21,510

17,258

10,405

14,657

 Depreciation and amortization

83,389

63,562

60,453

80,280

 Gain on investment in equity securities

(237

)

(968

)

(2,122

)

(1,391

)Share-based compensation expense

27,419

21,459

21,947

27,907

 Transition, acquisition and integration costs

4,296

2,113

17,916

20,099

 Other adjustments

6,587

-

-

6,587

 Adjusted EBITDA

$

178,027

$

127,880

$

148,912

$

199,060

   Ratio of Net Debt to LTM Adjusted EBITDA9/30/2022Gross debt

$

576,975

 Less: available cash 2

(230,726

)Net debt

$

346,249

 Leverage Ratio1.7x

1

Reflects last twelve months Adjusted EBITDA by taking full year 2021, less the nine months ended September 30, 2021, plus the nine months ended September 30, 2022 period. Amounts may differ due to rounding.

2

Available cash includes cash in transit from September 30, 2022 transaction date.

View source version on businesswire.com:https://www.businesswire.com/news/home/20221102005052/en/

    CONTACT: EVO Payments, Inc.

Sarah Jane Schneider

Investor Relations & Corporate Communications Manager

770-709-7365

             investor.relations@evopayments.com

KEYWORD: GEORGIA UNITED STATES NORTH AMERICA
    

INDUSTRY KEYWORD: TECHNOLOGY PAYMENTS FINANCE SECURITY FINTECH BANKING ELECTRONIC COMMERCE PROFESSIONAL SERVICES SOFTWARE DIGITAL CASH MANAGEMENT/DIGITAL ASSETS
    

SOURCE: EVO Payments, Inc.

Copyright Business Wire 2022.

PUB: 11/02/2022 04:05 PM/DISC: 11/02/2022 04:07 PM

http://www.businesswire.com/news/home/20221102005052/en