Euronet Worldwide, Inc. (EEFT) Q4 2012 Earnings Report, Transcript and Summary

Greetings, and welcome to the Euronet Worldwide Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Mr. Jeff Newman, Executive Vice President and General Counsel for Euronet Worldwide. Thank you. Mr. Newman, you may begin.

Thank you, Ben. Good morning, and welcome, everyone to Euronet's quarterly results conference call. We will present our results for the fourth quarter and full year 2012 on this call. We have Mike Brown, our CEO; Rick Weller, our CFO; and Kevin Caponecchi, the President of Euronet Worldwide on the call. Before we begin, I'd like to make a disclaimer concerning forward-looking statements. Statements made on this call that concern Euronet's or its management's intentions, expectations or predictions of future performance, are forward-looking statements. Euronet's actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including conditions in world financial markets and general economic conditions, technological developments affecting the market for the company's products and services, foreign currency exchange fluctuations, the company's ability to renew existing contracts at profitable rates, changes in fees payable for transactions performed over the company’s network, and changes in laws and regulations affecting the company's business, including immigration loss. These risks and other risks are described in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Copies of these filings may be obtained via the SEC's EDGAR website or by contacting the company or the SEC. Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. The company regularly posts important information to the Investor Relations section of its website. I'll now turn over the call to Rick Weller, our CFO.

Thank you, Jeff and welcome to everyone on the call. I will begin my comments with the fourth quarter results on Slide 5. After reviewing the results for the quarter, I will cover the full year. For the fourth quarter 2012, the company reported revenue of $351.2 million, an operating loss of $1.9 million and adjusted EBITDA of $45.8 million. As you saw in our press release, the operating loss included a $28.7 million impairment charge related to our Brazil goodwill. As we have mentioned over the last several quarters, a change in certain mobile operator strategy limited our ability to distribute products in certain markets within Brazil. We have cut costs and introduced nonmobile content into the market to offset the impact of these changes. However, these nonmobile products are new to Brazil and have not yet replaced the lost earnings. This is a non-cash U.S. GAAP adjustment. So to sharpen the focus on the performance of the business, we will center our discussion on adjusted operating income, which excludes the Brazil impairment. Our adjusted earnings per share for the fourth quarter was $0.47 less the $0.03 in onetime tax charges related to the repurchase of our convertible bonds, which I explained to you in the third quarter. We finished the quarter with a minimal unfavorable FX impact, less than $0.001 after tax. And we incurred about $0.01 of expense related to acquisition diligence that was not included in our $0.47 guidance. At times, during the quarter, it kind of felt like we were getting a bit of FX tailwind, but reflecting back in the quarter, you can see, for example, that the euro to the dollar dropped to about $1.27 in November and has since continued to improve. I would also like to provide an added level of analysis to this year's fourth quarter, $0.47 compared to last year's fourth quarter. You may recall that in our $0.46 of last year, we reported that we were $0.05 per share ahead of our guidance of $0.41, and that the $0.05 was due to benefits of tax planning initiatives, half of which were onetime benefits and the other half, which would be recurring, but evenly throughout the year. Accordingly, a cleaner view of our year-over-year cash earnings per share would be $0.47 compared to $0.41 or a 15% year-over-year earnings growth. Overall, this was a very good quarter for our business and in line with, if not a bit ahead of, our guidance provided in October. Let's move to Slide 6, please. On Slide 6, we show the 3-year trend in transactions for all 3 segments. EFT transactions increased 16%. This transaction growth was driven by 24% more ATMs under management from the end of 2011 to the end of 2012, together with transaction growth from our cross-border acquiring business. Epay transaction growth in the fourth quarter was driven by increases in North America, Germany, India and France. These volume increases were partially offset by declines in Brazil, Australia and Spain. Finally, total transactions for Ria increased 28%, including a 20% increase in money transfers. This marks the seventh consecutive quarter of double-digit money transfer transaction growth for Ria. Transfers initiated in the U.S. increased 26%, including a 28% increase in transfers to Mexico. We were also pleased to see non-US transfers increased 13%, including rebounds from 2 of our more challenging markets, Spain and Italy. As has been the trend for several quarters, our non-money transfers saw a nice growth at 63% in the quarter, driven by increases in check cashing transactions in the U.S. and the sale of Ria Pinless, which Mike will discuss more during his comments. Next slide, please. On Slide 7, you can see our reported results for the fourth quarter. In summary, there was not much FX conversion impact included in the fourth quarter 2012 compared to the fourth quarter 2011. Only about 1% on bottom line numbers, but a little more difference up and down the page. So I will focus my discussion on the next slide, where we present the constant currency numbers. Slide 8, please. In the fourth quarter, EFT segment continued to see strong growth with revenue, adjusted operating income and adjusted EBITDA increasing 22%, 55% and 40%, respectively. These results were attributed to a 24% increase in ATMs under management, expansion of value-added services and increased demand of our software products. Mike will speak to you more about Brown label ATMs in a few minutes. But I'm pleased to tell you that the Brown label ATMs we installed over the last several quarters are now producing positive operating income and we expect this tranche of ATMs to continue to deliver positive results in 2013. Moreover, the achievement of positive operating income contributions proves our theses on the Brown label concept, thereby affirming our deployment of additional machines in 2013. And to close my comments on EFT, you may recall our observations regarding the seasonal shifts we were seeing in EFT due to the growth of value-added products. If you compare the fourth quarter to the third quarter, you will see a slight decline in our sequential results. This sequential decline is entirely due to seasonality. Our epay segment saw a revenue growth of 6% while adjusted operating income and adjusted EBITDA each declined by 11%. The revenue growth in the fourth quarter was largely from nonmobile contributions in Germany and prepaid mobile sales in the U.S. The declines in operating income and adjusted EBITDA were primarily focused in Brazil, Australia and Spain, partially offset by gains in Germany and the U.S. We expect to see similar results from epay in the first quarter but look forward to the second quarter, when we expect results to stabilize as we anniversary the mobile operator changes in Brazil. Ria's strong momentum continued in the quarter where revenue increased 19%, adjusted operating income increased 67% and adjusted EBITDA increased 31%. These results reflect Ria's continued success in signing high-quality send and payout agents, which resulted in a 21% year-over-year increase in total network locations and transaction gains in existing markets. I suspect that some of you may ask if we felt pricing pressure from the leading competitor's pricing announcement. To, which I will answer, no. Moreover, money transfers, EBITDA margins, improved again in the fourth quarter, coming in at 14.1%, a nice tick over third quarter's 13.7%. Overall, we're very pleased with our Money Transfer Segment's results in the quarter. Let's move to Slide 9, please. On Slide 9, you can see our balance sheet for the year. Cash remained essentially the same from the end of the third quarter. In the fourth quarter, we repurchased substantially all of our convertible bonds, about $168 million. We repurchased about $42 million in shares. We completed the acquisition of certain assets of easy pay in New Zealand and we generated free cash flows. Our debt increased by approximately $40 million, essentially, from the repurchase of shares. So you might ask why debt didn't drop by $168 million for the repurchased convertible bonds. It didn't because we, essentially, repaid it in the third quarter by way of drawing down -- paying down our draws on the revolver to near 0 because we had accumulated cash in anticipation of October 15 convertible put date. Accordingly, when we, then, repurchased the convertibles in October -- on October 15, we drew against our revolver to cover the put. Another way to view our debt management, we closed last year with $339 million in debt. We closed this year with $301 million debt. That $38 million decrease was largely the result of using cash of about $80 million to repurchase bonds, and we then borrowed about $40 million to repurchase shares. The remaining bond repurchases of $88 million, roughly, was rolled into our revolver. Accordingly, at the end of the year, our revolver stands at about $215 million, term debt at about $75 million and capitalized leases and other debt of about $11 million. Regarding share repurchases, you shouldn't expect much as our share price has appreciated nicely, and with the size of the fourth quarter $40 million repurchase, our credit agreement will limit repurchases over the next 3 quarters. And finally, some of you may have seen our announcement regarding S&P's recent new credit rating of BBB-, entry-level investment grade. When I joined Euronet 10 years ago, we were challenged to find ways to repay a slug of 12 3/8 percent high yield debt. Today, we are rated investment grade. This was a short 10 years, but it is sure nice to see the company in such a sound financial condition and well-positioned to continue its strong growth trends. Now let's move to Slide 11 and I'll talk about full year results. On Slide 11, you can see 2012 revenues were $1.3 billion, operating income of $58 million, adjusted operating income of $86.7 million and adjusted EBITDA of $162.8 million. Full year cash EPS was $1.60, excluding the onetime tax charge of $0.03 I mentioned earlier, making net full-year cash EPS $1.57. Moreover, if you further analyze the year-over-year cash EPS and take out of last year's $1.48, the same $0.05 I discussed related to the fourth quarter 2011, an increase to $1.60 by about $0.08 for the impacts of currency rates over -- year-over-year, you would see that our full-year cash EPS grew by approximately 17%. This is consistent with the 17% growth in constant currency adjusted operating income you see on this slide. Overall, mid to upper teen growth rates in constant currency measures, up-and-down the P&L, can only be described as a very good year. Next slide, please. On Slide 12, you can see the full-year trend in transactions for all 3 segments. All segments -- for all segments, the transaction trend is virtually the same as we discussed for the fourth quarter and each of the 3 prior quarters. EFT transactions grew 23%; epay, 5%; and money transfer, 25%. Finally, I'd like to point out another milestone achieved by our EFT segment. It topped 1 billion transactions for the first time in Euronet's history. Let's move to Slide 14, where I will discuss the full-year results on a constant currency basis. On Slide 14, we have provided a view of the full year, adjusted to remove the impacts of currency impacts and nonrecurring items such as the impairment charge in Brazil. While the FX impact seen in the fourth quarter to fourth quarter analysis were minimal, the FX impacts for the full year-over-year review were more significant. The full year results for the EFT segment were consistent with what I reported on the quarterly results. EFT benefited from an increase in deployed ATMs, growth in our value-added service products and additional sales of software products. Full-year revenue increases in epay were largely from the full year benefit of our acquisition of cadooz in the third quarter 2011. Adjusted operating income and adjusted EBITDA declines were from challenges in Brazil, Australia and Spain, offset by nice contributions in the U.S. and Germany. Finally, the full-year money transfer results reflect the benefit of the expansion of our money transfer network, which has produced more transactions across all our markets. Overall, this year was a good year for our business, one in which we were able to deliver record cash earnings per share, double-digit constant currency growth in revenues of 15%, operating income of 17% and adjusted EBITDA of 15%. With that, I conclude my comments and hand it over to Mike.

Thank you, Rick. Wow, this is a good year. If you would start please on Slide #19, I'll continue with my presentation. Here, you can see the revenue was up 15%, and operating income up 17%. That is definitely the way to complete the year. I'll begin my comments on this slide and it was just a great year for our EFT team. We successfully executed on our strategy, we signed more contracts than ever before, we successfully increased our value-added service offerings and reach. We entered new markets and processed more than 1 billion transactions for the first time in our EFT history. As you can see on this slide, we are moving into 2013 with a strong pipeline of projects, which we expect to contribute to strong earnings in the coming year. Now let's get to the specifics. We doubled our presence in the Ukraine by signing an asset purchase and network participation agreement with a member of the French BNP Paribas Group. This agreement to add 172 ATMs was signed after a successful purchase and integration of 116 ATMs from the same bank in 2011 and is a perfect example of how we can provide banks with an opportunity to turn their costly ATM estates into profit contributors. In Poland, we expanded our offering to provide cardless ATM transactions for Deutsche Bank in Poland. This is an extension of our technology that allows Ria beneficiaries to collect funds at the ATMs in Poland without the use of a debit card. Deutsche Bank customers can now initiate a transfer to their online account and the funds can be collected by a beneficiary at any of our thousands of ATMs in Poland. We also signed a prepaid card issuing and POS driving agreement with Lamda Card Services in Cyprus. This agreement utilizes the payment services license that we have been using to expand our EFT presence, which also allows us to issue and process prepaid cards. We are now able to offer customers an end-to-end solution that covers the entire value chain. As Rick mentioned, our first Brown label ATMs in India have become profitable. We have learned a lot about the deployment of Brown label ATMs in the Indian market over the last year and we're excited that our initial 1,700 Brown label ATMs now contribute positively to our earnings. To keep the momentum going, in the fourth quarter, we signed an agreement to deploy an additional 1,500 ATMs with Access Bank. We will be selective on the rollout plan of these ATMs and the timing will depend upon their projected profitability. I would also like to highlight the success of our software team who produced record sales in the fourth quarter. This success was largely from sales of our products that are used to activate EMV or Chip Card Acquiring, as well as acceptance of China UnionPay and Diners Card. If you wouldn't mind, please move to Slide #20. On this slide, you can see that we renewed our sponsorship agreement with Pekao in Poland, with substantially the same terms and conditions of the old agreement. In case you're not familiar, in some countries, we have a sponsorship agreement with the bank, where they provide cash for our ATMs in our independently deployed networks. We also continued to see success with our value-added services. We introduced these products on our own IAD network in the Czech Republic, as well as on customer ATM and POS networks in 5 different countries. During the quarter, we deployed 230 ATMs, bringing the total number of ATMs we operate to 17,600. Finally, before I conclude my comments on EFT, I would like to take a minute to introduce you to the Pure Commerce acquisition we announced in January of this year. Pure Commerce provides similar products to those we currently offer on our ATMs and POS terminals in our EFT segment. They operate in several markets where we currently do business like Australia, Singapore and Europe, and give us another substantial Asian market with Korea. We believe the products and the culture of the business at Pure Commerce are right in line with our current strategy and we're excited to have the Pure Commerce team on board. With that said, our EFT team had an exceptional 2012 and we expect more of the same this year. Now let's move on to Slide #24 and we'll talk about epay for a minute. On Slide #24, before I get into the specific highlights for the quarter, I want to take a minute and talk about the epay segment as a whole. As you know, throughout the year, the epay segment results have been kind of mixed, where we have had markets with success, the successes has been tremendous. In markets where we faced challenges, those challenges have been significant. In 2012, we were very successful in introducing value-added services for mobile operators, which I will comment more in a minute, and in selling nonmobile content. Unfortunately, challenges remain in some of our markets. As we move into 2013, we will continue to execute our strategy to deliver mobile operator solutions to markets outside the U.S. and to sell additional nonmobile content in all of our markets. Now let's talk about fourth quarter epay highlights. In the U.S., we sold our mobile operator solutions to T-Mobile and Ultra Mobile. The agreement with T-Mobile makes epay the sole provider of prepaid top-up and commission payments in the independent channel in the U.S.. We have already started integrating our solution with both platforms and expect to see revenue from these agreements in the first quarter. In Germany, we began distributing Lebara SIM cards and mobile top-up for 7 MVNOs at Penny supermarkets. Finally, we renewed our prepaid top-up processing agreement with SPF, a large retailer and our biggest customer in France. Next slide, please. On Slide #25, we present our nonmobile highlights for the quarter. We continue to see success in our partnership with Apple iTunes. We Introduced iTunes into 8 new markets in the quarter, which include 2 large markets, Turkey and Russia. In the U.S., we began to sell iTunes in Wireless Zone, an exclusive Verizon wireless dealer. We are also able to add iTunes gift cards into cadooz's physical rewards business in Germany, and saw a nice demand for this product in the fourth quarter. In the U.K., we signed an agreement with Worldpay to provide card acquiring services on independent retailer POS terminals in the country. This partnership allows the independent retailers we serve to process debit and credit cards for all products sold in their stores, which in turn will provide them with additional revenue they would've missed out on otherwise. Finally, we acquired certain assets for easy pay, a leading mobile top-up and gift card distributor in New Zealand. This acquisition makes epay the market leader for prepaid and nonmobile content in New Zealand. There is no doubt that we continue to face challenges in certain markets in the epay segment but we also have certain markets that are performing well. I can assure you that we're working hard to implement value-added services in nonmobile content into the underperforming markets in order to restore growth to the epay segments. Now let's move on to Slide #26 and we'll talk about Ria. For the last several quarters, I've been talking to you about the momentum that's been building in our money transfer business, and our fourth quarter results are just an extension of that momentum. We continue to benefit from our efforts to expand our network of agents' payout locations, as well as capture a greater share of the transactions generated within our existing network. Our success in these areas led to new highs across all key financial indicators, including transaction growth across our markets. Now let's move on to Slide #29. On Slide #29, we present our Money Transfer highlights for the quarter. Year-over-year, our total network grew by 21%, key drivers for this quarter's growth were the 13 new correspondents that we launched, which, combined with new locations launched through existing correspondents, added approximately 7,000 locations to our network in Q4. We continue to strengthen our network footprint in top remittance markets such as Bangladesh, Mexico and India. As an example, in Bangladesh, we added 1,700 new locations through Southeast Bank, BRAC Bank and AB Bank, which offer excellent bank deposit and cash pickup services. These agreements are very important for our business in Bangladesh and we can now make deposits into any bank account in the country within 10 minutes. In Mexico, we launched new locations at existing correspondents, Elektra Mexico and Banamex and expanded our relationships with Scotiabank by adding payout in Mexico. This additions account for more than 1,000 new locations in the country. This strong expansion with key partners is helping to strengthen our position and is reflected in our successful transaction growth of 28% to this market. We also added cash pick up to over 1,400 of our own ATMs in Poland, which is partly contributing to the sharp increase in transactions we're seeing in this market. In addition to the launches I mentioned, we signed 10 new correspondents in 9 countries during the quarter. This includes the new agreement with Bank Negara in Indonesia, a top remittance market that receives over $7 billion in remittances a year. This agreement will allow us to provide the cash pick up and bank deposit service in more than 1,000 of their branches plus over 3,000 third-party locations that include the Indonesian post office and other rural banks. We also signed an agreement with Dutch-Bangla Bank in Bangladesh, which will allow us to offer cash pick up service in its branches. Next slide, please. On Slide #30, you can see the breakdown of our transactions in the quarter. Money Transfer transactions grew 20% this quarter. This is by far the fastest growth we've experienced at Ria since we purchased the company in 2007, and it represents a significant acceleration even from last quarter's 14% growth. Transactions originated in the U.S. grew by 26% year-over-year, driven by positive trends in most of the Latin American and Caribbean countries and other emerging markets such as Vietnam, Ethiopia, Philippines and Senegal. Transaction growth from the U.S. to Mexico, our largest single corridor, was an impressive 28% year-over-year, significantly outpacing the flat overall transaction rate reported by Banco de Mexico for the entire industry. We also saw strong performance in our non-Mexico transfers from the U.S. with 25% growth in this quarter, which, to put things in perspective, compares to 19% growth in the third quarter and 11% growth in the second quarter of 2012. In our international markets, we saw 13% year-over-year growth, which, if you will recall, compares to 7% last quarter. Despite the challenging economic scenario in Europe, we continue to see strong growth in markets such as France, Germany and the Nordic countries. It's promising to see that the growth is a broad trend even in our most complex markets such as Spain or Italy, where we are seeing signs of recovery and the transactions have returned to year-over-year growth. Our non-money transfer transactions continue to deliver strong growth as a result of our efforts to add additional products to our core money transfer capabilities. This quarter, our non-money transfer transactions posted a 63% growth over the same quarter last year. This increase is primarily the result of successful cross selling of the mobile top-ups of epay through Ria agents in Europe and the U.S., particularly, with transactions from the U.S. and Italy, as well as an increase in our check cashing transactions, specifically, ones originating in the United States. In May 2012, we issued a press release, introducing Ria Pinless, a high-quality prepaid airtime product that enables customers to make international calls at very competitive rates without the need to enter a pin. Our epay and Ria teams work together to introduce this product as the response to other Pinless products in the market. We gradually added this product to both our Ria and epay stores over the second half of the year and to Ria's agent network in December. Transactions in the Ria U.S. stores has been impressive so far and the agent response has been very enthusiastic. We are pleased with the cooperation of the 2 segments to produce a product tailored for the demand we are seeing from Ria's customers. Overall, this was a very strong finish to 2012 from our Money Transfer team. I'm excited about the continued momentum in this segment and I look forward to a great 2013. And now let's move on to Slide #31 to wrap up the year. On slide #13, our fourth quarter cash EPS was $0.47, excluding the $0.03 onetime tax charge related to the bond repurchases. We continued to maintain a strong balance sheet as evident by our investment grade rating from Standard & Poor's. EFT ended the year strong with growth through ATM expansion, sales of value-added services and increased demand for our software products. Epay had a challenging quarter but we look forward to the second quarter when we expect epay to stabilize. Our Money Transfer team continued its momentum and delivered solid results through strong network expansion and transaction growth. Overall, 2012 was a very good year for Euronet. We delivered another year of record cash earnings, made possible by our continued focus on new markets and products along with effective execution across most of our business. We have a strong team with a lot of good things in front of us and I'm excited to seize the opportunities in 2013. Finally, we expect our Q1 2013 expect -- adjusted cash EPS to be $0.37 assuming consistent foreign exchange rates. With that, we will be happy to answer questions. Operator, will you please assist.

[Operator Instructions] Our first question comes from the line of Mike Grondahl from Piper Jaffray.

The first one just really has to do with the iTunes business. Some of the new countries you won, could you kind of talk about how that is expected to ramp up in 2013? And then secondly, if you could just talk about, now that India is profitable, how do you expect those earnings to kind of ramp in 2013 and the rollout of the 1,500 new ATMs there?

Kevin?

So this is Kevin. Regarding iTunes, the bulk of those countries are small countries that won't have a significant impact on results. But the 2 countries that we're pretty excited about are Turkey and Russia, those are both large countries from the standpoint of population, and they're very successful countries with Apple hardware. So we should expect to see some impact from those -- from all of it but, specifically, related to Turkey and Russia. Regarding India and Brown label, Rick, you want to try to take that?

Well, I think that we'll continue to see our Brown label ATMs increase. We're very excited about seeing that we produced -- we got to operating profit numbers in the fourth quarter. As Mike mentioned, we've got about 1,500 more under signature now. We would expect to see the rollout of those kind of start towards the latter part of the first quarter and then gain momentum through second and third quarter. Right now, I would say that maybe a little more than half of those 1,500-or-so, we would deploy this year. If we see a little better than expected results on some of those, we might increase that number of deployments towards the latter half of the year. But probably, like I said, a little more than half of those we'd roll out this year.

Our next question comes from the line of Chris Shutler from William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: In Money Transfer, obviously, pretty strong results there. Just curious, if you dig into the numbers a bit, I'm curious if you're seeing outside strength in any particular geographies. And then, also, Mike, can you help us understand whether most of the growth, do you think it's being driven by existing customers doing more transactions, growth in the average transaction size or new customers? Ultimately, I'm trying to get a sense of how much of the improvement you think is more market share versus underlying improvement in the economy?

I think in Europe, you're seeing underlying improvement in the economy, particularly, in Spain and Italy, combined with new markets where there are market share gains, particularly, France, Germany, Nordics, et cetera. In the U.S., I would say, that's probably, an improvement -- probably, a combination of improvement in the economy and you've kind of seen that with some of the economic indicators here in the U.S., a little bit of construction kicking in and so forth. But combined with the fact that there has got to be some market share gains, because when you look at Bank Mexico's numbers, where they actually, they monitor the total number of transactions that come into the country, they're essentially flat, yet our numbers are up well into the double digits. So all that means is, we must be taking market share from somebody. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes. That makes sense. And on the guidance of $0.37, that's down $0.10 sequentially, due, obviously, to seasonality, but up year-over-year. But I'm just wondering if there's anything holding back the guidance at all. The last 2 years, the sequential decline from Q4 to Q1 has been between $0.08 and $0.10, if you normalize for that tax benefit last year. And you, obviously, have -- there were number of things coming online in Q1 with Pure Commerce, easy pay, some FX tailwinds and then the repurchase. So I just wanted to get a little more color there.

Yes. Well, those are good observations. One thing though, remember Rick's comment when he mentioned Q4 versus Q3. What we're finding now with our own independent deployments of ATMs, that we've got a significant growth in the fourth quarter, even more than we used to, where we used to have ATMs or we just get local guys doing lots of transactions during Christmastime. We now have the extra benefit where we're starting to put these independently deployed ATMs in a number of Western European countries, and we just get a lot more action in Q4 than kind of we have in the past. So the seasonal drop becomes a little exacerbated. And actually, I'm thrilled that we're going to do what we're going to do in Q1, just based upon the seasonality.

Chris, and I would add to that, the success in the nonmobile product has pushed a little bit more into the fourth quarter because products like Amazon and iTunes and stuff like that, have a very strong holiday sales effect. And so we're seeing a little bit more of that in the fourth quarter, and as Mike said, a little bit more on the value-added product side on the ATM.

With those gift cards, I think, the number, Kevin, you can correct me, is around 40% of the annual sales happen in the fourth quarter. So because we're doing more and more iTunes and Amazon and all of these gift cards, we just all of a sudden, across not just our EFT segment, but our epay segment and others, we just see a really strong bump up seasonal kind of way out of whack with Q1 in our business. It's good news, though, for Q4 and being able to hang on within $0.10 in Q4 and in Q1, that's really good news. Christopher Shutler - William Blair & Company L.L.C., Research Division: Yes. Okay. And then, can you just help me size the -- this revenue contribution for -- with easy pay and Pure Commerce, I guess, on an annualized basis, as we think about '13?

I don't think that we put out those. On Pure Commerce, we said that they did about $15 million in annual revenue, we didn't put out anything on easy pay. But I think the $15 million is, probably, not a bad number. I would actually expect it to be better than that as we experience growth on that side of the business.

Our next question comes from the line of Jason Nacca from Sidoti & Company. Jason Nacca - Sidoti & Company, LLC: I want to get right into it -- speaking about the outsourcing of ATMs in Europe. Given, you said in the Money Transfer business, we're seeing some improvements in economic conditions. Is that kind of changing the story for what some of these banks are thinking regarding their outsourcing strategies?

I think that the market -- what you say is interesting, particularly, with Money Transfer and with immigrants' jobs and so forth. They tend to lead the rest of the market and you'll see that well in advance of when you see the general market go up. The reality is, the crisis is still the crisis in Europe. And in fact, where people have passed stress tests, then they start to fail them now just because their economy's so weak and they can't make their operating income to cover their numbers. Now we like that. Actually, the crisis is our friend because it is causing these banks to have more conversations with us about doing innovative solutions to make their ATMs space, which are nothing but a cost center right, now into more of a profit center. Just like we did with the BNP Paribas deal in the Ukraine, we're doing other deals like that and discussing other deals across Europe. So crisis is still here in Europe, I'm loving it and we will take advantage of that. Jason Nacca - Sidoti & Company, LLC: Okay. And then my next is the DCC product, regarding the Pure Commerce as well, kind of pitching into that. Are you seeing some growth there that is more than you expected, given the Pure Commerce and the reputation that it has? Maybe find me a little color on what you're seeing now with that acquisition and if it's changing some of your outlook?

Well we have good goals for Pure Commerce, but understand, we've only had it under our belt for like less than a month. So I can't tell you that it's beaten our projections yet, because we just haven't had it long enough. But I'll tell you, there's a strong management team, very entrepreneurial, thoughtful guys who run that. They've stayed with the business since we acquired them. They've got some great plans for a continued rollout this year. We're just -- it's kind of a block and tackling here, we don't even have to sign much. We just have to kind of -- we just have to just roll out what we've got, and we're on it. We've got -- we're also leveraging some of our technical prowess that we have in our own EFT division to help them. So we'll be able to give you a little bit more color on this as the quarters go on because, like I said, we've only had them for a month. But when you think about what they do, it's a great product that could be used throughout the world. So we just need to get it into more places and bring it live with their current agreements they have signed. Jason Nacca - Sidoti & Company, LLC: Now regarding your Sydney rollout of this 3-phase program, specifically, these transportation related products, are you seeing any more interest worldwide from either governments or municipalities regarding you guys, kind of taking some market share there and seeing more interest?

Yes, so this is Kevin. So the -- let me speak to the Sydney project and then I'll speak to the global interest. On the Sydney project, as you recall, I think we said in the last update, it's a 3-phase project. We're in the pilot stage of the first phase. I'm very pleased with the technical execution on it, it went exceptionally well. In terms of measuring the demand for the product, it's still too early to predict. We're only about 6 weeks into it with a limited rollout, but we remain cautiously optimistic. Regarding interest from others, what we've done is we aren't doing that directly with transport authorities, we are using partners like, in the case of Australia with Cubic. And these partners are bidding on projects all around the world, and as they win these projects, we believe, we'll continue to be the preferred partner to provide our cardless solutions and our cashload solutions on the transport cards.

[Operator Instructions] Our next question comes from the line of Peter Heckmann from Avondale Partners.

Could you give us an update on cadooz first full year of ownership? Is there a way to break out a little bit, how to think of year-over-year growth in that entity? If there are any -- if there's an ability to enter into some new markets or particular successes that you want to point out. It seems to me that cadooz, if I remember correctly, was limited primarily to Germany and there wasn't really significant opportunity from other European countries, maybe some larger competitors. But it seems like that could be a much bigger business at some point, is that tracking with those expectations?

Pete, this is Kevin, again. So the 2012 performance of cadooz was generally in line with our expectations. We've made the decision last year, we explored some expansion opportunities and we made the decision last year to really continue to focus on Germany. If you recall, there's 2 elements of the business. There's the rewards business related to employee incentives and compensation and then there's a promotion side of the business where they do marketing promotions for companies. We had a lot of success with additional promotions. We had continued success on employee recognition but we really grew the promotion side of the business last year. Additionally, the other focus we had in 2012 was to expand the product content and we successfully did that by introducing the number of new products into the cadooz portfolio. For our 2013, your question is spot on, we are looking at expanding the cadooz model into likely 2 countries. We're not yet ready to, for competitive reasons, to say where we’re going to do that. But there's 2 countries where we're going to -- we feel are well-positioned with moderate competition and the product suite that we have, we think, is good for those markets. And so that's the plan for 2013.

Okay, great. And then Rick, in terms of long-term debt options, I may have missed it if you mentioned it, does it make sense to explore some fixed rate options for the debt at this point, or are you pretty comfortable with the amount of debt on the revolver?

Yes, Pete. I guess, I would say is that we're satisfied with where we are right now. However, as you know, the debt markets are pretty attractive. We've seen some very attractive longer-term rates. So what I would tell you is that, we keep our eye on the markets from an opportunistic standpoint. If there was something that would make sense, it would, probably, be along the line of some type of a longer-term fixed rate to take down the revolver, that would then, just a free up possible capital, if you will. But right now, we don't have any kind of urgent plans to rush to market on that.

But it is nice that S&P gave us an investment grade rating, so that's just going to make it even more attractive mathematically for us.

Right. Right. And then last question. Is there any regulatory change, pending regulatory change that could be either positive or negative that we should be keeping our eye on? It's always a little difficult, as an outsider, to kind of due diligence to all different the markets that you're in and some regulatory changes may just not be material, but anything that we should be tracking from either positive or negative standpoint for 2013?

I -- we're not tracking anything to -- there just doesn't seem like there's much out there that could affect us.

Our next question is a follow-up from the line of Mike Grondahl from Piper Jaffray.

Mike, I don't know if you commented or did you say anything quantitatively about your ATM backlog? And then if you could just handicap, maybe Euronet's chances of getting a deal in Western Europe this year, that would be helpful. Thanks.

Okay. So we've got about 300-or-so ATMs in our classic kind of backlog count methodology, but our business is evolving, so that doesn't -- it doesn't really apply as well anymore. So your question is a good one because we've always excluded the Brown label from our backlog, so we've got 1,500 of those ATMs, which we can put out all or few of those, depending on how profitable we can get. And then on top of that, we've got our own plans to expand our IADs, our Independent ATM Deployments, across Western Europe and Central Europe in a neighborhood of 500 to 1,000 ATMs. So when you kind of add it all up, I don't know, we'll see what happens in India, but there could be a couple thousand ATMs this year. We'll see, maybe 2, 500. But we're focused, particularly, in Europe, about -- I mean, sorry, in India, about -- because it took us a little bit, it took us an extra quarter or so to get profitable more than what we thought, we're going to be really careful about choosing our sites there. And then I forgot what the second question was.

Western Europe.

Oh, yes. Western Europe. We are talking with a number of banks in Western Europe. You noticed just nailing that deal with BNP Paribas, I mean, we're dealing with the Western banks, but they're making their decisions, so far, in Central Europe. We've had a number of discussions with Western banks for value-added services on ATM networks, about doing outsourcing or acquiring networks. We haven't closed a deal yet. It's kind of like always -- it's hard to predict these things until I've got their signature on a piece of paper. So but I will tell you, we are in discussions.

Our next question is a follow-up from the line of Chris Shutler of William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: In the EFT segment, the 1,700 Brown label ATMs in India, can you help quantify how much of a drag that has been to operating income in 2012?

What? $0.03 to $0.04?

Oh, yes. It's $0.03 to $0.04, maybe a little bit more. But probably $0.03 to $0.05 a share. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay, great. And then the only other one I had is in the corporate expense in the quarter. In the release, you guys talked about higher incentive comp. Then I looked at the adjusted results, and it looks like stock based comp only increased about $100,000 year-over-year. So what am I missing and how should we think about corporate expense going forward?

The other part of that was just, in looking at a year-over-year number, Chris, on cash bonus or short-term incentive, we had a little stronger numbers in the fourth quarter because as we came throughout the year, it looked like we were headed towards achieving the lower end of the targets, and as we completed the year and finished out the numbers that came in at the higher end of the target, so it was just kind of like a bit more cumulative pick up in the fourth quarter compared to the same kind of approach in the prior year. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. So going forward, it should normalize back down to the $7 million per quarter-ish range, somewhere in there?

Yes, I'd have to kind of -- yes, that doesn't seem to be too bad. And we do get a little bit of volatility by quarter on the stock based comp piece just because of -- substantially, all of our stock based comp is performance-based as opposed to just awarded shares. And so that performance base causes a lot of volatility in the accounting for that. But I think, your $7 million number is kind of directionally there.

And that does conclude our question-and-answer session. I would like to turn the conference back over to Mr. Michael Brown for any closing remarks.

I just want to thank everybody for taking the time on the call. We'll be around if you got any further questions. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect. Have a great rest of the day.