Global Payments Reports Second Quarter Earnings
ATLANTA, Jan. 7 /PRNewswire-FirstCall/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2009. For the second quarter, revenues grew 12% to $409.0 million compared to $365.9 million in the prior year. Diluted earnings per share from continuing operations grew 25% to $0.71 compared to $0.57 in the prior year (See Schedule 2 for financial results from continuing operations).
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Chairman and CEO, Paul R. Garcia, stated, "Despite challenging macroeconomic conditions, we reported solid financial performance this quarter, driven by strong growth in our U.S. ISO channel and continued successful execution in our International businesses.
"Based on our current outlook for continuing operations, we expect fiscal 2010 annual revenue of $1,580 million to $1,615 million, or 8% to 10% growth over fiscal 2009, and we are increasing our fiscal 2010 diluted EPS expectations to $2.35 to $2.46, reflecting 12% to 17% growth over fiscal 2009 EPS," said Garcia.
As a result of the company's recently announced divestiture of its Money Transfer business, the company has classified and reported Money Transfer as discontinued operations in its financial statements.
Conference Call
Global Payments will hold a conference call today, January 7, 2010 at 4:30 p.m. EST to discuss financial results and business highlights. Callers may access the conference call via the company's Web site at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-204-4317 and callers outside North America may dial 1-913-312-0963. The pass code is "GPN." A replay of the call may be accessed through the Global Payments' Web site through January 21, 2010.
Global Payments Inc. (NYSE:GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Latin America, Europe, and the Asia-Pacific region. Global Payments offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management. For more information about the company and its services, visit www.globalpaymentsinc.com.
This announcement and comments made by Global Payments' management during the conference call may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management's expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: foreign currency risks which become increasingly relevant as we expand internationally, the effect of current U.S. economic conditions, including a decline in the value of the U.S. dollar, the impact of the divestiture of the Money Transfer business and future performance and integration of recent acquisitions, and other risks detailed in the company's SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable. The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
Contact: Jane M. Elliott
770-829-8234 Voice
770-829-8267 Fax
[email protected]
SCHEDULE 1
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended Six Months Ended
November 30, November 30,
------------------ -----------------
2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
Revenues $408,951 $365,884 12% $818,882 $734,844 11%
-------- -------- -------- --- -------- -------- ---
Operating expenses:
Cost of service 144,881 131,144 10% 286,084 250,630 14%
Sales, general
and
administrative 175,368 156,858 12% 354,853 317,713 12%
------- ------- ------- -------
320,249 288,002 11% 640,937 568,343 13%
------- ------- ------- -------
Operating income 88,702 77,882 14% 177,945 166,501 7%
---------------- ------ ------ --- ------- ------- --
Other income
(expense):
Interest and other
income 690 1,936 (64)% 1,380 5,219 (74)%
Interest and other
expense (4,423) (1,799) 146% (8,564) (4,070) 110%
------ ------ ------ ------
(3,733) 137 NM (7,184) 1,149 NM
------ --- ------ -----
Income from continuing
operations before
income taxes 84,969 78,019 9% 170,761 167,650 2%
Provision for income
taxes (23,655) (20,813) 14% (49,191) (47,498) 4%
------- ------- ------- -------
Income from
continuing
operations 61,314 57,206 7% 121,570 120,152 1%
Income from
discontinued
operations,
net of tax 4,868 3,040 60% 7,056 5,942 19%
----- ----- ----- -----
Net income including
noncontrolling
interests 66,182 60,246 10% 128,626 126,094 2%
Less: Net income
attributable
to
noncontrolling
interests,
net of tax (3,347) (11,339) (70)% (7,960) (19,660) (60)%
------ ------- ------ -------
Net income
attributable
to Global
Payments $62,835 $48,907 28% $120,666 $106,434 13%
------- ------- -------- --------
Amounts attributable
to Global Payments:
Income from
continuing
operations $57,967 $45,867 26% $113,610 $100,492 13%
Income from
discontinued
operations,
net of tax 4,868 3,040 60% 7,056 5,942 19%
----- ----- ----- -----
Net income
attributable
to Global
Payments $62,835 $48,907 28% $120,666 $106,434 13%
------- ------- -------- --------
Basic earnings per
share attributable
to Global Payments:
Income from
continuing
operations $0.71 $0.57 25% $1.40 $1.26 12%
Income from
discontinued
operations,
net of tax 0.06 0.04 58% 0.09 0.07 17%
---- ---- ---- ----
Net income $0.77 $0.61 27% $1.49 $1.33 12%
----- ----- ----- -----
Diluted earnings per
share attributable
to Global Payments:
Income from
continuing
operations $0.71 $0.57 25% $1.39 $1.24 12%
Income from
discontinued
operations,
net of tax 0.05 0.03 67% 0.09 0.07 23%
---- ---- ---- ----
Net income $0.76 $0.60 27% $1.48 $1.31 12%
----- ----- ----- -----
Weighted average shares
outstanding(1):
Basic 81,236 80,228 80,890 80,037
Diluted 82,188 81,157 81,786 81,147
(1) Pursuant to the retrospective adoption of FASB guidance on
participating securities (ASC 260-10-45-40), basic and diluted
weighted average shares outstanding have been increased by 493 and
25, respectively for the three months ended November 30, 2008, and
439 and 29, respectively for the six months ended November 30, 2008.
NM - Not Meaningful
SCHEDULE 2
INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO GLOBAL PAYMENTS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended Six Months Ended
November 30, November 30,
------------------ -----------------
2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
Revenues $408,951 $365,884 12% $818,882 $734,844 11%
-------- -------- -------- --- -------- -------- ---
Operating expenses:
Cost of service 144,881 131,144 10% 286,084 250,630 14%
Sales, general
and
administrative 175,368 156,858 12% 354,853 317,713 12%
------- ------- ------- -------
320,249 288,002 11% 640,937 568,343 13%
------- ------- ------- -------
Operating income 88,702 77,882 14% 177,945 166,501 7%
---------------- ------ ------ --- ------- ------- ---
Other income (expense):
Interest and other
income 690 1,936 (64)% 1,380 5,219 (74)%
Interest and other
expense (4,423) (1,799) 146% (8,564) (4,070) 110%
------ ------ ------ ------
(3,733) 137 NM (7,184) 1,149 NM
------ --- ------ -----
Income from continuing
operations before
income taxes 84,969 78,019 9% 170,761 167,650 2%
Provision for
income taxes (23,655) (20,813) 14% (49,191) (47,498) 4%
------- ------- ------- -------
Income from continuing
operations including
noncontrolling
interests 61,314 57,206 7% 121,570 120,152 1%
Less: Net income
attributable to
noncontrolling
interests,
net of tax (3,347) (11,339) (70)% (7,960) (19,660) (60)%
------ ------- ------ -------
Net income from
continuing operations
attributable to
Global Payments $57,967 $45,867 26% $113,610 $100,492 13%
======= ======= ======== ========
Basic earnings
per share $0.71 $0.57 25% $1.40 $1.26 12%
===== ===== ===== =====
Diluted earnings
per share $0.71 $0.57 25% $1.39 $1.24 12%
===== ===== ===== =====
Weighted average
shares outstanding:
Basic 81,236 80,228 80,890 80,037
Diluted 82,188 81,157 81,786 81,147
NM - Not Meaningful
SCHEDULE 3
SEGMENT INFORMATION CONTINUING OPERATIONS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended Six Months Ended
November 30, November 30,
------------------ -----------------
2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
Revenues:
---------
United States $220,934 $192,149 15% $443,699 $392,845 13%
Canada 78,236 78,633 (1)% 159,461 164,577 (3)%
------ ------ ------- -------
North America
Merchant
Services 299,170 270,782 10% 603,160 557,422 8%
Europe 84,143 71,170 18% 164,610 132,772 24%
Asia-Pacific 25,638 23,932 7% 51,112 44,650 14%
------ ------ ------ ------
International
Merchant
Services 109,781 95,102 15% 215,722 177,422 22%
Total
Revenues $408,951 $365,884 12% $818,882 $734,844 11%
======== ======== ======== ========
Operating Income:
-----------------
North America
Merchant Services $73,643 $72,431 2% $149,564 $155,500 (4)%
International
Merchant Services 30,750 20,963 47% 59,499 41,365 44%
Corporate (15,691) (15,512) 1% (31,118) (30,364) 2%
------- ------- ------- -------
Operating Income $88,702 $77,882 14% $177,945 $166,501 7%
======= ======= ======== ========
SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
November 30, May 31,
2009 2009
---- ----
ASSETS
Current assets:
Cash and cash equivalents $1,090,847 $426,935
Accounts receivable, net of allowances
for doubtful accounts of $337 and $553,
respectively 131,690 122,831
Claims receivable, net of allowance for
losses of $4,150 and $4,026, respectively 833 607
Settlement processing assets 8,657 6,675
Inventory, net of obsolescence reserves of
$761 and $653, respectively 12,858 5,914
Deferred income taxes 2,591 3,789
Assets of discontinued operations 123,351 -
Prepaid expenses and other current assets 20,267 28,437
------ ------
Total current assets 1,391,094 595,188
--------- -------
Property and equipment, net of accumulated
depreciation of $118,170 and $121,189,
respectively 174,692 176,226
Goodwill 599,872 625,120
Other intangible assets, net of accumulated
amortization of $132,442 and $189,560,
respectively 225,211 258,094
Deferred income taxes 95,733 -
Other 23,246 22,193
------ ------
Total assets $2,509,848 $1,676,821
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $9,823 $10,174
Notes payable - current portion 109,138 29,393
Payables to money transfer beneficiaries - 12,343
Accounts payable and accrued liabilities 169,417 167,700
Settlement processing obligations 732,023 106,934
Liabilities of discontinued operations 23,437 -
Income taxes payable 8,171 9,633
----- -----
Total current liabilities 1,052,009 336,177
--------- -------
Notes payable 341,978 167,610
Deferred income taxes 62,112 76,405
Other long-term liabilities 25,125 19,009
------ ------
Total liabilities 1,481,224 599,201
--------- -------
Commitments and contingencies
Redeemable noncontrolling interest 96,613 399,377
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized and none issued - -
Common stock, no par value; 200,000,000
shares authorized; 81,473,144 and
80,445,009 shares issued and outstanding at
November 30, 2009 and May 31, 2009,
respectively - -
Paid-in capital 434,728 405,241
Retained earnings 467,476 273,090
Accumulated other comprehensive income 19,203 (10,901)
------ -------
Total Global Payments Inc. shareholders'
equity 921,407 667,430
------- -------
Noncontrolling interest 10,604 10,813
------ ------
Total equity 932,011 678,243
------- -------
Total liabilities and equity $2,509,848 $1,676,821
========== ==========
Presentation of prior year amounts have been adjusted to retrospectively
conform with FASB guidance on noncontrolling interests.
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Six Months Ended November 30,
-----------------------------
2009 2008
---- ----
Cash flows from operating activities:
Net income including noncontrolling
interests $128,626 $126,094
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization of
property and equipment 17,441 19,446
Amortization of acquired intangibles 16,264 15,654
Share-based compensation expense 7,433 7,154
Provision for operating losses and
bad debts 13,152 11,814
Deferred income taxes (18,091) 467
Estimated loss on disposal of
discontinued operations 15,850 -
Other, net (151) 349
Changes in operating assets and liabilities,
net of the effects of acquisitions:
Accounts receivable (7,869) (13,210)
Claims receivable (8,052) (9,872)
Settlement processing assets and
obligations, net 617,802 36,994
Inventory (7,274) (1,184)
Prepaid expenses and other assets 2,299 4,263
Payables to money transfer beneficiaries (5,082) 2,968
Accounts payable and accrued liabilities 13,642 (1,461)
Income taxes payable (768) 1,021
---- -----
Net cash provided by operating
activities 785,222 200,497
------- -------
Cash flows from investing activities:
Business and intangible asset
acquisitions (17,059) (454,265)
Capital expenditures (20,677) (17,396)
Net increase in financing receivables (501) -
Proceeds from sale of investment and
contractual rights 253 6,956
--- -----
Net cash used in investing activities (37,984) (464,705)
------- --------
Cash flows from financing activities:
Net (repayments) borrowings on lines of
credit (351) 5,047
Proceeds from issuance of notes payable 302,487 200,000
Acquisition of redeemable noncontrolling
interests (307,675) -
Principal payments under notes payable (49,509) (5,000)
Proceeds from stock issued under
share-based compensation plans 18,017 6,420
Tax benefit from share-based compensation
plans 4,037 1,749
Dividends paid (3,245) (3,210)
Contribution from noncontrolling interest
holder - 358
Distribution to noncontrolling interests (16,258) (11,718)
------- -------
Net cash (used in) provided by
financing activities (52,497) 193,646
------- -------
Effect of exchange rate changes on cash 6,522 (29,264)
----- -------
Increase (decrease) in cash and cash
equivalents 701,263 (99,826)
Cash and cash equivalents, beginning of
period 426,935 456,060
Cash and cash equivalents of discontinued
operations (37,351) -
------- ---
Cash and cash equivalents, end of period $1,090,847 $356,234
---------- --------
Presentation of prior year amounts have been adjusted to retrospectively
conform with FASB guidance on noncontrolling interests.
SCHEDULE 6
CONSTANT CURRENCY SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In millions, except per share data)
Q2 FY10 % change YTDFY10 % change
Actual Q2 FY09 Actual YTD FY09
------ ------- ------ --------
Fiscal 2010 Revenues
--------------------
Constant currency(1) $404 11% $835 14%
Foreign currency impact(2) 5 1% (16) (3%)
--- --- --- ----
Revenues from continuing
operations $409 12% $819 11%
==== === ==== ===
Fiscal 2010 Diluted Earnings
Per Share
----------------------------
Constant currency(1) $0.68 20% $1.43 15%
Foreign currency impact(2) 0.03 5% (0.04) (3%)
---- --- ----- ----
Diluted EPS from continuing
operations $0.71 25% $1.39 12%
===== === ===== ===
We supplemented our reporting of total revenues and earnings per share
information determined in accordance with GAAP by reporting revenues and
earnings per share for fiscal 2010 on a "constant currency" basis in this
earnings release as a measure to help evaluate performance. We
calculated revenues and earnings per share on a constant currency basis
by converting our fiscal 2010 actual revenues and expenses at fiscal 2009
exchange rates. We exclude the impact of exchange rate fluctuations in
order to more clearly focus on the factors we believe are pertinent to
the daily management of our operations, and our management uses constant
currency measures to evaluate the impact of operational business
decisions. Our revenues and earnings per share reported on a constant
currency basis should be considered in addition to, and not as a
substitute for, revenues and earnings per share determined in accordance
with GAAP. Our measures of revenues and earnings per share on a constant
currency basis reflect management's judgment of particular items, and may
not be comparable to similarly titled measures reported by other
companies.
(1) Reflects current period results on a pro forma basis as if foreign
currency rates did not change from the comparable prior year period.
(2) Reflects the impact of changes in foreign currency rates from the
comparable prior year period.
SCHEDULE 7
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
For Year Ended May 31, 2009 2010 2010
(in millions, except per
share data) Actual Expectations Growth Rates
------ ------------ ------------
(Unaudited)
Revenues $1,602 $1,705 $1,740 6% 9%
Money Transfer -
discontinued operations 139 125 125 (10)% (10)%
Adjusted Revenues $1,463 $1,580 $1,615 8% 10%
====== ====== ====== === ===
Diluted earnings per share
as previously reported $0.46 -- -- -- --
Diluted loss per share as
a result of impairment
-discontinued ops(1) $1.77 -- -- -- --
-----
Normalized diluted
earnings per share $2.23 $2.47 $2.58 11% 16%
Normalized earnings from
Money Transfer
-discontinued operations 0.13 0.12 0.12 (8)% (8)%
Diluted earnings from continuing
operations per share $2.10 $2.35 $2.46 12% 17%
===== ===== ===== === ===
As a result of the agreement to sell the money transfer businesses, ASC
205-20, Discontinued Operations requires classification of the money
transfer businesses as held for sale and the results of operations as
discontinued. Previously reported results will be reclassified in future
financial statements. The earnings per share calculation above reflects
this reclassification.
(1) Impairment charges consist of goodwill and other intangible asset
impairments in the Money Transfer segment. Also reflects the related
income tax benefit and share dilution. This impairment will be included
in discontinued operations along with the earnings from Money Transfer for
a GAAP diluted loss from discontinued operations per share of $1.64.
SOURCE Global Payments Inc.
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