Global Payments Reports Second Quarter Earnings
Further Increases Annual Fiscal 2015 Revenue, Margin and Cash EPS Outlook
Raises Share Repurchase Authorization to $300 Million
ATLANTA, January 8, 2015 -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2014.
“We are very pleased to deliver another quarter of solid performance across our direct businesses,” said Chief Executive Officer Jeff Sloan. “We also continue to successfully expand our worldwide footprint, one of our key strategies to accelerate growth. During the quarter, we completed the acquisition of Ezidebit, a technology company with direct distribution in Australia and New Zealand and an expanding presence throughout Asia. We also announced an agreement to establish a new joint venture with Bank of the Philippine Islands. This partnership will increase our existing distribution in the highly attractive Philippines market. These transactions help fulfill the vision we set forth in 2012 with the purchase of the minority interest in our then joint venture in Asia.”
Second Quarter 2015 Summary
| • | Revenues grew 10% to $697.3 million, compared to $634.1 million in the second quarter of fiscal 2014. |
| • | Cash diluted earnings per share1 grew 19% to $1.27, compared to $1.07 in the second quarter of fiscal 2014. |
| • | GAAP diluted earnings per share were $1.10, compared to $1.02 in the second quarter of fiscal 2014. |
2015 Outlook
Cameron Bready, Executive Vice President and Chief Financial Officer, stated, “We experienced strong organic revenue growth and margin expansion during the quarter, despite the strengthening of the U.S. dollar, and we continue to see solid performance from our recent acquisitions. Based on these results and our outlook for the remainder of the fiscal year, we are increasing our revenue, margin and cash earnings per share guidance.”
1See Schedule 2 for cash earnings and Schedules 6, 7, and 8 for reconciliations of historical cash earnings to GAAP.
The company is raising its annual fiscal 2015 revenue outlook to $2.75 billion to $2.80 billion, or 8% to 10% growth. In addition, Global Payments is increasing its outlook for annual fiscal 2015 diluted earnings per share on a cash basis to a range of $4.75 to $4.83, reflecting growth of 15% to 17% over fiscal 2014, and annual fiscal 2015 GAAP diluted earnings per share is expected to be in the range of $3.99 to $4.07. The company also now expects annual fiscal 2015 core cash operating margins to expand by as much as 50 basis points.
Capital Allocation
Global Payments’ Board of Directors approved a fiscal 2015 second quarter dividend of $0.02 per share payable February 27, 2015 to shareholders of record as of February 13, 2015 and also approved an increase to the existing authorization for the company’s share repurchase program, raising the total available authorization to $300 million.
Conference Call
Global Payments’ management will host a conference call today, January 8, 2015 at 8:00 a.m. ET to discuss financial results and business highlights. Callers may access the conference call via the investor relations page of the company’s website at www.globalpaymentsinc.com; or callers in North America may dial 877-674-6428 and callers outside North America may dial 970-315-0457. A replay of the call will be archived on the company's website within two hours of the live call.
About Global Payments
Global Payments Inc. is one of the largest worldwide providers of payment solutions for merchants, value added resellers, enterprise software providers, financial institutions, government agencies, multi-national corporations and independent sales organizations located throughout North America, Brazil, Europe and the Asia-Pacific region. Global Payments, a Fortune 1000 company, offers a comprehensive line of solutions and services 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. Visit www.globalpaymentsinc.com for more information about the company and its services.
This announcement and comments made by Global Payments' management 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 our ability to safeguard our data; increased competition from non-traditional competitors; our ability to update our products and services in a timely manner; potential systems interruptions or failures; software defects or undetected errors; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; increased attrition of merchants, referral partners or independent sales organizations; our ability to increase our share of existing markets and expand into new markets; unanticipated increases in chargeback liability; increases in credit card network fees; changes in laws, regulations or network rules or interpretations thereof; foreign currency exchange and interest rate risks; political, economic and regulatory changes in the foreign countries in which we operate; future performance, integration and conversion of acquired operations; loss of key personnel; and other risks detailed in our SEC filings, including the most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Report on Form 10-Q. We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
Investor contact: investor.relations@globalpay.com | Media contact: media.relations@globalpay.com |
| Jane Elliott | Amy Corn |
| 770-829-8234 | 770-829-8755 |
SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
| Three Months Ended November 30, | Six Months Ended November 30, | ||||||||||||||||||||
| 2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||
| Revenues | $ | 697,291 | $ | 634,122 | 10.0 | % | $ | 1,402,186 | $ | 1,263,807 | 10.9 | % | |||||||||
| Operating expenses: | |||||||||||||||||||||
| Cost of service | 257,796 | 235,170 | 9.6 | % | 517,635 | 465,915 | 11.1 | % | |||||||||||||
| Sales, general and administrative | 315,511 | 294,045 | 7.3 | % | 636,169 | 585,601 | 8.6 | % | |||||||||||||
| Processing system intrusion | — | (7,000 | ) | (100.0 | )% | — | (7,000 | ) | (100.0 | )% | |||||||||||
| 573,307 | 522,215 | 9.8 | % | 1,153,804 | 1,044,516 | 10.5 | % | ||||||||||||||
| Operating income | 123,984 | 111,907 | 10.8 | % | 248,382 | 219,291 | 13.3 | % | |||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest and other income | 1,282 | 5,288 | (75.8 | )% | 2,474 | 8,626 | (71.3 | )% | |||||||||||||
| Interest and other expense | (10,350 | ) | (8,025 | ) | 29.0 | % | (21,360 | ) | (15,904 | ) | 34.3 | % | |||||||||
| (9,068 | ) | (2,737 | ) | 231.3 | % | (18,886 | ) | (7,278 | ) | 159.5 | % | ||||||||||
| Income before income taxes | 114,916 | 109,170 | 5.3 | % | 229,496 | 212,013 | 8.2 | % | |||||||||||||
| Provision for income taxes | (29,660 | ) | (29,313 | ) | 1.2 | % | (59,806 | ) | (60,448 | ) | (1.1 | )% | |||||||||
| Net income | 85,256 | 79,857 | 6.8 | % | 169,690 | 151,565 | 12.0 | % | |||||||||||||
| Less: Net income attributable to noncontrolling interests, net of income tax | (10,475 | ) | (5,960 | ) | 75.8 | % | (19,543 | ) | (13,025 | ) | 50.0 | % | |||||||||
| Net income attributable to Global Payments | $ | 74,781 | $ | 73,897 | 1.2 | % | $ | 150,147 | $ | 138,540 | 8.4 | % | |||||||||
| Earnings per share attributable to Global Payments: | |||||||||||||||||||||
| Basic | $ | 1.11 | $ | 1.02 | 8.8 | % | $ | 2.22 | $ | 1.90 | 16.8 | % | |||||||||
| Diluted | $ | 1.10 | $ | 1.02 | 7.8 | % | $ | 2.20 | $ | 1.88 | 17.0 | % | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||
| Basic | 67,377 | 72,174 | 67,764 | 72,974 | |||||||||||||||||
| Diluted | 67,737 | 72,706 | 68,179 | 73,504 | |||||||||||||||||
4
SCHEDULE 2
CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
| Three Months Ended November 30, | Six Months Ended November 30, | ||||||||||||||||||||
| 2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
| Revenues | $ | 697,291 | $ | 634,122 | 10.0 | % | $ | 1,402,186 | $ | 1,263,807 | 10.9 | % | |||||||||
| Operating expenses: | |||||||||||||||||||||
| Cost of service | 239,533 | 220,610 | 8.6 | % | 481,518 | 436,383 | 10.3 | % | |||||||||||||
| Sales, general and administrative | 315,511 | 290,697 | 8.5 | % | 639,110 | 580,757 | 10.0 | % | |||||||||||||
| 555,044 | 511,307 | 8.6 | % | 1,120,628 | 1,017,140 | 10.2 | % | ||||||||||||||
| Operating income | 142,247 | 122,815 | 15.8 | % | 281,558 | 246,667 | 14.1 | % | |||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest and other income | 1,282 | 3,165 | (59.5 | )% | 2,474 | 6,503 | (62.0 | )% | |||||||||||||
| Interest and other expense | (10,350 | ) | (8,025 | ) | 29.0 | % | (21,360 | ) | (15,904 | ) | 34.3 | % | |||||||||
| (9,068 | ) | (4,860 | ) | 86.6 | % | (18,886 | ) | (9,401 | ) | 100.9 | % | ||||||||||
| Income before income taxes | 133,179 | 117,955 | 12.9 | % | 262,672 | 237,266 | 10.7 | % | |||||||||||||
| Provision for income taxes | (35,520 | ) | (32,873 | ) | 8.1 | % | (70,950 | ) | (69,559 | ) | 2.0 | % | |||||||||
| Net income | 97,659 | 85,082 | 14.8 | % | 191,722 | 167,707 | 14.3 | % | |||||||||||||
| Less: Net income attributable to noncontrolling interests, net of income tax | (11,648 | ) | (7,197 | ) | 61.8 | % | (21,951 | ) | (15,633 | ) | 40.4 | % | |||||||||
| Net income attributable to Global Payments | $ | 86,011 | $ | 77,885 | 10.4 | % | $ | 169,771 | $ | 152,074 | 11.6 | % | |||||||||
| Earnings per share attributable to Global Payments: | |||||||||||||||||||||
| Basic | $ | 1.28 | $ | 1.08 | 18.5 | % | $ | 2.51 | $ | 2.08 | 20.7 | % | |||||||||
| Diluted | $ | 1.27 | $ | 1.07 | 18.7 | % | $ | 2.49 | $ | 2.07 | 20.3 | % | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||
| Basic | 67,377 | 72,174 | 67,764 | 72,974 | |||||||||||||||||
| Diluted | 67,737 | 72,706 | 68,179 | 73,504 | |||||||||||||||||
See Schedules 6 & 7 for a reconciliation of cash earnings to GAAP.
5
SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
| Three Months Ended November 30, | ||||||||||||||||||||||
| 2014 | 2013 | % Change | ||||||||||||||||||||
| GAAP | Cash Earnings | GAAP | Cash Earnings | GAAP | Cash Earnings | |||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| United States | $ | 404,784 | $ | 404,784 | $ | 361,793 | $ | 361,793 | 11.9 | % | 11.9 | % | ||||||||||
| Canada | 83,992 | 83,992 | 85,240 | 85,240 | (1.5 | )% | (1.5 | )% | ||||||||||||||
| North America merchant services | 488,776 | 488,776 | 447,033 | 447,033 | 9.3 | % | 9.3 | % | ||||||||||||||
| Europe | 159,974 | 159,974 | 146,866 | 146,866 | 8.9 | % | 8.9 | % | ||||||||||||||
| Asia-Pacific | 48,541 | 48,541 | 40,223 | 40,223 | 20.7 | % | 20.7 | % | ||||||||||||||
| International merchant services | 208,515 | 208,515 | 187,089 | 187,089 | 11.5 | % | 11.5 | % | ||||||||||||||
| Total revenues | $ | 697,291 | $ | 697,291 | $ | 634,122 | $ | 634,122 | 10.0 | % | 10.0 | % | ||||||||||
| Operating income (loss) for segments: | ||||||||||||||||||||||
| North America merchant services | $ | 74,246 | $ | 85,419 | $ | 70,437 | $ | 77,621 | 5.4 | % | 10.0 | % | ||||||||||
| International merchant services | 76,443 | 83,533 | 62,467 | 69,843 | 22.4 | % | 19.6 | % | ||||||||||||||
Corporate1 | (26,705 | ) | (26,705 | ) | (20,997 | ) | (24,649 | ) | 27.2 | % | 8.3 | % | ||||||||||
| Operating income | $ | 123,984 | $ | 142,247 | $ | 111,907 | $ | 122,815 | 10.8 | % | 15.8 | % | ||||||||||
| Six Months Ended November 30, | ||||||||||||||||||||||
| 2014 | 2013 | % Change | ||||||||||||||||||||
| GAAP | Cash Earnings | GAAP | Cash Earnings | GAAP | Cash Earnings | |||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| United States | $ | 818,825 | $ | 818,825 | $ | 725,626 | $ | 725,626 | 12.8 | % | 12.8 | % | ||||||||||
| Canada | 173,957 | 173,957 | 171,912 | 171,912 | 1.2 | % | 1.2 | % | ||||||||||||||
| North America merchant services | 992,782 | 992,782 | 897,538 | 897,538 | 10.6 | % | 10.6 | % | ||||||||||||||
| Europe | 322,762 | 322,762 | 290,054 | 290,054 | 11.3 | % | 11.3 | % | ||||||||||||||
| Asia-Pacific | 86,642 | 86,642 | 76,215 | 76,215 | 13.7 | % | 13.7 | % | ||||||||||||||
| International merchant services | 409,404 | 409,404 | 366,269 | 366,269 | 11.8 | % | 11.8 | % | ||||||||||||||
| Total revenues | $ | 1,402,186 | $ | 1,402,186 | $ | 1,263,807 | $ | 1,263,807 | 10.9 | % | 10.9 | % | ||||||||||
| Operating income (loss) for segments: | ||||||||||||||||||||||
| North America merchant services | $ | 152,183 | $ | 174,734 | $ | 140,136 | $ | 157,025 | 8.6 | % | 11.3 | % | ||||||||||
| International merchant services | 150,045 | 160,670 | 124,008 | 138,600 | 21.0 | % | 15.9 | % | ||||||||||||||
Corporate1 | (53,846 | ) | (53,846 | ) | (44,853 | ) | (48,958 | ) | 20.0 | % | 10.0 | % | ||||||||||
| Operating income | $ | 248,382 | $ | 281,558 | $ | 219,291 | $ | 246,667 | 13.3 | % | 14.1 | % | ||||||||||
1 GAAP earnings for the three and six months ended November 30, 2013 include insurance proceeds of $7.0 million related to the fiscal 2012 processing system intrusion.
See Schedule 8 for reconciliation of cash earnings segment information to GAAP.
6
SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)
| November 30, 2014 | May 31, 2014 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 644,469 | $ | 581,872 | |||
| Accounts receivable, net of allowances for doubtful accounts of $469 and $401, respectively | 197,053 | 214,574 | |||||
| Claims receivable, net | 577 | 809 | |||||
| Settlement processing assets | 1,122,321 | 780,917 | |||||
| Inventory | 8,002 | 6,636 | |||||
| Deferred income taxes | 12,761 | 12,963 | |||||
| Prepaid expenses and other current assets | 40,072 | 45,673 | |||||
| Total current assets | 2,025,255 | 1,643,444 | |||||
| Goodwill | 1,483,615 | 1,337,285 | |||||
| Other intangible assets, net | 542,992 | 535,173 | |||||
| Property and equipment, net | 362,809 | 369,753 | |||||
| Deferred income taxes | 95,161 | 101,928 | |||||
| Other | 31,755 | 31,067 | |||||
| Total assets | $ | 4,541,587 | $ | 4,018,650 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities: | |||||||
| Lines of credit | $ | 530,721 | $ | 440,128 | |||
| Current portion of long-term debt | 46,875 | 17,677 | |||||
| Accounts payable and accrued liabilities | 303,008 | 290,106 | |||||
| Settlement processing obligations | 781,262 | 451,317 | |||||
| Income taxes payable | 14,267 | 12,390 | |||||
| Total current liabilities | 1,676,133 | 1,211,618 | |||||
| Long-term debt | 1,554,125 | 1,376,002 | |||||
| Deferred income taxes | 200,848 | 209,099 | |||||
| Other long-term liabilities | 88,245 | 89,132 | |||||
| Total liabilities | 3,519,351 | 2,885,851 | |||||
| Commitments and contingencies | |||||||
| Equity: | |||||||
| Preferred stock, no par value; 5,000,000 shares authorized and none issued | — | — | |||||
| Common stock, no par value; 200,000,000 shares authorized; 67,031,081 issued and outstanding at November 30, 2014 and 68,845,643 issued and outstanding at May 31, 2014 | — | — | |||||
| Paid-in capital | 144,419 | 183,023 | |||||
| Retained earnings | 852,972 | 815,980 | |||||
| Accumulated other comprehensive loss | (102,726 | ) | (1,776 | ) | |||
| Total Global Payments shareholders’ equity | 894,665 | 997,227 | |||||
| Noncontrolling interests | 127,571 | 135,572 | |||||
| Total equity | 1,022,236 | 1,132,799 | |||||
| Total liabilities and equity | $ | 4,541,587 | $ | 4,018,650 | |||
7
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
| Six Months Ended November 30, | |||||||
| 2014 | 2013 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 169,690 | $ | 151,565 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization of property and equipment | 33,055 | 28,439 | |||||
| Amortization of acquired intangibles | 36,117 | 28,953 | |||||
| Share-based compensation expense | 9,145 | 11,965 | |||||
| Provision for operating losses and bad debts | 7,432 | 10,249 | |||||
| Deferred income taxes | (982 | ) | 6,073 | ||||
| Other, net | (387 | ) | (4,345 | ) | |||
| Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||
| Accounts receivable | 17,521 | (6,353 | ) | ||||
| Claims receivable | (4,881 | ) | (6,567 | ) | |||
| Settlement processing assets and obligations, net | (13,778 | ) | 204,307 | ||||
| Inventory | (1,506 | ) | 2,237 | ||||
| Prepaid expenses and other assets | 5,409 | 5,761 | |||||
| Accounts payable and other accrued liabilities | (31,503 | ) | (21,845 | ) | |||
| Income taxes payable | 1,604 | 1,244 | |||||
| Net cash provided by operating activities | 226,936 | 411,683 | |||||
| Cash flows from investing activities: | |||||||
| Business, intangible and other asset acquisitions, net of cash acquired | (223,651 | ) | (2,324 | ) | |||
| Capital expenditures | (33,290 | ) | (41,178 | ) | |||
| Principal collections on financing receivables | 219 | 1,328 | |||||
| Net proceeds from sales of investments and business | 10,528 | 3,102 | |||||
| Net cash used in investing activities | (246,194 | ) | (39,072 | ) | |||
| Cash flows from financing activities: | |||||||
| Net borrowings on short-term lines of credit | 90,593 | 259,047 | |||||
| Proceeds from issuance of long-term debt | 1,080,000 | 810,000 | |||||
| Principal payments under long-term debt | (872,679 | ) | (779,380 | ) | |||
| Repurchase of common stock | (179,724 | ) | (250,183 | ) | |||
| Proceeds from stock issued under share-based compensation plans | 17,099 | 27,366 | |||||
| Common stock repurchased - share-based compensation plans | (15,705 | ) | (5,260 | ) | |||
| Tax benefit from share-based compensation plans | 3,599 | 4,415 | |||||
| Distributions to noncontrolling interests | (15,485 | ) | (15,593 | ) | |||
| Dividends paid | (2,693 | ) | (2,894 | ) | |||
| Net cash provided by financing activities | 105,005 | 47,518 | |||||
| Effect of exchange rate changes on cash | (23,150 | ) | (3,766 | ) | |||
| Increase in cash and cash equivalents | 62,597 | 416,363 | |||||
| Cash and cash equivalents, beginning of the period | 581,872 | 680,470 | |||||
| Cash and cash equivalents, end of the period | $ | 644,469 | $ | 1,096,833 | |||
8
SCHEDULE 6
RECONCILIATION OF QUARTERLY CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
| Three Months Ended November 30, 2014 | ||||||||||||||||
| GAAP | Processing System Intrusion | Other | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||
| Revenues | $ | 697,291 | $ | — | $ | — | $ | — | $ | 697,291 | ||||||
| Operating expenses: | ||||||||||||||||
| Cost of service | 257,796 | — | — | (18,263 | ) | 239,533 | ||||||||||
| Sales, general and administrative | 315,511 | — | — | — | 315,511 | |||||||||||
| Processing system intrusion | — | — | — | — | — | |||||||||||
| 573,307 | — | — | (18,263 | ) | 555,044 | |||||||||||
| Operating income | 123,984 | — | — | 18,263 | 142,247 | |||||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other income | 1,282 | — | — | — | 1,282 | |||||||||||
| Interest and other expense | (10,350 | ) | — | — | — | (10,350 | ) | |||||||||
| (9,068 | ) | — | — | — | (9,068 | ) | ||||||||||
| Income before income taxes | 114,916 | — | — | 18,263 | 133,179 | |||||||||||
| Provision for income taxes | (29,660 | ) | — | — | (5,860 | ) | (35,520 | ) | ||||||||
| Net income | 85,256 | — | — | 12,403 | 97,659 | |||||||||||
| Less: Net income attributable to noncontrolling interests, net of income tax | (10,475 | ) | — | — | (1,173 | ) | (11,648 | ) | ||||||||
| Net income attributable to Global Payments | $ | 74,781 | $ | — | $ | — | $ | 11,230 | $ | 86,011 | ||||||
| Diluted shares | 67,737 | 67,737 | ||||||||||||||
| Diluted earnings per share | $ | 1.10 | $ | — | $ | — | $ | 0.17 | $ | 1.27 | ||||||
| Three Months Ended November 30, 2013 | ||||||||||||||||
| GAAP | Processing System Intrusion1 | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||
| Revenues | $ | 634,122 | $ | — | $ | — | $ | — | $ | 634,122 | ||||||
| Operating expenses: | ||||||||||||||||
| Cost of service | 235,170 | — | — | (14,560 | ) | 220,610 | ||||||||||
| Sales, general and administrative | 294,045 | — | (3,348 | ) | — | 290,697 | ||||||||||
| Processing system intrusion | (7,000 | ) | 7,000 | — | — | — | ||||||||||
| 522,215 | 7,000 | (3,348 | ) | (14,560 | ) | 511,307 | ||||||||||
| Operating income | 111,907 | (7,000 | ) | 3,348 | 14,560 | 122,815 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other income | 5,288 | — | (2,123 | ) | — | 3,165 | ||||||||||
| Interest and other expense | (8,025 | ) | — | — | — | (8,025 | ) | |||||||||
| (2,737 | ) | — | (2,123 | ) | — | (4,860 | ) | |||||||||
| Income (loss) before income taxes | 109,170 | (7,000 | ) | 1,225 | 14,560 | 117,955 | ||||||||||
| (Provision for) benefit from income taxes | (29,313 | ) | 2,393 | (1,145 | ) | (4,808 | ) | (32,873 | ) | |||||||
| Net income (loss) | 79,857 | (4,607 | ) | 80 | 9,752 | 85,082 | ||||||||||
| Less: Net income attributable to noncontrolling interests, net of income tax | (5,960 | ) | — | — | (1,237 | ) | (7,197 | ) | ||||||||
| Net income (loss) attributable to Global Payments | $ | 73,897 | $ | (4,607 | ) | $ | 80 | $ | 8,515 | $ | 77,885 | |||||
| Diluted shares | 72,706 | 72,706 | ||||||||||||||
| Diluted earnings (loss) per share | $ | 1.02 | $ | (0.07 | ) | $ | — | $ | 0.12 | $ | 1.07 | |||||
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
2 For the three months ended November 30, 2013, represents one-time charges primarily related to employee termination benefits and a one-time credit related to the gain on the sale of an interest in a business.
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended November 30, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. In the three months ended November 30, 2014, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization. In the three months ended November 30, 2013, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization, the processing system intrusion, one-time charges related to employee termination benefits and a one-time credit related to the gain on the sale of an interest in a business. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
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SCHEDULE 7
RECONCILIATION OF YEAR TO DATE CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
| Six Months Ended November 30, 2014 | ||||||||||||||||
| GAAP | Processing System Intrusion | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||
| Revenues | $ | 1,402,186 | $ | — | $ | — | $ | — | $ | 1,402,186 | ||||||
| Operating expenses: | ||||||||||||||||
| Cost of service | 517,635 | — | — | (36,117 | ) | 481,518 | ||||||||||
| Sales, general and administrative | 636,169 | — | 2,941 | — | 639,110 | |||||||||||
| Processing system intrusion | — | — | — | — | — | |||||||||||
| 1,153,804 | — | 2,941 | (36,117 | ) | 1,120,628 | |||||||||||
| Operating income | 248,382 | — | (2,941 | ) | 36,117 | 281,558 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other income | 2,474 | — | — | — | 2,474 | |||||||||||
| Interest and other expense | (21,360 | ) | — | — | — | (21,360 | ) | |||||||||
| (18,886 | ) | — | — | — | (18,886 | ) | ||||||||||
| Income (loss) before income taxes | 229,496 | — | (2,941 | ) | 36,117 | 262,672 | ||||||||||
| (Provision for) benefit from income taxes | (59,806 | ) | — | 588 | (11,732 | ) | (70,950 | ) | ||||||||
| Net income (loss) | 169,690 | — | (2,353 | ) | 24,385 | 191,722 | ||||||||||
| Less: Net income attributable to noncontrolling interests, net of income tax | (19,543 | ) | — | — | (2,408 | ) | (21,951 | ) | ||||||||
| Net income (loss) attributable to Global Payments | $ | 150,147 | $ | — | $ | (2,353 | ) | $ | 21,977 | $ | 169,771 | |||||
| Diluted shares | 68,179 | 68,179 | ||||||||||||||
| Diluted earnings (loss) per share | $ | 2.20 | $ | — | $ | (0.03 | ) | $ | 0.32 | $ | 2.49 | |||||
| Six Months Ended November 30, 2013 | ||||||||||||||||
| GAAP | Processing System Intrusion1 | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||
| Revenues | $ | 1,263,807 | $ | — | $ | — | $ | — | $ | 1,263,807 | ||||||
| Operating expenses: | ||||||||||||||||
| Cost of service | 465,915 | — | (579 | ) | (28,953 | ) | 436,383 | |||||||||
| Sales, general and administrative | 585,601 | — | (4,844 | ) | — | 580,757 | ||||||||||
| Processing system intrusion | (7,000 | ) | 7,000 | — | — | — | ||||||||||
| 1,044,516 | 7,000 | (5,423 | ) | (28,953 | ) | 1,017,140 | ||||||||||
| Operating income | 219,291 | (7,000 | ) | 5,423 | 28,953 | 246,667 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other income | 8,626 | — | (2,123 | ) | — | 6,503 | ||||||||||
| Interest and other expense | (15,904 | ) | — | — | — | (15,904 | ) | |||||||||
| (7,278 | ) | — | (2,123 | ) | — | (9,401 | ) | |||||||||
| Income (loss) before income taxes | 212,013 | (7,000 | ) | 3,300 | 28,953 | 237,266 | ||||||||||
| (Provision for) benefit from income taxes | (60,448 | ) | 2,393 | (1,934 | ) | (9,570 | ) | (69,559 | ) | |||||||
| Net income (loss) | 151,565 | (4,607 | ) | 1,366 | 19,383 | 167,707 | ||||||||||
| Less: Net income attributable to noncontrolling interests, net of income tax | (13,025 | ) | — | — | (2,608 | ) | (15,633 | ) | ||||||||
| Net income (loss) attributable to Global Payments | $ | 138,540 | $ | (4,607 | ) | $ | 1,366 | $ | 16,775 | $ | 152,074 | |||||
| Diluted shares | 73,504 | 73,504 | ||||||||||||||
| Diluted earnings (loss) per share | $ | 1.88 | $ | (0.07 | ) | $ | 0.02 | $ | 0.24 | $ | 2.07 | |||||
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
2 For the six months ended November 30, 2014, represents a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the six months ended November 30, 2013, represents one-time charges primarily related to employee termination benefits, resolution of a contract related contingency and a one-time credit related to the gain on the sale of an interest in a business.
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the six months ended November 30, 2014 and 2013 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. For the six months ended November 30, 2014, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. In the six months ended November 30, 2013, we calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization, the processing system intrusion, one-time charges related to employee termination benefits and resolution of a contract related contingency, and a one-time credit related to the gain on the sale of an interest in a business. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
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SCHEDULE 8
RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
| Three Months Ended November 30, | |||||||||||||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||||||||||||
| GAAP | Processing System Intrusion | Other | Cash Earnings Adjustments3 | Cash Earnings | GAAP | Processing System Intrusion1 | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| United States | $ | 404,784 | $ | — | $ | — | $ | — | $ | 404,784 | $ | 361,793 | $ | — | $ | — | $ | — | $ | 361,793 | |||||||||||
| Canada | 83,992 | — | — | — | 83,992 | 85,240 | — | — | — | 85,240 | |||||||||||||||||||||
| North America merchant services | 488,776 | — | — | — | 488,776 | 447,033 | — | — | — | 447,033 | |||||||||||||||||||||
| Europe | 159,974 | — | — | — | 159,974 | 146,866 | — | — | — | 146,866 | |||||||||||||||||||||
| Asia-Pacific | 48,541 | — | — | — | 48,541 | 40,223 | — | — | — | 40,223 | |||||||||||||||||||||
| International merchant services | 208,515 | — | — | — | 208,515 | 187,089 | — | — | — | 187,089 | |||||||||||||||||||||
| Total revenues | $ | 697,291 | $ | — | $ | — | $ | — | $ | 697,291 | $ | 634,122 | $ | — | $ | — | $ | — | $ | 634,122 | |||||||||||
| Operating income (loss) for segments: | |||||||||||||||||||||||||||||||
| North America merchant services | $ | 74,246 | $ | — | $ | — | $ | 11,173 | $ | 85,419 | $ | 70,437 | $ | — | $ | — | $ | 7,184 | $ | 77,621 | |||||||||||
| International merchant services | 76,443 | — | — | 7,090 | 83,533 | 62,467 | — | — | 7,376 | 69,843 | |||||||||||||||||||||
| Corporate | (26,705 | ) | — | — | — | (26,705 | ) | (20,997 | ) | (7,000 | ) | 3,348 | — | (24,649 | ) | ||||||||||||||||
| Operating income (loss) | $ | 123,984 | $ | — | $ | — | $ | 18,263 | $ | 142,247 | $ | 111,907 | $ | (7,000 | ) | $ | 3,348 | $ | 14,560 | $ | 122,815 | ||||||||||
| Six Months Ended November 30, | |||||||||||||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||||||||||||
| GAAP | Processing System Intrusion | Other2 | Cash Earnings Adjustments3 | Cash Earnings | GAAP | Processing System Intrusion1 | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| United States | $ | 818,825 | $ | — | $ | — | $ | — | $ | 818,825 | $ | 725,626 | $ | — | $ | — | $ | — | $ | 725,626 | |||||||||||
| Canada | 173,957 | — | — | — | 173,957 | 171,912 | — | — | — | 171,912 | |||||||||||||||||||||
| North America merchant services | 992,782 | — | — | — | 992,782 | 897,538 | — | — | — | 897,538 | |||||||||||||||||||||
| Europe | 322,762 | — | — | — | 322,762 | 290,054 | — | — | — | 290,054 | |||||||||||||||||||||
| Asia-Pacific | 86,642 | — | — | — | 86,642 | 76,215 | — | — | — | 76,215 | |||||||||||||||||||||
| International merchant services | 409,404 | — | — | — | 409,404 | 366,269 | — | — | — | 366,269 | |||||||||||||||||||||
| Total revenues | $ | 1,402,186 | $ | — | $ | — | $ | — | $ | 1,402,186 | $ | 1,263,807 | $ | — | $ | — | $ | — | $ | 1,263,807 | |||||||||||
| Operating income (loss) for segments: | |||||||||||||||||||||||||||||||
| North America merchant services | $ | 152,183 | $ | — | $ | — | $ | 22,551 | $ | 174,734 | $ | 140,136 | $ | — | $ | 2,518 | $ | 14,371 | $ | 157,025 | |||||||||||
| International merchant services | 150,045 | — | (2,941 | ) | 13,566 | 160,670 | 124,008 | — | 10 | 14,582 | 138,600 | ||||||||||||||||||||
| Corporate | (53,846 | ) | — | — | — | (53,846 | ) | (44,853 | ) | (7,000 | ) | 2,895 | — | (48,958 | ) | ||||||||||||||||
| Operating income (loss) | $ | 248,382 | $ | — | $ | (2,941 | ) | $ | 36,117 | $ | 281,558 | $ | 219,291 | $ | (7,000 | ) | $ | 5,423 | $ | 28,953 | $ | 246,667 | |||||||||
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
2 For the six months ended November 30, 2014, represents a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the three and six months ended November 30, 2013, represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency.
3 Represents acquisition intangible amortization expense.
11
SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
| Fiscal 2014 Actual | Fiscal 2015 Outlook | % Change FY14 | |||||||
| Revenue Outlook | |||||||||
| Total Revenues | $2.55 | $2.75 to $2.80 | 8% to 10% | ||||||
| EPS Outlook | |||||||||
| Cash EPS | $4.12 | $4.75 to $4.83 | 15% to 17% | ||||||
Acquisition-related intangibles assets, non-recurring items and processing system intrusion1 | (0.75 | ) | (0.76 | ) | 1 | % | |||
| GAAP Diluted EPS | $3.37 | $3.99 to $4.07 | 18% to 21% | ||||||
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the fiscal years 2015 and 2014 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding amounts related to acquisition intangible amortization, the processing system intrusion, acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, non-cash losses from the retirement of fixed assets, employee termination benefits, resolution of a contract related contingency, costs associated with debt refinancing and HSBC's share of dividends declared by Global Payments Asia-Pacific. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
1 Fiscal 2015 reflects $0.72 of acquisition intangible amortization and $0.04 of one-time charges. Fiscal 2014 reflects acquisition intangible amortization of $0.51, a processing system intrusion credit of ($0.07) and non-recurring items of $0.31. Other non-recurring items include acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, non-cash losses from the retirement of fixed assets, employee termination benefits, resolution of a contract related contingency, costs associated with debt refinancing and HSBC's share of dividends declared by Global Payments Asia-Pacific.
12