2013 Third Quarter and YTD Results October 22, 2013 © 2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Exhibit 99.2 |
Forward-Looking Statements This presentation and comments made by management contain forward- looking statements including, among others, statements regarding the expected future operating results of TSYS. These statements are based on management’s current expectations and assumptions and are subject to risks, uncertainties and changes in circumstances. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “potential,” “estimate” or similar expressions. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors. More information about these risks, uncertainties and factors may be found in TSYS’ filings with the Securities and Exchange Commission, including its 2012 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. TSYS does not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise. 2 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Use of Non-GAAP Financial Measures This slide presentation contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles. Such non-GAAP financial measures include the following: revenues before reimbursable items; operating margin excluding reimbursable items; revenues measured on a constant currency basis; free cash flow; EBITDA, adjusted EBITDA , adjusted cash earnings per share, adjusted segment operating income and adjusted segment operating margin. The most comparable GAAP measures to these measures are revenues; operating margin; revenues; cash flows from operating activities; net income; net income; earnings per share, operating income and operating margin, respectively. Management uses these non-GAAP financial measures to assess the performance of TSYS’ core business. TSYS believes that these non-GAAP financial measures provide meaningful additional information about TSYS to assist investors in evaluating TSYS’ operating results. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this slide presentation are set forth in the Appendix to this slide presentation. 3 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Phil Tomlinson Chairman and Chief Executive Officer ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Troy Woods President & Chief Operating Officer ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
3Q 2013 North America Segment Highlights 6 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. (1) Includes Credit, Debit, Retail, Prepaid & Loyalty (2) Includes Healthcare Improving Revenue Growth Operating Income up 17.4% Margin Expansion: up 343 BPS over 3Q12 Shifting Conversion Pipeline (*) Revenues Before Reimbursable Items Segment Revenue by Line of Business* Adjusted Segment Operating Income Operating Margin Segment Revenue* YOY Growth % |
3Q 2013 North America Segment Highlights 7 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. (*) Growth Excluding Prepaid, Government Services and Single Use Accounts * Eleventh Straight Quarter of Account On File YOY Growth Fourteenth Straight Quarter of Transaction YOY Growth Same Client Transactions up 15.2%: Sixteenth Straight Quarter of YOY Growth 15.0% 12.1% 9.5% 12.7% 7.8% 11.5% 17.6% Accounts on File YOY Growth % Transaction Volume YOY Growth % |
3Q 2013 International Segment Highlights 8 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Revenue $95.4M* – down 2.8% – Up 3.7% on Constant Currency Currency Headwinds Continue: Q3 $6.4M* YTD $16.7M* Margin Expansion Continues Growth Through Greater Product and Market Penetration Expansion of Debit Processing (*) Revenues Before Reimbursable Items Segment Revenue by Region* Segment Revenue* YOY Growth % Adjusted Segment Operating Income Operating Margin |
3Q 2013 International Segment Highlights 9 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Record Number Accounts Processed Double-digit Transaction Growth Same Client Transaction Growth 11.7% Accounts on File YOY Growth % Transaction Volume YOY Growth % |
3Q 2013 Merchant Segment Highlights Growth in Direct Business Overpowered by Indirect Business Acquisitions Performing Well Sales Productivity on the Rise Back-end Integration on Schedule – Successful Pilot (*) Revenues Before Reimbursable Items ©2013 Total System Services, Inc.® Confidential and proprietary. All rights reserved worldwide. 10 Direct Indirect Segment Revenue* YOY Growth % Adjusted Segment Operating Income Operating Margin |
3Q 2013 Merchant Segment Highlights Indirect Faces Headwinds Due to Consolidation Within the Market Direct Faces Headwinds Due to Price Compression POS Transactions Increased 3.9%, Excluding Deconverted Accounts Continued Record SBS Sales Volume ©2013 Total System Services, Inc.® Confidential and proprietary. All rights reserved worldwide. 11 (excl. ProPay) (excl. BAMS) (*) Excludes Managed Accounts and ProPay SBS Sales Volume* YOY Growth % ($ in millions) YOY Growth Rate of Revenue |
Adjusted Segment Operating Income Operating Margin* Segment Revenue YOY Growth % 3Q 2013 NetSpend Segment Highlights 12 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. ($ in millions) Revenue $103.7M – up 22.2% Significant Sequential Quarter Margin Expansion Added 1k+ Retail Locations Added 75+ New PayCard Clients ($ in millions) (*) Operating Income Excluding Amortization of Acquisition Intangibles, M&A Costs and Non-recurring Items, and beginning in 3Q13 also excludes corporate administrative expenses 3Q13 Adjusted Operating Income represents NetSpend Segment Op. Inc. |
13 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 3Q 2013 NetSpend Segment Highlights Gross Dollar Volume YOY Growth % 30.1% 42.8% 18.2% 17.9 % 17.1% 18.4% Direct Deposit Active Cards YOY Growth % 42.3% 66.7% 25.1% 24.8% 24.2% 22.9% Direct Deposit Active Cards up 23.8% Gross Dollar Volume (GDV) up 22.4% (in thousands) ($ in millions) 23.8 % 22.4% |
Jim Lipham Chief Financial Officer ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Consolidated Selected Financial Highlights 15 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. $588,074 $468,059 25.6% Total Revenues $1,531,513 $1,391,872 10.0% 527,011 406,052 29.8 Revenues Before Reimbursable Items 1,348,760 1,199,922 12.4 105,628 90,893 16.2 Operating Income 275,845 267,821 3.0 64,350 60,312 6.7 Net Income Attributable to TSYS Common Shareholders 179,095 183,418 (2.4) Basic Earnings Per Share (EPS) Attributable to TSYS Common Shareholders: $0.34 $0.32 5.8 As Reported (GAAP) $0.95 $0.97 (2.1) $0.37 $0.32 14.7 Excluding M&A expenses $1.03 $0.97 5.5 $0.49 $0.36 37.0 Adjusted Cash EPS* $1.25 $1.09 14.7 $182,140 $137,858 32.1 Adjusted EBITDA* $449,931 $407,498 10.4 YTD 2013 YTD 2012 Percent Change (in thousands, except per share data) 3 rd Qtr 2013 3 rd Qtr 2012 Percent Change (*) Adjusted Cash EPS and Adjusted EBITDA definitions are contained in Appendix |
2013 YTD Revenue Change Revenues Before Reimbursable Items 16 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 15% 20% 5% 0% 5.5% Internal Growth New Clients 3.1% Acquisitions Lost Business (5.0%) Non-recurring Items (0.7%) Price Compression (2.1%) (7.8%) Reported 12.4% Currency (1.4%) 13.0% 10% |
Consumer Credit 224.2 195.0 15.0 224.2 208.6 7.4 Retail 26.8 24.1 11.2 26.8 25.9 3.6 Total Consumer 251.0 219.1 14.6 251.0 234.5 7.0 Commercial 38.9 36.3 7.2 38.9 38.6 0.8 Other 16.9 11.1 52.5 16.9 15.3 10.2 Subtotal 306.7 266.4 15.1 306.7 288.4 6.4 Prepaid / Stored Value 110.7 114.3 (3.1) 110.7 102.8 7.7 Government Services 61.6 48.8 26.2 61.6 60.6 1.7 Commercial Card Single Use 41.6 36.8 13.0 41.6 37.0 12.5 Total AOF 520.7 466.4 11.7 520.7 488.8 6.5 Consolidated Accounts on File Portfolio Summary (in millions) Sep 2013 Sep 2012 % Change Sep 2013 Jun 2013 % Change 17 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Cash Flow Strength: 2013 TTM Consolidated Financial Highlights 18 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. TTM = Trailing Twelve Months (in millions) $589 $429 $277 $249 $397 $0 $75 $150 $225 $300 $375 $450 $525 $600 $675 Adjusted EBITDA Cash flow from operations Free cash flow Net income Ending cash |
Debt to EBITDA Ratio 7/1/2013* 9/30/2013 DEBT $1,618 $1,556 EBITDA (ex. 1-times) 618 635 EBITDA Multiple 2.62x 2.45x (in millions) 19 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. * June 30, 2013 plus $300M draw Trailing Twelve Months (TSYS + NetSpend) |
Q&A ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Appendix ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Appendix: Non-GAAP Items – Adjusted EBITDA and Adjusted Cash EPS • Adjusted EBITDA is net income excluding equity in income of equity investments, nonoperating income/(expense), taxes, depreciation, amortization and stock-based compensation expenses and other non-recurring items. • Adjusted cash EPS is adjusted cash earnings divided by weighted average shares outstanding used for basic EPS calculations. Adjusted cash earnings is net income excluding the after-tax impact of stock-based compensation expenses, amortization of acquisition intangibles, and other non-recurring items. • Adjusted segment operating income is operating income at the segment level adjusted for acquisition intangible amortization. • Adjusted segment operating margin is adjusted segment operating income divided by segment revenues before reimbursable items. • The Company believes that these non-GAAP financial measures it presents are useful to investors in evaluating the Company’s operating performance for the following reasons: – adjusted EBITDA and adjusted cash EPS are widely used by investors to measure a company’s operating performance without regard to items, such as interest expense, income tax expense, depreciation and amortization, merger and acquisition expenses and employee stock-based compensation expense that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; and – securities analysts use adjusted EBITDA and adjusted cash EPS as supplemental measures to evaluate the overall operating performance of companies. • By comparing the Company’s adjusted EBITDA and adjusted cash EPS in different historical periods, investors can evaluate the Company’s operating results without the additional variations caused by employee stock-based compensation expense, which may not be comparable from period to period due to changes in the fair market value of the Company’s common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers) and is not a key measure of the Company’s operations. • The Company’s management uses the non-GAAP financial measures: – as measures of operating performance, because they exclude the impact of items not directly resulting from the Company’s core operations; – for planning purposes, including the preparation of the Company’s annual operating budget; – to allocate resources to enhance the financial performance of the Company’s business; – to evaluate the effectiveness of the Company’s business strategies; and – in communications with the Company’s board of directors concerning the Company’s financial performance. ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 22 |
Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items Total Revenues $588,074 $468,059 $1,531,513 $1,391,872 Reimbursable Items 61,063 62,007 182,753 191,950 Revenues Before Reimbursable Items $527,011 $406,052 $1,348,760 $1,199,922 (in thousands) 23 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Three Months Ended Nine Months Ended 9/30/13 9/30/13 9/30/12 9/30/12 |
Appendix: Non-GAAP Reconciliation – Adjusted Segment Operating Income and Operating Margin Operating income $105,628 $90,893 $275,845 $267,821 Less: acquisition intangible amort (24,731) (6,919) (41,142) (18,924) Less: Corporate admin and other (34,122) (21,421) (88,603) (65,791) Total segment adjusted operating income $164,481 $119,233 $405,590 $352,536 By segment: North America services (a) $82,274 $70,080 $229,373 $210,658 International services (b) $10,729 $8,244 $26,448 $22,842 Merchant services (c) $40,230 $40,909 $118,521 $119,036 NetSpend (d) $31,248 $ -- $31,248 $ -- Total revenues $588,074 $468,059 $1,531,513 $1,391,872 Reimbursable items (61,063) (62,007) (182,753) (191,950) Total segment revenues before reimbursable items $527,011 $406,052 $1,348,760 $1,199,922 Intersegment revenues (4,373) (5,003) (13,904) (15,542) By segment: North America services (e) $217,257 $203,497 $637,379 $613,111 International services (f) $95,399 $98,184 $281,201 $293,722 Merchant services (g) $113,650 $107,786 $335,903 $303,842 NetSpend (h) $103,706 $ -- $103,706 $ -- Adjusted segment operating margin: North America services (a) / (e) 37.87% 34.44% 35.99% 34.36% International services (b) / (f) 11.25% 8.40% 9.41% 7.78% Merchant services (c) / (g) 35.40% 37.95% 35.28% 39.18% NetSpend (d) / (h) 30.13% na 30.13% na (in thousands) 24 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Three Months Ended Nine Months Ended 9/30/13 9/30/12 9/30/13 9/30/12 |
Nine Months Ended 9/30/13 9/30/12 Percentage Change Three Months Ended 9/30/13 9/30/12 Percentage Change Appendix: Non-GAAP Reconciliation – Constant Currency (1) Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period. (2) Reflects the impact of calculated changes in foreign currency rates from the comparable period. (in thousands) Consolidated: Constant Currency (1) $594,470 $468,059 27.0% $1,548,296 $1,391,872 11.2% Foreign Currency (2) (6,396) --- (16,783) --- Total Revenues $588,074 $468,059 25.6% $1,531,513 $1,391,872 10.0% International Services: Constant Currency (1) $107,050 $102,691 4.2% $312,715 $306,466 2.0% Foreign Currency (2) (6,502) --- (16,984) --- Total Revenues $100,548 $102,691 (2.1%) $295,731 $306,466 (3.5%) 25 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Nine Months Ended 9/30/13 9/30/12 Percentage Change Three Months Ended 9/30/13 9/30/12 Percentage Change Appendix: Non-GAAP Reconciliation – Constant Currency (1) Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period. (2) Reflects the impact of calculated changes in foreign currency rates from the comparable period. (in thousands) Consolidated: Constant Currency (1) $533,297 $406,052 31.3% $1,365,215 $1,199,922 13.8% Foreign Currency (2) (6,286) --- (16,455) --- Revenues before reimbursable items $527,011 $406,052 29.8% $1,348,760 $1,199,922 12.4% International Services: Constant Currency (1) $101,790 $98,184 3.7% $297,857 $293,722 1.4% Foreign Currency (2) (6,391) --- (16,657) --- Revenues before reimbursable items $95,399 $98,184 (2.8%) $281,200 $293,722 (4.3%) 26 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) 27 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Three Months Ended Nine Months Ended Sep 2013 Sep 2012 Sep 2013 Sep 2012 Net income : As reported (GAAP) (a) $67,494 $62,043 $187,205 $187,666 Adjusted for: Deduct: Equity in Income of Equity Investments (2,792) (1,957) (9,357) (6,983) Add: Income Taxes 30,592 30,228 78,384 84,336 Add: Nonoperating expenses 10,334 579 19,613 2,802 Add: Depreciation and amortization 59,447 43,243 142,490 127,329 EBITDA $165,075 $134,136 $418,335 $ 395,150 Adjust for: Add: Share-based compensation 9,784 3,722 19,587 12,348 Add: NetSpend M&A expenses 7,282 -- 12,009 -- Adjusted EBITDA $182,140 $137,858 $449,931 $407,498 |
Appendix: Non-GAAP Reconciliation – Adjusted Cash EPS (in thousands) 28 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Three Months Ended Nine Months Ended Sep 2013 Sep 2012 Sep 2013 Sep 2012 Net income Available to TSYS Common Shareholders: As reported (GAAP) (a) $64,350 $60,312 $179,095 $183,418 Adjusted for amounts attributable to TSYS common shareholders (net of taxes): Acquisition intangible amortization 16,420 4,383 27,532 12,746 Share-based compensation 6,635 2,489 13,622 8,480 Cash earnings $87,405 $67,184 $220,250 $204,644 NetSpend M&A expenses (nonrecurring) 5,424 -- 13,934 -- Adjusted cash earnings (b) $92,829 $67,184 $234,184 $204,644 Average common shares outstanding and participating securities (c) 189,525 187,878 188,035 188,553 Basic EPS Available to TSYS Common Shareholders (a) / (c) $0.34 $0.32 $0.95 $0.97 Adjusted cash EPS Available to TSYS Common Shareholders (b) / (c) $0.49 $0.36 $1.25 $1.09 |
Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA Trailing Twelve Months Ended 9/30/2013 Net Income $249,461 Adjusted for: Deduct: Equity in Income of Equity Investments (12,544) Add: Income Taxes 109,151 Add: Nonoperating expense 19,608 Add: Depreciation and Amortization 185,771 EBITDA $551,447 Adjust for: Share-based compensation 25,860 NetSpend M&A Operating Expenses 12,009 Adjusted EBITDA $589,316 (in thousands) 29 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Appendix: Non-GAAP Reconciliation – Free Cash Flow Trailing Twelve Months Ended 9/30/2013 Cash Flows from Operating Activities $429,249 Less: Purchase of Property and Equipment (31,996) Additions to Licensed Computer Software from Vendors (48,027) Additions to Internally Developed Computer Software (26,601) Additions to Contract Acquisition Costs (45,509) Free Cash Flow $277,115 (in thousands) 30 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. |
Mar 31, 2013 Dec 31, 2012 Jun 30, 2012 Jun 30, 2013 Sep 30, 2012 Appendix: Non-GAAP Reconciliation – NetSpend Adjusted Operating Income Mar 31, 2012 Operating income (loss) (GAAP) ($8,964) $17,430 $7,869 $17,594 $18,332 $15,799 Adjusted for: Add: Amortization of acquisition intangibles 881 534 446 434 590 431 Add: Settlement (gains) and other losses 25,315 1,533 10,300 (160) 48 3,423 Add: M&A expenses -- -- -- -- 2,656 3,219 Adjusted operating income $17,232 $19,497 $18,615 $17,868 $21,626 $22,872 (in thousands) 31 ©2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide. Three Months Ended |