GPN - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Global Payments 2019 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will open the lines for your questions and answers. [Operator Instructions] And as a reminder, today's conference will be recorded.

At this time, I would like to turn the call over to your host, Vice President, Investor Relations, Winnie Smith. ahead. go Please

Winnie Smith

welcome call. and Payments' quarter second Good to conference XXXX morning, Global

Before you call to the like with financial we I'd begin, anticipated the remind about operating by merger during results and statements comments management that today's forward-looking conference contain TSYS. expected and made of some

benefits Including financial transaction, other of strategic the and matters. among the rationale

actual any on Forward-looking results place uncertainties our most including our SEC statements are filings, We and materially. subject differ undue risks to XX-K to risks subsequent and caution and could to These cause uncertainties these discussed in not filing. recent you statements. reliance

statements we as of undertake Forward-looking the and to speak obligation call, them. update this this during no call date only of

revenue, adjusted revenue fees, the and earnings operating of network comments adjusted net margin refer adjusted performance. ongoing of reflective share, are financial more made believe net which measures our we per non-GAAP plus Some adjusted to such as

these the regulations, measure non-GAAP to the full other financial trended www.globalpaymentsinc.com. in filed reconciliation a our see Form our to area of please Relations accordance our at of in of as press both and are release which X-K measures an For financial our morning furnished Investor available GAAP exhibit and with comparable this website most highlights, SEC

and statement may -- joint or to The Please well X have vote. statement, and offer SEC. on information presentation the discussed to in documents note with any registration itself, Payments those Format is the file entirety by of is an property that today today's Global the solicitation buy solicitation of amendments neither proxy offer as that as filed an a securities its or qualified

Executive and Jeff call and Sloan, the Cameron CFO. Bready, on Vice Senior CEO; me are President Joining

over call Jeff. the turn I'll Now, to

Jeffrey Sloan

Thanks, Winnie.

our strength operating and have to across of businesses. our margin technology-enabled of also XXX by basis earnings per of performance in are once XX% resulted adjusted points. We growth driven share outstanding adjusted delivered coupled double-digit execution with markets in this This growth quarter, again organic delighted expansion

from merger This first our with fees And net transformational produce network we acceleration terrific a revenue and as marked quarter's quarter. adjusted results advance plus TSYS. team simultaneously our growth also these

These to strategic consistent outcome. further a as that industry-leading of continues objectives serve outstanding the proof our deliver execution financial successful accomplishments points

are innovative solutions our distinctive driven channels ecosystem our scope We partnership customers TSYS footprint. to will focused enabled diversified technology providing scale of significantly And the on payment geographic enhance across with distribution and our our and globally. software

cover first, I the made we like would update to across will of strategy our the the TSYS key we milestones I on progress significant a have moment, a quarter. with pillars an this few but provide in of three achieved

organic integrated markets, vertical our we sustained delivered yet growth. with and a again Starting businesses, strong

partnered expectations mid contributed competitive our differentiation business high drive we to top-line software the technologies our in growth delivered continues performed new teens our to exceeding of Our integrated and new are ISP well channel. partners as wins. this to And the payments

including new to a working we we innovative fundraising, platform span partners. multiple payments buying and look recreation, provides currently XX new opportunity agreement with with management billion SaaS markets, solutions which fraternal a and growing, Togetherworks, annual signed group for vertical a forward Notably, with Togetherworks and $X organizations. companies that our is of

their scale our solutions assets, the software leverage for we payments in we strong and as SaaS As respective distribution are our own markets. leading vertical achieve results to across portfolio, also capabilities

pleased business. booking We solid consistent, seen were core network, trends this for to in the we largest the products trends manager active ever international with relationship our and sign have Starting camp recently remain class its continuing quarter.

practices. our referrals strong streamline OpenEdge is leading adoption our physician solution quarter to is best its to for including driving payment result, of product by great another had and also interface AdvancedMD date suite

Tim XXX Turning Canada locations months year-end. additional to SICOM. by in over and locations will Hortons' solution to an out over We XXX roll successfully deployed to last our few the kiosk

kiosks to across franchises started deploy the in also have Burger We United King our States.

through Our kiosk improve solution allows restaurants sell sales and marketing increase order opportunities. up and labor reduce to costs, accuracy,

e-commerce with Platform our progress solution businesses, API. Moving worldwide omnichannel Unified we which are payment and UCP, a making our or through omnichannel to significant Commerce single one provides new

Specifically, released our new we end testing the UCP API made our Management chargeback first we month. And for this the of available API globally at quarter. just

Asia live omnichannel with payments full in Pacific. We our and are infrastructure across new now Canada

both rollout worlds We combined to new the our markets the complex Payments year, platform and positioning to global of remain Global the on serve track by physical to of uniquely to all end needs. virtual complete seamlessly of the merchant

sophisticated most our already payment clients it's streamlined new wins. driving platform, our by of are to and marquee new operations their Several multinational integrating

our conjunction with in Caixa, expanding we're Specifically, our partner relationship

with their Desigual leverage across for to retailer Spanish in-store will new four to allow customers e-commerce continents clothing shop platform Desigual and both our across channels payments, globally. seamlessly

relationship two customer simplify retailer a than French to with more Additionally, platform luxury consumer markets to evolving simply have our and to our expanded centralize demand operations. their worldwide. payment dozen we premier into leverage are meet delighted and This will recently

We're agreement also marketplace to Canada's new with pleased of a to retailers largest have omnichannel offering. partnership one online expand recently our into reached an

Star established Cruises. we've a e-commerce in Lastly, new win with Asia,

solution. sale are partnership and full long-standing to we We beyond of Singapore, relationship a across the have a physical to point Malaysia. And excited omnichannel provide our Hong expand Kong,

Finally, to deliver in our markets. results growth we continue outstanding faster

in since geographies, newest in making launch XXXX. progress HSBC January Mexico, we our our Regarding are with excellent

new is And team our place, organizations. facility sales City. to is leadership are in Our we Mexico continuing as our support ramp in and

and opportunities organically this America as across in into and Latin growth seeing accelerated business for we technologies regarding remain leading these new bring enthusiastic markets. We long-term the are digits market this already double

exactly expansion scale we its are on partnership, distinctive joint of favorable this of our the with we by leveraging in secular the also And do. announced the said capitalize as Austria into working Bank business, we We country Erste would last to to our market, now our trends quarter. venture home

a join as Brazil, some us recently FIs HSBC, and the in are Inbursa sophisticated or Caixa strategic most institutions and agreed of financial globally. largest partner complex to Erste and which

be keep, with these that position we choice we more highlighting are could differentiation partner partner not of the the and to is and our multinational leading of to company FIs. a We extensibility leading institutions, of pleased and durability proud

strategic attractive biggest the globally. milestone leading payments on company our announce for scale, industry. creates were SMBs in May, to quarter, pure partnership to TSYS, at preeminent a with This we the Turning play of technology the markets focused the most FIs for at our end delighted agreement in landmark and transaction to combined our

software the leading in merchant as provider and merger payment enabled our The integrated omni payments technology of our driven accelerates and solutions e-commerce globally. strategies channel positions business

the customers critical addition providing cloud, with Further, increasingly services processing our card a issuing our dovetails on mission and SaaS dishware the in for worldwide, and basis. solutions strategy, software

number Canada, across This United Ireland a those revenue and business one is United and on substantially in share synergies. ranked will China, States, the bear across Europe. number Kingdom, that has No the in markets, peer Western which our two market scale at business

will have our will combination We're growth do operate us companies faster nearly XX globally over The and and we enhances provide countries Combined, in also today. both exposure physical business in scale presence XXX. a will additional geographies overseas. markets to and

businesses payments for of these significant opportunities. complementary enhancement revenue provides focus leading highly nature The

markets software merchant proposition United TSYS analytics for First, our locations more than inside XX XXX,XXX capabilities vertical over the the customer we commerce base enhance unified with and across States, value will platform. of solutions, meaningfully

will retail We than we sales some, more SMEs. base products partners. double XXX Vital will Payments’ TSYS for than like preeminent on focus referral will In more TSYS have reciprocate add merchant and professionals merchant by cross-selling POS domestic into base. institution our the financial U.S. business will Global predominantly also of

provides FI untapped and combined opportunities Second, merchant for of new relationships. outside also the the breadth large Partnerships United States, referral expanded our X,XXX issuer

ability FI's TSYS more we reverse. in our merger. two the as doubles into we to months have just interest partnerships, the had acquiring already globally. well base cross-sell since as existing issuing And And the announced expressed than our FI

that peers foreseeable now the States, XX noting the exits and is fully markets recent our Global corporate last in worth today Payments future. is legacy for with operational outside United something It

that be and some to services. cross-sell, purchasers context, will acquiring be time those able quite In before businesses it will effectively of issuing

of mentioned, transaction at also time our we As announcement. the

avenues open internationally, We positioning. inorganic for expect, merger growth given our our unique further to

businesses technologically, without ownership the geography Third, generating a issuing enable of believe combination network benefits own debit any need actually our acquiring will us globally to to and we the debit emulate superior opportunities. of in network return the

basis, therefore internally. to effective be will including multinational at on new positioned and joint enhance onus cross Strong schemes, SCA more Customer worldwide loyalty Authentication a and routing, and domestic strategies or sales merchant, border products We initially analytic scale approvals develop uniquely

SCA higher Payments. be that e-commerce businesses to last that via expect On available our our proprietary to authorization from rates point, own uniquely Global benefit we will

in provide consumer we Fourth, us geographies. BXC PXP with new and to and TSYS' BXB, finally, opportunities and new expect business solutions capabilities

As just help target partnerships bring one the expand existing of Global we U.S., expect believe based outside Payments States. we acquiring the Solutions. here pay substantially we on Payroll NetSpend net products spend United course, into addressable case, in new used Heartland's can And for to markets markets the for

ahead great of fourth made early now and as transaction are merger the announced the expect As tracking to the close we quarter. to itself, our and beginning progress previously of the have as plans

Xth, an capital establishing new our structure on in closed successfully company. July our for new also We combined in credit agreement important the milestone

underway is confidence on based increasing we in and we more in May. preliminary planning work, outlined targets even expected Our the that integration and synergies have

future two will value companies shareholders. be that businesses, employees, excited customers, more and could We partners our not about strong significant together opportunities with bring premier and you and payments management long-term cultures teams for generate as the

to let's Cameron. Now, over call turn the

Cameron Bready

everyone. Thanks, Jeff good and morning,

our We report financial focus driven on growth quarter are results and by of execution. exceptional relentless pleased ongoing another strategy very to differentiated

versus year Total quarter revenue for plus the prior net fees billion, company second of XX% was the reflecting network adjusted growth $X.XXX period.

currency constant network increased basis, per XX%. to Once over operating quarter. Adjusted XX% earnings again adjusted $X.XX. low-double-digit plus fees a earnings XX.X% expanded currency points to basis, this again growth. over share basis On by driven organic margin and XXX grew per net grew share revenue a XX% adjusted normalized On adjusted constant

pleased which moment cover We're achieved our the proud these momentum our in of remain parallel in we've TSYS, after business of milestones on also a half first performance have the results We're in by globally. the team with delivered with seen we will XXXX. I highlighting merger the the throughout encouraged

America. net of North reflecting approximately weakness an in with This was $XXX revenue point from headwind XXXX. basis XX% included XX dollar. Adjusted over fees plus million, growth Canadian network Starting the

operating XXX driven to basis strong continued technology by XX%, growth the and margin across in execution points in businesses America segment. our Adjusted enabled North expanded

double-digits in organically. distribution markets growth normalized in quarter direct business and led integrated businesses organic once the low vertical by in U.S. which grew Our low strength again double-digit the delivered our

see We single-digit to our expectations. while declined mid-teens wholesale our relationship-led growth in with continue channel channel high consistent organic our U.S.

Our local recent approximately mid-single headwinds acquisitions, by AdvancedMD grew in quarter, was largely the business million currency, which and $XX Canadian offset SICOM the in dollar. from Canadian contributed our digits

to local basis. reported X% Moving network adjusted plus revenue Europe grew net on currency, or X% reported in a fees

headwind remain quarter. rates exchange currency foreign a As significant in the

driven see growth UK we a at further slowdown without persist. QX, currency to April our in in and with declining and passing Local well versus weakness strength which of the Spain teens. this resolution. in each grew businesses in Brexit in macro the QX again this accelerated consumer quarter the environment deadline deteriorated organic spending growth UK was did into Europe, in the by central We expect The

another this such including the drive bright Our earlier. customers of our Jeff was wins, E-com mid-teens as to value UCP our by highlighted proposition, unique Europe continues elements and and new solutions omni with as new in again those spot quarter resonate business growing

XXX in execution driven points expanded business. margin increased our consistent scale benefits European basis the to operating and Adjusted in Europe by central of XX.X%,

XX% Pacific. Asia currency plus network constant approximately grew to fees adjusted X%, Reported basis. Turning revenue a or net on

this estimate largest While we QX, the in by which growth recent most We region negatively protest across trends quarter. is impacted consistent was of local by protests these approximately Asia. points strong market in basis with our the growth XXX impacted negatively Kong, currency saw Hong

the ongoing currency as continued in initiatives business. expanded reinvest to foreign XXX headwinds our in due margin of points operating to those and exchange execution basis region. Asia outstanding These team our to Adjusted the in well the as from XX.X% rates

times. our below As of was X.X quarter, the of end the leverage

ahead $XX approximately quarter, our through approximately of returned the invested During programs. program $XX in with million share Prior shareholders announced and merger repurchase expenditures TSYS. capital depositing million to repurchase the we

and will agreement facilities our will term secured become revolving In This combination credit Payments' loan and grade unsecured facility. merger at credit Global consisting plan connection closed a unsecured TSYS' effective credit the we we a the billion $X TSYS, with credit with earlier and agreement of revolving new a credit facility. closing this billion investment existing successfully of $X month, replace new

also double reduce interest Further, capacity the maturities. will our credit rate, our extend new facilities our and revolving

with which delighted of create the financial organization. the new are substantial combined execution flexibility We the agreement, for

competence the going pursue highlight in the new position to strategy achieve terms continue forward. our of us partners The bank organization well allocation our capital to and have

our Moving to the the our momentum allowed objectives in well XXXX, first to achieve the our us business financial half to in us outlook, of for our exceed positions full year. expectations

business of offset facing the from expect back the headwind in underlying now be we and FX the said, impact. pressure to incremental expect strong year. a currency seeing we We more foreign are however this half trends to in meaningful are the That

expect from XX%, plus adjusted $X.XX of reflecting XX% to XXXX. over revenue continue billion billion, To net to that to $X.X fees we to range network growth end,

assumes second XXXX, relative points equates headwind roughly an outlook approximately the to in guidance headwinds XX to provided the in of foreign of incremental we for currency half This basis XXX of full year May. basis which points the

in in recent the for Asia in moderate the weak expect environment again Hong QX, in and to to continue be the we the that the addition, be process growth to year. a will of balance In UK headwind Kong macroeconomic

in headwinds, And of earnings increasing margin XX%, per of a over both these for expansion Notwithstanding is share. to XXXX. adjusted Adjusted per to we to basis our XX range expand now to points. up share growth $X.XX, outlook expect and expected reflecting $X margin earnings by we XX% adjusted are operating

Please fourth beginning quarter. outlook that the of close merger the include to early of note, impact not our does expect the TSYS as we the as

solutions be We distinctive TSYS, most on opportunities not payment the in the focus attractive to globally. and we more differentiated will customers could excited delivering ahead. about markets Together with

per competitive position future expansion and very The margin bright. leverage and is indeed drive adjusted global share will our advantages industry leading leadership earnings We growth, line to top growth.

With that, to Jeff. I'll over turn the back call

Jeffrey Sloan

Cameron. Thanks,

the having first our are We in the We accomplishments in reflects half were defensible quarter significant team's edge the delighted our technologies resiliency the investments forefront and and evolution strength And of XXXX. with cutting of business at of our industry, and distribution. made outlook model. and the of our distinct

other results our six the last years best but transformation e-commerce has class also and companies. to peers, only high-tech networks, Our relative SaaS driven over to the card software in not legacy and compared providers

over in outstanding as so in XX This to last highlighted financial And very proud our we are performance be Global were noting to recently is stocks But were recognized. the future best S&P that starting technology was of only the we take XXX potential. great we And five past, be performing one pride Payments delighted similarly our we years. acknowledged. company the with of the

we Our are our evolution. merger And that near-term. will with ongoing eager the in partnership finalize TSYS accelerate to

deepen each element our competitive and purely innovation continue payments mode our will of strategy. in we Together, invest to across

and best to the the our in We the best very providing very experiences globally. markets technologies very employees, customers best have

the are exciting today. to in fortunate We a position be to we Winnie? an Global time This of part Payments. be in is new the are truly

Winnie Smith

questions. queue. our go Before everyone one like the follow-up we questions ask to question-and-answer now in to we session, to to limit to Operator, accommodate will you. begin with one Thank everyone I'd their

Operator

our of first the And from line Instructions] [Operator Andrew question from Jeffrey comes SunTrust.

please. question, Your

Andrew Jeffrey

little in question. Pay the expand of that. And the intrigued bit strategy and Togetherworks your made then could I taking there. you generally, the if kind Global Appreciate you partnership fact morning. positioning and U.S.? wonder on Good you Jeff, about comments by I'm a

Jeffrey Sloan

as well. I'm Sure start, Andrew, sure you. Cameron will thank add I'll

back and business. recent in Togetherworks step would of say win markets vertical a integrated is another in OpenEdge I example yet our So, and and businesses, particularly our

latest high-teens So, Togetherworks just whatever remarks, quarter, that. example probably the with as our to in is prepared growth. gone is in a and said row, And of three we another quarters OpenEdge sustained is mid accelerate

cloud-based on smaller to where in more then going. is in involved that that is some think That them specifically interest value the is company. and about very volume-based listed I SaaS Togetherworks, scale those related are business the about providing of thing is the really we they aggregation and remarks economics a more businesses. think prepared world businesses, That of and nice Now similarly I payments

role areas for. touch are education good on that buyer in. smart, services of we're yet sophisticated payment universities, we're Andrew, going include have Those significant, their another we delighted already provider that a things we we significant that a think at. us as Examples chose stuff, have And

today of our other the and little good where our in Technologies really folks. which rate. reminds billion talked noted trajectory going, volume good $X just makes calls that It some at the is forward. of there getting we're Togetherworks at me and bit feel prepared February about about going growing a May, in a And us I of remarks about we Tower

On question, come payment your facilitation TSYS, the already TSYS, post-TSYS in payment the of I'll we certainly prior second. back But in regarding Prior and to to businesses one facilitation. to world. I think a largest have second

you many ours, the a As markets, Andrew, to know, many the world particular, Europe most around for going the has days, for been UK and of many, PayPal of in customer years. Pacific, Asia HSBC in years, back

we In in October, fact, I PayPal. that November, that relationship we another renew think Cameron, of with period for announced years

my commerce we a through payment So, in in is unified immediate which that activities up also the coming in our prepared have United remarks I outside signed more terrific just facilitation States, the offering, business. partner think marquee term. product for a I marketplace we noted Canada,

excited the as pay through great or that States TSYS payment facilitation to a a And of is facilitation TSYS extend market of TSYS example United ability directly some very disbursement in most Uber for think I has pro to Lyft into United related States that and So, in we're got of business, very with kind the things more think, their to in ability conjunction get good we've business. thing. technologies, like about the markets, Kay, access the market. and Mary but

it we is States. in time suite, here TSYS for a So, long at. we domestically rounding next complete facilitation. Andrew our logical level, really good a in something United and But the view very which is takes say, the and think are payment to products we've layer been of out particularly to

And I largest of will at omnichannel course, e-commerce in the estimated about payment a merger, of time of one $XXX think world as million and we businesses is announced the have believe we the the revenue, at facilitation big of part that. and

Andrew Jeffrey

very you much. Thank

Operator

Thank you.

Togut next David comes from Evercore Our question ISI. of line from the

Your question, please.

David Togut

and you morning. good Thank

a highlighted particular and selling post You driving Is the opportunities synergy new conviction? increased announcement? both number that's in anything of there and TSYS cross target. synergy conviction in Two that cost with months increased deal revenue

Jeffrey Sloan

deals, start, I And I most I preliminary cross we've our Dave, what our effectively. work, more both it's make better feel as know gotten prepared benefits Jeff. we strongly marks started integration ability in as think are our join work. about we've going of be. press where you Cameron say you integration that would is And in our assumptions and in release Why into know, you as don't further as to our to going certainly Yes, is, well? mentioned, to we more

that. a you me give for of number examples So, let just

States domestically business. here me in merchant the with start United Let the

done last our I That's a think with fantastic the true in and job Xenial vertical about David has market. Heartland call restaurant and as SICOM. we particularly talked in

States anyone have middle in we of and significant solutions, May, about Heartland restaurants, end broadest Xenial, the of in on initiatives, But think our of United with software, the Heartland base end, talked that the hardware markets here front back house any and David has as and very combination we are Restaurant Register in we worldwide.

TSYS. bring while side. got an solutions something we've of certainly That into those is TSYS area restaurants not markets something think on the merchant fantastic that are and depth does We

way is same Heartland we're that POS, but TSYS in the which in Conversely, Heartland we're retail. Restaurant. the in on we focused has market not that think a of and the with case Register thing Again, Vital in,

in having particular, very the Global some and excited sale into point the folks TSYS So, Heartland the Payments time the the in Vital spent merchant with of based bring to folks announcements. into We're United the ability here post about TSYS States. the Heartland,

is date SCA, appreciate in sure And you'll there secondarily, authentication about approaches. a dialogue, the back or strong I'm stepping September not Europe of customer as lot particularly which

about So, over some roll Global that Payments today conversations date is months. for a day. There have well-positioned having of know, been XX that you as period in

the of Kingdom, in the business, issuing said ability the announced is which of though, purposes has Western in end Having at to EU. United partnership in into which for that going TSYS tremendous Ireland Europe, combine positioning May, the TSYS's the

initial TSYS from the of us higher them TSYS and with authentication TSYS Payments going Our of business the combine over ability reactions that strong rates I positive. that is within since of had the the have businesses four purposes walls think months last announcement we to that issuing now upon announcement inquiring and our into deal authorization for of couple is Global customer the

So, how what two think conviction in you of those an on with head when integration us but would term. the months really work less real synergies companies more say idea into provide I two within I intermediate you have things these is,

Cameron Bready

just well. side little on bit Cameron, its on as build maybe David, talk I'll And the that a to expense

that combining the over We continue there to $XXX by million expense two opportunity synergy businesses. believe of is

combined business more say ability a the but margins at I as TSYS And conviction export importantly, those to more to ability to achieve opportunity with had thereafter. to Jeff's point, colleagues would as spend to relates detail, that opportunities our regarding the have we have to conviction our to the we at more target greater scale more it in the a continue we minimum,

successful have, can of when synergy on a we’re the to on at be in action of take to I taking combined a the as but we rate we’re expanding back have said believe that we transaction the the to continue best going May, business and in we really whatever forward because basis achieve top so we in growth growing industry quick focus focused As we'll company. end the target relatively position announced very line the expense a the going on timeframe marketplace, combined

effectively over time, runway the business to achieved to of scale That after layer said, targeting that long us in by that for level. more we for even course driving continue a over efficiency million that at we business see of the synergies were the margins $XXX first

I’m excited time attractive ability to increase we margin economies terms business in through very for expansion in of really the rates particularly operate of drive at and So, about the the increased a of scale long period of how scope benefits globally.

David Togut

you. Thank

in Just quick how number as JVs Europe, the thinking bank ongoing really of Jeff that and in are high has of you a a are and Europe. expansion you follow-up, bank set acquirer Europe only countries JVs about into new new growth you announced merchant initiatives in in

You mentioned in opportunities inorganic in growth say Europe? Austria would versus

Jeffrey Sloan

always pursuing than there, JV. with bank think certainly TSYS bit else our JVs there going little is the being still start let's I us better the ball of while think I I forward. positions geographies, of I bank we that with think anybody a partnership that David, all in

will purposes at presence at Payments those look really That acquiring period especially assets strategic I'm marry those and Global those world markets look in historically as I in I have transactions have don’t mentioned are there targets. also think around over elements these we critical ties the product a element had into and issuing in issuing time. point we at of to up with good that the that with for and but I Europe inorganic where issuing to many think issuing combined actually are the acquiring scale businesses a acquiring evolving an to is poor but say, before,

the business course say, and Europe of United outside not delighted do of with look in at in would TSYS opportunities, they we same the we're they on acquiring would thing but issuing States. we're those

bank us think I a So, in a unrivaled acquiring the and certainly as I a both our is I'd of combination relative of prepared on the direct TSYS of inorganic based put financial the and durably to and to peers. be Payments around would and issuing those unmatched extensible, of may history also those else of combination FI's partner in partnerships results in XXXX I organic companies a mention relative strategic extensibility tell position remarks but institution durable, Europe, to as anybody partnerships of about to long worldwide you opportunities have sophisticated say that think world they assets all Global

David Togut

Thanks so strong on much congrats results. the and

Jeffrey Sloan

David. Thanks,

Operator

Thank you.

Our the Keane Bank. comes from Bryan next question from Deutsche line of

Your question please.

Bryan Keane

next that do Hi, guys. XX SCA, we've you could quantify your there, you will to comments, ask make over latest Jeff UK goes months. as you impact And Visa about similar heard maybe did regulation the maybe exposure. the slowdown, Wanted then of results just that on through weight thoughts the think just guys you percentage just that touch also on European

Cameron Bready

Cameron, it to Jeff side. off the turn then SCA Hey Bryan, and kick on it I'll over its maybe

relative spending relates in my I've did it see the said quarter, in the as as to prepared slowdown remarks, to So, we consumer QX. UK market, second

first seeing at I consumer the in I If X.X%, what think I you marketplace, data accurate something of declined in the year, X.X% think we're fairly spending in that range. half like something Visa look reflects think which the

So, consumer seeing market. we're the and sort obviously manifest impact in the of confidence Brexit of themselves

continue currency local in the UK. to We in grow

pleased So, we're about that. certainly

growing above market trend rate growth. our of the We of continue

revenue UK us for In QX for of level of a market same The manager. on XXXX as that timeframe, it's the know, the or a at TSYS probably even the X% pro as growing matter. forma company, not to for basis UK, that we today, me, the X% but you in the in been excuse had is obviously, [ph]

think grew growth. of as overall for continue on, So, rate it's not be going in forward. Europe well in our prepared overall, at to my targeted positioned remarks, I a exposure Europe we're particularly commented I us But big

well seeing we're across in trends the in rest of infected business our say Europe. we're diversified really the cross-border and that Again, UK continent, Europe the -- the I'd haven't

very our remains for strong, the overall omni in e-com growth For tailwind region.

the for foreseeable in positioned derived choppiness through expect region that So, UK we're we're and think of in market sort we future. the well the the obviously prepared I

on Jeff, let asked. the comment you a I'll maybe question that SCA

Jeffrey Sloan

Yes, sure.

you I us said one first historical on years, percentage. in UK, Well, to as in the at UK only our best for the excess would with of in have new new the half probably XXXX what of last So, the of add the very year-over-year. number sales the significant Cameron numbers, sales of periods the

separate that said, there. Europe So, can growth, like you be of positioning our rest reflect as see the to our in we numbers. Cameron seems terms And its economic of

think On same that XXXX. effective some suppose in regulators of provide period progress, ruled that I rule to over though, SCA, long be as September out make Brian, Even smartly. XXXX, have becomes really XXXX, think, continue these as a the XX-month from of will September that of the thing, said that the guidance through people I I September

that I less would So, of have issue an be might been. that think otherwise

say I Payments, really for Speaking we're Global would well prepared.

instead the area gateways So, and small or doing bank not like, But Visa and I small Global issuers think I particular the the the is the MasterCard think of much is that's Payments. merchants about way where how to so think focus. or and tertiary it

for what view to at relates our our omnichannel of that grow not as on, and It's is something altering years. remainder to business going e-commerce we're it the the

the mid-teens finished seen performance we've the into saying just three good, years. of really the another coming last off a really good with Cameron over or quarter As consistent four that that businesses

I in We issuing because a over particularly the I something presence say now. that the for the it. next with the earlier that those focused markets months, that we're Kingdom, in mean unique ready that since would think with XX us. Europe, a United acquiring position, it's on. bit certainly, has allow in issue TSYS in really in the Western unique, We're business the close will they solution on Payments marrying So have Global presents inside Ireland solution TSYS will of we're

private As solution. affect said remarks my prepared SCA unique our I own to and

is a of customers importantly, Global unique over ability keeping next our that So, authorizations value to will to XX our ability to but avoid proposition become and Payments within issues value provide services added started valid to any It's effective. have the we're also four the our months by that avoid to SCA going TSYS. walls

So, and else financial institutions, strengths to as the and merchants really choice think the nature of further if partner had their our to honest, it actually Global you that and Payments to think positions Bryan about nobody TSYS be and speaks businesses. of

Bryan Keane

helpful, Thanks. results. solid Okay,

Jeffrey Sloan

Thanks, Brian.

Operator

Thank you.

Our next question Glenn from of from Oppenheimer. comes the line Greene

please. question Your

Glenn Greene

Congrats I morning. guess results. opportunities. question, revenue prepared the talking about your synergy comments Good Jeff, on on the first Thanks.

could just on debit before. the what it's she of of You opportunities different key maybe is from heard talked what about which the elaborate you kind someone, there? mentioned sorts I've But opportunity,

your up follow improved and currency, once question the actually, be given deal then would stock And sort capital position, your capital strong significantly of thoughts the allocation closes, currency.

larger So, of the Bank deals allocation software your just the close priorities I'm in doing on terms deal? about versus kind International of sort of just thinking JVs, and capital thoughts

Jeffrey Sloan

Sure Glenn. start the address Cameron question. the second in first and I'll one will

issuing a to and marrying on think gateway listen, do I us. and So, new to it. philosophy first on all our and to needing not the not that all that not acquiring unique us, It's with one,

to we I similar said what in May. think it's

and acquiring. unique I the of authentication, So, one outside talking some without I marrying having of of just response gave, to customer about finished the strong in flood that's transactions question Bryan I when is those issuing meant walls us, the validate as to about to matter a to TSYS Bryan's go talked and our examples thing and four ability to I Global that Payments with

with do us need technologically. to own versus do Glenn The we difference debit it we to it, else gateway don't is a instead, everybody

the this, States. by way, physically get the are one So, at they market, new get is at in only the and those if at i.e. construct Fidelity, that's the or they look United gateways where And way present. for new Pfizer, debit reason of you the that

because providing the Hence, we we for and return our right. describing. one, we So, processing the its to with don't the source customers, that car gateway own do actually it who capabilities of technologically. through for own good compete tech, number need doing I'm affect brands very it my Instead, a to in actually our actually we order to the do need about and at are solutions in underlying commentary superior that, shareholders own

distinctive, one. instance, in and number I that was Glenn, what that So, to is referring that's

customer can of within walls the Payments like things doing we TSYS value TSYS that's to Number provided and globally, the do of relates North Global authentication, as that in purposes has we America, this globally. strong aside it and the in in because emulate putting these for a lot of two, can the four it, do by presence how Europe in by networks Asia we particular

gateway think States Pfizer, those the debit only in new based about Fidelity, you new purposes of for and services, services. If United were the

have mousetrap want to like dress number we'll markets where us. really upon it two to. think the of I Cameron, trying in Union better was a double that's to already is European advantage refer it's particularly worldwide one I SCA is construction solution. that. think to of I And scope, the the in So, a And as you relates what

Cameron Bready

to of on it Glenn allocation, kick comments capital Yeah, just couple so maybe a off.

will investment cash sheet again closing, right upon of balance levered a First on business the terms pro basis we the times forma of of to $X.X and flow how to of EBITDA of be pro forma expect be billion all, $X.X billion we you're expect neighborhood forma on year a in positioned have X.X basis, an on roughly free great pro of a basis. in generated combined

is priorities. financial continue it allocation going So, think - its and that's I have capital relates to combined to business well-positioned pursue to the to very as flexibility, scale

on that on is executing that we've upon smoothly, with I we're market closing strategy, to priority transaction is the go-to be and ensure of would however, that coming and combined together our integration the first made merger well-positioned as delivering the a that commitments say the foremost as that to is part business going we're and going TSYS.

However, to continue obviously, as that pursue lot we to discipline historically. allocation passes, have capital strategy have time that we're a capacity going of to

to we the on software focused many same expect have I that going our that Obviously, of And on been driven you strategy. should historically. payment think be it's things focused we're very bullish of

to right adding and will side Nexus software opportunity of and that the payments software as payment and grow business components businesses part both nexus the monetize software allocation TSYS, clearly, strategy. SaaS us the have core that the fit effectively, vertical the to So a business of allows between that capital be obviously that a with more combined the

capabilities think point with in and Jeff’s those the I in strategy ability ventures issuing new to Europe to and those with that'll a obviously, as compete opportunities, be U.S., of those to additional capabilities part acquisitions capital our well. be earlier, distinctive particularly in example, of terms where think acquiring for to to we LatAm capabilities of we do will see our And markets. assets continue for to joint outside pursue combine particularly continue allocation the

that would grade going lastly, we that to on the level and say, then maintaining a our to forward. at Obviously, leverage I pride investment support will investment company is balance that reemphasize that want And commitment balance going to I committed remain and sheet. certainly combined something that and having a grade will ourselves sheet maintaining as forward maintaining

five to doing obviously to growing the effectively for allows pursue the we been will said, business years six I terms being have us in globally. a we've that capacity, But expanding now of and allocation the ample do things last to that capital strategy think

Glenn Greene

Okay, thank you.

Jeffrey Sloan

Thanks, Glenn.

Operator

Thank you.

Our Citi. question from Shirvaikar of from Ashwin the line next comes

Your question please.

Ashwin Shirvaikar

Caixa, hi, good the this relationships Hi, start complexity opportunity with highlighted multinational Erste, the here. stuff these, to stressing just it to and Thanks. you TSYS. and linking relates scale of expanding I as on Hey, the Jeff, then want to HSBC, Cameron. with clearly asking,

knowing you The eclipse of question have. become, revenue how can even one large single sorts of synergy relationships a additional to would the target seem is, these

to immediately opportunity get fast this of where sense prioritization in, your I what's factored particular fits be mining in you? interest really So, a level for this that opportunity is just want

Jeffrey Sloan

great say to just revenue, question hanging fruits Ashwin. would I a United lowest the here right honest, States sorry, the the it's with in be the business. Yeah, merchant

you I examples, this few question morning. I response in gave David's earlier So, to think

most the and Global NTR services you So, merchant, Vital products certifications POS Payments one, are in and not an here TSYS just there another positioned today. if gave the that [ph] at are area that of as Heartland look be would I United in as has well States direct and example, in overlaps

has Heartland vertical that Register, things fashion. TSYS that things doesn't has that a directly with are or were with in Heartland have has, there markets today OpenEdge complementary our Conversely, XX there OpenEdge

referred to hanging complexity fruit it relates as relates revenue acceleration, low to and of to multinational enhancement So, as on right there partners. FI here, it lot is just that's you those a the that

point here of lot from right to in lot of term. from to immediate revenue a a of drive overlap a and technology the is a ability There view - product, incremental

lot you when think being a rather of kind I end, of front end Cameron middle talked than was he things about other see, and to this, alluding loaded, traditionally, in more transactions. might as the back

that's So, I right the think area that's of middle place. down the

you is So, with sell example help have newspaper domestically omnichannel say, think we cross-border out don't already, have banks you here Global and we're to further, today. doing step absolutely in to have can you corporate going multinational Payments we coming at we'd well, if see said, the the back is like and would we Now, one do? and ability that is the already be large immediately FI all but to pitching, this e-com what TSYS customers your point, else this to stuff out

where prepared of So, there straight at no Payments stuff with about doubt here's I our already MNCs the is Global is an commerce this pitch. today beginning sales my Well, platform mind, in pitching example of whatsoever large that's and unified talked remarks. my

that mind my immediately. strategy accelerate that In TSYS helps

more today. executing that that's a have. provide already can additional FI we don't avenues on TSYS into And that sales pitch multinational So, we're

of of accelerate in saying addition enhancement, we're complexity there is the doubt business. say my folks merchant elements to I the that are So, just opportunities now, revenue in mentioned, would help mind some immediate you that of some the to there no

I'd thing immediate maybe the on NetSpend. area immediate, its I is term point last The so think out to side, medium same the TSYS

U.S. which we say is business, I at want sure at to business and got business NetSpend make for reasons. that say historical just TSYS TSYS So, only that their their to is merchant a

the NetSpend of number exist is that the businesses, let's no number example. United outside we're just months, is a business of last markets markets and do in this there reason no overseas. merchant in over States. There those already But I, can for many take Well we of reason that Cameron

see with outside United our to by prepaid combined markets bring in the certainly the next NetSpend that's is very we're undertaking, footprint expect a XX scope, ability something happen optimistic months. And companies something the our that's not to States So, with about. two-year scale I way, on and to the

transactions of have things other confidence think that we've is I than near-term very on announced. a the enhancement side to the the been of in many ability our described. strategic some affect amount of revenue really that So, fair different There

Cameron Bready

we build on can about potential Jeff day in maybe to think organic the bit company. to things that but think start combined that all described, as further, that generally we just little business, synergy a about do, Ashwin, revenue do one the things or the as as a

of leverage combined require the with our given additional existing new investment, point, the your that may level the to venture additional or particularly some that joint opportunity outside To will have into acquiring that TSYS with opportunities U.S., capabilities, markets, capabilities

joint top targeted revenue new or generally, have that need we've of that's to venture behind going historically. ability to the of synergies really the because I or a new is expand go that a to on incremental, investment into as the there's think we establish frankly, market

to and think as highlighted then his question. the to the organic to we've really top may line able that largely to prepared that of revenue store his overall Jeff about do that that the your on obviously in the I the response incremental being but established point, yeah, that remarks. part eclipse were deal, again, your targets extent to So, that, And as opportunities

Ashwin Shirvaikar

guidance. the on what you would so while impact earnings also on standpoint? understood, follow-up -- FX absorbing And comment an quantify you're revenues, margin margins Can then but is incremental margin that. it, from for what the on themselves, on the a you Got absorbing still thank raising impact you you

Cameron Bready

good it's a Yeah, question, Ashwin.

So, year, XX to to and the points currency headwind on between anywhere I basis I for point probably XXX-ish the a XX would on be say basis full margin expect bottom-line.

from basis, a top-line guide, which we've it a business. again, is revenue foreign we've the the strong as currency momentum because quantified of the yes, incremental current of kind function in largely So revenue have we really offsetting headwinds maintained the

the feel So, revenue we good target. still overall about

course to margin gives expectations obviously, execution achieve the positions we've -- to for earnings increase the expansion around the year well full the achieve But in overall per of year. us been over an and our able share

way guide I the is it earnings generally to about the So, think is XX% XX%.

probably Interestingly, target guidance growth, XXX earnings. in that's terms cycle of basis our earnings but our to absorbing that's in roughly currency points XXX of

So which is that's strong really matter on a business. the currency really XX%, think of earnings north I constant number a for basis, as an

Ashwin Shirvaikar

you. Thank it. Got

Okay.

Cameron Bready

Ashwin. Thanks,

Operator

Thank you.

comes question the of from David Our from next Baird. line Koning

Your question, please.

David Koning

within growth North was easier type segment. strong your good is comps accelerating Direct, and good. and my share strongest of had years, function guys, about constant Canada wondering, half, obviously -- even getting in think thank organic about Hey smaller, maybe Yeah. first know And organic guess of America keeps that that's in direct the pretty is basis it's looked X.X% the level you. question, wholesale you I North And I'm mean half? we in hit that U.S. continuing and back sustainable accelerated constant a taking back But been actually currency. it's of America is us currency two I to I I the X.X% an sustainable is on US like maybe

Cameron Bready

kind suggested is you be Yeah, a of America closer end honest almost you so to I X.X% pretty got our to currency which your math so XX.X%, that's David, in the point to higher, you. is its of high normalized good the at about guidance. North pretty of and quarter constant growth Cameron, really wholesale, X I've what close with what think cycle

relationship performance reflects channel channel the to across market again, really Obviously, of Direct perform that, is as strong which, continues business well. and U.S. north well continued as our very vertical integrated our

trends your can today I sitting those those answer question think yes, levels. back-half here persist around the expectation to the same that So, is short is

offsetting business us Direct the that more the absorbing continue channels strength momentum feel in and the is currency to revenue, headwinds, North good we're help incremental that have I the way particular the outside in business think we're really US. about we in incremental and America and of the strength we regions absorb US FX notwithstanding, in the

expectation and is enter we long that short matter. of the in the of for level So, about as And yes, we QX QX and the persists. have into the the it North as this balance momentum revenue is a feel year continue the good performance that we to of business American

David Koning

buybacks was have a normal. free like half just half? catch lighter cash in flow that guess the it mean flow you or up looks half free first for back thanks. used in in follow-up, whatever cash Does a little a ton of the Great, of that get big the just I kind and the else one back than

Cameron Bready

target I its half, look for sort first at so Yeah, we're extra And and of on to highlighted timing best would on the the the schedule, of we've target billion because us. that's we for the if close tracking that in for year. think have really the full items I billion $X.X representation available business dollars cash for the it’s

out it's quarter. in liabilities, coming out timing lot of the some a cash, items, but sort holding customer in noise it next then of between because is is of rolls of reduction that restricted we're cash flip of There

for statement. we've way of really on to to and highlighted utilize. it's it us that sort financial That's the available way the the that's best items the business look timing So, at trended the extra cash in

David Koning

Good Great, thanks, guys. job.

Cameron Bready

Thanks, David.

Operator

you. comes KBW. line Steven from our from Kwok question Thank And the of final

Your question please.

Steven Kwok

in. good me And squeezing thanks guys, for quarter. Hey

questions, wholesale What's I little your but TSYS bit, integrate thoughts you bit market be improved to bit Just runoff is wholesale one well. two as of market, as quick a a has a of little U.S. going just a as around the well? TSYS that that, the on believe

question for just the given second then is lower environment, interest And rates. rate around the outlook

there potential debt lower costs? Thanks. your further to any Now, is

Jeffrey Sloan

I'm the Cameron Yes, Steven, U.S. will it's Jeff, the I'll start rates comment sure question. wholesale. on on

wholesale it, Payments, of if you to I if more when probably business U.S. So, back what would at how XX%, US is number one. you not business, the Global came the I we think look say about was up and

math, lacked Number addition the in also to two, also of we we diversity distribution. lacked

the bought wholesale business. So, from with our we United lot States we the exception in of sales away of when XXXX, a have in business, it didn't of with APT gaming really the exception the direct

So, on wholesale the is about on the business the emphasis less talking five I or think drove an for we've those two which been direct strategy the business. and years that four things that last same emphasis really of

probably that most of position, important of affable direct payments company so have have We're event the lowering combined business this with we distribution and a distribution we the plenty at direct partner lot of on a basis commodity TSYS wholesale certainly TSYS. X% but

have. Global don’t issues which have will concentration I say are not ago, as Payments for those it not issued because but the lack there Payments that of pieces predominate Payments are Global today of six way distribution to purposes, it diversity think about in in and especially the Global about years or thought same is I these two So, have we seven there issues

among So, I going would TSYS different or ISO in either. there years certainly seven think have add concentration Payments very also doesn’t that historically feel have about very in six that, I customers business, lot the of few we Global a that back

I going think what's approach same rather forward openly better way look think the it combined So, for I think mouse don’t a business. and think I and at combined with we best we the companies too much thing overall it trap about the

Cameron Bready

will revolving well. I'll executed of as an and rate basis question our TSYS I XXX.X% loss term the pricing expected environment where in with and very rate rating we that, that which saying earlier were the with plus by attractive start outcome that is our a credit prized on in points, your and our on we LIBOR Steven delighted And us course loan we're facility today of start we over credit obviously July, in is agreement improvement A, credit given in is where interestingly general

to we is terms. attractive good in feel of senior expectation the very aspect capital prior around put closing structure to the that about aspect of $X.X pretty us we done in structure that notes execute at at the place transaction remaining we gotten The need permanent over that in as actually today. billion closing months in is points capital place about really to lead we So, here the to up to for that your expect and the rate which to coming of attractive offering environment we recognize get

cost environment given would potentially take be allow for the business overseas that, at of even recognize rate and forma to also the the the lower particularly We there us geographically for business us in the mix as well. Europe of overall pro to that debt advantage UK lower can opportunities

for far us that we transaction we execution relates a some able So, rates. financing have as the permanent more combined that establish to the to that we gives confidence between the the potential against achieve seeing now close rate structure heels accretion but on capital as better-than-expected to I continue plans on been our the and would environment certainly come upside thus to of expectations the there's lot execute say to the for business were and

Steven Kwok

questions. taking All my Thanks for right.

Winnie Smith

joining On morning. and Steven. very interest in our behalf you Thanks of call this your you for company thank Payments, Global thank our for much

Operator

Thank your program. today's does ladies participation on This for gentlemen, conference. and you, conclude the

disconnect. may Good day. now You

Global Payments (GPN) 30 Jul 192019 Q2 Earnings call transcript