Global Payments Reports Third Quarter Earnings
ATLANTA, Apr. 3 /PRNewswire-AsiaNet/ --
Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third
quarter ended February 28, 2009. For the third quarter, revenues grew 26% to
$392.7 million compared to $310.6 million in the prior year. Normalized diluted
earnings per share grew 2% to $0.45 compared to $0.44 in the prior year quarter.
These results include the unfavorable impact of foreign currency exchange
rates during the quarter, and as such, the company included Schedule 9 to provide
revenue and diluted earnings per share growth on a constant currency basis for
both the quarter and the outlook for fiscal 2009. On a constant currency basis,
revenues grew 38% and normalized diluted earnings per share grew 25% over the
prior year quarter.
On a GAAP basis we reported revenue of $392.7 million and a loss per share of
($1.34). These results include a non-cash, pretax impairment charge relating to
our money transfer business of $147.7 million which was recorded as a result of
the company's annual FAS 142 Goodwill and Other Intangible Assets review. The
fair value of the money transfer business has significantly declined due to
ongoing challenging macroeconomic and immigrant labor trends.
Comments and Outlook
Chairman and CEO, Paul R. Garcia, stated, "We achieved solid third quarter
financial performance, in spite of continuing macroeconomic headwinds and
unfavorable foreign currency trends. Our normalized results for the quarter were
driven by the impact of our June 30, 2008 U.K. acquisition and strong results in
our North America segment. North America continues to benefit from successful
pricing initiatives in Canada and solid 15% transaction growth in the U.S."
"We are maintaining our 2009 annual revenue guidance of $1,550 million to
$1,580 million, or 22% to 24% growth over fiscal 2008. In addition, our constant
currency expectations for revenue growth of 29% to 31% remain unchanged from last
quarter. We are also reaffirming fiscal 2009 normalized diluted EPS guidance of
$2.14 to $2.21, reflecting 8% to 12% growth over fiscal 2008 (see Schedule 6 for
details). Our constant currency outlook for normalized diluted earnings per share
growth of 21% to 25% for fiscal 2009 also remains unchanged, in spite of a
challenging economic environment," said Garcia.
Conference Call
Global Payments will hold a conference call today, April 2, 2009 at 5:00 p.m.
EDT to discuss financial results and business highlights. Callers may access the
conference call via the company's Web site at www.globalpaymentsinc.com by
clicking the "Webcast" button; or callers may dial 1-888-740-6140 and callers
outside U.S. and Canada may dial 1-913-312-1269. The pass code is "GPN." A replay
of the call may be accessed through the Global Payments' Web site through April
16, 2009.
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic
transaction processing services for consumers, merchants, Independent Sales
Organizations (ISOs), financial institutions, government agencies and multi-
national corporations located throughout the United States, Canada, Latin
America, Europe, and the Asia-Pacific region. Global Payments offers a
comprehensive line of processing solutions for credit and debit cards, business-
to-business purchasing cards, gift cards, electronic check conversion and check
guarantee, verification and recovery including electronic check services, as well
as terminal management. The company also provides consumer money transfer
services from the United States and Europe to destinations in Latin America,
Morocco, and the Philippines. For more information about the company and its
This announcement and comments made by Global Payments' management during the
conference call may contain certain forward-looking statements within the meaning
of the "safe-harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Statements that are not historical facts, including revenue and earnings
estimates and management's expectations regarding future events and developments,
are forward looking statements and are subject to significant risks and
uncertainties. Important factors that may cause actual events or results to
differ materially from those anticipated by such forward-looking statements
include the following: foreign currency risks which become increasingly relevant
as we expand internationally, the effect of current U.S. economic conditions,
including a decline in the value of the U.S. dollar, the continued erosion of the
value of our money transfer business and other risks detailed in the company's
SEC filings, including the most recently filed Form 10-Q or Form 10-K, as
applicable. The company undertakes no obligation to revise any of these
statements to reflect future circumstances or the occurrence of unanticipated
events.
Contact: Jane M. Elliott
770-829-8234 Voice
770-829-8267 Fax
investor.relations@globalpay.com
SCHEDULE 1
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
-------------------------------------------------------------------------
Three Months Ended February 28/29,
---------------------------------
2009 2008
---- ----
Revenues $392,663 $310,641 ---
----------------------------------------------------------------------
Operating expenses:
Cost of service 146,760 117,661
Sales, general and administrative 180,117 133,069
Impairment 147,664 -
------- ------- 474,541
250,730 ------- -------
Operating (loss) income (81,878) 59,911 ---
----------------------------------------------------------------------
Other income (expense):
Interest and other income 1,200 4,767
Interest and other expense (2,222) (2,198)
------ ------
(1,022) 2,569 ------
-----
(Loss) income before income taxes
and minority interest (82,900) 62,480
Provision for income taxes (15,818) (19,265)
Minority interest, net of tax provision
(benefit) of $1,703 and ($506),
respectively (8,058) (3,160)
-------------------------------------------------------------------------
Net (loss) income $(106,776) $40,055
--------- -------
(Loss) earnings per share:
Basic $(1.34) $0.51
------ ----- Diluted $(1.34)
$0.50 ------ -----
Weighted average shares outstanding:
Basic 79,835 79,219
Diluted 79,835 80,650
SCHEDULE 2
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands) ---
----------------------------------------------------------------------
Three Months
Ended February 28/29,
---------------------
2009 2008
---- ----
Revenues:
---------
United States $206,237 $182,038
Canada 68,202 61,256
------ ------ North America Merchant Services 274,439
243,294
Europe 62,109 14,455 Asia-
Pacific 22,980 18,977
------ ------ International Merchant Services 85,089
33,432
United States 26,605 28,007 Europe
6,530 5,908 -----
----- Money Transfer 33,135 33,915
-------- --------
Total Revenues $392,663 $310,641
======== ========
Operating Income:
-----------------
North America Merchant Services(1) $57,909 $67,792
International Merchant Services 20,771 4,326 Money
Transfer 3,403 1,156 Corporate
(16,297) (13,363)
Impairment (147,664) -
-------- -------- Operating (Loss) Income
$(81,878) $59,911
======== =======
(1) Includes the favorable impact of a non-recurring, non-cash operating
tax item of $7.0 million in the three months ended February 29, 2008.
SCHEDULE 3
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
Reconciliations to Exclude Impairment Charges and an Operating Tax Item
from Normalized Results
(In thousands, except per share data)
-------------------------------------------------------------------------
Three Months Ended
February 28/29, 2009 2008
------------------------------- -----------------------
Operating
Tax
Normalized Impairment(1) GAAP Normalized Item(2) GAAP
---------- ------------ ---- ---------- ------ ----
Revenues $392,663 $- $392,663 $310,641 $- $310,641
-------------------------------------------------------------------------
Operating
expenses:
Cost of service 146,760 - 146,760 117,661 - 117,661
Sales, General
and
administrative 180,117 - 180,117 140,117 (7,048) 133,069
Impairment - 147,664 147,664 - - -
--- ------- ------- --- --- ---
326,877 147,664 474,541 257,778 (7,048) 250,730
------- ------- ------- ------- ------ -------
Operating income
(loss) 65,786 (147,664) (81,878) 52,863 7,048 59,911
-------------------------------------------------------------------------
Other income
(expense):
Interest and
other income 1,200 - 1,200 4,767 - 4,767
Interest and
other expense (2,222) - (2,222) (2,198) - (2,198)
------ --- ------ ------ --- ------
(1,022) - (1,022) 2,569 - 2,569
------ --- ------ ----- --- -----
Income before
income taxes and
minority interest
64,764 (147,664) (82,900) 55,432 7,048 62,480
Provision for
income taxes (19,906) 4,088 (15,818) (16,936)(2,329) (19,265)
Minority interest,
net of tax
provision (benefit)
of $1,703 and
($506),
respectively (8,058) - (8,058) (3,160) - (3,160)
-------------------------------------------------------------------------
Net income (loss) $36,800 $(143,576) $(106,776) $35,336 $4,719 $40,055
------- --------- --------- ------- ------ -------
Diluted shares 80,931 (1,096) 79,835 80,650 - 80,650
Diluted earnings
(loss) per share $0.45 $(1.79) $(1.34) $0.44 $0.06 $0.50
----- ------ ------ ----- ----- -----
Effective tax rate 33.1% (15.2%) 33.0% 33.0%
(1) Impairment charges consist of goodwill and other intangible asset
impairments in the Money Transfer segment. Also reflects the related
income tax benefit and share dilution.
(2) Relates to the favorable impact of a non-recurring, non-cash
operating tax item included in sales, general and administrative
expenses. Also reflects the related income tax benefit.
SCHEDULE 4
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
-------------------------------------------------------------------------
Nine Months Ended February 28/29,
--------------------------------
2009 2008
---- ----
Revenues $1,199,483 $930,397 ---
----------------------------------------------------------------------
Operating expenses:
Cost of service 445,248 350,483
Sales, general and administrative 512,587 394,023
Impairment and restructuring 147,664 1,317
------- ----- 1,105,499
745,823 --------- -------
Operating income 93,984 184,574 ---
----------------------------------------------------------------------
Other income (expense):
Interest and other income 6,573 14,643
Interest and other expense (6,642) (5,339)
------ ------
(69) 9,304 ---
-----
Income before income taxes and minority
interest 93,915 193,878
Provision for income taxes (66,539) (64,071)
Minority interest, net of tax provision
(benefit) of $1,028 and ($70),
respectively (27,718) (7,864)
-------------------------------------------------------------------------
Net (loss) income $(342) $121,943
----- --------
(Loss) Earnings per share:
Basic $- $1.53
--- ----- Diluted $-
$1.51 --- -----
Weighted average shares outstanding:
Basic 79,676 79,584
Diluted 79,676 81,023
SCHEDULE 5
SEGMENT INFORMATION GLOBAL
PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
-------------------------------------------------------------------------
Nine Months Ended February 28/29,
--------------------------------
2009 2008
---- ----
Revenues: ------
--- United
States $599,082 $537,603 Canada
232,779 193,705 -------
------- North America Merchant Services 831,861 731,308
Europe 194,881 42,365 Asia-
Pacific 67,630 53,467
------ ------ International Merchant Services 262,511
95,832
United States 84,596 86,003 Europe
20,515 17,254 ------
------ Money Transfer 105,111 103,257
---------- -------- Total Revenues
$1,199,483 $930,397
========== ========
Operating Income: ------
----------- North
America Merchant Services(1) $213,409 $205,007 International
Merchant Services 62,136 14,309 Money Transfer
12,764 6,117 Corporate (46,661)
(39,542)
Impairment and Restructuring (147,664) (1,317)
-------- ------
Operating Income $93,984 $184,574
======= ========
(1) Includes the favorable impact of a non-recurring, non-cash
operating tax item of $7.0 million in the nine months ended
February 29, 2008.
SCHEDULE 6
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
Reconciliations to Exclude Impairment and Restructuring Charges and an
Operating Tax Item from Normalized Results
(In thousands, except per share data)
-------------------------------------------------------------------------
Nine Months Ended
February 28/29, 2009 2008
------------------------------- ---------------------------
Restructuring
and
Operating
Tax
Normalized Impairment(1) GAAP Normalized Item(2) GAAP
---------- ------------ ---- ---------- ------ ----
Revenues $1,199,483 $- $1,199,483 $930,397 $- $930,397
-------------------------------------------------------------------------
Operating
expenses:
Cost of
service 445,248 - 445,248 350,483 - 350,483
Sales, general
and
administrative 512,587 - 512,587 401,071 (7,048 )394,023
Impairment and
restructuring - 147,664 147,664 - 1,317 1,317
--- ------- ------- --- ----- -----
957,835 147,664 1,105,499 751,554 (5,731) 745,823
------- ------- --------- ------- ------ -------
Operating income 241,648 (147,664) 93,984 178,843 5,731 184,574
-------------------------------------------------------------------------
Other income
(expense):
Interest and
other income 6,573 - 6,573 14,643 - 14,643
Interest and
other expense (6,642) - (6,642) (5,339) - (5,339)
------ --- ------ ------ --- ------
(69) - (69) 9,304 - 9,304
--- --- --- ----- --- -----
Income before
income taxes
and minority
interest 241,579 (147,664) 93,915 188,147 5,731 193,878
Provision for
income taxes (70,627) 4,088 (66,539) (62,191) (1,880) (64,071)
Minority
interest, net
of tax provision
(benefit)of
$1,028 and
($70),
respectively (27,718) - (27,718) (7,864) - (7,864)
-------------------------------------------------------------------------
Net income
(loss) $143,234 $(143,576) $(342) $118,092 $3,851 $121,943
-------- --------- ----- -------- ------ --------
Diluted shares 81,055 (1,379) 79,676 81,023 - 81,023
Diluted earnings
(loss) per share $1.77 $(1.77) $- $1.46 $0.05 $1.51
----- ------ --- ----- ----- -----
Effective tax rate 32.7% 100.5% 34.5% 34.5%
(1) Impairment charges consist of goodwill and other intangible asset
impairments in the Money Transfer segment. Also reflects the
related income tax benefit and share dilution.
(2) Relates to the favorable impact of a non-recurring, non-cash
operating tax item included in sales, general and administrative
expenses. Restructuring charges consist of employee termination
benefits relating to a facility closure. Also reflects the related
income tax benefit.
-------------------------------------------------------------------------
Year Ended May 31, 2008
----
Normalized diluted earnings per share $1.98
Restructuring and other (3) 0.03
----
GAAP diluted earnings per share $2.01
-----
(3) Full year fiscal 2008 diluted earnings per share was $2.01 on a GAAP
basis, which includes restructuring and other charges, a favorable
operating tax item, and an unfavorable foreign currency item. For
more information, please see our fiscal 2008 earnings press releases,
which were included as exhibits to our respective Form 8-Ks
furnished to the SEC.
SCHEDULE 7
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
-------------------------------------------------------------------------
February 28, May 31,
2009 2008
---- ----
(Unaudited)
Assets
------
Cash and cash equivalents $387,593 $456,060
Accounts receivable, net 105,242 100,179
Claims receivable, net 554 1,354
Settlement processing assets 3,234 24,280
Inventory, net 6,370 3,821
Deferred income taxes 4,287 4,119
Prepaid expenses and other current assets 23,132 27,597
------ ------
Current assets 530,412 617,410
Property and equipment, net 141,412 141,415
Goodwill 535,988 497,136
Other intangible assets, net 225,224 175,636
Other assets 11,560 14,310
------ ------
Total assets $1,444,596 $1,445,907
---------- ----------
Liabilities and Shareholders' Equity
------------------------------------
Lines of credit $4,110 $1,527
Current portion of term loan 25,000 -
Payables to money transfer beneficiaries 8,830 9,276
Accounts payable and accrued liabilities 143,011 138,243
Settlement processing obligations 70,020 56,731
Income taxes payable 13,736 11,975
------ ------
Current liabilities 264,707 217,752
Term loan 165,000 -
Deferred income taxes 54,793 75,001
Other long-term liabilities 11,600 11,612
------ ------
Total liabilities 496,100 304,365
------- -------
Commitments and contingencies
Minority interest in equity of subsidiaries 33,430 14,724
Preferred stock - -
Common stock - -
Paid-in capital 402,077 380,741
Retained earnings 616,725 621,875
Accumulated other comprehensive (loss)
income (103,736) 124,202
-------- -------
Total shareholders' equity 915,066 1,126,818
------- ---------
Total liabilities and shareholders'
equity $1,444,596 $1,445,907
---------- ----------
SCHEDULE 8
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
-------------------------------------------------------------------------
Nine Months Ended February 28/29,
--------------------------------
2009 2008
---- ----
Cash flows from operating activities:
Net (loss) income $(342) $121,943
Adjustments to reconcile net (loss) income
to net cash provided by operating
activities:
Depreciation and amortization of
property and equipment 27,175 21,258
Amortization of acquired intangibles 23,222 10,962 Share-
based compensation expense 10,954 9,853 Provision for
operating losses and bad
debts 20,256 21,884
Minority interest in earnings 28,746 7,794
Deferred income taxes (3,419) (3,757)
Impairment of goodwill and identified
intangible assets 147,664 - Other,
net (87) (5,763)
Changes in operating assets and
liabilities, net of the effects of
acquisitions:
Accounts receivable (8,856) (6,976)
Claims receivable (13,879) (18,123)
Settlement processing assets and
obligations, net 28,818 26,297
Inventory (2,314) (1,964)
Prepaid expenses and other assets 6,832 (7,961)
Payables to money transfer beneficiaries (446) 1,005
Accounts payable and accrued liabilities 2,692 (3,276)
Income taxes payable 1,761 10,734
----- ------ Net cash provided by operating
activities 268,777 183,910
------- -------
Cash flows from investing activities:
Business and intangible asset
acquisitions (454,279) (12,051)
Capital expenditures (25,458) (31,926)
Proceeds from sale of investment and
contractual rights 6,796 -
----- --- Net cash used in investing
activities (472,941) (43,977)
-------- -------
Cash flows from financing activities:
Net borrowings on lines of credit 2,583 1,126
Proceeds from term loan 200,000 -
Principal payments under term loan (10,000) -
Proceeds from stock issued under
share-based compensation plans 7,961 15,229
Tax benefit from share-based
compensation plans 2,421 7,384
Repurchase of common stock - (87,020)
Dividends paid (4,808) (4,784)
Contribution from minority interest
holder 358 -
Distributions to minority interests (23,258) (7,085)
------- ------
Net cash provided by (used in)
financing activities 175,257 (75,150)
------- -------
Effect of exchange rate changes on cash (39,560) 14,812
------- ------
(Decrease) increase in cash and cash
equivalents (68,467) 79,595
Cash and cash equivalents, beginning of
period 456,060 308,872
------- ------- Cash and cash equivalents, end of period $387,593
$388,467 -------- -------
-
SCHEDULE 9
CONSTANT CURRENCY OUTLOOK
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(in millions,
except for per
share data) Q1 FY09 % change Q2 FY09 % change
Actual Q1 FY08 Actual Q2 FY08
------ ------- ------ -------
Fiscal 2009 Revenue
-------------------
Constant
Currency(1) $397 28% $424 37%
Foreign
currency
impact(2) 9 3% (23) (7%)
- - --- --
Total
Revenues $406 31% $401 30%
==== == ==== ==
Fiscal 2009 Diluted Earnings Per Share
--------------------------------------
Constant
Currency(1) $0.68 27% $0.67 39%
Foreign
currency
impact(2) 0.03 5% (0.07) (14%)
---- - ----- ---
Normalized $0.71 32% $0.60 25%
Impairment and
Restructuring(3) - 2% - -
--- - --- ---
GAAP $0.71 34% $0.60 25%
===== == ===== ==
(in millions,
except for per
share data) Q3 FY09 % change Fiscal 2009 % change
Actual Q3 FY08 Outlook FY08
------ ------- ------- ----
Fiscal 2009 Revenue
-------------------
Constant
Currency(1) $428 38% $1,641 to $1,671 29% to 31%
Foreign
currency
impact(2) (35) (11%) (91) (7%)
--- --- --- --
Total
Revenues $393 26% $1,550 to $1,580 22% to 24%
==== == ================ =========
Fiscal 2009 Diluted Earnings Per Share
--------------------------------------
Constant
Currency(1) $0.55 25% $2.40 to $2.47 21% to 25%
Foreign
currency
impact(2) (0.10) (23%) (0.26) (13%)
----- --- ----- ---
Normalized $0.45 2% $2.14 to $2.21 8% to 12%
Impairment and
Restructuring(3) (1.79) - (1.79) (91%)
----- --- ----- ---
GAAP $(1.34) - $0.35 to $0.42 (83%) to (79%)
====== === ============== ============
(1) Reflects current period results excluding impairment charges on a
pro forma basis as if foreign currency rates did not change from the
comparable prior year period
(2) Reflects the impact of actual and forecasted changes in foreign
currency rates from the comparable prior year period.
(3) For more information, please see Schedule 6 and our earnings press
releases for each of these periods, which were included as exhibits
to our respective Form 8-Ks furnished to the SEC.
SOURCE: Global Payments Inc.
CONTACT: Jane M. Elliott,
+1-770-829-8234 Voice,
or +1-770-829-8267 Fax,
investor.relations@globalpay.com,
of Global Payments Inc.
(GPN)
__________________________________________________________________________________________
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