10-1-13 4:02 PM EDT | Email Article

Announces $100 Million Accelerated Share Repurchase Plan

Increases Fiscal 2014 EPS Outlook

ATLANTA, Oct. 1, 2013 /PRNewswire/ -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal first quarter ended August 31, 2013.  The company delivered revenues of $629.7 million or 7% growth and cash earnings per share of $1.00 or 15% growth over prior year.

(Logo: http://photos.prnewswire.com/prnh/20010221/ATW031LOGO )

Chairman Paul R. Garcia said, "We delivered strong first quarter results reflecting solid performance in North America and Europe.  We continue to focus on expanding our global market position and driving our strategic initiatives forward."

First Quarter 2014 Summary

  • Revenues grew 7% to $629.7 million, compared to $590.3 million in the first quarter of fiscal 2013.
  • Cash diluted earnings per share grew 15% to $1.00, compared to $0.87 in the first quarter of fiscal 2013.
  • GAAP diluted earnings per share were $0.87, compared to $0.59 in the first quarter of 2013.

$100 Million Accelerated Share Repurchase
David E. Mangum, Senior Executive Vice President and CFO, stated, "We are pleased with our first quarter results and delighted to announce that we plan to enter into an accelerated share repurchase plan, demonstrating our commitment to executing share repurchases while continuing to drive organic growth and pursue acquisitions."

Global Payments intends to enter into an accelerated share repurchase (ASR) plan this month to repurchase up to $100 million of the company's common stock.  The ASR is part of the Board authorized program to repurchase up to $250 million of the company's common stock. 

2014 Outlook
As a result of the ASR plan, the company has increased its full-year expectations for diluted earnings per share on a cash basis by five cents to a range of $3.98 to $4.05, or growth of 9% to 11% over fiscal 2013.  Annual fiscal 2014 GAAP diluted earnings per share is now expected to be $3.40 to $3.47

The company maintains its expectations for annual revenue of $2.51 billion to $2.56 billion, or 6% to 8% growth over fiscal 2013. 

Conference Call
Global Payments will hold a conference call today, October 1, 2013 at 5:00 p.m. EDT to discuss financial results and business highlights.  Callers may access the conference call via the investor relations page of the company's website at www.globalpaymentsinc.com by clicking the "Webcast" button; or callers in North America may dial 1-888-895-3550 and callers outside North America may dial 1-706-758-8809.  The pass code is "GPN."  A replay of the call may be accessed through the Global Payments website through October 15, 2013.  

About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout North America, South America, Europe and the Asia-Pacific region.  Global Payments, a Fortune 1000 company, 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.  Visit www.globalpaymentsinc.com for more information about the company and its services.

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:the effect on our results of operations of continued security enhancements to our processing system; foreign currency risks which become increasingly relevant as we expand internationally; the effect of current domestic and worldwide economic conditions, including sovereign insolvency situations and a decline in the value of the U.S. dollar, and future performance and integration of acquisitions, and other risks detailed in our SEC filings, including the most recently filed Form 10-K.  We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.


Investor contact:

investor.relations@globalpay.com    

     Media contact:

media.relations@globalpay.com


Jane Elliott


Amy Corn


770-829-8234


770-829-8755

 

SCHEDULE 1

GAAP CONSOLIDATED STATEMENTS OF INCOME 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES


(In thousands, except per share data)










Three Months Ended August 31,





2013


2012


% Change



(unaudited)



Revenues


$        629,685


$         590,287


6.7%

Operating expenses:







Cost of service


230,745


204,391


12.9%

Sales, general and administrative


291,556


281,419


3.6%

Processing system intrusion


-


23,989


(100.0%)



522,301


509,799


2.5%








Operating income


107,384


80,488


33.4%

Other income (expense):







Interest and other income


3,338


1,983


68.3%

Interest and other expense


(7,879)


(3,545)


122.3%



(4,541)


(1,562)


190.7%








Income before income taxes 


102,843


78,926


30.3%

Provision for income taxes


(31,135)


(24,764)


25.7%

Net income


71,708


54,162


32.4%

Less: Net income attributable to noncontrolling interests, net of tax


(7,065)


(7,487)


(5.6%)

Net income attributable to Global Payments


$          64,643


$           46,675


38.5%















Earnings per share attributable to Global Payments:







    Basic


$              0.88


$               0.59


49.2%

    Diluted


$              0.87


$               0.59


47.5%








Weighted average shares outstanding:







    Basic


73,765


78,604



    Diluted


74,289


79,043



 

SCHEDULE 2

CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES








(In thousands, except per share data)










Three Months Ended August 31,





2013


2012


% Change








Revenues


$          629,685


$        590,287


6.7%

Operating expenses:







Cost of service


215,773


193,005


11.8%

Sales, general and administrative


290,060


280,619


3.4%



505,833


473,624


6.8%















Operating income


123,852


116,663


6.2%

Other income (expense):







Interest and other income


3,338


1,983


68.3%

Interest and other expense


(7,879)


(3,545)


122.3%



(4,541)


(1,562)


190.7%








Income before income taxes 


119,311


115,101


3.7%

Provision for income taxes


(36,686)


(36,553)


0.4%

Net income


82,625


78,548


5.2%

Less: Net income attributable to noncontrolling interests, net of tax


(8,436)


(9,752)


(13.5%)

Net income attributable to Global Payments


$            74,189


$          68,796


7.8%















Earnings per share attributable to Global Payments:







    Basic


$                1.01


$              0.88


14.8%

    Diluted


$                1.00


$              0.87


14.9%








Weighted average shares outstanding:







    Basic


73,765


78,604



    Diluted


74,289


79,043










See Schedule 6 for a reconciliation of cash earnings to GAAP.

 

SCHEDULE 3

SEGMENT INFORMATION 

GLOBAL PAYMENTS INC. AND SUBSIDIARIES














(In thousands)
















 Three Months Ended August 31, 







2013


2012


 % Change 



 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 


 GAAP 


 Cash Earnings 














Revenues:













United States


$    363,833


$    363,833


$    345,898


$    345,898


5.2%


5.2%

Canada


86,672


86,672


80,897


80,897


7.1%


7.1%

North America merchant services


450,505


450,505


426,795


426,795


5.6%


5.6%














Europe


143,188


143,188


128,465


128,465


11.5%


11.5%

Asia-Pacific


35,992


35,992


35,027


35,027


2.8%


2.8%

International merchant services


179,180


179,180


163,492


163,492


9.6%


9.6%














Total revenues


$    629,685


$    629,685


$    590,287


$    590,287


6.7%


6.7%














Operating income (loss) for segments:













North America merchant services


$      69,699


$      79,404


$      67,217


$      71,443


3.7%


11.1%

International merchant services


61,541


68,757


57,140


65,044


7.7%


5.7%

Corporate1


(23,856)


(24,309)


(43,869)


(19,824)


45.6%


(22.6%)

Operating income


$    107,384


$    123,852


$      80,488


$    116,663


33.4%


6.2%








































1GAAP and cash earnings include incremental security spend for the three months ended August 31, 2013. GAAP earnings for the three months ended August 31, 2012 include a data intrusion charge of $24.0 million.  














See Schedule 7 for reconciliation of cash earnings segment information to GAAP. 

 

SCHEDULE 4

CONSOLIDATED BALANCE SHEETS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES






(In thousands, except share data)








August 31, 2013


May 31, 2013



(unaudited)



Assets





Current assets:





Cash and cash equivalents


$          725,887


$          680,470

Accounts receivable, net of allowances for doubtful accounts of $518 and $509, respectively


188,633


189,435

Claims receivable, net of allowance for losses of $4,248 and $3,144, respectively


1,100


1,156

Settlement processing assets


611,602


259,204

Inventory


6,677


11,057

Deferred income taxes


6,317


6,485

Prepaid expenses and other current assets


49,852


66,685

      Total current assets


1,590,068


1,214,492






Goodwill


1,047,578


1,044,222

Other intangible assets, net


387,234


400,848

Property and equipment, net


355,370


348,064

Deferred income taxes


96,646


95,178

Other


22,594


22,252






      Total assets


$       3,499,490


$       3,125,056






Liabilities and Equity





Current liabilities:





Lines of credit


$          328,487


$          187,461

Current portion of long-term debt


72,228


72,335

Accounts payable and accrued liabilities


224,100


262,890

Settlement processing obligations


400,887


162,558

Income taxes payable


19,118


18,870

        Total current liabilities


1,044,820


704,114






Long-term debt


1,000,383


891,134

Deferred income taxes


173,573


170,723

Other long-term liabilities


76,025


72,478

      Total liabilities


2,294,801


1,838,449






Equity:





Preferred stock, no par value; 5,000,000 shares authorized and none issued


-


-

Common stock, no par value; 200,000,000 shares authorized; 72,919,576 and 75,426,099 issued and outstanding at August 31, 2013 and May 31, 2013, respectively






-


-

Paid-in capital


166,848


202,396

Retained earnings


917,550


958,751

Accumulated other comprehensive loss


(17,376)


(15,062)

      Total Global Payments shareholders' equity


1,067,022


1,146,085

Noncontrolling interest


137,667


140,522

Total equity


1,204,689


1,286,607






      Total liabilities and equity


$       3,499,490


$       3,125,056

 

SCHEDULE 5

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

GLOBAL PAYMENTS INC. AND SUBSIDIARIES









(In thousands)














Three Months Ended August 31,






2013


2012









Cash flows from operating activities:





Net income



$        71,708


$         54,162

Adjustments to reconcile net income to net cash (used in) provided by operating activities:






Depreciation and amortization of property and equipment


13,981


12,670


Amortization of acquired intangibles


14,393


11,225


Share-based compensation expense


4,788


4,222


Provision for operating losses and bad debts


5,234


6,012


Deferred income taxes


5,784


10,273


Other, net


(1,891)


(941)

Changes in operating assets and liabilities, net of the effects of acquisitions:






Accounts receivable


802


3,087


Claims receivable


(3,864)


(3,272)


Settlement processing assets and obligations, net


(115,383)


(7,839)


Inventory


4,448


(2,992)


Prepaid expenses and other assets


16,772


(8,513)


Accounts payable and other accrued liabilities


(40,207)


(15,294)


Income taxes payable


248


5,827



Net cash (used in) provided by operating activities


(23,187)


68,627









Cash flows from investing activities:






Business, intangible and other asset acquisitions, net of cash acquired


-


(190)


Capital expenditures


(20,263)


(29,237)


Net decrease in financing receivables


665


740


Proceeds from sale of investment


990


-



Net cash used in investing activities


(18,608)


(28,687)









Cash flows from financing activities:






Net borrowings (payments) on short-term lines of credit


141,026


(6,137)


Proceeds from issuance of long-term debt


440,000


50,000


Principal payments under long-term debt


(331,515)


(30,080)


Proceeds from stock issued under employee stock plans


3,998


4,375


Common stock repurchased - share-based compensation plans


(4,604)


(6,348)


Repurchase of common stock


(143,700)


(3,249)


Tax benefit from employee share-based compensation 


1,213


1,733


Distribution to noncontrolling interests


(12,482)


(2,733)


Dividends paid


(1,456)


(1,578)




Net cash provided by financing activities


92,480


5,983









Effect of exchange rate changes on cash


(5,268)


14,133









Increase in cash and cash equivalents


45,417


60,056

Cash and cash equivalents, beginning of period


680,470


781,275

Cash and cash equivalents, end of period


$      725,887


$       841,331

 

SCHEDULE 6

RECONCILIATION OF CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES












(In thousands, except per share data)














Three Months Ended August 31, 2013



GAAP


Processing System Intrusion


Other1


Cash Earnings Adjustments2


Cash Earnings












Revenues


$         629,685


$                   -


$                   -


$                   -


$         629,685

Operating expenses:











   Cost of service


230,745


-


(579)


(14,393)


215,773

   Sales, general and administrative


291,556


-


(1,496)


-


290,060

   Processing system intrusion


-


-


-


-


-



522,301


-


(2,075)


(14,393)


505,833












Operating income


107,384


-


2,075


14,393


123,852

Other income (expense):











   Interest and other income


3,338


-


-


-


3,338

   Interest and other expense


(7,879)


-


-


-


(7,879)



(4,541)


-


-


-


(4,541)












Income before income taxes 


102,843


-


2,075


14,393


119,311

Provision for income taxes


(31,135)


-


(789)


(4,762)


(36,686)

Net income


71,708


-


1,286


9,631


82,625

Less: Net income attributable to noncontrolling interests, net of tax


(7,065)


-


-


(1,371)


(8,436)

Net income attributable to Global Payments


$           64,643


$                   -


$             1,286


$             8,260


$           74,189












Diluted shares


74,289








74,289

Diluted earnings per share


$               0.87


$                   -


$               0.02


$               0.11


$               1.00

























Three Months Ended August 31, 2012



GAAP


Processing System Intrusion


Other1


Cash Earnings Adjustments2


Cash Earnings












Revenues


$         590,287


$                   -


$                   -


$                   -


$         590,287

Operating expenses:











   Cost of service


204,391


-


(161)


(11,225)


193,005

   Sales, general and administrative


281,419


-


(800)


-


280,619

   Processing system intrusion


23,989


(23,989)


-


-


-



509,799


(23,989)


(961)


(11,225)


473,624












Operating income


80,488


23,989


961


11,225


116,663

Other income (expense):











   Interest and other income


1,983


-


-


-


1,983

   Interest and other expense


(3,545)


-


-


-


(3,545)



(1,562)


-


-


-


(1,562)












Income before income taxes 


78,926


23,989


961


11,225


115,101

Provision for income taxes


(24,764)


(8,279)


(150)


(3,360)


(36,553)

Net income


54,162


15,710


811


7,865


78,548

Less: Net income attributable to noncontrolling interests, net of tax


(7,487)


-


(741)


(1,524)


(9,752)

Net income attributable to Global Payments


$           46,675


$           15,710


$                  70


$             6,341


$           68,796












Diluted shares


79,043








79,043

Diluted earnings per share


$               0.59


$               0.20


$               0.00


$               0.08


$               0.87























1Represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency for the period ending August 31, 2013 and the prior year represents one-time charges primarily related to employee termination benefits and the net income attributable to our Asia-Pacific redeemable noncontrolling interest.












2Represents adjustments to cost of service to exclude acquisition intangible amortization expense from net income and the related income tax benefit.












We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended August 31, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits and resolution of a contract related contingency. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

SCHEDULE 7

RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP

GLOBAL PAYMENTS INC. AND SUBSIDIARIES














(In thousands)


















 Three Months Ended August 31, 2013 





 GAAP 


Processing System Intrusion


Other1


Cash
Earnings Adjustments2


 Cash Earnings 














Revenues:











United States


$      363,833


$                -


$                -


$                -


$      363,833

Canada


86,672


-


-


-


86,672


North America merchant services


450,505


-


-


-


450,505














Europe


143,188


-


-


-


143,188

Asia-Pacific


35,992


-


-


-


35,992


International merchant services


179,180


-


-


-


179,180
















Total revenues


$      629,685


$                -


$                -


$                -


$      629,685














Operating income (loss) for segments:











North America merchant services


$        69,699


$                -


$          2,518


$          7,187


$        79,404

International merchant services


61,541


-


10


7,206


68,757

Corporate


(23,856)


-


(453)


-


(24,309)


Operating income


$      107,384


$                -


$          2,075


$        14,393


$      123,852































 Three Months Ended August 31, 2012 





 GAAP 


Processing System Intrusion


Other1


Cash
Earnings Adjustments2


 Cash Earnings 














Revenues:











United States


$      345,898


$                -


$                -


$                -


$      345,898

Canada


80,897


-


-


-


80,897


North America merchant services


426,795


-


-


-


426,795














Europe


128,465


-


-


-


128,465

Asia-Pacific


35,027


-


-


-


35,027


International merchant services


163,492


-


-


-


163,492
















Total revenues


$      590,287


$                -


$                -


$                -


$      590,287














Operating income (loss) for segments:











North America merchant services


$        67,217


$                -


$             905


$          3,321


$        71,443

International merchant services


57,140


-


-


7,904


65,044

Corporate


(43,869)


23,989


56


-


(19,824)


Operating income


$        80,488


$        23,989


$             961


$        11,225


$      116,663



























1Represents one-time charges primarily related to employee termination benefits and resolution of a contract related contingency for the period ending August 31, 2013 and the prior year represents one-time charges primarily related to employee termination benefits and the net income attributable to our Asia-Pacific redeemable noncontrolling interest.














2 Represents acquisition intangible amortization expense.

SCHEDULE 8

OUTLOOK SUMMARY

GLOBAL PAYMENTS INC. AND SUBSIDIARIES









(In millions, except per share data)












Fiscal 2013 Actual


Fiscal 2014

Outlook


% Change FY13









Revenue Outlook







Total Revenues

$        2,376


$2,510 to $2,560


6% to 8%









EPS Outlook






Cash EPS 

$          3.65


$3.98 to $4.05


9% to 11%

Acquisition-related intangibles assets, non-recurring items and processing system intrusion 1

 

(0.89)


 

(0.58)


 

35%



GAAP Diluted EPS 

$          2.76


 $3.40 to $3.47 


23% to 26%

























We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended August 31, 2013 and 2012 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by excluding costs related to the processing system intrusion, acquisition intangible amortization and one-time charges related to employee termination benefits and resolution of a contract related contingency. We exclude these charges in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.


1 Fiscal 2014 reflects $0.48 of acquisition-related intangibles and $0.10 of non-recurring items. Acquisition-related intangibles accounted and non-recurring items accounted for $0.57 in fiscal 2013 and processing intrusion costs were $0.32.

SOURCE Global Payments Inc.

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Morningstar - 2013/10/1 - Global Payments Reports First Quarter Earnings
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