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| 8-K - 8-K - GLOBAL PAYMENTS INC | form8-kq3fy15earningsrelea.htm |
Global Payments Reports Third Quarter Earnings
Increases Annual Fiscal 2015 Outlook
Announces Planned $100 Million Accelerated Share Repurchase
ATLANTA, April 8, 2015 -- Global Payments Inc. (NYSE: GPN) today announced results for its fiscal third quarter ended February 28, 2015.
“We are pleased to report strong third quarter financial results, reflecting the success of our strategy to deliver technology-enabled payments solutions across an expansive direct customer base worldwide, while continuing to invest in future growth,” said Chief Executive Officer Jeff Sloan. “Our acquisition of Realex Payments enhances our international ecommerce offerings, extends our foundation for omni-channel capabilities and accelerates growth in our pan-European payments business.”
Third Quarter 2015 Summary
• | Revenues grew 8% to $666.9 million, compared to $616.5 million in the third quarter of fiscal 2014. |
• | Cash diluted earnings per share1 grew 19% to $1.14, compared to $0.96 in the third quarter of fiscal 2014. |
• | GAAP diluted earnings per share were $0.93, compared to $0.76 in the third quarter of fiscal 2014. |
2015 Outlook
“We delivered solid revenue growth and meaningful margin expansion in the third quarter despite the significant strengthening of the U.S. dollar, and we are again increasing our full-year margin and cash earnings per share expectations,” stated Cameron Bready, Executive Vice President and Chief Financial Officer. “We are also pleased to announce that we plan to enter into an accelerated share repurchase plan, further demonstrating our ongoing commitment to efficiently return capital to shareholders while investing in our business to increase our future growth potential.”
For the full-year of fiscal 2015, the company is maintaining its expectation for annual revenue of $2.75 billion to $2.80 billion, or 8% to 10% growth over fiscal 2014. The company is raising its outlook for annual fiscal 2015 diluted earnings per share on a cash basis to a range of $4.77 to $4.84, or 16% to 18% growth over
fiscal 2014, and annual fiscal 2015 GAAP diluted earnings per share is expected to be in the range of $4.01 to $4.08. Our outlook for cash and GAAP diluted earnings per share reflect the impact of share repurchases executed to date only and do not include any benefit from the announced accelerated share repurchase plan. The company also now expects annual fiscal 2015 core cash operating margins to expand by as much as 60 basis points.
Capital Allocation
Global Payments’ Board of Directors approved a fiscal 2015 third quarter dividend of $0.02 per share payable May 29, 2015 to shareholders of record as of May 15, 2015. The company intends to enter into an accelerated share repurchase plan this month to repurchase up to $100 million of the company's common stock.
Conference Call
Global Payments’ management will host a conference call today, April 8, 2015 at 8:00 a.m. ET to discuss financial results and business highlights. Callers may access the conference call via the investor relations page of the company’s website at www.globalpaymentsinc.com; or callers in North America may dial 877-674-6428 and callers outside North America may dial 970-315-0457. A replay of the call will be archived on the company's website within two hours of the live call.
About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading worldwide provider of payment technology services that delivers innovative solutions driven by customer needs globally. Our partnerships, technologies and employee expertise enable us to provide a broad range of products and services that allow our customers to accept all payment types across a variety of distribution channels in many markets around the world.
Headquartered in Atlanta, Georgia with more than 4,300 employees worldwide, Global Payments is a Fortune 1000 Company with merchants and partners in 29 countries throughout North America, Europe, the Asia-Pacific region and Brazil. For more information about Global Payments, our Service. Driven. Commerce brand and our technologies, please visit www.globalpaymentsinc.com.
_________________________
1See Schedule 2 for cash earnings and Schedules 6, 7 and 8 for reconciliations of cash earnings to GAAP.
This announcement and comments made by Global Payments' management may contain certain forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management’s expectations regarding future events and developments, are forward-looking statements and are subject to significant risks and uncertainties. Important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include our ability to safeguard our data; increased competition from non-traditional competitors; our ability to update our products and services in a timely manner; potential systems interruptions or failures; software defects or undetected errors; our ability to maintain Visa and MasterCard registration and financial institution sponsorship; our reliance on financial institutions to provide clearing services in connection with our settlement activities; our potential failure to comply with card network requirements; increased attrition of merchants, referral partners or independent sales organizations; our ability to increase our share of existing markets and expand into new markets; unanticipated increases in chargeback liability; increases in credit card network fees; changes in laws, regulations or network rules or interpretations thereof; foreign currency exchange and interest rate risks; political, economic and regulatory changes in the foreign countries in which we operate; future performance, integration and conversion of acquired operations; loss of key personnel; and other risks detailed in our SEC filings,
including the most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. We undertake no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
Investor contact: investor.relations@globalpay.com | Media contact: media.relations@globalpay.com |
Jane Elliott | Amy Corn |
770-829-8234 | 770-829-8755 |
SCHEDULE 1
UNAUDITED GAAP CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended February 28, | Nine Months Ended February 28, | ||||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
Revenues | $ | 664,983 | $ | 616,452 | 7.9 | % | $ | 2,067,169 | $ | 1,880,259 | 9.9 | % | |||||||||
Operating expenses: | |||||||||||||||||||||
Cost of service | 250,255 | 232,937 | 7.4 | % | 767,890 | 698,852 | 9.9 | % | |||||||||||||
Sales, general and administrative | 310,113 | 286,224 | 8.3 | % | 946,282 | 871,825 | 8.5 | % | |||||||||||||
Processing system intrusion | — | — | — | % | — | (7,000 | ) | (100.0 | )% | ||||||||||||
560,368 | 519,161 | 7.9 | % | 1,714,172 | 1,563,677 | 9.6 | % | ||||||||||||||
Operating income | 104,615 | 97,291 | 7.5 | % | 352,997 | 316,582 | 11.5 | % | |||||||||||||
Other income (expense): | |||||||||||||||||||||
Interest and other income | 1,160 | 2,944 | (60.6 | )% | 3,634 | 11,570 | (68.6 | )% | |||||||||||||
Interest and other expense | (13,429 | ) | (16,457 | ) | (18.4 | )% | (34,789 | ) | (32,361 | ) | 7.5 | % | |||||||||
(12,269 | ) | (13,513 | ) | (9.2 | )% | (31,155 | ) | (20,791 | ) | 49.8 | % | ||||||||||
Income before income taxes | 92,346 | 83,778 | 10.2 | % | 321,842 | 295,791 | 8.8 | % | |||||||||||||
Provision for income taxes | (23,031 | ) | (23,657 | ) | (2.6 | )% | (82,837 | ) | (84,105 | ) | (1.5 | )% | |||||||||
Net income | 69,315 | 60,121 | 15.3 | % | 239,005 | 211,686 | 12.9 | % | |||||||||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (6,747 | ) | (5,000 | ) | 34.9 | % | (26,290 | ) | (18,025 | ) | 45.9 | % | |||||||||
Net income attributable to Global Payments | $ | 62,568 | $ | 55,121 | 13.5 | % | $ | 212,715 | $ | 193,661 | 9.8 | % | |||||||||
Earnings per share attributable to Global Payments: | |||||||||||||||||||||
Basic | $ | 0.94 | $ | 0.77 | 22.1 | % | $ | 3.15 | $ | 2.67 | 18.0 | % | |||||||||
Diluted | $ | 0.93 | $ | 0.76 | 22.4 | % | $ | 3.13 | $ | 2.65 | 18.1 | % | |||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 66,890 | 71,835 | 67,476 | 72,598 | |||||||||||||||||
Diluted | 67,306 | 72,434 | 67,891 | 73,152 | |||||||||||||||||
4
SCHEDULE 2
CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended February 28, | Nine Months Ended February 28, | ||||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Revenues | $ | 666,859 | $ | 616,452 | 8.2 | % | $ | 2,069,045 | $ | 1,880,259 | 10.0 | % | |||||||||
Operating expenses: | |||||||||||||||||||||
Cost of service | 232,188 | 218,337 | 6.3 | % | 713,706 | 654,720 | 9.0 | % | |||||||||||||
Sales, general and administrative | 308,241 | 286,224 | 7.7 | % | 947,351 | 866,981 | 9.3 | % | |||||||||||||
540,429 | 504,561 | 7.1 | % | 1,661,057 | 1,521,701 | 9.2 | % | ||||||||||||||
Operating income | 126,430 | 111,891 | 13.0 | % | 407,988 | 358,558 | 13.8 | % | |||||||||||||
Other income (expense): | |||||||||||||||||||||
Interest and other income | 1,160 | 2,944 | (60.6 | )% | 3,634 | 9,447 | (61.5 | )% | |||||||||||||
Interest and other expense | (13,429 | ) | (8,313 | ) | 61.5 | % | (34,789 | ) | (24,217 | ) | 43.7 | % | |||||||||
(12,269 | ) | (5,369 | ) | 128.5 | % | (31,155 | ) | (14,770 | ) | 110.9 | % | ||||||||||
Income before income taxes | 114,161 | 106,522 | 7.2 | % | 376,833 | 343,788 | 9.6 | % | |||||||||||||
Provision for income taxes | (29,798 | ) | (30,373 | ) | (1.9 | )% | (100,748 | ) | (99,932 | ) | 0.8 | % | |||||||||
Net income | 84,363 | 76,149 | 10.8 | % | 276,085 | 243,856 | 13.2 | % | |||||||||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (7,825 | ) | (6,421 | ) | 21.9 | % | (29,776 | ) | (22,220 | ) | 34.0 | % | |||||||||
Net income attributable to Global Payments | $ | 76,538 | $ | 69,728 | 9.8 | % | $ | 246,309 | $ | 221,636 | 11.1 | % | |||||||||
Earnings per share attributable to Global Payments: | |||||||||||||||||||||
Basic | $ | 1.14 | $ | 0.97 | 17.5 | % | $ | 3.65 | $ | 3.05 | 19.7 | % | |||||||||
Diluted | $ | 1.14 | $ | 0.96 | 18.8 | % | $ | 3.63 | $ | 3.03 | 19.8 | % | |||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 66,890 | 71,835 | 67,476 | 72,598 | |||||||||||||||||
Diluted | 67,306 | 72,434 | 67,891 | 73,152 | |||||||||||||||||
See Schedules 6 & 7 for a reconciliation of cash earnings to GAAP.
5
SCHEDULE 3
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended February 28, | ||||||||||||||||||||||
2015 | 2014 | % Change | ||||||||||||||||||||
GAAP | Cash Earnings | GAAP | Cash Earnings | GAAP | Cash Earnings | |||||||||||||||||
Revenues: | ||||||||||||||||||||||
United States | $ | 404,016 | $ | 404,016 | $ | 355,880 | $ | 355,880 | 13.5 | % | 13.5 | % | ||||||||||
Canada | 69,047 | 69,047 | 73,467 | 73,467 | (6.0 | )% | (6.0 | )% | ||||||||||||||
North America merchant services | 473,063 | 473,063 | 429,347 | 429,347 | 10.2 | % | 10.2 | % | ||||||||||||||
Europe | 138,378 | 140,254 | 143,832 | 143,832 | (3.8 | )% | (2.5 | )% | ||||||||||||||
Asia-Pacific | 53,542 | 53,542 | 43,273 | 43,273 | 23.7 | % | 23.7 | % | ||||||||||||||
International merchant services | 191,920 | 193,796 | 187,105 | 187,105 | 2.6 | % | 3.6 | % | ||||||||||||||
Total revenues | $ | 664,983 | $ | 666,859 | $ | 616,452 | $ | 616,452 | 7.9 | % | 8.2 | % | ||||||||||
Operating income (loss) for segments: | ||||||||||||||||||||||
North America merchant services | $ | 66,723 | $ | 77,746 | $ | 61,695 | $ | 68,823 | 8.1 | % | 13.0 | % | ||||||||||
International merchant services | 64,902 | 73,822 | 58,077 | 65,549 | 11.8 | % | 12.6 | % | ||||||||||||||
Corporate | (27,010 | ) | (25,138 | ) | (22,481 | ) | (22,481 | ) | 20.1 | % | 11.8 | % | ||||||||||
Operating income | $ | 104,615 | $ | 126,430 | $ | 97,291 | $ | 111,891 | 7.5 | % | 13.0 | % | ||||||||||
Nine Months Ended February 28, | ||||||||||||||||||||||
2015 | 2014 | % Change | ||||||||||||||||||||
GAAP | Cash Earnings | GAAP | Cash Earnings | GAAP | Cash Earnings | |||||||||||||||||
Revenues: | ||||||||||||||||||||||
United States | $ | 1,222,841 | $ | 1,222,841 | $ | 1,081,506 | $ | 1,081,506 | 13.1 | % | 13.1 | % | ||||||||||
Canada | 243,004 | 243,004 | 245,379 | 245,379 | (1.0 | )% | (1.0 | )% | ||||||||||||||
North America merchant services | 1,465,845 | 1,465,845 | 1,326,885 | 1,326,885 | 10.5 | % | 10.5 | % | ||||||||||||||
Europe | 461,140 | 463,016 | 433,886 | 433,886 | 6.3 | % | 6.7 | % | ||||||||||||||
Asia-Pacific | 140,184 | 140,184 | 119,488 | 119,488 | 17.3 | % | 17.3 | % | ||||||||||||||
International merchant services | 601,324 | 603,200 | 553,374 | 553,374 | 8.7 | % | 9.0 | % | ||||||||||||||
Total revenues | $ | 2,067,169 | $ | 2,069,045 | $ | 1,880,259 | $ | 1,880,259 | 9.9 | % | 10.0 | % | ||||||||||
Operating income (loss) for segments: | ||||||||||||||||||||||
North America merchant services | $ | 218,906 | $ | 252,480 | $ | 201,831 | $ | 225,848 | 8.5 | % | 11.8 | % | ||||||||||
International merchant services | 214,947 | 234,492 | 182,085 | 204,149 | 18.0 | % | 14.9 | % | ||||||||||||||
Corporate1 | (80,856 | ) | (78,984 | ) | (67,334 | ) | (71,439 | ) | 20.1 | % | 10.6 | % | ||||||||||
Operating income | $ | 352,997 | $ | 407,988 | $ | 316,582 | $ | 358,558 | 11.5 | % | 13.8 | % | ||||||||||
1 GAAP earnings for the nine months ended February 28, 2014 include insurance proceeds of $7.0 million related to the fiscal 2012 processing system intrusion.
See Schedule 8 for reconciliation of cash earnings segment information to GAAP.
6
SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)
February 28, 2015 | May 31, 2014 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 610,148 | $ | 581,872 | |||
Accounts receivable, net of allowances for doubtful accounts of $405 and $401, respectively | 170,895 | 214,574 | |||||
Claims receivable, net | 584 | 809 | |||||
Settlement processing assets | 744,976 | 780,917 | |||||
Inventory | 5,587 | 6,636 | |||||
Deferred income taxes | 11,933 | 12,963 | |||||
Prepaid expenses and other current assets | 49,027 | 45,673 | |||||
Total current assets | 1,593,150 | 1,643,444 | |||||
Goodwill | 1,422,900 | 1,337,285 | |||||
Other intangible assets, net | 516,083 | 535,173 | |||||
Property and equipment, net | 355,885 | 369,753 | |||||
Deferred income taxes | 93,549 | 101,928 | |||||
Other | 36,753 | 31,067 | |||||
Total assets | $ | 4,018,320 | $ | 4,018,650 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Lines of credit | $ | 446,800 | $ | 440,128 | |||
Current portion of long-term debt | 62,500 | 17,677 | |||||
Accounts payable and accrued liabilities | 284,472 | 290,106 | |||||
Settlement processing obligations | 426,368 | 451,317 | |||||
Income taxes payable | 22,560 | 12,390 | |||||
Total current liabilities | 1,242,700 | 1,211,618 | |||||
Long-term debt | 1,546,000 | 1,376,002 | |||||
Deferred income taxes | 201,737 | 209,099 | |||||
Other long-term liabilities | 86,255 | 89,132 | |||||
Total liabilities | 3,076,692 | 2,885,851 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Preferred stock, no par value; 5,000,000 shares authorized and none issued | — | — | |||||
Common stock, no par value; 200,000,000 shares authorized; 66,457,816 issued and outstanding at February 28, 2015 and 68,845,643 issued and outstanding at May 31, 2014 | — | — | |||||
Paid-in capital | 147,344 | 183,023 | |||||
Retained earnings | 861,955 | 815,980 | |||||
Accumulated other comprehensive loss | (184,226 | ) | (1,776 | ) | |||
Total Global Payments shareholders’ equity | 825,073 | 997,227 | |||||
Noncontrolling interests | 116,555 | 135,572 | |||||
Total equity | 941,628 | 1,132,799 | |||||
Total liabilities and equity | $ | 4,018,320 | $ | 4,018,650 | |||
7
SCHEDULE 5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended February 28, | |||||||
2015 | 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 239,005 | $ | 211,686 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of property and equipment | 48,628 | 43,645 | |||||
Amortization of acquired intangibles | 54,184 | 43,553 | |||||
Share-based compensation expense | 14,827 | 17,269 | |||||
Provision for operating losses and bad debts | 10,530 | 14,203 | |||||
Deferred income taxes | 13,479 | 3,103 | |||||
Other, net | 469 | (1,006 | ) | ||||
Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||
Accounts receivable | 32,124 | 14,442 | |||||
Claims receivable | (7,159 | ) | (9,145 | ) | |||
Settlement processing assets and obligations, net | (27,948 | ) | (19,669 | ) | |||
Inventory | (256 | ) | 3,811 | ||||
Prepaid expenses and other assets | (5,431 | ) | 18,980 | ||||
Accounts payable and accrued liabilities | (36,044 | ) | (16,422 | ) | |||
Income taxes payable | 10,677 | (10,049 | ) | ||||
Net cash provided by operating activities | 347,085 | 314,401 | |||||
Cash flows from investing activities: | |||||||
Business, intangible and other asset acquisitions, net of cash acquired | (232,864 | ) | (2,519 | ) | |||
Capital expenditures | (56,746 | ) | (61,270 | ) | |||
Principal collections on financing receivables | 219 | 1,997 | |||||
Net proceeds from sales of investments and business | 10,597 | 3,521 | |||||
Net cash used in investing activities | (278,794 | ) | (58,271 | ) | |||
Cash flows from financing activities: | |||||||
Net borrowings on short-term lines of credit | 44,622 | 74,594 | |||||
Proceeds from issuance of long-term debt | 1,593,500 | 2,390,000 | |||||
Principal payments under long-term debt | (1,378,679 | ) | (2,099,869 | ) | |||
Payment of debt issuance costs | — | (5,961 | ) | ||||
Repurchase of common stock | (231,844 | ) | (258,562 | ) | |||
Proceeds from stock issued under share-based compensation plans | 18,867 | 29,740 | |||||
Common stock repurchased - share-based compensation plans | (16,175 | ) | (5,682 | ) | |||
Tax benefit from share-based compensation plans | 3,851 | 4,782 | |||||
Distributions to noncontrolling interests | (19,355 | ) | (33,744 | ) | |||
Dividends paid | (4,035 | ) | (4,330 | ) | |||
Net cash provided by financing activities | 10,752 | 90,968 | |||||
Effect of exchange rate changes on cash | (50,767 | ) | (14,008 | ) | |||
Increase in cash and cash equivalents | 28,276 | 333,090 | |||||
Cash and cash equivalents, beginning of the period | 581,872 | 680,470 | |||||
Cash and cash equivalents, end of the period | $ | 610,148 | $ | 1,013,560 | |||
8
SCHEDULE 6
RECONCILIATION OF QUARTERLY CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Three Months Ended February 28, 2015 | |||||||||||||
GAAP | Other1 | Cash Earnings Adjustments2 | Cash Earnings | ||||||||||
Revenues | $ | 664,983 | $ | 1,876 | $ | — | $ | 666,859 | |||||
Operating expenses: | |||||||||||||
Cost of service | 250,255 | — | (18,067 | ) | 232,188 | ||||||||
Sales, general and administrative | 310,113 | (1,872 | ) | — | 308,241 | ||||||||
560,368 | (1,872 | ) | (18,067 | ) | 540,429 | ||||||||
Operating income | 104,615 | 3,748 | 18,067 | 126,430 | |||||||||
Other income (expense): | |||||||||||||
Interest and other income | 1,160 | — | — | 1,160 | |||||||||
Interest and other expense | (13,429 | ) | — | — | (13,429 | ) | |||||||
(12,269 | ) | — | — | (12,269 | ) | ||||||||
Income before income taxes | 92,346 | 3,748 | 18,067 | 114,161 | |||||||||
Provision for income taxes | (23,031 | ) | (1,031 | ) | (5,736 | ) | (29,798 | ) | |||||
Net income | 69,315 | 2,717 | 12,331 | 84,363 | |||||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (6,747 | ) | — | (1,078 | ) | (7,825 | ) | ||||||
Net income attributable to Global Payments | $ | 62,568 | $ | 2,717 | $ | 11,253 | $ | 76,538 | |||||
Diluted shares | 67,306 | 67,306 | |||||||||||
Diluted earnings per share | $ | 0.93 | $ | 0.04 | $ | 0.17 | $ | 1.14 | |||||
Three Months Ended February 28, 2014 | |||||||||||||
GAAP | Other1 | Cash Earnings Adjustments2 | Cash Earnings | ||||||||||
Revenues | $ | 616,452 | $ | — | $ | — | $ | 616,452 | |||||
Operating expenses: | |||||||||||||
Cost of service | 232,937 | — | (14,600 | ) | 218,337 | ||||||||
Sales, general and administrative | 286,224 | — | — | 286,224 | |||||||||
519,161 | — | (14,600 | ) | 504,561 | |||||||||
Operating income | 97,291 | — | 14,600 | 111,891 | |||||||||
Other income (expense): | |||||||||||||
Interest and other income | 2,944 | — | — | 2,944 | |||||||||
Interest and other expense | (16,457 | ) | 8,144 | — | (8,313 | ) | |||||||
(13,513 | ) | 8,144 | — | (5,369 | ) | ||||||||
Income before income taxes | 83,778 | 8,144 | 14,600 | 106,522 | |||||||||
Provision for income taxes | (23,657 | ) | (2,180 | ) | (4,536 | ) | (30,373 | ) | |||||
Net income | 60,121 | 5,964 | 10,064 | 76,149 | |||||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (5,000 | ) | — | (1,421 | ) | (6,421 | ) | ||||||
Net income attributable to Global Payments | $ | 55,121 | $ | 5,964 | $ | 8,643 | $ | 69,728 | |||||
Diluted shares | 72,434 | 72,434 | |||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.08 | $ | 0.12 | $ | 0.96 | |||||
1 For the period ended February 28, 2015, the revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustment represents certain business tax assessments in the U.S. for prior periods. For the period ended February 28, 2014, the adjustments represent HSBC's share of GPAP dividends declared and costs associated with the debt refinancing that was completed on February 28, 2014.
2 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the three months ended February 28, 2015 and 2014 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by making the adjustments described above. We exclude these items 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.
9
SCHEDULE 7
RECONCILIATION OF YEAR TO DATE CASH EARNINGS ATTRIBUTABLE TO GLOBAL PAYMENTS TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Nine Months Ended February 28, 2015 | ||||||||||||||||
GAAP | Processing System Intrusion | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||
Revenues | $ | 2,067,169 | $ | — | $ | 1,876 | $ | — | $ | 2,069,045 | ||||||
Operating expenses: | ||||||||||||||||
Cost of service | 767,890 | — | — | (54,184 | ) | 713,706 | ||||||||||
Sales, general and administrative | 946,282 | — | 1,069 | — | 947,351 | |||||||||||
Processing system intrusion | — | — | — | — | — | |||||||||||
1,714,172 | — | 1,069 | (54,184 | ) | 1,661,057 | |||||||||||
Operating income | 352,997 | — | 807 | 54,184 | 407,988 | |||||||||||
Other income (expense): | ||||||||||||||||
Interest and other income | 3,634 | — | — | — | 3,634 | |||||||||||
Interest and other expense | (34,789 | ) | — | — | — | (34,789 | ) | |||||||||
(31,155 | ) | — | — | — | (31,155 | ) | ||||||||||
Income before income taxes | 321,842 | — | 807 | 54,184 | 376,833 | |||||||||||
Provision for income taxes | (82,837 | ) | — | (443 | ) | (17,468 | ) | (100,748 | ) | |||||||
Net income | 239,005 | — | 364 | 36,716 | 276,085 | |||||||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (26,290 | ) | — | — | (3,486 | ) | (29,776 | ) | ||||||||
Net income attributable to Global Payments | $ | 212,715 | $ | — | $ | 364 | $ | 33,230 | $ | 246,309 | ||||||
Diluted shares | 67,891 | 67,891 | ||||||||||||||
Diluted earnings per share | $ | 3.13 | $ | — | $ | 0.01 | $ | 0.49 | $ | 3.63 | ||||||
Nine Months Ended February 28, 2014 | ||||||||||||||||
GAAP | Processing System Intrusion1 | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||
Revenues | $ | 1,880,259 | $ | — | $ | — | $ | — | $ | 1,880,259 | ||||||
Operating expenses: | ||||||||||||||||
Cost of service | 698,852 | — | (579 | ) | (43,553 | ) | 654,720 | |||||||||
Sales, general and administrative | 871,825 | — | (4,844 | ) | — | 866,981 | ||||||||||
Processing system intrusion | (7,000 | ) | 7,000 | — | — | — | ||||||||||
1,563,677 | 7,000 | (5,423 | ) | (43,553 | ) | 1,521,701 | ||||||||||
Operating income | 316,582 | (7,000 | ) | 5,423 | 43,553 | 358,558 | ||||||||||
Other income (expense): | ||||||||||||||||
Interest and other income | 11,570 | — | (2,123 | ) | — | 9,447 | ||||||||||
Interest and other expense | (32,361 | ) | — | 8,144 | — | (24,217 | ) | |||||||||
(20,791 | ) | — | 6,021 | — | (14,770 | ) | ||||||||||
Income (loss) before income taxes | 295,791 | (7,000 | ) | 11,444 | 43,553 | 343,788 | ||||||||||
(Provision for) benefit from income taxes | (84,105 | ) | 2,393 | (4,114 | ) | (14,106 | ) | (99,932 | ) | |||||||
Net income (loss) | 211,686 | (4,607 | ) | 7,330 | 29,447 | 243,856 | ||||||||||
Less: Net income attributable to noncontrolling interests, net of income tax | (18,025 | ) | — | — | (4,195 | ) | (22,220 | ) | ||||||||
Net income (loss) attributable to Global Payments | $ | 193,661 | $ | (4,607 | ) | $ | 7,330 | $ | 25,252 | $ | 221,636 | |||||
Diluted shares | 73,152 | 73,152 | ||||||||||||||
Diluted earnings (loss) per share | $ | 2.65 | $ | (0.07 | ) | $ | 0.10 | $ | 0.35 | $ | 3.03 | |||||
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
2 For the period ended February 28, 2015, the revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustments represent certain business tax assessments in the U.S. for prior periods and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the period ended February 28, 2014, the adjustments represent one-time charges primarily related to employee termination benefits, resolution of a contract related contingency, a one-time credit related to the gain on the sale of an interest in a business, HSBC's share of GPAP dividends declared, and costs associated with the debt refinancing that was completed on February 28, 2014.
3 Represents adjustments to cost of service to exclude acquisition intangible amortization expense and the related income tax benefit.
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the nine months ended February 28, 2015 and 2014 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by making the adjustments described above. We exclude these items in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
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SCHEDULE 8
RECONCILIATION OF CASH EARNINGS SEGMENT INFORMATION TO GAAP
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Three Months Ended February 28, | ||||||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||||||
GAAP | Other2 | Cash Earnings Adjustments3 | Cash Earnings | GAAP | Processing System Intrusion | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
United States | $ | 404,016 | $ | — | $ | — | $ | 404,016 | $ | 355,880 | $ | — | $ | — | $ | — | $ | 355,880 | ||||||||||
Canada | 69,047 | — | — | 69,047 | 73,467 | — | — | — | 73,467 | |||||||||||||||||||
North America merchant services | 473,063 | — | — | 473,063 | 429,347 | — | — | — | 429,347 | |||||||||||||||||||
Europe | 138,378 | 1,876 | — | 140,254 | 143,832 | — | — | — | 143,832 | |||||||||||||||||||
Asia-Pacific | 53,542 | — | — | 53,542 | 43,273 | — | — | — | 43,273 | |||||||||||||||||||
International merchant services | 191,920 | 1,876 | — | 193,796 | 187,105 | — | — | — | 187,105 | |||||||||||||||||||
Total revenues | $ | 664,983 | $ | 1,876 | $ | — | $ | 666,859 | $ | 616,452 | $ | — | $ | — | $ | — | $ | 616,452 | ||||||||||
Operating income (loss) for segments: | ||||||||||||||||||||||||||||
North America merchant services | $ | 66,723 | $ | — | $ | 11,023 | $ | 77,746 | $ | 61,695 | $ | — | $ | — | $ | 7,128 | $ | 68,823 | ||||||||||
International merchant services | 64,902 | 1,876 | 7,044 | 73,822 | 58,077 | — | — | 7,472 | 65,549 | |||||||||||||||||||
Corporate | (27,010 | ) | 1,872 | — | (25,138 | ) | (22,481 | ) | — | — | — | (22,481 | ) | |||||||||||||||
Operating income (loss) | $ | 104,615 | $ | 3,748 | $ | 18,067 | $ | 126,430 | $ | 97,291 | $ | — | $ | — | $ | 14,600 | $ | 111,891 | ||||||||||
Nine Months Ended February 28, | ||||||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||||||
GAAP | Other2 | Cash Earnings Adjustments3 | Cash Earnings | GAAP | Processing System Intrusion1 | Other2 | Cash Earnings Adjustments3 | Cash Earnings | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
United States | $ | 1,222,841 | $ | — | $ | — | $ | 1,222,841 | $ | 1,081,506 | $ | — | $ | — | $ | — | $ | 1,081,506 | ||||||||||
Canada | 243,004 | — | — | 243,004 | 245,379 | — | — | — | 245,379 | |||||||||||||||||||
North America merchant services | 1,465,845 | — | — | 1,465,845 | 1,326,885 | — | — | — | 1,326,885 | |||||||||||||||||||
Europe | 461,140 | 1,876 | — | 463,016 | 433,886 | — | — | — | 433,886 | |||||||||||||||||||
Asia-Pacific | 140,184 | — | — | 140,184 | 119,488 | — | — | — | 119,488 | |||||||||||||||||||
International merchant services | 601,324 | 1,876 | — | 603,200 | 553,374 | — | — | — | 553,374 | |||||||||||||||||||
Total revenues | $ | 2,067,169 | $ | 1,876 | $ | — | $ | 2,069,045 | $ | 1,880,259 | $ | — | $ | — | $ | — | $ | 1,880,259 | ||||||||||
Operating income (loss) for segments: | ||||||||||||||||||||||||||||
North America merchant services | $ | 218,906 | $ | — | $ | 33,574 | $ | 252,480 | $ | 201,831 | $ | — | $ | 2,518 | $ | 21,499 | $ | 225,848 | ||||||||||
International merchant services | 214,947 | (1,065 | ) | 20,610 | 234,492 | 182,085 | — | 10 | 22,054 | 204,149 | ||||||||||||||||||
Corporate | (80,856 | ) | 1,872 | — | (78,984 | ) | (67,334 | ) | (7,000 | ) | 2,895 | — | (71,439 | ) | ||||||||||||||
Operating income (loss) | $ | 352,997 | $ | 807 | $ | 54,184 | $ | 407,988 | $ | 316,582 | $ | (7,000 | ) | $ | 5,423 | $ | 43,553 | $ | 358,558 | |||||||||
1 Represents insurance proceeds associated with the fiscal 2012 processing system intrusion.
2 For the three months ended February 28, 2015, the revenue adjustment represents select U.K. customer payments related to a vendor outage and the expense adjustment represent certain business tax assessments in the U.S. for prior periods. The adjustments for the nine months ended February 28, 2015, include the revenue and business tax adjustments described for the three-month period and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. For the nine months ended February 28, 2014, the adjustments represent one-time charges primarily related to employee termination benefits and resolution of a contract related contingency.
3 Represents acquisition intangible amortization expense.
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SCHEDULE 9
OUTLOOK SUMMARY
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)
Fiscal 2014 Actual | Fiscal 2015 Outlook | % Change FY14 | |||||||
Revenue Outlook | |||||||||
Total Revenues | $2.55 | $2.75 to $2.80 | 8% to 10% | ||||||
EPS Outlook | |||||||||
Cash EPS | $4.12 | $4.77 to $4.84 | 16% to 18% | ||||||
Acquisition-related intangibles assets, non-recurring items and processing system intrusion1 | (0.75 | ) | (0.76 | ) | 1 | % | |||
GAAP Diluted EPS | $3.37 | $4.01 to $4.08 | 19% to 21% | ||||||
We supplemented our reporting of income and the related earnings per share information determined in accordance with GAAP by reporting income and the related earnings per share for the fiscal years 2015 and 2014 on a "cash earnings" basis in this earnings release as a measure to help evaluate performance. We calculated income and earnings per share on a cash basis by making the adjustments described below. We exclude these items in order to more clearly focus on the factors we believe are pertinent to the daily management of our operations. Our income and earnings per share reported on a cash earnings basis should be considered in addition to, and not as a substitute for, income and earnings per share determined in accordance with GAAP. Our measures of income and earnings per share on a cash earnings basis reflect management’s judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.
1 Fiscal 2015 reflects $0.72 of acquisition intangible amortization and $0.04 of non-recurring items, including a revenue adjustment for select U.K. customer payments related to a vendor outage and expense adjustments for certain business tax assessments in the U.S. for prior periods and a gain on the sale of a component of our Russia business that leased ATMs to our sponsor bank in Russia. Fiscal 2014 reflects acquisition intangible amortization of $0.51, a processing system intrusion credit of ($0.07) and non-recurring items of $0.31. Other non-recurring items for fiscal 2014 include acceleration of equity awards and other costs associated with the retirement of our former Chairman and CEO, a credit related to the sale of an interest in our Brazil business and a subsequent charge associated with our retained interest, non-cash losses from the retirement of fixed assets, employee termination benefits, resolution of a contract related contingency, costs associated with debt refinancing and HSBC's share of dividends declared by Global Payments Asia-Pacific.
12