ATLANTA, January 6 /PRNewswire/ --
Global Payments Inc. (NYSE: GPN) today announced results for its fiscal second quarter ended November 30, 2008. For the second quarter, revenues grew 30 percent to US$401.1 million compared to US$308.8 million in the prior year. Diluted earnings per share grew 25 percent to US$0.60 compared to US$0.48 in the prior year quarter.
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These results include the unfavorable impact of foreign currency exchange rates during the period, and as such, the company added a schedule (Schedule 9) this quarter to provide revenue and diluted earnings per share growth on a constant currency basis for both the quarter as well as the outlook for fiscal 2009. On a constant currency basis, revenues grew 37 percent and diluted earnings per share grew 39 percent over the prior year quarter.
Comments and Outlook
Chairman and CEO, Paul R. Garcia, stated, We are pleased with our strong second quarter financial performance, in spite of the difficult macro environment. Our results for the quarter were driven by the favorable 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 as well as a solid 16 percent transaction growth in the U.S.
Based on the significant strengthening of the U.S. dollar this quarter, and the related translation impact, we are updating our annual revenue guidance to a range of US$1,550 million to US$1,580 million, or 22 percent to 24 percent growth over fiscal 2008. We are also modifying our annual diluted earnings per share guidance to a range of US$2.14 to US$2.21, or 8 percent to 12 percent growth versus US$1.98 in fiscal 2008 (see Schedule 6 for details). Our fiscal 2009 guidance excludes the impact of any future restructuring and other charges, as well as the impact of future acquisitions, such as our announced agreement to acquire ZAO United Card Service in the Russian Federation.
We remain committed to our long-term growth strategy, and the fundamentals of our business model remain strong. This is underscored by our constant currency outlook for diluted earnings per share growth of 21 percent to 25 percent for fiscal 2009, which is consistent with the constant currency outlook we provided last quarter, said Garcia.
Conference Call
Global Payments will hold a conference call today, January 6, 2009 at 5:00 p.m. ET 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 +1-877-857-6177 and callers outside U.S. and Canada may dial +1-719-325-4793. The pass code is GPN. A replay of the call may be accessed through the Global Payments' Web site through January 20, 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 services, visit www.globalpaymentsinc.com.
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, development difficulties, the effect of current economic conditions, including a decrease in consumer spending, costs of capital, the ability to consummate and integrate acquisitions, 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.
(All currency is in US$ unless otherwise noted) SCHEDULE 1 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data) Three Months Ended November 30, 2008 2007 Revenues $401,063 $308,776 Operating expenses: Cost of service 154,311 116,513 Sales, general and administrative 163,987 133,518 Restructuring - 314 318,298 250,345 Operating income 82,765 58,431 Other income (expense): Interest and other income 2,002 4,739 Interest and other expense (2,016) (1,268) (14) 3,471 Income before income taxes and minority interest 82,751 61,902 Provision for income taxes (22,505) (21,023) Minority interest, net of tax (provision) benefit of ($710) and $524, respectively (11,339) (2,566) Net income $48,907 $38,313 Earnings per share: Basic $0.61 $0.48 Diluted $0.60 $0.48 Weighted average shares outstanding: Basic 79,735 79,027 Diluted 81,132 80,506 SCHEDULE 2 SEGMENT INFORMATION GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) Three Months Ended November 30, 2008 2007 Revenues: United States $192,149 $176,115 Canada 78,633 65,772 North America Merchant Services 270,782 241,887 Europe 71,170 14,135 Asia-Pacific 23,932 18,426 International Merchant Services 95,102 32,561 United States 28,611 28,415 Europe 6,568 5,913 Money Transfer 35,179 34,328 Total Revenues $401,063 $308,776 Operating Income: North America Merchant Services $72,431 $66,245 International Merchant Services 20,963 4,847 Money Transfer 4,883 1,239 Corporate (15,512) (13,586) Restructuring - (314) Operating Income $82,765 $58,431 SCHEDULE 3 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES Reconciliation to Exclude Restructuring Charges from Normalized Results (In thousands, except per share data) Three Months Ended November 30, 2008 2007 Normal- Restruc- GAAP ized turing(1) GAAP Revenues $401,063 $308,776 $- $308,776 Operating expenses: Cost of service 154,311 116,513 - 116,513 Sales, general and administrative 163,987 133,518 - 133,518 Restructuring - - 314 314 318,298 250,031 314 250,345 Operating income 82,765 58,745 (314) 58,431 Other income (expense): Interest and other income 2,002 4,739 - 4,739 Interest and other expense (2,016) (1,268) - (1,268) (14) 3,471 - 3,471 Income before income taxes and minority interest 82,751 62,216 (314) 61,902 Provision for income taxes (22,505) (21,129) 106 (21,023) Minority interest, net of tax (provision) benefit of ($710) and $524, respectively (11,339) (2,566) - (2,566) Net income $48,907 $38,521 $(208) $38,313 Diluted shares 81,132 80,506 - 80,506 Diluted earnings per share $0.60 $0.48 $- $0.48 Effective tax rate 32.2% 34.8% 34.9% (1) Restructuring charges consist of employee termination benefits relating to a facility closure. 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) Six Months Ended November 30, 2008 2007 Revenues $806,820 $619,756 Operating expenses: Cost of service 298,488 232,822 Sales, general and administrative 332,470 260,954 Restructuring - 1,317 630,958 495,093 Operating income 175,862 124,663 Other income (expense): Interest and other income 5,373 9,876 Interest and other expense (4,420) (3,141) 953 6,735 Income before income taxes and minority interest 176,815 131,398 Provision for income taxes (50,721) (44,806) Minority interest, net of tax (provision) benefit of ($675) and $436, respectively (19,660) (4,704) Net income $106,434 $81,888 Earnings per share: Basic $1.34 $1.03 Diluted $1.31 $1.01 Weighted average shares outstanding: Basic 79,598 79,767 Diluted 81,118 81,209 SCHEDULE 5 SEGMENT INFORMATION GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) Six Months Ended November 30, 2008 2007 Revenues: United States $392,845 $355,565 Canada 164,577 132,449 North America Merchant Services 557,422 488,014 Europe 132,772 27,910 Asia-Pacific 44,650 34,490 International Merchant Services 177,422 62,400 United States 57,991 57,996 Europe 13,985 11,346 Money Transfer 71,976 69,342 Total Revenues $806,820 $619,756 Operating Income: North America Merchant Services $155,500 $137,215 International Merchant Services 41,365 9,983 Money Transfer 9,361 4,961 Corporate (30,364) (26,179) Restructuring - (1,317) Operating Income $175,862 $124,663 SCHEDULE 6 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME GLOBAL PAYMENTS INC. AND SUBSIDIARIES Reconciliations to Exclude Restructuring and Other Charges from Normalized Results (In thousands, except per share data) Six Months Ended November 30, 2008 2007 Normal- Restruc- GAAP ized turing(1) GAAP Revenues $806,820 $619,756 $- $619,756 Operating expenses: Cost of service 298,488 232,822 - 232,822 Sales, general and administrative 332,470 260,954 - 260,954 Restructuring - - 1,317 1,317 630,958 493,776 1,317 495,093 Operating income 175,862 125,980 (1,317) 124,663 Other income (expense): Interest and other income 5,373 9,876 - 9,876 Interest and other expense (4,420) (3,141) - (3,141) 953 6,735 - 6,735 Income before income taxes and minority interest 176,815 132,715 (1,317) 131,398 Provision for income taxes (50,721) (45,255) 449 (44,806) Minority interest, net of tax (provision) benefit of ($675) and $436, respectively (19,660) (4,704) - (4,704) Net income $106,434 $82,756 $(868) $81,888 Diluted shares 81,118 81,209 - 81,209 Diluted earnings per share $1.31 $1.02 $(0.01) $1.01 Effective tax rate 32.6% 35.1% 35.1% (1) 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(2) 0.03 GAAP diluted earnings per share $2.01 (2) 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) November 30, May 31, 2008 2008 (Unaudited) Assets Cash and cash equivalents $356,234 $456,060 Accounts receivable, net 109,739 100,179 Claims receivable, net 1,537 1,354 Settlement processing assets 5,179 24,280 Inventory, net 5,310 3,821 Deferred income taxes 4,261 4,119 Prepaid expenses and other current assets 24,726 27,597 Current assets 506,986 617,410 Property and equipment, net 145,664 141,415 Goodwill 696,246 497,136 Other intangible assets, net 251,999 175,636 Other assets 12,535 14,310 Total assets $1,613,430 $1,445,907 Liabilities and Shareholders' Equity Lines of credit $6,574 $1,527 Current portion of term loan 25,000 - Payables to money transfer beneficiaries 12,244 9,276 Accounts payable and accrued liabilities 138,401 138,243 Settlement processing obligations 76,702 56,731 Income taxes payable 13,671 11,975 Current liabilities 272,592 217,752 Term loan 170,000 - Deferred income taxes 57,086 75,001 Other long-term liabilities 12,001 11,612 Total liabilities 511,679 304,365 Commitments and contingencies Minority interest in equity of subsidiaries 35,210 14,724 Preferred stock - - Common stock - - Paid-in capital 396,064 380,741 Retained earnings 725,099 621,875 Accumulated other comprehensive (loss) income (54,622) 124,202 Total shareholders' equity 1,066,541 1,126,818 Total liabilities and shareholders' equity $1,613,430 $1,445,907 SCHEDULE 8 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands) Six Months Ended November 30, 2008 2007 Cash flows from operating activities: Net income $106,434 $81,888 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 19,446 13,712 Amortization of acquired intangibles 15,654 7,266 Share-based compensation expense 7,154 6,592 Provision for operating losses and bad debts 11,814 14,444 Minority interest in earnings 18,985 5,139 Deferred income taxes 467 (1,287) Other, net 349 156 Changes in operating assets and liabilities, net of the effects of acquisitions: Accounts receivable (13,210) (7,604) Claims receivable (9,872) (12,863) Settlement processing assets and obligations, net 36,994 51,818 Inventory (1,184) (2,836) Prepaid expenses and other assets 4,263 (8,209) Payables to money transfer beneficiaries 2,968 204 Accounts payable and accrued liabilities (1,461) (3,001) Income taxes payable 1,696 3,958 Net cash provided by operating activities 200,497 149,377 Cash flows from investing activities: Business and intangible asset acquisitions (454,265) (11,551) Capital expenditures (17,396) (22,914) Proceeds from sale of investment and contractual rights 6,956 - Net cash used in investing activities (464,705) (34,465) Cash flows from financing activities: Net borrowings on lines of credit 5,047 679 Proceeds from term loan 200,000 - Principal payments under term loan (5,000) - Proceeds from stock issued under share-based compensation plans 6,420 13,251 Tax benefit from share-based compensation plans 1,749 7,039 Repurchase of common stock - (87,020) Dividends paid (3,210) (3,193) Contribution from minority interest holder 358 - Distributions to minority interests (11,718) (4,876) Net cash provided by (used in) financing activities 193,646 (74,120) Effect of exchange rate changes on cash (29,264) 13,733 (Decrease) increase in cash and cash equivalents (99,826) 54,525 Cash and cash equivalents, beginning of period 456,060 308,872 Cash and cash equivalents, end of period $356,234 $363,397 SCHEDULE 9 CONSTANT CURRENCY OUTLOOK GLOBAL PAYMENTS INC. AND SUBSIDIARIES (in millions, except % for per share data) Q1 change Q2 % % FY09 Q1 FY09 change Fiscal 2009 change Actual FY08 Actual Q2 FY08 Outlook FY08 Fiscal 2009 Revenue Constant $1,641 to 29% to currency(1) $397 28% $424 37% $1,671 31% Foreign currency impact(2) 9 3% (23) (7%) (91) (7%) Total $1,550 to 22% to Revenues $406 31% $401 30% $1,580 24% Fiscal 2009 Diluted Earnings Per Share Constant $2.40 to 21% to currency(1) $0.68 27% $0.67 39% $2.47 25% Foreign currency impact(2) 0.03 5% (0.07) (14%) (0.26) (13%) $2.14 to 8% to Normalized $0.71 32% $0.60 25% $2.21 12% Restructuring and other items(3) - 2% - - - (2%) $2.14 to 6% to GAAP $0.71 34% $0.60 25% $2.21 10% (1) Reflects current period results 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. Contact: Jane M. Elliott +1-770-829-8234 Voice +1-770-829-8267 Fax investor.relations@globalpay.com
Jane M. Elliott, +1-770-829-8234, Fax: +1-770-829-8267, investor.relations@globalpay.com. Photo: http://www.newscom.com/cgi-bin/prnh/20010221/ATW031LOGO
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