10-KPeriod: FY2004

GLOBAL PAYMENTS INC Annual Report, Year Ended May 31, 2004

Filed August 10, 2004For Securities:GPN

Summary

GLOBAL PAYMENTS INC. (GPN) reported strong financial performance for the fiscal year ended May 31, 2004, with revenue increasing by 22% to $629.3 million, driven by growth in its direct merchant services and strategic acquisitions. Net income saw a healthy rise of 17% to $62.4 million, resulting in diluted earnings per share of $1.60. Excluding restructuring charges, the company demonstrated robust operating income growth of 30%, highlighting improved operational efficiency and profitability. The company completed two significant acquisitions during the fiscal year: Latin America Money Services, LLC (DolEx) for $190.4 million, expanding its money transfer services into the U.S.-to-Latin America corridor, and MUZO, a.s. in the Czech Republic for approximately $63.5 million (total for acquiring 98.3%), strengthening its European payment processing presence. These acquisitions are key components of GPN's strategy to increase market penetration, expand geographically, and diversify into new payment areas. Investors should note the company's focus on enhancing its direct merchant services channel, which generated approximately 79% of total revenue. While operating margins saw a slight decrease due to restructuring charges, the underlying business performance, when adjusted for these charges, shows significant improvement. GPN's financial position appears solid, with a strong cash flow from operations supporting its growth initiatives and debt repayment. The company also provided an optimistic outlook for fiscal year 2005, projecting revenue growth between 15% and 18%.

Key Highlights

  • 1Revenue increased by 22% to $629.3 million in fiscal 2004, driven by domestic direct merchant services and strategic acquisitions.
  • 2Net income rose by 17% to $62.4 million, with diluted EPS of $1.60.
  • 3Completed two significant acquisitions: Latin America Money Services, LLC (DolEx) for $190.4 million and MUZO, a.s. for approximately $63.5 million, expanding into money transfer and European payment processing.
  • 4Operating income, excluding restructuring charges, increased by 30% to $122.5 million, indicating strong underlying profitability.
  • 5Direct merchant services accounted for 79% of total revenue, highlighting its importance to the business.
  • 6Cash flow from operations significantly increased by $63.0 million to $92.2 million, providing strong liquidity.
  • 7Company provided a positive outlook for fiscal year 2005, projecting revenue growth of 15% to 18%.

Frequently Asked Questions

Revenue growth was primarily driven by the expansion of Global Payments Inc.'s direct merchant service offering in the United States and the successful completion of acquisitions, notably Latin America Money Services, LLC (DolEx) and MUZO, a.s. Excluding acquisition impacts, revenue still grew by a solid 12%.

The acquisition of DolEx for approximately $190.4 million expanded GPN's money transfer services, particularly in the U.S. to Latin America corridor. The acquisition of MUZO for approximately $63.5 million (for 98.3% ownership) strengthened its position in the Czech Republic and broader Central/Eastern European payment processing market.

Global Payments Inc. provided an optimistic outlook for fiscal year 2005, expecting revenue to be in the range of $722 million to $743 million, representing a growth of 15% to 18% compared to fiscal year 2004. They also anticipate an operating income margin of 19.5% to 19.8%.

In fiscal year 2004, the company incurred $9.6 million in restructuring and other charges, which impacted reported operating income. However, when excluding these charges, operating income increased by 30%, and operating margins improved from 18.3% to 19.5%, demonstrating underlying operational strength.