10-KPeriod: FY2011

GLOBAL PAYMENTS INC Annual Report, Year Ended May 31, 2011

Filed July 25, 2011For Securities:GPN

Summary

For the fiscal year ended May 31, 2011, Global Payments Inc. (GPN) demonstrated solid top-line growth, with revenue increasing by 13% to $1.86 billion, driven by strong performance in its North America merchant services segment and the strategic acquisition in Spain. While consolidated operating income saw a modest increase, net income attributable to Global Payments grew by 3% to $209.2 million. The company's international segment, in particular, showed robust growth with an 18% revenue increase and an expansion in operating margins, reflecting successful integration and operational efficiencies. Despite the overall positive financial trajectory, investors should note the slight decline in operating margins within the North America merchant services segment, attributed to the dilutive impact of ISO transactions and competitive pricing pressures in Canada. The company continues to invest in technology, including the development of its G2 platform, aiming to enhance processing capabilities and support future acquisitions. Management remains focused on leveraging its existing channels, expanding into new international markets, and maintaining a strong financial position.

Financial Highlights

27 data points
Beta

Revenue

$1.86B

Net Income

$209.24M

11.3% Net Margin

EPS (Diluted)

$1.30

Free Cash Flow

$611.24M

Financial Statements
Beta
Revenue$1.86B
SG&A Expenses$863.19M
Operating Expenses$1.53B
Operating Income$331.59M
Net Income$209.24M
EPS (Basic)$1.31
EPS (Diluted)$1.30
Shares Outstanding (Basic)159.67M
Shares Outstanding (Diluted)160.96M

Key Highlights

  • 1Revenue increased by 13% to $1.86 billion, driven by North America merchant services and international expansion.
  • 2Net income attributable to Global Payments rose by 3% to $209.2 million, translating to diluted EPS of $2.60.
  • 3International merchant services segment revenue grew by 18%, with operating margins improving to 29.0%.
  • 4North America merchant services segment operating income decreased slightly, with operating margins declining to 19.7% due to ISO channel dilutive impact and Canadian pricing.
  • 5Acquired a 51% controlling interest in Spain-based Comercia Global Payments Entidad de Pago, S.L. for €125 million.
  • 6Company ended the fiscal year with $1.35 billion in cash and cash equivalents, indicating strong liquidity.
  • 7Total debt increased to $624.8 million, primarily due to borrowings under new and existing credit facilities to support operations and acquisitions.

Frequently Asked Questions

Revenue growth was primarily driven by the North America merchant services segment, due to market share gains in the United States from the direct ISO channel, and by the International merchant services segment, significantly boosted by the acquisition of a majority stake in Spain's Comercia Global Payments Entidad de Pago, S.L.

Consolidated operating income increased modestly by 3%, while net income attributable to Global Payments grew by 3% to $209.2 million. Profitability was influenced by strong international segment performance, offset by a decrease in North America operating margins due to the dilutive impact of ISO transactions and pricing pressures in Canada. Increased corporate expenses related to a new Global Service Center in Manila also impacted overall results.

Global Payments aims to achieve future growth by expanding market share in existing markets through its distribution channels and acquisitions in North America and internationally, particularly in the Asia-Pacific region and Europe. The company is also investing in technology and people to improve execution and customer service, and it plans to enter new markets through strategic acquisitions.

The acquisition of a 51% controlling interest in Comercia Global Payments Entidad de Pago, S.L. in Spain contributed to the 18% revenue growth in the International merchant services segment. However, it also had a dilutive impact on operating margins within that segment due to integration costs and initial operating dynamics, though the overall international segment margins improved.