10-QPeriod: Q3 FY2002

GLOBAL PAYMENTS INC Quarterly Report for Q3 Ended Nov 30, 2002

Filed January 13, 2003For Securities:GPN

Summary

GLOBAL PAYMENTS INC. (GPN) filed its quarterly report for the period ending November 30, 2002. The company demonstrated solid year-over-year revenue growth, with a 12% increase in the third quarter and a 14% increase for the first six months of the fiscal year. This growth was primarily driven by the merchant services segment, bolstered by recent acquisitions, while the funds transfer business experienced a decline. Profitability also saw an increase, with net income rising 17% for the quarter. The company's management highlighted organic revenue growth and improved operating margins as key achievements. Furthermore, Global Payments reported a healthy increase in free cash flow, indicating strong operational performance and cash-generating capabilities. The company reiterated its positive outlook for the full fiscal year, projecting continued revenue and earnings per share growth.

Key Highlights

  • 1Total revenue for the three months ended November 30, 2002, was $129.5 million, a 12% increase from $115.6 million in the prior year.
  • 2Net income for the three months ended November 30, 2002, was $13.6 million, a 17% increase from $11.6 million in the prior year.
  • 3Diluted earnings per share (EPS) for the three months ended November 30, 2002, were $0.36, up from $0.31 in the prior year.
  • 4The company reported a 14% increase in revenue for the six months ended November 30, 2002, reaching $257.2 million compared to $226.6 million in the prior year.
  • 5Sales, general, and administrative expenses as a percentage of revenue increased to 32% for the quarter and 30% for the six months, primarily due to higher ISO commission payments.
  • 6Free cash flow increased by 41% to $42.3 million for the six months ended November 30, 2002, compared to $29.9 million in the prior year.
  • 7The company has reaffirmed its full-year revenue guidance for fiscal 2003 between $495 million and $514 million, representing 7% to 11% growth.

Frequently Asked Questions

The primary driver of revenue growth was the merchant services segment, which saw an increase of approximately 9% organically. This growth was further bolstered by the inclusion of results from recent acquisitions, such as the National Bank of Canada merchant portfolio.

Cost of service increased by 6% year-over-year for the quarter, but as a percentage of revenue, it decreased from 53% to 50%, indicating improved efficiency. However, Sales, General, and Administrative (SG&A) expenses increased by 21% for the quarter and rose as a percentage of revenue from 30% to 32%, largely due to increased commission payments to Independent Sales Organizations (ISOs).

Global Payments provided a positive outlook, reaffirming its full-year revenue guidance between $495 million and $514 million (7% to 11% growth). They also expect diluted earnings per share to be between $1.35 and $1.41 for fiscal 2003, representing 10% to 15% growth.

The company adopted SFAS No. 142, which eliminated the amortization of goodwill and certain other intangible assets. In fiscal 2002, they wrote off a $24.6 million trademark ($16.0 million net of tax) as a cumulative effect of a change in accounting principle because it was no longer in use. For the current reporting period, the results reflect ongoing operations without such a significant one-time charge.