10-QPeriod: Q1 FY2004

GLOBAL PAYMENTS INC Quarterly Report for Q1 Ended Feb 29, 2004

Filed April 1, 2004For Securities:GPN

Summary

Global Payments Inc. (GPN) reported a strong third quarter for fiscal year 2004, with significant revenue growth driven by recent acquisitions and organic expansion in its domestic merchant services. Revenue increased by 30% year-over-year to $162.6 million, and net income rose by 36% to $16.5 million, translating to diluted EPS of $0.42. The company successfully integrated the DolEx acquisition and made progress on the MUZO acquisition in the Czech Republic, signaling an expanding international footprint. Despite increased Sales, General & Administrative (SG&A) expenses primarily due to commission growth and investments in sales channels, operating margins improved to 18.7%. The company also made progress on restructuring initiatives aimed at leveraging infrastructure and consolidating operations. Liquidity remains robust, supported by strong operating cash flows and an expanded U.S. credit facility, which the company intends to use for further strategic acquisitions. Management expressed confidence in their ability to meet ongoing operational and capital needs.

Key Highlights

  • 1Revenue for the three months ended February 29, 2004, increased by 30% to $162.6 million compared to the prior year period.
  • 2Net income for the quarter rose by 36% to $16.5 million, with diluted earnings per share increasing to $0.42 from $0.32 in the prior year.
  • 3The company completed the acquisition of a majority stake in MUZO, a.s., a leading indirect payment processor in the Czech Republic, expanding its European presence.
  • 4The DolEx acquisition, completed in November 2003, is being integrated, contributing to the growth in the money transfer segment, which saw revenue increase by 660% for the quarter.
  • 5Operating income grew by 40% to $30.4 million, with operating margins improving to 18.7%, indicating increased efficiency.
  • 6Cash flow from operations increased by 30% to $68.8 million for the nine-month period, providing strong liquidity.
  • 7The company secured a new three-year, $350 million revolving credit facility to fund future strategic acquisitions and general corporate purposes.

Frequently Asked Questions

Revenue growth was primarily driven by the company's recent acquisitions, notably DolEx and MUZO, and continued organic growth in its domestic direct merchant services offering. The money transfer segment experienced exceptional growth due to the DolEx acquisition.

Profitability saw a significant improvement. Net income increased by 36% to $16.5 million, and diluted earnings per share grew to $0.42. Operating income also increased by 40% to $30.4 million, with operating margins expanding to 18.7% due to economies of scale and cost containment efforts.

Global Payments is actively pursuing strategic acquisitions to fuel growth. The acquisition of MUZO in the Czech Republic signifies a clear focus on expanding its international footprint, particularly in Central and Eastern Europe, which management believes offers significant growth potential.

Liquidity is strong, supported by a 30% increase in operating cash flow for the nine-month period. The company has also secured a new $350 million U.S. credit facility, providing ample capacity for future strategic acquisitions and working capital needs, in addition to its existing cash reserves.