10-QPeriod: Q3 FY2009

GLOBAL PAYMENTS INC Quarterly Report for Q3 Ended Aug 31, 2009

Filed October 6, 2009For Securities:GPN

Summary

Global Payments Inc. (GPN) reported a 9% increase in total revenues to $441.3 million for the three months ended August 31, 2009, compared to the prior year. This growth was primarily driven by its International merchant services segment, which saw a significant 29% revenue increase, largely due to recent acquisitions like HSBC Merchant Services LLP and UCS. The North America merchant services segment also contributed with a 6% revenue rise, fueled by market share expansion in the United States through its direct ISO channel, despite a decline in the average transaction amount. However, the company experienced a 15% decrease in revenue within its Money Transfer segment, attributed to challenging macroeconomic conditions and immigration trends affecting its core customer base. Consolidated operating income remained relatively flat, decreasing slightly by 0.5% to $92.6 million, impacted by unfavorable foreign currency exchange rates which reduced revenues by $21.0 million. Despite these headwinds, net income attributable to Global Payments was $57.8 million, remaining stable year-over-year with diluted earnings per share of $0.71.

Financial Highlights

22 data points
Beta

Net Income

$57.83M

EPS (Diluted)

$0.35

Cash & Equivalents

$1.07B

Free Cash Flow

$685.41M

Financial Statements
Beta
SG&A Expenses$179.49M
Operating Expenses$320.69M
Operating Income$89.24M
Net Income$57.83M
EPS (Basic)$0.36
EPS (Diluted)$0.35

Key Highlights

  • 1Total revenues increased by 9% to $441.3 million for the quarter ended August 31, 2009, compared to the prior year.
  • 2International merchant services revenue grew significantly by 29%, boosted by acquisitions and a full quarter's contribution from HSBC Merchant Services LLP.
  • 3North America merchant services revenue increased by 6%, with the U.S. direct ISO channel driving market share gains despite a lower average transaction value.
  • 4The Money Transfer segment saw a 15% decline in revenue, reflecting difficult economic conditions and immigration trends.
  • 5Consolidated operating income was largely flat, decreasing by 0.5% to $92.6 million.
  • 6Foreign currency fluctuations negatively impacted revenues by $21.0 million and diluted EPS by $0.07.
  • 7Net income attributable to Global Payments remained stable at $57.8 million, with diluted EPS at $0.71.

Frequently Asked Questions

Revenue growth was primarily driven by the International merchant services segment, up 29%, due to acquisitions and full quarter contributions from recent purchases. The North America merchant services segment also saw growth of 6%, with the U.S. direct ISO channel expanding market share.

The company faced challenges from declining average transaction values in both North America and Canada due to macroeconomic conditions and a shift towards debit transactions and smaller merchants. The Money Transfer segment experienced a 15% revenue decrease due to adverse economic and immigration trends. Additionally, foreign currency exchange rate fluctuations negatively impacted revenues by $21.0 million.

Recent acquisitions, particularly the full acquisition of HSBC Merchant Services LLP and the acquisition of UCS, significantly contributed to the revenue growth in the International merchant services segment. The company also made a new acquisition in late September 2009 to expand its direct acquiring business into fundraising activities.

As of August 31, 2009, Global Payments had $1,072.3 million in cash and cash equivalents. Net cash provided by operating activities increased significantly due to timing of month-end cut-offs in settlement-related cash. The company believes its current cash, borrowing capacity, and future operating cash flows are sufficient to meet its foreseeable needs.