10-QPeriod: Q3 FY2010

GLOBAL PAYMENTS INC Quarterly Report for Q3 Ended Nov 30, 2010

Filed January 10, 2011For Securities:GPN

Summary

Global Payments Inc. reported its quarterly results for the period ended November 30, 2010. While total revenues saw an increase of 8% year-over-year for both the three and six-month periods, reaching $443.5 million and $883.7 million respectively, the company experienced a decrease in consolidated operating income. This decline was primarily driven by weaker performance in the North America Merchant Services segment, particularly in Canada, which faced competitive pricing pressures. The company also saw an increase in Sales, General, and Administrative (SG&A) expenses due to investments in a new Global Service Center and employee-related costs. Despite the dip in operating income, the International Merchant Services segment showed positive trends with increased operating income and margins, especially in the UK and Asia-Pacific regions. The company also announced a significant strategic move with the formation of a limited partnership in Spain on December 20, 2010, indicating a focus on international expansion. Liquidity remains robust with substantial cash and cash equivalents, supported by a new $600 million revolving credit facility established in December 2010.

Key Highlights

  • 1Total revenues increased by 8% to $443.5 million for the three months ended November 30, 2010, and by 8% to $883.7 million for the six months ended November 30, 2010, compared to the prior year.
  • 2Consolidated operating income decreased by 6% to $83.1 million for the three months and by 7% to $165.3 million for the six months ended November 30, 2010, year-over-year.
  • 3The North America Merchant Services segment experienced a 9% decrease in operating income for the three months and a 9% decrease for the six months, with operating margins declining.
  • 4The International Merchant Services segment saw a positive trend with a 15% increase in operating income for the three months and a 12% increase for the six months, accompanied by improved operating margins.
  • 5Sales, General, and Administrative (SG&A) expenses increased significantly by 18% for the three months and 16% for the six months, driven by investments in a Global Service Center and increased ISO commissions.
  • 6The company formed a new limited partnership in Spain on December 20, 2010, acquiring a 51% stake to expand its direct merchant acquiring and payment processing services in that market.
  • 7Global Payments secured a new $600 million unsecured revolving credit facility in December 2010, enhancing its liquidity and supporting strategic growth initiatives.

Frequently Asked Questions

Global Payments Inc. reported an 8% increase in total revenues for both the three-month and six-month periods ended November 30, 2010, compared to the same periods in the prior year. This growth brought total revenues to $443.5 million for the quarter and $883.7 million for the six months.

The decrease in consolidated operating income was primarily due to a decline in the North America Merchant Services segment, particularly in Canada, which faced competitive pricing pressures. Additionally, Sales, General, and Administrative (SG&A) expenses increased significantly due to investments in a new Global Service Center and higher commission payments to Independent Sales Organizations (ISOs).

The International Merchant Services segment showed strong performance, with operating income increasing by 15% for the three-month period and 12% for the six-month period. Operating margins also improved in this segment, driven by growth in the United Kingdom and Asia-Pacific regions.

The company maintained a strong liquidity position with $663.7 million in cash and cash equivalents as of November 30, 2010. Furthermore, Global Payments secured a new $600 million revolving credit facility in December 2010, which will be used for strategic growth initiatives and general corporate purposes, supplementing its operational cash flows and existing borrowing capacity.