10-QPeriod: Q1 FY2015

GLOBAL PAYMENTS INC Quarterly Report for Q1 Ended Feb 28, 2015

Filed April 8, 2015For Securities:GPN

Summary

Global Payments Inc. (GPN) reported solid financial results for the nine months ended February 28, 2015, with total revenues increasing by 9.9% to $2,067.2 million compared to the prior year. This growth was driven by strong performance in both the North America merchant services segment (up 10.5%) and the International merchant services segment (up 8.7%), despite headwinds from unfavorable currency fluctuations. Net income attributable to Global Payments rose by 9.8% to $212.7 million, leading to a diluted earnings per share of $3.13, an increase from $2.65 in the prior year. The company also demonstrated effective cost management, with sales, general, and administrative expenses growing slower than revenue for the nine-month period, contributing to an 11.5% increase in consolidated operating income. The company's strategic acquisitions, such as PayPros and Ezidebit, are showing early signs of contributing to revenue growth and market expansion. Despite a slight increase in debt, the company remains compliant with its financial covenants, indicating a stable financial position.

Financial Highlights

48 data points
Beta

Revenue

$664.98M

Net Income

$62.57M

9.4% Net Margin

EPS (Diluted)

$0.46

Total Assets

$4.02B

Cash & Equivalents

$610.15M

Free Cash Flow

$347.08M

Financial Statements
Beta
Revenue$664.98M
SG&A Expenses$310.11M
Operating Expenses$560.37M
Operating Income$104.61M
Interest Expense$12.20M
Net Income$62.57M
EPS (Basic)$0.47
EPS (Diluted)$0.46
Shares Outstanding (Basic)133.78M
Shares Outstanding (Diluted)134.61M

Key Highlights

  • 1Total revenues grew 9.9% to $2.07 billion for the nine months ended February 28, 2015, compared to the prior year.
  • 2Net income attributable to Global Payments increased by 9.8% to $212.7 million for the same period.
  • 3Diluted earnings per share rose to $3.13 from $2.65 in the prior year.
  • 4North America merchant services revenue increased by 10.5%, driven by the U.S. direct integrated solutions channel and the PayPros acquisition.
  • 5International merchant services revenue grew by 8.7%, fueled by European growth and the Ezidebit acquisition in Asia-Pacific.
  • 6Consolidated operating income increased by 11.5% to $353.0 million.
  • 7The company made significant acquisitions, including Ezidebit and an agreement to acquire FIS's gaming business, demonstrating a strategy for expansion.

Frequently Asked Questions

Revenue growth was primarily driven by increased card transaction and volume growth across both the North America and International merchant services segments. Strategic acquisitions, such as PayPros in North America and Ezidebit in the Asia-Pacific region, also contributed significantly to revenue expansion. Growth in specific channels like the U.S. direct integrated solutions and Europe's e-commerce channels also played a key role.

Global Payments Inc. managed its expenses effectively. While cost of service and sales, general, and administrative expenses increased, they generally grew at a slower pace than revenue for the nine-month period. This contributed to an overall increase in operating income. The company also benefited from a $7.0 million credit related to a processing system intrusion in the prior year's nine-month period, which positively impacted operating income comparison.

The company is actively pursuing growth through acquisitions. Notable acquisitions in the period include Ezidebit and agreements to acquire FIS's gaming business and establish a partnership with Bank of the Philippine Islands. These moves indicate a strategy focused on expanding market presence, enhancing integrated solutions offerings, and strengthening direct distribution channels in key regions like Australia, New Zealand, the Philippines, and Europe.

The company's debt increased, with total debt at $2.06 billion as of February 28, 2015, up from $1.83 billion in the prior year. However, the company remains compliant with its financial covenants. Liquidity is primarily sourced from operating cash flows, which provided $347.1 million for the nine months ended February 28, 2015. The company also has access to credit facilities and believes its current liquidity and borrowing capacity are sufficient for its ongoing operations and future plans.