10-QPeriod: Q3 FY2015

GLOBAL PAYMENTS INC Quarterly Report for Q3 Ended Aug 31, 2015

Filed October 7, 2015For Securities:GPN

Summary

Global Payments Inc. (GPN) reported solid financial results for the three months ended August 31, 2015, demonstrating continued growth and operational efficiency. Revenues increased by 6.2% year-over-year to $748.8 million, driven by growth across its key markets, particularly in North America and Asia-Pacific. The company also saw a significant increase in operating income by 10.8% to $137.8 million, with an improved operating margin of 18.4% compared to 17.6% in the prior year period, indicating effective cost management. Net income attributable to Global Payments grew by 15.0% to $86.6 million, translating to a diluted EPS of $1.32, up from $1.10 in the prior year. This growth was supported by strategic acquisitions, including the FIS Gaming Business and a venture in the Philippines, as well as a successful refinancing of its long-term debt, which lowered borrowing rates and expanded debt capacity. The company's balance sheet remains strong, with a healthy cash position and manageable debt levels, positioning it well for future growth and strategic initiatives.

Financial Highlights

47 data points
Beta

Revenue

$748.80M

Net Income

$86.65M

11.6% Net Margin

EPS (Diluted)

$0.66

Total Assets

$5.47B

Cash & Equivalents

$803.31M

Free Cash Flow

$513.39M

Financial Statements
Beta
Revenue$748.80M
SG&A Expenses$338.36M
Operating Expenses$611.02M
Operating Income$137.77M
Interest Expense$13.00M
Net Income$86.65M
EPS (Basic)$0.66
EPS (Diluted)$0.66
Shares Outstanding (Basic)130.33M
Shares Outstanding (Diluted)131.15M

Key Highlights

  • 1Consolidated revenues increased by 6.2% to $748.8 million, driven by growth in key markets.
  • 2Operating income rose 10.8% to $137.8 million, with operating margin improving to 18.4%.
  • 3Net income attributable to Global Payments increased by 15.0% to $86.6 million.
  • 4Diluted earnings per share (EPS) grew to $1.32 from $1.10 in the prior year period.
  • 5Completed two strategic acquisitions: FIS Gaming Business (North America) and a merchant acquiring business in the Philippines (Asia-Pacific).
  • 6Successfully refinanced long-term debt, expanding debt capacity to $3 billion and lowering borrowing rates.
  • 7Ended the quarter with a strong cash and cash equivalents balance of $803.3 million.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in card transaction and volume across its major markets, alongside contributions from recent acquisitions such as the FIS Gaming Business and the merchant acquiring business in the Philippines. Growth in the North America segment was particularly strong due to U.S. direct distribution channels, and the Asia-Pacific segment saw significant expansion from the Ezidebit acquisition.

The company completed a significant debt refinancing on July 31, 2015, which resulted in a senior unsecured $1.75 billion term loan facility and a $1.25 billion revolving credit facility. This move expanded its total debt capacity to $3 billion, lowered its overall borrowing rates, and provided funds to repay existing debt, with remaining proceeds available for strategic initiatives like acquisitions and share repurchases.

Global Payments operates in three reportable segments: North America, Europe, and Asia-Pacific. For the three months ended August 31, 2015, North America represented the largest portion of revenue (70.9%), followed by Europe (22.5%) and Asia-Pacific (6.6%). All segments showed revenue growth, with Asia-Pacific experiencing the highest percentage increase (30.1%) due to acquisitions.

Cost of service and Selling, general and administrative expenses increased in absolute terms, consistent with revenue growth and acquisition-related costs. However, as a percentage of revenue, both cost of service (36.4% vs 36.9%) and SG&A expenses (45.2% vs 45.5%) slightly decreased compared to the prior year, indicating improved operational leverage and efficiency.