8-KOther Events

GLOBAL PAYMENTS INC 8-K Report, Corporate Update (Jan 17, 2013)

Filed January 17, 2013For Securities:GPN

Summary

GLOBAL PAYMENTS INC (GPN) announced on January 17, 2013, an entry into an Accelerated Share Repurchase (ASR) agreement to buy back $125 million of its common stock. This initiative is part of a larger, board-authorized program allowing for up to $300 million in stock repurchases. The company expects to receive approximately two million shares at the outset of the ASR, with the final number of shares dependent on the volume-weighted average price upon completion, anticipated by May 31, 2013. As a direct consequence of this repurchase program, GPN has raised its fiscal year 2013 diluted earnings per share (EPS) expectations on a cash basis by three cents, now projecting a range of $3.64 to $3.71, signifying a 3% to 5% growth over fiscal 2012. On a constant currency basis, cash EPS growth is expected to be between 5% and 7%. The company also revised its full-year GAAP diluted EPS outlook, excluding intrusion remediation costs, to a range of $3.04 to $3.11. Notably, full-year revenue expectations remain unchanged.

Key Highlights

  • 1Global Payments Inc. entered an Accelerated Share Repurchase (ASR) agreement to buy back $125 million of its common stock.
  • 2The ASR is part of a larger $300 million stock repurchase authorization by the Board.
  • 3The company anticipates receiving approximately 2 million shares at the ASR's inception.
  • 4Final share count in the ASR will be determined by the volume-weighted average price upon settlement.
  • 5The ASR is expected to be completed by May 31, 2013.
  • 6Full-year fiscal 2013 cash basis diluted EPS expectations increased by $0.03 to a new range of $3.64 - $3.71 (3%-5% growth).
  • 7Full-year fiscal 2013 GAAP diluted EPS (excluding intrusion remediation costs) revised to $3.04 - $3.11.
  • 8Full-year revenue expectations for fiscal 2013 remain unchanged.

Frequently Asked Questions

An Accelerated Share Repurchase (ASR) is an agreement where a company buys back its own stock from a financial institution. Typically, the company receives a substantial portion of the shares upfront, and the final number of shares repurchased is determined at a later date based on the average market price over the repurchase period. This allows companies to return capital to shareholders efficiently and often signals confidence in the company's valuation.

The share repurchase reduces the number of outstanding shares. With fewer shares outstanding, the company's net income is divided among a smaller base, leading to a higher Earnings Per Share (EPS). Global Payments specifically cited an increase of three cents in its cash basis diluted EPS expectation for fiscal year 2013 due to this program.

The primary risk for the company is that the final number of shares repurchased will be based on the volume-weighted average price. If the stock price rises significantly during the ASR period, the company might end up repurchasing fewer shares than initially anticipated for the same dollar amount, or paying a higher average price per share.

The increase in EPS guidance is a direct result of the share repurchase program. By reducing the number of outstanding shares, the company expects to achieve higher EPS figures. The company also provided revised GAAP EPS expectations, excluding certain remediation costs, indicating a focus on operational profitability.