Exhibit 99.1
| Contact: Jane M. Elliott | ||
| 770-829-8234 Voice | ||
| 770-829-8267 Fax | ||
| For Immediate Release |
investor.relations@globalpay.com |
Global Payments Reports First Quarter Earnings
ATLANTA, September 27, 2007 — Global Payments Inc. (NYSE: GPN) today announced results for its first quarter ended August 31, 2007. For the first quarter, revenue grew 19 percent to $311.0 million compared to $260.3 million in the prior year. Excluding the impact of current period restructuring charges, diluted earnings per share grew 6 percent to $0.54 compared to $0.51 in the prior year quarter.
In accordance with GAAP, the current quarter includes restructuring charges (see attached reconciliation schedule) relating to an operating center consolidation announced in March 2007. These charges are reflected in our GAAP diluted earnings per share amounts. For the three months ended August 31, 2007, GAAP diluted earnings per share was $0.53 compared to $0.51 in the prior year period.
During the current quarter, Global Payments completed $67.9 million in open market repurchases of 1.8 million shares at an average price of $37.27 per share, including commissions paid. As of August 31, 2007, the company had $32.1 million remaining under its current share repurchase authorization.
Comments and Outlook
Chairman, President and CEO, Paul R. Garcia, stated, “We are pleased with our fiscal 2008 first quarter results, which were driven by growth in our merchant services segment. Our revenue growth was primarily driven by continued organic expansion in our domestic ISO channel, as well as the favorable impact from our July 2006 addition of our Asia-Pacific joint venture with HSBC. In addition, our Canadian merchant services channel benefited from a favorable Canadian currency exchange rate. Lastly, our money transfer segment met our expectations for the quarter, and our corporate expenses declined compared to the prior year due to lower equity compensation costs.”
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GPN Reports First Quarter Earnings
September 27, 2007
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Comments and Outlook
“Based on these results and trends, we are providing annual fiscal 2008 revenue guidance of $1,195 million to $1,247 million. This revenue guidance reflects an expected 13 percent to 17 percent growth versus $1,061.5 million in fiscal 2007. In addition, we are providing annual fiscal 2008 diluted earnings per share guidance of $1.87 to $1.96, or 6 percent to 11 percent growth versus $1.77 in fiscal 2007. 1 This includes the impact of stock option expenses as a result of our June 1, 2006 adoption of FAS 123R. Our guidance excludes the impact of future significant acquisitions, and these earnings per share ranges exclude the impact of potential restructuring and other charges,” said Garcia.
Conference Call
Global Payments will hold a conference call today, September 27, 2007 at 5:00 p.m. ET to discuss financial results and business highlights. The conference call may be accessed by calling 1-877-546-1566 (U.S.) or 1-312-470-7270 (internationally) and using a pass code of “GPN” for both numbers, or via Web cast at www.globalpaymentsinc.com. A replay of the call will be available on the Global Payments Web site through October 11, 2007.
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GPN Reports First Quarter Earnings
September 27, 2007
Page 3
Global Payments Inc. (NYSE: GPN) is a leading provider of electronic transaction processing services for consumers, merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Latin America, Europe and the Asia-Pacific. Global Payments offers a comprehensive line of processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, verification and recovery including electronic check services, as well as terminal management. The company also provides consumer money transfer services from the U.S. and Europe to destinations in Latin America, Morocco and the Philippines. For more information about the company and its services, visit www.globalpaymentsinc.com.
| 1 |
Fiscal 2007 diluted earnings per share was $1.75 on a GAAP basis, which includes restructuring and other charges equivalent to $0.02 in diluted earnings per share. |
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This announcement and comments made by Global Payments’ management during the conference call contain certain forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including revenue and earnings estimates and management’s expectations regarding future events and developments, are forward looking statements and are subject to significant risks and uncertainties. Among the important factors that may cause actual events or results to differ materially from those anticipated by such forward-looking statements include the following: continued certification by credit card associations, foreign currency risks, competition and pricing, product demand, market and customer acceptance, development difficulties, the effect of economic conditions and consumer spending, security breaches or system failures, costs of capital, changes in immigration patterns, changes in state, federal or foreign laws and regulations affecting the electronic money transfer industry, increases in credit card association fees, utility or system interruptions, the ability to consummate and integrate acquisitions, and other risks detailed in the company’s SEC filings, including the most recently filed Form 10-Q or Form 10-K, as applicable. The company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands, except per share data) |
||||||||
| Three Months Ended August 31, | ||||||||
| 2007 | 2006 | |||||||
| Revenues |
$ | 310,980 | $ | 260,308 | ||||
| Operating expenses: |
||||||||
| Cost of service |
116,309 | 98,190 | ||||||
| Sales, general and administrative |
127,436 | 98,591 | ||||||
| Restructuring |
1,003 | — | ||||||
| 244,748 | 196,781 | |||||||
| Operating income |
66,232 | 63,527 | ||||||
| Other income (expense): |
||||||||
| Interest and other income |
5,137 | 3,596 | ||||||
| Interest and other expense |
(1,873 | ) | (2,162 | ) | ||||
| 3,264 | 1,434 | |||||||
| Income before income taxes and minority interest |
69,496 | 64,961 | ||||||
| Provision for income taxes |
(23,783 | ) | (20,909 | ) | ||||
| Minority interest, net of tax |
(2,138 | ) | (2,543 | ) | ||||
| Net income |
$ | 43,575 | $ | 41,509 | ||||
| Earnings per share: |
||||||||
| Basic |
$ | 0.54 | $ | 0.52 | ||||
| Diluted |
$ | 0.53 | $ | 0.51 | ||||
| Weighted average shares outstanding: |
||||||||
| Basic |
80,501 | 79,734 | ||||||
| Diluted |
81,907 | 81,576 | ||||||
CONSOLIDATED CONDENSED BALANCE SHEETS
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands) |
||||||
| August 31, 2007 |
May 31, 2007 | |||||
| (Unaudited) | ||||||
| Assets |
||||||
| Cash and cash equivalents |
$ | 270,544 | $ | 308,872 | ||
| Accounts receivable, net |
88,336 | 76,168 | ||||
| Claims receivable, net |
3,341 | 2,187 | ||||
| Settlement processing assets |
26,510 | 32,853 | ||||
| Other current assets |
35,366 | 24,349 | ||||
| Current assets |
424,097 | 444,429 | ||||
| Property and equipment, net |
122,588 | 118,495 | ||||
| Goodwill |
454,459 | 451,244 | ||||
| Other intangible assets, net |
173,213 | 175,620 | ||||
| Other assets |
11,021 | 10,841 | ||||
| Total assets |
$ | 1,185,378 | $ | 1,200,629 | ||
| Liabilities and Shareholders' Equity |
||||||
| Lines of credit |
$ | 133 | $ | — | ||
| Settlement processing obligations |
14,572 | 20,617 | ||||
| Payable to money transfer beneficiaries |
7,944 | 6,589 | ||||
| Accounts payable and other accrued liabilities |
119,421 | 115,671 | ||||
| Current liabilities |
142,070 | 142,877 | ||||
| Other long-term liabilities |
85,079 | 85,043 | ||||
| Total liabilities |
227,149 | 227,920 | ||||
| Minority interest in equity of subsidiaries |
14,612 | 14,933 | ||||
| Shareholders' equity |
943,617 | 957,776 | ||||
| Total liabilities and shareholders' equity |
$ | 1,185,378 | $ | 1,200,629 | ||
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands) |
||||||||
| Three Months Ended August 31, | ||||||||
| 2007 | 2006 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 43,575 | $ | 41,509 | ||||
| Non-cash items |
||||||||
| Depreciation and amortization |
10,229 | 9,805 | ||||||
| Minority interest in earnings |
2,050 | 2,651 | ||||||
| Other, net |
7,964 | 9,554 | ||||||
| Changes in working capital, which used cash |
||||||||
| Settlement processing assets and obligations, net |
(569 | ) | (7,572 | ) | ||||
| Other, net |
(25,110 | ) | (33,587 | ) | ||||
| Net cash provided by operating activities |
38,139 | 22,360 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(9,605 | ) | (6,929 | ) | ||||
| Business acquisitions |
(2,625 | ) | (67,195 | ) | ||||
| Net cash used in investing activities |
(12,230 | ) | (74,124 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Net borrowings on lines of credit |
133 | 49 | ||||||
| Principal payments under capital leases |
— | (349 | ) | |||||
| Repurchase of common stock |
(67,873 | ) | — | |||||
| Net proceeds under share-based compensation plans and dividends |
3,530 | 5,585 | ||||||
| Distributions to minority interests |
(2,372 | ) | (2,530 | ) | ||||
| Net cash (used in) provided by financing activities |
(66,582 | ) | 2,755 | |||||
| Effect of exchange rate changes on cash |
2,345 | (888 | ) | |||||
| Decrease in cash and cash equivalents |
(38,328 | ) | (49,897 | ) | ||||
| Cash and cash equivalents, beginning of period |
308,872 | 218,475 | ||||||
| Cash and cash equivalents, end of period |
$ | 270,544 | $ | 168,578 | ||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
Reconciliation to Exclude Restructuring Charges from Normalized Results
| (In thousands, except per share data) |
||||||||||||||||
| Three Months Ended August 31, | ||||||||||||||||
| 2007 | 2006 | |||||||||||||||
| Normalized | Restructuring1 | GAAP | GAAP | |||||||||||||
| Revenues |
$ | 310,980 | $ | — | $ | 310,980 | $ | 260,308 | ||||||||
| Operating expenses: |
||||||||||||||||
| Cost of service |
116,309 | — | 116,309 | 98,190 | ||||||||||||
| Sales, general and administrative |
127,436 | — | 127,436 | 98,591 | ||||||||||||
| Restructuring |
— | 1,003 | 1,003 | — | ||||||||||||
| 243,745 | 1,003 | 244,748 | 196,781 | |||||||||||||
| Operating income |
67,235 | (1,003 | ) | 66,232 | 63,527 | |||||||||||
| Other income/(expense): |
||||||||||||||||
| Interest and other income |
5,137 | — | 5,137 | 3,596 | ||||||||||||
| Interest and other expense |
(1,873 | ) | — | (1,873 | ) | (2,162 | ) | |||||||||
| 3,264 | — | 3,264 | 1,434 | |||||||||||||
| Income before income taxes |
70,499 | (1,003 | ) | 69,496 | 64,961 | |||||||||||
| Provision for income taxes |
(24,126 | ) | 343 | (23,783 | ) | (20,909 | ) | |||||||||
| Minority interest, net of tax |
(2,138 | ) | — | (2,138 | ) | (2,543 | ) | |||||||||
| Net income |
$ | 44,235 | $ | (660 | ) | $ | 43,575 | $ | 41,509 | |||||||
| Diluted shares |
81,907 | — | 81,907 | 81,576 | ||||||||||||
| Diluted earnings per share |
$ | 0.54 | $ | (0.01 | ) | $ | 0.53 | $ | 0.51 | |||||||
| 1 |
Restructuring charges consist of employee termination benefits relating to a facility closure. Also reflects the related income tax benefit using the company's effective tax rate, which is defined as the provision for income taxes divided by income before income taxes and minority interest. |
SEGMENT INFORMATION
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
| (In thousands) |
||||||||
| Three Months Ended August 31, | ||||||||
| 2007 | 2006 | |||||||
| Revenues |
||||||||
| Domestic direct |
$ | 167,868 | $ | 135,442 | ||||
| Canada |
66,677 | 60,918 | ||||||
| Asia-Pacific |
16,064 | 5,486 | ||||||
| Central and Eastern Europe |
13,775 | 13,275 | ||||||
| Domestic indirect and other |
11,582 | 12,195 | ||||||
| Merchant services |
275,966 | 227,316 | ||||||
| Domestic |
29,581 | 29,302 | ||||||
| Europe |
5,433 | 3,690 | ||||||
| Money transfer |
35,014 | 32,992 | ||||||
| Total revenues |
$ | 310,980 | $ | 260,308 | ||||
| Operating income |
||||||||
| Merchant services |
$ | 76,106 | $ | 72,961 | ||||
| Money transfer |
3,722 | 4,679 | ||||||
| Corporate |
(12,593 | ) | (14,113 | ) | ||||
| Restructuring |
(1,003 | ) | — | |||||
| Operating income |
$ | 66,232 | $ | 63,527 | ||||