GPN
$179.20
Global Payments
($2.28)
(1.26%)
Earnings Details
2nd Quarter June 2020
Monday, August 3, 2020 6:55:00 AM
Tweet Share Watch
Summary

Global Payments Beats

Global Payments (GPN) reported 2nd Quarter June 2020 earnings of $1.36 per share on revenue of $1.7 billion. The consensus earnings estimate was $1.18 per share on revenue of $1.4 billion. The Earnings Whisper number was $1.24 per share. Revenue grew 78.8% on a year-over-year basis.

Global Payments Inc is a provider of payment solutions for merchants, value-added resellers, enterprise software providers, financial institutions, government agencies, multi-national corporations and independent sales organizations.

Results
Reported Earnings
$1.36
Earnings Whisper
$1.24
Consensus Estimate
$1.18
Reported Revenue
$1.67 Bil
Revenue Estimate
$1.43 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Global Payments Reports Second Quarter 2020 Results

Collaborates with Amazon Web Services to Deliver Future of Payments

Expands Partnership with CaixaBank

ATLANTA--(BUSINESS WIRE)--Global Payments Inc. (NYSE: GPN) today announced results for the second quarter ended June 30, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200803005127/en/

"We are pleased with our performance in the second quarter, with each month exceeding our post COVID-19 expectations and results improving significantly in May and June. We are also very proud of our team members around the globe for their exceptional and continuous dedication to our customers and the communities in which they live and work despite difficult circumstances,” said Jeff Sloan, Chief Executive Officer.

"We continue to make substantial progress on our strategic goals. First, we entered into a new relationship with Amazon Web Services (AWS) to be our preferred cloud provider for our issuer business. We expect our collaboration with AWS to drive innovative payments solutions worldwide; substantially expand our target addressable opportunities; enable best-in-class experiences for our customers and their consumers; and facilitate revenue possibilities with Amazon across all segments of our business. Together with AWS, we will deliver an industry-leading, cloud-based platform to institutions worldwide, bringing transformative technologies to all types of issuers and providing consumers with frictionless digital experiences.”

Sloan added, “Second, we are delighted to expand our relationship with longstanding partner CaixaBank by agreeing to meaningfully increase our ownership in our joint venture and extending our partnership through 2040. CaixaBank is one of the largest banks in Europe and is Spain’s leading financial group. Their confidence in us further highlights the strength of our differentiated model as the partner of choice to the most sophisticated and complex institutions globally.”

Second Quarter 2020 Summary

  • GAAP revenues were $1.672 billion, compared to $935 million in the second quarter of 2019; diluted earnings per share were $0.12 compared to $0.77 in the prior year; and operating margin was 6.4%.
  • Adjusted net revenues declined 14% to $1.521 billion, compared to $1.772 billion in the second quarter of 2019 on a combined basis.
  • Adjusted earnings per share declined 13% to $1.31, compared to $1.51 in the second quarter of 2019.
  • Adjusted operating margin was 37.0%, compared to 37.4% in the second quarter of 2019 on a combined basis.

Financial Highlights
“We delivered solid financial performance for the second quarter in a challenging environment and are encouraged by the recovery across our businesses, which has continued in July,” said Paul Todd, Senior Executive Vice President and Chief Financial Officer. “Our cost actions in response to the pandemic remain on track to deliver $400 million in additional annual run rate expense savings, which is incremental to the at least $350 million of annual run rate expense synergies and at least $125 million in annual run rate revenue synergies we expect to achieve through 2022 related to the TSYS merger.”

Todd concluded, “We benefited by entering the crisis in extraordinary condition, and the timing and quantum of our actions taken early on enabled us to substantially exceed our adjusted operating margin expectations for the quarter. Finally, our strong cash flows, together with our investment grade balance sheet and liquidity position, provide us with significant financial flexibility to continue to pursue strategic priorities opportunistically as markets stabilize.”

Capital Allocation
Global Payments’ Board of Directors approved a dividend of $0.195 per share payable September 24, 2020 to shareholders of record as of September 10, 2020.

Conference Call
Global Payments’ management will host a live audio webcast today, August 3, 2020, at 8:00 a.m. ET to discuss financial results and business highlights. All interested parties may access the audio webcast via the investor relations page of the company’s website at investors.globalpaymentsinc.com. A replay of the audio webcast will be archived on the company's website following the live event.

Non-GAAP Financial Measures
Global Payments supplements revenues, income, operating income, operating margin and earnings per share information determined in accordance with GAAP by providing these measures, and other measures with certain adjustments (such measures being non-GAAP financial measures) on an adjusted basis in this earnings release to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations.

Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.

About Global Payments
Global Payments Inc. (NYSE: GPN) is a leading pure play payments technology company delivering innovative software and services to our customers globally.  Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with nearly 24,000 employees worldwide, Global Payments is a member of the S&P 500 with worldwide reach spanning over 100 countries throughout North America, Europe, Asia Pacific and Latin America. For more information, visit www.globalpaymentsinc.com and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Forward-Looking Statements
Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks, uncertainties and assumptions that could significantly affect the financial condition, results of operations, business plans and the future performance of Global Payments. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding the effects of the global pandemic on our business, including estimates of the effects of the pandemic on our revenues and financial operating results, the effects of actions taken by us in response to the pandemic, anticipated benefits of the merger with TSYS, including our future financial and operating results, the combined company’s plans, objectives, expectations and intentions, our expected financial and operating results, projected future growth of business, or completion or anticipated benefits of strategic initiatives, and other statements that are not historical facts. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to factors previously disclosed in Global Payments’ reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects and duration of global economic, political, market, health and social events or other conditions, including the effects and duration of the global pandemic; regulatory measures or voluntary actions, including social distancing, shelter-in-place orders, reinstating of opening restrictions on nonessential businesses and similar measures imposed or undertaken in an effort to combat the spread of the global pandemic; management’s assumptions and projections used in their estimates of the timing and severity of the effects of the global pandemic on our future revenues and results of operations; our ability to meet our liquidity needs in light of the effects of the global pandemic; the outcome of any legal proceedings that may be instituted against Global Payments or its or TSYS’ current or former directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the merger when expected or at all; business disruptions from the merger or integration that will harm our business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the merger, including as it relates to the businesses’ ability to successfully renew existing client contracts on favorable terms or at all and obtain new clients; failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain Visa and Mastercard registration and financial institution sponsorship; the ability to retain and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing following the merger; the business, economic and political conditions in the markets in which we operate; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards, including privacy and cybersecurity laws and regulations; and events beyond our control, such as acts of terrorism, and other factors included in the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and in other documents that we file with the SEC, which are available at http://www.sec.gov. Any forward-looking statements speak only as of the date of this communication or as of the date they were made, and we undertake no obligation to update forward-looking statements, except as required by law.

 
 
 
 

SCHEDULE 1
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2020

 

2019

 

%

Change

 

2020

 

2019

 

%

Change

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

1,671,952

 

 

$

935,152

 

 

78.8

%

 

$

3,575,550

 

 

$

1,818,190

 

 

96.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of service

893,740

 

 

302,276

 

 

195.7

%

 

1,827,611

 

 

607,505

 

 

200.8

%

Selling, general and administrative

670,638

 

 

411,150

 

 

63.1

%

 

1,396,386

 

 

789,467

 

 

76.9

%

 

1,564,378

 

 

713,426

 

 

119.3

%

 

3,223,997

 

 

1,396,972

 

 

130.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

107,574

 

 

221,726

 

 

(51.5

)%

 

351,553

 

 

421,218

 

 

(16.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

2,787

 

 

6,176

 

 

(54.9

)%

 

5,293

 

 

9,112

 

 

(41.9

)%

Interest and other expense

(82,855

)

 

(65,616

)

 

26.3

%

 

(175,499

)

 

(124,697

)

 

40.7

%

 

(80,068

)

 

(59,440

)

 

34.7

%

 

(170,206

)

 

(115,585

)

 

47.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and equity in income of equity method investments

27,506

 

 

162,286

 

 

(83.1

)%

 

181,347

 

 

305,633

 

 

(40.7

)%

Income tax expense

(836

)

 

(32,247

)

 

(97.4

)%

 

(16,338

)

 

(56,388

)

 

(71.0

)%

Income before equity in income of equity method investments

26,670

 

 

130,039

 

 

(79.5

)%

 

165,009

 

 

249,245

 

 

(33.8

)%

Equity in income of equity method investments, net of tax

12,774

 

 

 

 

nm

 

25,041

 

 

 

 

nm

Net income

39,444

 

 

130,039

 

 

(69.7

)%

 

190,050

 

 

249,245

 

 

(23.7

)%

Net income attributable to noncontrolling interests, net of income tax

(2,113

)

 

(9,581

)

 

(77.9

)%

 

(9,147

)

 

(16,445

)

 

(44.4

)%

Net income attributable to Global Payments

$

37,331

 

 

$

120,458

 

 

(69.0

)%

 

$

180,903

 

 

$

232,800

 

 

(22.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Global Payments:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.12

 

 

$

0.77

 

 

(84.4

)%

 

$

0.60

 

 

$

1.48

 

 

(59.5

)%

Diluted

$

0.12

 

 

$

0.77

 

 

(84.4

)%

 

$

0.60

 

 

$

1.48

 

 

(59.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

299,140

 

 

156,768

 

 

 

 

299,264

 

 

157,141

 

 

 

Diluted

300,246

 

 

157,262

 

 

 

 

300,541

 

 

157,638

 

 

 

----------------------------------------------------------------------------------
nm - not meaningful

 
 
 
 

SCHEDULE 2
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue

$

1,520,898

 

 

$

888,418

 

 

71.2

%

 

$

3,249,749

 

 

$

1,721,480

 

 

88.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income

$

562,219

 

 

$

360,694

 

 

55.9

%

 

$

1,236,927

 

 

$

689,326

 

 

79.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Global Payments

$

394,313

 

 

$

236,830

 

 

66.5

%

 

$

868,157

 

 

$

448,928

 

 

93.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to Global Payments

$

1.31

 

 

$

1.51

 

 

(13.2

)%

 

$

2.89

 

 

$

2.85

 

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Information with 2019 on Combined Basis(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue(1)

$

1,520,898

 

 

$

1,771,860

 

 

(14.2

)%

 

$

3,249,749

 

 

$

3,496,973

 

 

(7.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income(1)

$

562,219

 

 

$

662,139

 

 

(15.1

)%

 

$

1,236,927

 

 

$

1,283,422

 

 

(3.6

)%

----------------------------------------------------------------------------------
(1) The non-GAAP information for 2019 is presented on a combined basis and includes TSYS results for the three and six months ended 2019 determined in accordance with GAAP applied by TSYS and presented with Global Payments' adjustments to revenue and operating income.


See Schedules 6 and 7 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure.


NON-GAAP FINANCIAL MEASURES
Global Payments supplements revenues, income, operating income, operating margin and EPS information determined in accordance with U.S. GAAP by providing these measures, and other measures, with certain adjustments (such measures being non-GAAP financial measures) in this document to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. Management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers. Management uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. Adjusted net revenue, adjusted operating income, adjusted operating margin, adjusted net income and adjusted EPS should be considered in addition to, and not as substitutes for, revenues, operating income, net income and EPS determined in accordance with GAAP. The non-GAAP financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

Adjusted net revenue excludes gross-up related payments associated with certain lines of business to reflect economic benefits to the company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses. Adjusted operating income, adjusted net income and adjusted EPS exclude acquisition-related amortization expense, share-based compensation expense, acquisition and integration expense and certain other items, such as unusual, direct and discrete costs due to the global pandemic, specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6 and 7. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenue. The tax rate used in determining the income tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

 
 
 
 
 

SCHEDULE 3
SEGMENT INFORMATION (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)

 

 

Three Months Ended

 

 

 

 

 

 

June 30, 2020

 

June 30, 2019

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP(1)

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,001,555

 

 

$

905,663

 

 

$

929,914

 

 

$

1,150,912

 

 

7.7

%

 

(21.3

)%

Issuer Solutions

 

470,025

 

 

414,207

 

 

5,238

 

 

437,684

 

 

nm

 

(5.4

)%

Business and Consumer Solutions

 

216,722

 

 

216,722

 

 

 

 

196,143

 

 

nm

 

10.5

%

Intersegment Elimination

 

(16,350

)

 

(15,694

)

 

 

 

(12,879

)

 

nm

 

(21.9

)%

 

 

$

1,671,952

 

 

$

1,520,898

 

 

$

935,152

 

 

$

1,771,860

 

 

78.8

%

 

(14.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

175,078

 

 

$

371,476

 

 

$

283,411

 

 

$

521,849

 

 

(38.2

)%

 

(28.8

)%

Issuer Solutions

 

58,027

 

 

177,114

 

 

3,596

 

 

159,121

 

 

nm

 

11.3

%

Business and Consumer Solutions

 

48,195

 

 

70,105

 

 

 

 

48,230

 

 

nm

 

45.4

%

Corporate

 

(173,726

)

 

(56,476

)

 

(65,281

)

 

(67,061

)

 

(166.1

)%

 

15.8

%

 

 

$

107,574

 

 

$

562,219

 

 

$

221,726

 

 

$

662,139

 

 

(51.5

)%

 

(15.1

)%

 

 

Six Months Ended

 

 

 

 

 

 

June 30, 2020

 

June 30, 2019

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP(1)

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

2,216,824

 

 

$

2,007,007

 

 

$

1,807,696

 

 

$

2,233,455

 

 

22.6

%

 

(10.1

)%

Issuer Solutions

 

973,787

 

 

856,193

 

 

10,494

 

 

876,414

 

 

nm

 

(2.3

)%

Business and Consumer Solutions

 

420,668

 

 

420,668

 

 

 

 

415,321

 

 

nm

 

1.3

%

Intersegment Elimination

 

(35,729

)

 

(34,119

)

 

 

 

(28,217

)

 

nm

 

(20.9

)%

 

 

$

3,575,550

 

 

$

3,249,749

 

 

$

1,818,190

 

 

$

3,496,973

 

 

96.7

%

 

(7.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

479,231

 

 

$

871,901

 

 

$

521,540

 

 

$

994,087

 

 

(8.1

)%

 

(12.3

)%

Issuer Solutions

 

117,331

 

 

351,792

 

 

7,035

 

 

313,581

 

 

nm

 

12.2

%

Business and Consumer Solutions

 

79,307

 

 

122,591

 

 

 

 

105,989

 

 

nm

 

15.7

%

Corporate

 

(324,316

)

 

(109,357

)

 

(107,357

)

 

(130,235

)

 

(202.1

)%

 

16.0

%

 

 

$

351,553

 

 

$

1,236,927

 

 

$

421,218

 

 

$

1,283,422

 

 

(16.5

)%

 

(3.6

)%

----------------------------------------------------------------------------------
nm - not meaningful

(1) The non-GAAP information for 2019 is presented on a combined basis and includes TSYS results for the three and six months ended 2019 determined in accordance with GAAP applied by TSYS and presented with Global Payments' adjustments to revenue and operating income and segment reporting structure.


See Schedules 8 and 9 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 2 for a discussion of non-GAAP financial measures.

 
 
 
 
 

SCHEDULE 4
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)

 

June 30, 2020

 

December 31, 2019

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,825,625

 

 

$

1,678,273

 

Accounts receivable, net

788,697

 

 

895,232

 

Settlement processing assets

1,314,811

 

 

1,353,778

 

Prepaid expenses and other current assets

422,208

 

 

439,165

 

Total current assets

4,351,341

 

 

4,366,448

 

Goodwill

23,679,923

 

 

23,759,740

 

Other intangible assets, net

12,538,621

 

 

13,154,655

 

Property and equipment, net

1,477,635

 

 

1,382,802

 

Deferred income taxes

6,220

 

 

6,292

 

Other noncurrent assets

1,947,737

 

 

1,810,225

 

Total assets

$

44,001,477

 

 

$

44,480,162

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Settlement lines of credit

$

439,474

 

 

$

463,237

 

Current portion of long-term debt

833,334

 

 

35,137

 

Accounts payable and accrued liabilities

1,606,028

 

 

1,822,166

 

Settlement processing obligations

1,350,507

 

 

1,258,806

 

Total current liabilities

4,229,343

 

 

3,579,346

 

Long-term debt

8,440,267

 

 

9,090,364

 

Deferred income taxes

2,972,142

 

 

3,145,641

 

Other noncurrent liabilities

726,736

 

 

609,822

 

Total liabilities

16,368,488

 

 

16,425,173

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Preferred stock, no par value; 5,000,000 shares authorized and none issued

 

 

 

Common stock, no par value; 400,000,000 shares authorized at June 30, 2020 and December 31, 2019; 299,244,326 issued and outstanding at June 30, 2020 and 300,225,590 issued and outstanding at December 31, 2019

 

 

 

Paid-in capital

25,570,582

 

 

25,833,307

 

Retained earnings

2,314,423

 

 

2,333,011

 

Accumulated other comprehensive loss

(459,146

)

 

(310,571

)

Total Global Payments shareholders’ equity

27,425,859

 

 

27,855,747

 

Noncontrolling interests

207,130

 

 

199,242

 

Total equity

27,632,989

 

 

28,054,989

 

Total liabilities and equity

$

44,001,477

 

 

$

44,480,162

 

 
 
 
 
 

SCHEDULE 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)

 

 

Six Months Ended

 

June 30, 2020

 

June 30, 2019

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$

190,050

 

 

$

249,245

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization of property and equipment

172,229

 

 

82,760

 

Amortization of acquired intangibles

628,264

 

 

210,993

 

Amortization of capitalized contract costs

38,070

 

 

31,965

 

Share-based compensation expense

62,805

 

 

27,914

 

Provision for operating losses and bad debts

66,921

 

 

18,637

 

Noncash lease expense

47,770

 

 

17,989

 

Deferred income taxes

(96,458

)

 

(6,483

)

Other, net

(14,218

)

 

4,480

 

Changes in operating assets and liabilities, net of the effects of business combinations:

 

 

 

Accounts receivable

56,186

 

 

(49,774

)

Settlement processing assets and obligations, net

136,453

 

 

(41,715

)

Prepaid expenses and other assets

(97,653

)

 

(148,435

)

Accounts payable and other liabilities

(230,130

)

 

(150,223

)

Net cash provided by operating activities

960,289

 

 

247,353

 

Cash flows from investing activities:

 

 

 

Acquisitions, net of cash acquired

(74,095

)

 

(78,245

)

Capital expenditures

(208,384

)

 

(133,312

)

Other, net

12,188

 

 

13,182

 

Net cash used in investing activities

(270,291

)

 

(198,375

)

Cash flows from financing activities:

 

 

 

Net (repayments of) borrowings from settlement lines of credit

(25,546

)

 

32,163

 

Proceeds from long-term debt

1,867,008

 

 

586,000

 

Repayments of long-term debt

(1,809,199

)

 

(569,119

)

Payments of debt issuance costs

(8,006

)

 

 

Repurchases of common stock

(421,162

)

 

(233,996

)

Proceeds from stock issued under share-based compensation plans

42,632

 

 

12,952

 

Common stock repurchased - share-based compensation plans

(39,226

)

 

(11,167

)

Distributions to noncontrolling interests

 

 

(26,239

)

Dividends paid

(116,591

)

 

(3,137

)

Net cash used in financing activities

(510,090

)

 

(212,543

)

Effect of exchange rate changes on cash

(32,556

)

 

414

 

Increase (decrease) in cash and cash equivalents

147,352

 

 

(163,151

)

Cash and cash equivalents, beginning of the period

1,678,273

 

 

1,210,878

 

Cash and cash equivalents, end of the period

$

1,825,625

 

 

$

1,047,727

 

 
 
 
 
 

SCHEDULE 6
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 

 

Three Months Ended June 30, 2020

 

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,671,952

 

 

$

(151,054

)

 

$

 

 

$

 

 

$

1,520,898

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

107,574

 

 

$

2,685

 

 

$

451,960

 

 

$

 

 

$

562,219

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

37,331

 

 

$

2,685

 

 

$

452,443

 

 

$

(98,146

)

 

$

394,313

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

0.12

 

 

 

 

 

 

 

 

$

1.31

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

300,246

 

 

 

 

 

 

 

 

300,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

935,152

 

 

$

(46,734

)

 

$

 

 

$

 

 

$

888,418

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

221,726

 

 

$

4,234

 

 

$

134,734

 

 

$

 

 

$

360,694

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

120,458

 

 

$

4,234

 

 

$

135,643

 

 

$

(23,505

)

 

$

236,830

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

0.77

 

 

 

 

 

 

 

 

$

1.51

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

157,262

 

 

 

 

 

 

 

 

157,262

 

----------------------------------------------------------------------------------
(1) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the three months ended June 30, 2020 and June 30, 2019, includes $2.7 million and $4.2 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(2) For the three months ended June 30, 2020, earnings adjustments to operating income included $328.3 million in Cost of Service (COS) and $123.6 million in Selling, General, & Administrative (SG&A) expenses. Adjustments to COS include $314.4 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $11.0 million of other items. Adjustments to SG&A include $35.0 million of share-based compensation expense, $82.2 million of acquisition and integration expenses and $6.4 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

Net income attributable to Global Payments also reflects the removal of a $2.0 million loss associated with the partial sale of an ownership position in a strategic partner.

For the three months ended June 30, 2019, earnings adjustments to operating income include $105.2 million in COS and $29.5 million in SG&A expenses. Adjustments to COS include $104.1 million of amortization of acquired intangibles and $1.1 million of acquisition and integration expenses. Adjustments to SG&A include $16.5 million of share-based compensation expense and $13.0 million of acquisition and integration expenses. Net income attributable to Global Payments also reflects an adjustment to remove a $2.9 million charge to interest expense associated with the bridge facility the company entered into in connection with the proposed TSYS merger.

(3) Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.


See "Non-GAAP Financial Measures" discussion on Schedule 2.

 
 
 
 
 

SCHEDULE 7
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)

 

 

Six Months Ended June 30, 2020

 

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

3,575,550

 

 

$

(325,801

)

 

$

 

 

$

 

 

$

3,249,749

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

351,553

 

 

$

5,584

 

 

$

879,790

 

 

$

 

 

$

1,236,927

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

180,903

 

 

$

5,584

 

 

$

885,384

 

 

$

(203,714

)

 

$

868,157

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

0.60

 

 

 

 

 

 

 

 

$

2.89

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

300,541

 

 

 

 

 

 

 

 

300,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,818,190

 

 

$

(96,710

)

 

$

 

 

$

 

 

$

1,721,480

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

421,218

 

 

$

8,641

 

 

$

259,467

 

 

$

 

 

$

689,326

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

232,800

 

 

$

8,641

 

 

$

258,376

 

 

$

(50,889

)

 

$

448,928

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

1.48

 

 

 

 

 

 

 

 

$

2.85

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

157,638

 

 

 

 

 

 

 

 

157,638

 

----------------------------------------------------------------------------------
(1) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the six months ended June 30, 2020 and June 30, 2019, includes $5.6 million and $8.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(2) For the six months ended June 30, 2020, earnings adjustments to operating income included $648.6 million in COS and $231.1 million in SG&A expenses. Adjustments to COS include $629.2 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $16.5 million of other items. Adjustments to SG&A include $62.8 million of share-based compensation expense, $153.8 million of acquisition and integration expenses and $14.5 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

Net income attributable to Global Payments also reflects the removal of a $8.7 million loss associated with the partial sale of an ownership position in a strategic partner.

For the six months ended June 30, 2019, earnings adjustments to operating income include $214.0 million in COS and $45.5 million in SG&A expenses. Adjustments to COS include $212.1 million of amortization of acquired intangibles and $1.9 million of acquisition and integration expenses. Adjustments to SG&A include $27.9 million of share-based compensation expense and $17.6 million of acquisition and integration expenses. Net income attributable to Global Payments also reflects an adjustment to remove a $2.9 million charge to interest expense associated with the bridge facility the company entered into in connection with the proposed TSYS merger.

(3) Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.


See "Non-GAAP Financial Measures" discussion on Schedule 2.

 
 
 
 
 

SCHEDULE 8
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)

 

 

 

 

Three Months Ended June 30, 2020

 

 

 

 

GAAP

 

Net Revenue

Adjustments (2)

 

Earnings

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

$

1,001,555

 

 

$

(95,892

)

 

$

 

 

$

905,663

 

Issuer Solutions

 

 

 

470,025

 

 

(55,818

)

 

 

 

414,207

 

Business and Consumer Solutions

 

 

 

216,722

 

 

 

 

 

 

216,722

 

Intersegment Eliminations

 

 

 

(16,350

)

 

656

 

 

 

 

(15,694

)

 

 

 

 

$

1,671,952

 

 

$

(151,054

)

 

$

 

 

$

1,520,898

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

$

175,078

 

 

$

320

 

 

$

196,078

 

 

$

371,476

 

Issuer Solutions

 

 

 

58,027

 

 

2,365

 

 

116,722

 

 

177,114

 

Business and Consumer Solutions

 

 

 

48,195

 

 

 

 

21,910

 

 

70,105

 

Corporate

 

 

 

(173,726

)

 

 

 

117,250

 

 

(56,476

)

 

 

 

 

$

107,574

 

 

$

2,685

 

 

$

451,960

 

 

$

562,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2019

 

 

GAAP

 

TSYS(1)

 

Net Revenue

Adjustments(2)

 

Earnings

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

929,914

 

 

$

361,194

 

 

$

(140,196

)

 

$

 

 

$

1,150,912

 

Issuer Solutions

 

5,238

 

 

487,517

 

 

(55,071

)

 

 

 

437,684

 

Business and Consumer Solutions

 

 

 

196,143

 

 

 

 

 

 

196,143

 

Intersegment Eliminations

 

 

 

(13,552

)

 

673

 

 

 

 

(12,879

)

 

 

$

935,152

 

 

$

1,031,302

 

 

$

(194,594

)

 

$

 

 

$

1,771,860

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

283,411

 

 

$

86,005

 

 

$

4,234

 

 

$

148,199

 

 

$

521,849

 

Issuer Solutions

 

3,596

 

 

155,525

 

 

 

 

 

 

159,121

 

Business and Consumer Solutions

 

 

 

34,996

 

 

 

 

13,234

 

 

48,230

 

Corporate

 

(65,281

)

 

(57,438

)

 

 

 

55,658

 

 

(67,061

)

 

 

$

221,726

 

 

$

219,088

 

 

$

4,234

 

 

$

217,091

 

 

$

662,139

 

(1) Represents TSYS financial information determined in accordance with GAAP applied by TSYS and presented in Global Payments new segment reporting structure, net of revenues between legacy Global Payments and TSYS considered intercompany revenue following the merger.

(2) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the three months ended June 30, 2020 and June 30, 2019, includes $2.7 million and $4.2 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(3) For the three months ended June 30, 2020, earnings adjustments to operating income included $328.3 million in COS and $123.6 million in SG&A expenses. Adjustments to COS include $314.4 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $11.0 million of other items. Adjustments to SG&A include $35.0 million of share-based compensation expense, $82.2 million of acquisition and integration expenses and $6.4 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

For the three months ended June 30, 2019, earnings adjustments to operating income include $158.9 million in COS and $58.2 million in SG&A expenses. Adjustments to COS include $157.8 million of amortization of acquired intangibles and $1.1 million of acquisition and integration expenses. Adjustments to SG&A include $40.2 million of share-based compensation expense and $18.0 million of acquisition and integration expenses.


See "Non-GAAP Financial Measures" discussion on Schedule 2.

 
 
 
 
 

SCHEDULE 9
UNAUDITED RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)

 

 

 

 

Six Months Ended June 30, 2020

 

 

 

 

GAAP

 

Net Revenue

Adjustments(2)

 

Earnings

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

$

2,216,824

 

 

$

(209,817

)

 

$

 

 

$

2,007,007

 

Issuer Solutions

 

 

 

973,787

 

 

(117,594

)

 

 

 

856,193

 

Business and Consumer Solutions

 

 

 

420,668

 

 

 

 

 

 

420,668

 

Intersegment Eliminations

 

 

 

(35,729

)

 

1,610

 

 

 

 

(34,119

)

 

 

 

 

$

3,575,550

 

 

$

(325,801

)

 

$

 

 

$

3,249,749

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

$

479,231

 

 

$

517

 

 

$

392,153

 

 

$

871,901

 

Issuer Solutions

 

 

 

117,331

 

 

5,067

 

 

229,394

 

 

351,792

 

Business and Consumer Solutions

 

 

 

79,307

 

 

 

 

43,284

 

 

122,591

 

Corporate

 

 

 

(324,316

)

 

 

 

214,959

 

 

(109,357

)

 

 

 

 

$

351,553

 

 

$

5,584

 

 

$

879,790

 

 

$

1,236,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

GAAP

 

TSYS(1)

 

Net Revenue

Adjustments(2)

 

Earnings

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,807,696

 

 

$

701,018

 

 

$

(275,259

)

 

$

 

 

$

2,233,455

 

Issuer Solutions

 

10,494

 

 

974,771

 

 

(108,851

)

 

 

 

876,414

 

Business and Consumer Solutions

 

 

 

415,321

 

 

 

 

 

 

415,321

 

Intersegment Eliminations

 

$

 

 

(29,536

)

 

1,319

 

 

 

 

(28,217

)

 

 

$

1,818,190

 

 

$

2,061,574

 

 

$

(382,791

)

 

$

 

 

$

3,496,973

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

521,540

 

 

$

161,226

 

 

$

8,641

 

 

$

302,680

 

 

$

994,087

 

Issuer Solutions

 

7,035

 

 

306,546

 

 

 

 

 

 

313,581

 

Business and Consumer Solutions

 

 

 

79,521

 

 

 

 

26,468

 

 

105,989

 

Corporate

 

(107,357

)

 

(104,935

)

 

 

 

82,057

 

 

(130,235

)

 

 

$

421,218

 

 

$

442,358

 

 

$

8,641

 

 

$

411,205

 

 

$

1,283,422

 

(1) Represents TSYS financial information determined in accordance with GAAP applied by TSYS and presented in Global Payments new segment reporting structure, net of revenues between legacy Global Payments and TSYS considered intercompany revenue following the merger.

(2) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the six months ended June 30, 2020 and June 30, 2019, includes $5.6 million and $8.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(3) For the six months ended June 30, 2020, earnings adjustments to operating income included $648.6 million in COS and $231.1 million in SG&A expenses. Adjustments to COS include $629.2 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $16.5 million of other items. Adjustments to SG&A include $62.8 million of share-based compensation expense, $153.8 million of acquisition and integration expenses and $14.5 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

For the six months ended June 30, 2019, earnings adjustments to operating income include $322.7 million in COS and $88.5 million in SG&A expenses. Adjustments to COS include $320.8 million of amortization of acquired intangibles and $1.9 million of acquisition and integration expenses. Adjustments to SG&A include $62.3 million of share-based compensation expense and $26.2 million of acquisition and integration expenses.


See "Non-GAAP Financial Measures" discussion on Schedule 2.

Investor contact:
investor.relations@globalpay.com
Winnie Smith
770-829-8478

Media contact:
media.relations@globalpay.com
Emily Edmonds
770-829-8755

Source: Global Payments Inc.