TSYS Reports Third Quarter Adjusted EPS Grew 40.2%

Raises 2015 Adjusted EPS and Revenue Guidance

COLUMBUS, Ga.--()--TSYS (NYSE: TSS) today reported results for the third quarter and year to date.

“We are very pleased with our outstanding third quarter results. These exceptional results were driven by the performance of our clients, the businesses we serve, the consumers who buy and use our products and our team members executing to our strategic plan,” said M. Troy Woods, chairman, president and chief executive officer of TSYS.

“As a result of this continued strong performance, we are raising our guidance range for revenues before reimbursables to 12-13%, up from the previous range of 10-12%, and our adjusted earnings per share (EPS) guidance range to 24-26%, up from the previous range of 15-17%,” said Woods.

Highlights for the third quarter of 2015 include:

  • Adjusted EPS from continuing operations were $0.78, an increase of 40.2%. On a GAAP basis, basic EPS from continuing operations were $0.66, an increase of 46.7%.
  • Excluding the impact from discrete tax items of approximately $0.13 per share in the quarter, adjusted EPS was $0.65, an increase of 17.2%.
  • Income from continuing operations attributable to TSYS’ shareholders was $120.6 million, an increase of 45.5%.
  • Adjusted EBITDA was $238.9 million, an increase of 20.6%.
  • Total revenues for the quarter were $707.9 million, an increase of 14.8%. Revenues before reimbursable items were $636.4 million, an increase of 15.1%.
  • Adjusted operating margin was 31.0%. GAAP operating margin was 23.0%.

Highlights for the first nine months of 2015 include:

  • Adjusted EPS from continuing operations were $1.89, an increase of 36.8%. On a GAAP basis, basic EPS from continuing operations were $1.53, an increase of 48.2%.
  • Excluding the impact from discrete tax items of approximately $0.13 per share year to date, adjusted EPS was $1.76, an increase of 27.5%.
  • Income from continuing operations attributable to TSYS’ shareholders was $281.2 million, an increase of 46.5%.
  • Adjusted EBITDA was $638.9 million, an increase of 23.2%.
  • Total revenues were $2.1 billion, an increase of 13.8%. Revenues before reimbursable items were $1.9 billion, an increase of 14.2%.
  • Adjusted operating margin was 27.9%. GAAP operating margin was 20.2%.

“Our year-to-date free cash flow increased 45.8% over 2014 to $324.4 million. With this build-up of cash during the quarter, we plan to continue our strategic goal of returning approximately 75% of available free cash flow to our shareholders in the form of dividends and share repurchases,” said Woods.

    2015 Revised Financial Outlook
Range    

(in millions, except per

Percent

share amounts)

    Change
Total revenues $2,728   to   $2,746 11%   to   12%
Revenues before reimbursable items $2,463 to $2,473 12% to 13%

Adjusted EPS attributable to TSYS common shareholders from continuing operations*

 

$2.43

 

to

 

$2.47

 

24%

 

to

26%

* Average Basic Weighted Shares 184
 

*Note: The impact of any future share repurchases is not included.

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, October 27. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the link under "Webcasts" on the main homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the link under "Webcasts" on the main homepage of tsys.com.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of its consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Additional information about non-GAAP financial measures, including, but not limited to, adjusted EBITDA and adjusted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 9 to 12 of this release.

About TSYS

At TSYS® (NYSE: TSS), we believe payments should revolve around people, not the other way around. We call this belief People-Centered Payments®. By putting people at the center of every decision we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. Through NetSpend®, A TSYS Company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions.

TSYS’ headquarters are located in Columbus, Ga., U.S.A., with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS is a member of The Civic 50 and has been named one of the 2015 World's Most Ethical Companies by Ethisphere magazine. TSYS routinely posts all important information on its website. For more, please visit us at www.tsys.com.

Forward-Looking Statements

This press release contains “forward-looking statements” – that is, statements related to future, not past, events. Forward-looking statements often address our expected future business and financial performance and often contain words such as “expect,” “anticipate,” “intend,” “believe,” “should,” “plan,” “potential,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ plan to continue its strategic goal of returning approximately 75% of available free cash flow to shareholders and regarding TSYS’ revised earnings guidance for 2015 total revenues, revenues before reimbursable items and adjusted EPS, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management, are based on management’s assumptions and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results or events to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond TSYS’ ability to control or predict. These factors include, but are not limited to, the material breach of security of any of TSYS’ systems; TSYS’ ability to integrate acquisitions and achieve the anticipated growth opportunities and other benefits of the acquisitions; the effect of current domestic and worldwide economic conditions; risks associated with foreign operations, including adverse developments with respect to foreign currency exchange rates; expenses are incurred associated with the signing of a significant client; TSYS does not convert clients’ portfolios as scheduled; the deconversion of a significant client; changes occur in laws, rules, regulations, credit card association rules, prepaid industry rules or other industry standards affecting TSYS and our clients that may result in costly new compliance burdens on TSYS and our clients and lead to a decrease in the volume and/or number of transactions processed or limit the types and amounts of fees that can be charged to customers; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; adverse developments with respect to the payment card industry in general, including a decline in the use of cards as a payment mechanism; and growth rates of TSYS’ existing clients are lower than anticipated or attrition rates of existing clients are higher than anticipated. Additional risks and other factors that could cause actual results or events to differ materially from those contemplated in this release can be found in TSYS’ filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.

 
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
         
Three Months Ended Nine Months Ended
September 30, September 30,
Percent Percent
2015 2014 Change 2015 2014 Change
 
Total revenues $ 707,890 616,891 14.8 % $ 2,062,698 1,811,774 13.8 %
 
Cost of services 456,465 407,391 12.0 1,366,141 1,246,763 9.6
Selling, general and administrative expenses 88,321   80,093   10.3 280,355   256,144   9.5
Total expenses 544,786   487,484   11.8 1,646,496   1,502,907   9.6
 
Operating income 163,104 129,407 26.0 416,202 308,867 34.8
 
Nonoperating expenses (8,564 ) (9,997 ) 14.3 (27,982 ) (30,195 ) 7.3

 

Income before income taxes, noncontrolling interests and equity in income of equity investments

154,540 119,410 29.4 388,220 278,672 39.3
Income taxes 37,825   39,227   (3.6 ) 119,204   94,333   26.4

Income before noncontrolling interests and equity in income of equity investments

116,715 80,183 45.6 269,016 184,339 45.9
Equity in income of equity investments, net of tax 5,336   4,135   29.0 15,309   11,831   29.4
Income from continuing operations, net of tax 122,051 84,318 44.8 284,325 196,170 44.9
Gain from discontinued operations, net of tax -   880   nm -   51,993   nm
Net income 122,051 85,198 43.3 284,325 248,163 14.6
Net income attributable to noncontrolling interests (1,429 ) (1,393 ) (2.6 ) (3,109 ) (5,151 ) 39.6
 
Net income attributable to TSYS common shareholders $ 120,622   83,805   43.9 % $ 281,216   243,012   15.7 %
 
Basic earnings per share (EPS):

Income from continuing operations to TSYS common shareholders*

$ 0.66 0.45 46.7 % $ 1.53 1.03 48.2 %

Gain from discontinued operations to TSYS common shareholders*

-   0.00   nm -   0.27   nm
Basic EPS $ 0.66   0.45   45.2 % $ 1.53   1.30   17.1 %
 
Diluted EPS:

Income from continuing operations to TSYS common shareholders*

$ 0.65 0.44 47.3 % $ 1.52 1.02 49.1 %

Gain from discontinued operations to TSYS common shareholders*

-   0.00   nm -   0.27   nm
Diluted EPS $ 0.65   0.45   44.2 % $ 1.52   1.29   17.8 %
 
Weighted average shares outstanding:
(includes participating securities)
Basic 183,954   185,577   184,320   186,559  
Diluted 185,281   187,572   185,534   188,836  
 
Dividends declared per share $ 0.10   0.10   $ 0.30   0.30  
 
Amounts attributable to TSYS common shareholders:

Income from continuing operations, net of tax

$ 120,622 82,925 45.5 % $ 281,216 192,018 46.5 %
Gain from discontinued operations, net of tax -   880  

nm

-   50,994   nm
Net income $ 120,622   83,805   43.9 % $ 281,216   243,012   15.7 %
 

Non-GAAP measures:

Adjusted EPS from continuing operations $ 0.78   0.56   40.2 % $ 1.89   1.38   36.8 %
 
Adjusted EBITDA $ 238,898   198,040   20.6 % $ 638,889   518,529   23.2 %
 
nm = not meaningful
* EPS amounts may not total due to rounding.
 
 
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                     
Three Months Ended September 30, Nine Months Ended September 30,
Change Change
2015   2014   $   % 2015   2014   $   %
Revenues before reimbursable items:
North America Services $ 293,571 240,957 52,614 21.8 % $ 846,989 698,543 148,446 21.3 %
International Services 86,446 87,385 (939 ) (1.1 ) 244,033 248,890 (4,857 ) (2.0 )
Merchant Services 123,721 115,012 8,709 7.6 351,987 327,972 24,015 7.3
NetSpend 139,648 114,048 25,600 22.4 436,343 363,521 72,822 20.0
Intersegment revenues (7,000 )   (4,542 )   (2,458 ) (54.1 ) (25,098 )   (15,248 )   (9,850 ) (64.6 )

 

Revenues before reimbursable items from external customers

$ 636,386     552,860     83,526   15.1 % $ 1,854,254     1,623,678     230,576   14.2 %
 
Total revenues:
North America Services $ 341,416 282,833 58,583 20.7 % $ 984,493 818,335 166,158 20.3 %
International Services 92,177 91,865 312 0.3 261,597 264,710 (3,113 ) (1.2 )
Merchant Services 143,100 134,117 8,983 6.7 409,676 384,824 24,852 6.5
NetSpend 139,648 114,048 25,600 22.4 436,343 363,521 72,822 20.0
Intersegment revenues (8,451 )   (5,972 )   (2,479 ) (41.5 ) (29,411 )   (19,616 )   (9,795 ) (49.9 )
Revenues from external customers $ 707,890     616,891     90,999   14.8 % $ 2,062,698     1,811,774     250,924   13.8 %
 
Depreciation and amortization:
North America Services $ 25,300 22,173 3,127 14.1 % $ 72,831 63,377 9,454 14.9 %
International Services 8,678 9,610 (932 ) (9.7 ) 26,084 29,176 (3,092 ) (10.6 )
Merchant Services 4,670 3,624 1,046 28.9 13,394 10,591 2,803 26.5
NetSpend 2,632     2,155     477   22.1 7,547     5,779     1,768   30.6
Segment depreciation and amortization 41,280 37,562 3,718 9.9 119,856 108,923 10,933 10.0
Acquisition intangible amortization 22,883 24,210 (1,327 ) (5.5 ) 69,601 72,805 (3,204 ) (4.4 )
Corporate admin and other 336     662     (326 ) (49.2 ) 1,762     1,702     60   3.5
Total depreciation and amortization $ 64,499     62,434     2,065   3.3 % $ 191,219     183,430     7,789   4.2 %
 
Adjusted segment operating income:
North America Services $ 113,946 92,736 21,210 22.9 % $ 324,902 251,892 73,010 29.0 %
International Services 18,370 15,976 2,394 15.0 38,706 32,274 6,432 19.9
Merchant Services 42,387 40,409 1,978 4.9 117,192 103,473 13,719 13.3
NetSpend 37,315     36,123     1,192   3.3 109,224     95,543     13,681   14.3
Total adjusted segment operating income 212,018 185,244 26,774 14.5 590,024 483,182 106,842 22.1
Acquisition intangible amortization (22,883 ) (24,210 ) 1,327 5.5 (69,601 ) (72,805 ) 3,204 4.4
NetSpend M&A operating expenses - (779 ) 779 nm - (3,213 ) 3,213 nm
Share-based compensation (11,295 ) (5,420 ) (5,875 ) nm (31,468 ) (23,019 ) (8,449 ) (36.7 )
Corporate admin and other (14,736 ) (25,428 ) 10,692   42.0 (72,753 ) (75,278 ) 2,525   3.4
Operating income $ 163,104     129,407     33,697   26.0 % $ 416,202     308,867     107,335   34.8 %
 
Other:
Reimbursable items:
North America Services $ 47,845 41,876 5,969 14.3 % $ 137,504 119,792 17,712 14.8 %
International Services 5,731 4,480 1,251 27.9 17,564 15,820 1,744 11.0
Merchant Services 19,379 19,105 274 1.4 57,689 56,852 837 1.5
NetSpend - - - na - - - na
Intersegment revenues (1,451 ) (1,430 ) (21 ) (1.5 ) (4,313 ) (4,368 ) 55   1.3
Reimbursable items $ 71,504     64,031     7,473   11.7 % $ 208,444     188,096     20,348   10.8 %
 
 
TSYS
Condensed Balance Sheet
(unaudited)
(in thousands)
     
September 30, 2015 December 31, 2014
Assets
Current assets:
Cash and cash equivalents $ 447,850 289,183
Accounts receivable, net 333,467 283,203
Other current assets 115,007 118,167
Total current assets 896,324 690,553
Goodwill 1,545,888 1,547,397
Other intangible assets, net 348,017 404,107
Property, equipment and software, net 641,696 656,733
Other long term assets 457,597 434,791
Total assets $ 3,889,522 3,733,581
 
Liabilities
Current liabilities:
Accounts payable $ 55,111 48,793
Bonds, notes and capital leases 41,777 50,911
Other current liabilities 228,473 196,809
Total current liabilities 325,361 296,513
Bonds, notes and capital leases, excluding current portion 1,377,927 1,405,106
Other long-term liabilities 282,067 309,826
Total liabilities 1,985,355 2,011,445
Redeemable noncontrolling interest 23,001 22,492
Equity
Shareholders' equity 1,875,615 1,692,762
Noncontrolling interests in consolidated subsidiaries 5,551 6,882
Total equity 1,881,166 1,699,644
Total liabilities and equity $ 3,889,522 3,733,581
 
 
TSYS
Selected Cash Flow Highlights
(unaudited)
(in thousands)
   
Nine Months Ended September 30,
2015 2014
Cash flows from operating activities:
Net income $ 284,325 248,163

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

Gain on disposal of subsidiaries - (87,013 )
Equity in income of equity investments (15,309 ) (11,831 )
Dividends received from equity investments 12,092 9,189
Depreciation and amortization 191,219 184,827
Other non cash adjustments 35,926 40,626
Changes in operating assets and liabilities: (47,699 ) 6,153  
Net cash provided by operating activities 460,554 390,114
 
Net cash used in investing activities (138,618 ) (164,528 )
 
Net cash used in financing activities (158,429 ) (236,189 )
 
Cash and cash equivalents:
Effect of exchange rate changes on cash and cash equivalents (4,840 ) (1,586 )
Net increase in cash and cash equivalents 158,667 (12,189 )
Cash and cash equivalents at beginning of period 289,183   278,230  
Cash and cash equivalents at end of period $ 447,850   266,041  
 
Supplemental - Non-GAAP:
Net cash provided by operating activities $ 460,554 390,114
Capital expenditures (136,183 ) (167,656 )
Free cash flow 324,371 222,458
Principal payments on debt and capital leases (42,215 ) (48,682 )
Available free cash flow $ 282,156   173,776  
 
Dividends paid on common stock 55,277 56,159
Repurchase of common stock under plans 83,521   115,675  
Available free cash flow returned to shareholders $ 138,798   171,834  
 
Percent available free cash flow returned to shareholders 49.2   % 98.9   %
 
 
TSYS
Supplemental Information
(unaudited)
       
Other
Accounts on File (AOF):
Total Accounts on File
%

(in millions)

September 2015   September 2014   Change
Consumer Credit 373.6 263.9 41.5
Retail 25.4   28.4 (10.3 )
Total Consumer 399.0 292.3 36.5
Commercial 44.1 41.5 6.0
Other 24.8   21.2 17.4
Subtotal 467.9 355.0 31.8
Prepaid/Stored Value 133.8 125.1 6.9
Government Services 78.7 66.7 18.0
Commercial Card Single Use 80.0   58.7 36.3
Total AOF 760.4   605.5 25.6

Growth in Accounts on File (in millions):

    September 2014 to     September 2013 to
September 2015     September 2014
Beginning balance 605.5 520.6
Change in accounts on file due to:
Internal growth of existing clients 41.0 39.6
New clients 153.7 76.0
Purges/Sales (38.3 ) (30.3 )
Deconversions (1.5 )       (0.4 )
Ending balance 760.4         605.5  
  Three Months Ended September 30,
    Change
2015   2014     Inc(Dec)   %
North America Segment:  
Transactions (in millions) 4,156.7 2,833.6 1,323.1 46.7 %
 
International Segment:
Transactions (in millions) 626.1 574.3 51.8 9.0 %
 
Merchant Segment:
Point-of-sale transactions (in millions) 1,117.3 1,034.4 82.9 8.0 %
Dollar sales volume (in millions) $ 12,055.7 $ 11,877.5 $ 178.2 1.5 %
 
NetSpend Segment:
Gross dollar volume (in millions) $ 5,391.2 $ 4,409.3 $ 981.9 22.3 %
 
Nine Months Ended September 30,
Change
2015   2014   Inc(Dec)   %
North America Segment:
AOF (in millions) 685.5 541.4 144.1 26.6 %
Transactions (in millions) 11,509.6 7,857.9 3,651.7 46.5 %
 
International Segment:
AOF (in millions) 74.9 64.1 10.8 16.9 %
Transactions (in millions) 1,812.0 1,650.3 161.7 9.8 %
 
Merchant Segment:
Point-of-sale transactions (in millions) 3,191.3 3,061.7 129.6 4.2 %
Dollar sales volume (in millions) $ 35,671.5 $ 34,453.8 $ 1,217.7 3.5 %
 
NetSpend Segment:
Gross dollar volume (in millions) $ 18,582.8 $ 15,604.5 $ 2,978.3 19.1 %
 
Direct deposit 90-day active cards (in thousands) 1,796.0 1,520.7 275.3 18.1 %
90-day active cards (in thousands) 3,643.4 3,086.1 557.3 18.1 %
% of 90-day active cards with direct deposit 49.3 % 49.3 %
 
Reconciliation of GAAP to Non-GAAP Financial Measures
 
Non-GAAP Measures
 
The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents third quarter 2015 financial results using the previous year’s foreign currency exchange rates. On a full year constant currency basis, TSYS’ total revenues grew 15.3% as compared to a reported GAAP increase of 13.8%.
 
The schedule below also provides a reconciliation of basic EPS, adjusted for the after-tax impact of acquisition intangible amortization, share-based compensation and merger and acquisition costs, to adjusted EPS.
 
The tax rate used in the calculation of adjusted EPS for the quarter and year is equal to an estimate of our annual effective tax rate on GAAP income. This effective rate is estimated annually and may be adjusted during the year to take into account events or trends that materially impact the effective tax rate including, but not limited to, significant changes resulting from tax legislation, material changes in the mix of revenues and expenses by entity and other significant events.
 
The schedule also provides a reconciliation of net income, adjusted for income from discontinued operations, equity in income of equity investments, income taxes, nonoperating expense, depreciation and amortization, share-based compensation, and merger and acquisition expenses, to adjusted EBITDA.
 
TSYS believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, TSYS includes non-GAAP financial measures when reporting its financial results to shareholders and potential investors in order to provide them with an additional tool to evaluate TSYS’ ongoing business operations. TSYS believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of TSYS’ current and ongoing business operations.
 
Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled captions of other companies due to potential inconsistencies in the method of calculation.
 
TSYS believes that its use of non-GAAP financial measures provides investors with the same key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see TSYS as viewed by management, to assess TSYS with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. TSYS believes that the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.
 
Reconciliation of GAAP to Non-GAAP
                                           
Constant Currency Comparison
(unaudited)
(in thousands)
                   
Three Months Ended September 30, Nine Months Ended September 30,
Percent Percent
2015     2014   Change 2015     2014   Change
Consolidated
Constant currency (1) $ 716,363 616,891 16.1 % $ 2,088,418 1,811,774 15.3 %
Foreign currency impact (2) (8,473 )     - (25,720 )     -
Total revenues $ 707,890       616,891 14.8 % $ 2,062,698       1,811,774 13.8 %
 
Constant currency (1) $ 644,364 552,860 16.6 % $ 1,878,291 1,623,678 15.7 %
Foreign currency impact (2) (7,978 )     - (24,037 )     -
Total revenues before reimbursable items $ 636,386       552,860 15.1 % $ 1,854,254       1,623,678 14.2 %
 
Constant currency (1) $ 163,464 129,407 26.3 % $ 416,907 308,867 35.0 %
Foreign currency impact (2) (360 )     - (705 )     -
Operating income $ 163,104     129,407 26.0 % $ 416,202       308,867 34.8 %
 
International Services
Constant currency (1) $ 100,512 91,865 9.4 % $ 286,969 264,710 8.4 %
Foreign currency impact (2) (8,335 )     - (25,372 )     -
Total revenues $ 92,177       91,865 0.3 % $ 261,597       264,710 (1.2 ) %
 
(1) Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period.
(2) Reflects the impact of calculated changes in foreign currency rates from the comparable period.
                                           
Revenues Before Reimbursable Items
(unaudited)
(in thousands)
 
Three Months Ended September 30, Nine Months Ended September 30,
Percent Percent
2015       2014   Change 2015       2014   Change
Total revenues $ 707,890 616,891 14.8 % $ 2,062,698 1,811,774 13.8 %
Reimbursable items 71,504       64,031 11.7 208,444       188,096 10.8
Revenues before reimbursable items $ 636,386       552,860 15.1 % $ 1,854,254       1,623,678 14.2 %
 
Reconciliation of GAAP to Non-GAAP
                                         
Adjusted Earnings per Share
(unaudited)
(in thousands, except per share data)
             
Three Months Ended September 30,   Nine Months Ended September 30,  
Percent Percent

Income from continuing operations attributable to

2015   2014   Change 2015   2014   Change
TSYS common shareholders $ 120,622 82,925 45.5 % $ 281,216 192,018 46.5 %
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes $ 15,104 15,762 (4.2 ) % 45,948 47,374 (3.0 )
Add: Share-based compensation, net of taxes 7,544 3,573 nm 21,018 15,174 38.5
Add: NetSpend M&A expenses, net of taxes* -     786   nm -     3,111   nm
Adjusted earnings $ 143,270     103,046   39.0 % $ 348,182     257,677   35.1 %
Deduct: Federal and state tax credits and related expenses, net of tax (23,557 )   -   na (23,557 )   -   na
Adjusted earnings without impact of one-time tax items $ 119,713     103,046   16.2 % $ 324,625     257,677   26.0 %
 

Basic EPS - Income from continuing operations attributable to TSYS common shareholders

As reported (GAAP) $ 0.66     0.45   46.7 % $ 1.53     1.03   48.2 %
 
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes 0.08 0.08 (3.3 ) 0.25 0.25 (1.8 )
Add: Share-based compensation, net of taxes 0.04 0.02 nm 0.11 0.08 40.1
Add: NetSpend M&A expenses, net of taxes* -     0.00   nm -     0.02   nm
Adjusted EPS ** $ 0.78     0.56   40.2 % $ 1.89     1.38   36.8 %
Deduct: Federal and state tax credits and related expenses, net of tax (0.13 )   -   na (0.13 )   -   na
Adjusted EPS without impact of one-time tax items $ 0.65     0.56   17.2 % $ 1.76     1.38   27.5 %
 
Weighted average shares outstanding 183,954     185,577   184,320     186,559  
 
* Certain merger and acquisition costs are nondeductible for income tax purposes
** Adjusted EPS amounts may not total due to rounding.
                                         
Adjusted EBITDA
(unaudited)
(in thousands)
 
Three Months Ended September 30,     Nine Months Ended September 30,  
Percent Percent
2015   2014   Change   2015   2014 Change  
Net income $ 122,051 85,198 43.3 % $ 284,325 248,163 14.6 %
Adjust for:
Deduct: Income from discontinued operations - (880 ) nm - (51,993 ) nm
Deduct: Equity in income of equity investments (5,336 ) (4,135 ) (29.0 ) (15,309 ) (11,831 ) (29.4 )
Add: Income taxes 37,825 39,227 (3.6 ) 119,204 94,333 26.4
Add: Nonoperating expense 8,564 9,997 (14.3 ) 27,982 30,195 (7.3 )
Add: Depreciation and amortization 64,499     62,434   3.3 191,219     183,430   4.2
EBITDA $ 227,603 191,841 18.6 % $ 607,421 492,297 23.4 %
Adjust for:
Add: Share-based compensation 11,295 5,420 nm 31,468 23,019 36.7
Add: NetSpend M&A operating expenses -     779   nm -     3,213   nm
Adjusted EBITDA $ 238,898     198,040   20.6 % $ 638,889     518,529   23.2 %
Deduct: State tax credits and related expenses (15,084 )   -   na (15,084 )   -   na
Adjusted EBITDA without impact of one-time tax items $ 223,814     198,040   13.0 % $ 623,805     518,529   20.3 %
nm = not meaningful
 
Reconciliation of GAAP to Non-GAAP
               
Segment Operating Margin and Consolidated Adjusted Operating Margin
(unaudited)
(in thousands)
 
Three Months Ended September 30, 2015 Three Months Ended September 30, 2014
Adjusted Segment Revenues before Adjusted Adjusted Segment Revenues before Adjusted
Operating Income   Reimbursable Items     Operating Margin Operating Income   Reimbursable Items   Operating Margin
North America Services $ 113,946 293,571 38.81 % $ 92,736 240,957 38.49 %
International Services 18,370 86,446 21.25 15,976 87,385 18.28
Merchant Services 42,387 123,721 34.26 40,409 115,012 35.13
NetSpend 37,315 139,648 26.72 36,123 114,048 31.67
Intersegment - (7,000 ) - (4,542 )
Corporate admin and other (14,736 )     (25,428 )    
Adjusted operating margin $ 197,282 636,386 31.00 % $ 159,816 552,860 28.91 %
Acquisition intangible amortization (22,883 ) (24,210 )
NetSpend M&A operating expenses - (779 )
Share-based compensation (11,295 )     (5,420 )    
Operating income and margin* $ 163,104 636,386 25.63 % $ 129,407 552,860 23.41 %
Reimbursable items     71,504       64,031  

Operating income and margin (US GAAP)

$ 163,104     707,890   23.04 % $ 129,407     616,891   20.98 %

 

 
Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014
Adjusted Segment Revenues before Adjusted Adjusted Segment Revenues before Adjusted
Operating Income   Reimbursable Items     Operating Margin Operating Income   Reimbursable Items   Operating Margin
North America Services $ 324,902 846,989 38.36 % $ 251,892 698,543 36.06 %
International Services 38,706 244,033 15.86 32,274 248,890 12.97
Merchant Services 117,192 351,987 33.29 103,473 327,972 31.55
NetSpend 109,224 436,343 25.03 95,543 363,521 26.28
Intersegment - (25,098 ) - (15,248 )
Corporate admin and other (72,753 )     (75,278 )    
Adjusted operating margin $ 517,271 1,854,254 27.90 % $ 407,904 1,623,678 25.12 %
Acquisition intangible amortization (69,601 ) (72,805 )
NetSpend M&A operating expenses - (3,213 )
Share-based compensation (31,468 )     (23,019 )    
Operating income and margin* $ 416,202 1,854,254 22.45 % $ 308,867 1,623,678 19.02 %
Reimbursable items     208,444       188,096  

Operating income and margin (US GAAP)

$ 416,202     2,062,698   20.18 % $ 308,867  

 

1,811,774   17.05 %

 

 
* Operating margin on revenue before reimbursable items

Contacts

TSYS Investor Relations
Shawn Roberts, +1-706-644-6081
shawnroberts@tsys.com

Release Summary

TSYS (NYSE: TSS) today reported results for the third quarter and year to date.

#Hashtags

Contacts

TSYS Investor Relations
Shawn Roberts, +1-706-644-6081
shawnroberts@tsys.com