TSYS (NYSE: TSS) today reported results for the first quarter of 2019.
“Our first quarter results provide a great start to the year. We
delivered strong performance across all three of our segments, which
helped to solidify our expectations for the remainder of 2019,” said M.
Troy Woods, chairman, president and chief executive officer of TSYS.
Highlights for the first quarter of 2019 vs. 2018:
-
Total revenues were $1.03 billion, an increase of 4.8%. On a constant
currency basis (non-GAAP), total revenues increased 5.6%. -
Net revenue (non-GAAP), which excludes reimbursable items, was $980.3
million, an increase of 4.8%. On a constant currency basis (non-GAAP),
net revenue increased 5.6%. -
Net income attributable to TSYS common shareholders was $161.6
million, an increase of 13.9%. Diluted EPS was $0.90, an increase of
16.1%. -
Adjusted earnings (non-GAAP) were $215.4 million, an increase of 3.8%.
Adjusted diluted EPS (non-GAAP) was $1.20, an increase of 5.8%. - Adjusted EBITDA (non-GAAP) was $357.3 million, an increase of 8.0%.
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday,
April 23. The conference call can be accessed via live webcast on the
“Investor Relations” section of TSYS’ website at investors.tsys.com
where an accompanying slide presentation will also be available. The
replay will be archived for 12 months and will be available
approximately 30 minutes after the completion of the call.
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, net revenue, revenues measured on a constant currency
basis, adjusted earnings, adjusted EBITDA and adjusted diluted EPS, and
a reconciliation of those measures to the most directly comparable GAAP
measures is included on pages 10 to 14 in the financial schedules of
this release.
About TSYS
TSYS® (NYSE: TSS) is a leading global payments provider,
offering seamless, secure and innovative solutions across the payments
spectrum — for issuers, merchants and consumers. We succeed because we
put people and their needs at the heart of every decision to help them
unlock payment opportunities. It’s an approach we call People-Centered
Payments®.
Our headquarters are located in Columbus, Ga., U.S.A., with
approximately 13,000 team members and local offices across 13 countries.
TSYS generated revenue of $4.0 billion in 2018, while processing more
than 32.3 billion transactions. We are a member of The Civic 50 and were
named one of the 2018 World’s Most Ethical Companies by Ethisphere
magazine. TSYS is a member of the S&P 500 and routinely posts all
important information on its website. For more, visit 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’ performance for the first quarter
helped to solidify its expectations for its financial performance for
the remainder of 2019, 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,
particularly the recently completed Cayan acquisition; the effect of
current domestic and worldwide economic conditions; risks associated
with foreign operations, including adverse developments with respect to
foreign currency exchange rates, and in particular with respect to the
current environment, adverse developments with respect to foreign
currency exchange rates as a result of the United Kingdom’s decision to
leave the European Union (Brexit) and the uncertainty over the terms and
timing of the expected departure; expenses incurred associated with the
signing of a significant client; conversions and deconversions of
clients’ portfolios do not occur 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, and in particular the
CFPB’s new rule regarding prepaid financial products; the potential for
our systems and software to contain undetected errors, viruses or
defects; 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; one or
more of the assumptions upon which earnings guidance for 2019 is based
is inaccurate; 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. TSYS disclaims any obligation to
update any forward-looking statements as a result of new information,
future developments or otherwise except as required by law.
TSYS | |||||||||||
Financial Highlights | |||||||||||
(unaudited) | |||||||||||
(in thousands, except per share data) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
Percent | |||||||||||
2019 | 2018 | Change | |||||||||
Total revenues | $ | 1,034,531 | 987,170 | 4.8 | % | ||||||
Cost of services | 632,212 | 613,365 | 3.1 | ||||||||
Selling, general and administrative expenses | 179,049 | 185,534 | (3.5 | ) | |||||||
Total expenses | 811,261 | 798,899 | 1.5 | ||||||||
Operating income | 223,270 | 188,271 | 18.6 | ||||||||
Nonoperating expenses | (42,991 | ) | (37,642 | ) | (14.2 | ) | |||||
Income before income taxes and equity in income of equity |
180,279 | 150,629 | 19.7 | ||||||||
Income tax expense | 29,899 | 18,135 | 64.9 | ||||||||
Income before equity in income of equity investments | 150,380 | 132,494 | 13.5 | ||||||||
Equity in income of equity investments, net of tax | 11,227 | 10,608 | 5.8 | ||||||||
Net income | 161,607 | 143,102 | 12.9 | ||||||||
Net income attributable to noncontrolling interests | – | (1,261 | ) | 100.0 | |||||||
Net income attributable to TSYS common shareholders | $ | 161,607 | 141,841 | 13.9 | % | ||||||
Earnings per share (EPS): | |||||||||||
Basic EPS | $ | 0.91 | 0.78 | 16.0 | % | ||||||
Diluted EPS | $ | 0.90 | 0.77 | 16.1 | % | ||||||
Weighted average shares outstanding: | |||||||||||
(includes participating securities) | |||||||||||
Basic | 178,435 | 181,612 | |||||||||
Diluted | 179,886 | 183,298 | |||||||||
Dividends declared per share | $ | 0.13 | 0.13 | ||||||||
Non-GAAP measures:* |
|||||||||||
Net revenue | $ | 980,270 | 935,497 | 4.8 | % | ||||||
Adjusted EBITDA | $ | 357,287 | 330,922 | 8.0 | % | ||||||
Adjusted earnings | $ | 215,446 | 207,586 | 3.8 | % | ||||||
Adjusted diluted EPS | $ | 1.20 | 1.13 | 5.8 | % | ||||||
* See reconciliation of non-GAAP measures. | |||||||||||
TSYS | |||||||||||||||
Segment Breakdown | |||||||||||||||
(unaudited) | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended March 31, | |||||||||||||||
Change | |||||||||||||||
2019 | 2018 | $ | % | ||||||||||||
Adjusted segment EBITDA: | |||||||||||||||
Issuer Solutions (a) | $ | 204,934 | 195,764 | 9,170 | 4.7 | % | |||||||||
Merchant Solutions (b) | 128,836 | 118,940 | 9,896 | 8.3 | |||||||||||
Consumer Solutions (c) | 63,693 | 53,667 | 10,026 | 18.7 | |||||||||||
Corporate admin and other | (40,176 | ) | (37,449 | ) | (2,727 | ) | (7.3 | ) | |||||||
Total (d) | 357,287 | 330,922 | 26,365 | 8.0 | |||||||||||
Less: | |||||||||||||||
Share-based compensation | 10,714 | 6,295 | 4,419 | 70.2 | |||||||||||
Cayan and TransFirst M&A and integration expenses | 3,710 | 14,368 | (10,658 | ) | (74.2 | ) | |||||||||
Depreciation and amortization | 103,710 | 104,389 | (679 | ) | (0.7 | ) | |||||||||
Client incentive/contract cost amortization | 8,038 | 6,874 | 1,164 | 16.9 | |||||||||||
Contract cost asset amortization | 7,845 | 10,726 | (2,881 | ) | (26.9 | ) | |||||||||
Operating income | 223,270 | 188,270 | 35,000 | 18.6 | |||||||||||
Nonoperating expenses | (42,991 | ) | (37,641 | ) | (5,350 | ) | (14.2 | ) | |||||||
Income before income taxes and equity in income of equity |
$ | 180,279 | 150,629 | 29,650 | 19.7 | % | |||||||||
Net revenue by segment: | |||||||||||||||
Issuer Solutions (e) | $ | 433,473 | 423,574 | 9,899 | 2.3 | % | |||||||||
Merchant Solutions (f) | 342,956 | 317,403 | 25,553 | 8.1 | |||||||||||
Consumer Solutions (g) | 219,178 | 210,489 | 8,689 | 4.1 | |||||||||||
Segment net revenue | 995,607 | 951,466 | 44,141 | 4.6 | |||||||||||
Less: Intersegment revenues | 15,337 | 15,969 | (632 | ) | (4.0 | ) | |||||||||
Net revenue (h) | 980,270 | 935,497 | 44,773 | 4.8 | |||||||||||
Add: reimbursable items | 54,261 | 51,673 | 2,588 | 5.0 | |||||||||||
Total revenues | $ | 1,034,531 | 987,170 | 47,361 | 4.8 | % | |||||||||
Adjusted segment EBITDA margin on segment net revenue: | |||||||||||||||
Issuer Solutions (a)/(e) | 47.3 | % | 46.2 | % | |||||||||||
Merchant Solutions (b)/(f) | 37.6 | % | 37.5 | % | |||||||||||
Consumer Solutions (c)/(g) | 29.1 | % | 25.5 | % | |||||||||||
Adjusted EBITDA margin on net revenue (d)/(h) | 36.4 | % | 35.4 | % | |||||||||||
TSYS | ||||||||||||||||
Segment Breakdown | ||||||||||||||||
(unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
Change | ||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||
Depreciation and amortization by segment: | ||||||||||||||||
Issuer Solutions | $ | 35,167 | 28,331 | 6,836 | 24.1 | % | ||||||||||
Merchant Solutions | 7,682 | 7,825 | (143 | ) | (1.8 | ) | ||||||||||
Consumer Solutions | 4,416 | 4,259 | 157 | 3.7 | ||||||||||||
Depreciation and amortization | 47,265 | 40,415 | 6,850 | 16.9 | ||||||||||||
Acquisition intangible amortization | 54,957 | 63,023 | (8,066 | ) | (12.8 | ) | ||||||||||
Corporate admin and other | 1,488 | 951 | 537 | 56.5 | ||||||||||||
Total depreciation and amortization | $ | 103,710 | 104,389 | (679 | ) | (0.7 | ) | % | ||||||||
Segment statistical data: |
||||||||||||||||
Issuer Solutions |
||||||||||||||||
Total transactions (in millions) | 5,948.9 | 5,547.9 | 401.0 | 7.2 | % | |||||||||||
Total Accounts on File (AOF) (in millions) | 756.0 | 811.3 | (55.3 | ) | (6.8 | ) | % | |||||||||
Total Traditional AOF (in millions) | 628.2 | 578.6 | 49.6 | 8.6 | % | |||||||||||
Merchant Solutions |
||||||||||||||||
Point-of-sale transactions (in millions) | 1,524.3 | 1,339.6 | 184.7 | 13.8 | % | |||||||||||
Dollar sales volume (in millions) | $ | 40,241.6 | 37,266.7 | 2,974.9 | 8.0 | % | ||||||||||
Segment net revenue per transaction | $ | 0.225 | 0.237 | (0.012 | ) | (5.1 | ) | % | ||||||||
Consumer Solutions |
||||||||||||||||
Gross dollar volume (in millions) | $ | 10,053.5 | 9,690.0 | 363.5 | 3.8 | % | ||||||||||
Direct deposit 90-day active cards (in thousands) | 2,681.5 | 2,669.9 | 11.6 | 0.4 | % | |||||||||||
90-day active cards (in thousands) | 5,226.9 | 5,225.5 | 1.4 | 0.0 | % | |||||||||||
% of 90-day active cards with direct deposit | 51.3 | % | 51.1 | % | ||||||||||||
TSYS | |||||
Condensed Balance Sheet | |||||
(unaudited) | |||||
(in thousands) | |||||
March 31, 2019 | December 31, 2018 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 494,646 | 471,156 | ||
Accounts receivable, net | 490,045 | 450,322 | |||
Contract assets | 44,473 | 30,950 | |||
Other current assets | 200,229 | 188,355 | |||
Total current assets | 1,229,393 | 1,140,783 | |||
Goodwill | 4,115,380 | 4,114,838 | |||
Software and other intangible assets, net | 1,288,454 | 1,331,238 | |||
Property and equipment, net | 385,400 | 383,074 | |||
Operating lease right-of-use assets, net | 206,239 | – | |||
Contract assets – long-term | 53,865 | 47,839 | |||
Contract cost assets – long-term | 147,342 | 145,598 | |||
Other long term assets | 348,059 | 305,339 | |||
Total assets | $ | 7,774,132 | 7,468,709 | ||
Liabilities | |||||
Current liabilities: | |||||
Accounts payable | $ | 73,061 | 97,956 | ||
Current portion of long-term borrowings, finance leases and |
38,710 | 29,125 | |||
Current portion of operating lease liabilities |
49,469 | – | |||
Contract liabilities | 54,581 | 47,227 | |||
Other current liabilities | 349,556 | 341,293 | |||
Total current liabilities | 565,377 | 515,601 | |||
Long-term borrowings, finance leases and license agreements, |
4,180,733 | 3,889,541 | |||
Long-term operating lease liabilities, excluding current portion | 168,505 | – | |||
Deferred income tax liabilities | 409,706 | 380,278 | |||
Contract liabilities – long-term | 23,805 | 21,489 | |||
Other long-term liabilities | 73,246 | 75,894 | |||
Total liabilities | 5,421,372 | 4,882,803 | |||
Equity | 2,352,760 | 2,585,906 | |||
Total liabilities and equity | $ | 7,774,132 | 7,468,709 | ||
TSYS | |||||||
Selected Cash Flow Highlights | |||||||
(unaudited) | |||||||
(in thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 161,607 | 143,102 | ||||
Adjustments to reconcile net income to net cash provided by |
|||||||
Equity in income of equity investments, net of tax | (11,227 | ) | (10,608 | ) | |||
Depreciation and amortization | 103,710 | 104,389 | |||||
Amortization of debt issuance costs | 1,322 | 1,035 | |||||
Amortization of operating lease right-of-use assets | 12,654 | – | |||||
Share-based compensation | 10,714 | 6,295 | |||||
Deferred income tax expense | 27,745 | 15,180 | |||||
Other noncash adjustments | 17,158 | 19,775 | |||||
Changes in operating assets and liabilities | (96,094 | ) | (67,275 | ) | |||
Net cash provided by operating activities | 227,589 | 211,893 | |||||
Purchases of property and equipment | (19,396 | ) | (22,069 | ) | |||
Additions to licensed computer software from vendors | (48,628 | ) | (13,827 | ) | |||
Additions to internally developed computer software | (12,405 | ) | (10,340 | ) | |||
Cash used in acquisitions, net of cash acquired | – | (1,036,853 | ) | ||||
Other investing activities | (2,350 | ) | (1,550 | ) | |||
Net cash used in investing activities | (82,779 | ) | (1,084,639 | ) | |||
Principal payments on long-term borrowings, finance lease |
(157,324 | ) | (129,010 | ) | |||
Proceeds from long-term borrowings | 450,000 | 1,040,000 | |||||
Dividends paid on common stock | (23,456 | ) | (23,496 | ) | |||
Proceeds from exercise of stock options | 6,466 | 26,461 | |||||
Repurchase of common stock | (400,013 | ) | (24 | ) | |||
Other financing activities | – | (1 | ) | ||||
Net cash (used in) provided by financing activities | (124,327 | ) | 913,930 | ||||
Cash, cash equivalents and restricted cash: | |||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
2,049 | 1,684 | |||||
Net increase in cash, cash equivalents and restricted cash | 22,532 | 42,868 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 474,279 | 451,370 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 496,811 | 494,238 | ||||
Supplemental | |||||||
Capital expenditures | $ | 80,429 | 46,236 | ||||
Free cash flow (non-GAAP)* | $ | 147,160 | 165,657 | ||||
* See reconciliation of non-GAAP measures. | |||||||
TSYS | |||||||||||
Supplemental Information | |||||||||||
(unaudited) | |||||||||||
Other | |||||||||||
Accounts on File (AOF): |
Total Accounts on File | ||||||||||
(in millions) |
At |
At |
Percent
Change |
||||||||
Consumer | 523.0 | 486.5 | 7.5 | % | |||||||
Commercial | 60.2 | 55.2 | 8.9 | ||||||||
Other | 45.0 | 36.9 | 22.2 | ||||||||
Traditional AOF | 628.2 | 578.6 | 8.6 | ||||||||
Prepaid*/Stored Value | 11.5 | 38.7 | (70.3 | ) | |||||||
Commercial Card Single Use | 116.3 | 97.5 | 19.3 | ||||||||
Government Services | – | 96.5 | (100.0 | ) | |||||||
Total AOF | 756.0 | 811.3 | (6.8 | ) | % | ||||||
* Prepaid does not include Consumer Solutions accounts. | |||||||||||
Growth in AOF: |
|||||||||||
(in millions) |
March 2018 to
March 2019 |
March 2017 to
March 2018 |
|||||||||
Beginning balance | 811.3 | 762.0 | |||||||||
Change in accounts on file due to: | |||||||||||
Internal growth of existing clients | 57.2 | 53.5 | |||||||||
New clients | 29.2 | 31.8 | |||||||||
Purges/Sales | (24.0 | ) | (34.9 | ) | |||||||
Deconversions | (117.7 | ) | (1.1 | ) | |||||||
Ending balance | 756.0 | 811.3 | |||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
Non-GAAP Measures |
The schedules below provide a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents first quarter 2019 financial results using the previous year’s foreign currency exchange rates. On a constant currency basis, TSYS’ total revenues for the first quarter of 2019 were higher 5.6% as compared to a reported GAAP increase of 4.8%. |
The schedules below also provide a reconciliation of total revenues to net revenue. |
The schedules below also provide a reconciliation of diluted EPS to adjusted diluted EPS. |
The schedules below also provide a reconciliation of net income to adjusted EBITDA. |
The schedules below also provide a reconciliation of cash flows from operating activities and capital expenditures to free cash flow. |
The schedules below also provide a reconciliation of 2019 guidance of total revenues to net revenue and diluted EPS to adjusted diluted EPS. |
The tax rate used in the calculation of adjusted diluted EPS for the quarter 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. |
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 measures of other companies due to potential inconsistencies in the method of calculation. |
TSYS believes that its provision of non-GAAP financial measures provides investors with important 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 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 March 31, | ||||||||
Percent | ||||||||
2019 | 2018 | Change | ||||||
Consolidated |
||||||||
Total revenues (GAAP) | $ | 1,034,531 | 987,170 | 4.8 | % | |||
Foreign currency impact (1) | 8,270 | – | ||||||
Constant currency (2) (non-GAAP) | $ | 1,042,801 | 987,170 | 5.6 | % | |||
Net revenue (non-GAAP) | $ | 980,270 | 935,497 | 4.8 | % | |||
Foreign currency impact (1) | 7,706 | – | ||||||
Constant currency (2) (non-GAAP) | $ | 987,976 | 935,497 | 5.6 | % | |||
Operating income (GAAP) | $ | 223,270 | 188,271 | 18.6 | % | |||
Foreign currency impact (1) | 1,897 | – | ||||||
Constant currency (2) (non-GAAP) | $ | 225,167 | 188,271 | 19.6 | % | |||
Issuer Solutions |
||||||||
Segment net revenue (GAAP) | $ | 433,473 | 423,574 | 2.3 | % | |||
Foreign currency impact (1) | 7,847 | – | ||||||
Constant currency (2) (non-GAAP) | $ | 441,320 | 423,574 | 4.2 | % | |||
(1) Reflects the impact of calculated changes in foreign currency rates from the comparable period. |
||||||||
(2) Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period. |
||||||||
Net Revenue | ||||||||
(unaudited) | ||||||||
(in thousands) | ||||||||
Three Months Ended March 31, | ||||||||
Percent | ||||||||
2019 | 2018 | Change | ||||||
Total revenues | $ | 1,034,531 | 987,170 | 4.8 | % | |||
Less: reimbursable items | 54,261 | 51,673 | 5.0 | |||||
Net revenue | $ | 980,270 | 935,497 | 4.8 | % | |||
Reconciliation of GAAP to Non-GAAP | |||||||||||
Adjusted Diluted Earnings per Share | |||||||||||
(unaudited) | |||||||||||
(in thousands, except per share data) | |||||||||||
Three Months Ended March 31, | |||||||||||
Percent | |||||||||||
2019 | 2018 | Change | |||||||||
Net income attributable to TSYS common shareholders (GAAP) |
$ | 161,607 | 141,841 | 13.9 | % | ||||||
Adjust for amounts attributable to TSYS common shareholders: | |||||||||||
Add: Acquisition intangible amortization | 54,957 | 62,988 | (12.8 | ) | |||||||
Add: Share-based compensation | 10,714 | 6,294 | 70.2 | ||||||||
Add: Cayan and TransFirst M&A and integration expenses* | 3,710 | 14,368 | (74.2 | ) | |||||||
Less: Tax impact of adjustments** | (15,542 | ) | (17,905 | ) | 13.2 | ||||||
Adjusted earnings (non-GAAP) | $ | 215,446 | 207,586 | 3.8 | % | ||||||
Diluted EPS – Net income attributable to TSYS common |
|||||||||||
As reported (GAAP) | $ | 0.90 | 0.77 | 16.1 | % | ||||||
Adjusted diluted EPS (non-GAAP) | $ | 1.20 | 1.13 | 5.8 | % | ||||||
Weighted average diluted shares outstanding | 179,886 | 183,298 | |||||||||
* Costs associated with the Cayan and TransFirst acquisitions and |
|||||||||||
** Certain of these merger and acquisition costs are nondeductible for income tax purposes. |
|||||||||||
Reconciliation of GAAP to Non-GAAP | ||||||||||
Adjusted EBITDA | ||||||||||
(unaudited) | ||||||||||
(in thousands) | ||||||||||
Three Months Ended March 31, | ||||||||||
Percent | ||||||||||
2019 | 2018 | Change | ||||||||
Net income (GAAP) (a) | $ | 161,607 | 143,102 | 12.9 | % | |||||
Adjust for: | ||||||||||
Less: Equity in income of equity investments | (11,227 | ) | (10,608 | ) | (5.8 | ) | ||||
Add: Income tax expense | 29,899 | 18,135 | 64.9 | |||||||
Add: Interest expense, net | 42,769 | 36,652 | 16.7 | |||||||
Add: Depreciation and amortization | 103,710 | 104,389 | (0.7 | ) | ||||||
Add: Client incentive/contract asset amortization | 8,038 | 6,874 | 16.9 | |||||||
Add: Contract cost asset amortization | 7,845 | 10,726 | (26.9 | ) | ||||||
Add: Loss on foreign currency translations | 1,138 | 427 | nm | |||||||
Less/Add: Other nonoperating (income)/expenses | (916 | ) | 562 | nm | ||||||
Add: Share-based compensation | 10,714 | 6,295 | 70.2 | |||||||
Add: Cayan and TransFirst M&A and integration expenses* | 3,710 | 14,368 | (74.2 | ) | ||||||
Adjusted EBITDA (non-GAAP) (b) | $ | 357,287 | 330,922 | 8.0 | % | |||||
Total revenues (c) | $ | 1,034,531 | 987,170 | 4.8 | % | |||||
Net income margin on total revenues (GAAP) (a)/(c) | 15.6 | % | 14.5 | % | ||||||
Net revenue (d) | $ | 980,270 | 935,497 | 4.8 | % | |||||
Adjusted EBITDA margin on net revenue (non-GAAP) (b)/(d) | 36.4 | % | 35.4 | % | ||||||
* Costs associated with the Cayan and TransFirst acquisitions and |
||||||||||
nm = not meaningful | ||||||||||
Reconciliation of GAAP to Non-GAAP | |||||||||||||||||||
Free Cash Flow | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
Free cash flow: | March 31, | ||||||||||||||||||
2019 | 2018 | ||||||||||||||||||
Net cash provided by operating activities (GAAP) | $ | 227,589 | 211,893 | ||||||||||||||||
Capital expenditures | (80,429 | ) | (46,236 | ) | |||||||||||||||
Free cash flow (non-GAAP) | $ | 147,160 | 165,657 | ||||||||||||||||
Guidance Summary | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||
Revenue: | 2019 | % Change | |||||||||||||||||
Total revenues (GAAP) | $ | 4,190 | to | $ | 4,290 | 4 | % | to | 6 | % | |||||||||
Less: reimbursable items | 200 | to | 200 | ||||||||||||||||
Net revenue (non-GAAP) | $ | 3,990 | to | $ | 4,090 | 5 | % | to | 7 | % | |||||||||
Earnings per share (EPS): | |||||||||||||||||||
Diluted EPS (GAAP) | $ | 3.48 | to | $ | 3.63 | 11 | % | to | 16 | % | |||||||||
Acquisition intangible amortization, share-based compensation, |
1.27 | to | 1.27 | ||||||||||||||||
Adjusted diluted EPS attributable to TSYS common shareholders* |
$ | 4.75 | to | $ | 4.90 | 6 | % | to | 10 | % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190423005908/en/