TSYS Reports Operating Income Growth of 12.0% and EPS of $0.32 for the Third Quarter

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TSYS Reports Operating Income Growth of 12.0% and EPS of $0.32 for the Third Quarter

COLUMBUS, Ga.--(BUSINESS WIRE)-- TSYS (NYS: TSS) today reported results for the third quarter of 2012. For the quarter, basic earnings per share was $0.32, an increase of 5.7% over 2011. Revenues before reimbursable items were $406.1 million and operating income was $90.9 million, increases of 4.1% and 12.0%, respectively, as compared to 2011. Total revenues for the quarter were $468.1 million, an increase of 1.8% over 2011, and were impacted by a decrease of $7.6 million in reimbursable items.

The operating margin for the quarter was 22.4%, an increase of 157 basis points over the third quarter of last year. The increase is attributable to the 4.1% increase in revenues before reimbursable items while expenses before reimbursable items were up 2.0%.


POS transactions, excluding deconverted clients in the indirect merchant business, were up 9.5% and sales volume in the direct merchant business was up 17.4%. Excluding the impact of the acquisition, sales volume was up 9.3%. North America and International issuer processing businesses grew with same client transactions up 10.1% over last year.

"In August, TSYS formed a joint venture with Central Payment Co., LLC to further strengthen our sales distribution channels in the direct merchant business. Also during the quarter, we spent $61.2 million as we purchased 2.6 million shares of our stock bringing our share repurchases since September 2010 to 12.3 million and a total spend of $227.0 million. We continue to see value in our buyback program, absent a strategic acquisition, and have 7.7 million shares remaining under the plan that expires in April 2014. We also closed a new credit facility of $500 million this quarter with a 5-year term loan of $150 million and a 5-year revolver of $350 million that included nine banks. This new revolver, along with our free cash flow, will provide us with more financial flexibility as we continue to make investments that we expect to grow our company and enhance shareholder return," said Tomlinson.

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, October 23. 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

The financial highlights section of this release contains the non-GAAP financial measures of revenues and operating results on a constant currency basis to describe TSYS' performance. Management uses these non-GAAP financial measures to better understand and assess TSYS' operating results and financial performance. TSYS believes these non-GAAP financial measures provide meaningful additional information about TSYS to assist investors in understanding and evaluating its operating results.

Additional information about non-GAAP financial measures and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 11 and 12 of this release.

About TSYS

At TSYS, (NYS: 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, with unmatched customer service and industry insight, TSYS is able to support financial institutions, businesses and governments in more than 80 countries. Offering merchant payment-acceptance solutions as well as services in credit, debit, prepaid, mobile, chip, healthcare and more, we make it possible for those in the global marketplace to conduct safe and secure electronic transactions with trust and convenience.

TSYS' headquarters are located in Columbus, Georgia, with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS provides services to more than half of the top 20 international banks, is a Fortune 1000 company and was named one of the 2012 World's Most Ethical Companies by Ethisphere magazine. For more information, 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," "will," "could," and similar expressions. These forward-looking statements include, among others, statements regarding TSYS expectation that the investments TSYS makes will grow the company and enhance shareholder return, 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 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 ultimate results of TSYS' investments may not have a positive impact on TSYS' business as is currently expected for a number of reasons including fluctuations in the price of our stock and acquired companies not performing as expected. Additional risks and other factors that could cause actual results 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 EndedNine Months Ended
September 30,September 30,
PercentPercent
20122011Change20122011Change
 
Total revenues$468,059459,7471.8%$1,391,8721,336,7324.1%
 
Cost of services315,685321,481(1.8)946,612935,0241.2
Selling, general and administrative expenses61,481 57,086 7.7177,439 168,970 5.0
 
Operating income90,89381,18012.0267,821232,73815.1
 
Nonoperating expenses(579)(3,794)84.7(2,802)(5,363)47.8
 
Income before income taxes, noncontrolling interests and equity in income of equity investments
90,31477,38616.7265,019227,37516.6
Income taxes30,228 24,286 24.584,336 73,102 15.4
Income before noncontrolling interests and equity in income of equity investments
60,08653,10013.2180,683154,27317.1
Equity in income of equity investments1,957 4,588 (57.3)6,983 7,475 (6.6)
Net income62,04357,6887.5187,666161,74816.0
Net income attributable to noncontrolling interests(1,731)460 nm(4,248)(1,064)nm
 
Net income attributable to TSYS common shareholders$60,312 58,148 3.7%$183,418 160,684 14.1%
 
Basic earnings per share$0.32 0.30 5.7%$0.97 0.83 16.6%
 
Diluted earnings per share$0.32 0.30 5.2%$0.97 0.83 16.1%
 
 
Dividends declared per share$0.10 0.07 $0.30 0.21 
 
nm = not meaningful
 
 
TSYS
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
          
 
Three Months EndedNine Months Ended
September 30, September 30,
 
2012201120122011
 
Net income$62,04357,688187,666161,748
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments9,999(9,244)2,9352,713
Postretirement healthcare plan adjustments(1,537)1,156 (1,250)793
Other comprehensive income (loss)8,462 (8,088)1,685 3,506
Comprehensive income70,50549,600189,351165,254
Comprehensive income attributable to

 

noncontrolling interests

1,709 (265)3,844 1,934
Comprehensive income attributable to
TSYS common shareholders$68,796 49,865 185,507 163,320
 
 
TSYS
Earnings Per Share
(unaudited)
(in thousands, except per share data)
              
 
Three Months EndedThree Months EndedNine Months EndedNine Months Ended
September 30, 2012September 30, 2011September 30, 2012September 30, 2011
CommonParticipatingCommonParticipatingCommonParticipatingCommonParticipating
StockSecuritiesStockSecuritiesStockSecuritiesStockSecurities
 
Basic Earnings per share:
Net income$60,31258,148$183,418160,684
Less income allocated to nonvested awards(191)191(208)208(613)613(592)592

Net income allocated to common stock for EPS calculation (a)

$60,121 19157,940 208$182,805 613160,092 592
 

Average common shares outstanding (b)

187,269 609190,706 691187,911 642191,823 715
 
Average common shares and participating securities187,878 191,397 188,553 192,538 
 

Basic Earnings per share (a)/(b)

$0.32?
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