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Global Payments Inc NYSE: GPN-N

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Global Payments Reports Third Quarter 2021 Results

Business Wire - Tue Nov 2, 2021

Global Payments Inc. (NYSE: GPN) today announced results for the third quarter ended September 30, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211102005352/en/

“We are pleased to have delivered the strongest performance in our history in the third quarter despite facing incremental challenges from COVID-19 during the period,” said Jeff Sloan, Chief Executive Officer. “Our businesses continued to demonstrate their resilience, and our results highlight our consistent execution across cycles. As we have throughout the pandemic, we benefit from accelerated digitization across our markets. This quarter provided further proof points that our four-pillared strategy drives differentiated growth.”

Sloan concluded, “Today we are a top quartile software-as-a-service (SaaS) technology company, the leading issuer technology provider and program manager with unique partnerships, and a leading e-commerce and omnichannel acquirer with unmatched virtual and physical presence. And we deliver our technologies with tremendous breadth across developed and attractive growth markets while benefiting from innovation in the ecosystem.”

Strategic Highlights

  • Renewed key issuer technology partnerships with CIBC and CITI as a top SaaS provider to the most complex and sophisticated institutions worldwide;
  • Significantly expanded the duration and scope of our relationship with PayPal, including support of cryptocurrencies as a leading e-commerce technology partner;
  • Selected by Mercedes-Benz Stadium to maximize its connected commerce environment as a leading software and omnichannel enabler;
  • Announced plans to launch a two-sided ecosystem with Virgin Money to redefine consumer and merchant digital experiences as a unique network provider;
  • Formally entered the B2B market with our acquisition of MineralTree as a leading B2B company;
  • Completed the acquisition of Bankia’s merchant services business together with our partners at CaixaBank, deepening our presence in one of the most attractive markets in Europe; and
  • Closed the acquisition of Worldline’s PayOne Austrian POS acquiring assets through our Erste joint venture, bringing our distinctive distribution and market-leading technologies at scale to another strong secular growth market.

Third Quarter 2021 Summary

  • GAAP revenues were $2.20 billion, compared to $1.92 billion in the third quarter of 2020; diluted earnings per share were $1.01 compared to $0.74 in the prior year; and operating margin was 18.2% compared to 15.1% in the prior year.
  • Adjusted net revenues increased 15% to $2.00 billion, compared to $1.75 billion in the third quarter of 2020.
  • Adjusted earnings per share increased 28% to $2.18, compared to $1.71 in the third quarter of 2020.
  • Adjusted operating margin of 42.8% expanded 170 basis points.

Business Outlook

"We are delighted with the growth we achieved across our businesses despite facing incremental headwinds from the delta variant of COVID-19 in the third quarter.  We are also pleased that we delivered consistent performance in our Merchant Solutions business. In particular, our worldwide acquiring businesses generated 19% adjusted net revenue growth compared to 2019, continuing our track record of strong execution and performance," said Cameron Bready, President and Chief Operating Officer.

2021 Outlook

“We are gratified by the strong financial performance we delivered in the third quarter, which exceeded our expectations despite the incremental impact of the pandemic,” said Paul Todd, Senior Executive Vice President and Chief Financial Officer. “We achieved double digit adjusted net revenue growth, strong adjusted operating margin expansion and impressive adjusted earnings per share growth compared to both 2020 and 2019.”

Todd concluded, “We remain encouraged by the trends we are seeing in our business, and we are increasing the lower ends of our adjusted net revenue and adjusted earnings per share guidance by $10 million and $0.03 per share, respectively. We now expect full year 2021 adjusted net revenue to be in the range of $7.71 billion to $7.73 billion, reflecting growth of 14% to 15%, and adjusted earnings per share to be in a range of $8.10 to $8.20, or growth of 27% to 28% over 2020. This presumes a consistent macroeconomic environment for the remainder of the year with no change to the COVID-19 outlook globally.”

Capital Allocation

Global Payments’ Board of Directors approved a dividend of $0.25 per share payable December 30, 2021 to shareholders of record as of December 16, 2021.

Conference Call

Global Payments’ management will host a live audio webcast today, November 2, 2021, at 8:00 a.m. EDST 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 determined in accordance with GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) 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 each 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 payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with nearly 24,000 team members worldwide, Global Payments is a Fortune 500® company and 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.globalpayments.com and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the "safe-harbor" provisions 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. Accordingly, we cannot guarantee that our plans and expectations will be achieved. Examples of forward-looking statements include, but are not limited to, statements we make regarding guidance and projected financial results for the year 2021; the effects of the COVID-19 pandemic on our business, including estimates of the effects of the pandemic on our revenues, financial operating results and liquidity; the effects of actions taken by us in response to the pandemic; the anticipated benefits of the merger with TSYS (the “Merger’), including the combined company’s plans, objectives, expectations and intentions; timing and completion of anticipated benefits of acquisitions or strategic initiatives; our success and timing in developing and introducing new services; and future financial and operating results. 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 of global economic, political, market, health and social events or other conditions, including the effects and duration of the COVID-19 pandemic and actions taken in response; management’s assumptions and projections used in their estimates of the timing and severity of the effects of the COVID-19 pandemic on our future revenues, results of operations and liquidity; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic or otherwise; the outcome of any legal proceedings that may be instituted against the Company and our directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing controls 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 integration that may harm our business, including current plans and operations; 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; 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, 2020, and in other documents that we file with the SEC, which are available at https://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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2021

 

2020

 

%

Change

 

2021

 

2020

 

%

Change

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

2,202,337

 

 

$

1,917,815

 

 

14.8

%

 

$

6,329,781

 

 

$

5,493,365

 

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of service

944,172

 

 

900,921

 

 

4.8

%

 

2,805,728

 

 

2,728,532

 

 

2.8

%

Selling, general and administrative

858,082

 

 

726,475

 

 

18.1

%

 

2,486,153

 

 

2,122,862

 

 

17.1

%

 

1,802,254

 

 

1,627,396

 

 

10.7

%

 

5,291,881

 

 

4,851,394

 

 

9.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

400,083

 

 

290,419

 

 

37.8

%

 

1,037,900

 

 

641,971

 

 

61.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

6,320

 

 

29,983

 

 

(78.9

)%

 

16,009

 

 

35,277

 

 

(54.6

)%

Interest and other expense

(82,187

)

 

(82,976

)

 

(1.0

)%

 

(245,884

)

 

(258,475

)

 

(4.9

)%

 

(75,867

)

 

(52,993

)

 

43.2

%

 

(229,875

)

 

(223,198

)

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

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

324,216

 

 

237,426

 

 

36.6

%

 

808,025

 

 

418,773

 

 

93.0

%

Income tax expense

50,117

 

 

42,834

 

 

17.0

%

 

131,600

 

 

59,173

 

 

122.4

%

Income before equity in income of equity method investments

274,099

 

 

194,592

 

 

40.9

%

 

676,425

 

 

359,600

 

 

88.1

%

Equity in income of equity method investments, net of tax

31,364

 

 

35,638

 

 

(12.0

)%

 

94,261

 

 

60,682

 

 

55.3

%

Net income

305,463

 

 

230,230

 

 

32.7

%

 

770,686

 

 

420,282

 

 

83.4

%

Net income attributable to noncontrolling interests, net of income tax

(8,727

)

 

(9,259

)

 

(5.7

)%

 

(13,679

)

 

(18,406

)

 

(25.7

)%

Net income attributable to Global Payments

$

296,736

 

 

$

220,971

 

 

34.3

%

 

$

757,007

 

 

$

401,876

 

 

88.4

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Global Payments:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.02

 

 

$

0.74

 

 

37.8

%

 

$

2.57

 

 

$

1.34

 

 

91.8

%

Diluted

$

1.01

 

 

$

0.74

 

 

36.5

%

 

$

2.56

 

 

$

1.34

 

 

91.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

291,502

 

 

299,255

 

 

 

 

294,262

 

 

299,261

 

 

 

Diluted

292,507

 

 

300,491

 

 

 

 

295,421

 

 

300,525

 

 

 

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

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue

$

2,000,327

 

 

$

1,745,905

 

 

14.6

%

 

$

5,753,082

 

 

$

4,995,654

 

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income

855,573

 

 

717,669

 

 

19.2

%

 

2,400,876

 

 

1,954,596

 

 

22.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Global Payments

637,328

 

 

513,756

 

 

24.1

%

 

1,781,696

 

 

1,381,915

 

 

28.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to Global Payments

$

2.18

 

 

$

1.71

 

 

27.5

%

 

$

6.03

 

 

$

4.60

 

 

31.1

%

 
______________________________
 

See Schedules 6 and 7 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure and Schedule 10 for a discussion of non-GAAP financial measures.

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

(In thousands)

 

Three Months Ended

 

 

 

 

 

September 30, 2021

 

September 30, 2020

 

% Change

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

$

1,495,898

 

 

$

1,357,617

 

 

$

1,243,961

 

 

$

1,125,405

 

 

20.3

 

20.6

%

Issuer Solutions

522,166

 

 

457,755

 

 

487,409

 

 

433,372

 

 

7.1

%

 

5.6

%

Business and Consumer Solutions

207,670

 

 

207,671

 

 

204,106

 

 

204,106

 

 

1.7

%

 

1.7

%

Intersegment Elimination

(23,397

)

 

(22,716

)

 

(17,661

)

 

(16,978

)

 

(32.5

)%

 

(33.8

)%

 

$

2,202,337

 

 

$

2,000,327

 

 

$

1,917,815

 

 

$

1,745,905

 

 

14.8

%

 

14.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

$

488,407

 

 

$

669,462

 

 

$

344,981

 

 

$

532,287

 

 

41.6

%

 

25.8

%

Issuer Solutions

77,692

 

 

198,462

 

 

70,800

 

 

187,658

 

 

9.7

%

 

5.8

%

Business and Consumer Solutions

35,233

 

 

53,092

 

 

31,052

 

 

52,252

 

 

13.5

%

 

1.6

%

Corporate

(201,249

)

 

(65,443

)

 

(156,414

)

 

(54,528

)

 

(28.7

)%

 

(20.0

)%

 

$

400,083

 

 

$

855,573

 

 

$

290,419

 

 

$

717,669

 

 

37.8

%

 

19.2

%

 

 

Nine Months Ended

 

 

 

 

 

September 30, 2021

 

September 30, 2020

 

% Change

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

$

4,190,524

 

 

$

3,796,146

 

 

$

3,460,785

 

 

$

3,132,412

 

 

21.1

%

 

21.2

%

Issuer Solutions

1,528,349

 

 

1,343,542

 

 

1,461,196

 

 

1,289,565

 

 

4.6

%

 

4.2

%

Business and Consumer Solutions

678,611

 

 

678,613

 

 

624,774

 

 

624,774

 

 

8.6

%

 

8.6

%

Intersegment Elimination

(67,703

)

 

(65,218

)

 

(53,390

)

 

(51,097

)

 

(26.8

)%

 

(27.6

)%

 

$

6,329,781

 

 

$

5,753,082

 

 

$

5,493,365

 

 

$

4,995,654

 

 

15.2

%

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

$

1,265,689

 

 

$

1,826,260

 

 

$

824,212

 

 

$

1,404,189

 

 

53.6

%

 

30.1

%

Issuer Solutions

220,954

 

 

584,202

 

 

188,131

 

 

539,450

 

 

17.4

%

 

8.3

%

Business and Consumer Solutions

139,439

 

 

195,178

 

 

110,358

 

 

174,842

 

 

26.4

%

 

11.6

%

Corporate

(588,182

)

 

(204,764

)

 

(480,730

)

 

(163,885

)

 

(22.4

)%

 

(24.9

)%

 

$

1,037,900

 

 

$

2,400,876

 

 

$

641,971

 

 

$

1,954,596

 

 

61.7

%

 

22.8

%

______________________________
 

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 10 for a discussion of non-GAAP financial measures.

 

Note: Amounts may not sum due to rounding.

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

 

September 30, 2021

 

December 31, 2020

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,347,732

 

 

$

1,945,868

 

Accounts receivable, net

904,142

 

 

794,172

 

Settlement processing assets

1,912,421

 

 

1,230,853

 

Prepaid expenses and other current assets

628,042

 

 

621,467

 

Total current assets

5,792,337

 

 

4,592,360

 

Goodwill

24,344,275

 

 

23,871,451

 

Other intangible assets, net

11,529,826

 

 

12,015,883

 

Property and equipment, net

1,667,287

 

 

1,578,532

 

Deferred income taxes

8,480

 

 

7,627

 

Other noncurrent assets

2,412,270

 

 

2,135,692

 

Total assets

$

45,754,475

 

 

$

44,201,545

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Settlement lines of credit

$

588,347

 

 

$

358,698

 

Current portion of long-term debt

39,148

 

 

827,357

 

Accounts payable and accrued liabilities

2,387,972

 

 

2,061,384

 

Settlement processing obligations

2,018,840

 

 

1,301,652

 

Total current liabilities

5,034,307

 

 

4,549,091

 

Long-term debt

10,709,791

 

 

8,466,407

 

Deferred income taxes

2,831,349

 

 

2,948,390

 

Other noncurrent liabilities

824,679

 

 

750,613

 

Total liabilities

19,400,126

 

 

16,714,501

 

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 September 30, 2021 and December 31, 2020; 290,086,635 issued and outstanding at September 30, 2021 and 298,332,459 issued and outstanding at December 31, 2020

 

 

 

Paid-in capital

23,544,800

 

 

24,963,769

 

Retained earnings

2,845,192

 

 

2,570,874

 

Accumulated other comprehensive loss

(242,965

)

 

(202,273

)

Total Global Payments shareholders’ equity

26,147,027

 

 

27,332,370

 

Noncontrolling interests

207,322

 

 

154,674

 

Total equity

26,354,349

 

 

27,487,044

 

Total liabilities and equity

$

45,754,475

 

 

$

44,201,545

 

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

(In thousands)

 

Nine Months Ended

 

September 30, 2021

 

September 30, 2020

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$

770,686

 

 

$

420,282

 

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

 

 

 

Depreciation and amortization of property and equipment

292,230

 

 

265,738

 

Amortization of acquired intangibles

973,948

 

 

941,654

 

Amortization of capitalized contract costs

68,112

 

 

57,888

 

Share-based compensation expense

146,097

 

 

105,081

 

Provision for operating losses and credit losses

73,286

 

 

98,967

 

Noncash lease expense

80,371

 

 

73,493

 

Deferred income taxes

(136,004

)

 

(118,466

)

Equity in income of equity investments, net of tax

(94,261

)

 

(60,682

)

Other, net

19,967

 

 

(13,584

)

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

 

 

 

Accounts receivable

(123,370

)

 

23,352

 

Settlement processing assets and obligations, net

28,242

 

 

155,385

 

Prepaid expenses and other assets

(185,973

)

 

(240,804

)

Accounts payable and other liabilities

114,279

 

 

(163,544

)

Net cash provided by operating activities

2,027,610

 

 

1,544,760

 

Cash flows from investing activities:

 

 

 

Business combinations and other acquisitions, net of cash acquired

(946,377

)

 

(77,180

)

Capital expenditures

(350,745

)

 

(329,413

)

Other, net

1,248

 

 

11,575

 

Net cash used in investing activities

(1,295,874

)

 

(395,018

)

Cash flows from financing activities:

 

 

 

Net borrowings from (repayments of) settlement lines of credit

244,858

 

 

(31,069

)

Proceeds from long-term debt

3,909,988

 

 

1,868,199

 

Repayments of long-term debt

(2,434,805

)

 

(1,829,637

)

Payments of debt issuance costs

(8,569

)

 

(8,075

)

Repurchases of common stock

(1,833,689

)

 

(421,162

)

Proceeds from stock issued under share-based compensation plans

38,570

 

 

51,055

 

Common stock repurchased - share-based compensation plans

(84,659

)

 

(41,966

)

Contribution from a noncontrolling interest

46,320

 

 

 

Distribution to a noncontrolling interest

 

 

(6,955

)

Dividends paid

(188,203

)

 

(175,025

)

Net cash used in financing activities

(310,189

)

 

(594,635

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(42,704

)

 

(12,558

)

Increase in cash, cash equivalents and restricted cash

378,843

 

 

542,549

 

Cash, cash equivalents and restricted cash, beginning of the period

2,089,771

 

 

1,678,273

 

Cash, cash equivalents and restricted cash, end of the period

$

2,468,614

 

 

$

2,220,822

 

 
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 September 30, 2021

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Revenues

$

2,202,337

 

$

(202,010

)

 

$

 

$

 

 

$

2,000,327

 

 

 

 

 

 

 

 

 

 

Operating income

$

400,083

 

$

966

 

 

$

454,524

 

$

 

 

$

855,573

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

$

296,736

 

$

966

 

 

$

439,616

 

$

(99,990

)

 

$

637,328

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

$

1.01

 

 

 

 

 

 

 

$

2.18

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

292,507

 

 

 

 

 

 

 

292,507

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Revenues

$

1,917,815

 

$

(171,910

)

 

$

 

$

 

 

$

1,745,905

 

 

 

 

 

 

 

 

 

 

Operating income

$

290,419

 

$

2,555

 

 

$

424,695

 

$

 

 

$

717,669

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

$

220,971

 

$

2,555

 

 

$

375,340

 

$

(85,110

)

 

$

513,756

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

$

0.74

 

 

 

 

 

 

 

$

1.71

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

300,491

 

 

 

 

 

 

 

300,491

 
______________________________
 
(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. For the three months ended September 30, 2021 and September 30, 2020, includes $1.0 million and $2.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

(2)

For the three months ended September 30, 2021, earnings adjustments to operating income included $317.8 million in cost of services (COS) and $136.7 million in selling, general and administrative expenses (SG&A). Adjustments to COS represent amortization of acquired intangibles of $319.9 million and other items of $(2.1) million. Adjustments to SG&A include share-based compensation expense of $65.6 million, acquisition and integration expenses of $71.6 million and other items of $(0.5) million. Net income attributable to Global Payments also reflects the removal of $14.5 million of equity method investment earnings from our interest in a private equity investment fund.

 

For the three months ended September 30, 2020, earnings adjustments to operating income included $317.3 million in COS and $107.4 million in SG&A expenses. Adjustments to COS represent amortization of acquired intangibles of $313.4 million and other items of $3.9 million. Adjustments to SG&A include share-based compensation expense of $42.3 million, acquisition and integration expenses of $59.8 million and other items of $5.3 million. For 2020, other COS and SG&A items 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 $27.3 million gain associated with the fair value of shares received from the partial conversion of Visa Inc. convertible preferred shares and the removal of $23.1 million of equity method investment earnings from our interest in a private equity investment fund.

 

(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 10.

 

Note: Amounts may not sum due to rounding.

 
SCHEDULE 7
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

Nine Months Ended September 30, 2021

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Revenues

$

6,329,781

 

$

(576,699

)

 

$

 

$

 

 

$

5,753,082

 

 

 

 

 

 

 

 

 

 

Operating income

$

1,037,900

 

$

3,992

 

 

$

1,358,983

 

$

 

 

$

2,400,876

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

$

757,007

 

$

3,992

 

 

$

1,312,326

 

$

(291,629

)

 

$

1,781,696

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

$

2.56

 

 

 

 

 

 

 

$

6.03

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

295,421

 

 

 

 

 

 

 

295,421

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Revenues

$

5,493,365

 

$

(497,711

)

 

$

 

$

 

 

$

4,995,654

 

 

 

 

 

 

 

 

 

 

Operating income

$

641,971

 

$

8,139

 

 

$

1,304,486

 

$

 

 

$

1,954,596

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

$

401,876

 

$

8,139

 

 

$

1,260,724

 

$

(288,824

)

 

$

1,381,915

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

$

1.34

 

 

 

 

 

 

 

$

4.60

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

300,525

 

 

 

 

 

 

 

300,525

 
______________________________
 
(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. For the nine months ended September 30, 2021 and September 30, 2020, includes $4.0 million and $8.1 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

(2)

For the nine months ended September 30, 2021, earnings adjustments to operating income included $971.7 million in COS and $387.3 million in SG&A. Adjustments to COS represent amortization of acquired intangibles of $973.9 million and other items of $(2.2) million. Adjustments to SG&A include share-based compensation expense of $146.1 million, acquisition and integration expenses of $241.6 million and other items of $(0.4) million. Net income attributable to Global Payments also reflects the removal of $44.6 million of equity method investment earnings from our interest in a private equity investment fund.

 

For the nine months ended September 30, 2020, earnings adjustments to operating income included $965.9 million in COS and $338.5 million in SG&A expenses. Adjustments to COS represent amortization of acquired intangibles of $942.6 million and other items of $23.3 million. Adjustments to SG&A include share-based compensation expense of $105.1 million, acquisition and integration expenses of $213.6 million and other items of $19.8 million. For 2020, other COS and SG&A items 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 $27.3 million gain associated with the fair value of shares received from the partial conversion of Visa Inc. convertible preferred shares, the removal of $23.1 million of equity method investment earnings from our interest in a private equity investment fund, and the removal of a $8.7 million loss associated with the partial sale of an ownership position in a strategic partner.

 

(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 10.

 

Note: Amounts may not sum due to rounding.

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

(In thousands)

 

Three Months Ended September 30, 2021

 

GAAP

 

Net Revenue

Adjustments (1)

 

Earnings

Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Merchant Solutions

$

1,495,898

 

 

$

(138,281

)

 

$

 

$

1,357,617

 

Issuer Solutions

522,166

 

 

(64,411

)

 

 

457,755

 

Business and Consumer Solutions

207,670

 

 

2

 

 

 

207,671

 

Intersegment Eliminations

(23,397

)

 

681

 

 

 

(22,716

)

 

$

2,202,337

 

 

$

(202,010

)

 

$

 

$

2,000,327

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

Merchant Solutions

$

488,407

 

 

$

103

 

 

$

180,952

 

$

669,462

 

Issuer Solutions

77,692

 

 

862

 

 

119,908

 

198,462

 

Business and Consumer Solutions

35,233

 

 

 

 

17,859

 

53,092

 

Corporate

(201,249

)

 

 

 

135,805

 

(65,443

)

 

$

400,083

 

 

$

966

 

 

$

454,524

 

$

855,573

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Merchant Solutions

$

1,243,961

 

 

$

(118,556

)

 

$

 

$

1,125,405

 

Issuer Solutions

487,409

 

 

(54,037

)

 

 

433,372

 

Business and Consumer Solutions

204,106

 

 

 

 

 

204,106

 

Intersegment Eliminations

(17,661

)

 

683

 

 

 

(16,978

)

 

$

1,917,815

 

 

$

(171,910

)

 

$

 

$

1,745,905

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

Merchant Solutions

$

344,981

 

 

$

316

 

 

$

186,990

 

$

532,287

 

Issuer Solutions

70,800

 

 

2,239

 

 

114,619

 

187,658

 

Business and Consumer Solutions

31,052

 

 

 

 

21,200

 

52,252

 

Corporate

(156,414

)

 

 

 

101,886

 

(54,528

)

 

$

290,419

 

 

$

2,555

 

 

$

424,695

 

$

717,669

 

 
______________________________
 
(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 September 30, 2021 and September 30, 2020, includes $1.0 million and $2.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

(2)

For the three months ended September 30, 2021, earnings adjustments to operating income included $317.8 million in COS and $136.7 million in SG&A. Adjustments to COS represent amortization of acquired intangibles of $319.9 million and other items of $(2.1) million. Adjustments to SG&A include share-based compensation expense of $65.6 million, acquisition and integration expenses of $71.6 million and other items of $(0.5) million.

 

For the three months ended September 30, 2020, earnings adjustments to operating income included $317.3 million in COS and $107.4 million in SG&A expenses. Adjustments to COS represent amortization of acquired intangibles of $313.4 million and other items of $3.9 million. Adjustments to SG&A include share-based compensation expense of $42.3 million, acquisition and integration expenses of $59.8 million and other items of $5.3 million. For 2020, other COS and SG&A items include employee termination benefits and other incremental charges directly related to COVID-19.

 

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 

Note: Amounts may not sum due to rounding.

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

(In thousands)

 

Nine months ended September 30, 2021

 

GAAP

 

Net Revenue

Adjustments (1)

 

Earnings

Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Merchant Solutions

$

4,190,524

 

 

$

(394,379

)

 

$

 

$

3,796,146

 

Issuer Solutions

1,528,349

 

 

(184,807

)

 

 

1,343,542

 

Business and Consumer Solutions

678,611

 

 

2

 

 

 

678,613

 

Intersegment Eliminations

(67,703

)

 

2,485

 

 

 

(65,218

)

 

$

6,329,781

 

 

$

(576,699

)

 

$

 

$

5,753,082

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

Merchant Solutions

$

1,265,689

 

 

$

530

 

 

$

560,040

 

$

1,826,260

 

Issuer Solutions

220,954

 

 

3,463

 

 

359,785

 

584,202

 

Business and Consumer Solutions

139,439

 

 

 

 

55,739

 

195,178

 

Corporate

(588,182

)

 

 

 

383,419

 

(204,764

)

 

$

1,037,900

 

 

$

3,992

 

 

$

1,358,983

 

$

2,400,876

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2020

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Merchant Solutions

$

3,460,785

 

 

$

(328,373

)

 

$

 

$

3,132,412

 

Issuer Solutions

1,461,196

 

 

(171,631

)

 

 

1,289,565

 

Business and Consumer Solutions

624,774

 

 

 

 

 

624,774

 

Intersegment Eliminations

(53,390

)

 

2,293

 

 

 

(51,097

)

 

$

5,493,365

 

 

$

(497,711

)

 

$

 

$

4,995,654

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

Merchant Solutions

$

824,212

 

 

$

833

 

 

$

579,144

 

$

1,404,189

 

Issuer Solutions

188,131

 

 

7,306

 

 

344,013

 

539,450

 

Business and Consumer Solutions

110,358

 

 

 

 

64,484

 

174,842

 

Corporate

(480,730

)

 

 

 

316,845

 

(163,885

)

 

$

641,971

 

 

$

8,139

 

 

$

1,304,486

 

$

1,954,596

 

 
______________________________
 
(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 nine months ended September 30, 2021 and September 30, 2020, includes $4.0 million and $8.1 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

(2)

For the nine months ended September 30, 2021, earnings adjustments to operating income included $971.7 million in COS and $387.3 million in SG&A. Adjustments to COS represent amortization of acquired intangibles of $973.9 million and other items of $(2.2) million. Adjustments to SG&A include share-based compensation expense of $146.1 million, acquisition and integration expenses of $241.6 million and other items of $(0.4) million.

 

For the nine months ended September 30, 2020, earnings adjustments to operating income included $965.9 million in COS and $338.5 million in SG&A expenses. Adjustments to COS represent amortization of acquired intangibles of $942.6 million and other items of $23.3 million. Adjustments to SG&A include $105.1 million of share-based compensation expense, $213.6 million of acquisition and integration expenses and other items of $19.8 million. For 2020, other COS and SG&A items include employee termination benefits and other incremental charges directly related to COVID-19.

 

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 

Note: Amounts may not sum due to rounding.

 
 
SCHEDULE 10
OUTLOOK SUMMARY (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In billions, except per share data)

 

2020

 

2021 Outlook

 

% Change

Revenues:

 

 

 

 

 

GAAP revenues

$7.42

 

 

$8.48 to $8.50

 

14% to 15%

Adjustments(1)

(0.68

)

 

(0.77)

 

 

Adjusted net revenue

$6.75

 

 

$7.71 to $7.73

 

14% to 15%

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

GAAP diluted EPS

$1.95

 

 

$3.50 to $3.60

 

79% to 85%

Adjustments(2)

4.45

 

 

4.60

 

 

Adjusted EPS

$6.40

 

 

$8.10 to $8.20

 

27% to 28%

 
______________________________
 
(1)

Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefit to the company. Amounts also include adjustments to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

(2)

Adjustments to 2020 GAAP diluted EPS include the removal of 1) software-related contract liability adjustments described above of $0.03, 2) acquisition related amortization expense of $3.20, 3) share-based compensation expense of $0.38, 4) acquisition and integration expense of $0.82, 5) other items, inclusive of employee termination benefits and other incremental charges directly related to COVID-19, of $0.13, 6) gain associated with the fair value of common shares received from the conversion of certain Visa Inc. preferred shares of $0.07, 7) equity method investment earnings from our interest in a private equity investment fund of $0.11, 8) loss associated with the partial sale of an ownership position in a strategic partner of $0.02 and 9) discrete tax items of $0.05. Adjustments to 2020 GAAP diluted EPS include the effect on noncontrolling interests and income taxes, as applicable.

 

Note: Amounts may not sum due to rounding.

 

NON-GAAP FINANCIAL MEASURES

Global Payments supplements revenues, income, operating income, operating margin and EPS determined in accordance with U.S. GAAP by providing these 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.

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