EX-99.1 2 d54101dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

Total System Services, Inc.

One TSYS Way

P.O. Box 2567

Columbus, GA 31902-2567

     

 

 

 +1.706.649.2307

+1.706.649.5740

www.tsys.com

   

  

  

For immediate release:

Contacts:

Shawn Roberts

TSYS Investor Relations

+1.706.644.6081

shawnroberts@tsys.com

TSYS Reports 2015 Adjusted EPS Grew 25.5%

Provides 2016 Adjusted EPS and Revenue Guidance

COLUMBUS, Ga., January 26, 2016 — TSYS (NYSE: TSS) today reported results for the 2015 fourth quarter and full year.

“We were especially pleased with our operational performance and 12.9% revenue growth in the fourth quarter. Our full year financial results for 2015 were outstanding and they marked the third year in a row of double digit growth in revenues, adjusted operating income and adjusted earnings per share,” said M. Troy Woods, chairman, president and chief executive officer of TSYS.

“We repurchased 3.0 million shares of our stock in the fourth quarter for $158.6 million, bringing the total for the year to 5.2 million shares for $242.1 million. Including our dividends of $73.7 million, we returned $315.8 million to our shareholders, which was in excess of 92% of available free cash flow for the year and an increase of 31.5% over 2014,” said Woods

Highlights for the full year of 2015 include:

 

  •   Adjusted EPS from continuing operations were $2.46, an increase of 25.5%. On a GAAP basis, basic EPS from continuing operations were $1.97, an increase of 33.3%.

 

  •   Excluding the impact from discrete tax items of approximately $0.13 per share full year, adjusted EPS was $2.33, an increase of 19.0%.

 

  •   Income from continuing operations attributable to TSYS’ shareholders was $362.6 million, an increase of 31.8%.

 

  •   Adjusted EBITDA was $833.9 million, an increase of 17.1%.

 

  •   Total revenues were $2.8 billion, an increase of 13.6%. Revenues before reimbursable items were $2.5 billion, an increase of 14.0%.

 

  •   Adjusted operating margin was 26.7%. GAAP operating margin was 19.2%.

 

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LOGO

 

TSYS Reports 2015 Adjusted EPS Grew 25.5%

Highlights for the fourth quarter of 2015 include:

 

  •   Adjusted EPS from continuing operations were $0.57, a decrease of 1.6%. On a GAAP basis, basic EPS from continuing operations were $0.44, a decrease of 1.2%.

 

  •   Income from continuing operations attributable to TSYS’ shareholders was $81.4 million, a decrease of 2.1%.

 

  •   Adjusted EBITDA was $195.0 million, an increase of 0.7%.

 

  •   Total revenues for the quarter were $716.8 million, an increase of 12.9%. Revenues before reimbursable items were $645.1 million, an increase of 13.3%.

 

  •   Adjusted operating margin was 23.4%. GAAP operating margin was 16.4%.

“Our guidance for 2016 includes revenue growth in all four of our segments as we continue to expect broad based performance gains in our business,” said Woods.

 

     2016 Financial Outlook  
     Range         
     (in millions, except per
share amounts)		      Percent
Change		  

Total revenues

    $ 2,900         to       $ 2,946         4 %      to         6 % 

Revenues before reimbursable items

    $ 2,624         to       $ 2,674         5 %      to         7 % 

Adjusted EPS attributable to TSYS common shareholders from continuing operations*

    $ 2.56         to       $ 2.62         4 %      to         7 % 

*  Average Basic Weighted Shares

      184.5           

 

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

TSYS to Acquire TransFirst

TSYS also announced today that it has entered into a definitive agreement with Vista Equity Partners to acquire TransFirst, a Vista portfolio company and a leading U.S. merchant solutions provider, in an all-cash transaction valued at approximately $2.35 billion. Please refer to the separate press release issued by TSYS today for additional details regarding the transaction.

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 26. 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.

 

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TSYS Reports 2015 Adjusted EPS Grew 25.5%

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 10 to 13 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.

 

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LOGO

 

TSYS Reports 2015 Adjusted EPS Grew 25.5%

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’ earnings guidance for 2016 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.

— more —

 

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TSYS Announces Fourth Quarter 2015 Earnings

Page 5 of 13

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
                 Percent                 Percent  
     2015     2014     Change     2015     2014     Change  

Total revenues

    $ 716,843        635,104        12.9 %    $ 2,779,541        2,446,877        13.6 % 

Cost of services

      489,040        422,129        15.9        1,855,181        1,668,892        11.2   

Selling, general and administrative expenses

      109,898        90,202        21.8        390,253        346,345        12.7   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total expenses

      598,938        512,331        16.9        2,245,434        2,015,237        11.4   
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating income

      117,905        122,773        (4.0 )      534,107        431,640        23.7   

Nonoperating expenses

      (9,237 )      (8,516 )      (8.5 )      (37,219 )      (38,711 )      3.9   
  

 

 

    

 

 

      

 

 

    

 

 

    

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

      108,668        114,257        (4.9 )      496,888        392,929        26.5   

Income taxes

      32,160        35,428        (9.2 )      151,364        129,761        16.6   
  

 

 

    

 

 

      

 

 

    

 

 

    

Income before noncontrolling interests and equity in income of equity investments

      76,508        78,829        (2.9 )      345,524        263,168        31.3   

Equity in income of equity investments, net of tax

      6,797        5,751        18.2        22,106        17,583        25.7   
  

 

 

    

 

 

      

 

 

    

 

 

    

Income from continuing operations, net of tax

      83,305        84,580        (1.5 )      367,630        280,751        30.9   

Gain (Loss) from discontinued operations, net of tax

      1,411        (3,338 )      nm        1,411        48,655        (97.1 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Net income

      84,716        81,242        4.3        369,041        329,406        12.0   

Net income attributable to noncontrolling interests

      (1,888 )      (1,382 )      (36.6 )      (4,997 )      (6,534 )      23.5   
  

 

 

    

 

 

      

 

 

    

 

 

    

Net income attributable to TSYS common shareholders

    $ 82,828        79,860        3.7 %    $ 364,044        322,872        12.8 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Basic earnings per share (EPS):

             

Income from continuing operations to TSYS common shareholders*

    $ 0.44        0.45        (1.2 )%    $ 1.97        1.48        33.3 % 

Gain (Loss) from discontinued operations to TSYS common shareholders*

      0.01        (0.02 )      nm        0.01        0.26        (97.0 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Basic EPS

    $ 0.45        0.43        4.8 %    $ 1.98        1.73        14.1 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Diluted EPS:

             

Income from continuing operations to TSYS common shareholders*

    $ 0.44        0.45        (1.2 )%    $ 1.96        1.47        33.5 % 

Gain (Loss) from discontinued operations to TSYS common shareholders*

      0.01        (0.02 )      nm        0.01        0.25        (97.0 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Diluted EPS

    $ 0.45        0.43        4.8 %    $ 1.97        1.72        14.2 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Weighted average shares outstanding:
(includes participating securities)

             

Basic

      183,376        185,221          184,082        186,222     
  

 

 

    

 

 

      

 

 

    

 

 

    

Diluted

      184,581        186,420          185,239        187,681     
  

 

 

    

 

 

      

 

 

    

 

 

    

Dividends declared per share

    $ 0.10        0.10        $ 0.40        0.40     
  

 

 

    

 

 

      

 

 

    

 

 

    

Amounts attributable to TSYS common shareholders:

             

Income from continuing operations, net of tax

    $ 81,417        83,198        (2.1 )%    $ 362,633        275,216        31.8 % 

Gain (Loss) from discontinued operations, net of tax

      1,411        (3,338 )      nm        1,411        47,656        (97.0 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Net income

    $ 82,828        79,860        3.7 %    $ 364,044        322,872        12.8 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Non-GAAP measures:

             

Adjusted EPS from continuing operations

    $ 0.57        0.58        (1.6 )%    $ 2.46        1.96        25.5 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Adjusted EBITDA

    $ 195,031        193,738        0.7 %    $ 833,920        712,267        17.1 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

nm = not meaningful

* EPS amounts may not total due to rounding.

 

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TSYS Announces Fourth Quarter 2015 Earnings

Page 6 of 13

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

     Three Months Ended December 31,     Twelve Months Ended December 31,  
                 Change                 Change  
     2015     2014     $     %     2015     2014     $     %  

Revenues before reimbursable items:

                 

North America Services

    $ 300,265        255,539        44,726        17.5 %    $ 1,147,254        954,082        193,172        20.2 % 

International Services

      87,126        92,895        (5,769 )      (6.2 )      331,159        341,785        (10,626 )      (3.1 ) 

Merchant Services

      122,053        107,677        14,376        13.4        474,040        435,649        38,391        8.8   

NetSpend

      144,034        119,165        24,869        20.9        580,377        482,686        97,691        20.2   

Intersegment revenues

      (8,383 )      (5,975 )      (2,408 )      (40.3 )      (33,481 )      (21,224 )      (12,257 )      (57.8 ) 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Revenues before reimbursable items from external customers

    $ 645,095        569,301        75,794        13.3 %    $ 2,499,349        2,192,978        306,371        14.0 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total revenues:

                 

North America Services

    $ 349,764        299,429        50,335        16.8 %    $ 1,334,258        1,117,764        216,494        19.4 % 

International Services

      93,128        98,650        (5,522 )      (5.6 )      354,725        363,359        (8,634 )      (2.4 ) 

Merchant Services

      139,693        125,296        14,397        11.5        549,369        510,120        39,249        7.7   

NetSpend

      144,034        119,165        24,869        20.9        580,377        482,686        97,691        20.2   

Intersegment revenues

      (9,776 )      (7,436 )      (2,340 )      (31.5 )      (39,188 )      (27,052 )      (12,136 )      (44.9 ) 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Revenues from external customers

    $ 716,843        635,104        81,739        12.9 %    $ 2,779,541        2,446,877        332,664        13.6 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Depreciation and amortization:

                 

North America Services

    $ 26,712        23,136        3,576        15.5 %    $ 99,544        86,513        13,031        15.1 % 

International Services

      8,808        9,733        (925 )      (9.5 )      34,892        38,909        (4,017 )      (10.3 ) 

Merchant Services

      4,874        3,980        894        22.5        18,268        14,571        3,697        25.4   

NetSpend

      3,139        1,730        1,409        81.4        10,686        7,509        3,177        42.3   
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Segment depreciation and amortization

      43,533        38,579        4,954        12.8        163,390        147,502        15,888        10.8   

Acquisition intangible amortization

      22,920        24,166        (1,246 )      (5.2 )      92,522        96,971        (4,449 )      (4.6 ) 

Corporate admin and other

      593        446        147        33.0        2,352        2,147        205        9.5   
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total depreciation and amortization

    $ 67,046        63,191        3,855        6.1 %    $ 258,264        246,620        11,644        4.7 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Adjusted segment operating income:

                 

North America Services

    $ 104,162        99,620        4,542        4.6 %    $ 429,064        351,512        77,552        22.1 % 

International Services

      21,381        22,849        (1,468 )      (6.4 )      60,087        55,123        4,964        9.0   

Merchant Services

      33,033        31,399        1,634        5.2        150,225        134,872        15,353        11.4   

NetSpend

      28,614        32,742        (4,128 )      (12.6 )      137,837        128,285        9,552        7.4   
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total adjusted segment operating income

      187,190        186,610        580        0.3        777,213        669,792        107,421        16.0   

Acquisition intangible amortization

      (22,920 )      (24,166 )      1,246        5.2        (92,522 )      (96,971 )      4,449        4.6   

NetSpend M&A operating expenses

      —          (3 )      3        nm        —          (3,217 )      3,217        nm   

Share-based compensation

      (10,080 )      (7,771 )      (2,309 )      (29.7 )      (41,549 )      (30,790 )      (10,759 )      (34.9 ) 

Corporate admin and other

      (36,285 )      (31,897 )      (4,388 )      (13.8 )      (109,035 )      (107,174 )      (1,861 )      (1.7 ) 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Operating income

    $ 117,905        122,773        (4,868 )      (4.0 )%    $ 534,107        431,640        102,467        23.7 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Other:

                 

Reimbursable items:

                 

North America Services

    $ 49,499        43,890        5,609        12.8 %    $ 187,004        163,682        23,322        14.2 % 

International Services

      6,002        5,755        247        4.3        23,566        21,574        1,992        9.2   

Merchant Services

      17,640        17,619        21        0.1        75,329        74,471        858        1.2   

NetSpend

      —          —          —          na        —          —          —          na   

Intersegment revenues

      (1,393 )      (1,461 )      68        4.7        (5,707 )      (5,828 )      121        2.1   
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Reimbursable items

    $ 71,748        65,803        5,945        9.0 %    $ 280,192        253,899        26,293        10.4 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 7 of 13

 

TSYS

Condensed Balance Sheet

(unaudited)

(in thousands)

 

     December 31, 2015      December 31, 2014  

Assets

      

Current assets:

      

Cash and cash equivalents

    $ 389,328         289,183   

Accounts receivable, net

      314,705         283,203   

Other current assets

      180,690         118,167   
  

 

 

     

 

 

  

Total current assets

      884,723         690,553   

Goodwill

      1,545,424         1,547,397   

Other intangible assets, net

      328,320         404,107   

Property, equipment and software, net

      694,968         656,733   

Other long term assets

      456,685         434,791   
  

 

 

     

 

 

  

Total assets

    $ 3,910,120         3,733,581   
  

 

 

     

 

 

  

Liabilities

      

Current liabilities:

      

Accounts payable

    $ 52,213         48,793   

Bonds, notes and capital leases

      53,832         50,911   

Other current liabilities

      234,993         196,809   
  

 

 

     

 

 

  

Total current liabilities

      341,038         296,513   

Bonds, notes and capital leases, excluding current portion

      1,383,634         1,405,106   

Other long-term liabilities

      313,356         309,826   
  

 

 

     

 

 

  

Total liabilities

      2,038,028         2,011,445   
  

 

 

     

 

 

  

Redeemable noncontrolling interest

      23,410         22,492   
  

 

 

     

 

 

  

Equity

      

Shareholders’ equity

      1,843,019         1,692,762   
  

 

 

     

 

 

  

Noncontrolling interests in consolidated subsidiaries

      5,663         6,882   
  

 

 

     

 

 

  

Total equity

      1,848,682         1,699,644   
  

 

 

     

 

 

  

Total liabilities and equity

    $ 3,910,120         3,733,581   
  

 

 

     

 

 

  

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 8 of 13

 

TSYS

Selected Cash Flow Highlights

(unaudited)

(in thousands)

 

     Twelve Months Ended December 31,  
     2015     2014  

Cash flows from operating activities:

     

Net income

    $ 369,041        329,406   

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

     

Gain on disposal of subsidiaries

      (3,568 )      (86,961 ) 

Equity in income of equity investments

      (22,106 )      (17,583 ) 

Dividends received from equity investments

      12,097        9,189   

Depreciation and amortization

      258,264        248,018   

Other noncash adjustments

      64,034        67,427   

Changes in operating assets and liabilities:

      (77,568 )      10,705   
  

 

 

    

 

 

  

Net cash provided by operating activities

      600,194        560,201   

Net cash used in investing activities

      (202,184 )      (226,607 ) 

Net cash used in financing activities

      (290,754 )      (316,473 ) 

Cash and cash equivalents:

     

Effect of exchange rate changes on cash and cash equivalents

      (7,111 )      (6,168 ) 
  

 

 

    

 

 

  

Net increase in cash and cash equivalents

      100,145        10,953   

Cash and cash equivalents at beginning of period

      289,183        278,230   
  

 

 

    

 

 

  

Cash and cash equivalents at end of period

    $ 389,328        289,183   
  

 

 

    

 

 

  

Supplemental - Non-GAAP:

     

Net cash provided by operating activities

    $ 600,194        560,201   

Capital expenditures

      (203,315 )      (235,924 ) 
  

 

 

    

 

 

  

Free cash flow

      396,879        324,277   

Principal payments on debt and capital leases

      (54,719 )      (69,939 ) 
  

 

 

    

 

 

  

Available free cash flow

    $ 342,160        254,338   
  

 

 

    

 

 

  

Dividends paid on common stock

      73,677        74,796   

Repurchase of common stock under plans

      242,085        165,297   
  

 

 

    

 

 

  

Available free cash flow returned to shareholders

    $ 315,762        240,093   
  

 

 

    

 

 

  

Percent available free cash flow returned to shareholders

      92.3 %      94.4 % 
  

 

 

    

 

 

  

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 9 of 13

 

TSYS

Supplemental Information

(unaudited)

Other

Accounts on File (AOF):

 

     Total Accounts on File  
(in millions)    December 2015      December 2014      %
Change		  

Consumer Credit

      382.1         270.0         41.5   

Retail

      26.1         28.4         (7.9 ) 
  

 

 

     

 

 

     

Total Consumer

      408.2         298.4         36.8   

Commercial

      45.4         41.6         9.2   

Other

      26.6         22.4         18.8   
  

 

 

     

 

 

     

Subtotal

      480.2         362.4         32.5   

Prepaid*/Stored Value

      97.2         127.3         (23.7 ) 

Government Services

      79.3         67.4         17.8   

Commercial Card Single Use

      75.8         59.6         27.1   
  

 

 

     

 

 

     

Total AOF

      732.5         616.7         18.8   
  

 

 

     

 

 

     

*  Prepaid does not include NetSpend accounts

         

Growth in Accounts on File (in millions):

 

     December 2014 to
December 2015		      December 2013 to
December 2014		  

Beginning balance

      616.7         541.0   

Change in accounts on file due to:

      

Internal growth of existing clients

      42.2         40.0   

New clients

      145.6         75.3   

Purges/Sales

      (29.0 )       (39.0 ) 

Deconversions

      (43.0 )       (0.6 ) 
  

 

 

     

 

 

  

Ending balance

      732.5         616.7   
  

 

 

     

 

 

  

Segment data:

 

     Three Months Ended December 31,  
                 Change  
     2015     2014     Inc(Dec)      %  

North America Segment:

          

Transactions (in millions)

      4,264.9        2,980.0        1,284.9         43.1 % 

International Segment:

          

Transactions (in millions)

      661.7        618.1        43.5         7.0 % 

Merchant Segment:

          

Point-of-sale transactions (in millions)

      1,075.2        991.0        84.2         8.5 % 

Dollar sales volume (in millions)

    $ 12,401.1      $ 12,392.6      $ 8.5         0.1 % 

NetSpend Segment:

          

Gross dollar volume (in millions)

    $ 5,692.0      $ 4,691.5      $ 1,000.5         21.3 % 
     Twelve Months Ended December 31,  
                 Change  
     2015     2014     Inc(Dec)      %  

North America Segment:

          

AOF (in millions)

      654.1        550.0        104.1         18.9 % 

Transactions (in millions)

      15,774.5        10,838.0        4,936.5         45.5 % 

International Segment:

          

AOF (in millions)

      78.5        66.6        11.9         17.8 % 

Transactions (in millions)

      2,473.6        2,268.4        205.2         9.0 % 

Merchant Segment:

          

Point-of-sale transactions (in millions)

      4,266.5        4,052.7        213.8         5.3 % 

Dollar sales volume (in millions)

    $ 48,072.7      $ 46,846.4      $ 1,226.3         2.6 % 

NetSpend Segment:

          

Gross dollar volume (in millions)

    $ 24,274.9      $ 20,296.0      $ 3,978.9         19.6 % 

Direct deposit 90-day active cards (in thousands)

      1,895.0        1,610.2        284.8         17.7 % 

90-day active cards (in thousands)

      3,894.1        3,215.0        679.1         21.1 % 

% of 90-day active cards with direct deposit

      48.7 %      50.1 %      

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 10 of 13

 

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 fourth quarter 2015 financial results using the previous year’s foreign currency exchange rates. On a full year constant currency basis, TSYS’ total revenues grew 14.9% as compared to a reported GAAP increase of 13.6%.

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.

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 11 of 13

 

Reconciliation of GAAP to Non-GAAP

Constant Currency Comparison

(unaudited)

(in thousands)

 

     Three Months Ended December 31,     Twelve Months Ended December 31,  
                  Percent                  Percent  
     2015     2014      Change     2015     2014      Change  

Consolidated

               

Constant currency (1)

    $ 722,581        635,104         13.8 %    $ 2,810,999        2,446,877         14.9 % 

Foreign currency impact (2)

      (5,738 )      —             (31,458 )      —        
  

 

 

    

 

 

       

 

 

    

 

 

     

Total revenues

    $ 716,843        635,104         12.9 %    $ 2,779,541        2,446,877         13.6 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Constant currency (1)

    $ 650,484        569,301         14.3 %    $ 2,528,775        2,192,978         15.3 % 

Foreign currency impact (2)

      (5,389 )      —             (29,426 )      —        
  

 

 

    

 

 

       

 

 

    

 

 

     

Total revenues before reimbursable items

    $ 645,095        569,301         13.3 %    $ 2,499,349        2,192,978         14.0 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Constant currency (1)

    $ 118,297        122,773         (3.6 )%    $ 535,204        431,640         24.0 % 

Foreign currency impact (2)

      (392 )      —             (1,097 )      —        
  

 

 

    

 

 

       

 

 

    

 

 

     

Operating income

    $ 117,905        122,773         (4.0 )%    $ 534,107        431,640         23.7 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

International Services

               

Constant currency (1)

    $ 98,707        98,650         0.1 %    $ 385,676        363,359         6.1 % 

Foreign currency impact (2)

      (5,579 )      —             (30,951 )      —        
  

 

 

    

 

 

       

 

 

    

 

 

     

Total revenues

    $ 93,128        98,650         (5.6 )%    $ 354,725        363,359         (2.4 )% 
  

 

 

    

 

 

       

 

 

    

 

 

     

 

(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 December 31,     Twelve Months Ended December 31,  
                   Percent                   Percent  
     2015      2014      Change     2015      2014      Change  

Total revenues

    $ 716,843         635,104         12.9 %    $ 2,779,541         2,446,877         13.6 % 

Reimbursable items

      71,748         65,803         9.0        280,192         253,899         10.4   
  

 

 

     

 

 

       

 

 

     

 

 

     

Revenues before reimbursable items

    $ 645,095         569,301         13.3 %    $ 2,499,349         2,192,978         14.0 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 12 of 13

 

Reconciliation of GAAP to Non-GAAP

Adjusted Earnings per Share

(unaudited)

(in thousands, except per share data)

 

     Three Months Ended December 31,     Twelve Months Ended December 31,  
                   Percent                  Percent  
     2015      2014      Change     2015     2014      Change  

Income from continuing operations attributable to TSYS common shareholders

    $ 81,417         83,198         (2.1 )%    $ 362,633        275,216         31.8 % 

Adjust for amounts attributable to TSYS common shareholders:

                

Add: Acquisition intangible amortization, net of taxes

    $ 15,580         17,747         (12.2 )%      61,525        65,127         (5.5 ) 

Add: Share-based compensation, net of taxes

      6,933         5,777         20.0        27,954        20,944         33.5   

Add: NetSpend M&A expenses, net of taxes*

      —           3         nm        —          3,115         nm   
  

 

 

     

 

 

       

 

 

    

 

 

     

Adjusted earnings

    $ 103,930         106,725         (2.6 )%    $ 452,112        364,402         24.1 % 
  

 

 

     

 

 

       

 

 

    

 

 

     

Add/deduct: Federal & state R&D credits and related expenses, net of tax

      118         —           na        (23,440 )      —           na   
  

 

 

     

 

 

       

 

 

    

 

 

     

Adjusted earnings without impact of one-time tax items

    $ 104,048         106,725         (2.5 )%    $ 428,672        364,402         17.6 % 
  

 

 

     

 

 

       

 

 

    

 

 

     

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

                

As reported (GAAP)

    $ 0.44         0.45         (1.2 )%    $ 1.97        1.48         33.3 % 
  

 

 

     

 

 

       

 

 

    

 

 

     

Adjust for amounts attributable to TSYS common shareholders:

                

Add: Acquisition intangible amortization, net of taxes

      0.09         0.10         (11.3 )      0.33        0.35         (4.4 ) 

Add: Share-based compensation, net of taxes

      0.04         0.03         21.2        0.15        0.11         34.9   

Add: NetSpend M&A expenses, net of taxes*

      —           —           nm        —          0.02         nm   
  

 

 

     

 

 

       

 

 

    

 

 

     

Adjusted EPS **

    $ 0.57         0.58         (1.6 )%    $ 2.46        1.96         25.5 % 
  

 

 

     

 

 

       

 

 

    

 

 

     

Add/deduct: Federal & state R&D credits and related expenses, net of tax

      0.00         —           na        (0.13 )      —           na   
  

 

 

     

 

 

       

 

 

    

 

 

     

Adjusted EPS without impact of one-time tax items

    $ 0.57         0.58         (1.5 )%    $ 2.33        1.96         19.0 % 
  

 

 

     

 

 

       

 

 

    

 

 

     

Weighted average shares outstanding

      183,376         185,221           184,082        186,222      
  

 

 

     

 

 

       

 

 

    

 

 

     

 

* 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 December 31,     Twelve Months Ended December 31,  
                 Percent                 Percent  
     2015     2014     Change     2015     2014     Change  

Net income

    $ 84,716        81,242        4.3 %    $ 369,041        329,406        12.0 % 

Adjust for:

             

Deduct: Income from discontinued operations

      (1,411 )      3,338        nm        (1,411 )      (48,655 )      97.1   

Deduct: Equity in income of equity investments

      (6,797 )      (5,751 )      (18.2 )      (22,106 )      (17,583 )      (25.7 ) 

Add: Income taxes

      32,160        35,428        (9.2 )      151,364        129,761        16.6   

Add: Nonoperating expense

      9,237        8,516        8.5        37,219        38,711        (3.9 ) 

Add: Depreciation and amortization

      67,046        63,191        6.1        258,264        246,620        4.7   
  

 

 

    

 

 

      

 

 

    

 

 

    

EBITDA

    $ 184,951        185,964        (0.5 )%    $ 792,371        678,260        16.8 % 

Adjust for:

             

Add: Share-based compensation

      10,080        7,771        29.7        41,549        30,790        34.9   

Add: NetSpend M&A operating expenses

      —          3        nm        —          3,217        nm   
  

 

 

    

 

 

      

 

 

    

 

 

    

Adjusted EBITDA

    $ 195,031        193,738        0.7 %    $ 833,920        712,267        17.1 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Add/deduct: State R&D credits and related expenses

      181        —          na        (14,903 )      —          na   
  

 

 

    

 

 

      

 

 

    

 

 

    

Adjusted EBITDA without impact of one-time tax items

    $ 195,212        193,738        0.8 %    $ 819,017        712,267        15.0 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

nm = not meaningful

 

- more -

TSYS Announces Fourth Quarter 2015 Earnings

Page 13 of 13

 

Reconciliation of GAAP to Non-GAAP

Segment Operating Margin and Consolidated Adjusted Operating Margin

(unaudited)

(in thousands)

 

    Three Months Ended December 31, 2015     Three Months Ended December 31, 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

   $ 104,162        300,265        34.69 %    $ 99,620        255,539        38.98 % 

International Services

     21,381        87,126        24.54        22,849        92,895        24.60   

Merchant Services

     33,033        122,053        27.06        31,399        107,677        29.16   

NetSpend

     28,614        144,034        19.87        32,742        119,165        27.48   

Intersegment

     —          (8,383 )        —          (5,975 )   

Corporate admin and other

     (36,285 )          (31,897 )     
 

 

 

    

 

 

      

 

 

    

 

 

    

Adjusted operating margin

   $ 150,905        645,095        23.39 %    $ 154,713        569,301        27.18 % 

Acquisition intangible amortization

     (22,920 )          (24,166 )     

NetSpend M&A operating expenses

     —              (3 )     

Share-based compensation

     (10,080 )          (7,771 )     
 

 

 

    

 

 

      

 

 

    

 

 

    

Operating income and margin*

   $ 117,905        645,095        18.28 %    $ 122,773        569,301        21.57 % 

Reimbursable items

       71,748            65,803     
 

 

 

    

 

 

      

 

 

    

 

 

    

Operating income and margin (US GAAP)

   $ 117,905        716,843        16.45 %    $ 122,773        635,104        19.33 % 
 

 

 

    

 

 

      

 

 

    

 

 

    
    Twelve Months Ended December 31, 2015     Twelve Months Ended December 31, 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

   $ 429,064        1,147,254        37.40 %    $ 351,512        954,082        36.84 % 

International Services

     60,087        331,159        18.14        55,123        341,785        16.13   

Merchant Services

     150,225        474,040        31.69        134,872        435,649        30.96   

NetSpend

     137,837        580,377        23.75        128,285        482,686        26.58   

Intersegment

     —          (33,481 )        —          (21,224 )   

Corporate admin and other

     (109,035 )          (107,174 )     
 

 

 

    

 

 

      

 

 

    

 

 

    

Adjusted operating margin

   $ 668,178        2,499,349        26.73 %    $ 562,618        2,192,978        25.66 % 

Acquisition intangible amortization

     (92,522 )          (96,971 )     

NetSpend M&A operating expenses

     —              (3,217 )     

Share-based compensation

     (41,549 )          (30,790 )     
 

 

 

    

 

 

      

 

 

    

 

 

    

Operating income and margin*

   $ 534,107        2,499,349        21.37 %    $ 431,640        2,192,978        19.68 % 

Reimbursable items

       280,192            253,899     
 

 

 

    

 

 

      

 

 

    

 

 

    

Operating income and margin (US GAAP)

   $ 534,107        2,779,541        19.22 %    $ 431,640        2,446,877        17.64 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

* Operating margin on revenue before reimbursable items

 

- ### -