This summary is based on the third quarter fiscal 2008 earnings call conducted by Global Payments, Inc. (GPN: chart) on March 27, 2008.
Management:
Chairman, President and Chief Executive Officer: Paul Garcia
Senior Executive Vice President and Chief Operating Officer: James Kelley
Executive Vice President and Chief Financial Officer: Joseph Hyde
Vice President of Investor Relations: Jane Elliott
Key Investors Issues
- EPS were 50 cents a share compared to 42 cents a share last year.
- Profit rose to $40.1 million from $34.3 million a year ago.
- Revenue rose to $310.6 million from $260.4 million in the year ago period.
Third Quarter Highlights
Revenue grew 19% to $310 million and normalized earnings per share grew 5% to 44 cents per share.
Growth was primarily driven by solid performance in merchant services segment. In addition money transfer segment had improved revenue growth primarily due to recent favorable pricing trends.
Merchant segment ISO’s continue to drive strong organic growth in domestic direct channel.
- Credit and debit card transactions grew 27% with the revenue growth of 26%.
- The company is raising expectation for fiscal 2008 revenue growth to the low to mid 20% range for domestic direct channel.
In Canada credit and debit card transactions grew 3% while revenue grew 12% as anticipated.
- Revenue growth was largely driven by a favorable Canadian currency exchange rate.
- In addition, the company expects to benefit from pricing initiatives related to changes in the Canadian Market Interchange structure starting in April 2008 with the majority of the benefit to be realized in fiscal 2009.
- Based on this expected benefit and a continued strong Canadian currency exchange rate, the company is raising fiscal 2008 revenue growth expectation to the mid-teen percentage ratings for Canadian channel.
Asia Pacific channel had strong revenue growth of 29%.
- Due to these results, the company is increasing expectation for fiscal 2008 revenue growth for this channel to 44% to 47% on a reported basis, or the low to mid 20% range on a pro forma basis.
- This growth reflects solid momentum gained from continual sales, initiatives and investments in addition to strategic pricing initiatives and a positive turn in revenue growth from Taiwan.
- The company continues to make operational progress on goal to be fully converted from HSBC’s back and front end system platforms by calendar 2010.
Central and Eastern European channel had revenue growth of 18% with growth in credit and debit card transactions of 13%.
- Revenue growth was driven by a favorable year-over-year Czech currency exchange rate and solid transaction growth. This growth was partially offset by the de-conversion of the previously discussed large customer and to a lesser extent pricing reductions granted on contract renewals.
- Based on the continued strong Czech currency exchange rates, the company is raising fiscal 2008 revenue growth expectation to the low to mid-teen percentage range.
Domestic, indirect and other revenue declined 8% as anticipated primarily due to industry consolidation.
- The company expects a fiscal 2008 revenue decline in the mid-single digit to high single-digit percentage range for this area.
- In the U.S. transactions grew 8% while revenue increased 4%. These improved results are primarily due to the anniversary of last year’s competitive domestic pricing environment in addition to steady transaction growth.
- The company closed a number of unprofitable domestic branches and ended the quarter with 825 domestic DolEx locations. In Europe the company ended the quarter with 71 branches compared to 57 locations last year.
- The company achieved 27% transaction growth and 33% revenue growth in this channel. For fiscal 2008 the company continues to anticipate money transfer segment revenue growth in the high to mid single-digit percentage range.
GAAP results include a non-recurring, non-cash operating tax item of $7 million that reduced SG&A expenses.
