26 November 2014

MasterCard net income up 13% in Q4

31 January 2014  |  1087 views  |  0 Source: MasterCard

MasterCard Incorporated (NYSE:MA) today announced financial results for the fourth quarter of 2013.

Excluding a special item, the company reported net income of $684 million, up 13%, and earnings per diluted share of $0.57 (adjusted for the company's ten-for-one stock split), up 16%, versus the year-ago period. Including the special item, a $61 million after-tax charge related to the opt-outs in the U.S. merchant litigations, the company reported net income of $623 million, or $0.52 per diluted share. The net income and earnings per diluted share, excluding the special item, are reconciled to their comparable GAAP measures in the accompanying tables.

Net revenue for the fourth quarter of 2013 was $2.1 billion, a 12% increase versus the same period in 2012. Adjusted for currency, net revenue increased 11%. Net revenue growth was driven by the impact of the following:

  • A 14% increase in gross dollar volume, on a local currency basis, to $1.1 trillion;
  • An increase in cross-border volumes of 18%; and
  • An increase in processed transactions of 13%, to 10.4 billion.

These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.

Worldwide purchase volume during the quarter was up 12% on a local currency basis versus the fourth quarter of 2012, to $805 billion. As of December 31, 2013, the company's customers had issued almost 2 billion MasterCard and Maestro-branded cards.

"We are very pleased with our performance this quarter and our full-year 2013 results reflect the overall strength of our global business," said Ajay Banga, MasterCard president and CEO. "In addition to signing several significant deals last quarter, we made new investments in processing and person-to person payments while expanding our MasterPass digital platform - all supporting safe and seamless payment experiences."

Excluding the special item, total operating expenses increased 11%, both before and after adjusting for currency, to $1.1 billion for the fourth quarter of 2013 compared to the same period in 2012. The increase was primarily driven by higher investments in people and marketing to support strategic initiatives. Including the special item, total operating expenses increased 21% from the year-ago period.

Operating income for the fourth quarter of 2013 increased 13% over the year-ago period, excluding the special item, and the company delivered an operating margin of 47.7%.

MasterCard reported total other expense of $9 million in the fourth quarter of 2013 versus $5 million in the fourth quarter of 2012. The increase was primarily driven by joint venture-related expenses.

MasterCard's effective tax rate was 32.0% in the fourth quarter of 2013, versus a rate of 32.4% in the comparable period of 2012, excluding the special item. The decrease in the effective tax rate for the period was primarily due to a more favorable geographic mix of earnings and a lower state effective tax rate, partially offset by higher discrete benefits in 2012.

During the fourth quarter of 2013, MasterCard repurchased 9.8 million shares of Class A common stock at a cost of approximately $751 million. Quarter-to-date through January 24th, the company repurchased an additional 4.2 million shares at a cost of approximately $351 million, with $3.3 billion remaining under the current repurchase program authorization.

Full-Year 2013 Results

For the year ended December 31, 2013, MasterCard reported net income of $3.2 billion, up 15%, and earnings per diluted share of $2.61, up 19%, in each case versus the year-ago period and excluding the special items representing charges related to the U.S. merchant litigations taken in both 2012 and 2013. Including the 2013 special item, full-year 2013 net income was $3.1 billion and earnings per diluted share was $2.56.

Net revenue for full-year 2013 was $8.3 billion, an increase of 13% versus 2012 both before and after adjusting for currency. Gross dollar volume growth of 14%, cross-border volume growth of 18% and processed transaction growth of 13%, contributed to the net revenue growth in the full-year period. These increases were partially offset by an increase in rebates and incentives.

Excluding special items in both years, total operating expenses increased 9%, compared to 2012, both before and after adjusting for currency, to $3.7 billion, primarily due to higher personnel costs related to strategic initiatives. Including special items, total operating expenses increased 11%, to $3.8 billion, versus 2012.

Excluding special items, operating income increased 16% for 2013 versus 2012, delivering an operating margin of 55.1% for full-year 2013.

Total other expense was $3 million for full-year 2013 versus $4 million in 2012.

MasterCard's effective tax rate was 30.9% for full-year 2013, versus a rate of 29.9% for full-year 2012, excluding special items. The increase was primarily due to higher discrete benefits in 2012, partially offset by a more favorable geographic mix of earnings in 2013. Including special items, the effective tax rate was 30.8% for full-year 2013, versus a rate of 29.9% for full-year 2012.

For full-year 2013, MasterCard repurchased 41 million shares at a cost of approximately $2.4 billion.

Full details available here. 

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