TSYS reports $57.7 million profit in Q2, EPS down almost 13%

For the second quarter, total revenues were $478.4 million, an increase of 3.4% as compared to 2012. Total revenues were impacted by a decrease of $3.0 million in reimbursable items for the quarter, as well as an unfavourable currency translation of $6.4 million. Revenues before reimbursable items for the quarter were $417.5 million, an increase of 4.7% over 2012, or 6.3% on a constant currency basis. Revenues before reimbursable items were impacted by an unfavourable currency translation of $6.2 million. TSYS’ operating income, excluding merger and acquisition expenses associated with NetSpend, was $96.6 million, an increase of 4.9% over 2012. On a GAAP basis, operating income was $95.3 million, an increase of 3.5% over 2012. Basic earnings per share (EPS), excluding expenses incurred in connection with the acquisition of NetSpend, was $0.34, a decrease of 4.3% over 2012. Basic EPS on a GAAP basis was $0.31, a decrease of 12.9% over 2012. Diluted EPS on a GAAP basis was $0.31, a decrease of 12.4% over 2012.

On a year-to-date basis, total revenues were $943.4 million, an increase of 2.1% as compared to 2012. Total revenues were impacted by a decrease of $8.3 million in reimbursable items, as well as an unfavourable currency translation of $10.4 million.

Revenues before reimbursable items were $821.7 million, an increase of 3.5% over 2012 or 4.8% on a constant currency basis. Revenues before reimbursable items were impacted by an unfavourable currency translation of $10.2 million. TSYS’ operating income, excluding merger and acquisition expenses associated with NetSpend, was $174.9 million, a decrease of 1.1% over 2012. On a GAAP basis, operating income was $170.2 million, a decrease of 3.8% over 2012. Basic EPS, excluding expenses incurred in connection with the acquisition of NetSpend, was $0.67, an increase of 2.9% over 2012. Basic EPS on a GAAP basis was $0.61, a decrease of 6.0% over 2012. Diluted EPS on a GAAP basis was $0.61, a decrease of 5.9% over 2012. 2013

TSYS Reports Second Quarter Results

Our financial results for the first six months met our expectations excluding currency translation adjustments and merger and acquisition expenses. The acquisition of NetSpend is a transformational event for us. NetSpend’s revenue has grown at a 22% CAGR over the past five years. The next two years will be very exciting as we work on the integration of NetSpend. We also plan on growing the prepaid program management business and converting the largest pipeline of accounts in our history over the next two years, said Philip W. Tomlinson, chairman of the board and chief executive officer, TSYS.

NetSpend is the second largest provider of general purpose reloadable (GPR) and Paycards in the U.S. With the NetSpend acquisition, TSYS gains entry into one of the fastest growing areas of payments which is expected to double over the next 4–5 years. The acquisition complements our already strong presence in the prepaid processing space, said Tomlinson.

There are an estimated 68 million U.S. consumers who are underserved. Only 17% of these consumers have ever used a GPR card, and NetSpend serves less than 5% of the overall market today. NetSpend has a leadership team with deep prepaid experience and a differentiated product offering customized for the consumers it serves. The opportunity to capture greater market share is within our reach. NetSpend’s mission is to empower consumers with the convenience, security and freedom to be self-banked, which aligns with TSYS’ brand promise to improve people’s lives and businesses by putting people at the centre of payments, said Tomlinson.

With the acquisition of NetSpend, TSYS is providing guidance on adjusted cash earnings per share and adjusted EBITDA as these metrics will provide a more meaningful measure of the company’s financial performance given the increased borrowing of $1.4 billion and the increase in amortization expense for acquisition intangibles. Beginning in the third quarter, NetSpend will be reported as TSYS’ fourth operating segment.

The full report can be downloaded below.