Delivers Strong Third Quarter Performance
Raises 2023 Outlook
Increases Targeted Synergies from EVO
Acquisition
Global Payments Inc. (NYSE: GPN) today announced results for the
third quarter ended September 30, 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20231031418739/en/
"We delivered strong third quarter results that were ahead of
our expectations despite what continues to be an uncertain
macroeconomic environment,” said Cameron Bready, President and
Chief Executive Officer. "Our performance highlights the durability
of our business model and our consistency of execution across
market cycles, further reinforcing the confidence we have in our
strategy and the results it delivers.”
Bready continued, “We have made outstanding progress with the
integration of EVO Payments and now expect to deliver approximately
$135 million in annual run-rate synergies. We are enthusiastic
about the future together with EVO Payments as we build on our
competitive advantages and payments leadership position.”
Bready concluded, “We remain focused on elevating the commerce
experience for our customers globally. Our sharpened focus,
differentiated technology-enabled strategy, and consistent
execution are driving sustainable growth and creating significant
value for all of our stakeholders.”
Third Quarter 2023 Summary
- GAAP revenues were $2.48 billion, compared to $2.29 billion in
2022; diluted earnings per share were $1.39 compared to $1.05 in
the prior year; and operating margin was 22.5% compared to 16.9% in
the prior year.
- Adjusted net revenues increased 9% to $2.23 billion, compared
to $2.06 billion in 2022.
- Adjusted earnings per share increased 11% to $2.75, compared to
$2.48 in 2022.
- Adjusted operating margin expanded 50 basis points to
45.7%.
2023 Outlook
“We are pleased with our continued solid financial performance
and results for the third quarter and year-to-date period,” said
Josh Whipple, Senior Executive Vice President and Chief Financial
Officer. “We achieved 9% adjusted net revenue growth, strong
adjusted operating margin expansion and 11% adjusted earnings per
share growth compared to the same period in 2022.”
Whipple continued, “We remain encouraged by the trends we are
seeing in our business, despite ongoing macroeconomic concerns and
foreign currency exchange rate volatility. The company continues to
expect adjusted net revenue to be in a range of $8.660 billion to
$8.735 billion, reflecting growth of 7% to 8% over 2022, and for
adjusted operating margin to expand by up to 120 basis points in
2023. We now anticipate adjusted earnings per share to be in a
range of $10.39 to $10.45, reflecting growth of 11% to 12% over
2022, or roughly 17% excluding dispositions.”
Whipple concluded, “Our 2023 outlook reflects the ongoing
momentum in our business, while also accommodating for a more
tempered economic environment given the continued uncertainty.”
Capital Allocation
Global Payments’ Board of Directors approved a dividend of $0.25
per share payable on December 29, 2023 to shareholders of record as
of December 15, 2023.
Conference Call
Global Payments’ management will host a live audio webcast
today, October 31, 2023, at 8:00 a.m. EDT to discuss financial
results and business highlights. The audio webcast, along with
supplemental financial information, can be accessed via the
investor relations page of the company’s website at
investors.globalpayments.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, operating income,
operating margin and net income 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.
Global Payments also has provided supplemental non-GAAP
information to reflect the divestiture of the consumer portion of
our Netspend business, which comprised our former Consumer
Solutions segment, which closed in April 2023. Management believes
that providing such supplemental financial information should
enhance shareholders’ ability to evaluate how the business will be
managed going forward.
Reconciliations of each of the non-GAAP financial measures to
the most directly comparable GAAP measure are included in the
schedules to this release, except for forward-looking measures
where a reconciliation to the corresponding GAAP measures is not
available due to the variability, complexity and limited visibility
of the items that are excluded from the non-GAAP outlook
measures.
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 approximately 27,000 team members
worldwide, Global Payments is a Fortune 500® company and a member
of the S&P 500 with worldwide reach spanning over 170 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 and
uncertainties 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 2023; the effects of general economic
conditions on our business; statements about the benefits of our
acquisitions or divestitures, including future financial and
operating results, the company’s plans, objectives, expectations
and intentions, and the successful integration of our acquisitions
or completion of anticipated benefits or strategic initiatives; our
success and timing in developing and introducing new services and
expanding our business; and other statements regarding our future
financial performance. Although we believe that the plans and
expectations reflected in any forward-looking statements are based
on reasonable assumptions, we can give no assurance that our plans
and 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;
foreign currency exchange, continuing inflation and rising interest
rate risks; difficulties, delays and higher than anticipated costs
related to integrating the businesses of acquired companies,
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; the effect of a
security breach or operational failure on our business; 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, develop 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; our ability to meet environmental, social or
governance targets, goals and commitments; the potential effect of
climate change including natural disasters; the effects of new or
changes in current laws, regulations, credit card association rules
or other industry standards on us or our partners and customers,
including privacy and cybersecurity laws and regulations; and other
events beyond our control, and other factors included in the “Risk
Factors” in our most recent Annual Report on Form 10-K and in other
documents that we file with the SEC, which are available at
https://www.sec.gov.
These cautionary statements qualify all of our forward-looking
statements, and you are cautioned not to place undue reliance on
these forward-looking statements. Our forward-looking statements
speak only as of the date they are made and should not be relied
upon as representing our plans and expectations as of any
subsequent date. While we may elect to update or revise
forward-looking statements at some time in the future, we
specifically disclaim any obligation to publicly release the
results of any revisions to our 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,
2023
2022
% Change
2023
2022
% Change
Revenues
$
2,475,691
$
2,285,371
8.3
%
$
7,220,607
$
6,722,531
7.4
%
Operating expenses:
Cost of service
915,531
931,249
(1.7
)%
2,805,237
2,850,706
(1.6
)%
Selling, general and administrative
1,001,964
918,757
9.1
%
3,058,605
2,605,085
17.4
%
Impairment of goodwill
—
—
nm
—
833,075
nm
Net loss on business dispositions
—
48,933
nm
139,095
201,144
(30.8
)%
1,917,495
1,898,939
6,002,937
6,490,010
Operating income
558,196
386,432
44.4
%
1,217,670
232,521
523.7
%
Interest and other income
35,732
20,393
75.2
%
74,830
25,060
198.6
%
Interest and other expense
(176,094
)
(135,184
)
30.3
%
(490,463
)
(327,655
)
49.7
%
(140,362
)
(114,791
)
(415,633
)
(302,595
)
Income (loss) before income taxes and
equity in income of equity method investments
417,834
271,641
53.8
%
802,037
(70,074
)
nm
Income tax expense
58,936
14,255
313.4
%
199,748
119,250
67.5
%
Income (loss) before equity in income of
equity method investments
358,898
257,386
39.4
%
602,289
(189,324
)
nm
Equity in income of equity method
investments, net of tax
17,707
42,780
(58.6
)%
54,101
74,074
(27.0
)%
Net income (loss)
376,605
300,166
25.5
%
656,390
(115,250
)
nm
Net income attributable to noncontrolling
interest, net of income tax
(14,775
)
(9,712
)
52.1
%
(31,454
)
(22,563
)
39.4
%
Net income (loss) attributable to Global
Payments
$
361,830
$
290,454
24.6
%
$
624,936
$
(137,813
)
nm
Earnings (loss) per share attributable to
Global Payments:
Basic earnings (loss) per share
$
1.39
$
1.06
31.1
%
$
2.40
$
(0.49
)
nm
Diluted earnings (loss) per share
$
1.39
$
1.05
32.4
%
$
2.39
$
(0.49
)
nm
Weighted-average number of shares
outstanding:
Basic
260,232
275,030
260,890
278,411
Diluted
260,935
275,435
261,410
278,411
Note: nm = not meaningful.
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,
2023
2022
% Change
2023
2022
% Change
Adjusted net revenue
$
2,232,442
$
2,058,237
8.5
%
$
6,484,725
$
6,069,342
6.8
%
Adjusted operating income
$
1,019,525
$
930,619
9.6
%
$
2,889,017
$
2,635,442
9.6
%
Adjusted net income attributable to Global
Payments
$
718,632
$
683,632
5.1
%
$
2,035,200
$
1,926,248
5.7
%
Adjusted diluted earnings per share
attributable to Global Payments
$
2.75
$
2.48
11.0
%
$
7.79
$
6.91
12.7
%
Supplemental Non-GAAP(1)
Adjusted net revenue(1)
$
2,232,442
$
1,927,215
15.8
%
$
6,339,283
$
5,629,117
12.6
%
Adjusted operating income(1)
$
1,019,525
$
876,625
16.3
%
$
2,815,788
$
2,505,920
12.4
%
___________________________
(1)
The supplemental non-GAAP information reflects the divestiture
of our consumer business which closed in April 2023.
See Schedules 6 and 7 for a reconciliation
of each non-GAAP financial measure to the most comparable GAAP
measure, Schedules 8 and 9 for a reconciliation of adjusted net
revenue and adjusted operating income by segment and supplemental
non-GAAP information 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, 2023
September 30, 2022
% Change
GAAP
Non-GAAP
GAAP
Non-GAAP
GAAP
Non-GAAP
Revenues:
Merchant Solutions
$
1,884,006
$
1,727,951
$
1,596,326
$
1,450,023
18.0
%
19.2
%
Issuer Solutions
607,848
519,736
566,039
489,149
7.4
%
6.3
%
Consumer Solutions
—
—
147,337
142,599
nm
nm
Intersegment eliminations
(16,163
)
(15,245
)
(24,331
)
(23,534
)
33.6
%
35.2
%
$
2,475,691
$
2,232,442
$
2,285,371
$
2,058,237
8.3
%
8.5
%
Operating income (loss):
Merchant Solutions
$
637,864
$
847,678
$
550,684
$
724,392
15.8
%
17.0
%
Issuer Solutions
113,877
246,643
97,548
226,842
16.7
%
8.7
%
Consumer Solutions
—
—
23,175
53,994
nm
nm
Corporate
(193,545
)
(74,797
)
(236,042
)
(74,609
)
18.0
%
(0.3
)%
Loss on business dispositions
—
—
(48,933
)
—
nm
nm
$
558,196
$
1,019,525
$
386,432
$
930,619
44.4
%
9.6
%
Nine Months Ended
September 30, 2023
September 30, 2022
% Change
GAAP
Non-GAAP
GAAP
Non-GAAP
GAAP
Non-GAAP
Revenues:
Merchant Solutions
$
5,331,909
$
4,866,484
$
4,651,061
$
4,221,149
14.6
%
15.3
%
Issuer Solutions
1,769,196
1,515,235
1,663,008
1,441,763
6.4
%
5.1
%
Consumer Solutions
182,740
163,027
478,082
473,344
nm
nm
Intersegment eliminations
(63,238
)
(60,021
)
(69,620
)
(66,913
)
9.2
%
10.3
%
$
7,220,607
$
6,484,725
$
6,722,531
$
6,069,342
7.4
%
6.8
%
Operating income (loss):
Merchant Solutions
$
1,748,622
$
2,351,195
$
1,530,573
$
2,076,288
14.2
%
13.2
%
Issuer Solutions
292,388
697,796
244,190
640,061
19.7
%
9.0
%
Consumer Solutions
(3,908
)
73,230
67,735
129,522
nm
nm
Corporate
(680,337
)
(233,203
)
(575,758
)
(210,428
)
(18.2
)%
(10.8
)%
Impairment of goodwill
—
—
(833,075
)
—
nm
nm
Net loss on business dispositions
(139,095
)
—
(201,144
)
—
30.8
%
nm
$
1,217,670
$
2,889,017
$
232,521
$
2,635,442
423.7
%
9.6
%
________________________
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.
Note: nm = not meaningful.
SCHEDULE 4
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except share data)
September 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,941,777
$
1,997,566
Accounts receivable, net
1,077,944
998,332
Settlement processing assets
2,966,176
2,519,114
Current assets held for sale
6,898
138,815
Prepaid expenses and other current
assets
787,551
660,321
Total current assets
6,780,346
6,314,148
Goodwill
26,517,777
23,320,736
Other intangible assets, net
10,259,055
9,658,374
Property and equipment, net
2,118,014
1,838,809
Deferred income taxes
76,384
37,907
Noncurrent assets held for sale
26
1,295,799
Notes receivable
692,188
—
Other noncurrent assets
2,480,815
2,343,241
Total assets
$
48,924,605
$
44,809,014
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit
$
710,401
$
747,111
Current portion of long-term debt
80,098
1,169,330
Accounts payable and accrued
liabilities
2,570,489
2,442,560
Settlement processing obligations
2,860,373
2,413,799
Current liabilities held for sale
1,352
125,891
Total current liabilities
6,222,713
6,898,691
Long-term debt
16,570,841
12,289,248
Deferred income taxes
2,300,193
2,428,412
Noncurrent liabilities held for sale
152
4,478
Other noncurrent liabilities
672,753
647,975
Total liabilities
25,766,652
22,268,804
Commitments and contingencies
Redeemable noncontrolling interests
473,132
—
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, 2023 and December 31, 2022;
260,359,506 issued and outstanding at September 30, 2023 and
263,081,872 issued and outstanding at December 31, 2022
—
—
Paid-in capital
19,751,734
19,978,095
Retained earnings
3,160,705
2,731,380
Accumulated other comprehensive loss
(470,938
)
(405,969
)
Total Global Payments shareholders’
equity
22,441,501
22,303,506
Nonredeemable noncontrolling interests
243,320
236,704
Total equity
22,684,821
22,540,210
Total liabilities, redeemable
noncontrolling interests and equity
$
48,924,605
$
44,809,014
SCHEDULE 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended
September 30, 2023
September 30, 2022
Cash flows from operating
activities:
Net income (loss)
$
656,390
$
(115,250
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization of property
and equipment
342,025
299,348
Amortization of acquired intangibles
986,026
962,413
Amortization of capitalized contract
costs
90,463
81,052
Share-based compensation expense
173,325
122,465
Provision for operating losses and credit
losses
84,154
87,071
Noncash lease expense
49,805
63,211
Deferred income taxes
(407,767
)
(281,376
)
Equity in income of equity method
investments, net of tax
(54,101
)
(74,074
)
Facilities exit charges
5,164
27,662
Impairment of goodwill
—
833,075
Net loss on business dispositions
139,095
201,144
Other, net
2,438
4,939
Changes in operating assets and
liabilities, net of the effects of business combinations:
Accounts receivable
(51,490
)
(107,908
)
Settlement processing assets and
obligations, net
(29,857
)
(117,989
)
Prepaid expenses and other assets
(266,923
)
(224,529
)
Accounts payable and other liabilities
(127,456
)
(226,746
)
Net cash provided by operating
activities
1,591,291
1,534,508
Cash flows from investing
activities:
Business combinations and other
acquisitions, net of cash and restricted cash acquired
(4,099,766
)
(24,969
)
Capital expenditures
(500,795
)
(463,357
)
Issuance of notes receivable
(50,000
)
—
Repayment of notes receivable
50,000
—
Net cash from sales of businesses
478,695
(29,755
)
Proceeds from sale of investments
—
31,046
Other, net
2,187
101
Net cash used in investing activities
(4,119,679
)
(486,934
)
Cash flows from financing
activities:
Net repayments of settlement lines of
credit
(33,328
)
(2,770
)
Net borrowings from commercial paper
notes
1,896,513
—
Proceeds from long-term debt
8,861,129
9,124,449
Repayments of long-term debt
(7,628,854
)
(7,193,661
)
Payments of debt issuance costs
(12,735
)
(44,360
)
Repurchases of common stock
(418,271
)
(2,139,731
)
Proceeds from stock issued under
share-based compensation plans
51,085
33,776
Common stock repurchased - share-based
compensation plans
(37,236
)
(38,366
)
Distributions to noncontrolling
interests
(24,315
)
(17,729
)
Payment of contingent consideration in
business combination
—
(15,726
)
Purchase of capped calls related to
issuance of convertible notes
—
(302,375
)
Dividends paid
(195,611
)
(208,082
)
Net cash provided by (used in) financing
activities
2,458,377
(804,575
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(35,730
)
(208,529
)
Increase (decrease) in cash, cash
equivalents and restricted cash
(105,741
)
34,470
Cash, cash equivalents and restricted
cash, beginning of the period
2,215,606
2,123,023
Cash, cash equivalents and restricted
cash, end of the period
$
2,109,865
$
2,157,493
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,
2023
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income
Taxes on Adjustments(3)
Non-GAAP
Revenues
$
2,475,691
$
(243,249
)
$
—
$
—
$
2,232,442
Operating income
$
558,196
$
541
$
460,787
$
—
$
1,019,525
Net income attributable to Global
Payments
$
361,830
$
541
$
464,389
$
(108,128
)
$
718,632
Diluted earnings per share attributable to
Global Payments
$
1.39
$
2.75
Diluted weighted average shares
outstanding
260,935
260,935
Three Months Ended September 30,
2022
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income
Taxes on Adjustments(3)
Non-GAAP
Revenues
$
2,285,371
$
(227,134
)
$
—
$
—
$
2,058,237
Operating income
$
386,432
$
(3,868
)
$
548,055
$
—
$
930,619
Net income attributable to Global
Payments
$
290,454
$
(3,868
)
$
537,591
$
(140,545
)
$
683,632
Diluted earnings per share attributable to
Global Payments
$
1.05
$
2.48
Diluted weighted average shares
outstanding
275,435
275,435
__________________________________________________
(1)
Includes 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, 2023 and 2022, net revenue
adjustments also included $0.5 million and $0.9 million,
respectively, to eliminate the effect of acquisition accounting
fair value adjustments for software-related contract liabilities
associated with acquired businesses. Adjustments for the three
months ended September 30, 2022 also included a $4.7 million
adjustment to exclude revenues that were associated with certain
excluded expenses of our consumer business, which was divested in
April 2023.
(2)
For the three months ended September 30, 2023, earnings
adjustments to operating income included $340.8 million in cost of
services (COS) and $120.0 million in selling, general and
administrative expenses (SG&A). Adjustments to COS included
amortization of acquired intangibles of $340.4 million and other
items of $0.4 million. Adjustments to SG&A included share-based
compensation expense of $36.6 million, acquisition, integration and
separation expenses of $75.1 million, facilities exit charges of
$3.7 million, and other items of $4.6 million.
For the three months ended September 30,
2022, earnings adjustments to operating income included $307.0
million in COS and $192.1 million in SG&A. Adjustments to COS
included amortization of acquired intangibles of $306.0 million and
other items of $1.0 million. Adjustments to SG&A included
share-based compensation expense of $37.1 million, acquisition,
integration and separation expenses of $106.8 million, facilities
exit charges of $31.7 million, and other items of $16.5
million.
Acquisition, integration and separation
expenses for the three months ended September 30, 2022 included
$34.1 million related to our divested consumer business. These
incremental expenses, which include card and marketing expenses,
compensation and benefit expenses, and other expenses, were
incurred as a result of contractual obligations with the purchasers
of the consumer business and do not reflect the manner in which the
company would have operated the business and would not have
otherwise been incurred absent the transaction.
For the three months ended September 30,
2022, earnings adjustments to operating income also included the
$48.9 million loss on business dispositions.
(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,
2023
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income Taxes on
Adjustments(3)
Non-GAAP
Revenues
$
7,220,607
$
(735,882
)
$
—
$
6,484,725
Operating income
$
1,217,670
$
(18,100
)
$
1,689,447
$
—
$
2,889,017
Net income attributable to Global
Payments
$
624,936
$
(18,100
)
$
1,707,746
$
(279,382
)
$
2,035,200
Diluted earnings per share attributable to
Global Payments
$
2.39
$
7.79
Diluted weighted average shares
outstanding
261,410
261,410
Nine Months Ended September 30,
2022
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income Taxes on
Adjustments(3)
Non-GAAP
Revenues
$
6,722,531
$
(653,189
)
$
—
$
—
$
6,069,342
Operating income (loss)
$
232,521
$
1,520
$
2,401,402
$
—
$
2,635,442
Net income (loss) attributable to Global
Payments
$
(137,813
)
$
1,520
$
2,393,227
$
(330,686
)
$
1,926,248
Diluted earnings (loss) per share
attributable to Global Payments
$
(0.49
)
$
6.91
Diluted weighted average shares
outstanding (4)
278,411
278,816
________________________________________________
(1)
Includes 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 nine
months ended September 30, 2023 and 2022, net revenue
adjustments also included $1.6 million and $6.3 million,
respectively, to eliminate the effect of acquisition accounting
fair value adjustments for software-related contract liabilities
associated with acquired businesses. Adjustments for the nine
months ended September 30, 2023 and 2022, also included a
$19.7 million and $4.7 million adjustment, respectively, to exclude
revenues that were associated with certain excluded expenses of our
consumer business, which was divested in April 2023.
(2)
For the nine months ended September 30, 2023, earnings
adjustments to operating income included $988.7 million in COS and
$561.6 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $986.0 million and other
items of $2.7 million. Adjustments to SG&A included share-based
compensation expense of $173.3 million, acquisition, integration
and separation expenses of $336.4 million, facilities exit charges
of $15.0 million, employee severance charges of $31.5 million, and
other items of $5.4 million. Earnings adjustments to operating
income also included the $139.1 million loss on business
dispositions.
Acquisition, integration and separation
expenses for the nine months ended September 30, 2023 included
$93.6 million related to our divested consumer business. These
incremental expenses, which include card and marketing expenses,
compensation and benefit expenses, and other expenses, were
incurred as a result of contractual obligations with the purchasers
of the consumer business and do not reflect the manner in which the
company would have operated the business and would not have
otherwise been incurred absent the transaction.
Earnings adjustments to net income also
included an allowance for current expected credit losses (CECL) of
$18.2 million within interest and other expense related to the
seller financing issued in connection with the business
dispositions.
For the nine months ended September 30,
2022, earnings adjustments to operating income included $964.1
million in COS and $403.1 million in SG&A. Adjustments to COS
included amortization of acquired intangibles of $962.4 million and
other items of $1.7 million. Adjustments to SG&A included
share-based compensation expense of $122.5 million, acquisition,
integration and separation expenses of $219.6 million, facilities
exit charges of $40.0 million, and other items of $21.0
million.
Acquisition, integration and separation
expenses for the nine months ended September 30, 2022 included
$34.1 million related to our divested consumer business. These
incremental expenses, which include card and marketing expenses,
compensation and benefit expenses, and other expenses, were
incurred as a result of contractual obligations with the purchasers
of the consumer business and do not reflect the manner in which the
company would have operated the business and would not have
otherwise been incurred absent the transaction.
For the nine months ended September 30,
2022, earnings adjustments to operating income also included the
$833.1 million noncash goodwill impairment charge related to our
former Business and Consumer Solutions segment, driven by the
strategic review and pending divestiture of our consumer business,
and the $201.1 million loss on business dispositions.
(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.
(4)
Includes 404,593 dilutive shares for non-GAAP. All awards are
antidilutive for GAAP due to reporting a net loss.
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,
2023
GAAP
Net Revenue Adjustments (1)
Earnings Adjustments(2)
Non-GAAP
Revenues:
Merchant Solutions
$
1,884,006
$
(156,055
)
$
—
$
1,727,951
Issuer Solutions
607,848
(88,112
)
—
519,736
Intersegment eliminations
(16,163
)
918
—
(15,245
)
$
2,475,691
$
(243,249
)
$
—
$
2,232,442
Operating income (loss):
Merchant Solutions
$
637,864
$
1
$
209,813
$
847,678
Issuer Solutions
113,877
540
132,226
246,643
Corporate
(193,545
)
—
118,748
(74,797
)
$
558,196
$
541
$
460,787
$
1,019,525
Three Months Ended September 30,
2022
GAAP
Net Revenue Adjustments (1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
1,596,326
$
(146,303
)
$
—
$
1,450,023
$
—
$
1,450,023
Issuer Solutions
566,039
(76,890
)
—
489,149
—
489,149
Consumer Solutions
147,337
(4,738
)
—
142,599
(142,599
)
—
Intersegment eliminations
(24,331
)
797
—
(23,534
)
11,577
(11,957
)
$
2,285,371
$
(227,134
)
$
—
$
2,058,237
$
(131,022
)
$
1,927,215
Operating income (loss):
Merchant Solutions
$
550,684
$
(67
)
$
173,775
$
724,392
$
—
$
724,392
Issuer Solutions
97,548
937
128,357
226,842
—
226,842
Consumer Solutions
23,175
(4,738
)
35,558
53,994
(53,994
)
—
Corporate
(236,042
)
—
161,433
(74,609
)
—
(74,609
)
Net loss on business dispositions
(48,933
)
—
48,933
—
—
—
$
386,432
$
(3,868
)
$
548,055
$
930,619
$
(53,994
)
$
876,625
___________________________________________________
(1)
Includes 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, 2023 and 2022, net revenue
adjustments also included $0.5 million and $0.9 million,
respectively, to eliminate the effect of acquisition accounting
fair value adjustments for software-related contract liabilities
associated with acquired businesses. Adjustments for the three
months ended September 30, 2022 also included a $4.7 million
adjustment to exclude revenues that were associated with certain
excluded expenses of our consumer business, which was divested in
April 2023.
(2)
For the three months ended September 30, 2023, earnings
adjustments to operating income included $340.8 million in COS and
$120.0 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $340.4 million and other
items of $0.4 million. Adjustments to SG&A included share-based
compensation expense of $36.6 million, acquisition, integration and
separation expenses of $75.1 million, facilities exit charges of
$3.7 million, and other items of $4.6 million.
For the three months ended September 30,
2022, earnings adjustments to operating income included $307.0
million in COS and $192.1 million in SG&A. Adjustments to COS
included amortization of acquired intangibles of $306.0 million and
other items of $1.0 million. Adjustments to SG&A included
share-based compensation expense of $37.1 million, acquisition,
integration and separation expenses of $106.8 million, facilities
exit charges of $31.7 million, and other items of $16.5
million.
Acquisition, integration and separation
expenses for the three months ended September 30, 2022 included
$34.1 million related to our divested consumer business. These
incremental expenses, which include card and marketing expenses,
compensation and benefit expenses, and other expenses, were
incurred as a result of contractual obligations with the purchasers
of the consumer business and do not reflect the manner in which the
company would have operated the business and would not have
otherwise been incurred absent the transaction.
For the three months ended September 30,
2022, earnings adjustments to operating income also included the
$48.9 million loss on business dispositions.
(3)
The supplemental non-GAAP information excludes the results of
the consumer business that was divested in April 2023.
See "Non-GAAP Financial Measures"
discussion on Schedule 10.
Note: Amounts may not sum due to
rounding.
SCHEDULE 9
RECONCILIATION OF SEGMENT NON-GAAP
FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Nine Months Ended September 30,
2023
GAAP
Net Revenue Adjustments (1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
5,331,909
$
(465,425
)
$
—
$
4,866,484
$
—
$
4,866,484
Issuer Solutions
1,769,196
(253,961
)
—
1,515,235
—
1,515,235
Consumer Solutions
182,740
(19,713
)
—
163,027
(163,027
)
—
Intersegment eliminations
(63,238
)
3,217
—
(60,021
)
17,585
(42,436
)
$
7,220,607
$
(735,882
)
$
—
$
6,484,725
$
(145,442
)
$
6,339,283
Operating income (loss):
Merchant Solutions
$
1,748,622
$
23
$
602,550
$
2,351,195
$
—
$
2,351,195
Issuer Solutions
292,388
1,590
403,818
697,796
—
697,796
Consumer Solutions
(3,908
)
(19,713
)
96,851
73,230
(73,230
)
—
Corporate
(680,337
)
—
447,134
(233,203
)
—
(233,203
)
Net loss on business dispositions
(139,095
)
—
139,095
—
—
—
$
1,217,670
$
(18,100
)
$
1,689,447
$
2,889,017
$
(73,230
)
$
2,815,788
Nine Months Ended September 30,
2022
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
4,651,061
$
(429,912
)
$
—
$
4,221,149
$
—
$
4,221,149
Issuer Solutions
1,663,008
(221,245
)
—
1,441,763
—
1,441,763
Consumer Solutions
478,082
(4,738
)
—
473,344
(473,344
)
—
Intersegment eliminations
(69,620
)
2,707
—
(66,913
)
33,118
(33,791
)
$
6,722,531
$
(653,189
)
$
—
$
6,069,342
$
(440,225
)
$
5,629,117
Operating income (loss):
Merchant Solutions
$
1,530,573
$
152
$
545,563
$
2,076,288
$
—
$
2,076,288
Issuer Solutions
244,190
6,106
389,765
640,061
—
640,061
Consumer Solutions
67,735
(4,738
)
66,525
129,522
(129,522
)
—
Corporate
(575,758
)
—
365,330
(210,428
)
—
(210,428
)
Impairment of goodwill
(833,075
)
—
833,075
—
—
—
Net loss on business dispositions
(201,144
)
—
201,144
—
—
—
$
232,521
$
1,520
$
2,401,402
$
2,635,442
$
(129,522
)
$
2,505,920
__________________________________________________
(1)
Includes 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 nine
months ended September 30, 2023 and 2022, net revenue
adjustments also included $1.6 million and $6.3 million,
respectively, to eliminate the effect of acquisition accounting
fair value adjustments for software-related contract liabilities
associated with acquired businesses. Adjustments for the nine
months ended September 30, 2023 and 2022, also included a
$19.7 million and $4.7 million adjustment, respectively, to exclude
revenues that were associated with certain excluded expenses of our
consumer business, which was divested in April 2023.
(2)
For the nine months ended September 30, 2023, earnings
adjustments to operating income included $988.7 million in COS and
$561.6 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $986.0 million and other
items of $2.7 million. Adjustments to SG&A included share-based
compensation expense of $173.3 million, acquisition, integration
and separation expenses of $336.4 million, facilities exit charges
of $15.0 million, employee severance charges of $31.5 million, and
other items of $5.4 million. Earnings adjustments to operating
income also included the $139.1 million loss on business
dispositions.
Acquisition, integration and separation
expenses for the nine months ended September 30, 2023 included
$93.6 million related to our divested consumer business. These
incremental expenses, which include card and marketing expenses,
compensation and benefit expenses, and other expenses, were
incurred as a result of contractual obligations with the purchasers
of the consumer business and do not reflect the manner in which the
company would have operated the business and would not have
otherwise been incurred absent the transaction.
For the nine months ended September 30,
2022, earnings adjustments to operating income included $964.1
million in COS and $403.1 million in SG&A. Adjustments to COS
included amortization of acquired intangibles of $962.4 million and
other items of $1.7 million. Adjustments to SG&A included
share-based compensation expense of $122.5 million, acquisition,
integration and separation expenses of $219.6 million, facilities
exit charges of $40.0 million, and other items of $21.0
million.
Acquisition, integration and separation
expenses for the nine months ended September 30, 2022 included
$34.1 million related to our divested consumer business. These
incremental expenses, which include card and marketing expenses,
compensation and benefit expenses, and other expenses, were
incurred as a result of contractual obligations with the purchasers
of the consumer business and do not reflect the manner in which the
company would have operated the business and would not have
otherwise been incurred absent the transaction.
For the nine months ended September 30,
2022, earnings adjustments to operating income also included the
$833.1 million noncash goodwill impairment charge related to our
former Business and Consumer Solutions segment, driven by the
strategic review and pending divestiture of our consumer business,
and the $201.1 million loss on business dispositions.
(3)
The supplemental non-GAAP information excludes the results of
the consumer business that was divested in April 2023.
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 millions, except per share data)
2022
2023 Outlook
Growth
Revenues:
GAAP revenues
$8,976
$9,650 to $9,725
7% to 8%
Adjustments(1)
(884
)
(990
)
Adjusted net revenue
$8,092
$8,660 to $8,735
7% to 8%
Earnings Per
Share:
GAAP diluted EPS
$0.40
$3.93 to $3.99
nm
Adjustments(2)
8.92
6.46
Adjusted EPS
$9.32
$10.39 to $10.45
11% to 12%
(1)
Includes 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
included adjustments to eliminate the effect of acquisition
accounting fair value adjustments for software-related contract
liabilities associated with acquired businesses, as well as
adjustments to exclude revenues that were associated with certain
excluded expenses of our consumer business which was classified as
assets held for sale on our balance sheet.
(2)
Adjustments to 2022 GAAP diluted EPS included the removal of 1)
software-related contract liability adjustments described above of
$0.02, 2) acquisition related amortization expense of $3.53, 3)
share-based compensation expense of $0.46, 4) acquisition,
integration, and separation expense of $1.00, 5) facilities exit
charges of $0.13, 6) equity method investment earnings from our
interest in a private equity investment fund of $(0.06), 7)
discrete tax items of $0.01, 8) goodwill impairment charge in
connection with the strategic review of the former Business and
Consumer Solutions segment and sale of the consumer business of
$3.02, 9) loss on business dispositions of $0.70, 10) other income
and expense of $0.05, 11) the effect of noncontrolling interests
and income taxes, as applicable, and 12) other items of $0.06.
Note: nm = not meaningful.
NON-GAAP FINANCIAL MEASURES
Global Payments supplements revenues, operating income,
operating margin and net income and earnings per share (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 earnings per share 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, integration and separation expense, gain or
losses on business divestitures, and certain other items 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.
The supplemental non-GAAP information excludes the results of
the consumer business that was divested in April 2023. Management
believes that providing such supplemental financial information
should enhance shareholders’ ability to evaluate how the business
will be managed going forward.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031418739/en/
Investor contact: investor.relations@globalpay.com Winnie Smith
770-829-8478
Media contact: media.relations@globalpay.com Emily Edmonds
770-829-8755
Global Payments (NYSE:GPN)
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