Increases 2017 Outlook for Revenue and Earnings per Share,
Increases Quarterly Dividend by 30%
TSYS (NYSE: TSS) today reported results for the second
quarter of 2017.
“Our second quarter results were outstanding driven by solid
revenue growth that converted into very strong operating income and
diluted earnings per share (EPS). These results are all organic as
this is the first quarter that the TransFirst acquisition is in
both quarters reflecting the execution of our strategic goals,”
said M. Troy Woods, chairman and chief executive officer of
TSYS.
“With our strong cash flow, we reduced our debt another $125
million during the quarter bringing our year to date reduction to
$225 million. We are also pleased to announce that we are
increasing our quarterly dividend by 30% to $0.13 per share from
$0.10 per share and raising our revenue and EPS guidance,” said
Woods.
Highlights for the second quarter of 2017 vs. 2016:
- Total revenues were $1.2 billion, an
increase of 6.1%.
- Net revenue (non-GAAP), which excludes
reimbursable items, interchange and assessment expenses, was $844.1
million, an increase of 6.2%.
- Net income attributable to TSYS common
shareholders was $115.0 million, an increase of 65.0%. Diluted EPS
were $0.62, an increase of 64.3%.
- Adjusted earnings (non-GAAP) were
$158.2 million, an increase of 16.8%. Adjusted diluted EPS
(non-GAAP) were $0.85, an increase of 16.4%.
- Adjusted EBITDA (non-GAAP) was $307.7
million, an increase of 12.3%.
Dividend Increase
TSYS’ Board of Directors approved a 30% increase in the regular
quarterly dividend payable on TSYS common stock from $0.10 per
share to $0.13 per share, payable on October 2, 2017 to
shareholders of record as of the close of business on September 21,
2017.
2017 Revised Outlook
The 2017 revised guidance is below.
2017 Revised
Financial Outlook Range
Percent
Change
(in millions, except per share amounts)
Revenue: Total revenues (GAAP) $4,809 to
$4,889 15% to 17% Net revenue (non-GAAP) $3,315 to $3,395 9% to 12%
Earnings per share: Diluted EPS (GAAP) $2.30 to $2.38
33% to 37% Adjusted diluted EPS attributable to TSYS common
shareholders (non-GAAP)
$3.22
to
$3.30
15%
to
18%
Weighted average diluted shares outstanding 185
Conference Call
TSYS will host its quarterly conference call at 5:00 p.m. ET on
Tuesday, July 25. The conference call can be accessed via
simultaneous Internet broadcast on the “Investor Relations” section
of TSYS’ website at investors.tsys.com where an accompanying slide
presentation will also be available. The replay will be archived
for 12 months and will be available approximately 30 minutes after
the completion of the call.
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, net revenue, adjusted earnings,
adjusted EBITDA and adjusted diluted EPS, and a reconciliation of
those measures to the most directly comparable GAAP measures is
included on pages 11 to 14 in the financial schedules of this
release.
About TSYS
TSYS® (NYSE: TSS) is a leading global payments provider,
offering seamless, secure and innovative solutions across the
payments spectrum — from issuer processing and merchant acquiring
to prepaid program management. We succeed because we put people,
and their needs, at the heart of every decision. It’s an approach
we call ‘People-Centered Payments®’.
Our headquarters are located in Columbus, Ga., U.S.A., with
approximately 11,500 team members and local offices spread across
13 countries. TSYS generated revenue of $4.2 billion in 2016, while
processing more than 25.5 billion transactions. We are a member of
The Civic 50 and were named one of the 2017 World’s Most Ethical
Companies by Ethisphere magazine. TSYS is a member of the S&P
500 and routinely posts all important information on its website.
For more, visit tsys.com.
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 2017 total revenues, net revenue, diluted EPS and adjusted
diluted 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, particularly the TransFirst
acquisition; the effect of current domestic and worldwide economic
conditions; risks associated with foreign operations, including
adverse developments with respect to foreign currency exchange
rates, and in particular with respect to the current environment,
adverse developments with respect to foreign currency exchange
rates as a result of the United Kingdom’s decision to leave the
European Union (Brexit); expenses 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, and in
particular the CFPB’s new rule regarding prepaid financial
products; 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. TSYS disclaims any obligation to update any
forward-looking statements as a result of new information, future
developments or otherwise except as required by law.
TSYS Financial Highlights
(unaudited) (in thousands, except per share data)
Three Months Ended Six Months
Ended June 30, June 30, Percent Percent 2017 2016 Change 2017 2016
Change Total revenues $ 1,222,375 1,151,587 6.1 % $
2,407,100 1,890,965 27.3 % Cost of services* 877,887 841,923
4.3 1,739,744 1,326,430 31.2 Selling, general and administrative
expenses* 151,240 173,843 (13.0 )
306,925 277,027 10.8 Total expenses 1,029,127
1,015,766 1.3 2,046,669 1,603,457
27.6 Operating income 193,248 135,821 42.3 360,431
287,508 25.4 Nonoperating expenses* (30,042 ) (29,760
) (0.9 ) (59,945 ) (51,857 ) (15.6 )
Income before income taxes and equity in
income of equity investments
163,206 106,061 53.9 300,486 235,651 27.5 Income taxes
56,207 40,290 39.5 99,289 83,719
18.6 Income before equity in income of equity investments 106,999
65,771 201,197 151,932 Equity in income of equity investments, net
of tax* 9,513 5,977 59.2 22,422
12,224 83.4 Net income 116,512 71,748 62.4 223,619 164,156
36.2 Net income attributable to noncontrolling interests
(1,498 ) (2,040 ) 26.6 (2,737 ) (3,820 ) 28.4 Net
income attributable to TSYS common shareholders $ 115,014
69,708 65.0 % $ 220,882 160,336 37.8 %
Earnings per share (EPS): Basic EPS $ 0.62 0.38 64.6
% $ 1.20 0.87 37.3 % Diluted EPS $ 0.62
0.38 64.3 % $ 1.19 0.87 37.2 % Weighted
average shares outstanding: (includes participating securities)
Basic 184,153 183,724 184,019
183,489 Diluted 185,286 184,598
185,122 184,335 Dividends declared per share $
0.10 0.10 $ 0.20 0.20
Non-GAAP
measures:**
Net revenue $ 844,068 794,937 6.2 % $ 1,676,960
1,466,581 14.3 % Adjusted EBITDA $ 307,698
274,032 12.3 % $ 594,935 504,862 17.8 %
Adjusted earnings $ 158,215 135,416 16.8 % $
310,480 256,126 21.2 % Adjusted diluted EPS $
0.85 0.73 16.4 % $ 1.68 1.39 20.7 %
* Certain prior year amounts have been reclassified between
nonoperating expenses and equity in income of equity investments,
net of tax and between income of equity investments, net of tax and
between cost of services and selling, general and administrative
expenses. ** See reconciliation of non-GAAP measures.
TSYS Segment Breakdown
(unaudited) (in thousands)
Three Months Ended June 30, Six Months
Ended June 30, Change Change 2017 2016
$ % 2017 2016 $
% Adjusted operating income by segment: Issuer
Solutions (a) $ 147,277 128,493 18,784 14.6 % $ 281,150 263,570
17,580 6.7 % Merchant Solutions (b) 101,996 89,915 12,081 13.4
193,275 128,272 65,003 50.7 Netspend (c) 46,044 42,481 3,563 8.4
94,692 84,682 10,010 11.8 Corporate admin and other (36,036
) (33,340 ) (2,696 ) (8.1 )
(71,608 ) (62,808 ) (8,800 ) (14.0 )
Adjusted segment operating income (d) 259,281 227,549 31,732 13.9
497,509 413,716 83,793 20.3 Less: Share-based compensation 11,008
12,566 (1,558 ) (12.4 ) 20,055 20,723 (668 ) (3.2 ) TransFirst
M&A and integration expenses 4,165 20,676 (16,511 ) (79.9 )
9,034 24,078 (15,044 ) (62.5 ) Litigation, claims, judgments or
settlements (83 ) - (83 ) na 1,878 - 1,878 na Acquisition
intangible amortization 50,943 58,486
(7,543 ) (12.9 ) 106,111
81,407 24,704 30.3 Operating
income 193,248 135,821 57,427 42.3 360,431 287,508 72,923 25.4
Nonoperating expenses, net (30,042 ) (29,760 )
(282 ) (0.9 ) (59,945 ) (51,857
) (8,088 ) (15.6 )
Income before income taxes and equity in
income of equity investments
$ 163,206 106,061 57,145
53.9 % $ 300,486 235,651
64,835 27.5 % Net revenue by segment: Issuer
Solutions (f) $ 392,760 377,862 14,898 3.9 % $ 780,015 755,871
24,144 3.2 % Merchant Solutions (g) 278,588 261,467 17,121 6.5
539,149 382,079 157,070 41.1 Netspend (h) 183,065
162,620 20,445 12.6
380,530 347,613
32,917 9.5 Segment net revenue 854,413 801,949 52,464 6.5
1,699,694 1,485,563 214,131 14.4 Less: Intersegment revenues
10,345 7,012 3,333
47.5 22,734 18,982
3,752 19.8 Net revenue (i) 844,068 794,937 49,131 6.2
1,676,960 1,466,581 210,379 14.3 Add: reimbursable items,
interchange and assessments expenses 378,307
356,650 21,657 6.1
730,140 424,384 305,756
72.0 Total revenues $ 1,222,375
1,151,587 70,788 6.1 % $ 2,407,100
1,890,965 516,135
27.3 % Adjusted segment operating margin on segment
net revenue: Issuer Solutions (a)/(f) 37.5 %
34.0 % 36.0 % 34.9 % Merchant Solutions
(b)/(g) 36.6 % 34.4 % 35.9 %
33.6 % Netspend (c)/(h) 25.2 % 26.1 %
24.9 % 24.4 % Adjusted segment
operating margin on net revenue: (d)/(i) 30.7 %
28.6 % 29.7 % 28.2 % na = not
applicable TSYS Segment
Breakdown (unaudited) (in thousands)
Three Months Ended June 30, Six
Months Ended June 30, Change Change 2017 2016
$ % 2017 2016 $
% Depreciation and amortization by segment: Issuer
Solutions $ 35,735 35,649 86 0.2 % $ 72,588 71,268 1,320 1.9 %
Merchant Solutions 7,380 6,805 575 8.4 14,402 11,856 2,546 21.5
Netspend 4,180 3,116 1,064
34.1 8,272 6,224
2,048 32.9 Depreciation and amortization 47,295 45,570 1,725
3.8 95,262 89,348 5,914 6.6 Acquisition intangible amortization
50,943 58,486 (7,543 ) (12.9 ) 106,111 81,407 24,704 30.3 Corporate
admin and other 1,121 913 208
22.8 2,164 1,797
367 20.4 Total depreciation and amortization $ 99,359
104,969 (5,610 ) (5.3 )% $ 203,537
172,552 30,985 18.0 %
Segment
statistical data:
Issuer
Solutions
Total transactions (in millions) 5,340.6 4,985.1 355.5 7.1 %
10,217.2 9,573.1 644.1 6.7 % Total Accounts on file (AOF) (in
millions) 773.6 742.1 31.5 4.2 % Total Traditional AOF (in
millions) 542.0 501.1 40.9 8.2 %
Merchant
Solutions
Point-of-sale transactions (in millions) 1,233.5 1,159.5 74.0 6.4 %
2,361.3 2,250.4 110.9 4.9 % Dollar sales volume (in millions) $
31,127.5 28,560.8 2,566.7 9.0 % $ 60,247.9 40,344.2 19,903.7 49.3 %
Segment net revenue per transaction $ 0.226 0.225 0.001 0.2 % $
0.228 0.170 0.058 34.5 %
Netspend
Gross dollar volume (in millions) $ 7,605.5 6,614.7 990.8 15.0 % $
17,212.8 15,776.2 1,436.6 9.1 % Direct deposit 90-day active cards
(in thousands) 2,416.7 2,192.5 224.2 10.2 % 90-day active cards (in
thousands) 4,964.9 4,448.8 516.1 11.6 % % of 90-day active cards
with direct deposit 48.7 % 49.3 %
TSYS Condensed Balance Sheet (unaudited) (in
thousands) June 30, 2017
December 31, 2016
Assets Current assets: Cash and cash
equivalents $ 427,589 425,354 Accounts receivable, net 442,094
432,847 Other current assets 156,297 164,488 Total current
assets 1,025,980 1,022,689 Goodwill 3,271,975 3,270,952 Software
and other intangible assets, net 1,213,871 1,329,864 Property and
equipment, net 280,636 282,345 Other long term assets
481,619 460,327 Total assets $ 6,274,081 6,366,177
Liabilities Current liabilities: Accounts payable $ 52,095
38,712 Current portion of long-term borrowings and capital leases
573,075 50,727 Other current liabilities 315,077 330,914
Total current liabilities 940,247 420,353 Long-term borrowings and
capital leases, excluding current portion 2,564,068 3,313,276
Deferred income tax liabilities 402,088 419,552 Other long-term
liabilities 90,040 88,983 Total liabilities 3,996,443
4,242,164
Redeemable noncontrolling interest 13,102
24,093
Equity 2,264,536 2,099,920 Total liabilities
and equity $ 6,274,081 6,366,177
TSYS Selected Cash Flow Highlights (unaudited) (in
thousands) Six Months Ended June
30, 2017 2016
Cash flows from operating activities: Net
income $ 223,619 164,156
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in income of equity investments, net of tax (22,422 )
(12,224 ) Dividends received from equity investments 943 808
Depreciation and amortization 203,537 172,552 Amortization of debt
issuance costs 2,163 11,451 Share-based compensation 20,055 20,724
Deferred income tax (benefit) expense (18,191 ) 18,519 Other
noncash adjustments 38,248 21,449 Changes in operating assets and
liabilities (47,160 ) (58,354 )
Net cash provided by
operating activities 400,792 339,081
Purchases of property and equipment (26,739 ) (20,669 )
Additions to licensed computer software from vendors (10,568 )
(11,379 ) Additions to internally developed computer software
(13,581 ) (18,484 ) Additions to contract acquisition costs (14,655
) (31,276 ) Cash used in acquisitions, net of cash acquired -
(2,345,438 ) Other investing activities (759 ) (1,730 )
Net cash used in investing activities (66,302 )
(2,428,976 )
Principal payments on long-term borrowings
and capital lease obligations
(234,093 ) (435,953 ) Proceeds from long-term borrowings -
2,666,295 Debt issuance costs - (26,554 ) Purchase of
noncontrolling interests (70,000 ) (5,878 ) Dividends paid on
common stock (36,734 ) (36,622 ) Proceeds from exercise of stock
options 8,987 9,737 Other financing activities (3,909 ) (829
)
Net cash (used in) provided by financing activities
(335,749 ) 2,170,196
Cash and cash
equivalents: Effect of exchange rate changes on cash and cash
equivalents 3,494 (4,310 ) Net increase in cash and
cash equivalents 2,235 75,991 Cash and cash equivalents at
beginning of period 425,354 389,328 Cash and
cash equivalents at end of period $ 427,589 465,319
Supplemental Capital expenditures $ 65,543
81,808 Free cash flow (non-GAAP)* $ 335,249 257,273
* See reconciliation of non-GAAP measures.
TSYS Supplemental
Information (unaudited)
Other AOF: Total Accounts on File (in millions)
At
June 2017
At
June 2016
%
Change
Consumer 457.0 425.3 7.4 Commercial 51.5 47.0 9.6 Other 33.5
28.8 16.2 Traditional AOF 542.0 501.1 8.2
Prepaid*/Stored Value 50.6 79.5 (36.3 ) Government Services 91.3
84.6 7.9 Commercial Card Single Use 89.7 76.9
16.6 Total AOF 773.6 742.1 4.2 *
Prepaid does not include Netspend accounts
Growth in Accounts
on File (in millions):
June 2016 to
June 2017
June 2015 to
June 2016
Beginning balance 742.1 751.4 Change in accounts on file due to:
Internal growth of existing clients 53.1 51.8 New clients 23.7 32.9
Purges/Sales (23.3 ) (24.0 ) Deconversions (22.0 )
(70.0 ) Ending balance 773.6 742.1
Reconciliation of GAAP
to Non-GAAP Financial Measures Non-GAAP Measures
The schedules below provide a reconciliation of revenues and
operating results on a constant currency basis to reported revenues
and operating income. This non-GAAP measure presents second quarter
and year-to-date 2017 financial results using the previous year’s
foreign currency exchange rates. On a constant currency basis,
TSYS’ total year-to-date revenues for the second quarter of 2017
grew 28.4% as compared to a reported GAAP increase of 27.3%.
The schedules below also provide a reconciliation of diluted EPS to
adjusted diluted EPS. The schedules below also provide a
reconciliation of net income to adjusted EBITDA. The
schedules below also provide a reconciliation of cash flows from
operating activities and capital expenditures to free cash flow.
The schedules below also provide a reconciliation of 2017
guidance of total revenues to net revenue and diluted EPS to
adjusted diluted EPS. The tax rate used in the calculation
of adjusted diluted 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.
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 measures of
other companies due to potential inconsistencies in the method of
calculation. TSYS believes that its provision of non-GAAP
financial measures provides investors with important 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 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.
Reconciliation of
GAAP to Non-GAAP Constant Currency Comparison
(unaudited) (in thousands)
Three
Months Ended June 30, Six Months Ended June 30, Percent Percent
2017 2016 Change 2017
2016 Change
Consolidated
Constant currency (1) $ 1,232,358 1,151,587 7.0 % $ 2,428,207
1,890,965 28.4 % Foreign currency impact (2) (9,983 )
- (21,107 ) - Total revenues $
1,222,375 1,151,587 6.1 % $ 2,407,100
1,890,965 27.3 % Constant currency (1) $
853,368 794,937 7.4 % $ 1,696,600 1,466,581 15.7 % Foreign currency
impact (2) (9,300 ) - (19,640 )
- Net revenue $ 844,068 794,937 6.2 % $
1,676,960 1,466,581 14.3 % Constant
currency (1) $ 197,922 135,821 45.7 % $ 369,893 287,508 28.7 %
Foreign currency impact (2) (4,674 ) -
(9,462 ) - Operating income $ 193,248
135,821 42.3 % $ 360,431 287,508 25.4 %
Issuer
Solutions
Constant currency (1) $ 452,597 429,864 5.3 % $ 900,832 859,577 4.8
% Foreign currency impact (2) (9,961 ) -
(21,079 ) - Total revenues $ 442,636
429,864 3.0 % $ 879,753 859,577
2.3 % Constant currency (1) $ 402,038 377,862 6.4 % $
799,627 755,871 5.8 % Foreign currency impact (2) (9,278 )
- (19,612 ) - Segment net
revenue $ 392,760 377,862 3.9 % $ 780,015
755,871 3.2 % (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. Net Revenue (unaudited) (in
thousands) Three Months Ended June 30, Six Months Ended June
30, Percent Percent 2017 2016 Change
2017 2016 Change Total revenues $
1,222,375 1,151,587 6.1 % $ 2,407,100 1,890,965 27.3 % Less:
reimbursable items, interchange and assessments expenses
378,307 356,650 6.1 730,140
424,384 72.0 Net revenue $ 844,068
794,937 6.2 % $ 1,676,960 1,466,581
14.3 %
Reconciliation of GAAP
to Non-GAAP Adjusted Diluted Earnings per Share
(unaudited) (in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
Percent Percent 2017 2016 Change 2017
2016 Change
Net income attributable to TSYS common
shareholders
$ 115,014 69,708 65.0 % $ 220,882 160,336 37.8 % Adjust for amounts
attributable to TSYS common shareholders: Add: Acquisition
intangible amortization $ 50,783 58,210 (12.8 ) $ 105,785 80,855
30.8 Add: Share-based compensation 11,009 12,557 (12.3 ) 20,051
20,707 (3.2 ) Add: TransFirst M&A expenses* 4,149 20,676 (79.9
) 8,973 33,859 (73.5 ) Add: Litigation, claims, judgments or
settlements** (83 ) - na 1,878 - na Less: Tax impact of
adjustments*** (22,657 ) (25,735 ) 12.0
(47,089 ) (39,631 ) (18.8 ) Adjusted earnings $
158,215 135,416 16.8 % $ 310,480
256,126 21.2 %
Diluted EPS - Net income attributable
to TSYS common shareholders
As reported (GAAP) $ 0.62 0.38 64.3 % $
1.19 0.87 37.2 % Adjusted
diluted EPS $ 0.85 0.73 16.4 % $ 1.68
1.39 20.7 % Weighted average
diluted shares outstanding 185,286
184,598 185,122 184,335
* Costs associated with the TransFirst acquisition and
integration that are included in selling, general and
administrative expenses and nonoperating expenses. ** Litigation
settlement or settlement discussions and related legal expenses.
*** Certain of these merger and acquisition costs are nondeductible
for income tax purposes. Income tax impact includes a discrete item
as a result of the acquisition.
Adjusted EBITDA (unaudited) (in thousands) Three Months
Ended June 30, Six Months Ended June 30, Percent Percent 2017
2016 Change 2017 2016
Change
Net income $ 116,512 71,748 62.4 % $
223,619 164,156 36.2 % Adjust for: Less: Equity in income of equity
investments (9,513 ) (5,977 ) (59.2 ) (22,422 ) (12,224 ) (83.4 )
Add: Income taxes 56,207 40,290 39.5 99,289 83,719 18.6 Add:
Interest expense, net 29,537 30,770 (4.0 ) 59,310 53,065 11.8 Add:
Depreciation and amortization 99,359 104,969 (5.3 ) 203,537 172,552
18.0 Less: (Gain)/loss on foreign currency translations 513 (960 )
nm 824 (1,469 ) nm Less: Other nonoperating (income)/expenses (8 )
(50 ) 84.0 (189 ) 261 nm Add: Share-based compensation 11,008
12,566 (12.4 ) 20,055 20,724 (3.2 ) Add: TransFirst M&A
expenses* 4,166 20,676 (79.9 ) 9,034 24,078 (62.5 ) Add:
Litigation, claims, judgments or settlements (83 )
- na 1,878 - na
Adjusted EBITDA $ 307,698 274,032
12.3 % $ 594,935 504,862 17.8 %
* Costs associated with the TransFirst acquisition and
integration that are included in selling, general and
administrative expenses. nm = not meaningful na = not
applicable
Reconciliation
of GAAP to Non-GAAP Free Cash Flow (unaudited)
(in thousands) Six Months Ended
Free cash flow: June 30,
2017 2016 Net cash provided by
operating activities (GAAP) $ 400,792 339,081 Capital expenditures
(65,543 ) (81,808 ) Free cash flow (non-GAAP) $
335,249 257,273 Revised
Guidance Summary (unaudited) (in millions, except per share data)
Revenue: 2017 % Change Total revenues
(GAAP) $ 4,809 to $ 4,889 15 % to 17 %
Less: reimbursable items, interchange and
assessments expenses
1,494 to 1,494 Net
revenue (non-GAAP) $ 3,315 to $ 3,395 9 % to 12 %
Earnings per share (EPS): Diluted EPS (GAAP) $ 2.30
to $ 2.38 33 % to 37 %
Acquisition intangible amortization,
share-based compensation, litigation, claims, judgments or
settlements and TransFirst M&A expenses, less the tax impact of
adjustments
0.92 to 0.92
Adjusted diluted EPS attributable to TSYS
common shareholders* (non-GAAP)
$ 3.22 to $ 3.30 15 % to 18 % *
Weighted average diluted shares outstanding 185
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170725006455/en/
TSYSMedia Relations:Cyle Mims,
706-644-3110cylemims@tsys.comorInvestor Relations:Shawn Roberts,
706-644-6081shawnroberts@tsys.com
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