Exhibit 99.1

 

 

Picture 6

 

Picture 7

 

 

 

 

Picture 1

 

 

 

TSYS Reports Second Quarter Earnings and Increases 2018 Outlook

 

Columbus, Ga., July 24, 2018 – TSYS (NYSE:  TSS) today reported results for the second quarter of 2018.

“We were very pleased with the performance and momentum of the second quarter as all three of our segments continue to deliver exceptional results.  This performance enables us to again raise our guidance for the year while continuing to invest for the long term in preparation for our solid pipeline of new business,” said M. Troy Woods, chairman, president and chief executive officer of TSYS. 

 

Highlights for the second quarter of 2018 vs. 2017:

·

Total revenues were $1,007.6 million, a decrease of 17.6%. The decrease is the result of adopting ASC 606.(1)

·

Net revenue (non-GAAP), which excludes reimbursable items, interchange and payment network fees, was $956.5 million, an increase of 13.3%.

·

Net income attributable to TSYS common shareholders was $142.4 million, an increase of 23.8%.  Diluted EPS were $0.78, an increase of 25.0%.

·

Adjusted earnings (non-GAAP) were $203.8 million, an increase of 28.8%.  Adjusted diluted EPS (non-GAAP) were $1.11, an increase of 30.0%.

·

Adjusted EBITDA (non-GAAP) was $345.0 million, an increase of 12.1%.

(1)

On January 1, 2018, TSYS adopted Accounting Standards Codification (ASC) 606 “Revenue from Contracts with Customers” using the modified retrospective transition method. The most significant impact of adopting ASC 606 in 2018 is primarily the result of gross versus net presentation of interchange and payment network fees. In 2018, these fees collected on behalf of the payment networks and card issuers are presented “net” of the amounts paid to them, as opposed to the “gross” presentation for certain of these fees in 2017.

 

 


 

Page 2 of 16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revised 2018 Outlook

TSYS’ revised 2018 guidance is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revised 2018 Financial

 

 

 

 

(in millions, except per share amounts)

 

 

 

Outlook Range(1)(2)

 

Percent Change

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Total revenues (GAAP)

 

 

$

3,940

to

$

4,040

 

(20%)

to

(18%)

Net revenue (non-GAAP)

 

 

$

3,740

to

$

3,840

 

10%

to

13%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS (GAAP)

 

 

$

3.02

to

$

3.12

 

(4%)

to

(1%)

Adjusted diluted EPS attributable to TSYS common shareholders (non-GAAP)

 

 

$

4.30

to

$

4.40

 

28%

to

31%

Weighted average diluted shares outstanding

 

 

 

 

184

 

 

 

 

 

 

 

 

(2)

The estimated impact of the adoption of ASC 606(1) on TSYS’ revised 2018 Outlook is as follows:

 

 

 

 

Total revenues

($1,700)

to

($1,675)

Net revenue

($69)

to

($62)

Diluted EPS

($0.04)

to

($0.03)

Adjusted diluted EPS

($0.04)

to

($0.03)

 

 

 

 

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, July 24. The conference call can be accessed via live webcast 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


 

Page 3 of 16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 15 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 — for issuers, merchants and consumers. We succeed because we put people and their need at the heart of every decision to help them unlock payment opportunities.   It’s an approach we call ‘People-Centered Payments®.

Our headquarters are located in Columbus, Ga., U.S.A., with approximately 12,000 team members and local offices across 13 countries. TSYS generated revenue of $4.9 billion in 2017, while processing more than 27.8 billion transactions. We are a member of The Civic 50 and were named one of the 2018 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’ revised earnings guidance for 2018 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 recently completed Cayan 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


 

Page 4 of 16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

result of the United Kingdom’s decision to leave the European Union (Brexit);expenses incurred associated with the signing of a significant client; conversions of clients’ portfolios do not occur 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, including its effective date; the potential for our systems and software to contain undetected errors, viruses or defects;  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.

 

 

Contacts:

Cyle Mims

TSYS Media Relations

+1.706.644.3110

cylemims@tsys.com

 

Shawn Roberts

TSYS Investor Relations

+1.706.644.6081

shawnroberts@tsys.com

- more -

 

 


 

TSYS Announces First Quarter 2018 Earnings

Page 5 of 16

 

 

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

 

 

 

 

Percent

 

 

 

 

 

 

 

Percent

 

 

  

2018

  

2017

  

Change

    

 

2018

  

2017

  

Change

 

Total revenues

 

$

1,007,580

 

1,222,375

 

(17.6)

 

$

1,994,750

 

2,407,100

 

(17.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

617,818

 

877,887

 

(29.6)

 

 

 

1,231,183

 

1,739,744

 

(29.2)

 

Selling, general and administrative expenses

 

 

181,064

 

151,240

 

19.7

 

 

 

366,598

 

306,925

 

19.4

 

Total expenses

 

 

798,882

 

1,029,127

 

(22.4)

 

 

 

1,597,781

 

2,046,669

 

(21.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

208,698

 

193,248

 

8.0

 

 

 

396,969

 

360,431

 

10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating expenses

 

 

(41,170)

 

(30,042)

 

(37.0)

 

 

 

(78,812)

 

(59,945)

 

(31.5)

 

Income before income taxes and equity in income of equity investments

 

 

167,528

 

163,206

 

2.6

 

 

 

318,157

 

300,486

 

5.9

 

Income tax expense

 

 

37,415

 

56,207

 

(33.4)

 

 

 

55,549

 

99,289

 

(44.1)

 

Income before equity in income of equity investments

 

 

130,113

 

106,999

 

21.6

 

 

 

262,608

 

201,197

 

30.5

 

Equity in income of equity investments, net of tax

 

 

12,322

 

9,513

 

29.5

 

 

 

22,929

 

22,422

 

2.3

 

Net income

 

 

142,435

 

116,512

 

22.2

 

 

 

285,537

 

223,619

 

27.7

 

Net income attributable to noncontrolling interests

 

 

 —

 

(1,498)

 

100.0

 

 

 

(1,261)

 

(2,737)

 

53.9

 

Net income attributable to TSYS common shareholders

 

$

142,435

 

115,014

 

23.8

%  

 

$

284,276

 

220,882

 

28.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (EPS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

$

0.78

 

0.62

 

25.1

%  

 

$

1.56

 

1.20

 

30.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.78

 

0.62

 

25.0

%  

 

$

1.55

 

1.19

 

29.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(includes participating securities)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

182,355

 

184,153

 

 

 

 

 

181,991

 

184,019

 

 

 

Diluted

 

 

183,575

 

185,286

 

 

 

 

 

183,456

 

185,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.13

 

0.10

 

30.0

%  

 

$

0.26

 

0.20

 

30.0

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP measures:*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

956,548

 

844,068

 

13.3

%  

 

$

1,892,045

 

1,676,960

 

12.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

345,021

 

307,698

 

12.1

%  

 

$

675,943

 

594,935

 

13.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings

 

$

203,796

 

158,215

 

28.8

%  

 

$

411,383

 

310,480

 

32.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted EPS

 

$

1.11

 

0.85

 

30.0

%  

 

$

2.24

 

1.68

 

33.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*    See reconciliation of non-GAAP measures.

 

 

- more  -


 

TSYS Announces First Quarter 2018 Earnings

Page 6 of 16

 

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

 

 

 

 

Change

 

 

 

 

 

 

Change

 

 

    

2018

    

2017

    

$

    

%

    

2018

    

2017

    

$

    

%

 

Adjusted operating income by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions (a)

 

$

151,490

 

147,277

 

4,213

 

2.9

%  

$

302,481

 

281,150

 

21,331

 

7.6

%

Merchant Solutions (b)

 

 

124,817

 

101,996

 

22,821

 

22.4

 

 

234,831

 

193,275

 

41,556

 

21.5

 

Consumer Solutions (c)

 

 

50,232

 

46,044

 

4,188

 

9.1

 

 

99,585

 

94,692

 

4,893

 

5.2

 

Corporate admin and other

 

 

(39,166)

 

(36,036)

 

(3,130)

 

(8.7)

 

 

(77,567)

 

(71,608)

 

(5,959)

 

(8.3)

 

Adjusted segment operating income (d)

 

 

287,373

 

259,281

 

28,092

 

10.8

 

 

559,330

 

497,509

 

61,821

 

12.4

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

14,229

 

11,008

 

3,221

 

29.3

 

 

20,524

 

20,055

 

469

 

2.3

 

Cayan and Transfirst M&A and integration expenses

 

 

2,581

 

4,165

 

(1,584)

 

(38.0)

 

 

16,949

 

9,034

 

7,915

 

87.6

 

Litigation, claims, judgments or settlements

 

 

 —

 

(83)

 

83

 

100.0

 

 

 —

 

1,878

 

(1,878)

 

(100.0)

 

Acquisition intangible amortization

 

 

61,865

 

50,943

 

10,922

 

21.4

 

 

124,888

 

106,111

 

18,777

 

17.7

 

Operating income

 

 

208,698

 

193,248

 

15,450

 

8.0

 

 

396,969

 

360,431

 

36,538

 

10.1

 

Nonoperating expenses

 

 

(41,170)

 

(30,042)

 

(11,128)

 

(37.0)

 

 

(78,812)

 

(59,945)

 

(18,867)

 

(31.5)

 

Income before income taxes and equity in income of equity investments

 

$

167,528

 

163,206

 

4,322

 

2.6

%  

$

318,157

 

300,486

 

17,671

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions (e)

 

$

421,015

 

392,760

 

28,255

 

7.2

%  

$

844,589

 

780,015

 

64,574

 

8.3

%

Merchant Solutions (f)

 

 

346,389

 

278,588

 

67,801

 

24.3

 

 

663,792

 

539,149

 

124,643

 

23.1

 

Consumer Solutions (g)

 

 

200,293

 

183,065

 

17,228

 

9.4

 

 

410,781

 

380,530

 

30,251

 

7.9

 

Segment net revenue

 

 

967,697

 

854,413

 

113,284

 

13.3

 

 

1,919,162

 

1,699,694

 

219,468

 

12.9

 

Less: Intersegment revenues

 

 

11,149

 

10,345

 

804

 

7.8

 

 

27,117

 

22,734

 

4,383

 

19.3

 

Net revenue (h)

 

 

956,548

 

844,068

 

112,480

 

13.3

 

 

1,892,045

 

1,676,960

 

215,085

 

12.8

 

Add: reimbursable items, interchange and payment network fees

 

 

51,032

 

378,307

 

(327,275)

 

(86.5)

 

 

102,705

 

730,140

 

(627,435)

 

(85.9)

 

Total revenues

 

$

1,007,580

 

1,222,375

 

(214,795)

 

(17.6)

%  

$

1,994,750

 

2,407,100

 

(412,350)

 

(17.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted segment operating margin on segment net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Issuer Solutions (a)/(e)

 

 

36.0%

 

37.5%

 

 

 

 

 

 

35.8%

 

36.0%

 

 

 

 

 

  Merchant Solutions (b)/(f)

 

 

36.0%

 

36.6%

 

 

 

 

 

 

35.4%

 

35.9%

 

 

 

 

 

  Consumer Solutions (c)/(g)

 

 

25.1%

 

25.2%

 

 

 

 

 

 

24.2%

 

24.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted segment operating margin on net revenue: (d)/(h)

 

 

30.0%

 

30.7%

 

 

 

 

 

 

29.6%

 

29.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


- more -

 


 

TSYS Announces First Quarter 2018 Earnings

Page 7 of 16

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

Change

 

 

 

 

 

 

Change

 

 

    

2018

    

2017

    

$

    

%

    

 

2018

    

2017

    

$

    

%

 

Depreciation and amortization by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions

 

$

29,640

 

35,735

 

(6,095)

 

(17.1)

%

XX

$

57,971

 

72,588

 

(14,617)

 

(20.1)

%

Merchant Solutions

 

 

7,523

 

7,380

 

143

 

1.9

 

 

 

15,348

 

14,402

 

946

 

6.6

 

Consumer Solutions

 

 

4,313

 

4,180

 

133

 

3.2

 

 

 

8,573

 

8,272

 

301

 

3.6

 

Depreciation and amortization

 

 

41,476

 

47,295

 

(5,819)

 

(12.3)

 

 

 

81,892

 

95,262

 

(13,370)

 

(14.0)

 

Acquisition intangible amortization

 

 

61,865

 

50,943

 

10,922

 

21.4

 

 

 

124,888

 

106,111

 

18,777

 

17.7

 

Corporate admin and other

 

 

949

 

1,121

 

(172)

 

(15.3)

 

 

 

1,899

 

2,164

 

(265)

 

(12.2)

 

Total depreciation and amortization*

 

$

104,290

 

99,359

 

4,931

 

5.0

%

 

$

208,679

 

203,537

 

5,142

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Client incentive/contract asset amortization and contract cost asset amortization are no longer included in depreciation and amortization due to the adoption of ASC 606 on January 1,2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total transactions (in millions)

 

 

6,050.0

 

5,340.6

 

709.4

 

13.3

%

 

 

11,598.0

 

10,217.2

 

1,380.8

 

13.5

%

Total Accounts on file (AOF) (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

829.3

 

773.6

 

55.7

 

7.2

%

Total traditional AOF (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

588.9

 

542.0

 

46.9

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point-of-sale transactions (in millions)

 

 

1,498.5

 

1,233.5

 

265.0

 

21.5

%

 

 

2,838.0

 

2,361.3

 

476.7

 

20.2

%

Dollar sales volume (in millions)

 

$

40,362.1

 

31,127.5

 

9,234.6

 

29.7

%

 

$

77,628.8

 

60,247.9

 

17,380.9

 

28.8

%

Segment net revenue per transaction

 

$

0.231

 

0.226

 

0.005

 

2.4

%

 

$

0.234

 

0.228

 

0.006

 

2.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross dollar volume (in millions)

 

$

8,336.2

 

7,605.5

 

730.7

 

9.6

%

 

$

18,030.5

 

17,212.8

 

817.7

 

4.8

%

Direct deposit 90-day active cards (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

2,518.7

 

2,416.7

 

102.0

 

4.2

%

90-day active cards (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

5,078.5

 

4,964.9

 

113.6

 

2.3

%

% of 90-day active cards with direct deposit

 

 

 

 

 

 

 

 

 

 

 

 

49.6%

 

48.7%

 

 

 

 

 


- more -

 


 

TSYS Announces First Quarter 2018 Earnings

Page 8 of 16

 

 

TSYS

Condensed Balance Sheet

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

    

June 30, 2018

    

December 31, 2017

Assets