Exhibit 99.1

 

 

Picture 6

 

Picture 7

 

 

 

 

Picture 1

 

 

 

TSYS Reports Third Quarter Earnings and Increases 2018 Outlook

 

Columbus, Ga., October 23, 2018 – TSYS (NYSE:  TSS) today reported results for the third quarter of 2018.

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

 

Highlights for the third quarter of 2018 vs. 2017:

·

Total revenues were $1,015.4 million, a decrease of 18.6%. The decrease is the result of adopting ASC 606.(1)

·

Net revenue (non-GAAP), which excludes reimbursable items, interchange and payment network fees, was $964.6 million, an increase of 13.1%.

·

Net income attributable to TSYS common shareholders was $156.0 million, an increase of 26.7%.  Diluted EPS were $0.85, an increase of 28.0%.

·

Adjusted earnings (non-GAAP) were $212.4 million, an increase of 30.6%.  Adjusted diluted EPS (non-GAAP) were $1.16, an increase of  32.0%.

·

Adjusted EBITDA (non-GAAP) was $348.5 million, an increase of 12.6%.

(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)

 

 

$

3,990

to

$

4,040

 

(19%)

to

(18%)

Net revenue (non-GAAP)

 

 

$

3,790

to

$

3,840

 

11%

to

13%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS (GAAP)

 

 

$

3.09

to

$

3.15

 

(2%)

to

0%

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

 

 

$

4.41

to

$

4.47

 

31%

to

33%

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, October 23. 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 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-


 

Page 3 of 16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 13,000 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 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


 

Page 4 of 16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Third Quarter 2018 Earnings

Page 5 of 16

 

 

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

 

Percent

 

 

 

 

 

 

 

Percent

 

 

  

2018

  

2017

  

Change

    

 

2018

  

2017

  

Change

 

Total revenues

 

$

1,015,371

 

1,247,576

 

(18.6)

 

$

3,010,121

 

3,654,676

 

(17.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

624,363

 

898,471

 

(30.5)

 

 

 

1,855,546

 

2,638,214

 

(29.7)

 

Selling, general and administrative expenses

 

 

175,025

 

149,413

 

17.1

 

 

 

541,623

 

456,339

 

18.7

 

Total expenses

 

 

799,388

 

1,047,884

 

(23.7)

 

 

 

2,397,169

 

3,094,553

 

(22.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

215,983

 

199,692

 

8.2

 

 

 

612,952

 

560,123

 

9.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating expenses

 

 

(41,294)

 

(28,835)

 

(43.2)

 

 

 

(120,106)

 

(88,780)

 

(35.3)

 

Income before income taxes and equity in income of equity investments

 

 

174,689

 

170,857

 

2.2

 

 

 

492,846

 

471,343

 

4.6

 

Income tax expense

 

 

31,112

 

54,628

 

(43.0)

 

 

 

86,662

 

153,917

 

(43.7)

 

Income before equity in income of equity investments

 

 

143,577

 

116,229

 

23.5

 

 

 

406,184

 

317,426

 

28.0

 

Equity in income of equity investments, net of tax

 

 

12,383

 

8,497

 

45.7

 

 

 

35,313

 

30,919

 

14.2

 

Net income

 

 

155,960

 

124,726

 

25.0

 

 

 

441,497

 

348,345

 

26.7

 

Net income attributable to noncontrolling interests

 

 

 —

 

(1,631)

 

100.0

 

 

 

(1,261)

 

(4,368)

 

71.1

 

Net income attributable to TSYS common shareholders

 

$

155,960

 

123,095

 

26.7

%  

 

$

440,236

 

343,977

 

28.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (EPS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

$

0.85

 

0.67

 

28.0

%  

 

$

2.42

 

1.87

 

29.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.85

 

0.66

 

28.0

%  

 

$

2.40

 

1.85

 

29.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(includes participating securities)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

182,428

 

184,272

 

 

 

 

 

182,140

 

184,107

 

 

 

Diluted

 

 

183,846

 

185,809

 

 

 

 

 

183,601

 

185,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.13

 

0.13

 

 —

%  

 

$

0.39

 

0.33

 

18.2

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP measures:*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

964,594

 

852,759

 

13.1

%  

 

$

2,856,639

 

2,529,719

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

348,488

 

309,461

 

12.6

%  

 

$

1,024,431

 

904,396

 

13.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings

 

$

212,412

 

162,667

 

30.6

%  

 

$

623,795

 

473,148

 

31.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted EPS

 

$

1.16

 

0.88

 

32.0

%  

 

$

3.40

 

2.55

 

33.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*    See reconciliation of non-GAAP measures.

 

 

- more  -


 

TSYS Announces Third Quarter 2018 Earnings

Page 6 of 16

 

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

Change

 

 

 

 

 

 

Change

 

 

    

2018

    

2017

    

$

    

%

    

2018

    

2017

    

$

    

%

 

Adjusted operating income by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions (a)

 

$

154,107

 

147,758

 

6,349

 

4.3

%  

$

456,588

 

428,909

 

27,679

 

6.5

%

Merchant Solutions (b)

 

 

125,153

 

103,275

 

21,878

 

21.2

 

 

359,983

 

296,551

 

63,432

 

21.4

 

Consumer Solutions (c)

 

 

49,503

 

48,560

 

943

 

1.9

 

 

149,089

 

143,251

 

5,838

 

4.1

 

Corporate admin and other

 

 

(39,911)

 

(39,560)

 

(351)

 

(0.9)

 

 

(117,477)

 

(111,170)

 

(6,307)

 

(5.7)

 

Adjusted segment operating income (d)

 

 

288,852

 

260,033

 

28,819

 

11.1

 

 

848,183

 

757,541

 

90,642

 

12.0

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

12,392

 

8,407

 

3,985

 

47.4

 

 

32,916

 

28,462

 

4,454

 

15.6

 

Cayan and Transfirst M&A and integration expenses

 

 

2,887

 

1,052

 

1,835

 

nm 

 

 

19,836

 

10,086

 

9,750

 

96.7

 

Litigation, claims, judgments or settlements

 

 

 —

 

26

 

(26)

 

(100.0)

 

 

 —

 

1,904

 

(1,904)

 

(100.0)

 

Acquisition intangible amortization

 

 

57,590

 

50,856

 

6,734

 

13.2

 

 

182,479

 

156,966

 

25,513

 

16.3

 

Operating income

 

 

215,983

 

199,692

 

16,291

 

8.2

 

 

612,952

 

560,123

 

52,829

 

9.4

 

Nonoperating expenses

 

 

(41,294)

 

(28,835)

 

(12,459)

 

(43.2)

 

 

(120,106)

 

(88,780)

 

(31,326)

 

(35.3)

 

Income before income taxes and equity in income of equity investments

 

$

174,689

 

170,857

 

3,832

 

2.2

%  

$

492,846

 

471,343

 

21,503

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions (e)

 

$

434,332

 

401,074

 

33,258

 

8.3

%  

$

1,278,921

 

1,181,090

 

97,831

 

8.3

%

Merchant Solutions (f)

 

 

346,309

 

281,819

 

64,490

 

22.9

 

 

1,010,101

 

820,968

 

189,133

 

23.0

 

Consumer Solutions (g)

 

 

195,810

 

179,918

 

15,892

 

8.8

 

 

606,591

 

560,448

 

46,143

 

8.2

 

Segment net revenue

 

 

976,451

 

862,811

 

113,640

 

13.2

 

 

2,895,613

 

2,562,506

 

333,107

 

13.0

 

Less: Intersegment revenues

 

 

11,857

 

10,052

 

1,805

 

18.0

 

 

38,974

 

32,787

 

6,187

 

18.9

 

Net revenue (h)

 

 

964,594

 

852,759

 

111,835

 

13.1

 

 

2,856,639

 

2,529,719

 

326,920

 

12.9

 

Add: reimbursable items, interchange and payment network fees

 

 

50,777

 

394,817

 

(344,040)

 

(87.1)

 

 

153,482

 

1,124,957

 

(971,475)

 

(86.4)

 

Total revenues

 

$

1,015,371

 

1,247,576

 

(232,205)

 

(18.6)

%  

$

3,010,121

 

3,654,676

 

(644,555)

 

(17.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted segment operating margin on segment net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Issuer Solutions (a)/(e)

 

 

35.5%

 

36.8%

 

 

 

 

 

 

35.7%

 

36.3%

 

 

 

 

 

  Merchant Solutions (b)/(f)

 

 

36.1%

 

36.6%

 

 

 

 

 

 

35.6%

 

36.1%

 

 

 

 

 

  Consumer Solutions (c)/(g)

 

 

25.3%

 

27.0%

 

 

 

 

 

 

24.6%

 

25.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

29.9%

 

30.5%

 

 

 

 

 

 

29.7%

 

29.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

nm = not meaningful

 

- more -

 


 

TSYS Announces Third Quarter 2018 Earnings

Page 7 of 16

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

Change

 

 

 

 

 

 

Change

 

 

    

2018

    

2017

    

$

    

%

    

 

2018

    

2017

    

$

    

%

 

Depreciation and amortization by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Solutions

 

$

30,411

 

36,699

 

(6,288)

 

(17.1)

%

XX

$

88,382

 

109,287

 

(20,905)

 

(19.1)

%

Merchant Solutions

 

 

8,014

 

7,588

 

426

 

5.6

 

 

 

23,362

 

21,990

 

1,372

 

6.2

 

Consumer Solutions

 

 

4,303

 

3,785

 

518

 

13.7

 

 

 

12,875

 

12,057

 

818

 

6.8

 

Depreciation and amortization

 

 

42,728

 

48,072

 

(5,344)

 

(11.1)

 

 

 

124,619

 

143,334

 

(18,715)

 

(13.1)

 

Acquisition intangible amortization

 

 

57,590

 

50,856

 

6,734

 

13.2

 

 

 

182,479

 

156,966

 

25,513

 

16.3

 

Corporate admin and other

 

 

1,014

 

1,356

 

(342)

 

(25.2)

 

 

 

2,912

 

3,521

 

(609)

 

(17.3)

 

Total depreciation and amortization*

 

$

101,332

 

100,284

 

1,048

 

1.0

%

 

$

310,010

 

303,821

 

6,189

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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)

 

 

6,154.7

 

5,494.9

 

659.8

 

12.0

%

 

 

17,752.7

 

15,712.1

 

2,040.6

 

13.0

%

Total Accounts on file (AOF) (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

823.7

 

797.3

 

26.4

 

3.3

%

Total traditional AOF (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

594.4

 

562.1

 

32.3

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point-of-sale transactions (in millions)

 

 

1,533.9

 

1,260.9

 

273.0

 

21.7

%

 

 

4,371.9

 

3,622.2

 

749.7

 

20.7

%

Dollar sales volume (in millions)

 

$

40,910.2

 

31,478.2

 

9,432.0

 

30.0

%

 

$

118,539.0

 

91,726.1

 

26,812.9

 

29.2

%

Segment net revenue per transaction

 

$

0.226

 

0.223

 

0.002

 

1.0

%

 

$

0.231

 

0.227

 

0.004

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross dollar volume (in millions)

 

$

8,053.2

 

7,242.3

 

810.9

 

11.2

%

 

$

26,083.7

 

24,455.1

 

1,628.6

 

6.7

%

Direct deposit 90-day active cards (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

2,503.7

 

2,315.3

 

188.4

 

8.1

%

90-day active cards (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

4,948.3

 

4,697.2

 

251.1

 

5.3

%

% of 90-day active cards with direct deposit

 

 

 

 

 

 

 

 

 

 

 

 

50.6%

 

49.3%

 

 

 

 

 


- more -

 


 

TSYS Announces Third Quarter 2018 Earnings

Page 8 of 16

 

 

TSYS

Condensed Balance Sheet

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

    

September 30, 2018

    

December 31, 2017

Assets