Delivers Strong Second Quarter Performance
Raises 2023 Outlook
Remains on Track to Achieve Targeted Synergies
from EVO Acquisition
Global Payments Inc. (NYSE: GPN) today announced results for the
second quarter ended June 30, 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230801220353/en/
“We delivered strong second quarter results, as the
effectiveness of our four-pillared strategy and outstanding
execution by our team members worldwide continue to propel our
business,” said Cameron Bready, President and Chief Executive
Officer. “Our differentiated focus on software primacy, omnichannel
solutions, faster growth markets and business-to-business payments
generated significant growth across our go forward businesses.”
Bready continued, “We also remain delighted with the EVO
Payments acquisition and the progress we have made with our
integration activities. We are even more excited now about our
prospects together as a combined business than we were at the time
we announced the transaction, and remain on course to deliver at
least $125 million in run-rate synergies.”
Bready concluded, “I have been at Global Payments for nearly a
decade and have never been more enthusiastic about the
opportunities available to us. We have a compelling
technology-enabled strategy, a world-class team, great partners and
clients and a global presence with distribution capabilities that
are second to none. And having completed our strategic pivot to
focus on a simpler model, I am confident that our best days remain
in front of us.”
Second Quarter 2023 Summary
- GAAP revenues were $2.45 billion, compared to $2.28 billion in
2022; diluted earnings per share were $1.05 compared to a loss per
share of $2.42 in the prior year; and operating margin was 24.6%
compared to (23.0)% in the prior year.
- Adjusted net revenues increased 7% to $2.20 billion, compared
to $2.06 billion in 2022.
- Adjusted earnings per share increased 11% to $2.62, compared to
$2.36 in 2022.
- Adjusted operating margin expanded 100 basis points to
44.8%.
2023 Outlook
“Our outstanding financial results for the second quarter and
year-to-date period reflect continued strong and consistent
execution across our businesses, despite an uncertain macroeconomic
environment,” said Josh Whipple, Senior Executive Vice President
and Chief Financial Officer. “Based on this performance, we are
raising our expectations for 2023.
“The company now expects 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 adjusted earnings per share to now be in a range of
$10.35 to $10.44, reflecting growth of 11% to 12% over 2022, or 16%
to 17% excluding dispositions. We continue to expect adjusted
operating margin for 2023 to expand by up to 120 basis points.”
Whipple concluded, “Our 2023 outlook reflects the continued
momentum we are seeing in our business, while also accommodating
the potential for a more tempered macroeconomic environment over
the remainder of the year.”
Capital Allocation
Global Payments’ Board of Directors approved a dividend of $0.25
per share payable on September 29, 2023 to shareholders of record
as of September 15, 2023.
Conference Call
Global Payments’ management will host a live audio webcast
today, August 1, 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
the 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
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
Revenues
$
2,452,469
$
2,280,906
7.5
%
$
4,744,916
$
4,437,160
6.9
%
Operating expenses:
Cost of service
941,952
962,299
(2.1
)%
1,889,705
1,919,457
(1.6
)%
Selling, general and administrative
1,013,514
863,179
17.4
%
2,056,641
1,686,328
22.0
%
Impairment of goodwill
—
833,075
nm
—
833,075
nm
Net (gain) loss on business
dispositions
(105,738
)
152,211
nm
139,095
152,211
nm
1,849,728
2,810,764
4,085,441
4,591,071
Operating income (loss)
602,741
(529,858
)
nm
659,475
(153,911
)
nm
Interest and other income
27,944
2,956
845.3
%
39,097
4,667
737.7
%
Interest and other expense
(191,423
)
(99,188
)
93.0
%
(314,368
)
(192,471
)
63.3
%
(163,479
)
(96,232
)
(275,271
)
(187,804
)
Income (loss) before income taxes and
equity in income of equity method investments
439,262
(626,090
)
nm
384,204
(341,715
)
nm
Income tax expense
172,211
52,776
226.3
%
140,812
104,994
34.1
%
Income (loss) before equity in income of
equity method investments
267,051
(678,866
)
nm
243,392
(446,709
)
nm
Equity in income of equity method
investments, net of tax
17,155
13,815
24.2
%
36,394
31,294
16.3
%
Net income (loss)
284,206
(665,051
)
nm
279,786
(415,415
)
nm
Net income attributable to noncontrolling
interest, net of income tax
(10,058
)
(7,948
)
26.5
%
(16,679
)
(12,851
)
29.8
%
Net income (loss) attributable to Global
Payments
$
274,148
$
(672,999
)
nm
$
263,107
$
(428,266
)
nm
Earnings (loss) per share attributable to
Global Payments:
Basic earnings (loss) per share
$
1.05
$
(2.42
)
nm
$
1.00
$
(1.53
)
nm
Diluted earnings (loss) per share
$
1.05
$
(2.42
)
nm
$
1.00
$
(1.53
)
nm
Weighted-average number of shares
outstanding:
Basic
260,827
278,181
261,965
280,130
Diluted
261,328
278,181
262,394
280,130
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
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
Adjusted net revenue
$
2,202,827
$
2,058,450
7.0
%
$
4,252,284
$
4,011,105
6.0
%
Adjusted operating income
$
986,980
$
902,352
9.4
%
$
1,869,494
$
1,704,823
9.7
%
Adjusted net income attributable to Global
Payments
$
685,308
$
657,776
4.2
%
$
1,316,570
$
1,242,616
6.0
%
Adjusted diluted earnings per share
attributable to Global Payments
$
2.62
$
2.36
11.1
%
$
5.02
$
4.43
13.3
%
Supplemental Non-GAAP(1)
Adjusted net revenue(1)
$
2,173,242
$
1,907,371
13.9
%
$
4,106,842
$
3,701,901
10.9
%
Adjusted operating income(1)
$
971,067
$
864,926
12.3
%
$
1,796,264
$
1,629,295
10.2
%
__________________________
(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
June 30, 2023
June 30, 2022
% Change
GAAP
Non-GAAP
GAAP
Non-GAAP
GAAP
Non-GAAP
Revenues:
Merchant Solutions
$
1,842,293
$
1,682,143
$
1,581,716
$
1,433,933
16.5
%
17.3
%
Issuer Solutions
590,441
505,283
559,639
484,241
5.5
%
4.3
%
Consumer Solutions
39,031
33,785
161,629
161,629
nm
nm
Intersegment eliminations
(19,296
)
(18,384
)
(22,078
)
(21,353
)
12.6
%
13.9
%
$
2,452,469
$
2,202,827
$
2,280,906
$
2,058,450
7.5
%
7.0
%
Operating income (loss):
Merchant Solutions
$
603,548
$
815,236
$
535,359
$
719,779
12.7
%
13.3
%
Issuer Solutions
95,701
235,910
77,499
211,466
23.5
%
11.6
%
Consumer Solutions
1,890
15,913
21,942
37,426
nm
nm
Corporate
(204,136
)
(80,079
)
(179,372
)
(66,319
)
(13.8
)%
(20.7
)%
Impairment of goodwill
—
—
(833,075
)
—
nm
nm
Gain (loss) on business dispositions
105,738
—
(152,211
)
—
nm
nm
$
602,741
$
986,980
$
(529,858
)
$
902,352
nm
9.4
%
Six Months Ended
June 30, 2023
June 30, 2022
% Change
GAAP
Non-GAAP
GAAP
Non-GAAP
GAAP
Non-GAAP
Revenues:
Merchant Solutions
$
3,447,903
$
3,138,533
$
3,054,735
$
2,771,125
12.9
%
13.3
%
Issuer Solutions
1,161,349
995,500
1,096,965
952,609
5.9
%
4.5
%
Consumer Solutions
182,740
163,027
330,744
330,744
nm
nm
Intersegment eliminations
(47,076
)
(44,776
)
(45,284
)
(43,375
)
(4.0
)%
(3.2
)%
$
4,744,916
$
4,252,284
$
4,437,160
$
4,011,105
6.9
%
6.0
%
Operating income (loss):
Merchant Solutions
$
1,110,757
$
1,503,516
$
979,889
$
1,351,896
13.4
%
11.2
%
Issuer Solutions
178,511
451,152
146,641
413,218
21.7
%
9.2
%
Consumer Solutions
(3,908
)
73,230
44,560
75,528
nm
nm
Corporate
(486,790
)
(158,404
)
(339,715
)
(135,819
)
(43.3
)%
(16.6
)%
Impairment of goodwill
—
—
(833,075
)
—
nm
nm
Net loss on business dispositions
(139,095
)
—
(152,211
)
—
nm
nm
$
659,475
$
1,869,494
$
(153,911
)
$
1,704,823
nm
9.7
%
__________________________
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)
June 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,919,591
$
1,997,566
Accounts receivable, net
1,159,266
998,332
Settlement processing assets
1,600,809
2,519,114
Current assets held for sale
7,224
138,815
Prepaid expenses and other current
assets
832,254
660,321
Total current assets
5,519,144
6,314,148
Goodwill
26,491,160
23,320,736
Other intangible assets, net
10,741,990
9,658,374
Property and equipment, net
2,084,209
1,838,809
Deferred income taxes
112,087
37,907
Noncurrent assets held for sale
29
1,295,799
Notes receivable
724,644
—
Other noncurrent assets
2,477,617
2,343,241
Total assets
$
48,150,880
$
44,809,014
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit
$
528,990
$
747,111
Current portion of long-term debt
75,681
1,169,330
Accounts payable and accrued
liabilities
2,710,458
2,442,560
Settlement processing obligations
1,802,361
2,413,799
Current liabilities held for sale
942
125,891
Total current liabilities
5,118,432
6,898,691
Long-term debt
16,975,360
12,289,248
Deferred income taxes
2,447,947
2,428,412
Noncurrent liabilities held for sale
164
4,478
Other noncurrent liabilities
693,518
647,975
Total liabilities
25,235,421
22,268,804
Commitments and contingencies
Redeemable noncontrolling interests
499,479
—
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 June 30, 2023 and December 31, 2022;
259,962,485 issued and outstanding at June 30, 2023 and 263,081,872
issued and outstanding at December 31, 2022
—
—
Paid-in capital
19,686,035
19,978,095
Retained earnings
2,863,852
2,731,380
Accumulated other comprehensive loss
(378,401
)
(405,969
)
Total Global Payments shareholders’
equity
22,171,486
22,303,506
Nonredeemable noncontrolling interests
244,494
236,704
Total equity
22,415,980
22,540,210
Total liabilities, redeemable
noncontrolling interests and equity
$
48,150,880
$
44,809,014
SCHEDULE 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands)
Six Months Ended
June 30, 2023
June 30, 2022
Cash flows from operating
activities:
Net income (loss)
$
279,786
$
(415,415
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization of property
and equipment
223,753
199,875
Amortization of acquired intangibles
645,675
656,373
Amortization of capitalized contract
costs
59,065
53,113
Share-based compensation expense
136,701
85,414
Provision for operating losses and credit
losses
61,313
57,929
Noncash lease expense
32,362
43,036
Deferred income taxes
(317,660
)
(180,001
)
Equity in income of equity method
investments, net of tax
(36,394
)
(31,294
)
Impairment of goodwill
—
833,075
Net loss on business dispositions
139,095
152,211
Other, net
1,409
17,573
Changes in operating assets and
liabilities, net of the effects of business combinations:
Accounts receivable
(58,981
)
(80,580
)
Settlement processing assets and
obligations, net
213,936
69,595
Prepaid expenses and other assets
(191,478
)
(191,652
)
Accounts payable and other liabilities
(24,099
)
(71,119
)
Net cash provided by operating
activities
1,164,483
1,198,133
Cash flows from investing
activities:
Business combinations and other
acquisitions, net of cash and restricted cash acquired
(4,101,415
)
(9,931
)
Capital expenditures
(331,002
)
(324,027
)
Issuance of notes receivable
(50,000
)
—
Net cash from sales of businesses
478,695
(29,755
)
Other, net
2,186
16
Net cash used in investing activities
(4,001,536
)
(363,697
)
Cash flows from financing
activities:
Net borrowings from (repayments of)
settlement lines of credit
(233,075
)
4,139
Net borrowings from commercial paper
notes
1,841,675
—
Proceeds from long-term debt
7,359,193
2,954,156
Repayments of long-term debt
(5,673,724
)
(2,276,488
)
Payments of debt issuance costs
(12,255
)
(1,706
)
Repurchases of common stock
(418,271
)
(1,249,994
)
Proceeds from stock issued under
share-based compensation plans
19,282
23,619
Common stock repurchased - share-based
compensation plans
(33,680
)
(26,972
)
Distributions to noncontrolling
interests
(17,255
)
(14,363
)
Payment of contingent consideration in
business combination
—
(15,726
)
Dividends paid
(130,635
)
(139,315
)
Net cash provided by (used in) financing
activities
2,701,255
(742,650
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
34,543
(114,968
)
Decrease in cash, cash equivalents and
restricted cash
(101,255
)
(23,182
)
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
$
2,114,351
$
2,099,841
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 June 30,
2023
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income Taxes on
Adjustments(3)
Non-GAAP
Revenues
$
2,452,469
$
(249,642
)
$
—
$
—
$
2,202,827
Operating income
$
602,741
$
(4,704
)
$
388,943
$
—
$
986,980
Net income attributable to Global
Payments
$
274,148
$
(4,704
)
$
405,783
$
10,081
$
685,308
Diluted earnings per share attributable to
Global Payments
$
1.05
$
2.62
Diluted weighted average shares
outstanding
261,328
261,328
Three Months Ended June 30,
2022
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income Taxes on
Adjustments(3)
Non-GAAP
Revenues
$
2,280,906
$
(222,456
)
$
—
$
—
$
2,058,450
Operating income (loss)
$
(529,858
)
$
1,776
$
1,430,434
$
—
$
902,352
Net income (loss) attributable to Global
Payments
$
(672,999
)
$
1,776
$
1,432,057
$
(103,058
)
$
657,776
Diluted earnings (loss) per share
attributable to Global Payments
$
(2.42
)
$
2.36
Diluted weighted average shares
outstanding (4)
278,181
278,523
__________________________
(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 June 30, 2023
and 2022, net revenue adjustments also included $0.5 million and
$1.8 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 June 30, 2023 also included a $5.2 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 June 30, 2023,
earnings adjustments to operating income included $344.3 million in
cost of services (COS) and $150.3 million in selling, general and
administrative expenses (SG&A). Adjustments to COS included
amortization of acquired intangibles of $344.4 million and other
items of $(0.1) million. Adjustments to SG&A included
share-based compensation expense of $47.1 million, acquisition,
integration and separation expenses of $86.6 million, facilities
exit charges of $3.6 million, employee severance charges of $11.2
million, and other items of $1.8 million. Earnings adjustments to
operating income also included the $105.7 million gain on business
dispositions.
Acquisition, integration and separation
expenses for the three months ended June 30, 2023 included $19.4
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 three months ended June 30, 2022,
earnings adjustments to operating income included $327.8 million in
COS and $117.3 million in SG&A. Adjustments to COS represent
amortization of acquired intangibles of $327.4 million and other
items of $0.4 million. Adjustments to SG&A include share-based
compensation expense of $47.0 million, acquisition and integration
expenses of $61.8 million and other items of $8.5 million.
For the three months ended June 30, 2022,
earnings adjustments to operating income also included the $833.1
million noncash goodwill impairment charge in connection with the
strategic review of the former Business and Consumer Solutions
segment and sale of the consumer business and the $152.2 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. In addition, for the three months ended
June 30, 2023, income taxes on adjustments include the removal of
tax expense related to business dispositions.
(4)
Includes 341,681 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 7
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES TO GAAP MEASURES (UNAUDITED)
GLOBAL PAYMENTS INC. AND SUBSIDIARIES
(In thousands, except per share data)
Six Months Ended June 30,
2023
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income Taxes on
Adjustments(3)
Non-GAAP
Revenues
$
4,744,916
$
(492,633
)
$
—
$
—
$
4,252,284
Operating income
$
659,475
$
(18,641
)
$
1,228,660
$
—
$
1,869,494
Net income attributable to Global
Payments
$
263,107
$
(18,641
)
$
1,243,358
$
(171,254
)
$
1,316,570
Diluted earnings per share attributable to
Global Payments
$
1.00
$
5.02
Diluted weighted average shares
outstanding
262,394
262,394
Six Months Ended June 30,
2022
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Income Taxes on
Adjustments(3)
Non-GAAP
Revenues
$
4,437,160
$
(426,055
)
$
—
$
—
$
4,011,105
Operating income (loss)
$
(153,911
)
$
5,388
$
1,853,346
$
—
$
1,704,823
Net income (loss) attributable to Global
Payments
$
(428,266
)
$
5,388
$
1,855,635
$
(190,141
)
$
1,242,616
Diluted earnings (loss) per share
attributable to Global Payments
$
(1.53
)
$
4.43
Diluted weighted average shares
outstanding (4)
280,130
280,534
__________________________
(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 six months ended June 30, 2023 and
2022, net revenue adjustments also included $1.1 million and $5.4
million, respectively, to eliminate the effect of acquisition
accounting fair value adjustments for software-related contract
liabilities associated with acquired businesses. Adjustments for
the six months ended June 30, 2023 also included a $19.7 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 six months ended June 30, 2023,
earnings adjustments to operating income included $647.9 million in
COS and $441.6 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $645.7 million and other
items of $2.2 million. Adjustments to SG&A included share-based
compensation expense of $136.7 million, acquisition, integration
and separation expenses of $261.3 million, facilities exit charges
of $11.3 million, employee severance charges of $29.9 million, and
other items of $2.4 million. Earnings adjustments to operating
income also included the $139.1 million loss on business
dispositions.
Acquisition, integration and separation
expenses for the six months ended June 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 six months ended June 30, 2022,
earnings adjustments to operating income included $657.0 million in
COS and $211.0 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $656.4 million and other
items of $0.6 million. Adjustments to SG&A included share-based
compensation expense of $85.4 million, acquisition and integration
expenses of $112.9 million and other items of $12.7 million.
For the six months ended June 30, 2022,
earnings adjustments to operating income also included the $833.1
million noncash goodwill impairment charge in connection with the
strategic review of the former Business and Consumer Solutions
segment and sale of the consumer business and the $152.2 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. In addition, for the three months ended
June 30, 2023, income taxes on adjustments include the removal of
tax expense related to business dispositions.
(4)
Includes 404,349 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 June 30,
2023
GAAP
Net Revenue Adjustments (1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
1,842,293
$
(160,150
)
$
—
$
1,682,143
$
—
$
1,682,143
Issuer Solutions
590,441
(85,158
)
—
505,283
—
505,283
Consumer Solutions
39,031
(5,246
)
—
33,785
(33,785
)
—
Intersegment eliminations
(19,296
)
912
—
(18,384
)
4,200
(14,184
)
$
2,452,469
$
(249,642
)
$
—
$
2,202,827
$
(29,585
)
$
2,173,242
Operating income (loss):
Merchant Solutions
$
603,548
$
9
$
211,679
$
815,236
$
—
$
815,236
Issuer Solutions
95,701
534
139,676
235,910
—
235,910
Consumer Solutions
1,890
(5,246
)
19,269
15,913
(15,913
)
—
Corporate
(204,136
)
—
124,057
(80,079
)
—
(80,079
)
Gain on business dispositions
105,738
—
(105,738
)
—
—
—
$
602,741
$
(4,704
)
$
388,943
$
986,980
$
(15,913
)
$
971,067
Three Months Ended June 30,
2022
GAAP
Net Revenue Adjustments (1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
1,581,716
$
(147,783
)
$
—
$
1,433,933
$
—
$
1,433,933
Issuer Solutions
559,639
(75,398
)
—
484,241
—
484,241
Consumer Solutions
161,629
—
—
161,629
(161,629
)
—
Intersegment eliminations
(22,078
)
725
—
(21,353
)
10,550
(10,803
)
$
2,280,906
$
(222,456
)
$
—
$
2,058,450
$
(151,079
)
$
1,907,371
Operating income (loss):
Merchant Solutions
$
535,359
$
139
$
184,281
$
719,779
$
—
$
719,779
Issuer Solutions
77,499
1,636
132,330
211,466
—
211,466
Consumer Solutions
21,942
—
15,484
37,426
(37,426
)
—
Corporate
(179,372
)
—
113,053
(66,319
)
—
(66,319
)
Impairment of goodwill
(833,075
)
—
833,075
—
—
—
Net loss on business dispositions
(152,211
)
—
152,211
—
—
—
$
(529,858
)
$
1,776
$
1,430,434
$
902,352
$
(37,426
)
$
864,926
__________________________
(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 June 30, 2023
and 2022, net revenue adjustments also included $0.5 million and
$1.8 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 June 30, 2023 also included a $5.2 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 June 30, 2023,
earnings adjustments to operating income included $344.3 million in
COS and $150.3 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $344.4 million and other
items of $(0.1) million. Adjustments to SG&A included
share-based compensation expense of $47.1 million, acquisition,
integration and separation expenses of $86.6 million, facilities
exit charges of $3.6 million, employee severance charges of $11.2
million, and other items of $1.8 million. Earnings adjustments to
operating income also included the $105.7 million gain on business
dispositions.
Acquisition, integration and separation
expenses for the three months ended June 30, 2023 included $19.4
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 June 30, 2022,
earnings adjustments to operating income included $327.8 million in
COS and $117.3 million in SG&A. Adjustments to COS represent
amortization of acquired intangibles of $327.4 million and other
items of $0.4 million. Adjustments to SG&A include share-based
compensation expense of $47.0 million, acquisition and integration
expenses of $61.8 million and other items of $8.5 million.
For the three months ended June 30, 2022,
earnings adjustments to operating income also included the $833.1
million noncash goodwill impairment charge in connection with the
strategic review of the former Business and Consumer Solutions
segment and sale of the consumer business and the $152.2 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)
Six Months Ended June 30,
2023
GAAP
Net Revenue Adjustments (1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
3,447,903
$
(309,370
)
$
—
$
3,138,533
$
—
$
3,138,533
Issuer Solutions
1,161,349
(165,849
)
—
995,500
—
995,500
Consumer Solutions
182,740
(19,713
)
—
163,027
(163,027
)
—
Intersegment eliminations
(47,076
)
2,300
—
(44,776
)
17,585
(27,191
)
$
4,744,916
$
(492,633
)
$
—
$
4,252,284
$
(145,442
)
$
4,106,842
Operating income (loss):
Merchant Solutions
$
1,110,757
$
22
$
392,737
$
1,503,516
$
—
$
1,503,516
Issuer Solutions
178,511
1,050
271,591
451,152
—
451,152
Consumer Solutions
(3,908
)
(19,713
)
96,851
73,230
(73,230
)
—
Corporate
(486,790
)
—
328,386
(158,404
)
—
(158,404
)
Impairment of goodwill
—
—
—
—
—
—
Net loss on business dispositions
(139,095
)
—
139,095
—
—
—
$
659,475
$
(18,641
)
$
1,228,660
$
1,869,494
$
(73,230
)
$
1,796,264
Six Months Ended June 30,
2022
GAAP
Net Revenue Adjustments(1)
Earnings Adjustments(2)
Non-GAAP
Consumer Business (3)
Supplemental Non-GAAP (3)
Revenues:
Merchant Solutions
$
3,054,735
$
(283,610
)
$
—
$
2,771,125
$
—
$
2,771,125
Issuer Solutions
1,096,965
(144,355
)
—
952,609
—
952,609
Consumer Solutions
330,744
—
—
330,744
(330,744
)
—
Intersegment eliminations
(45,284
)
1,910
—
(43,375
)
21,541
(21,834
)
$
4,437,160
$
(426,055
)
$
—
$
4,011,105
$
(309,203
)
$
3,701,901
Operating income (loss):
Merchant Solutions
$
979,889
$
219
$
371,787
$
1,351,896
$
—
$
1,351,896
Issuer Solutions
146,641
5,169
261,408
413,218
—
413,218
Consumer Solutions
44,560
—
30,968
75,528
(75,528
)
—
Corporate
(339,715
)
—
203,896
(135,819
)
—
(135,819
)
Impairment of goodwill
(833,075
)
—
833,075
—
—
—
Net loss on business dispositions
(152,211
)
—
152,211
—
—
—
$
(153,911
)
$
5,388
$
1,853,346
$
1,704,823
$
(75,528
)
$
1,629,295
__________________________
(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 six months ended June 30, 2023 and
2022, net revenue adjustments also included $1.1 million and $5.4
million, respectively, to eliminate the effect of acquisition
accounting fair value adjustments for software-related contract
liabilities associated with acquired businesses. Adjustments for
the six months ended June 30, 2023 also included a $19.7 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 six months ended June 30, 2023,
earnings adjustments to operating income included $647.9 million in
COS and $441.6 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $645.7 million and other
items of $2.2 million. Adjustments to SG&A included share-based
compensation expense of $136.7 million, acquisition, integration
and separation expenses of $261.3 million, facilities exit charges
of $11.3 million, employee severance charges of $29.9 million, and
other items of $2.4 million. Earnings adjustments to operating
income also included the $139.1 million loss on business
dispositions.
Acquisition, integration and separation
expenses for the six months ended June 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 six months ended June 30, 2022,
earnings adjustments to operating income included $657.0 million in
COS and $211.0 million in SG&A. Adjustments to COS included
amortization of acquired intangibles of $656.4 million and other
items of $0.6 million. Adjustments to SG&A included share-based
compensation expense of $85.4 million, acquisition and integration
expenses of $112.9 million and other items of $12.7 million.
For the six months ended June 30, 2022,
earnings adjustments to operating income also included the $833.1
million noncash goodwill impairment charge in connection with the
strategic review of the former Business and Consumer Solutions
segment and sale of the consumer business and the $152.2 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
$4.01 to $4.10
nm
Adjustments(2)
8.92
6.34
Adjusted EPS
$9.32
$10.35 to $10.44
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) other items of
$0.06, 7) equity method investment earnings from our interest in a
private equity investment fund of $(0.06), 8) discrete tax items of
$0.01, 9) 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, 10) loss on
business dispositions of $0.70, 11) other income and expense of
$0.05, and 12) the effect of noncontrolling interests and income
taxes, as applicable.
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 or 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/20230801220353/en/
Investor contact: investor.relations@globalpay.com Winnie Smith
770-829-8478
Media contact: media.relations@globalpay.com Emily Edmonds
770-829-8755
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