TSYS Reports 2015 Adjusted EPS Grew 25.5%

Provides 2016 Adjusted EPS and Revenue Guidance

COLUMBUS, Ga.--()--TSYS (NYSE: TSS) today reported results for the 2015 fourth quarter and full year.

“We were especially pleased with our operational performance and 12.9% revenue growth in the fourth quarter. Our full year financial results for 2015 were outstanding and they marked the third year in a row of double digit growth in revenues, adjusted operating income and adjusted earnings per share,” said M. Troy Woods, chairman, president and chief executive officer of TSYS.

“We repurchased 3.0 million shares of our stock in the fourth quarter for $158.6 million, bringing the total for the year to 5.2 million shares for $242.1 million. Including our dividends of $73.7 million, we returned $315.8 million to our shareholders, which was in excess of 92% of available free cash flow for the year and an increase of 31.5% over 2014,” said Woods.

Highlights for the full year of 2015 include:

  • Adjusted EPS from continuing operations were $2.46, an increase of 25.5%. On a GAAP basis, basic EPS from continuing operations were $1.97, an increase of 33.3%.
  • Excluding the impact from discrete tax items of approximately $0.13 per share full year, adjusted EPS was $2.33, an increase of 19.0%.
  • Income from continuing operations attributable to TSYS’ shareholders was $362.6 million, an increase of 31.8%.
  • Adjusted EBITDA was $833.9 million, an increase of 17.1%.
  • Total revenues were $2.8 billion, an increase of 13.6%. Revenues before reimbursable items were $2.5 billion, an increase of 14.0%.
  • Adjusted operating margin was 26.7%. GAAP operating margin was 19.2%.

Highlights for the fourth quarter of 2015 include:

  • Adjusted EPS from continuing operations were $0.57, a decrease of 1.6%. On a GAAP basis, basic EPS from continuing operations were $0.44, a decrease of 1.2%.
  • Income from continuing operations attributable to TSYS’ shareholders was $81.4 million, a decrease of 2.1%.
  • Adjusted EBITDA was $195.0 million, an increase of 0.7%.
  • Total revenues for the quarter were $716.8 million, an increase of 12.9%. Revenues before reimbursable items were $645.1 million, an increase of 13.3%.
  • Adjusted operating margin was 23.4%. GAAP operating margin was 16.4%.

“Our guidance for 2016 includes revenue growth in all four of our segments as we continue to expect broad based performance gains in our business,” said Woods.

      2016 Financial Outlook
Range    
(in millions, except per Percent
share amounts) Change
Total revenues $2,900   to   $2,946 4%   to   6%
Revenues before reimbursable items $2,624 to $2,674 5% to 7%
Adjusted EPS attributable to TSYS common shareholders from continuing operations*

 

$2.56

 

to

 

$2.62

 

4%

 

to

 

7%

* Average Basic Weighted Shares 184.5
 

 

*Note: The impact of any future share repurchases is not included.

TSYS to Acquire TransFirst

TSYS also announced today that it has entered into a definitive agreement with Vista Equity Partners to acquire TransFirst, a Vista portfolio company and a leading U.S. merchant solutions provider, in an all-cash transaction valued at approximately $2.35 billion. Please refer to the separate press release issued by TSYS today for additional details regarding the transaction.

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, January 26. The conference call can be accessed via simultaneous Internet broadcast at tsys.com by clicking on the link under "Webcasts" on the main homepage. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call. A slide presentation to accompany the call will be available by clicking on the link under "Webcasts" on the main homepage of tsys.com.

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, adjusted EBITDA and adjusted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures are included on pages 10 to 13 of this release.

About TSYS

At TSYS® (NYSE: TSS), we believe payments should revolve around people, not the other way around. We call this belief People-Centered Payments®. By putting people at the center of every decision we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. Through NetSpend®, A TSYS Company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions.

TSYS’ headquarters are located in Columbus, Ga., U.S.A., with local offices spread across the Americas, EMEA and Asia-Pacific. TSYS is a member of The Civic 50 and has been named one of the 2015 World's Most Ethical Companies by Ethisphere magazine. TSYS routinely posts all important information on its website. For more, please visit us at www.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 2016 total revenues, revenues before reimbursable items and adjusted 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; the effect of current domestic and worldwide economic conditions; risks associated with foreign operations, including adverse developments with respect to foreign currency exchange rates; expenses are 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; 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. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.

                                             
TSYS
Financial Highlights
(unaudited)
(in thousands, except per share data)
                       
Three Months Ended Twelve Months Ended
December 31, December 31,
Percent Percent
2015 2014 Change 2015 2014 Change
 
Total revenues $ 716,843 635,104 12.9 % $ 2,779,541 2,446,877 13.6 %
 
Cost of services 489,040 422,129 15.9 1,855,181 1,668,892 11.2
Selling, general and administrative expenses 109,898   90,202   21.8 390,253   346,345   12.7
Total expenses 598,938   512,331   16.9 2,245,434   2,015,237   11.4
 
Operating income 117,905 122,773 (4.0 ) 534,107 431,640 23.7
 
Nonoperating expenses (9,237 ) (8,516 ) (8.5 ) (37,219 ) (38,711 ) 3.9

 

Income before income taxes, noncontrolling interests and equity in income of equity investments

108,668 114,257 (4.9 ) 496,888 392,929 26.5
Income taxes 32,160   35,428   (9.2 ) 151,364   129,761   16.6

Income before noncontrolling interests and equity in income of equity investments

76,508 78,829 (2.9 ) 345,524 263,168 31.3
Equity in income of equity investments, net of tax 6,797   5,751   18.2 22,106   17,583   25.7
Income from continuing operations, net of tax 83,305 84,580 (1.5 ) 367,630 280,751 30.9
Gain (Loss) from discontinued operations, net of tax 1,411   (3,338 ) nm 1,411   48,655   (97.1 )
Net income 84,716 81,242 4.3 369,041 329,406 12.0
Net income attributable to noncontrolling interests (1,888 ) (1,382 ) (36.6 ) (4,997 ) (6,534 ) 23.5
 
Net income attributable to TSYS common shareholders $ 82,828   79,860   3.7 % $ 364,044   322,872   12.8 %
 
Basic earnings per share (EPS):

Income from continuing operations to TSYS common shareholders*

$ 0.44 0.45 (1.2 ) % $ 1.97 1.48 33.3 %

Gain (Loss) from discontinued operations to TSYS common shareholders*

0.01   (0.02 ) nm 0.01   0.26   (97.0 )
Basic EPS $ 0.45   0.43   4.8 % $ 1.98   1.73   14.1 %
 
Diluted EPS:

Income from continuing operations to TSYS common shareholders*

$ 0.44 0.45 (1.2 ) % $ 1.96 1.47 33.5 %

Gain (Loss) from discontinued operations to TSYS common shareholders*

0.01   (0.02 ) nm 0.01   0.25   (97.0 )
Diluted EPS $ 0.45   0.43   4.8 % $ 1.97   1.72   14.2 %
 

Weighted average shares outstanding: (includes participating securities)

Basic 183,376   185,221   184,082   186,222  
Diluted 184,581   186,420   185,239   187,681  
 
Dividends declared per share $ 0.10   0.10   $ 0.40   0.40  
 
Amounts attributable to TSYS common shareholders:
Income from continuing operations, net of tax $ 81,417 83,198 (2.1 ) % $ 362,633 275,216 31.8 %
Gain (Loss) from discontinued operations, net of tax 1,411   (3,338 ) nm 1,411   47,656   (97.0 )
Net income $ 82,828   79,860   3.7 % $ 364,044   322,872   12.8 %
 

Non-GAAP measures:

Adjusted EPS from continuing operations $ 0.57   0.58   (1.6 ) % $ 2.46   1.96   25.5 %
 
Adjusted EBITDA $ 195,031   193,738   0.7 % $ 833,920   712,267   17.1 %
 
nm = not meaningful
* EPS amounts may not total due to rounding.
 
 
TSYS
Segment Breakdown
(unaudited)
(in thousands)
                   
Three Months Ended December 31, Twelve Months Ended December 31,
Change Change
2015   2014   $   % 2015   2014   $   %
Revenues before reimbursable items:
North America Services $ 300,265 255,539 44,726 17.5 % $ 1,147,254 954,082 193,172 20.2 %
International Services 87,126 92,895 (5,769 ) (6.2 )

331,159

341,785 (10,626 ) (3.1 )
Merchant Services 122,053 107,677 14,376 13.4 474,040 435,649 38,391 8.8
NetSpend 144,034 119,165 24,869 20.9 580,377 482,686 97,691 20.2
Intersegment revenues (8,383 )   (5,975 )   (2,408 ) (40.3 ) (33,481 )   (21,224 )   (12,257 ) (57.8 )

Revenues before reimbursable items from external customers

$ 645,095     569,301     75,794   13.3 % $ 2,499,349     2,192,978     306,371   14.0 %
 
Total revenues:
North America Services $ 349,764 299,429 50,335 16.8 % $ 1,334,258 1,117,764 216,494 19.4 %
International Services 93,128 98,650 (5,522 ) (5.6 ) 354,725 363,359 (8,634 ) (2.4 )
Merchant Services 139,693 125,296 14,397 11.5 549,369 510,120 39,249 7.7
NetSpend 144,034 119,165 24,869 20.9 580,377 482,686 97,691 20.2
Intersegment revenues (9,776 )   (7,436 )   (2,340 ) (31.5 ) (39,188 )   (27,052 )   (12,136 ) (44.9 )
Revenues from external customers $ 716,843     635,104     81,739   12.9 % $ 2,779,541     2,446,877     332,664   13.6 %
 
Depreciation and amortization:
North America Services $ 26,712 23,136 3,576 15.5 % $ 99,544 86,513 13,031 15.1 %
International Services 8,808 9,733 (925 ) (9.5 ) 34,892 38,909 (4,017 ) (10.3 )
Merchant Services 4,874 3,980 894 22.5 18,268 14,571 3,697 25.4
NetSpend 3,139     1,730     1,409   81.4 10,686     7,509     3,177   42.3
Segment depreciation and amortization 43,533 38,579 4,954 12.8 163,390 147,502 15,888 10.8
Acquisition intangible amortization 22,920 24,166 (1,246 ) (5.2 ) 92,522 96,971 (4,449 ) (4.6 )
Corporate admin and other 593     446     147   33.0 2,352     2,147     205   9.5
Total depreciation and amortization $ 67,046     63,191     3,855   6.1 % $ 258,264     246,620     11,644   4.7 %
 
Adjusted segment operating income:
North America Services $ 104,162 99,620 4,542 4.6 % $ 429,064 351,512 77,552 22.1 %
International Services 21,381 22,849 (1,468 ) (6.4 ) 60,087 55,123 4,964 9.0
Merchant Services 33,033 31,399 1,634 5.2 150,225 134,872 15,353 11.4
NetSpend 28,614     32,742     (4,128 ) (12.6 ) 137,837     128,285     9,552   7.4
Total adjusted segment operating income 187,190 186,610 580 0.3 777,213 669,792 107,421 16.0
Acquisition intangible amortization (22,920 ) (24,166 ) 1,246 5.2 (92,522 ) (96,971 ) 4,449 4.6
NetSpend M&A operating expenses - (3 ) 3 nm - (3,217 ) 3,217 nm
Share-based compensation (10,080 ) (7,771 ) (2,309 ) (29.7 ) (41,549 ) (30,790 ) (10,759 ) (34.9 )
Corporate admin and other (36,285 )   (31,897 )   (4,388 ) (13.8 ) (109,035 )   (107,174 )   (1,861 ) (1.7 )
Operating income $ 117,905     122,773     (4,868 ) (4.0 ) % $ 534,107     431,640     102,467   23.7 %
 
Other:
Reimbursable items:
North America Services $ 49,499 43,890 5,609 12.8 % $ 187,004 163,682 23,322 14.2 %
International Services 6,002 5,755 247 4.3 23,566 21,574 1,992 9.2
Merchant Services 17,640 17,619 21 0.1 75,329 74,471 858 1.2
NetSpend - - - na - - - na
Intersegment revenues (1,393 )   (1,461 )   68   4.7 (5,707 )   (5,828 )   121   2.1
Reimbursable items $ 71,748     65,803     5,945   9.0 % $ 280,192     253,899     26,293   10.4 %
 
 
TSYS
Condensed Balance Sheet
(unaudited)
(in thousands)
     
December 31, 2015 December 31, 2014
Assets
Current assets:
Cash and cash equivalents $ 389,328 289,183
Accounts receivable, net 314,705 283,203
Other current assets 180,690 118,167
Total current assets 884,723 690,553
Goodwill 1,545,424 1,547,397
Other intangible assets, net 328,320 404,107
Property, equipment and software, net 694,968 656,733
Other long term assets 456,685 434,791
Total assets $ 3,910,120 3,733,581
 
Liabilities
Current liabilities:
Accounts payable $ 52,213 48,793
Bonds, notes and capital leases 53,832 50,911
Other current liabilities 234,993 196,809
Total current liabilities 341,038 296,513
Bonds, notes and capital leases, excluding current portion 1,383,634 1,405,106
Other long-term liabilities 313,356 309,826
Total liabilities 2,038,028 2,011,445
Redeemable noncontrolling interest 23,410 22,492
Equity
Shareholders' equity 1,843,019 1,692,762
Noncontrolling interests in consolidated subsidiaries 5,663 6,882
Total equity 1,848,682 1,699,644
Total liabilities and equity $ 3,910,120 3,733,581
 
 
TSYS
Selected Cash Flow Highlights
(unaudited)
(in thousands)
       
Twelve Months Ended December 31,
2015 2014
Cash flows from operating activities:
Net income $ 369,041 329,406

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on disposal of subsidiaries (3,568 ) (86,961 )
Equity in income of equity investments (22,106 ) (17,583 )
Dividends received from equity investments 12,097 9,189
Depreciation and amortization 258,264 248,018
Other noncash adjustments 64,034 67,427
Changes in operating assets and liabilities: (77,568 ) 10,705  
Net cash provided by operating activities 600,194 560,201
 
Net cash used in investing activities (202,184 ) (226,607 )
 
Net cash used in financing activities (290,754 ) (316,473 )
 
Cash and cash equivalents:
Effect of exchange rate changes on cash and cash equivalents (7,111 ) (6,168 )
Net increase in cash and cash equivalents 100,145 10,953
Cash and cash equivalents at beginning of period 289,183   278,230  
Cash and cash equivalents at end of period $ 389,328   289,183  
 
Supplemental - Non-GAAP:
Net cash provided by operating activities $ 600,194 560,201
Capital expenditures (203,315 ) (235,924 )
Free cash flow 396,879 324,277
Principal payments on debt and capital leases (54,719 ) (69,939 )
Available free cash flow $ 342,160   254,338  
 
Dividends paid on common stock 73,677 74,796
Repurchase of common stock under plans 242,085   165,297  
Available free cash flow returned to shareholders $ 315,762   240,093  
 
Percent available free cash flow returned to shareholders 92.3   % 94.4   %
 
 
TSYS
Supplemental Information
(unaudited)
           
Other
Accounts on File (AOF): Total Accounts on File
%

(in millions)

December 2015     December 2014     Change
Consumer Credit 382.1 270.0 41.5
Retail 26.1     28.4 (7.9 )
Total Consumer 408.2 298.4 36.8
Commercial 45.4 41.6 9.2
Other 26.6     22.4 18.8
Subtotal 480.2 362.4 32.5
Prepaid*/Stored Value 97.2 127.3 (23.7 )
Government Services 79.3 67.4 17.8
Commercial Card Single Use 75.8     59.6 27.1
Total AOF 732.5     616.7 18.8

* Prepaid does not include NetSpend accounts

 
Growth in Accounts on File (in millions):              
December 2014 to December 2013 to
December 2015       December 2014
Beginning balance 616.7 541.0
Change in accounts on file due to:
Internal growth of existing clients 42.2 40.0
New clients 145.6 75.3
Purges/Sales (29.0 ) (39.0 )
Deconversions (43.0 )       (0.6 )
Ending balance 732.5         616.7  
Segment data:        
Three Months Ended December 31,
    Change
2015     2014     Inc(Dec)     %
North America Segment:    
Transactions (in millions) 4,264.9 2,980.0 1,284.9 43.1 %
 
International Segment:
Transactions (in millions) 661.7 618.1 43.5 7.0 %
 
Merchant Segment:
Point-of-sale transactions (in millions) 1,075.2 991.0 84.2 8.5 %
Dollar sales volume (in millions) $ 12,401.1 $ 12,392.6 $ 8.5 0.1 %
 
NetSpend Segment:
Gross dollar volume (in millions) $ 5,692.0 $ 4,691.5 $ 1,000.5 21.3 %
 
Twelve Months Ended December 31,
Change
2015     2014     Inc(Dec)     %
North America Segment:
AOF (in millions) 654.1 550.0 104.1 18.9 %
Transactions (in millions) 15,774.5 10,838.0 4,936.5 45.5 %
 
International Segment:
AOF (in millions) 78.5 66.6 11.9 17.8 %
Transactions (in millions) 2,473.6 2,268.4 205.2 9.0 %
 
Merchant Segment:
Point-of-sale transactions (in millions) 4,266.5 4,052.7 213.8 5.3 %
Dollar sales volume (in millions) $ 48,072.7 $ 46,846.4 $ 1,226.3 2.6 %
 
NetSpend Segment:
Gross dollar volume (in millions) $ 24,274.9 $ 20,296.0 $ 3,978.9 19.6 %
 
Direct deposit 90-day active cards (in thousands) 1,895.0 1,610.2 284.8 17.7 %
90-day active cards (in thousands) 3,894.1 3,215.0 679.1 21.1 %
% of 90-day active cards with direct deposit 48.7% 50.1%
 
Reconciliation of GAAP to Non-GAAP Financial Measures
 
Non-GAAP Measures
 
The schedule below provides a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents fourth quarter 2015 financial results using the previous year’s foreign currency exchange rates. On a full year constant currency basis, TSYS’ total revenues grew 14.9% as compared to a reported GAAP increase of 13.6%.
 
The schedule below also provides a reconciliation of basic EPS, adjusted for the after-tax impact of acquisition intangible amortization, share-based compensation and merger and acquisition costs, to adjusted EPS.
 
The tax rate used in the calculation of adjusted 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.
 
The schedule also provides a reconciliation of net income, adjusted for income from discontinued operations, equity in income of equity investments, income taxes, nonoperating expense, depreciation and amortization, share-based compensation, and merger and acquisition expenses, to adjusted EBITDA.
 
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 captions of other companies due to potential inconsistencies in the method of calculation.
 
TSYS believes that its use of non-GAAP financial measures provides investors with the same 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 the presentation of GAAP financial measures alone would not provide its shareholders and potential investors with the ability to appropriately analyze its ongoing operational results, and therefore expected future results. TSYS therefore 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 December 31, Twelve Months Ended December 31,
Percent Percent
2015     2014     Change 2015     2014     Change
Consolidated
Constant currency (1) $ 722,581 635,104 13.8 % $ 2,810,999 2,446,877 14.9 %
Foreign currency impact (2) (5,738 )     - (31,458 )     -
Total revenues $ 716,843       635,104 12.9 % $ 2,779,541       2,446,877 13.6 %
 
Constant currency (1) $ 650,484 569,301 14.3 % $ 2,528,775 2,192,978 15.3 %
Foreign currency impact (2) (5,389 )     - (29,426 )     -
Total revenues before reimbursable items $ 645,095       569,301 13.3 % $ 2,499,349       2,192,978 14.0 %
 
Constant currency (1) $ 118,297 122,773 (3.6 ) % $ 535,204 431,640 24.0 %
Foreign currency impact (2) (392 )     - (1,097 )     -
Operating income $ 117,905       122,773 (4.0 ) % $ 534,107       431,640 23.7 %
 
International Services
Constant currency (1) $ 98,707 98,650 0.1 % $ 385,676 363,359 6.1 %
Foreign currency impact (2) (5,579 )     - (30,951 )     -
Total revenues $ 93,128       98,650 (5.6 ) % $ 354,725       363,359 (2.4 ) %
 
(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.
                                               
Revenues Before Reimbursable Items
(unaudited)
(in thousands)
 
Three Months Ended December 31, Twelve Months Ended December 31,
Percent Percent
2015     2014 Change 2015     2014 Change
Total revenues $ 716,843 635,104 12.9 % $ 2,779,541 2,446,877 13.6 %
Reimbursable items 71,748       65,803 9.0 280,192       253,899 10.4
Revenues before reimbursable items $ 645,095       569,301 13.3 % $ 2,499,349       2,192,978 14.0 %
 
Reconciliation of GAAP to Non-GAAP
Adjusted Earnings per Share
(unaudited)
(in thousands, except per share data)
               
Three Months Ended December 31,   Twelve Months Ended December 31,
Percent Percent

 

2015   2014  

Change

2015   2014 Change

Income from continuing operations attributable to TSYS common shareholders

$ 81,417 83,198 (2.1 ) % $ 362,633 275,216 31.8 %
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes $ 15,580 17,747 (12.2 ) % 61,525 65,127 (5.5 )
Add: Share-based compensation, net of taxes 6,933 5,777 20.0 27,954 20,944 33.5
Add: NetSpend M&A expenses, net of taxes* -     3   nm -     3,115   nm
Adjusted earnings $ 103,930     106,725   (2.6 ) % $ 452,112     364,402   24.1 %
Add/deduct: Federal & state R&D credits and related expenses, net of tax 118     -   na (23,440 )   -   na
Adjusted earnings without impact of one-time tax items $ 104,048     106,725   (2.5 ) % $ 428,672     364,402   17.6 %
 

Basic EPS - Income from continuing operations attributable to TSYS common shareholders

As reported (GAAP) $ 0.44     0.45   (1.2 ) % $ 1.97     1.48   33.3 %
 
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes 0.09 0.10 (11.3 ) 0.33 0.35 (4.4 )
Add: Share-based compensation, net of taxes 0.04 0.03 21.2 0.15 0.11 34.9
Add: NetSpend M&A expenses, net of taxes* -     -   nm -     0.02   nm
Adjusted EPS ** $ 0.57     0.58   (1.6 ) % $ 2.46     1.96   25.5 %
Add/deduct: Federal & state R&D credits and related expenses, net of tax 0.00     -   na (0.13 )   -   na
Adjusted EPS without impact of one-time tax items $ 0.57     0.58   (1.5 ) % $ 2.33     1.96   19.0 %
 
Weighted average shares outstanding 183,376     185,221   184,082     186,222  
 
* Certain merger and acquisition costs are nondeductible for income tax purposes
** Adjusted EPS amounts may not total due to rounding.
                                       
Adjusted EBITDA
(unaudited)
(in thousands)
 
Three Months Ended December 31,     Twelve Months Ended December 31,
Percent Percent
2015   2014  

Change

2015   2014   Change
Net income $ 84,716 81,242 4.3 % $ 369,041 329,406 12.0 %
Adjust for:
Deduct: Income from discontinued operations (1,411 ) 3,338 nm (1,411 ) (48,655 ) 97.1
Deduct: Equity in income of equity investments (6,797 ) (5,751 ) (18.2 ) (22,106 ) (17,583 ) (25.7 )
Add: Income taxes 32,160 35,428 (9.2 ) 151,364 129,761 16.6
Add: Nonoperating expense 9,237 8,516 8.5 37,219 38,711 (3.9 )
Add: Depreciation and amortization 67,046     63,191   6.1 258,264     246,620   4.7
EBITDA $ 184,951 185,964 (0.5 ) % $ 792,371 678,260 16.8 %
Adjust for:
Add: Share-based compensation 10,080 7,771 29.7 41,549 30,790 34.9
Add: NetSpend M&A operating expenses -     3   nm -     3,217   nm
Adjusted EBITDA $ 195,031     193,738   0.7 % $ 833,920     712,267   17.1 %
Add/deduct: State R&D credits and related expenses 181     -   na (14,903 )   -   na
Adjusted EBITDA without impact of one-time tax items $ 195,212     193,738   0.8 % $ 819,017     712,267   15.0 %
nm = not meaningful
 
Reconciliation of GAAP to Non-GAAP
Segment Operating Margin and Consolidated Adjusted Operating Margin
(unaudited)
(in thousands)
                   
Three Months Ended December 31, 2015 Three Months Ended December 31, 2014
Adjusted Segment Revenues before Adjusted Adjusted Segment Revenues before Adjusted
Operating Income   Reimbursable Items   Operating Margin Operating Income   Reimbursable Items     Operating Margin
North America Services $ 104,162 300,265 34.69 % $ 99,620 255,539 38.98 %
International Services 21,381 87,126 24.54 22,849 92,895 24.60
Merchant Services 33,033 122,053 27.06 31,399 107,677 29.16
NetSpend 28,614 144,034 19.87 32,742 119,165 27.48
Intersegment - (8,383 ) - (5,975 )
Corporate admin and other (36,285 )     (31,897 )    
Adjusted operating margin $ 150,905 645,095 23.39 % $ 154,713 569,301 27.18 %
Acquisition intangible amortization (22,920 ) (24,166 )
NetSpend M&A operating expenses - (3 )
Share-based compensation (10,080 )     (7,771 )    
Operating income and margin* $ 117,905 645,095 18.28 % $ 122,773 569,301 21.57 %
Reimbursable items     71,748       65,803  

Operating income and margin (US GAAP)

$ 117,905     716,843   16.45 % $ 122,773     635,104   19.33 %

 

 
Twelve Months Ended December 31, 2015 Twelve Months Ended December 31, 2014
Adjusted Segment Revenues before Adjusted Adjusted Segment Revenues before Adjusted
Operating Income   Reimbursable Items   Operating Margin Operating Income   Reimbursable Items Operating Margin
North America Services $ 429,064 1,147,254 37.40 % $ 351,512 954,082 36.84 %
International Services 60,087 331,159 18.14 55,123 341,785 16.13
Merchant Services 150,225 474,040 31.69 134,872 435,649 30.96
NetSpend 137,837 580,377 23.75 128,285 482,686 26.58
Intersegment - (33,481 ) - (21,224 )
Corporate admin and other (109,035 )     (107,174 )    
Adjusted operating margin $ 668,178 2,499,349 26.73 % $ 562,618 2,192,978 25.66 %
Acquisition intangible amortization (92,522 ) (96,971 )
NetSpend M&A operating expenses - (3,217 )
Share-based compensation (41,549 )     (30,790 )    
Operating income and margin* $ 534,107 2,499,349 21.37 % $ 431,640 2,192,978 19.68 %
Reimbursable items     280,192       253,899  

Operating income and margin (US GAAP)

$ 534,107     2,779,541   19.22 % $ 431,640     2,446,877   17.64 %
 
* Operating margin on revenue before reimbursable items
 

Contacts

TSYS Investor Relations
Shawn Roberts, +1-706-644-6081
shawnroberts@tsys.com

Release Summary

TSYS (NYSE: TSS) today reported results for the 2015 fourth quarter and full year.

Contacts

TSYS Investor Relations
Shawn Roberts, +1-706-644-6081
shawnroberts@tsys.com