TSYS (NYSE: TSS) today reported results for the second quarter and year to date.

“For the second quarter in a row, we exceeded our expectations that resulted in another outstanding quarter and year-to-date performance. Organic revenue grew 13.7% year-to-date as we continue to deliver exceptional performance across our key metrics,” said M. Troy Woods, chairman, president and chief executive officer of TSYS.

“As a result of our great performance during the first half of the year, we are raising our revenues before reimbursables guidance range to 10-12%, up from the previous range of 8-10%, and our adjusted earnings per share (EPS) guidance range to 15-17%, up from the previous range of 12-14%,” said Woods.

Highlights for the second quarter of 2015 include:

  • Adjusted EPS from continuing operations were $0.58, an increase of 29.0%. On a GAAP basis, basic EPS from continuing operations were $0.45, an increase of 40.5%.
  • Income from continuing operations attributable to TSYS’ shareholders was $82.8 million, an increase of 38.6%.
  • Adjusted EBITDA was $206.5 million, an increase of 20.9%.
  • Total revenues for the quarter were $692.7 million, an increase of 15.1%. Revenues before reimbursable items were $622.1 million, an increase of 15.6%.
  • Adjusted operating margin was 26.6%. GAAP operating margin was 18.9%.

Highlights for the first six months of 2015 include:

  • Adjusted EPS from continuing operations were $1.11, an increase of 34.6%. On a GAAP basis, basic EPS from continuing operations were $0.87, an increase of 49.6%.
  • Income from continuing operations attributable to TSYS’ shareholders was $160.6 million, an increase of 47.2%.
  • Adjusted EBITDA was $400.0 million, an increase of 24.8%.
  • Total revenues were $1.4 billion, an increase of 13.4%. Revenues before reimbursable items were $1.2 billion, an increase of 13.7%.
  • Adjusted operating margin was 26.3%. GAAP operating margin was 18.7%.

“During the quarter, we purchased 700,000 shares of our stock under our share repurchase program bringing our year to date total to 2.2 million shares with a total spend of $83.5 million. Coupled with our dividends of $36.9 million, we returned $120.4 million to our shareholders, which was 74.2% of available year-to-date free cash flow,” said Woods.

    2015 Revised Financial Outlook
Range    

(in millions, except per

Percent

share amounts)

    Change
Total revenues $2,667   to   $2,716 9%   to   11%
Revenues before reimbursable items $2,412 to $2,456 10% to 12%

Adjusted EPS attributable to TSYS common shareholders from continuing operations*

 

$2.25

 

to

 

$2.29

 

15%

 

to

17%

* Average Basic Weighted Shares 184
 

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

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, July 28. 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 9 to 12 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’ revised earnings guidance for 2015 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 Six Months Ended
June 30, June 30,
Percent Percent
2015 2014 Change   2015 2014 Change  
 
Total revenues $ 692,652 602,036 15.1 % $ 1,354,808 1,194,883 13.4 %
 
Cost of services 459,941 416,489 10.4 909,646 839,372 8.4
Selling, general and administrative expenses 102,109   86,784   17.7 192,064   176,051   9.1
Total expenses 562,050   503,273   11.7 1,101,710   1,015,423   8.5
 
Operating income 130,602 98,763 32.2 253,098 179,460 41.0
 
Nonoperating expenses (10,209 ) (10,385 ) 1.7 (19,418 ) (20,198 ) 3.9
 

 

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

120,393 88,378 36.2 233,680 159,262 46.7
Income taxes 41,597   30,771   35.2 81,379   55,106   47.7

Income before noncontrolling interests and equity in income of equity investments

78,796 57,607 36.8 152,301 104,156 46.2
Equity in income of equity investments, net of tax 4,579   3,600   27.2 9,973   7,696   29.6
Income from continuing operations, net of tax 83,375 61,207 36.2 162,274 111,852 45.1

Gain from discontinued operations, net of tax

-   50,133   nm -   51,113   nm
Net income 83,375 111,340 (25.1 ) 162,274 162,965 (0.4 )
Net income attributable to noncontrolling interests (536 ) (1,436 ) 62.7 (1,680 ) (3,759 ) 55.3
 

Net income attributable to TSYS common shareholders

$ 82,839   109,904   (24.6 ) % $ 160,594   159,206   0.9 %
 
Basic earnings per share(EPS):

 

Income from continuing operations to TSYS common shareholders*

$ 0.45 0.32 40.5 % $ 0.87 0.58 49.6 %

 

Gain from discontinued operations to TSYS common shareholders*

-   0.27   nm -   0.27   nm
Basic EPS $ 0.45   0.59   (23.6 ) % $ 0.87   0.85   2.5 %
 
Diluted EPS:

 

Income from continuing operations to TSYS common shareholders*

$ 0.45 0.32 41.1 % $ 0.87 0.58 50.5 %

 

Gain from discontinued operations to TSYS common shareholders*

-   0.27   nm -   0.26   nm
Diluted EPS $ 0.45   0.58   (23.3 ) % $ 0.87   0.84   3.1 %
 

 

Weighted average shares outstanding: (includes participating securities)

Basic 183,829   186,373   184,153   187,058  
Diluted 185,020   188,367   185,299   189,437  
 
Dividends declared per share $ 0.10   0.10   $ 0.20   0.20  
 
Amounts attributable to TSYS common shareholders:
Income from continuing operations, net of tax $ 82,839 59,771 38.6 % $ 160,594 109,092 47.2 %
Gain from discontinued operations, net of tax -   50,133   nm -   50,114   nm
Net income $ 82,839   109,904   (24.6 ) % $ 160,594   159,206   0.9 %
 

Non-GAAP measures:

Adjusted EPS from continuing operations $ 0.58   0.45   29.0 % $ 1.11   0.83   34.6 %
 
Adjusted EBITDA $ 206,537   170,894   20.9 % $ 399,991   320,489   24.8 %
 
nm = not meaningful
* EPS amounts may not total due to rounding.
 

TSYS

Segment Breakdown
(unaudited)
(in thousands)
                   
Three Months Ended June 30, Six Months Ended June 30,
Change Change
2015   2014   $   %   2015   2014   $   %
Revenues before reimbursable items:
North America Services $ 287,199 233,217 53,982 23.1 % $ 553,418 457,585 95,833 20.9 %
International Services 83,857 84,732 (875 ) (1.0 ) 157,587 161,505 (3,918 ) (2.4 )
Merchant Services 117,868 108,335 9,533 8.8 228,266 212,960 15,306 7.2
NetSpend 141,621 116,833 24,788 21.2 296,695 249,473 47,222 18.9
Intersegment revenues (8,461 )   (5,050 )   (3,411 ) (67.5 ) (18,098 )   (10,705 )   (7,393 ) (69.1 )

 

Revenues before reimbursable items from external customers

$ 622,084     538,067     84,017   15.6 % $ 1,217,868     1,070,818     147,050   13.7 %
 
Total revenues:
North America Services $ 333,844 273,324 60,520 22.1 % $ 643,077 535,502 107,575 20.1 %
International Services 89,618 90,466 (848 ) (0.9 ) 169,420 172,844 (3,424 ) (2.0 )
Merchant Services 137,472 128,017 9,455 7.4 266,576 250,707 15,869 6.3
NetSpend 141,621 116,833 24,788 21.2 296,695 249,473 47,222 18.9
Intersegment revenues (9,903 )   (6,604 )   (3,299 ) (50.0 ) (20,960 )   (13,643 )   (7,317 ) (53.6 )
Revenues from external customers $ 692,652     602,036     90,616   15.1 % $ 1,354,808     1,194,883     159,925   13.4 %
 
Depreciation and amortization:
North America Services $ 24,468 20,928 3,540 16.9 % $ 47,532 41,204 6,328 15.4 %
International Services 8,628 9,761 (1,133 ) (11.6 ) 17,406 19,566 (2,160 ) (11.0 )
Merchant Services 4,446 3,567 879 24.6 8,723 6,967 1,756 25.2
NetSpend 2,622     1,890     732   38.7 4,915     3,625     1,290   35.6
Segment depreciation and amortization 40,164 36,146 4,018 11.1 78,576 71,362 7,214 10.1
Acquisition intangible amortization 22,852 24,282 (1,430 ) (5.9 ) 46,718 48,595 (1,877 ) (3.9 )
Corporate admin and other 889     533     356   66.8 1,426     1,038     388   37.4
Total depreciation and amortization $ 63,905     60,961     2,944   4.8 % $ 126,720     120,995     5,725   4.7 %
 
Adjusted segment operating income:
North America Services $ 108,385 84,578 23,807 28.1 % $ 210,956 159,155 51,801 32.5 %
International Services 13,353 11,743 1,610 13.7 20,336 16,298 4,038 24.8
Merchant Services 40,690 32,896 7,794 23.7 74,805 63,064 11,741 18.6
NetSpend 36,442     30,703     5,739   18.7 71,909     59,421     12,488   21.0
Total adjusted segment operating income 198,870 159,920 38,950 24.4 378,006 297,938 80,068 26.9
Acquisition intangible amortization (22,852 ) (24,282 ) 1,430 5.9 (46,718 ) (48,595 ) 1,877 3.9
NetSpend M&A operating expenses - (1,182 ) 1,182 nm - (2,435 ) 2,435 nm
Share-based compensation (12,030 ) (9,988 ) (2,042 ) (20.4 ) (20,173 ) (17,599 ) (2,574 ) (14.6 )
Corporate admin and other (33,386 )   (25,705 )   (7,681 ) (29.9 ) (58,017 )   (49,849 )   (8,168 ) (16.4 )
Operating income $ 130,602     98,763     31,839   32.2 % $ 253,098     179,460     73,638   41.0 %
 
Other:
Reimbursable items:
North America Services $ 46,645 40,107 6,538 16.3 % $ 89,659 77,917 11,742 15.1 %
International Services 5,761 5,734 27 0.5 11,833 11,339 494 4.4
Merchant Services 19,604 19,682 (78 ) (0.4 ) 38,310 37,747 563 1.5
NetSpend - - - na - - - na
Intersegment revenues (1,442 )   (1,554 )   112   7.2 (2,862 )   (2,938 )   76   2.6
Reimbursable items $ 70,568     63,969     6,599   10.3 % $ 136,940     124,065     12,875   10.4 %
 
TSYS
Condensed Balance Sheet
(unaudited)
(in thousands)
    Jun 30, 2015     Dec 31, 2014
Assets
Current assets:
Cash and cash equivalents $ 349,378 289,183
Accounts receivable, net 314,678 283,203
Other current assets 123,689   118,167  
Total current assets 787,745 690,553
Goodwill 1,547,089 1,547,397
Other intangible assets, net 366,215 404,107
Property, equipment and software, net 647,115 656,733
Other long term assets 464,360   434,791  
Total assets $ 3,812,524   3,733,581  
 
Liabilities
Current liabilities:
Accounts payable $ 57,358 48,793
Bonds, notes and capital leases 43,791 50,911
Other current liabilities 230,075   196,809  
Total current liabilities 331,224 296,513
Bonds, notes and capital leases, excluding current portion 1,387,514 1,405,106
Other long-term liabilities 291,249   309,826  
Total liabilities 2,009,987   2,011,445  
Redeemable noncontrolling interest 22,370   22,492  
Equity
Shareholders' equity 1,774,224   1,692,762  
Noncontrolling interests in consolidated subsidiaries 5,943   6,882  
Total equity 1,780,167   1,699,644  
Total liabilities and equity $ 3,812,524   3,733,581  
               
TSYS
Selected Cash Flow Highlights
(unaudited)
(in thousands)
Six Months Ended June 30,
2015 2014
Cash flows from operating activities:
Net income $ 162,274 162,965

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

Gain on disposal of subsidiaries - (85,310 )
Equity in income of equity investments (9,973 ) (7,696 )
Dividends received from equity investments 984 -
Depreciation and amortization 126,720 122,393
Other non cash adjustments 29,537 31,996
Changes in operating assets and liabilities: (24,249 ) 15,094  
Net cash provided by operating activities 285,293 239,442
 
Net cash used in investing activities (97,512 ) (61,539 )
 
Net cash used in financing activities (126,244 ) (207,575 )
 
Cash and cash equivalents:
Effect of exchange rate changes on cash and cash equivalents (1,342 ) 2,399  
Net increase in cash and cash equivalents 60,195 (27,273 )
Cash and cash equivalents at beginning of period 289,183   278,230  
Cash and cash equivalents at end of period $ 349,378   250,957  
 
Supplemental - Non GAAP:
Net cash provided by operating activities $ 285,293 239,442
Capital expenditures (96,552 ) (105,776 )
Free cash flow 188,741 133,666
Principal payments on debt and capital leases (26,393 ) (34,467 )
Available free cash flow $ 162,348   99,199  
 
TSYS
Supplemental Information
(unaudited)
       
Other
Accounts on File:
 
Total Accounts on File
%

(in millions)

June 2015   June 2014   Change
Consumer Credit 374.1 246.5 51.8
Retail 26.4     27.9 (5.6 )
Total Consumer 400.5 274.4 45.9
Commercial 44.0 40.4 8.7
Other 24.0     20.4 18.4
Subtotal 468.5 335.2 39.8
Prepaid/Stored Value 133.1 117.7 13.2
Government Services 77.1 65.6 17.4
Commercial Card Single Use 72.7     54.2 34.2
Total AOF 751.4     572.7 31.2
 
 
 

Growth in Accounts on File (in millions):

June 2014 to June 2013 to
June 2015 June 2014
Beginning balance 572.7 488.7
Change in accounts on file due to:
Internal growth of existing clients 42.4 38.4
New clients 166.1 71.9
Purges/Sales (29.3 ) (25.4 )
Deconversions (0.5 )       (0.9 )
Ending balance 751.4         572.7  
Segment data:      
Three Months Ended June 30,
  Change
2015   2014   Inc(Dec)   %
North America Segment:  
Transactions (in millions) 4,042.2 2,696.7 1,345.5 49.9 %
 
International Segment:
Transactions (in millions) 613.9 558.1 55.8 10.0 %
 
Merchant Segment:
Point-of-sale transactions (in millions) 1,089.4 1,045.1 44.3 4.2 %
Dollar sales volume (in millions) $ 12,314.8 $ 11,796.5 $ 518.3 4.4 %
 
NetSpend Segment:
Gross dollar volume (in millions) $ 5,531.0 $ 4,628.0 $ 903.0 19.5 %
 
 
Six Months Ended June 30,
Change
2015   2014   Inc(Dec)   %
North America Segment:
Accounts on file (AOF) (in millions) 677.5 510.3 167.2 32.8 %
Transactions (in millions) 7,353.0 5,024.3 2,328.7 46.3 %
 
International Segment:
AOF (in millions) 73.9 62.3 11.6 18.5 %
Transactions (in millions) 1,185.9 1,076.0 109.9 10.2 %
 
Merchant Segment:
Point-of-sale transactions (in millions) 2,074.0 2,027.3 46.7 2.3 %
Dollar sales volume (in millions) $ 23,616.4 $ 22,576.3 $ 1,040.1 4.6 %
 
NetSpend Segment:
Gross dollar volume (in millions) $ 13,191.7 $ 11,195.2 $ 1,996.5 17.8 %
 
Direct deposit 90-day active cards (in thousands) 1,879.8 1,600.7 279.1 17.4 %
90-day active cards (in thousands) 3,885.1 3,388.0 497.1 14.7 %
% of 90-day active cards with direct deposit 48.4 % 47.2 %
 
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 second quarter 2015 financial results using the previous year’s foreign currency exchange rates. On a full year constant currency basis, TSYS’ total revenues grew 14.8% as compared to a reported GAAP increase of 13.4%.
 
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 June 30, Six Months Ended June 30,
Percent Percent
2015   2014   Change 2015   2014   Change
Consolidated
Constant currency (1) $ 702,191 602,036 16.6 % $ 1,372,054 1,194,883 14.8 %
Foreign currency (2) (9,539)     - (17,246)     -
Total revenues $ 692,652     602,036 15.1 % $ 1,354,808     1,194,883 13.4 %
 
Constant currency (1) $ 631,025 538,067 17.3 % $ 1,233,927 1,070,818 15.2 %
Foreign currency (2) (8,941)     - (16,059)     -
Total revenues before reimbursable items $ 622,084     538,067 15.6 % $ 1,217,868     1,070,818 13.7 %
 
Constant currency (1) $ 131,105 98,763 32.7 % $ 253,443 179,460 41.2 %
Foreign currency (2) (503)     - (345)     -
Operating income $ 130,602     98,763 32.2 % $ 253,098     179,460 41.0 %
 
International Services
Constant currency (1) $ 99,076 90,466 9.5 % $ 186,456 172,844 7.9 %
Foreign currency (2) (9,458)     - (17,036)     -
Total revenues $ 89,618     90,466 (0.9) % $ 169,420     172,844 (2.0) %
 
(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 June 30, Six Months Ended June 30,
Percent Percent
2015   2014   Change 2015   2014   Change
Total revenues $ 692,652 602,036 15.1 % $ 1,354,808 1,194,883 13.4 %
Reimbursable items 70,568     63,969 10.3 136,940     124,065 10.4
Revenues before reimbursable items $ 622,084     538,067 15.6 % $ 1,217,868     1,070,818 13.7 %
 
Reconciliation of GAAP to Non-GAAP
Adjusted Earnings per Share
(unaudited)
(in thousands, except per share data)
               
Three Months Ended June 30,   Six Months Ended June 30,  
Percent Percent

 

2015   2014   Change 2015   2014   Change

Income from continuing operations attributable to TSYS common shareholders

$ 82,839 59,771 38.6 % $ 160,594 109,092 47.2 %
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes $ 15,083 15,799 (4.5 ) % 30,844 31,612 (2.4 )
Add: Share-based compensation, net of taxes 8,033 6,584 22.0 13,474 11,601 16.1
Add: NetSpend M&A expenses, net of taxes* -     1,122   nm -     2,326   nm
Adjusted earnings $ 105,955     83,276   27.2 % $ 204,912     154,631   32.5 %
 

 

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

As reported (GAAP) $ 0.45     0.32   40.5 % $ 0.87     0.58   49.6 %
 
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization, net of taxes 0.08 0.08 (3.3 ) 0.17 0.17 (0.9 )
Add: Share-based compensation, net of taxes 0.04 0.04 23.7 0.07 0.06 18.0
Add: NetSpend M&A expenses, net of taxes* -     0.01   nm -     0.01   nm
Adjusted EPS ** $ 0.58     0.45   29.0 % $ 1.11     0.83   34.6 %
 
Weighted average shares outstanding 183,829     186,373   184,153     187,058  
 
* 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 June 30, Six Months Ended June 30,
Percent Percent
2015   2014   Change 2015   2014   Change
Net income $ 83,375 111,340 (25.1 ) % $ 162,274 162,965 (0.4 ) %
Adjust for:
Deduct: Income from discontinued operations - (50,133 ) nm - (51,113 ) nm
Deduct: Equity in income of equity investments (4,579 ) (3,600 ) (27.2 ) (9,973 ) (7,696 ) (29.6 )
Add: Income taxes 41,597 30,771 35.2 81,379 55,106 47.7
Add: Nonoperating expense 10,209 10,385 (1.7 ) 19,418 20,198 (3.9 )
Add: Depreciation and amortization 63,905     60,961   4.8 126,720     120,995   4.7
EBITDA $ 194,507 159,724 21.8 % $ 379,818 300,455 26.4 %
Adjust for:
Add: Share-based compensation 12,030 9,988 20.4 20,173 17,599 14.6
Add: NetSpend M&A operating expenses -     1,182   nm -     2,435   nm
Adjusted EBITDA $ 206,537     170,894   20.9 % $ 399,991     320,489   24.8 %
 
nm = not meaningful
 
Reconciliation of GAAP to Non-GAAP
Segment Operating Margin and Consolidated Adjusted Operating Margin
(unaudited)
(in thousands)
             
Three Months Ended June 30, 2015 Three Months Ended June 30, 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 $ 108,385 287,199 37.74 % $ 84,578 233,217 36.27 %
International Services 13,353 83,857 15.92 11,743 84,732 13.86
Merchant Services 40,690 117,868 34.52 32,896 108,335 30.37
NetSpend 36,442 141,621 25.73 30,703 116,833 26.28
Intersegment - (8,461 ) - (5,050 )
Corporate admin and other (33,386 )     (25,705 )    
Adjusted operating margin $ 165,484 622,084 26.60 % $ 134,215 538,067 24.94 %
Acquisition intangible amortization (22,852 ) (24,282 )
NetSpend M&A operating expenses - (1,182 )
Share-based compensation (12,030 )     (9,988 )    
Operating income and margin* $ 130,602 622,084 20.99 % $ 98,763 538,067 18.36 %
Reimbursable items     70,568       63,969  
Operating margin (US GAAP) $ 130,602     692,652   18.86 % $ 98,763     602,036   16.40 %
 
 
Six Months Ended June 30, 2015 Six Months Ended June 30, 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 $ 210,956 553,418 38.12 % $ 159,155 457,585 34.78 %
International Services 20,336 157,587 12.90 16,298 161,505 10.09
Merchant Services 74,805 228,266 32.77 63,064 212,960 29.61
NetSpend 71,909 296,695 24.24 59,421 249,473 23.82
Intersegment - (18,098 ) - (10,705 )
Corporate admin and other (58,017 )     (49,849 )    
Adjusted operating margin $ 319,989 1,217,868 26.27 % $ 248,089 1,070,818 23.17 %
Acquisition intangible amortization (46,718 ) (48,595 )
NetSpend M&A operating expenses - (2,435 )
Share-based compensation (20,173 )     (17,599 )    
Operating income and margin* $ 253,098 1,217,868 20.78 % $ 179,460 1,070,818 16.76 %
Reimbursable items     136,940       124,065  
Operating margin (US GAAP) $ 253,098     1,354,808   18.68 % $ 179,460     1,194,883   15.02 %
 
* Operating margin on revenue before reimbursable items