Global Payments Reports Fourth Quarter and Full Year 2020 Results

February 8, 2021

Delivers EPS Growth and Strong Margin Performance for the Fourth Quarter and Full Year 2020

Sets 2021 Growth Targets

Partners with Google for Digital Merchant Solutions Worldwide

Increases Share Repurchase Authorization to $1.5 Billion and Announces Plan for $500 Million Accelerated Share Repurchase

ATLANTA--(BUSINESS WIRE)-- Global Payments Inc. (NYSE: GPN) today announced results for the fourth quarter and year ended December 31, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210208005236/en/

“We are pleased to have ended 2020 with continued sequential improvement in the fourth quarter, highlighting the consistency of our execution since the beginning of the pandemic," said Jeff Sloan, Chief Executive Officer. "We also continue to make significant progress delivering against our strategic objectives, culminating in the announcement today of our new partnership with Google to substantially expand the opportunity set for our merchant solutions business. None of this would have been possible without the dedication of our exceptional team members during this challenging period, and we thank them for their commitment to our customers and communities.

“Our new collaboration with Google advances our merchant business competitively by driving incremental revenue and lowering operating costs through a multi-year worldwide go-to-market distribution and product development relationship combined with utilization of cutting edge, transformative cloud native technologies. Together we will bring new best-in-class digital products to market worldwide more quickly, and we will further accelerate our culture of market-leading innovation.

“Our company accomplished a great deal over the last twelve months,” Sloan continued. “Across our merchant and issuer segments, we have struck significant and unique distribution relationships with two of the world’s largest and most sophisticated technology companies with a combined market capitalization of nearly $3 trillion. Together, we will leapfrog legacy means of distribution and redefine how payment technologies for merchants and issuers are sold and consumed in the digital age.

“In addition, our Netspend business has played a critical role in the disbursement of more than $2.5 billion in stimulus funds to those most in need domestically, in many cases days in advance of traditional and financial technology competitors because of the depth and breadth of our network. We also expanded our target addressable market in 2020 by entering continental Europe and leveraging our multinational footprint.”

Sloan concluded, “These accomplishments would have been meaningful in any year but are especially so given the challenges presented by COVID-19. We expect these milestones to deepen our competitive moat and extend ongoing share gains. We exited 2020 in a better position than we entered it.”

Fourth Quarter 2020 Summary

  • GAAP revenues were $1.93 billion, compared to $1.99 billion in the fourth quarter of 2019; diluted earnings per share were $0.61 compared to $0.34 in the prior year; and operating margin was 13.1%.
  • Adjusted net revenues declined 2.9% to $1.75 billion, compared to $1.80 billion in the fourth quarter of 2019.
  • Adjusted earnings per share increased 11.1% to $1.80, compared to $1.62 in the fourth quarter of 2019.
  • Adjusted operating margin of 41.5% expanded 320 basis points.

Full Year 2020 Summary

  • GAAP revenues were $7.42 billion, compared to $4.91 billion in 2019; diluted earnings per share were $1.95 compared to $2.16 in the prior year; and operating margin was 12.0%.
  • Adjusted net revenues declined 5.2% to $6.75 billion, compared to $7.12 billion in 2019 on a combined basis.
  • Adjusted earnings per share increased 2.9% to $6.40, compared to $6.22 in 2019.
  • Adjusted operating margin of 39.7% expanded 210 basis points on a combined basis.

Financial Highlights and 2021 Outlook

“Our performance in the fourth quarter and for the full year 2020 exceeded our expectations post COVID-19 and highlights our outstanding execution and the resiliency of our business model,” said Paul Todd, Senior Executive Vice President and Chief Financial Officer. “Our technology-enabled payments strategy coupled with the decisive expense actions taken at the onset of the pandemic allowed us to generate substantial adjusted operating margin expansion, adjusted earnings per share growth and strong free cash flow despite the impact of the pandemic on the worldwide economy.

“Given significant progress with our integration activities, we are again raising our expectations for both revenue and expense synergies within three years from the close of the TSYS merger. Specifically, we now expect annual run rate revenue synergies to amount to at least $150 million by September 2022, an increase from our prior estimate of $125 million; and we expect annual run rate expense synergies to amount to at least $400 million by September 2022, an increase from our prior estimate of $375 million.

“Based on our outlook for 2021, we are excited to return to growth across our segments this year. We currently expect full year 2021 adjusted net revenue to be in a range of $7.50 billion to $7.60 billion, representing growth of 11% to 13%. Consistent with the target we provided on our third quarter call, we expect adjusted earnings per share to be in a range of $7.75 to $8.05, reflecting growth of 21% to 26% over 2020 despite the adverse impact of additional lock-downs and social distancing protocols in a number of our markets since late October. This outlook presumes we continue on a path toward recovery worldwide over the course of the year.”

Todd concluded, “We have also returned to our traditional capital allocation priorities, and our Board of Directors has approved an increase to our share repurchase authorization to $1.5 billion. As part of that program, we intend to execute an accelerated share repurchase program for $500 million in the coming days.”

Capital Allocation

Global Payments’ Board of Directors approved a dividend of $0.195 per share payable March 26, 2021 to shareholders of record as of March 12, 2021 and also approved an increase to the existing authorization for the company's share repurchase program, raising the total available authorization to $1.5 billion.

Conference Call

Global Payments’ management will host a live audio webcast today, February 8, 2021, at 8:00 a.m. ET to discuss financial results and business highlights. All interested parties may access the audio webcast via the investor relations page of the company’s website at investors.globalpaymentsinc.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, income, operating income, operating margin 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.

Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading pure play payments technology company delivering innovative software and services to our customers globally. Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with nearly 24,000 employees worldwide, Global Payments is a member of the S&P 500 with worldwide reach spanning over 100 countries throughout North America, Europe, Asia Pacific and Latin America. For more information, visit www.globalpaymentsinc.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, uncertainties and assumptions 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 2021; the effects of the COVID-19 pandemic on our business, including estimates of the effects of the pandemic on our revenues, financial operating results and liquidity; the effects of actions taken by us in response to the pandemic; capital expenditures and share repurchases, including the ability of Global Payments to complete the anticipated accelerated share repurchase transaction; the anticipated benefits of the merger with TSYS (the “Merger’), including the combined company’s plans, objectives, expectations and intentions; timing and completion of anticipated benefits of strategic initiatives, including the commercial success of our partnership with Google; our success and timing in developing and introducing new services; and future financial and operating results. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our 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 and duration of global economic, political, market, health and social events or other conditions, including the effects and duration of the COVID-19 pandemic; regulatory measures or voluntary actions, including continued or prolonged social distancing, shelter-in-place orders, operating restrictions on nonessential businesses and similar measures imposed or undertaken in an effort to combat the spread of the COVID-19 pandemic; management’s assumptions and projections used in their estimates of the timing and severity of the effects of the COVID-19 pandemic on our future revenues, results of operations and liquidity; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic; the outcome of any legal proceedings that may be instituted against our directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the Merger when expected or at all; business disruptions from the Merger integration that may harm our business, including current plans and operations; 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 and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; the business, economic and political conditions in the markets in which we operate; 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, foreign currency exchange and interest rate risks; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards, including privacy and cybersecurity laws and regulations; and events beyond our control, such as acts of terrorism, and other factors included in the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and in other documents that we file with the SEC, which are available at https://www.sec.gov. Any forward-looking statements speak only as of the date of this communication or as of the date they were made, and we undertake no obligation to update 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 December 31,

 

Years Ended December 31,

 

2020

 

2019

 

%
Change

 

2020

 

2019

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

1,930,193

 

 

$

1,987,760

 

 

(2.9)

%

 

$

7,423,558

 

 

$

4,911,892

 

 

51.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of service

922,195

 

 

1,041,136

 

 

(11.4)

%

 

3,650,727

 

 

2,073,803

 

 

76.0

%

Selling, general and administrative

756,017

 

 

750,462

 

 

0.7

%

 

2,878,878

 

 

2,046,672

 

 

40.7

%

 

1,678,212

 

 

1,791,598

 

 

(6.3)

%

 

6,529,605

 

 

4,120,475

 

 

58.5

%

Operating income

251,981

 

 

196,162

 

 

28.5

%

 

893,953

 

 

791,417

 

 

13.0

%

Interest and other income

8,275

 

 

11,068

 

 

(25.2)

%

 

43,551

 

 

31,413

 

 

38.6

%

Interest and other expense

(85,073)

 

 

(84,047)

 

 

1.2

%

 

(343,548)

 

 

(304,905)

 

 

12.7

%

 

(76,798)

 

 

(72,979)

 

 

5.2

%

 

(299,997)

 

 

(273,492)

 

 

9.7

%

Income before income taxes and
equity in income of equity method investments

175,183

 

 

123,183

 

 

42.2

%

 

593,956

 

 

517,925

 

 

14.7

%

Income tax expense

17,981

 

 

22,423

 

 

(19.8)

%

 

77,153

 

 

62,190

 

 

24.1

%

Income before equity in income of
equity method investments

157,202

 

 

100,760

 

 

56.0

%

 

516,803

 

 

455,735

 

 

13.4

%

Equity in income of equity method
investments, net of tax

27,616

 

 

13,541

 

 

103.9

%

 

88,297

 

 

13,541

 

 

552.1

%

Net income

184,818

 

 

114,301

 

 

61.7

%

 

605,100

 

 

469,276

 

 

28.9

%

Net income attributable to
noncontrolling interests, net of income tax

(2,175)

 

 

(11,531)

 

 

(81.1)

%

 

(20,580)

 

 

(38,663)

 

 

(46.8)

%

Net income attributable to Global Payments

$

182,643

 

 

$

102,770

 

 

77.7

%

 

$

584,520

 

 

$

430,613

 

 

35.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to
Global Payments:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.61

 

 

$

0.34

 

 

79.4

%

 

$

1.95

 

 

$

2.17

 

 

(10.1)

%

Diluted

$

0.61

 

 

$

0.34

 

 

79.4

%

 

$

1.95

 

 

$

2.16

 

 

(9.7)

%

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

299,106

 

 

300,528

 

 

 

 

299,222

 

 

198,298

 

 

 

Diluted

300,493

 

 

302,342

 

 

 

 

300,516

 

 

199,134

 

 

 

SCHEDULE 2

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue

$

1,752,369

 

 

$

1,803,902

 

 

(2.9)%

 

$

6,748,023

 

 

$

4,587,601

 

 

47.1%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income

$

726,714

 

 

$

690,224

 

 

5.3%

 

$

2,681,311

 

 

$

1,821,302

 

 

47.2%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Global Payments

$

540,523

 

 

$

488,618

 

 

10.6%

 

$

1,922,439

 

 

$

1,238,653

 

 

55.2%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to Global Payments

$

1.80

 

 

$

1.62

 

 

11.1%

 

$

6.40

 

 

$

6.22

 

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Information for 2019 on Combined Basis(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue

 

 

 

 

 

 

$

6,748,023

 

 

$

7,120,505

 

 

(5.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income

 

 

 

 

 

 

$

2,681,311

 

 

$

2,676,075

 

 

0.2

%

(1)

  The non-GAAP information for 2019 is presented on a combined basis and includes TSYS results for the twelve months ended December 31, 2019 determined in accordance with GAAP applied by TSYS and presented with Global Payments' adjustments to revenue and operating income.
   
  See Schedules 6 and 7 for a reconciliation of each non-GAAP financial measure 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

 

 

 

 

 

 

December 31, 2020

 

December 31, 2019

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,227,550

 

 

$

1,112,269

 

 

$

1,285,940

 

 

$

1,160,963

 

 

(4.5)

%

 

(4.2)

%

Issuer Solutions

 

520,239

 

 

457,005

 

 

518,532

 

 

459,004

 

 

0.3

%

 

(0.4)

%

Business and Consumer Solutions

 

204,731

 

 

204,731

 

 

199,544

 

 

199,544

 

 

2.6

%

 

2.6

%

Intersegment Elimination

 

(22,327)

 

 

(21,636)

 

 

(16,256)

 

 

(15,609)

 

 

(37.3)

%

 

(38.6)

%

 

 

$

1,930,193

 

 

$

1,752,369

 

 

$

1,987,760

 

 

$

1,803,902

 

 

(2.9)

%

 

(2.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

338,529

 

 

$

528,067

 

 

$

308,649

 

 

$

522,460

 

 

9.7

%

 

1.1

%

Issuer Solutions

 

89,520

 

 

204,200

 

 

69,252

 

 

184,735

 

 

29.3

%

 

10.5

%

Business and Consumer Solutions

 

28,271

 

 

49,433

 

 

16,108

 

 

42,812

 

 

75.5

%

 

15.5

%

Corporate

 

(204,339)

 

 

(54,986)

 

 

(197,847)

 

 

(59,783)

 

 

(3.3)

%

 

8.0

%

 

 

$

251,981

 

 

$

726,714

 

 

$

196,162

 

 

$

690,224

 

 

28.5

%

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended

 

 

 

 

 

 

December 31, 2020

 

December 31, 2019

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP(1)

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

4,688,335

 

 

$

4,244,681

 

 

$

4,098,580

 

 

$

4,594,064

 

 

14.4

%

 

(7.6)

%

Issuer Solutions

 

1,981,435

 

 

1,746,570

 

 

604,654

 

 

1,780,057

 

 

nm

 

(1.9)

%

Business and Consumer Solutions

 

829,505

 

 

829,505

 

 

227,440

 

 

805,344

 

 

nm

 

3.0

%

Intersegment Elimination

 

(75,717)

 

 

(72,733)

 

 

(18,782)

 

 

(58,960)

 

 

nm

 

(23.4)

%

 

 

$

7,423,558

 

 

$

6,748,023

 

 

$

4,911,892

 

 

$

7,120,505

 

 

51.1

%

 

(5.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,162,741

 

 

$

1,932,256

 

 

$

1,148,975

 

 

$

2,078,655

 

 

1.2

%

 

(7.0)

%

Issuer Solutions

 

277,651

 

 

743,650

 

 

82,172

 

 

668,448

 

 

nm

 

11.3

%

Business and Consumer Solutions

 

138,630

 

 

224,276

 

 

19,473

 

 

184,038

 

 

nm

 

21.9

%

Corporate

 

(685,069)

 

 

(218,871)

 

 

(459,203)

 

 

(255,066)

 

 

(49.2)

%

 

14.2

%

 

 

$

893,953

 

 

$

2,681,311

 

 

$

791,417

 

 

$

2,676,075

 

 

13.0

%

 

0.2

%

  nm - not meaningful
   

(1)

  The non-GAAP information for 2019 is presented on a combined basis and includes TSYS results for the twelve months ended December 31, 2019 determined in accordance with GAAP applied by TSYS and presented with Global Payments' adjustments to revenue and operating income and segment reporting structure.
   
  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.

SCHEDULE 4

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except share data)

 

 

December 31,

 

2020

 

2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,945,868

 

 

$

1,678,273

 

Accounts receivable, net

794,172

 

 

895,232

 

Settlement processing assets

1,230,853

 

 

1,353,778

 

Prepaid expenses and other current assets

621,467

 

 

439,165

 

Total current assets

4,592,360

 

 

4,366,448

 

Goodwill

23,871,451

 

 

23,759,740

 

Other intangible assets, net

12,015,883

 

 

13,154,655

 

Property and equipment, net

1,578,532

 

 

1,382,802

 

Deferred income taxes

7,627

 

 

6,292

 

Other noncurrent assets

2,135,692

 

 

1,810,225

 

Total assets

$

44,201,545

 

 

$

44,480,162

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Settlement lines of credit

$

358,698

 

 

$

463,237

 

Current portion of long-term debt

827,357

 

 

35,137

 

Accounts payable and accrued liabilities

2,061,384

 

 

1,822,166

 

Settlement processing obligations

1,301,652

 

 

1,258,806

 

Total current liabilities

4,549,091

 

 

3,579,346

 

Long-term debt

8,466,407

 

 

9,090,364

 

Deferred income taxes

2,948,390

 

 

3,145,641

 

Other noncurrent liabilities

750,613

 

 

609,822

 

Total liabilities

16,714,501

 

 

16,425,173

 

Commitments and contingencies

 

 

 

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 December 31, 2020 and 2019;
298,332,458 shares issued and outstanding at December 31, 2020 and 300,225,590 shares
issued and outstanding at December 31, 2019

 

 

 

Paid-in capital

24,963,769

 

 

25,833,307

 

Retained earnings

2,570,874

 

 

2,333,011

 

Accumulated other comprehensive loss

(202,273)

 

 

(310,571)

 

Total Global Payments shareholders’ equity

27,332,370

 

 

27,855,747

 

Noncontrolling interests

154,674

 

 

199,242

 

Total equity

27,487,044

 

 

28,054,989

 

Total liabilities and equity

$

44,201,545

 

 

$

44,480,162

 

SCHEDULE 5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

Years Ended December 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

605,100

 

 

$

469,276

 

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

 

 

 

Depreciation and amortization of property and equipment

357,529

 

 

211,200

 

Amortization of acquired intangibles

1,256,911

 

 

667,135

 

Amortization of capitalized contract costs

78,147

 

 

66,086

 

Share-based compensation expense

148,792

 

 

89,634

 

Provision for operating losses and bad debts

126,712

 

 

100,188

 

Noncash lease expense

98,592

 

 

52,612

 

Deferred income taxes

(166,224)

 

 

(108,309)

 

Equity in income of equity investments, net of tax

(88,297)

 

 

(13,541)

 

Other, net

(13,665)

 

 

12,971

 

Changes in operating assets and liabilities, net of the effects of business combinations:

 

 

 

Accounts receivable

55,986

 

 

(115,528)

 

Settlement processing assets and obligations, net

125,852

 

 

213,701

 

Prepaid expenses and other assets

(270,965)

 

 

(159,056)

 

Accounts payable and other liabilities

(320)

 

 

(95,091)

 

Net cash provided by operating activities

2,314,150

 

 

1,391,278

 

Cash flows from investing activities:

 

 

 

Business combinations and other acquisitions, net of cash acquired

(160,801)

 

 

(644,622)

 

Restricted cash from business combinations

119,372

 

 

 

Capital expenditures

(436,236)

 

 

(307,868)

 

Other, net

39,323

 

 

35,404

 

Net cash used in investing activities

(438,342)

 

 

(917,086)

 

Cash flows from financing activities:

 

 

 

Net borrowings from settlement lines of credit

(133,282)

 

 

(236,473)

 

Proceeds from long-term debt

2,401,147

 

 

7,203,903

 

Repayments of long-term debt

(2,342,072)

 

 

(6,484,689)

 

Payments of debt issuance costs

(8,075)

 

 

(43,599)

 

Repurchases of common stock

(631,148)

 

 

(311,383)

 

Proceeds from stock issued under share-based compensation plans

66,142

 

 

24,514

 

Common stock repurchased - share-based compensation plans

(61,243)

 

 

(62,577)

 

Distributions to noncontrolling interests

(26,199)

 

 

(31,632)

 

Preacquisition dividends paid to former TSYS shareholders

 

 

(23,240)

 

Dividends paid

(233,216)

 

 

(63,498)

 

Purchase of subsidiary shares from noncontrolling interest

(578,196)

 

 

 

Net cash (used in) financing activities

(1,546,142)

 

 

(28,674)

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

81,832

 

 

21,877

 

Increase in cash, cash equivalents and restricted cash

411,498

 

 

467,395

 

Cash, cash equivalents and restricted cash, beginning of the period

1,678,273

 

 

1,210,878

 

Cash, cash equivalents and restricted cash, end of the period

$

2,089,771

 

 

$

1,678,273

 

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 December 31, 2020

 

 

GAAP

 

Net Revenue
Adjustment(1)

 

Earnings
Adjustments(2)

 

Income
Taxes on
Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,930,193

 

 

$

(177,824)

 

 

$

 

 

$

 

 

$

1,752,369

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

251,981

 

 

$

2,378

 

 

$

472,355

 

 

$

 

 

$

726,714

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

182,643

 

 

$

2,378

 

 

$

460,250

 

 

$

(104,748)

 

 

$

540,523

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

0.61

 

 

 

 

 

 

 

 

$

1.80

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

300,493

 

 

 

 

 

 

 

 

300,493

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

 

GAAP

 

Net Revenue
Adjustment(1)

 

Earnings
Adjustments(2)

 

Income
Taxes on
Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,987,760

 

 

$

(183,858)

 

 

$

 

 

$

 

 

$

1,803,902

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

196,162

 

 

$

2,708

 

 

$

491,354

 

 

$

 

 

$

690,224

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

102,770

 

 

$

2,708

 

 

$

485,041

 

 

$

(101,901)

 

 

$

488,618

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per shareattributable to Global Payments

 

$

0.34

 

 

 

 

 

 

 

 

$

1.62

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

302,342

 

 

 

 

 

 

 

 

302,342

 

(1)

  Represents 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 December 31, 2020 and December 31, 2019, includes $2.4 million and $2.7 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.
   

(2)

  For the three months ended December 31, 2020, earnings adjustments to operating income include $317.4 million in cost of services (COS) and $154.9 million in selling, general and administrative expenses (SG&A). Adjustments to COS include amortization of acquired intangibles of $315.3 million and $2.1 million of other items. Adjustments to SG&A include share-based compensation expense of $43.7 million, acquisition and integration expenses of $105.8 million and $5.4 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19. Net income attributable to Global Payments also reflects the removal of $10.8 million of equity method investment earnings from our interest in a private equity investment fund.
   
  For the three months ended December 31, 2019, earnings adjustments to operating income include $351.6 million in COS and $139.7 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $322.2 million and acquisition and integration expenses of $29.4 million. Adjustments to SG&A include share-based compensation expense of $33.8 million and acquisition and integration expenses of $105.9 million. Net income attributable to Global Payments also reflects the removal of a $4.4 million gain related to the partial sale of our investment in Brazil.
   

(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.
   
  See "Non-GAAP Financial Measures" discussion on Schedule 10.

SCHEDULE 7

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

 

Year Ended December 31, 2020

 

 

GAAP

 

Net Revenue
Adjustment(1)

 

Earnings
Adjustments(2)

 

Income
Taxes on
Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

7,423,558

 

 

$

(675,535)

 

 

$

 

 

$

 

 

$

6,748,023

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

893,953

 

 

$

10,517

 

 

$

1,776,841

 

 

$

 

 

$

2,681,311

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

584,520

 

 

$

10,517

 

 

$

1,720,973

 

 

$

(393,571)

 

 

$

1,922,439

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

1.95

 

 

 

 

 

 

 

 

$

6.40

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

300,516

 

 

 

 

 

 

 

 

300,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

GAAP

 

Net Revenue
Adjustment(1)

 

Earnings
Adjustments(2)

 

Income
Taxes on
Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

4,911,892

 

 

$

(324,291)

 

 

$

 

 

$

 

 

$

4,587,601

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

791,417

 

 

$

15,351

 

 

$

1,014,534

 

 

$

 

 

$

1,821,302

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

430,613

 

 

$

15,351

 

 

$

1,036,550

 

 

$

(243,861)

 

 

$

1,238,653

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

2.16

 

 

 

 

 

 

 

 

$

6.22

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

199,134

 

 

 

 

 

 

 

 

199,134

 

(1)

  Represents 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. Also, for the twelve months ended December 31, 2020 and December 31, 2019, includes $10.5 million and $15.4 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.
   

(2)

  For the year ended December 31, 2020, earnings adjustments to operating income include $1,283.3 million in COS and $493.5 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $1,257.8 million and $25.5 million of other items. Adjustments to SG&A include share-based compensation expense of $148.8 million, acquisition and integration expenses of $319.5 million and $25.2 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19. Net income attributable to Global Payments also reflects the removal of a $27.7 million gain associated with the fair value of common shares received from the conversion of certain Visa Inc. preferred shares, the removal of $33.9 million of equity method investment earnings from our interest in a private equity investment fund, and the removal of a $8.7 million loss associated with the partial sale of an ownership position in a strategic partner.
   
  For the year ended December 31, 2019, earnings adjustments to operating income include $711.1 million in COS and $303.4 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $669.3 million and acquisition and integration expenses of $41.8 million. Adjustments to SG&A include share-based compensation expense of $89.6 million and acquisition and integration expenses of $213.8 million. Net income attributable to Global Payments also reflects the removal of $34.3 million in charges from interest expense in connection with the merger with TSYS. These include fees related to the bridge facility the company entered into, the write-off of debt issuance fees in connection with the refinancing of our credit facility and interest expense on new senior notes attributable to the period between issuance and merger close, net of interest income earned from these notes while in escrow. Also includes the removal of a $4.4 million gain related to the partial sale of our investment in Brazil.
   

(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.
   
  See "Non-GAAP Financial Measures" discussion on Schedule 10.

SCHEDULE 8

RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Three Months Ended December 31, 2020

 

 

GAAP

 

Net Revenue
Adjustments(1)

 

Earnings
Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,227,550

 

 

$

(115,281)

 

 

$

 

 

$

1,112,269

 

Issuer Solutions

 

520,239

 

 

(63,234)

 

 

 

 

457,005

 

Business and Consumer Solutions

 

204,731

 

 

 

 

 

 

204,731

 

Intersegment Elimination

 

(22,327)

 

 

691

 

 

 

 

(21,636)

 

 

 

$

1,930,193

 

 

$

(177,824)

 

 

$

 

 

$

1,752,369

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

338,529

 

 

$

361

 

 

$

189,177

 

 

$

528,067

 

Issuer Solutions

 

89,520

 

 

2,017

 

 

112,663

 

 

204,200

 

Business and Consumer Solutions

 

28,271

 

 

 

 

21,162

 

 

49,433

 

Corporate

 

(204,339)

 

 

 

 

149,353

 

 

(54,986)

 

 

 

$

251,981

 

 

$

2,378

 

 

$

472,355

 

 

$

726,714

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

 

GAAP

 

Net Revenue
Adjustments(1)

 

Earnings
Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,285,940

 

 

$

(124,977)

 

 

$

 

 

$

1,160,963

 

Issuer Solutions

 

518,532

 

 

(59,528)

 

 

 

 

459,004

 

Business and Consumer Solutions

 

199,544

 

 

 

 

 

 

199,544

 

Intersegment Elimination

 

(16,256)

 

 

647

 

 

 

 

(15,609)

 

 

 

$

1,987,760

 

 

$

(183,858)

 

 

$

 

 

$

1,803,902

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

308,649

 

 

$

131

 

 

$

213,680

 

 

$

522,460

 

Issuer Solutions

 

69,252

 

 

2,577

 

 

112,906

 

 

184,735

 

Business and Consumer Solutions

 

16,108

 

 

 

 

26,704

 

 

42,812

 

Corporate

 

(197,847)

 

 

 

 

138,064

 

 

(59,783)

 

 

 

$

196,162

 

 

$

2,708

 

 

$

491,354

 

 

$

690,224

 

 

 

 

 

 

 

 

 

 

(1)

  Represents 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 December 31, 2020 and December 31, 2019, includes $2.4 million and $2.7 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.
   

(2)

  For the three months ended December 31, 2020, earnings adjustments to operating income include $317.4 million in COS and $154.9 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $315.3 million and $2.1 million of other items. Adjustments to SG&A include share-based compensation expense of $43.7 million, acquisition and integration expenses of $105.8 million and $5.4 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.
   
  For the three months ended December 31, 2019, earnings adjustments to operating income include $351.6 million in COS and $139.7 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $322.2 million and acquisition and integration expenses of $29.4 million. Adjustments to SG&A include share-based compensation expense of $33.8 million and acquisition and integration expenses of $105.9 million.
   
  See "Non-GAAP Financial Measures" discussion on Schedule 10.

SCHEDULE 9

RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

 

GAAP

 

Net Revenue
Adjustment(2)

 

Earnings
Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

$

4,688,335

 

 

$

(443,654)

 

 

$

 

 

$

4,244,681

 

Issuer Solutions

 

 

 

1,981,435

 

 

(234,865)

 

 

 

 

1,746,570

 

Business and Consumer Solutions

 

 

 

829,505

 

 

 

 

 

 

829,505

 

Intersegment Elimination

 

 

 

(75,717)

 

 

2,984

 

 

 

 

(72,733)

 

 

 

 

 

$

7,423,558

 

 

$

(675,535)

 

 

$

 

 

$

6,748,023

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

 

 

$

1,162,741

 

 

$

1,194

 

 

$

768,321

 

 

$

1,932,256

 

Issuer Solutions

 

 

 

277,651

 

 

9,323

 

 

456,676

 

 

743,650

 

Business and Consumer Solutions

 

 

 

138,630

 

 

 

 

85,646

 

 

224,276

 

Corporate

 

 

 

(685,069)

 

 

 

 

466,198

 

 

(218,871)

 

 

 

 

 

$

893,953

 

 

$

10,517

 

 

$

1,776,841

 

 

$

2,681,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

 

GAAP

 

TSYS(1)

 

Net Revenue
Adjustment(2)

 

Earnings
Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

4,098,580

 

 

$

1,017,489

 

 

$

(522,005)

 

 

$

 

 

$

4,594,064

 

Issuer Solutions

 

604,654

 

 

1,398,326

 

 

(222,923)

 

 

 

 

1,780,057

 

Business and Consumer Solutions

 

227,440

 

 

577,904

 

 

 

 

 

 

805,344

 

Intersegment Elimination

 

(18,782)

 

 

(42,794)

 

 

2,616

 

 

 

 

(58,960)

 

 

 

$

4,911,892

 

 

$

2,950,925

 

 

$

(742,312)

 

 

$

 

 

$

7,120,505

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,148,975

 

 

$

239,796

 

 

$

12,774

 

 

$

677,110

 

 

$

2,078,655

 

Issuer Solutions

 

82,172

 

 

452,688

 

 

2,577

 

 

131,011

 

 

668,448

 

Business and Consumer Solutions

 

19,473

 

 

95,826

 

 

 

 

68,739

 

 

184,038

 

Corporate

 

(459,203)

 

 

(231,018)

 

 

 

 

435,155

 

 

(255,066)

 

 

 

$

791,417

 

 

$

557,292

 

 

$

15,351

 

 

$

1,312,015

 

 

$

2,676,075

 

(1)

  Represents TSYS financial information determined in accordance with GAAP applied by TSYS and presented in Global Payments new segment reporting structure, net of revenues between legacy Global Payments and TSYS considered intercompany revenue following the merger.
   

(2)

  Represents 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 twelve months ended December 31, 2020 and December 31, 2019, includes $10.5 million and $15.4 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.
   

(3)

  For the year ended December 31, 2020, earnings adjustments to operating income include $1,283.3 million in COS and $493.5 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $1,257.8 million and $25.5 million of other items. Adjustments to SG&A include share-based compensation expense of $148.8 million, acquisition and integration expenses of $319.5 million and $25.2 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.
   
  For the year ended December 31, 2019, earnings adjustments to operating income include $711.1 million in COS and $303.4 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $669.3 million and acquisition and integration expenses of $41.8 million. Adjustments to SG&A include share-based compensation expense of $89.6 million and acquisition and integration expenses of $213.8 million.
   
  See "Non-GAAP Financial Measures" discussion on Schedule 10.

SCHEDULE 10

OUTLOOK SUMMARY (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In billions, except per share data)

 

 

 

2020

 

2021 Outlook

 

% Change

Revenues:

 

 

 

 

 

 

GAAP revenues

 

$7.42

 

 

$8.18 to $8.28

 

10% to 12%

Adjustments(1)

 

(0.67)

 

 

(0.68)

 

 

Adjusted net revenue

 

$6.75

 

 

$7.50 to $7.60

 

11% to 13%

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

GAAP diluted EPS

 

$1.95

 

 

$3.42 to $3.72

 

75% to 91%

Adjustments(2)

 

4.45

 

 

4.33

 

 

Adjusted diluted EPS

 

$6.40

 

 

$7.75 to $8.05

 

21% to 26%

(1)

  Represents 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 include adjustments to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.
   

(2)

  Adjustments to 2020 GAAP diluted EPS include the removal of 1) software-related contract liability adjustments described above of $0.03, 2) acquisition related amortization expense of $3.20, 3) share-based compensation expense of $0.38, 4) acquisition and integration expense of $0.82, 5) other items, inclusive of employee termination benefits and other incremental charges directly related to COVID-19, of $0.13, 6) gain associated with the fair value of common shares received from the conversion of certain Visa Inc. preferred shares of $0.07, 7) equity method investment earnings from our interest in a private equity investment fund of $0.11, 8) loss associated with the partial sale of an ownership position in a strategic partner of $0.02 and 9) discrete tax items of $0.05. Adjustments to 2020 GAAP diluted EPS include the effect on noncontrolling interests and income taxes, as applicable.

NON-GAAP FINANCIAL MEASURES

Global Payments supplements revenues, income, operating income, operating margin and 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 EPS 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 and integration expense and certain other items, such as unusual, direct and discrete costs due to the global pandemic, specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6 and 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.

Investors:
Winnie Smith 770-829-8478
investor.relations@globalpay.com

Media:
Emily Edmonds 770-829-8755
media.relations@globalpay.com

Source: Global Payments Inc.

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