Global Payments Reports Fourth Quarter and Full Year 2021 Results

February 10, 2022

Delivers Record Fourth Quarter and Full Year 2021 Results

Sets Growth Targets for 2022

Commences Strategic Review of Netspend Consumer Business

Increases Share Repurchase Authorization to $2.0 Billion

ATLANTA--(BUSINESS WIRE)-- Global Payments Inc. (NYSE: GPN) today announced results for the fourth quarter and year ended December 31, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220210005217/en/

“We are pleased with the resilience that our businesses demonstrated during the fourth quarter of 2021 and for the full year,” said Jeff Sloan, Chief Executive Officer. “We are particularly proud of the sequential improvement in our Merchant Solutions business this quarter, despite the incremental impact of COVID-19 throughout the period. We reported the best results in our history in 2021, and we expect 2022 to exceed that performance as we continue to meaningfully advance our differentiated strategies for growth.

“We are thrilled to announce that Global Payments is the finalist company in Caixabank’s selection process for a technology partner for its card issuing businesses. During the coming weeks we expect to finalize contract negotiations. Upon implementation in conjunction with our recently announced partnership with Virgin Money, we believe that Global Payments will be among the leading debit technology providers across Europe.”

Sloan continued, “In addition to our selection by Caixa and the announcement of our collaboration with Virgin Money, we achieved many other significant accomplishments over the past twelve months despite a highly uncertain environment. This includes our partnership with Google to deliver innovative and seamless digital services to all manner of merchants worldwide; the expansion of our relationship with AWS for unique distribution and cutting-edge issuer technologies; our successful acquisitions of Zego and MineralTree to advance our software leadership position; and our partnership with Mercedes-Benz Stadium to enable its multi-channel commerce ecosystem and provide best-in-class experiences for fans.

“It has been an active period for capital management with more than $6 billion deployed since 2020 to expand our target addressable markets while concurrently returning capital to shareholders. Our free cash flow conversion and balance sheet provide us with ample firepower to continue to execute on our priorities.”

Sloan concluded, “At the same time, we seek to refine our portfolio mix by simplifying the composition of our businesses and maintaining a singular focus on our corporate customers. As part of that initiative, we have commenced a strategic review of the Netspend consumer business; we intend to retain its B2B assets as we further expand this new pillar of our strategy.”

Full Year 2021 Summary

  • GAAP revenues were $8.52 billion, compared to $7.42 billion in 2020; diluted earnings per share were $3.29 compared to $1.95 in the prior year; and operating margin was 15.9% compared to 12.0% in the prior year.
  • Adjusted net revenues increased 14.7% to $7.74 billion, compared to $6.75 billion in 2020.
  • Adjusted earnings per share increased 27.5% to $8.16, compared to $6.40 in 2020.
  • Adjusted operating margin of 41.8% expanded 210 basis points.

Fourth Quarter 2021 Summary

  • GAAP revenues were $2.19 billion, compared to $1.93 billion in the fourth quarter of 2020; diluted earnings per share were $0.72 compared to $0.61 in the prior year; and operating margin was 14.6% compared to 13.1% in the prior year.
  • Adjusted net revenues increased 13.3% to $1.98 billion, compared to $1.75 billion in the fourth quarter of 2020.
  • Adjusted earnings per share increased 18.3% to $2.13, compared to $1.80 in the fourth quarter of 2020.
  • Adjusted operating margin of 42.0% expanded 50.0 basis points.

2022 Outlook

“Our performance for the full year meaningfully exceeded our initial expectations despite the unexpected impact of COVID-19 variants, highlighting outstanding execution and the durability of our business model,” said Paul Todd, Senior Executive Vice President and Chief Financial Officer. “We are pleased with how our business is positioned as we enter 2022 and the resulting financial outlook for the year.

“The company expects adjusted net revenue to be in a range of $8.42 billion to $8.50 billion, reflecting growth of 9% to 10% (10% to 11% on a constant currency basis) over 2021, and adjusted earnings per share to be in a range of $9.45 to $9.67, reflecting growth of 16% to 19% (17% to 20% on a constant currency basis) over 2021. Annual adjusted operating margin for 2022 is expected to expand by up to 100 basis points (up to 150 basis points excluding acquisitions).”

Todd concluded, “This outlook presumes continued recovery from the pandemic worldwide throughout 2022.”

Capital Allocation

Global Payments’ Board of Directors approved a dividend of $0.25 per share payable March 25, 2022 to shareholders of record as of March 11, 2022. The Board also approved an increase to the existing authorization for the company's share repurchase program, raising the total available authorization to $2.0 billion.

Conference Call

Global Payments’ management will host a live audio webcast today, February 10, 2022, at 8:00 a.m. EST to discuss financial results and business highlights. The audio webcast, along with supplemental financial information, can be accessed via the investor relations page of the company’s website at investors.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 each of the non-GAAP financial 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 payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with nearly 24,000 team members worldwide, Global Payments is a Fortune 500® company and a member of the S&P 500 with worldwide reach spanning over 170 countries throughout North America, Europe, Asia Pacific and Latin America. For more information, visit www.globalpayments.com and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks, 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 2022; 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; the anticipated benefits of the merger with TSYS , including the combined company’s plans, objectives, expectations and intentions; timing and completion of anticipated benefits of acquisitions or strategic initiatives; our success and timing in developing and introducing new services; and future financial and operating results. Although we believe that the plans and expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our plans and expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to factors previously disclosed in Global Payments’ reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects of global economic, political, market, health and social events or other conditions, including the effects and duration of the COVID-19 pandemic and actions taken in response; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic or otherwise; the outcome of any legal proceedings that may be instituted against the Company or our directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; the impact of a security breach or operational failure on the Company’s business; failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain Visa and Mastercard registration and financial institution sponsorship; the ability to retain, develop and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; our ability to meet environmental, social or governance targets, goals and commitments; the potential effect of climate change including natural disasters; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards on us or our partners and customers, including privacy and cybersecurity laws and regulations; and other events beyond our control, 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, 2020, 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,

 

 

2021

 

 

 

2020

 

 

% Change

 

 

2021

 

 

 

2020

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

2,193,981

 

 

$

1,930,193

 

 

13.7

%

 

$

8,523,762

 

 

$

7,423,558

 

 

14.8

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

967,997

 

 

 

922,195

 

 

5.0

%

 

 

3,773,725

 

 

 

3,650,727

 

 

3.4

%

Selling, general and administrative

 

905,008

 

 

 

756,017

 

 

19.7

%

 

 

3,391,161

 

 

 

2,878,878

 

 

17.8

%

 

 

1,873,005

 

 

 

1,678,212

 

 

11.6

%

 

 

7,164,886

 

 

 

6,529,605

 

 

9.7

%

Operating income

 

320,976

 

 

 

251,981

 

 

27.4

%

 

 

1,358,876

 

 

 

893,953

 

 

52.0

%

Interest and other income

 

3,311

 

 

 

8,275

 

 

(60.0

) %

 

 

19,320

 

 

 

43,551

 

 

(55.6

) %

Interest and other expense

 

(87,767

)

 

 

(85,073

)

 

3.2

%

 

 

(333,651

)

 

 

(343,548

)

 

(2.9

) %

 

 

(84,456

)

 

 

(76,798

)

 

10.0

%

 

 

(314,331

)

 

 

(299,997

)

 

4.8

%

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

 

236,520

 

 

 

175,183

 

 

35.0

%

 

 

1,044,545

 

 

 

593,956

 

 

75.9

%

Income tax expense

 

37,434

 

 

 

17,981

 

 

108.2

%

 

 

169,034

 

 

 

77,153

 

 

119.1

%

Income before equity in income of equity method investments

 

199,086

 

 

 

157,202

 

 

26.6

%

 

 

875,511

 

 

 

516,803

 

 

69.4

%

Equity in income of equity method investments, net of tax

 

18,092

 

 

 

27,616

 

 

(34.5

) %

 

 

112,353

 

 

 

88,297

 

 

27.2

%

Net income

 

217,178

 

 

 

184,818

 

 

17.5

%

 

 

987,864

 

 

 

605,100

 

 

63.3

%

Net income attributable to noncontrolling interests, net of income tax

 

(8,725

)

 

 

(2,175

)

 

301.1

%

 

 

(22,404

)

 

 

(20,580

)

 

8.9

%

Net income attributable to Global Payments

$

208,453

 

 

$

182,643

 

 

14.1

%

 

$

965,460

 

 

$

584,520

 

 

65.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Global Payments:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.72

 

 

$

0.61

 

 

18.0

%

 

$

3.30

 

 

$

1.95

 

 

69.2

%

Diluted

$

0.72

 

 

$

0.61

 

 

18.0

%

 

$

3.29

 

 

$

1.95

 

 

68.7

%

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

287,887

 

 

 

299,106

 

 

 

 

 

292,655

 

 

 

299,222

 

 

 

Diluted

 

288,466

 

 

 

300,493

 

 

 

 

 

293,669

 

 

 

300,516

 

 

 

SCHEDULE 2

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended

 

Years Ended

 

December 31,

 

December 31,

 

 

2021

 

 

2020

 

% Change

 

 

2021

 

 

2020

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue

$

1,984,878

 

$

1,752,369

 

13.3

%

 

$

7,737,960

 

$

6,748,023

 

14.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income

$

833,472

 

$

726,714

 

14.7

%

 

$

3,234,347

 

$

2,681,311

 

20.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Global Payments

$

614,726

 

$

540,523

 

13.7

%

 

$

2,396,422

 

$

1,922,439

 

24.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to Global Payments

$

2.13

 

$

1.80

 

18.3

%

 

$

8.16

 

$

6.40

 

27.5

%

_______________________

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, 2021

 

December 31, 2020

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,475,032

 

 

$

1,339,975

 

 

$

1,227,550

 

 

$

1,112,269

 

 

20.2

%

 

20.5

%

Issuer Solutions

 

 

537,623

 

 

 

462,904

 

 

 

520,239

 

 

 

457,005

 

 

3.3

%

 

1.3

%

Business and Consumer Solutions

 

 

207,831

 

 

 

207,804

 

 

 

204,731

 

 

 

204,731

 

 

1.5

%

 

1.5

%

Intersegment Elimination

 

 

(26,505

)

 

 

(25,805

)

 

 

(22,327

)

 

 

(21,636

)

 

(18.7

) %

 

(19.3

) %

 

 

$

2,193,981

 

 

$

1,984,878

 

 

$

1,930,193

 

 

$

1,752,369

 

 

13.7

%

 

13.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

460,304

 

 

$

646,204

 

 

$

338,529

 

 

$

528,067

 

 

36.0

%

 

22.4

%

Issuer Solutions

 

 

80,166

 

 

 

200,850

 

 

 

89,520

 

 

 

204,200

 

 

(10.4

) %

 

(1.6

) %

Business and Consumer Solutions

 

 

28,338

 

 

 

45,007

 

 

 

28,271

 

 

 

49,433

 

 

0.2

%

 

(9.0

) %

Corporate

 

 

(247,832

)

 

 

(58,589

)

 

 

(204,339

)

 

 

(54,986

)

 

(21.3

) %

 

(6.6

) %

 

 

$

320,976

 

 

$

833,472

 

 

$

251,981

 

 

$

726,714

 

 

27.4

%

 

14.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended

 

 

 

 

 

 

December 31, 2021

 

December 31, 2020

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

5,665,557

 

 

$

5,136,121

 

 

$

4,688,335

 

 

$

4,244,681

 

 

20.8

%

 

21.0

%

Issuer Solutions

 

 

2,065,971

 

 

 

1,806,445

 

 

 

1,981,435

 

 

 

1,746,570

 

 

4.3

%

 

3.4

%

Business and Consumer Solutions

 

 

886,443

 

 

 

886,418

 

 

 

829,505

 

 

 

829,505

 

 

6.9

%

 

6.9

%

Intersegment Elimination

 

 

(94,209

)

 

 

(91,024

)

 

 

(75,717

)

 

 

(72,733

)

 

(24.4

) %

 

(25.1

) %

 

 

$

8,523,762

 

 

$

7,737,960

 

 

$

7,423,558

 

 

$

6,748,023

 

 

14.8

%

 

14.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,725,990

 

 

$

2,472,460

 

 

$

1,162,741

 

 

$

1,932,256

 

 

48.4

%

 

28.0

%

Issuer Solutions

 

 

301,119

 

 

 

785,050

 

 

 

277,651

 

 

 

743,650

 

 

8.5

%

 

5.6

%

Business and Consumer Solutions

 

 

167,777

 

 

 

240,185

 

 

 

138,630

 

 

 

224,276

 

 

21.0

%

 

7.1

%

Corporate

 

 

(836,010

)

 

 

(263,348

)

 

 

(685,069

)

 

 

(218,871

)

 

(22.0

) %

 

(20.3

) %

 

 

$

1,358,876

 

 

$

3,234,347

 

 

$

893,953

 

 

$

2,681,311

 

 

52.0

%

 

20.6

%

__________________________

See Schedules 8 and 9 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 10 for a discussion of non-GAAP financial measures.

Note: Amounts may not sum due to rounding.

SCHEDULE 4

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except share data)

 

 

December 31,

 

 

2021

 

 

 

2020

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,979,308

 

 

$

1,945,868

 

Accounts receivable, net

 

946,247

 

 

 

794,172

 

Settlement processing assets

 

1,143,539

 

 

 

1,230,853

 

Prepaid expenses and other current assets

 

641,891

 

 

 

621,467

 

Total current assets

 

4,710,985

 

 

 

4,592,360

 

Goodwill

 

24,813,274

 

 

 

23,871,451

 

Other intangible assets, net

 

11,633,709

 

 

 

12,015,883

 

Property and equipment, net

 

1,687,586

 

 

 

1,578,532

 

Deferred income taxes

 

12,117

 

 

 

7,627

 

Other noncurrent assets

 

2,422,042

 

 

 

2,135,692

 

Total assets

$

45,279,713

 

 

$

44,201,545

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Settlement lines of credit

$

484,202

 

 

$

358,698

 

Current portion of long-term debt

 

78,505

 

 

 

827,357

 

Accounts payable and accrued liabilities

 

2,542,256

 

 

 

2,061,384

 

Settlement processing obligations

 

1,358,051

 

 

 

1,301,652

 

Total current liabilities

 

4,463,014

 

 

 

4,549,091

 

Long-term debt

 

11,414,809

 

 

 

8,466,407

 

Deferred income taxes

 

2,793,427

 

 

 

2,948,390

 

Other noncurrent liabilities

 

739,046

 

 

 

750,613

 

Total liabilities

 

19,410,296

 

 

 

16,714,501

 

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, 2021 and 2020; 284,750,452 shares issued and outstanding at December 31, 2021 and 298,332,458 shares issued and outstanding at December 31, 2020

 

 

 

 

 

Paid-in capital

 

22,880,261

 

 

 

24,963,769

 

Retained earnings

 

2,982,122

 

 

 

2,570,874

 

Accumulated other comprehensive loss

 

(234,182

)

 

 

(202,273

)

Total Global Payments shareholders’ equity

 

25,628,201

 

 

 

27,332,370

 

Noncontrolling interests

 

241,216

 

 

 

154,674

 

Total equity

 

25,869,417

 

 

 

27,487,044

 

Total liabilities and equity

$

45,279,713

 

 

$

44,201,545

 

SCHEDULE 5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

Years Ended December 31,

 

 

2021

 

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income

$

987,864

 

 

$

605,100

 

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

 

 

 

Depreciation and amortization of property and equipment

 

396,342

 

 

 

357,529

 

Amortization of acquired intangibles

 

1,295,042

 

 

 

1,256,911

 

Amortization of capitalized contract costs

 

93,328

 

 

 

78,147

 

Share-based compensation expense

 

180,779

 

 

 

148,792

 

Provision for operating losses and bad debts

 

90,208

 

 

 

126,712

 

Noncash lease expense

 

107,775

 

 

 

98,592

 

Deferred income taxes

 

(189,050

)

 

 

(166,224

)

Equity in income of equity method investments, net of tax

 

(112,353

)

 

 

(88,297

)

Facilities exit charges

 

51,349

 

 

 

 

Distribution received on investments

 

36,914

 

 

 

7,738

 

Other, net

 

10,810

 

 

 

(21,403

)

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

 

 

 

Accounts receivable

 

(165,543

)

 

 

55,986

 

Settlement processing assets and obligations, net

 

128,584

 

 

 

125,852

 

Prepaid expenses and other assets

 

(264,009

)

 

 

(270,965

)

Accounts payable and other liabilities

 

132,785

 

 

 

(320

)

Net cash provided by operating activities

 

2,780,825

 

 

 

2,314,150

 

Cash flows from investing activities:

 

 

 

Business combinations and other acquisitions, net of cash acquired

 

(1,811,432

)

 

 

(160,801

)

Restricted cash from business combinations

 

 

 

 

119,372

 

Capital expenditures

 

(493,216

)

 

 

(436,236

)

Other, net

 

10,822

 

 

 

39,323

 

Net cash used in investing activities

 

(2,293,826

)

 

 

(438,342

)

Cash flows from financing activities:

 

 

 

Net borrowings from (repayments of) settlement lines of credit

 

149,528

 

 

 

(133,282

)

Proceeds from long-term debt

 

7,057,668

 

 

 

2,401,147

 

Repayments of long-term debt

 

(4,826,769

)

 

 

(2,342,072

)

Payments of debt issuance costs

 

(21,320

)

 

 

(8,075

)

Repurchases of common stock

 

(2,533,629

)

 

 

(631,148

)

Proceeds from stock issued under share-based compensation plans

 

49,545

 

 

 

66,142

 

Common stock repurchased - share-based compensation plans

 

(90,649

)

 

 

(61,243

)

Distributions to noncontrolling interests

 

 

 

 

(26,199

)

Dividends paid

 

(259,726

)

 

 

(233,216

)

Purchase of subsidiary shares from noncontrolling interest

 

 

 

 

(578,196

)

Contributions from noncontrolling interests

 

69,987

 

 

 

 

Net cash used in financing activities

 

(405,365

)

 

 

(1,546,142

)

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

 

(48,382

)

 

 

81,832

 

Increase in cash, cash equivalents and restricted cash

 

33,252

 

 

 

411,498

 

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

 

2,089,771

 

 

 

1,678,273

 

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

$

2,123,023

 

 

$

2,089,771

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, 2021

 

 

GAAP

 

Net Revenue Adjustment(1)

 

Earnings Adjustments(2)

 

Income

Taxes on Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,193,981

 

$

(209,103

)

 

$

 

$

 

 

$

1,984,878

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

320,976

 

$

1,030

 

 

$

511,465

 

$

 

 

$

833,472

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

208,453

 

$

1,030

 

 

$

510,301

 

$

(105,058

)

 

$

614,726

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

0.72

 

 

 

 

 

 

 

$

2.13

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

288,466

 

 

 

 

 

 

 

 

288,466

 

 

 

 

 

 

 

 

 

 

 

 

 

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 shareattributable to Global Payments

 

$

0.61

 

 

 

 

 

 

 

$

1.80

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

300,493

 

 

 

 

 

 

 

 

300,493

________________________

(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, 2021 and December 31, 2020, includes $1.0 million and $2.4 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

(2)

For the three months ended December 31, 2021, earnings adjustments to operating income included $321.4 million in cost of services (COS) and $190.0 million in selling, general and administrative expenses (SG&A). Adjustments to COS represent amortization of acquired intangibles of $321.1 million and other items of $0.3 million. Adjustments to SG&A include share-based compensation expense of $34.7 million, acquisition and integration expenses of $98.6 million, facilities exit charges of $56.8 million and other items of $(0.1) million. Net income attributable to Global Payments also reflects the removal of $2.5 million of equity method investment earnings from our interest in a private equity investment fund.

 

 

For the three months ended December 31, 2020, earnings adjustments to operating income included $317.4 million in COS and $154.9 million in SG&A expenses. Adjustments to COS include amortization of acquired intangibles of $315.3 million and other items of $2.1 million. Adjustments to SG&A include share-based compensation expense of $43.7 million, acquisition and integration expenses of $105.8 million and other items of $5.4 million. For 2020, other COS and SG&A items 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.

 

(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.

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 7

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

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

 

Year Ended December 31, 2021

 

 

GAAP

 

Net Revenue Adjustment(1)

 

Earnings Adjustments(2)

 

Income

Taxes on Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

8,523,762

 

$

(785,802

)

 

$

 

$

 

 

$

7,737,960

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

1,358,876

 

$

5,023

 

 

$

1,870,448

 

$

 

 

$

3,234,347

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

965,460

 

$

5,023

 

 

$

1,822,626

 

$

(396,687

)

 

$

2,396,422

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

3.29

 

 

 

 

 

 

 

$

8.16

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

293,669

 

 

 

 

 

 

 

 

293,669

 

 

 

 

 

 

 

 

 

 

 

 

 

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

________________________

(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, 2021 and December 31, 2020, includes $5.0 million and $10.5 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, 2021, earnings adjustments to operating income included $1,293.1 million in COS and $577.3 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $1,295.0 million and other items of $(1.9) million. Adjustments to SG&A include share-based compensation expense of $180.8 million, acquisition and integration expenses of $340.2 million, facilities exit charges of $56.8 million and other items of $(0.5) million. Net income attributable to Global Payments also reflects the removal of $47.0 million of equity method investment earnings from our interest in a private equity investment fund.

 

 

 

For the year ended December 31, 2020, earnings adjustments to operating income included $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 other items of $25.5 million. Adjustments to SG&A include share-based compensation expense of $148.8 million, acquisition and integration expenses of $319.5 million and other items of $25.2 million. For 2020, other COS and SG&A items 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 shares received from the partial conversion of Visa Inc. convertible 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.

 

 

(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.

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 8

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

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Three Months Ended December 31, 2021

 

 

GAAP

 

Net Revenue Adjustments(1)

 

Earnings Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,475,032

 

 

$

(135,057

)

 

$

 

$

1,339,975

 

Issuer Solutions

 

 

537,623

 

 

 

(74,719

)

 

 

 

 

462,904

 

Business and Consumer Solutions

 

 

207,831

 

 

 

(27

)

 

 

 

 

207,804

 

Intersegment Elimination

 

 

(26,505

)

 

 

700

 

 

 

 

 

(25,805

)

 

 

$

2,193,981

 

 

$

(209,103

)

 

$

 

$

1,984,878

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

460,304

 

 

$

193

 

 

$

185,707

 

$

646,204

 

Issuer Solutions

 

 

80,166

 

 

 

838

 

 

 

119,846

 

 

200,850

 

Business and Consumer Solutions

 

 

28,338

 

 

 

 

 

 

16,669

 

 

45,007

 

Corporate

 

 

(247,832

)

 

 

 

 

 

189,243

 

 

(58,589

)

 

 

$

320,976

 

 

$

1,030

 

 

$

511,465

 

$

833,472

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

___________________

(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, 2021 and December 31, 2020, includes $1.0 million and $2.4 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

 

(2)

For the three months ended December 31, 2021, earnings adjustments to operating income included $321.4 million in cost of services (COS) and $190.0 million in selling, general and administrative expenses (SG&A). Adjustments to COS represent amortization of acquired intangibles of $321.1 million and other items of $0.3 million. Adjustments to SG&A include share-based compensation expense of $34.7 million, acquisition and integration expenses of $98.6 million, facilities exit charges of $56.8 million and other items of $(0.1) million.

 

 

For the three months ended December 31, 2020, earnings adjustments to operating income included $317.4 million in COS and $154.9 million in SG&A expenses. Adjustments to COS include amortization of acquired intangibles of $315.3 million and other items of $2.1 million. Adjustments to SG&A include share-based compensation expense of $43.7 million, acquisition and integration expenses of $105.8 million and other items of $5.4 million. For 2020, other COS and SG&A items include employee termination benefits and other incremental charges directly related to COVID-19.

 

 

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

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 9

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

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Year Ended December 31, 2021

 

 

GAAP

 

Net Revenue Adjustment(1)

 

Earnings Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

5,665,557

 

 

$

(529,436

)

 

$

 

$

5,136,121

 

Issuer Solutions

 

 

2,065,971

 

 

 

(259,526

)

 

 

 

 

1,806,445

 

Business and Consumer Solutions

 

 

886,443

 

 

 

(25

)

 

 

 

 

886,418

 

Intersegment Elimination

 

 

(94,209

)

 

 

3,185

 

 

 

 

 

(91,024

)

 

 

$

8,523,762

 

 

$

(785,802

)

 

$

 

$

7,737,960

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,725,990

 

 

$

723

 

 

$

745,747

 

$

2,472,460

 

Issuer Solutions

 

 

301,119

 

 

 

4,300

 

 

 

479,631

 

 

785,050

 

Business and Consumer Solutions

 

 

167,777

 

 

 

 

 

 

72,408

 

 

240,185

 

Corporate

 

 

(836,010

)

 

 

 

 

 

572,662

 

 

(263,348

)

 

 

$

1,358,876

 

 

$

5,023

 

 

$

1,870,448

 

$

3,234,347

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2020

 

 

GAAP

 

Net Revenue Adjustment(1)

 

Earnings Adjustments(2)

 

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

 

________________________  

(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 twelve months ended December 31, 2021 and December 31, 2020, includes $5.0 million and $10.5 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, 2021, earnings adjustments to operating income included $1,293.1 million in COS and $577.3 million in SG&A. Adjustments to COS include amortization of acquired intangibles of $1,295.0 million and other items of $(1.9) million. Adjustments to SG&A include share-based compensation expense of $180.8 million, acquisition and integration expenses of $340.2 million, facilities exit charges of $56.8 million and other items of $(0.5) million.

 

 

 

For the year ended December 31, 2020, earnings adjustments to operating income included $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 other items of $25.5 million. Adjustments to SG&A include share-based compensation expense of $148.8 million, acquisition and integration expenses of $319.5 million and other items of $25.2 million. For 2020, other COS and SG&A items include employee termination benefits and other incremental charges directly related to COVID-19.

 

 

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

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 10

OUTLOOK SUMMARY (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In billions, except per share data)

 

 

 

 

2021

 

 

2022 Outlook

 

% Change

Revenues:

 

 

 

 

 

 

GAAP revenues

 

$

8.52

 

 

$9.22 to $9.30

 

8% to 9%

Adjustments(1)

 

 

(0.78

)

 

(0.80

)

 

 

Adjusted net revenue

 

$

7.74

 

 

$8.42 to $8.50

 

9% to 10%

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

GAAP diluted EPS

 

$

3.29

 

 

$4.97 to $5.19

 

51% to 58%

Adjustments(2)

 

 

4.87

 

 

4.48

 

 

 

Adjusted diluted EPS

 

$

8.16

 

 

$9.45 to $9.67

 

16% to 19%

 

(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 2021 GAAP diluted EPS include the removal of 1) software-related contract liability adjustments described above of $0.02, 2) acquisition related amortization expense of $3.39, 3) share-based compensation expense of $0.47, 4) acquisition and integration expense of $0.89, 5) facilities exit charges of $0.15, 6) other items of $(0.1), 7) equity method investment earnings from our interest in a private equity investment fund of $(0.16) and 8) discrete tax items of $0.12. Adjustments to 2021 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 other items 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. Adjusted net revenue and adjusted EPS range on a constant currency basis excludes the estimated impact of foreign currency fluctuations and is calculated using average exchange rates during 2021. 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.

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

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

Source: Global Payments Inc.

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