EPS Forecast
Revenue Forecast
EX-99.1
2
ex991earningsrelease123120.htm
EX-99.1
Document
| 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 -- Global Payments Inc. (NYSE: GPN) today announced results for the fourth quarter and year ended December 31, 2021.
“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.
1
“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).”
2
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.
3
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
4
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.
| Investor contact: | investor.relations@globalpay.com | Media contact: | media.relations@globalpay.com | ||||||||
| Winnie Smith | Emily Edmonds | ||||||||||
| 770-829-8478 | 770-829-8755 | ||||||||||
Source: Global Payments Inc.
5
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 | |||||||||||||||||||||||||||||||
6
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.
7
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.
8
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 | |||||||
9
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 | |||||||
10
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 Adjustments(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 Adjustments(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 | ||||||||||||||||||||||||||||||
----------------------------------------------------------------------------------
(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.
11
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 Adjustments(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 Adjustments(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.
12
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.
13
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 Adjustments(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 Adjustments(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.
14
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.
15