Exhibit 99.1

 

 

		Total System Services, Inc. One TSYS Way P.O. Box 2567 Columbus, GA, 31902-2567		tel fax web		+1.706.649.2307 +1.706.649.5740 www.tsys.com

 

TSYS Reports Third Quarter Earnings

Revises Revenue Guidance and Reaffirms EPS Guidance

COLUMBUS, Ga., October 25, 2016 — TSYS (NYSE: TSS) reported results for the third quarter of 2016.

“We were very pleased with this quarter’s financial performance as all four of our operating segments exceeded our expectations. We remain on track with our TransFirst integration activities and continue to be laser-focused on successfully combining our legacy merchant businesses with TransFirst,” said M. Troy Woods, chairman and chief executive officer of TSYS.

Highlights for the third quarter of 2016 include:

 

•

Total revenues were $1.1 billion, an increase of 62.0% over last year’s $707.9 million.

 

•

Net revenue (non-GAAP), which excludes reimbursable items, interchange and assessment expense, was $789.6 million, an increase of 24.1% over last year’s $636.4 million.

 

•

GAAP net income attributable to TSYS common shareholders was $85.4 million, a decrease of 29.2% from last year’s $120.6 million. GAAP basic earnings per share (EPS) were $0.46 per share, a decrease of 29.2% from last year’s $0.66.

 

•

Adjusted EBITDA (non-GAAP) was $269.1 million, an increase of 12.7% over last year’s $238.9 million. Q3 ’15 results included tax benefits of $15.1 million that did not recur in 2016.

 

•

Adjusted earnings (non-GAAP) were $130.7 million, a decrease of 8.8% over last year’s $143.3 million. Q3 ’15 adjusted earnings and adjusted EPS (non-GAAP) included $23.6 million and $0.13, respectively, of tax related benefits that did not recur in 2016. Q3 ’16 adjusted EPS was $0.71, which included $0.06 of headwinds for currency and severance expenses, a decrease of 8.7% over last year’s $0.78.

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Page 2 of 15

 

		Total System Services, Inc. One TSYS Way P.O. Box 2567 Columbus, GA, 31902-2567		tel fax web		+1.706.649.2307 +1.706.649.5740 www.tsys.com

 

“Our cash flow from operating activities and free cash flow for the first nine months of the year were both records. This allowed us to reduce our debt by $175 million during the quarter, bringing the total debt reduction to $300 million year to date,” said Woods.

During the third quarter, currencies, including the rapid and steep decline in the British Pound compared to the U. S. Dollar, negatively impacted total revenues and net revenue by $14 million and $13 million, respectively, on a constant currency basis compared to 2015. A similar impact is expected in Q4. This same constant currency comparison negatively impacted EPS by $0.03 in Q3 ’16 and is expected to have a similar impact in Q4.

The Consumer Financial Protection Bureau released its long-awaited rule on prepaid financial products on October 5, 2016. The new rule is not expected to have a significant financial impact on 2016 results. Additional details on the impact of the new rule will be discussed at today’s quarterly conference call.

Updated 2016 Outlook

As a result of currency headwinds, total and net revenue guidance are being adjusted. EPS guidance remains unchanged. The resulting revised guidance is below.

 

		2016 Revised Financial Outlook Range										Percent Change
(in millions, except per share amounts)
Revenue:
Total revenues (GAAP)			$4,150			to			$4,170				49	%		to			50	%
Net revenue (non-GAAP)			$3,030			to			$3,045				21	%		to			22	%
Earnings per share:
Basic EPS (GAAP)			$1.77			to			$1.83				(10	%)		to			(7	%)
Adjusted EPS attributable to TSYS common shareholders from continuing operations (non-GAAP)			$2.78			to			$2.85				13	%		to			16	%
Average basic weighted shares			183.7

Conference Call

TSYS will host its quarterly conference call at 5:00 p.m. ET on Tuesday, October 25. The conference call can be accessed via simultaneous Internet broadcast on the “Investor Relations” section of TSYS’ website at investors.tsys.com where an accompanying slide presentation will also be available. The replay will be archived for 12 months and will be available approximately 30 minutes after the completion of the call.

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		Total System Services, Inc. One TSYS Way P.O. Box 2567 Columbus, GA, 31902-2567		tel fax web		+1.706.649.2307 +1.706.649.5740 www.tsys.com

 

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of its consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Additional information about non-GAAP financial measures, including, but not limited to, net revenue, adjusted earnings, adjusted EBITDA and adjusted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures is included on pages 11 to 15 of this release.

About TSYS

TSYS^® (NYSE: TSS) unlocks opportunities in payments for payment providers, businesses and consumers. Our headquarters are in Columbus, Georgia, USA, and we operate in more than 80 countries with local offices across the Americas, EMEA and Asia-Pacific.

We provide seamless, secure and innovative solutions across the payments spectrum — from issuer processing and merchant acquiring to prepaid program management — delivered through partnership and expertise. We succeed because we put people, and their needs, at the heart of every decision. It’s an approach we call ‘People-Centered Payments^®’.

Our industry is changing every day — and we’re leading the way toward the payments of tomorrow. We routinely post all important information on our website. For more, visit us at tsys.com.

Forward-Looking Statements

This press release contains “forward-looking statements” – that is, statements related to future, not past, events. Forward-looking statements often address our expected future business and financial performance and often contain words such as “expect,” “anticipate,” “intend,” “believe,” “should,” “plan,” “potential,” “will,” “could,” and similar expressions. These forward-looking statements include, among others, statements regarding TSYS’ expectation with respect to the impact of constant currency on revenues and EPS in the fourth quarter of 2016, the expected impact of the Consumer Financial Protection Bureau’s new rule regarding prepaid financial products on TSYS’ 2016 results, TSYS’earnings guidance for 2016 total revenues, net revenue, basic EPS and adjusted EPS, and the assumptions underlying such statements. These statements are based on the current beliefs and expectations of TSYS’ management, are based on management’s assumptions and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements. A number of important factors could cause actual results or

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		Total System Services, Inc. One TSYS Way P.O. Box 2567 Columbus, GA, 31902-2567		tel fax web		+1.706.649.2307 +1.706.649.5740 www.tsys.com

 

events to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond TSYS’ ability to control or predict. These factors include, but are not limited to, the material breach of security of any of TSYS’ systems; TSYS’ ability to integrate acquisitions and achieve the anticipated growth opportunities and other benefits of the acquisitions, particularly the recently closed TransFirst acquisition; the effect of current domestic and worldwide economic conditions; risks associated with foreign operations, including adverse developments with respect to foreign currency exchange rates, and in particular with respect to the current environment, adverse developments with respect to foreign currency exchange rates as a result of the United Kingdom’s decision to leave the European Union (Brexit); expenses are incurred associated with the signing of a significant client; TSYS does not convert clients’ portfolios as scheduled; the deconversion of a significant client; changes occur in laws, rules, regulations, credit card association rules, prepaid industry rules or other industry standards affecting TSYS and our clients that may result in costly new compliance burdens on TSYS and our clients and lead to a decrease in the volume and/or number of transactions processed or limit the types and amounts of fees that can be charged to customers, and in particular the CFPB’s new rule regarding prepaid financial products; the costs and effects of litigation, investigations or similar matters or adverse facts and developments relating thereto; adverse developments with respect to the payment card industry in general, including a decline in the use of cards as a payment mechanism; and growth rates of TSYS’ existing clients are lower than anticipated or attrition rates of existing clients are higher than anticipated. Additional risks and other factors that could cause actual results or events to differ materially from those contemplated in this release can be found in TSYS’ filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. TSYS disclaims any obligation to update any forward-looking statements as a result of new information, future developments or otherwise except as required by law.

Contacts:

Cyle Mims

TSYS Media Relations

+1.706.644.3110

cylemims@tsys.com

Shawn Roberts

TSYS Investor Relations

+1.706.644.6081

shawnroberts@tsys.com

 

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TSYS Announces Third Quarter 2016 Earnings

Page 5 of 15

 

 

TSYS

Financial Highlights

(unaudited)

(in thousands, except per share data)

 

 

				Three Months Ended																Nine Months Ended
				September 30,																September 30,
												Percent																Percent
				2016				2015				Change								2016				2015				Change
Total revenues		$			1,146,888				707,890				62.0			%		$			3,037,853				2,062,698				47.3			%
Cost of services					840,300				456,465				84.1								2,166,731				1,366,141				58.6
Selling, general and administrative expenses					151,261				88,321				71.3								428,287				280,355				52.8
Total expenses*					991,561				544,786				82.0								2,595,018				1,646,496				57.6
Operating income					155,327				163,104				(4.8)								442,835				416,202				6.4
Nonoperating expenses					(30,005)				(8,564)				nm								(82,506)				(27,982)				nm
Income before income taxes, noncontrolling interests and equity in income of equity investments					125,322				154,540				(18.9)								360,329				388,220				(7.2)
Income taxes					44,247				37,825				17.0								127,966				119,204				7.4
Income before noncontrolling interests and equity in income of equity investments					81,075				116,715				(30.5)								232,363				269,016				(13.6)
Equity in income of equity investments, net of tax					6,366				5,336				19.3								19,234				15,309				25.6
Net income					87,441				122,051				(28.4)								251,597				284,325				(11.5)
Net income attributable to noncontrolling interests					(2,089)				(1,429)				(46.2)								(5,909)				(3,109)				(90.1)
Net income attributable to TSYS common shareholders		$			85,352				120,622				(29.2)			%		$			245,688				281,216				(12.6)			%
Earnings per share (EPS):
Basic EPS		$			0.46				0.66				(29.2)			%		$			1.34				1.53				(12.3)			%
Diluted EPS		$			0.46				0.65				(29.0)			%		$			1.33				1.52				(12.1)			%
Weighted average shares outstanding:
(includes participating securities)
Basic					183,830				183,954												183,601				184,320
Diluted					184,642				185,281												184,430				185,534
Dividends declared per share		$			0.10				0.10									$			0.30				0.30
Non-GAAP measures:
Net revenue		$			789,588				636,386				24.1			%		$			2,256,169				1,854,254				21.7			%
Adjusted EPS		$			0.71				0.78				(8.7)			%		$			2.11				1.89				11.5			%
Adjusted EBITDA		$			269,142				238,898				12.7			%		$			774,003				638,889				21.1			%

* Certain amounts in prior quarters in 2016 have been reclassed between cost of services and selling, general and administrative expenses.

** See reconciliation of non-GAAP.

** nm = not meaningful

 

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TSYS Announces Third Quarter 2016 Earnings

Page 6 of 15

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

				Three Months Ended September 30,																				Nine Months Ended September 30,
												Change																				Change
				2016				2015				$						%						2016				2015				$						%
Operating income (a)		$			155,327				163,104				(7,777)					(4.8)		%		$			442,835				416,202				26,633					6.4		%
Share-based compensation					13,069				11,295				1,774					15.7							33,792				31,468				2,324					7.4
TransFirst M&A expenses					1,830				-				1,830					na							25,908				-				25,908					na
Acquisition intangible amortization					53,341				22,883				30,458					nm							134,748				69,601				65,147					93.6
Adjusted operating income (b)		$			223,567				197,282				26,285					13.3		%		$			637,283				517,271				120,012					23.2		%
Adjusted segment operating income:
North America Services (c)		$			113,425				113,946				(521)					(0.5)		%		$			350,955				324,902				26,053					8.0		%
International Services (d)					15,524				18,370				(2,846)					(15.5)							41,564				38,706				2,858					7.4
Merchant Services (e)					90,784				42,387				48,397					nm							219,056				117,192				101,864					86.9
NetSpend (f)					40,856				37,315				3,541					9.5							125,538				109,224				16,314					14.9
Corporate admin and other					(37,022	)			(14,736)				(22,286)					nm							(99,830	)			(72,753)				(27,077)					(37.2)
Adjusted segment operating income		$			223,567				197,282				26,285					13.3		%		$			637,283				517,271				120,012					23.2		%
Total revenues (g)		$			1,146,888				707,890				438,998					62.0		%		$			3,037,853				2,062,698				975,155					47.3		%
Less: reimbursable items, interchange and assessments expenses					357,300				71,504				285,796					nm							781,684				208,444				573,240					nm
Net revenue (h)					789,588				636,386				153,202					24.1							2,256,169				1,854,254				401,915					21.7
Intersegment revenues					8,454				7,000				1,454					20.8							29,498				25,098				4,400					17.5
Segment net revenue		$			798,042				643,386				154,656					24.0		%		$			2,285,667				1,879,352				406,315					21.6		%
Segment net revenue
North America Services (i)		$			300,754				293,571				7,183					2.4		%		$			901,563				846,989				54,574					6.4		%
International Services (j)					79,445				86,446				(7,001)					(8.1)							236,570				244,033				(7,463)					(3.1)
Merchant Services (k)					262,494				123,721				138,773					nm							644,573				351,987				292,586					83.1
NetSpend (l)					155,349				139,648				15,701					11.2							502,961				436,343				66,618					15.3
Segment net revenue		$			798,042				643,386				154,656					24.0		%		$			2,285,667				1,879,352				406,315					21.6		%
Operating margin (GAAP) (a)/(g)					13.5%				23.0%																14.6%				20.2%
Adjusted Operating margin on net revenue (b)/(h)					28.3%				31.0%																28.3%				27.9%
Adjusted segment operating margin on net revenue
North America Services(c)/(i)					37.7%				38.8%																38.9%				38.4%
International Services (d)/(j)					19.5%				21.3%																17.6%				15.9%
Merchant Services (e)/(k)					34.6%				34.3%																34.0%				33.3%
NetSpend (f)/(l)					26.3%				26.7%																25.0%				25.0%

nm = not meaningful

na = not applicable

 

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TSYS Announces Third Quarter 2016 Earnings

Page 7 of 15

 

 

TSYS

Segment Breakdown

(unaudited)

(in thousands)

 

 

				Three Months Ended September 30,																				Nine Months Ended September 30,
												Change																				Change
				2016				2015				$				%								2016				2015				$				%
Depreciation and amortization:
North America Services		$			27,540				25,300				2,240					8.9		%		$			82,464				72,831				9,633					13.2		%
International Services					7,050				8,678				(1,628)					(18.8)							23,394				26,084				(2,690)					(10.3)
Merchant Services					6,846				4,670				2,176					46.6							18,702				13,394				5,308					39.6
NetSpend					3,241				2,632				609					23.1							9,466				7,547				1,919					25.4
Segment depreciation and amortization					44,677				41,280				3,397					8.2							134,026				119,856				14,170					11.8
Acquisition intangible amortization					53,341				22,883				30,458					nm							134,748				69,601				65,147					93.6
Corporate admin and other					898				336				562					nm							2,694				1,762				932					52.9
Total depreciation and amortization		$			98,916				64,499				34,417					53.4		%		$			271,468				191,219				80,249					42.0		%
Segment statistical data:
Transactions (in millions)
North America Services:					4,361.5				4,156.7				204.8					4.9		%					12,657.7				11,509.6				1,148.1					10.0		%
International Services:					698.8				626.1				72.7					11.6							1,975.7				1,812.0				163.7					9.0
Total transactions					5,060.3				4,782.8				277.5					5.8		%					14,633.4				13,321.6				1,311.8					9.8		%
Accounts on file (AOF) (in millions)
North America Services:																									652.5				685.5				(33.0)					(4.8)		%
International Services:																									86.3				74.9				11.4					15.2
Total AOF																									738.8				760.4				(21.6)					(2.8)		%
Traditional accounts on file (AOF) (in millions)
North America Services:																									444.6				404.6				40.0					9.9		%
International Services:																									66.6				63.3				3.3					5.2
Total Traditional AOF																									511.2				467.9				43.3					9.2		%
Merchant Services
Point-of-sale transactions (in millions)					1,177.1				1,117.3				59.8					5.4		%					3,427.6				3,191.3				236.3					7.4		%
Dollar sales volume (in millions)		$			28,680.7				12,055.7				16,625.0					nm		%		$			69,024.9				35,671.5				33,353.4					93.5		%
NetSpend
Gross dollar volume (in millions)		$			6,367.0				5,391.2				975.8					18.1		%		$			22,143.3				18,582.8				3,560.5					19.2		%
Direct deposit 90-day active cards (in thousands)																									2,079.8				1,796.0				283.8					15.8		%
90-day active cards (in thousands)																									4,162.7				3,643.4				519.3					14.3		%
% of 90-day active cards with direct deposit																									50.0%				49.3%

nm = not meaningful

na = not applicable

 

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TSYS Announces Third Quarter 2016 Earnings

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TSYS

Condensed Balance Sheet

(unaudited)

(in thousands)

 

 

				September 30, 2016		December 31, 2015
Assets
Current assets:
Cash and cash equivalents		$		446,883			389,328
Accounts receivable, net				413,867			314,705
Other current assets				124,118			154,199
Total current assets				984,868			858,232
Goodwill				3,254,422			1,545,424
Other intangible assets, net				954,821			328,320
Property, equipment and software, net				722,749			694,968
Other long term assets				458,318			450,951
Total assets		$		6,375,178			3,877,895
Liabilities
Current liabilities:
Accounts payable		$		36,659			52,213
Notes payable and capital leases				43,244			53,546
Other current liabilities				289,572			233,173
Total current liabilities				369,475			338,932
Bonds payable, notes payable and capital leases, excluding current portion				3,425,147			1,377,541
Deferred tax liability				398,083			192,445
Other long-term liabilities				91,751			96,885
Total liabilities				4,284,456			2,005,803
Redeemable noncontrolling interest				25,053			23,410
Equity
Shareholders’ equity				2,065,669			1,843,018
Noncontrolling interests in consolidated subsidiaries				-			5,664
Total equity				2,065,669			1,848,682
Total liabilities and equity		$		6,375,178			3,877,895

 

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TSYS

Selected Cash Flow Highlights

(unaudited)

(in thousands)

 

 

				Nine Months Ended September 30,
				2016		2015
Cash flows from operating activities:
Net income		$		251,597		284,325
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of equity investments				(19,234)		(15,309)
Dividends received from equity investments				15,246		12,092
Depreciation and amortization				271,468		191,219
Amortization of debt issuance costs				12,499		1,378
Share-based compensation				33,792		31,468
Deferred income tax expense (benefit)				4,110		(25,960)
Other noncash adjustments				35,508		29,039
Changes in operating assets and liabilities				(54,026)		(47,698)
Net cash provided by operating activities				550,960		460,554
Net cash used in investing activities				(2,457,138)		(138,618)
Net cash provided by (used in) financing activities				1,969,628		(158,429)
Cash and cash equivalents:
Effect of exchange rate changes on cash and cash equivalents				(5,895)		(4,840)
Net increase in cash and cash equivalents				57,555		158,667
Cash and cash equivalents at beginning of period				389,328		289,183
Cash and cash equivalents at end of period		$		446,883		447,850

 

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TSYS

Supplemental Information

(unaudited)

 

 

Other
AOF:		Total Accounts on File
(in millions)		At      September 2016				At   September 2015				%         Change
Consumer			433.5				399.0				8.6
Commercial			48.0				44.1				8.9
Other			29.7				24.8				19.5
Traditional AOF			511.2				467.9				9.2
Prepaid*/Stored Value			58.9				133.8				(56.0)
Government Services			85.7				78.7				9.0
Commercial Card Single Use			83.0				80.0				3.8
Total AOF			738.8				760.4				(2.8)
* Prepaid does not include NetSpend accounts
Growth in Accounts on File (in millions) :
		September 2015 to      September 2016				September 2014 to      September 2015
Beginning balance			760.4				605.5
Change in accounts on file due to:
Internal growth of existing clients			53.8				41.0
New clients			31.6				153.7
Purges/Sales			(16.7)				(38.3)
Deconversions			(90.3)				(1.5)
Ending balance			738.8				760.4

 

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TSYS Announces Third Quarter 2016 Earnings

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Reconciliation of GAAP to Non-GAAP Financial Measures

Non-GAAP Measures

The schedules below provide a reconciliation of revenues and operating results on a constant currency basis to reported revenues and operating income. This non-GAAP measure presents third quarter 2016 financial results using the previous year’s foreign currency exchange rates. On a constant currency basis, TSYS’ total revenues grew 48.5% as compared to a reported GAAP increase of 47.3%.

The schedules below also provide a reconciliation of EPS to adjusted EPS.

The schedules below also provide a reconciliation of net income to EBITDA and adjusted EBITDA.

The schedules below also provide a reconciliation of operating margin to adjusted operating margin excluding severance.

The schedules below also provide a reconciliation of cash flows from operating activities and capital expenditures to free cash flow.

The schedules below also provide a reconciliation of 2016 guidance of total revenues to net revenue and EPS to adjusted EPS.

The tax rate used in the calculation of adjusted EPS for the quarter and year is equal to an estimate of our annual effective tax rate on GAAP income. This effective rate is estimated annually and may be adjusted during the year to take into account events or trends that materially impact the effective tax rate including, but not limited to, significant changes resulting from tax legislation, material changes in the mix of revenues and expenses by entity and other significant events.

TSYS believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, TSYS includes non-GAAP financial measures when reporting its financial results to shareholders and potential investors in order to provide them with an additional tool to evaluate TSYS’ ongoing business operations. TSYS believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of TSYS’ current and ongoing business operations.

Although non-GAAP financial measures are often used to measure TSYS’ operating results and assess its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation.

TSYS believes that its provision of non-GAAP financial measures provides investors with important key financial performance indicators that are utilized by management to assess TSYS’ operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see TSYS as viewed by management, to assess TSYS with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. TSYS believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.

 

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TSYS Announces Third Quarter 2016 Earnings

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Reconciliation of GAAP to Non-GAAP
Constant Currency Comparison
(unaudited)
(in thousands)
				Three Months Ended September 30,														Nine Months Ended September 30,
												Percent														Percent
				2016				2015				Change						2016				2015				Change
Consolidated
Constant currency (1)		$			1,161,181				707,890			64.0		%		$			3,063,788				2,062,698			48.5		%
Foreign currency impact (2)					(14,293	)			-										(25,935	)			-
Total revenues		$			1,146,888				707,890			62.0		%		$			3,037,853				2,062,698			47.3		%
Constant currency (1)		$			802,958				636,386			26.2		%		$			2,280,389				1,854,254			23.0		%
Foreign currency impact (2)					(13,370	)			-										(24,220	)			-
Net revenue		$			789,588				636,386			24.1		%		$			2,256,169				1,854,254			21.7		%
Constant currency (1)		$			161,567				163,104			(0.9)		%		$			452,196				416,202			8.6		%
Foreign currency impact (2)					(6,240	)			-										(9,361	)			-
Operating income		$			155,327				163,104			(4.8)		%		$			442,835				416,202			6.4		%
International Services
Constant currency (1)		$			99,171				92,177			7.6		%		$			279,332				261,597			6.8		%
Foreign currency impact (2)					(14,338	)			-										(25,917	)			-
Total revenues		$			84,833				92,177			(8.0)		%		$			253,415				261,597			(3.1)		%
Constant currency (1)		$			92,861				86,446			7.4		%		$			260,772				244,033			6.9		%
Foreign currency impact (2)					(13,416	)			-										(24,202	)			-
Net revenue		$			79,445				86,446			(8.1)		%		$			236,570				244,033			(3.1)		%
(1)  Reflects current period results on a non-GAAP basis as if foreign currency rates did not change from the comparable prior year period.
(2)  Reflects the impact of calculated changes in foreign currency rates from the comparable period.
Net Revenue
(unaudited)
(in thousands)
				Three Months Ended September 30,														Nine Months Ended September 30,
												Percent														Percent
				2016				2015				Change						2016				2015				Change
Total revenues		$			1,146,888				707,890			62.0		%		$			3,037,853				2,062,698			47.3		%
Less: reimbursable items, interchange and assessments expenses					357,300				71,504			nm							781,684				208,444			nm
Net revenue		$			789,588				636,386			24.1		%		$			2,256,169				1,854,254			21.7		%

nm = not meaningful

 

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TSYS Announces Third Quarter 2016 Earnings

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Reconciliation of GAAP to Non-GAAP

 

 

Adjusted Earnings per Share

(unaudited)

(in thousands, except per share data)

 

 

 

				Three Months Ended September 30,																Nine Months Ended September 30,
				2016				2015				Percent Change								2016				2015				Percent Change
Income attributable to TSYS common shareholders		$			85,352				120,622				(29.2	)		%		$			245,688				281,216				(12.6	)		%
Adjust for amounts attributable to TSYS common shareholders:
Add: Acquisition intangible amortization		$			53,065				22,607				nm					$			133,920				68,774				94.7
Add: Share-based compensation					13,059				11,291				15.7								33,766				31,459				7.3
Add: TransFirst M&A expenses*					1,830				-				na								35,689				-				na
Less: Tax impact of adjustments**					(22,633	)			(11,250)				nm								(62,264	)			(33,267)				(87.2	)
Adjusted earnings		$			130,673				143,270				(8.8	)		%		$			386,799				348,182				11.1			%
Add: Severance impact					8,749				-				na								8,749				-				na
Add: Severance impact - Share-based compensation					147				-				na								147				-				na
Add: Currency impact					6,320				-				na								9,564				-				na
Less: Federal & state R&D tax credits and related expenses					-				(15,084)				nm								-				(15,084)				nm
Less: Tax impact of adjustments					(4,671	)			(8,473)				nm								(5,686	)			(8,473)				nm
Adjusted earnings excluding impact of severance, currency and tax credits		$			141,218				119,713				18.0			%		$			399,573				324,625				23.1			%
Basic EPS - Income attributable to TSYS common shareholders
As reported (GAAP)		$			0.46				0.66				(29.2	)		%		$			1.34				1.53				(12.3	)		%
Adjusted EPS		$			0.71				0.78				(8.7	)		%		$			2.11				1.89				11.5			%
Add/Less: Impact of severance, currency and tax credits					0.06				(0.13)				nm								0.07				(0.13)				nm
Adjusted EPS without impact of severance, currency and tax credits		$			0.77				0.65				18.0			%		$			2.18				1.76				23.5			%
Weighted average shares outstanding					183,830				183,954												183,601				184,320

 

*	Costs associated with the TransFirst acquisition and integration that are included in selling, general and administrative expenses and nonoperating expenses.

**	Certain of these merger and acquisition costs are nondeductible for income tax purposes. Income tax impact includes a discrete item as a result of the acquisition.

 

 

Adjusted EBITDA

(unaudited)

(in thousands)

 

 

						Three Months Ended September 30,																				Nine Months Ended September 30,
						2016				2015				Percent Change												2016				2015				Percent Change
Net income		$					87,441				122,051				(28.4	)			%			$					251,597				284,325				(11.5	)			%
Adjust for:
Less: Equity in income of equity investments							(6,366	)			(5,336)				(19.3	)											(19,234	)			(15,309)				(25.6	)
Add: Income taxes							44,247				37,825				17.0												127,966				119,204				7.4
Add: Nonoperating expense							30,005				8,564				nm												82,506				27,982				nm
Add: Depreciation and amortization							98,916				64,499				53.4												271,468				191,219				42.0
EBITDA		$					254,243				227,603				11.7				%			$					714,303				607,421				17.6				%
Adjust for:
Add: Share-based compensation							13,069				11,295				15.7												33,792				31,468				7.4
Add: TransFirst M&A expenses*							1,830				-				na												25,908				-				na
Adjusted EBITDA		$					269,142				238,898				12.7				%			$					774,003				638,889				21.1				%

 * Costs associated with the TransFirst acquisition and integration that are included in selling, general and administrative expenses.

nm = not meaningful

na = not applicable

 

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TSYS Announces Third Quarter 2016 Earnings

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Reconciliation of GAAP to Non-GAAP

 

 

TSYS

Operating Margins Excluding the Impact of Severance

(unaudited)

(in thousands)

 

 

				Three Months Ended September 30,																Nine Months Ended September 30,
				As reported				Severance				Adjusted								As reported				Severance				Adjusted
				2016								2016								2016								2016
Operating income (a)		$			155,327				8,749				164,076					$			442,835				8,749				451,584
Share-based compensation					13,069				147				13,216								33,792				147				33,939
TransFirst M&A expenses					1,830				-				1,830								25,908				-				25,908
Acquisition intangible amortization					53,341				-				53,341								134,748				-				134,748
Adjusted segment operating income (b)		$			223,567				8,896				232,463					$			637,283				8,896				646,179
Adjusted segment operating income:
North America Services (c)		$			113,425				6,103				119,528					$			350,955				6,103				357,058
International Services (d)					15,524				1,882				17,406								41,564				1,882				43,446
Merchant Services (e)					90,784				81				90,865								219,056				81				219,137
NetSpend (f)					40,856				182				41,038								125,538				182				125,720
Corporate admin and other					(37,022)				648				(36,374)								(99,830)				648				(99,182)
Adjusted segment operating income (b)		$			223,567				8,896				232,463					$			637,283				8,896				646,179
Total revenues (g)		$			1,146,888								1,146,888					$			3,037,853								3,037,853
Less: reimbursable items, interchange and
assessments expenses					357,300								357,300								781,684								781,684
Net revenue (h)		$			789,588								789,588					$			2,256,169								2,256,169
Segment net revenue
North America Services (i)		$			300,754								300,754					$			901,563								901,563
International Services (j)					79,445								79,445								236,570								236,570
Merchant Services (k)					262,494								262,494								644,573								644,573
NetSpend (l)					155,349								155,349								502,961								502,961
Intersegment revenues					(8,454)								(8,454)								(29,498)								(29,498)
Net revenue (h)		$			789,588								789,588					$			2,256,169								2,256,169
Operating margin (GAAP) (a)/(g)					13.5%								14.3%								14.6%								14.9%
Adjusted operating margin on net revenue (b)/(h)					28.3%								29.4%								28.3%								28.6%
Adjusted segment operating margin on net revenue
North America Services(c)/(i)					37.7%								39.7%								38.9%								39.6%
International Services (d)/(j)					19.5%								21.9%								17.6%								18.4%
Merchant Services (e)/(k)					34.6%								34.6%								34.0%								34.0%
NetSpend (f)/(l)					26.3%								26.4%								25.0%								25.0%

 

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TSYS Announces Third Quarter 2016 Earnings

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Reconciliation of GAAP to Non-GAAP

Free Cash Flow

(unaudited)

(in thousands)

				Nine Months Ended
Free cash flow:				September 30,
				2016				2015
Net cash provided by operating activities		$		550,960				460,554
Capital expenditures				(107,335)				(136,183)
Free cash flow		$		443,625				324,371

 

Guidance Summary

(unaudited)

(in thousands, except per share data)

 

Revenue:				2016														% Change
Total revenues (GAAP)		$			4,150			to		$	4,170								49%			to			50%
Less: reimbursable items, interchange and assessments expenses					1,120			to			1,125
Net revenue (non-GAAP)		$			3,030			to		$	3,045								21%			to			22%
Earnings per share (EPS)
Basic EPS (GAAP)		$			1.77			to		$	1.83								(10%	)		to			(7%)
Acquisition intangible amortization, share-based compensation and Transfirst M&A expenses, less the tax impact of adjustments					1.01			to			1.02
Adjusted EPS attributable to TSYS common shareholders from continuing operations* (non-GAAP)		$			2.78			to		$	2.85								13%			to			16%
* Average basic weighted shares								183.7

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