Global Payments Inc. (GPN) filed Quarterly Report for the period ended 2009-08-31.
Global Payments Inc. is a leading provider of electronic transaction processing services for consumers merchants Independent Sales Organizations financial institutions government agencies and multi- national corporations located throughout the United States Canada Latin America and Europe. Global Payments offers a comprehensive line of processing solutions for credit and debit cards business-to-business purchasing cards gift cards electronic check conversion and check guarantee verification and recovery as well as terminal management. The company also provides consumer money transfer services from the U.S. and Europe to destinations in Latin America Morocco and the Philippines. Global Payments Inc. has a market cap of $3.85 billion; its shares were traded at around $47.73 with a P/E ratio of 21.4 and P/S ratio of 2.4. The dividend yield of Global Payments Inc. stocks is 0.2%. Global Payments Inc. had an annual average earning growth of 17.5% over the past 5 years.
Highlight of Business Operations:
For the three months ended August 31, 2009, International merchant services revenue increased 29% to $105.9 million compared to the prior year period. Our Europe merchant services revenue for the three months ended August 31, 2009 increased 31% to $80.5 million compared to the prior year period. This growth was primarily due to the impact of reporting a full quarter of results of our June 30, 2008 acquisition of 51% of HSBC Merchant Services LLP for the three months ended August 31, 2009 compared to the prior year comparable period. Also contributing to this growth was to our acquisition of UCS on April 30, 2009. Our Asia-Pacific merchant services revenue for the three months ended August 31, 2009 increased 23% to $25.5 million compared to the prior year period. The growth was due to our acquisition of Global Payments Asia-Pacific Philippines Incorporated on September 4, 2008.
During the three months ended August 31, 2009, our consolidated operating income decreased $0.5 million to $92.6 million compared to consolidated operating income of $93.1 million in the prior year. This decrease was primarily due to the unfavorable impact of foreign currency exchange rates offset by the favorable impact of growth in our International merchant services segment.
During the three months ended August 31, 2009, we reported net income attributable to Global Payments of $57.8 million ($0.71 diluted earnings per share) compared to $57.5 million ($0.71 diluted earnings per share) in the prior year’s comparable period.
At August 31, 2009, we had cash and cash equivalents totaling $1,072.3 million. Of this amount, we consider $167.6 million to be available cash, which generally excludes settlement related and merchant reserve cash balances. Settlement related cash balances represent surplus funds that we hold on behalf of our member sponsors when the incoming amount from the card networks precedes the member sponsors’ funding obligation to the merchant. At August 31, 2009, settlement related cash balances and the corresponding settlement processing obligations were unusually high due to the timing of month end cut off. Settlement related cash balances are not restricted; however, these funds are generally paid out in satisfaction of settlement processing obligations the following day. At August 31, 2009, our cash and cash equivalents included $178.3 million related to Merchant reserves. While this cash is not restricted in its use, we believe that designating this cash to collateralize Merchant reserves strengthens our fiduciary standing with our member sponsors and is in accordance with the guidelines set by the card networks. See Cash and cash equivalents and Settlement processing assets and obligations under Note 1 in the notes to the unaudited consolidated financial statements for additional details.
Net cash used in investing activities decreased $433.0 million to $11.1 million for the three months ended August 31, 2009 from the prior year’s comparable period, primarily due to our $441.6 million investment in a partnership with HSBC UK during the three months ended August 31, 2008. Capital expenditures increased to $11.1 million for the three months ended August 31, 2009 from the prior year’s comparable period. These expenditures primarily relate to technology and merchant terminal spending.
For the three months ended August 31, 2009, we used $41.7 million in cash for financing activities as we paid down debt of $27.5 million and made distributions to noncontrolling interests of $14.0 million. The purchase of our 49% interest in the LLP of $307.7 million is reflected as a financing cash outflow because it was treated as an equity transaction pursuant to FAS 160. This outflow was largely offset by proceeds from our $300.5 million term loan. For the three months ended August 31, 2008, we generated $217.8 million cash provided by financing activities due to proceeds from our $200 million term loan agreement. See Long-Term Debt and Credit Facilities below for a more detailed discussion of our borrowing activities.
GPN is in the portfolios of Richard Aster Jr of Meridian Fund, John Hussman of Hussman Economtrics Advisors, Inc..
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