Global Payments Inc. Reports Operating Results (10-K)
Global Payments Inc. has a market cap of $3.86 billion; its shares were traded at around $48.23 with a P/E ratio of 17.47 and P/S ratio of 2.08. The dividend yield of Global Payments Inc. stocks is 0.17%. Global Payments Inc. had an annual average earning growth of 16.2% over the past 10 years. GuruFocus rated Global Payments Inc. the business predictability rank of 4-star.
Highlight of Business Operations: In the year ended May 31, 2011, or fiscal 2011, revenue increased 13% to $1,859.8 million from $1,642.5 million in the year ended May 31, 2010, or fiscal 2010. This revenue growth was primarily due to growth in most of our direct merchant acquiring markets around the world and the impact of our acquisition in Spain on December 20, 2010.
Consolidated operating income was $331.6 million for fiscal 2011, compared to $323.3 million for fiscal 2010. Net income attributable to Global Payments increased $5.9 million, or 3%, to $209.2 million in fiscal 2011 from $203.3 million in the prior year, resulting in a $0.12 increase in diluted earnings per share to $2.60 in fiscal 2011 from $2.48 in fiscal 2010.
North America merchant services segment revenue increased $142.8 million or 12% to $1,362.9 million in fiscal 2011 from $1,220.1 million in fiscal 2010. North America merchant services segment operating income decreased to $268.2 million in fiscal 2011 from $275.4 million in fiscal 2010, with operating margins of 19.7% and 22.6% for fiscal 2011 and 2010, respectively.
International merchant services segment revenue increased $74.6 million or 18% to $496.9 million in fiscal 2011 from $422.4 million in fiscal 2010. International merchant services operating income also increased to $143.9 million in fiscal 2011 from $113.7 million in fiscal 2010, with operating margins of 29.0% and 26.9% for fiscal 2011 and 2010, respectively.
As an illustration, on a $100.00 credit card transaction, the card issuer may fund the Member $98.50 after retaining approximately $1.50 referred to as an interchange fee or interchange expense. The card issuer seeks reimbursement of $100.00 from the cardholder in the cardholders monthly credit card bill. The Member would, in turn, pay the merchant $100.00. The net settlement after this transaction would require Global Payments to advance the Member $1.50. After the end of the month, we would bill the merchant a percentage of the transaction, or discount, to cover the full amount of the interchange fee and our net revenue from the transaction. If our net revenue from the merchant in the above example was 0.5%, we would bill the merchant $2.00 at the end of the month for the transaction, reimburse ourselves for approximately $1.50 in interchange fees and retain $0.50 as our net revenue for the transaction. Our gross profit on the transaction reflects the net revenue less operating expenses, including the network and systems cost to process the transaction (including assessments) and commissions paid to our sales force or ISO. Assessments are fees charged by Visa and MasterCard based on the dollar value of transactions processed through their networks.
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