Total System Services, Inc. has a market cap of $4.44 billion; its shares were traded at around $23.84 with a P/E ratio of 18.6 and P/S ratio of 2.5. The dividend yield of Total System Services, Inc. stocks is 1.7%. Total System Services, Inc. had an annual average earning growth of 7.1% over the past 10 years.
Highlight of Business Operations:Total revenues increased $15.1 million and $46.8 million, or 3.4% and 5.3%, respectively, for the three and six months ended June 30, 2012 compared to the same periods in 2011. The increase in revenues for the three and six months ended June 30, 2012 includes a decrease of $2.6 million and $3.7 million, respectively, related to the effects of currency translation of foreign-based subsidiaries and branches. The Company has included reimbursements received for out-of-pocket expenses as revenues and expenses. The largest reimbursable expense item for which TSYS is reimbursed by clients is postage. The Companys reimbursable items are impacted with changes in postal rates and changes in the volumes of all mailing activities by its clients. Reimbursable items for the three and six months ended June 30, 2012 were $64.0 million and $129.9 million, a decrease of $3.3 million or 5.0% and $4.2 million or 3.1%, respectively, compared to $67.3 million and $134.1 million for the same periods last year. Excluding reimbursable items, revenues increased $18.5 million and $51.0 million, or 4.9% and 6.9%, during the three and six months ended June 30, 2012 compared to the same period in 2011.
Operating income increased 17.3% and 16.7% for the three and six months ended June 30, 2012, respectively, over the same periods in 2011. The Companys operating profit margin for the three and six months ended June 30, 2012 was 19.9% and 19.2%, respectively, compared to 17.5% and 17.3% for the same periods last year. TSYS operating margin increased for the three and six months ended June 30, 2012, as compared to the same periods in 2011, as a result of gains in productivity.
TSYS effective income tax rate for the three months ended June 30, 2012 was 26.7%, compared to 30.4% for the same period in 2011. TSYS effective income tax rate for the six months ended June 30, 2012 was 30.4%, compared to 32.2% for the same period in 2011. The reduction in the 2012 rates reflect changes in discrete items, tax credits and in the jurisdictional sources of income. The calculation of the effective tax rate is income taxes adjusted for income taxes associated with noncontrolling interest and equity income divided by TSYS pretax income adjusted for minority interests in consolidated subsidiaries net income and equity pre-tax earnings of its equity investments. Refer to Note 6 in the Notes to Unaudited Condensed Consolidated Financial Statements for more information on income taxes.
As compared to 2011, TSYS expects its 2012 income from continuing operations to increase by 8%-10%, its EPS from continuing operations available to TSYS common shareholders to increase by 10%-12%, its revenues before reimbursable items to increase by 2%-5% and its total revenues to increase by 0%-2%, based on the following assumptions: (1) there will be no significant movements in London Interbank Offered Rate (LIBOR) and TSYS will not make any significant draws on the remaining balance of its revolving credit facility; (2) there will be no significant movement in foreign currency exchange rates related to TSYS business; (3) TSYS will not incur significant expenses associated with the conversion of new large clients or acquisitions, or any significant impairment of goodwill or other intangibles; (4) there will be no deconversions of large clients during the year; and (5) the economy will not worsen.
TSYS may seek additional external sources of capital in the future. The form of any such financing will vary depending upon prevailing market and other conditions and may include short-term or long-term borrowings from financial institutions or the issuance of additional equity and/or debt securities such as industrial revenue bonds. However, there can be no assurance that funds will be available on terms acceptable to TSYS. Management expects that TSYS will continue to be able to fund a significant portion of its capital expenditure needs through internally generated cash in the future, as evidenced by TSYS current ratio of 2.0:1. At June 30, 2012, TSYS had working capital of $381.7 million compared to $269.6 million at December 31, 2011.
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