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Heartland Payment Systems Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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Heartland Payment Systems Inc. (HPY) filed Quarterly Report for the period ended 2012-09-30.

Heartland Payment Systems, Inc. has a market cap of $1.02 billion; its shares were traded at around $27.82 with a P/E ratio of 19.1 and P/S ratio of 0.5. The dividend yield of Heartland Payment Systems, Inc. stocks is 0.9%.

Highlight of Business Operations:

Our total bankcard processing volume for the three months ended September 30, 2012 was $26.5 billion, a 21.3% increase from the $21.8 billion processed during the three months ended September 30, 2011. Our total bankcard processing volume for the nine months ended September 30, 2012 was $75.9 billion, a 22.5% increase from the $61.9 billion processed during the nine months ended September 30, 2011. Our SME bankcard processing volume for the three and nine months ended September 30, 2012 was $18.8 billion and $54.1 billion, respectively, increases of 5.8% and 6.7%, respectively, over the three and nine months ended September 30, 2011 reflecting increases for same store sales growth, new SME merchants installed, and lower merchant attrition. Our bankcard processing volume for the three and nine months ended September 30, 2012 also includes $7.4 billion and $21.2 billion, respectively, of settled volume for Network Services Merchants, compared to $3.8 billion and $10.8 billion, respectively, for the three and nine months ended September 30, 2011. Network Services' increase for the 2012 periods primarily reflects the expansion of a contract with a large petroleum merchant to include back end settlement. Bankcard processing volume for the three and nine months ended September 30, 2012 and 2011 was as follows:

Our general and administrative expenses increased $5.9 million, or 18.3%, from $32.2 million in the three months ended September 30, 2011 to $38.1 million in the three months ended September 30, 2012. The increase in general and administrative expense for the three months ended September 30, 2012 was primarily due to a $5.3 million increase in personnel costs, including a $2.2 million increase in share-based compensation. Personnel costs from the Heartland School Solutions acquisitions are the primary drivers of the remaining increase. General and administrative expenses for the three months ended September 30, 2012 benefited from refined allocations of certain information technology related expenses, previously reported in general and administrative expense, now recorded in processing and servicing expense. General and administrative expenses as a percentage of total revenue for the three months ended September 30, 2012 was 7.1%, up from 6.1% for the three months ended September 30, 2011.

Costs of services. Costs of services decreased 3.3% from $478.0 million in the three months ended September 30, 2011 to $462.4 million in the three months ended September 30, 2012, primarily due to the decrease in interchange expense resulting from the Durbin Amendment. Interchange expense decreased 8.8% from $369.0 million in the three months ended September 30, 2011 to $336.6 million in the three months ended September 30, 2012, and represented 63.0% of total revenues in the three months ended September 30, 2012 compared to 69.4% in the three months ended September 30, 2011.

General and administrative. General and administrative expenses increased $5.9 million, or 18.3%, from $32.2 million in the three months ended September 30, 2011 to $38.1 million in the three months ended September 30, 2012. This increase was primarily due to a $5.3 million increase in personnel costs, including a $2.2 million increase in share-based compensation. See "— Critical Accounting Estimates — Share-based Compensation" for more detail on share-based compensation expense. Personnel costs from the Heartland School Solutions acquisitions are the primary drivers of the remaining increase. General and administrative expenses for the three months ended September 30, 2012 benefited from refined allocations of certain information technology related expenses, previously reported in general and administrative expense, now recorded in processing and servicing expense. General and administrative expenses as a percentage of total revenue for the three months ended September 30, 2012 was 7.1%, an increase from 6.1% for the three months ended September 30, 2011.

General and administrative. General and administrative expenses increased $11.9 million, or 13.0%, from $91.7 million in the nine months ended September 30, 2011 to $103.6 million in the nine months ended September 30, 2012. General and administrative expenses in the nine months ended September 30, 2012 and 2011 included $1.1 million and $0.3 million, respectively for our periodic sales and servicing organization summit held in March 2012. Excluding these summit expenses, our general and administrative expenses in 2012 increased $11.0 million, or 12.1%, primarily due to a $10.1 million increase in personnel costs, including a $5.4 million increase for share-based compensation. Personnel costs from the Heartland School Solutions acquisitions are the primary drivers of the remaining increase. General and administrative expenses for the nine months ended September 30, 2012 benefited from refined allocations of certain information technology related expenses, previously reported in general and administrative expense, now recorded in processing and servicing expense. Offsetting this benefit was the increase in personnel costs which included additional personnel costs relating to the acquisition of the Heartland School Solutions businesses and an increase in share-based compensation expense. See "— Critical Accounting Estimates — Share-based Compensation" for more detail on share-based compensation expense. General and administrative

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