Total System Services Inc

Total System Services — Q2 2014 Earnings Presentation

31 slides from Total System Services's earnings presentation, Jul 22, 2014

  1. Slide 1: 2014 Second Quarter Results

    2014 Second Quarter Results July 22, 2014 ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation and comments made by management contain forward- looking statements including, among others, statements regarding the expected future operating results of TSYS. These statements are based on management’s current expectations and assumptions and are subjec

  3. Slide 3: Use of Non-GAAP Financial Measures

    Use of Non-GAAP Financial Measures This slide presentation contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles. Such non-GAAP financial measures include the following: revenues before reimbursable items; operating

  4. Slide 4: Phil Tomlinson, Chairman and Chief Executive Officer

    Phil Tomlinson Chairman and Chief Executive Officer ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  5. Slide 5: Troy Woods, President & Chief Operating Officer

    Troy Woods President & Chief Operating Officer ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  6. Slide 6: 2Q 2014 North America Segment Highlights

    2Q 2014 North America Segment Highlights Segment Revenue by Line of Business* 4%  Revenue up 8.7% YOY; 7th Straight Quarter of Positive Growth Consumer (1)  Benefiting from Conversion of 16.9M 23% Commercial (2) Accounts since 2Q13 73% Other (1) Includes Credit, Debit, Retail, Prepaid & Loyalty (2

  7. Slide 7: 2Q 2014 North America Segment Highlights

    2Q 2014 North America Segment Highlights  AOF at Highest Level in History; Exceeded 500M Mark  Strong YOY Growth in Traditional Accounts on File  Largest Quarter of Transaction Volume in History at 2.7B  Same Client Transactions up 13.9% Accounts on File Transaction Volume YOY Growth % YOY Growt

  8. Slide 8: 2Q 2014 International Segment Highlights

    2Q 2014 International Segment Highlights Segment Revenue by Region  Revenue $84.7M* – Up 10.6% QTD 6% ‒ Up 1.8% on Constant Currency 6% ‒ $6.7M of Currency Benefit Europe  Margin Improvement Plans Show Tangible Results 88% MEA  Accelerate Growth Program Strengthens Rest Of World Pipeline Segment

  9. Slide 9: 2Q 2014 International Segment Highlights

    2Q 2014 International Segment Highlights  AOF Grew 4.3M YOY, Mainly Through Existing Clients  Irish Debit Continues to be Strong Growth Driver at 42.9%  15th Straight Quarter of Double digit Transaction Growth  Same Client Transactions Grew 14.6% Accounts on File Transaction Volume YOY Growth %

  10. Slide 10: 2Q 2014 Merchant Segment Highlights

    2Q 2014 Merchant Segment Highlights Segment Revenue by Mix*  Improved Margin Following Conversion QTD  Strong Pipeline of Indirect Clients 57% 43% Direct Indirect Segment Revenue* Adjusted Segment Operating Income YOY Growth % Operating Margin* ($ in millions) ($ in millions) $113.0 $113.6 $110.4

  11. Slide 11: 2Q 2014 Merchant Segment Highlights

    2Q 2014 Merchant Segment Highlights  Direct Revenues Up 1%  Indirect Revenues Down 10% ‒ Positive Turn Compared to Prior Quarters  POS Transactions Increased 3.5%, Excluding Deconverted Accounts  Record Quarter Direct Small Business Sales Volume ‒ Continued Growth in High Single Digits SBS Sales

  12. Slide 12: 2Q 2014 NetSpend Segment Highlights

    2Q 2014 NetSpend Segment Highlights Segment Revenue by Channel  Revenue $116.8M – up 11.4% QTD  Added 2k Retail Locations 13% Partner  Added 80+ New PayCard Clients Retail 47%  Preparing for PayChex and 30% Direct Western Union Launches Paycard 10% Segment Revenue Adjusted Segment Operating Inco

  13. Slide 13: 2Q 2014 NetSpend Segment Highlights

    2Q 2014 NetSpend Segment Highlights  Direct Deposit Active Cards up 17.6%  Gross Dollar Volume (GDV) up 17.2% Direct Deposit Active Cards Gross Dollar Volume $6,567.2 YOY Growth % 2,070.3 YOY Growth % (in thousands) ($ in millions) 1,707.9 $5,378.7 1,600.7 $4,628.0 1,361.4 1,321.1 1,261.1 $3,947.9

  14. Slide 14: Paul Todd, Chief Financial Officer

    Paul Todd Chief Financial Officer ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  15. Slide 15: Consolidated Selected Financial Highlights

    Consolidated Selected Financial Highlights (in thousands, except per share data) 2nd Qtr 2nd Qtr Percent YTD YTD Percent 2014 2013 Change 2014 2013 Change $602,036 $461,860 30.4% Total Revenues $1,194,883 $910,651 31.2% 538,067 400,929 34.2 Revenues Before Reimbursable Items 1,070,818 788,960 35.7 1

  16. Slide 16: Segment Operating Margin and Consolidated Adjusted Operating Margin

    Segment Operating Margin and Consolidated Adjusted Operating Margin Three Months Ended June 30, 2014 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $84,578 $233,217 36.27% International 11,743 84,732 13.86% Merchant 32,896

  17. Slide 17: Segment Operating Margin and Consolidated Adjusted Operating Margin

    Segment Operating Margin and Consolidated Adjusted Operating Margin Six Months Ended June 30, 2014 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $159,155 $457,585 34.78% International 16,298 161,505 10.09% Merchant 63,064

  18. Slide 18: Rollforward of Quarterly Cash Balance

    Rollforward of Quarterly Cash Balance (in millions) $500 Sale Share Operating Cap Ex Proceeds,net Repurchase Activities ($59) ($116) $45 $400 $91 Beginning Balance $307 Debt Pmts $300 ($12) Ending Dividends Other Balance ($19) $14 $251 $274* $200 $100 $0 3/31/2014 6/30/2014 * Cash Balance from Conti

  19. Slide 19: Cash Flow Strength: 2014 TTM Consolidated Financial Highlights

    Cash Flow Strength: 2014 TTM Consolidated Financial Highlights (in millions) $750 $681 $675 $600 $535 $525 $450 $375 $313 $300 $300 $251 $225 $150 $75 $0 Adjusted EBITDA Cash flow from operations Free cash flow Net income Ending cash TTM = Trailing Twelve Months 19 ©2014 Total System Services, Inc.®

  20. Slide 20: Q&A

    Q&A ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  21. Slide 21: Appendix

    Appendix ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  22. Slide 22: Appendix: Non-GAAP Items – Adjusted EBITDA and Adjusted EPS

    Appendix: Non-GAAP Items – Adjusted EBITDA and Adjusted EPS • Adjusted EBITDA is net income excluding equity in income of equity investments, nonoperating income/(expense), taxes, depreciation, amortization and stock-based compensation expenses and NetSpend merger & acquisition expenses. • Adjusted

  23. Slide 23: Appendix: Accounts on File Portfolio Summary

    Appendix: Accounts on File Portfolio Summary (in millions) Jun Jun % Jun Mar % 2014 2013 Change 2014 2014 Change Consumer Credit 246.5 208.5 18.2 246.5 234.8 5.0 Retail 27.9 25.9 8.0 27.9 27.5 1.4 Total Consumer 274.4 234.4 17.1 274.4 262.3 4.6 Commercial 40.4 38.6 4.9 40.4 40.4 0.1 Other 20.4 15.3

  24. Slide 24: Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items

    Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items (in thousands) Three Months Ended Six Months Ended 6/30/14 6/30/13 6/30/14 6/30/13 Total Revenues $602,036 $461,860 $1,194,883 $910,651 Reimbursable Items 63,969 60,931 124,065 121,691 Revenues Before Reimbursable Items $538,067

  25. Slide 25: Appendix: Non-GAAP Reconciliation – Adjusted Segment Operating Income and Operating Margin

    Appendix: Non-GAAP Reconciliation – Adjusted Segment Operating Income and Operating Margin (in thousands) Three Months Ended Six Months Ended 6/30/14 6/30/13 6/30/14 6/30/13 Operating income $98,763 $94,642 $179,460 $169,163 Add: Acquisition intangible amort 24,282 7,879 48,595 16,411 Add: Corporate

  26. Slide 26: Appendix: Non-GAAP Reconciliation – Constant Currency

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Six Percentage Months Ended Change Months Ended Change 6/30/14 6/30/13 6/30/14 6/30/13 Consolidated: Constant Currency (1) $594,799 $461,860 28.8% $1,183,283 $910,651 29.9% Foreign Currency (2) 7,237 --- 11,600 ---

  27. Slide 27: Appendix: Non-GAAP Reconciliation – Constant Currency

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Six Percentage Months Ended Change Months Ended Change 6/30/14 6/30/13 6/30/14 6/30/13 Consolidated: Constant Currency (1) $531,303 $400,929 32.5% $1,060,004 $788,960 34.4% Foreign Currency (2) 6,764 --- 10,813 ---

  28. Slide 28: Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Three Months Ended Six Months Ended Jun Jun Jun Jun 2014 2013 2014 2013 Net income : As reported (GAAP) (a) $111,340 $60,561 $162,965 $119,710 Adjusted for: Deduct: Income from discontinued operations (50,133) (678) (51,11

  29. Slide 29: Appendix: Non-GAAP Reconciliation – Adjusted EPS

    Appendix: Non-GAAP Reconciliation – Adjusted EPS (in thousands) Three Months Ended Six Months Ended Jun Jun Jun Jun 2014 2013 2014 2013 Income from continuing operations available to TSYS Common Shareholders: As reported (GAAP) (a) $59,771 $58,096 $109,092 $116,000 Adjusted for amounts attributable

  30. Slide 30: Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Trailing Twelve Months Ended 6/30/2014 Net Income $299,853 Adjusted for: Deduct: Discontinued operations (52,476) Deduct: Equity in Income of Equity Investments (14,179) Add: Income Taxes 240,165 Add: Nonoperating expense

  31. Slide 31: Appendix: Non-GAAP Reconciliation – Free Cash Flow

    Appendix: Non-GAAP Reconciliation – Free Cash Flow Trailing (in thousands) Twelve Months Ended 6/30/2014 Cash Flows from Operating Activities $534,593 Less: Purchase of Property and Equipment (64,048) Additions to Licensed Computer Software from Vendors (44,748) Additions to Internally Developed Com

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