Total System Services Inc

Total System Services — Q3 2016 Earnings Presentation

29 slides from Total System Services's earnings presentation, Oct 25, 2016

  1. Slide 1: 2016 Third Quarter

    2016 THIRD QUARTER October 25, 2016 ©2016 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  2. Slide 2: Forward-Looking Statements

    2016 Third Quarter FORWARD-LOOKING STATEMENTS This slide 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 a

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

    2016 Third Quarter 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: net revenue, operating marg

  4. Slide 4: M. Troy Woods, Chairman and Chief Executive Officer

    M. Troy Woods Chairman and Chief Executive Officer ©2016 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 4

  5. Slide 5: Paul Todd, Chief Financial Officer

    Paul Todd Chief Financial Officer ©2016 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 5

  6. Slide 6: Consolidated Selected Financial Highlights

    2016 Third Quarter CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS (in thousands, except per share data) QTD QTD Percent YTD YTD Percent 2016 2015 Change 2016 2015 Change $1,146,888 $707,890 62.0% Total Revenues $3,037,853 $2,062,698 47.3% 789,588 636,386 24.1 Net Revenue(1) 2,256,169 1,854,254 21.7 269,

  7. Slide 7: Consolidated Highlights

    2016 Third Quarter CONSOLIDATED HIGHLIGHTS 3rd Quarter Net Revenue by Segment(1) ➜ Net revenue increased 24.1% ➜ All 4 segments exceeded internal NetSpend North America expectations 20% 37% ➜ Record number of traditional AOF Merchant International 33% 10% Consolidated Net Revenue(1) Adjusted Operati

  8. Slide 8: North America Segment Highlights

    2016 Third Quarter NORTH AMERICA SEGMENT HIGHLIGHTS Traditional Accounts on File ➜ Continued focus on growth objectives (in millions) YOY Growth % 444.6 435.1 ➜ Record number of traditional AOF 423.3 415.1 ➜ Net revenue growth of 2.4% slightly 404.6 ahead of expectations 36.9% 37.3% 6.8% 7.3% 9.9% 

  9. Slide 9: International Segment Highlights

    2016 Third Quarter INTERNATIONAL SEGMENT HIGHLIGHTS Traditional Accounts on File YOY Growth % ➜ Net revenue up 7.4% and operating (in millions) margin up 280 bps on a constant currency basis ➜ Two new debit clients and two contract 63.3 65.1 65.5 66.0 66.6 extensions signed in period 6.5% 8.5% 6.6%

  10. Slide 10: Merchant Segment Highlights

    2016 Third Quarter MERCHANT SEGMENT HIGHLIGHTS Segment Net Revenue by LOB(1) YOY Growth % ➜ TransFirst integration continues on-track ($ in millions) and synergy achievement is on target $50 $48 $47 $49 6% $48 (3%) (1%) 10% 7% ➜ Strong revenue growth driven by focus on SMB and integrated channels $7

  11. Slide 11: NetSpend Segment Highlights

    2016 Third Quarter NETSPEND SEGMENT HIGHLIGHTS Gross Dollar Volume YOY Growth % ➜ CFPB issued final rules on prepaid ($ in billions) $9.2 ➜ Direct deposit active cards increased 15.8% $6.6 $6.4 ➜ Double-digit revenue growth in 3 of 4 $5.4 $5.7 channels 22.3% 21.3% 19.6% 19.6% 18.1% 3Q15 4Q15 1Q16 2Q

  12. Slide 12: Segment Operating Margin and Consolidated Adjusted Operating Margin

    2016 Third Quarter SEGMENT OPERATING MARGIN AND CONSOLIDATED ADJUSTED OPERATING MARGIN Three Months Ended September 30, 2016 Adjusted Segment Adjusted Operating (1) (1) (1) Operating Income Net Revenue Margin (in thousands) North America $113,425 $300,754 37.71% International 15,524 79,445 19.54% Me

  13. Slide 13: Segment Operating Margin and Consolidated Adjusted Operating Margin

    2016 Third Quarter SEGMENT OPERATING MARGIN AND CONSOLIDATED ADJUSTED OPERATING MARGIN Nine Months Ended September 30, 2016 Adjusted Segment Adjusted Operating (1) (1) (1) Operating Income Net Revenue Margin (in thousands) North America $350,955 $901,563 38.93% International 41,564 236,570 17.57% Me

  14. Slide 14: 2016 Revised Guidance

    2016 Third Quarter 2016 REVISED GUIDANCE* (in millions, except per share data) Range Range Percent Change Revenue: Total Revenues (GAAP) $4,150 to $4,170 49% to 50% Net Revenue (non-GAAP) (1) $3,030 to $3,045 21% to 22% Earnings per share: (EPS) Basic EPS (GAAP) $1.77 to $1.83 (10%) to (7%) Adjusted

  15. Slide 15: Q&A

    Q&A ©2016 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 15

  16. Slide 16: Thank You

    THANK YOU ©2016 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  17. Slide 17: Appendix

    APPENDIX ©2016 Total System Services, Inc.® Proprietary. All rights reserved worldwide. 17

  18. Slide 18: Accounts on File Portfolio Summary

    2016 Third Quarter APPENDIX: Accounts on File Portfolio Summary (in millions) September September % September June % 2016 2015 Change 2016 2016 Change Consumer 433.5 399.0 8.6 433.5 425.3 1.9 Commercial 48.0 44.1 8.9 48.0 47.0 2.0 Other 29.7 24.8 19.5 29.7 28.8 3.1 Traditional AOF 511.2 467.9 9.2 51

  19. Slide 19: Non-GAAP Items – Net Revenue, Adjusted EBITDA and Adjusted EPS

    2016 Third Quarter APPENDIX: Non-GAAP Items – Net Revenue, Adjusted EBITDA and Adjusted EPS ➔ Net revenue is defined as total revenues less reimbursable items (such as postage), as well as, merchant acquiring interchange and assessment fees charged by the card associations or payment networks that a

  20. Slide 20: Non-GAAP Reconciliation – Net Revenue

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Net Revenue (in thousands) Three Months Ended Nine Months Ended 9/30/16 9/30/15 9/30/16 9/30/15 $1,146,888 $707,890 Total revenues $3,037,853 $2,062,698 Less: reimbursable items, interchange and assessments 357,300 71,504 expenses 781,684 208,44

  21. Slide 21: Non-GAAP Reconciliation – Adjusted Segment Operating Income and Operating Margin

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Adjusted Segment Operating Income and Operating Margin Three Months Ended Nine Months Ended (in thousands) 9/30/16 9/30/15 9/30/16 9/30/15 Adjusted segment operating income By segment: North America services (a) $113,425 $113,946 $350,955 $324,9

  22. Slide 22: Adjusted Segment Operating Income and Margin excluding Severance

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Adjusted Segment Operating Income and Operating Margin excluding Severance Three Months Ended Nine Months Ended (in thousands) 9/30/16 9/30/16 9/30/16 9/30/16 Adjusted segment operating income As reported Severance Adjusted As reported Severance

  23. Slide 23: Non-GAAP Reconciliation – Constant Currency Net Revenue

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Constant Currency Net Revenue (in thousands) Three Months Ended Nine Months Ended Percentage Percentage 9/30/16 9/30/15 Change 9/30/16 9/30/15 Change Consolidated: Constant currency(1) $802,958 $636,386 26.2% $2,280,389 $1,854,254 23.0% Foreign

  24. Slide 24: Non-GAAP Reconciliation – Constant Currency Total Revenues

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Constant Currency Total Revenues (in thousands) Three Months Ended Nine Months Ended Percentage Percentage 9/30/16 9/30/15 Change 9/30/16 9/30/15 Change Consolidated: Constant currency(1) $1,161,181 $707,890 64.0% $3,063,788 $2,062,698 48.5% For

  25. Slide 25: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Three Months Ended Nine Months Ended 9/30/16 9/30/15 9/30/16 9/30/15 Net income : As reported (GAAP) $87,441 $122,051 $251,597 $284,325 Adjust for: Deduct: Equity in income of equity investments (6,366)

  26. Slide 26: Non-GAAP Reconciliation – Adjusted EPS

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Adjusted EPS Three Months Ended Nine Months Ended (in thousands, except per share data) 9/30/16 9/30/15 9/30/16 9/30/15 Income from continuing operations available to TSYS common shareholders: As reported (GAAP) (a) $85,352 $120,622 $245,688 $28

  27. Slide 27: Adjusted EPS excluding impact of severance, currency and tax credits

    2016 Third Quarter APPENDIX: Non-GAAP Reconciliation – Adjusted EPS excluding impact of severance, currency and tax credits Three Months Ended Nine Months Ended (in thousands, except per share data) 9/30/16 9/30/15 9/30/16 9/30/15 Income from continuing operations available to TSYS common shareholde

  28. Slide 28: 2016 Revised Guidance

    2016 Third Quarter 2016 REVISED GUIDANCE* (in millions, except per share data) Range Range Percent Change Total Revenues (GAAP) $4,150 to $4,170 49% to 50% Less: reimbursable items, interchange and assessments expenses 1,120 to 1,125 Net Revenue (non-GAAP) (1) $3,030 to $3,045 21% to 22% Basic EPS (

  29. Slide 29: 2016 Revised Guidance Assumptions

    2016 Third Quarter APPENDIX: 2016 Revised Guidance Assumptions The guidance assumes: • There will be no significant movements in the London Interbank Offered rate and TSYS will not make any significant draws on the remaining balance of its credit facility; • There will be no additional significant m

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