Total System Services Inc

Total System Services — Q4 2013 Earnings Presentation

38 slides from Total System Services's earnings presentation, Jan 28, 2014

  1. Slide 1: 2013 Fourth Quarter and YTD Results

    2013 Fourth Quarter and YTD Results January 28, 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: 4Q 2013 North America Segment Highlights

    4Q 2013 North America Segment Highlights  Improving Revenue Growth 3%  Annual Total Revenues Exceeded $1.0B  Operating Income Up 8.1% 24%  Margin Expansion: Up 126 BPS Over 4Q12 73% (1) Includes Credit, Debit, Retail, Prepaid & Loyalty (2) Includes Healthcare Adjusted Segment Operating Income Op

  7. Slide 7: 4Q 2013 North America Segment Highlights

    4Q 2013 North America Segment Highlights  Twelfth Straight Quarter of Account On File YOY Growth  Fifteenth Straight Quarter of Transaction YOY Growth  Third Largest Quarter of Transaction Volume  Same Client Transactions Up 10.6%: Seventeenth Straight Quarter of YOY Growth (in millions) (in mil

  8. Slide 8: 4Q 2013 International Segment Highlights

    4Q 2013 International Segment Highlights  Revenue $108.3M* – Up 5.8% 6% ‒ Up 9.6% on Constant Currency 4%  Currency Headwinds Slowed: Q4 $4.0M* YTD $20.6M*  Continued Focus on Margin Improvement 16%  Plans in Place to Accelerate Growth 74%  Expansion of Debit Opportunities Adjusted Segment Oper

  9. Slide 9: 4Q 2013 International Segment Highlights

    4Q 2013 International Segment Highlights  Strong AOF Growth, Despite Some Client Purging in Q4 2013  Irish Debit AOF Grew By 109.3%  Double-digit Transaction Growth of 17.2%  Same Client Transaction Growth 8.0%  Debit Transactions More Than Doubled (in millions) (in millions) 14.7% 11.1% 4.9% 3

  10. Slide 10: 4Q 2013 Merchant Segment Highlights

    4Q 2013 Merchant Segment Highlights  Acquisitions Performing Well  Sales Productivity Continues to Improve  Expect Improved Operating Margins in 2H 2014 57% 43% Adjusted Segment Operating Income Operating Margin* ($ in millions) ($ in millions) 13.7% 5.0% 15.6% 5.5% 11.1% 15.6% 5.4% 4.3% (*) Reve

  11. Slide 11: 4Q 2013 Merchant Segment Highlights

    4Q 2013 Merchant Segment Highlights  Direct Revenues Up 21.8%  Indirect Revenues Down 12.2%  Significant Milestone Achieved on Journey to Transform Merchant Segment  POS Transactions Increased 3.8%, Excluding Deconverted Accounts  Double-digit Small Business Sales Volume Growth Segment Revenue

  12. Slide 12: 4Q 2013 NetSpend Segment Highlights

    4Q 2013 NetSpend Segment Highlights  Revenue $104.1M – up 16.1%  Significant Year over Year Margin Expansion 17%  Added 4k Retail Locations  Added 80+ New PayCard Clients 45% 28% 10% Segment Revenue Adjusted Segment Operating Income YOY Growth % Operating Margin* ($ in millions) ($ in millions)

  13. Slide 13: 4Q 2013 NetSpend Segment Highlights

    4Q 2013 NetSpend Segment Highlights  Direct Deposit Active Cards up 22.1%  Gross Dollar Volume (GDV) up 21.5% Direct Deposit Active Cards Gross Dollar Volume YOY Growth % YOY Growth % (in thousands) ($ in millions) 22.9% 24.2% 24.8% 25.1% 66.7% 42.3% 23.8% 22.1% 18.4% 17.1% 17.9% 18.2% 42.8% 30.1%

  14. Slide 14: Jim Lipham, Chief Financial Officer

    Jim Lipham 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) 4th Qtr 4th Qtr Percent YTD YTD Percent 2013 2012 Change 2013 2012 Change $600,840 $ 479,100 25.4% Total Revenues $2,132,353 $ 1,870,972 14.0% 542,996 418,569 29.7 Revenues Before Reimbursable Items 1,891,755 1,618,491

  16. Slide 16: 2013 YTD Revenue Change

    2013 YTD Revenue Change Revenues Before Reimbursable Items 20% Currency Lost Business (1.3%) (5.3%) Non-recurring Items (0.6%) 15% Price Compression (1.9%) Reported 10% New (7.8%) Clients Acquisitions Internal 16.7% 3.5% 5% Growth 16.9% 5.8% 0% 16 ©2014 Total System Services, Inc.® Proprietary. All

  17. Slide 17: External Revenue Composition – Revenues before Reimbursable Items

    External Revenue Composition – Revenues before Reimbursable Items 4th Qtr. 2013 4th Qtr. 2012 17 ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  18. Slide 18: Reconciliation of Segment Operating Margin to Consolidated Operating Margin

    Reconciliation of Segment Operating Margin to Consolidated Operating Margin Three Months Ended December 31, 2013 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $85,205 $223,266 38.2% International 19,463 108,332 18.0% Merch

  19. Slide 19: Reconciliation of Segment Operating Margin to Consolidated Operating Margin

    Reconciliation of Segment Operating Margin to Consolidated Operating Margin Twelve Months Ended December 31, 2013 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $314,577 $860,645 36.6% International 45,911 389,532 11.8% Mer

  20. Slide 20: Consolidated Accounts on File Portfolio Summary

    Consolidated Accounts on File Portfolio Summary (in millions) Dec Dec % Dec Sep % 2013 2012 Change 2013 2013 Change Consumer Credit 229.0 200.5 14.2 229.0 224.2 2.2 Retail 27.8 25.0 11.0 27.8 26.8 3.6 Total Consumer 256.8 225.5 13.9 256.8 251.0 2.3 Commercial 39.9 37.1 7.6 39.9 38.9 2.7 Other 18.9 1

  21. Slide 21: Rollforward of Quarterly Cash Balance

    Rollforward of Quarterly Cash Balance (in millions) $800 Operating Activities Cap Ex $600 $145 ($75) Debt Pmts Beginning ($84) Balance Share $397 Repurchase $400 ($98) Dividends Other Ending Balance ($19) $12 $278 $200 $0 09/30/2013 12/31/2013 21 ©2014 Total System Services, Inc.® Proprietary. All r

  22. Slide 22: Cash Flow Strength: 2013 Consolidated Financial Highlights

    Cash Flow Strength: 2013 Consolidated Financial Highlights (in millions) $675 $634 $600 $525 $452 $450 $375 $300 $259 $278 $257 $225 $150 $75 $0 Adjusted EBITDA Cash flow from operations Free cash flow Net income Ending cash 22 ©2014 Total System Services, Inc.® Proprietary. All rights reserved worl

  23. Slide 23: Debt to EBITDA Ratio

    Debt to EBITDA Ratio (in millions) Trailing Twelve Months (TSYS + NetSpend) 7/1/2013* 12/31/2013 DEBT $1,618 $1,493 EBITDA (ex. 1-times) 618 656 EBITDA Multiple 2.62x 2.27x * June 30, 2013 plus $300M draw 23 ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  24. Slide 24: Share Repurchase Plan

    Share Repurchase Plan  Current Plan – Up to 28M with 12M Remaining  Expires April 2015 Number of Shares Repurchased Capital Deployed (in millions) ($ in millions) 24 ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

  25. Slide 25: 2014 Guidance

    2014 Guidance* (in millions, except per share data) Range Range Percent Change Total Revenues $2,491 to $2,542 17% to 19% Revenues Before Reimbursable Items $2,252 to $2,297 19% to 21% Adjusted EBITDA $744 to $759 17% to 20% Adjusted Cash EPS $1.90 to $1.93 11% to 13% Average Basic Weighted Shares 1

  26. Slide 26: Q&A

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

  27. Slide 27: Appendix

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

  28. Slide 28: Appendix: Non-GAAP Items – Adjusted EBITDA and Adjusted Cash EPS

    Appendix: Non-GAAP Items – Adjusted EBITDA and Adjusted Cash 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 other non-recurring items. • Adjusted cash EPS

  29. Slide 29: Non-GAAP Reconciliation – Revenues Before Reimbursable Items

    Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items (in thousands) Three Months Ended Twelve Months Ended 12/31/13 12/31/12 12/31/13 12/31/12 Total Revenues $600,840 $479,100 $2,132,353 $1,870,972 Reimbursable Items 57,844 60,531 240,598 252,481 Revenues Before Reimbursable Items

  30. Slide 30: 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 Twelve Months Ended 12/31/13 12/31/12 12/31/13 12/31/12 Operating income $110,402 $89,831 $386,247 $357,652 Add: Acquisition intangible amort 24,751 7,340 65,893 26,264 Add: C

  31. Slide 31: Non-GAAP Reconciliation – Constant Currency

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Twelve Percentage Months Ended Change Months Ended Change 12/31/13 12/31/12 12/31/13 12/31/12 Consolidated: Constant Currency (1) $604,665 $479,100 26.2% $2,152,961 $1,870,972 15.1% Foreign Currency (2) (3,825) ---

  32. Slide 32: Non-GAAP Reconciliation – Constant Currency

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Twelve Percentage Months Ended Change Months Ended Change 12/31/13 12/31/12 12/31/13 12/31/12 Consolidated: Constant Currency (1) $546,849 $418,569 30.6% $1,912,063 $1,618,491 18.1% Foreign Currency (2) (3,853) ---

  33. Slide 33: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Three Months Ended Twelve Months Ended Dec Dec Dec Dec 2013 2012 2013 2012 Net income : As reported (GAAP) (a) $69,393 $62,257 $256,597 $249,923 Adjusted for: Deduct: Equity in Income of Equity Investments (3,691) (3,188)

  34. Slide 34: Non-GAAP Reconciliation – Adjusted Cash EPS

    Appendix: Non-GAAP Reconciliation – Adjusted Cash EPS (in thousands) Three Months Ended Twelve Months Ended Dec Dec Dec Dec 2013 2012 2013 2012 Net income Available to TSYS Common Shareholders: As reported (GAAP) (a) $65,655 $60,862 $244,750 $244,280 Adjusted for amounts attributable to TSYS common

  35. Slide 35: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Twelve Months Ended 12/31/2013 Net Income $256,597 Adjusted for: Deduct: Equity in Income of Equity Investments (13,047) Add: Income Taxes 112,369 Add: Nonoperating expense 30,328 Add: Depreciation and Amortization 205,352

  36. Slide 36: Non-GAAP Reconciliation – Free Cash Flow

    Appendix: Non-GAAP Reconciliation – Free Cash Flow (in thousands) Twelve Months Ended 12/31/2013 Cash Flows from Operating Activities $452,399 Less: Purchase of Property and Equipment (40,598) Additions to Licensed Computer Software from Vendors (64,729) Additions to Internally Developed Computer So

  37. Slide 37: Non-GAAP Reconciliation – NetSpend Adjusted Operating Income

    Appendix: Non-GAAP Reconciliation – NetSpend Adjusted Operating Income (in thousands) Three Months Ended Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, 2012 2012 2012 2012 2013 2013 Operating income (loss) (GAAP) ($8,964) $17,430 $7,869 $17,594 $18,332 $15,799 Adjusted for: Add: Amortization of acq

  38. Slide 38: Appendix: 2014 Guidance Assumptions

    Appendix: 2014 Guidance Assumptions The guidance assumes: • No significant movement in foreign exchange rates; and • Minimal synergies from the NetSpend acquisition for 2014. 38 ©2014 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

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