Total System Services Inc

Total System Services — Q3 2014 Earnings Presentation

30 slides from Total System Services's earnings presentation, Oct 28, 2014

  1. Slide 1: 2014 Third Quarter and YTD Results

    2014 Third Quarter and YTD Results October 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: Troy Woods, President & Chief Executive Officer

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

  5. Slide 5: Paul Todd, Chief Financial Officer

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

  6. Slide 6: 3Q 2014 North America Segment Highlights

    3Q 2014 North America Segment Highlights  Largest Quarter of Segment Revenue in Segment Revenue by Line of Business* History, Excluding Termination Fees 4%  Double Digit YOY Revenue Growth Consumer (1) ‒ First Time Since 2006 23% Commercial (2)  Revenue Growth Benefiting from Conversions 73% Othe

  7. Slide 7: 3Q 2014 North America Segment Highlights

    3Q 2014 North America Segment Highlights  Five Straight Quarters of Double Digit Growth in Traditional Accounts on File*  Over 10M Accounts Converted in 3Q14  Largest Quarter of Transaction Volume in History at 2.8B  Same Client Transactions up 12.6% Accounts on File Transaction Volume 2,833.6 Y

  8. Slide 8: 3Q 2014 International Segment Highlights

    3Q 2014 International Segment Highlights  Revenue $87.4M* – Up 12.2% Segment Revenue by Region QTD ‒ Up 4.4% on Constant Currency 7% 7% ‒ $6.1M of Currency Benefit  Positive Revenue Growth in All Regions Europe  Margin Improvement Continues MEA 86% Rest Of World Segment Revenue* Adjusted Segment

  9. Slide 9: 3Q 2014 International Segment Highlights

    3Q 2014 International Segment Highlights  AOF Grew 4.9M YOY Predominately Organic  Transactions Grew 48.9M, or 9.3% YOY  Same Client Transactions Grew 9.7% Accounts on File Transaction Volume YOY Growth % YOY Growth % 574.3 558.1 (in millions) (in millions) 555.6 62.3 64.1 525.5 517.9 58.0 59.2 5

  10. Slide 10: 3Q 2014 Merchant Segment Highlights

    3Q 2014 Merchant Segment Highlights Segment Revenue by Mix*  Revenues Before Reimbursables Increased 1.2% QTD − Direct Up 4% with Continued Focus on Growth Initiatives − Indirect Down (2)% But Exceeding Expectations  Second Quarter of Improved Operating Margin 57% 43% Direct Indirect Segment Reven

  11. Slide 11: 3Q 2014 Merchant Segment Highlights

    3Q 2014 Merchant Segment Highlights  POS Transactions Increased 4.3%, Excluding Deconverted Accounts  SBS Sales Volume Up 10.0%  Value Added Products Key Component Driving Revenue Growth SBS Sales Volume* Segment Revenue by LOB ($ in billions) YOY Growth % ($ in millions) YOY Growth % $5.8 $5.9 $

  12. Slide 12: 3Q 2014 NetSpend Segment Highlights

    3Q 2014 NetSpend Segment Highlights Segment Revenue by Channel  Revenue $114.0M – Up 10.0% QTD  Added 4k Distributing Locations and 13% Partner Employers Bringing the Total to Over 80k Retail  Launched Western Union Both in Retail and 33% 44% Direct Direct Channels Paycard  Rolled Out Paychex to

  13. Slide 13: 3Q 2014 NetSpend Segment Highlights

    3Q 2014 NetSpend Segment Highlights  Direct Deposit Active Cards up 20.6%  Gross Dollar Volume (GDV) up 16.6%  Double Digit Growth in Direct Deposit Active Cards Across All Channels Direct Deposit Active Cards Gross Dollar Volume YOY Growth % YOY Growth % 2,070.3 $6,567.2 (in thousands) ($ in mil

  14. Slide 14: Consolidated Selected Financial Highlights

    Consolidated Selected Financial Highlights (in thousands, except per share data) 3rd Qtr 3rd Qtr Percent YTD YTD Percent 2014 2013 Change 2014 2013 Change $616,891 $570,551 8.1% Total Revenues $1,811,774 $1,481,202 22.3% 552,860 509,488 8.5 Revenues Before Reimbursable Items 1,623,678 1,298,449 25.0

  15. Slide 15: Segment Operating Margin and Consolidated Adjusted Operating Margin

    Segment Operating Margin and Consolidated Adjusted Operating Margin Three Months Ended September 30, 2014 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $92,736 $240,957 38.49% International 15,976 87,385 18.28% Merchant 40

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

    Segment Operating Margin and Consolidated Adjusted Operating Margin Nine Months Ended September 30, 2014 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $251,892 $698,543 36.06% International 32,274 248,890 12.97% Merchant 1

  17. Slide 17: Rollforward of Quarterly Cash Balance

    Rollforward of Quarterly Cash Balance (in millions) $500 Operating Activities Cap Ex $151 ($62) $400 Acquisition ($39) Debt Pmts ($14) Dividends $300 Beginning ($19) Other Ending Balance Balance $251 ($2) $266 $200 $100 $0 6/30/2014 9/30/2014 17 ©2014 Total System Services, Inc.® Proprietary. All ri

  18. Slide 18: Cash Flow Strength: 2014 TTM Consolidated Financial Highlights

    Cash Flow Strength: 2014 TTM Consolidated Financial Highlights (in millions) $750 $700 $675 $600 $535 $525 $450 $375 $318 $292 $300 $266 $225 $150 $75 $0 Adjusted EBITDA Cash flow from operations Free cash flow Net income Ending cash TTM = Trailing Twelve Months 18 ©2014 Total System Services, Inc.®

  19. Slide 19: Q&A

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

  20. Slide 20: Appendix

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

  21. Slide 21: 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

  22. Slide 22: Appendix: Accounts on File Portfolio Summary

    Appendix: Accounts on File Portfolio Summary (in millions) Sep Sep % Sep Jun % 2014 2013 Change 2014 2014 Change Consumer Credit 263.9 224.1 17.8 263.9 246.5 7.1 Retail 28.4 26.8 5.8 28.4 27.9 1.5 Total Consumer 292.3 250.9 16.5 292.3 274.4 6.5 Commercial 41.5 38.8 6.9 41.5 40.4 2.8 Other 21.2 16.9

  23. Slide 23: Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items

    Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items (in thousands) Three Months Ended Nine Months Ended 9/30/14 9/30/13 9/30/14 9/30/13 Total Revenues $616,891 $570,551 $1,811,774 $1,481,202 Reimbursable Items 64,031 61,063 188,096 182,753 Revenues Before Reimbursable Items $552,8

  24. Slide 24: 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 Nine Months Ended 9/30/14 9/30/13 9/30/14 9/30/13 Operating income $129,407 $104,479 $308,867 $273,642 Add: Acquisition intangible amort 24,210 24,731 72,805 41,142 Add: Corpo

  25. Slide 25: Appendix: Non-GAAP Reconciliation – Constant Currency

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Nine Percentage Months Ended Change Months Ended Change 9/30/14 9/30/13 9/30/14 9/30/13 Consolidated: Constant Currency (1) $610,554 $570,551 7.0% $1,793,838 $1,481,202 21.1% Foreign Currency (2) 6,337 --- 17,936 -

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

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Nine Percentage Months Ended Change Months Ended Change 9/30/14 9/30/13 9/30/14 9/30/13 Consolidated: Constant Currency (1) $546,782 $509,488 7.3% $1,606,786 $1,298,449 23.7% Foreign Currency (2) 6,078 --- 16,892 -

  27. Slide 27: Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Three Months Ended Nine Months Ended Sep Sep Sep Sep 2014 2013 2014 2013 Net income : As reported (GAAP) (a) $85,198 $67,494 $248,163 $187,205 Adjusted for: Deduct: Income from discontinued operations (880) (611) (51,993)

  28. Slide 28: Appendix: Non-GAAP Reconciliation – Adjusted EPS

    Appendix: Non-GAAP Reconciliation – Adjusted EPS (in thousands) Three Months Ended Nine Months Ended Sep Sep Sep Sep 2014 2013 2014 2013 Income from continuing operations available to TSYS Common Shareholders: As reported (GAAP) (a) $82,925 $64,834 $192,018 $180,835 Adjusted for amounts attributable

  29. Slide 29: Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Trailing Twelve Months Ended 9/30/2014 Net Income $317,556 Adjusted for: Deduct: Discontinued operations (52,744) Deduct: Equity in Income of Equity Investments (15,522) Add: Income Taxes 127,767 Add: Nonoperating expense

  30. Slide 30: Appendix: Non-GAAP Reconciliation – Free Cash Flow

    Appendix: Non-GAAP Reconciliation – Free Cash Flow Trailing (in thousands) Twelve Months Ended 9/30/2014 Cash Flows from Operating Activities $535,028 Less: Purchase of Property and Equipment (71,057) Additions to Licensed Computer Software from Vendors (44,814) Additions to Internally Developed Com

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