Total System Services Inc

Total System Services — Q1 2014 Earnings Presentation

32 slides from Total System Services's earnings presentation, Apr 22, 2014

  1. Slide 1: 2014 First Quarter Results

    2014 First Quarter Results April 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: 1Q 2014 North America Segment Highlights

    1Q 2014 North America Segment Highlights  Improving Revenue Growth Segment Revenue by Line of Business* ‒ 6th Straight Positive Growth Quarter 4%  Adjusted Segment Operating Income Up 8.5% Consumer (1) 23%  Adjusted Operating Margin: 33.2% Commercial (2) ‒ Chase License Payments Expired 73% Other

  7. Slide 7: 1Q 2014 North America Segment Highlights

    1Q 2014 North America Segment Highlights  Thirteenth Straight Quarter of Account On File YOY Growth  Large Account Conversion Pipeline  Sixteenth Straight Quarter of Transaction YOY Growth  Same Client Transactions Up 12.9%: Eighteenth Straight Quarter of YOY Growth Accounts on File Transaction

  8. Slide 8: 1Q 2014 International Segment Highlights

    1Q 2014 International Segment Highlights Segment Revenue by Region  Revenue $76.8M* – Up 0.5% QTD 6% ‒ Down 4.6% on Constant Currency 5%  Currency Tailwinds Europe  Continued Margin Improvement Focus MEA  Reemphasis on Accelerating Growth 89%  Japan Market Divestitures Rest Of World Segment Rev

  9. Slide 9: 1Q 2014 International Segment Highlights

    1Q 2014 International Segment Highlights  Strong AOF Growth, Despite Some Client Purging  Irish Debit AOF Grew By 71.2%  Double-digit Transaction Growth of 19.3%  Same Client Transaction Growth of 17.3% Accounts on File Transaction Volume YOY Growth % YOY Growth % 555.6 (in millions) (in million

  10. Slide 10: 1Q 2014 Merchant Segment Highlights

    1Q 2014 Merchant Segment Highlights  Anniversary of Acquisitions Segment Revenue by Mix* QTD  Completed Clearing and Settlement Conversion  Direct Revenue Mix Holds at 57%  Expanded CPAY Ownership to 75% 57% 43% Direct Indirect Segment Revenue* Adjusted Segment Operating Income YOY Growth % Oper

  11. Slide 11: 1Q 2014 Merchant Segment Highlights

    1Q 2014 Merchant Segment Highlights  Direct Revenues Up 4.2%  Indirect Revenues Down 13.5%  POS Transactions Increased 2.7%, Excluding Deconverted Accounts  High Single-digit Direct Small Business Sales Volume Growth SBS Sales Volume* Segment Revenue by LOB ($ in billions) YOY Growth % ($ in mil

  12. Slide 12: 1Q 2014 NetSpend Segment Highlights

    1Q 2014 NetSpend Segment Highlights Segment Revenue by Channel  Revenue $132.6M – up 13.1% QTD  Added 2k Retail Locations 12% Partner  Added 70+ New PayCard Clients Retail 52% 28%  Announced PayChex and Western Union Direct Partnerships Paycard 8% Segment Revenue Adjusted Segment Operating Incom

  13. Slide 13: 1Q 2014 NetSpend Segment Highlights

    1Q 2014 NetSpend Segment Highlights  Direct Deposit Active Cards up 21.2% ‒ Exceeded 2M for the first time in history  Gross Dollar Volume (GDV) up 22.1% ‒ Record Tax Season Direct Deposit Active Cards Gross Dollar Volume $6,567.2 YOY Growth % 2,070.3 YOY Growth % (in thousands) ($ in millions) 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) 1St Qtr 1st Qtr Percent 2014 2013 Change Total Revenues $592,848 $448,791 32.1% Revenues Before Reimbursable Items 532,750 388,032 37.3 Adjusted EBITDA* 149,596 123,446 21.2 Adjusted Cash EPS* from Continuing Operations

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

    Segment Operating Margin and Consolidated Adjusted Operating Margin Three Months Ended March 31, 2014 Adjusted Revenues before (in thousands) Segment Reimbursable Adjusted Operating Income Items Operating Margin North America $74,578 $224,368 33.24% International 4,555 76,773 5.93% Merchant 30,168 1

  17. Slide 17: Rollforward of Quarterly Cash Balance

    Rollforward of Quarterly Cash Balance (in millions) $500 Operating Activities Cap Ex $149 ($47) $400 Debt Pmts ($22) Acquisition ($38) Beginning Dividends Other Ending Balance $300 ($19) $3 $274 Balance $248 $200 $100 $0 12/31/2013 3/31/2014 17 ©2014 Total System Services, Inc.® Proprietary. All rig

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

    Cash Flow Strength: 2014 TTM Consolidated Financial Highlights (in millions) $750 $675 $650 $600 $549 $525 $450 $375 $363 $300 $274 $249 $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: 2014 Revised Guidance

    2014 Revised Guidance* (in millions, except per share data) Range Range Percent Change Total Revenues $2,422 to $2,471 17% to 20% Revenues Before Reimbursable Items $2,182 to $2,226 20% to 22% Adjusted EBITDA $732 to $746 17% to 20% Adjusted Cash EPS from continuing operations $1.90 to $1.93 10% to

  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 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

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

    Appendix: Accounts on File Portfolio Summary (in millions) Mar Mar % Mar Dec % 2014 2013 Change 2014 2013 Change Consumer Credit 234.8 203.7 15.3 234.8 228.9 2.6 Retail 27.5 25.2 9.3 27.5 27.8 (0.9) Total Consumer 262.3 228.9 14.6 262.3 256.7 2.2 Commercial 40.4 37.9 6.7 40.4 39.9 1.2 Other 19.7 13.

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

    Appendix: Non-GAAP Reconciliation – Revenues Before Reimbursable Items (in thousands) Three Months Ended 03/31/14 03/31/13 Total Revenues $592,848 $448,791 Reimbursable Items 60,098 60,759 Revenues Before Reimbursable Items $532,750 $388,032 24 ©2014 Total System Services, Inc.® Proprietary. All rig

  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 3/31/14 3/31/13 Operating income $80,697 $74,520 Add: Acquisition intangible amort 24,313 8,532 Add: Corporate admin and other 33,008 30,193 Total segment adjusted operating i

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

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Months Ended Change Consolidated: 3/31/14 3/31/13 Constant Currency (1) $588,485 $448,791 31.1% Foreign Currency (2) 4,363 --- Total Revenues $592,848 $448,791 32.1% International Services: Constant Currency (1) $7

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

    Appendix: Non-GAAP Reconciliation – Constant Currency (in thousands) Three Percentage Months Ended Change Consolidated: 3/31/14 3/31/13 Constant Currency (1) $528,701 $388,032 36.3% Foreign Currency (2) 4,049 --- Revenues before reimbursable items $532,750 $388,032 37.3% International Services: Cons

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

    Appendix: Non-GAAP Reconciliation – EBITDA and Adjusted EBITDA (in thousands) Three Months Ended Mar Mar 2014 2013 Net income : As reported (GAAP) (a) $51,625 $59,149 Adjusted for: Deduct: Income from discontinued operations (980) (15) Deduct: Equity in Income of Equity Investments (4,096) (3,817) A

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

    Appendix: Non-GAAP Reconciliation – Adjusted Cash EPS (in thousands) Three Months Ended Mar Mar 2014 2013 Income from continuing operations available to TSYS common shareholders: As reported (GAAP) (a) $49,321 $57,905 Adjusted for amounts attributable to TSYS common shareholders (net of taxes): Acqu

  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 3/31/2014 Net Income $249,074 Adjusted for: Deduct: Discontinued operations (3,021) Deduct: Equity in Income of Equity Investments (13,327) Add: Income Taxes 218,210 Add: Nonoperating expense 3

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

    Appendix: Non-GAAP Reconciliation – Free Cash Flow Trailing (in thousands) Twelve Months Ended 3/31/2014 Cash Flows from Operating Activities $548,668 Less: Purchase of Property and Equipment (47,757) Additions to Licensed Computer Software from Vendors (40,788) Additions to Internally Developed Com

  32. Slide 32: Appendix: 2014 Guidance Assumptions

    Appendix: 2014 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 significant movement in foreign currency exchange r

Total System Services — Q1 2014 Earnings Presentation on 6ix