Earnings Review and Free Research Report: Global Payments’ Adjusted Revenue Jumped 18.4%; Adjusted EPS Soared 24%
Research Desk Line-up: Atento Post Earnings Coverage
LONDON, UK / ACCESSWIRE / August 22, 2017 /Pro-Trader Daily has just published a free post-earnings coverage on Global Payments Inc. (NYSE: GPN), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=GPN, following the Company's reporting of its second quarter fiscal 2017 operating results on August 03, 2017. The electronics payment processing Company delivered double-digit organic net revenue growth and outperformed top- and bottom-line expectations. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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For the three months ended June 30, 2017, Global Payments reported GAAP revenues of $962.2 million compared to $842.6 million in Q2 2016. The Company's adjusted net revenue grew 18.4% to $847.9 million compared to $716.3 million in the prior year's corresponding quarter. Global Payments' revenue numbers topped analysts' expectations of $837.6 million
For Q2 2017, Global Payments' operating margin was 13.7% compared to 7.3% in Q2 2016. The Company's adjusted operating margin expanded 130 basis points to 29.2%.
Global Payments reported earnings of $66.91 million, or $0.44 per diluted share, compared to earnings of $62.23 million, or $0.42 per diluted share, in Q2 2016. The Company's adjusted earnings per share grew 24% to $0.94 compared to $0.76 in the year ago same period. Global Payments' earnings surpassed Wall Street's expectations of $0.91 per share.
Global Payments' Segment Results
During Q2 2017, North American segment recorded revenue of $710.97 million, up 13.9% compared to revenue of $624.41 million in Q2 2016. The division's operating margin expanded 230 basis points to 29.7%. Margin expansion was driven by the strong net revenue performance across its US direct channels and the realization of expense synergies from Heartland.
For Q2 2017, net revenues from Europe grew 13% to $159 million, or 14.9%, to $186.51 million, led by double-digit organic growth in the Company's European ecommerce and omnichannel solutions business as well as its United Kingdom and Spanish businesses. European operating margin of 45.5% declined 200 basis points from the previous year, primarily due to foreign currency impacts and integration costs associated with the Erste transaction, as well as the higher cost associated with increased cross-border volumes.
Asia/Pacific business net revenue grew 15% to $64.77 million, driven by solid trends across the Company's key markets, including Hong Kong, Malaysia, Singapore, and China. Asia/Pacific's operating margins of 30.2% increased 330 basis points y-o-y, driven by strong net revenue growth across the region.
During Q2 2017, excluding Heartland integration costs, Global Payments generated free cash flow of approximately $130 million. The Company's capital expenditures totaled $44 million for the quarter. In addition, since the beginning of the year, Global Payments has reduced outstanding debt by approximately $180 million, resulting in gross leverage of under 4x at the end of the reported quarter.
Global Payments' Board of Directors approved a dividend of $0.01 per share payable September 29, 2017, to shareholders of record as of September 15, 2017.
Global Payments' is forecasting adjusted net revenue to range from $3.40 billion to $3.475 billion, or growth of 20% to 22% over 2016 and adjusted operating margin to expand by as much as 120 basis points. Adjusted earnings per share are now expected to be in a range of $3.85 to $4.00, reflecting growth of 21% to 25% over 2016.
On the day of earnings announcement, Global Payments announced an agreement to acquire the communities and sports divisions of ACTIVE Network from Vista Equity Partners. ACTIVE Network delivers cloud-based, mission critical enterprise software, including payment technology solutions to event organizers in the communities and health and fitness verticals. The outdoors division of ACTIVE Network will be retained by Vista Equity Partners.
Under terms of the acquisition agreement, Global Payments will acquire the communities and sports divisions of ACTIVE Network from Vista Equity Partners in a stock and cash transaction valued at approximately $1.2 billion, including a tax asset. Net of the tax asset, the effective purchase price is approximately $1.0 billion. Vista will receive $600 million of Global Payments stock and $600 million in cash as consideration. Global Payments will finance the cash portion with its existing credit facility and cash on hand. The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in Q4 2017. Global Payments expects the transaction to have an immaterial impact on 2017 adjusted earnings per share results.
On Monday, August 21, 2017, the stock closed the trading session at $94.57, marginally up 0.86% from its previous closing price of $93.76. A total volume of 857.22 thousand shares have exchanged hands. Global Payments' stock price surged 3.10% in the last three months, 19.94% in the past six months, and 26.52% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have soared 36.25%. The stock is trading at a PE ratio of 59.33 and has a dividend yield of 0.04%. At Monday's closing price, the stock's net capitalization stands at $14.41 billion.
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