CEO: Stakes are high at TSYS, but the best is yet to come

Tomlinson says company processed 16 billion credit-card transactions in 2013, poised for steady growth

tadams@ledger-enquirer.comMay 1, 2014 

TSYS Riverfront Campus

JOE PAULL — jpaull@ledger-enquirer.com

Early in Thursday’s annual shareholder meeting, Phil Tomlinson noted TSYS had celebrated its 30th anniversary as a publicly traded firm in 2013.

But the chairman and chief executive officer of the Columbus-based credit card and payments processor then remarked that the next three decades could end up being its best period ever.

“The stakes are high, but we are a leading provider of payment solutions around the world. And we’re really doing better than we’ve ever done in our history,” said Tomlinson, who proceeded to tick off numerical accomplishments in 2013 as evidence.

• TSYS today manages more than 550 million credit-card accounts around the world. That should rise to 670 million by year’s end.

• Last year, the firm processed 16 billion transactions. That’s more than 44 million transactions a day.

• It settled more than $2.6 trillion in transactions, or a daily average of $7.1 billion.

• The company now serves 2.4 million merchant locations, and handles 3.7 million active prepaid cards for consumers across the U.S.

• At its support center in Columbus, TSYS produced 1.8 billion-plus credit-card statements and mailed them out. It created more than 31 million credit cards for its bank, retail and card-issuer clients.

“But we know we can do even more. We can win more. We can have more successes. We can have more innovation. And we can provide our clients more value,” the CEO said. “We’ve got to do that, and we’ve got to keep people at the center of payments going forward.”

Tomlinson was addressing a nearly full house Thursday inside its corporate headquarters in downtown Columbus. He said about 1,000 more people were taking in the event via a global webcast.

After procedural matters that included approving its board of directors, KPMG as its accounting firm, and an executive compensation proposal, Tomlinson got into the meat of the meeting.

The past year has been an eventful one, he said, with the $1.4 billion acquisition of Austin, Texas-based NetSpend — the largest purchase in its history — an obvious highlight. The prepaid card company, now a TSYS subsidiary, accounted for 10 percent of the firm’s revenue in 2013, a number that is expected to double this year.

The processor’s merchant business and international segment also performed well last year, he said, while its North American group once again led the way.

“Upon conversion completion of the Bank of America business this year, TSYS will process over 40 percent of the Visa and Mastercard consumer credit card accounts issued by the top 50 banks in the United States. We think we’re pushing 70 percent in Canada,” the CEO said. “It’s pretty amazing to have those types of market share, and we’re still continuing to win (new contracts and renewals) in both of those countries.”

Tomlinson said it all added up to total revenue topping $2 billion for the first time in the company’s history, calling it a “massive benchmark for us” and one that many companies never see. He said many never reach total annual revenue of $1 billion.

“So we’re pushing for $3 billion over the next few years and think we can get there,” he said.

Speaking directly to shareholders, Tomlinson said the company has returned $497 million to investors over the last three years through common stock dividends and stock repurchase programs. The latter takes stock shares out of circulation, making those remaining in the hands of shareholders more valuable.

The CEO also noted the firm’s stock has been on a steady rise, with its price rising more than 57 percent in 2013. Over the past three years, it has climbed nearly 124 percent.

“That beat every indice, every index you can find — the Dow, the S&P, whatever you’re looking for — that beat,” he said.

Shares of TSYS rose 4 cents, closing at $31.81, in trading Thursday on the New York Stock Exchange. That’s not far off the stock’s 52-week high of $33.44 per share. The 52-week low is $22.58.

Before the meeting concluded, Tomlinson used a pie chart to point out the company’s strategy of diversifying its business is also paying off. It came out of a 2009 management retreat at Callaway Gardens.

At that time, North American card processing was about 90 percent of revenue, he said. In 2014, that number is expected to be 44 percent, while the merchant segment and NetSpend each will be at 21 percent, and international should be 14 percent.

“That’s a good looking pie chart,” the CEO said. “It keeps us safe from one massive segment having a serious problem, and carries each other, hopefully, through any difficult times.”

Wrapping up the shareholder gathering, Tomlinson said TSYS has three important goals that it will focus on through the year 2018 as it works to reach a billion card accounts under its management.

“One is to continue to deliver industry-leading results to shareholders,” he said. “Two is to delight customers. Three is to engage team members and have some fun in the process.”

On April 22, TSYS reported its first-quarter financial performance. The company posted a profit of $49.3 million, or 26 cents per share, down from $57 million, or 31 cents per share in the January-March period of 2013. However, revenue was up from $532.8 million a year ago to $592.8 million in the quarter this year.

Troy Woods, TSYS president and chief operating officer, said extra expenses tied primarily to increased incentive pay and salary adjustments caused the net income, or profit, figure to decline. He said expenses historically rise in the first quarter each year.

TSYS employs roughly 9,800 people worldwide, with about 4,200 of those earning a paycheck in Columbus.

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