TSYS reports $69.7 million quarterly profit on revenue of nearly $1.2 billion

Absorbing its $2.35 billion acquisition of TransFirst, credit-card and payment processor TSYS on Tuesday reported a second-quarter profit of $69.7 million on total revenues of nearly $1.2 billion.

That compares to a profit, or net income, of $82.8 million — a nearly 16 percent decline — during the same April-June period of 2015. However, revenues a year ago were $692.6 million, jumping this quarter more than 66 percent with the addition of TransFirst’s merchant-based business.

TSYS, headquartered in downtown Columbus, saw expenses rise sharply connected to loan amortization of the mega-deal that was completed at the end of the first quarter of this year. Related merger and acquisition costs also pinched the firm’s bottom line.

“This has been another excellent quarter for TSYS. Our team members across our global footprint delivered an outstanding performance for the quarter and for the first half of the year,” Troy Woods, TSYS chairman and chief executive officer, said in conference call with market analysts who follow his firm after the earnings information was released.

He said all four business lines operated by TSYS experienced solid net revenue. Those are North America, International, Merchant and NetSpend.

“We are also pleased to report that the integration of our TransFirst acquisition this quarter is going very well,” Woods said. “TransFirst, along with our legacy merchant business, gives us a commanding leadership position in the merchant acquiring market on which we intend to capitalize.”

TSYS Chief Financial Officer Paul Todd reiterated on the conference call that the company is committed to paying down debt from the TransFirst purchase as quickly as possible. The current goal is to eliminate $800 million within the first two years of the acquisition.

“We deployed $125 million during the quarter for accelerated repayments on our bank credit facility as part of our deleveraging plan and we remain committed to this plan and our investment grade rating,” Todd said.

The firm’s second-quarter profit translates to earnings per share of 38 cents, which was down nearly 16 percent from 45 cents per share in the same three-month period a year ago.

The company reported that its “cost of services” shot up 82 percent from nearly $460 million a year ago to $837.6 million in the current quarter, cutting into revenues. “Selling, general and administrative expenses” were up 74.5 percent from $102 million to $178.1 million.

TSYS is a global processor with about 11,800 employees. That includes the 1,000 staffers added with TransFirst and the 4,950 people working in Columbus at its corporate headquarters and other facilities on the city’s north side.

Breaking down revenue of the specific business lines at TSYS in the quarter, North America increased 3.5 percent to $297.1 million from the quarter a year ago. International dipped 2.5 percent to $81.7 million and NetSpend jumped nearly 15 percent to $162.6 million. Merchant surged from $117.8 million to $261.4 million, with TransFirst folding its revenue into that of TSYS’s existing merchant processing business.

Another measurement by the company, accounts on file, came in flat overall, with the company having 742 million accounts under its oversight, down slightly from 751 million at the end of June a year ago. However, consumer accounts, its bread and butter processing, were up 6.2 percent to just over 425 million.

Through the first six months of this year, TSYS recorded a profit of $160.3 million, compared to $160.5 million in the same January-June period of 2015. Earnings per share were 87 cents both periods.

That profit came on six-month total revenues of $1.89 billion, a nearly 40 percent increase from $1.35 billion a year ago.

TSYS shares rose 48 cents, or 0.8 percent, to close at $56.43 apiece in trading Tuesday on the New York Stock Exchange. That’s near the stock’s 52-week high of $56.69 per share. Its low for the past 12 months is $37.47 per share.

This story was originally published July 26, 2016 at 4:32 PM with the headline "TSYS reports $69.7 million quarterly profit on revenue of nearly $1.2 billion."