Though credit-card and payment processor TSYS remains largely mum about details, the company is now carrying out a restructuring — dubbed “TSYS 20/20” — that is rippling throughout the global company.
The publicly traded high-tech firm, headquartered in Columbus, declined Wednesday to say much beyond what it has previously disclosed at its annual meeting in April and in conference calls over the summer with Wall Street analysts who follow its financial results.
The restructuring includes an undetermined number of job cuts that are expected to be completed in the third quarter, which ends Friday. TSYS also has said it will charge off expenses amounting to between $5 million and $7 million in the July-September quarter related to paying severance to those who lose their jobs.
Those taking severance packages from companies that are laying them off typically are required to sign confidentiality agreements that include not publicly disparaging their former employer.
Asked for comment Wednesday, company spokesman Cyle Mims would only release a snippet from TSYS Chairman and Chief Executive Officer Troy Woods in a July 26 call with analysts.
“The TSYS 20/20 initiative is an enterprise-wide initiative to bring clarity and focus to our future business model,” Woods said. “One of the tenets of TSYS 20/20 was to provide us with an assessment of the ideal operating structure to maximize efficiencies and scale of our operations. As a result of this process, we do expect to have some one-time related expenses in the third quarter primarily related to severance. We are convinced that these moves will ensure we are operating at our full potential and will allow us to strengthen our already very successful business model.”
TSYS employs about 11,500 around the world. Of those, roughly 4,950 people earn a paycheck at its corporate headquarters in downtown Columbus and at other facilities in the city, including a card and statement production operation off Moon Road.
The company also inherited about 1,000 staffers through its $2.35 billion purchase of merchant-processing specialty firm TransFirst earlier this year. Based in Hauppauge, N.Y., TransFirst — which now falls under the company’s TSYS Merchant Solutions operation — also has facilities in Broomfield, Colo., Aurora, Colo., Franklin, Tenn., and Cypress, Calif.
TSYS Merchant Solutions is based in Omaha, Neb., with it having been purchased by TSYS from First National Bank of Omaha in two pieces starting in 2010. The Columbus company entered a joint venture with First National Merchant Solutions that year, paying $150.5 million for 51-percent controlling interest in the firm. First National had about 475 employees at that time. Less than a year later, TSYS bought out the remaining 49-percent of the merchant specialty firm, forking over $169.6 million more.
With TransFirst entering the picture, analysts have noted the “cost synergies” that could be realized with the New York outfit blending with the Omaha merchant operation. Earlier this year, Deutsche Bank research analyst Bryan Keane pegged cost savings of as much as $15 million in 2017 and possibly twice that figure in 2018. Costs generally refer to people, property and equipment.
TSYS in early August acknowledged job cuts were on the way, but would not say where or how many. The company said it had already been communicating with workers about the pending restructuring and why it is needed.
“What we’ve told employees is it will begin in August. We hope to have it wrapped up in September,” Robie Cline, senior director of TSYS Global Brand and Corporate Communications, said at the time. “It’s definitely not just in Columbus … it is global.”
The company has yet to send a notice to the Georgia Department of Economic Development’s Workforce Division to let the state know of any layoffs occurring at the firm, Shameeka Johnson, a department communications specialist, confirmed Wednesday. U.S. labor law, under the Worker Adjustment and Retraining Notification (WARN) Act, requires most companies with at least 100 employees to give staffers at least a 60-day notice in the case of mass layoffs and plant closures.
TSYS is expected to release its third-quarter earnings report in mid- to late October. In the April-June quarter, the company reported a profit of nearly $70 million on revenues of nearly $1.2 billion. That comes with the firm working to pay off debt related to the TransFirst purchase as aggressively as possible.
The company, which was spun out of Columbus-based Synovus Financial Corp., has not been quick to lay off workers in the past, although it is not unprecedented. Not long before its 2010 purchase of the Omaha merchant business — and coming out of the Great Recession — it cut about 400 jobs as part of a company-wide downsizing. That amounted to about 5 percent of its then-global staff of about 7,600 people. The firm at that time was projecting annual earnings to tumble 14 to 15 percent after the loss of a key processing client.