TSYS racks up $105.9 million profit on $1.2 billion in revenues

It was a double-digit first quarter for credit-card and payment processor TSYS, with the high-tech company on Tuesday reporting a profit of $105.9 million, which is up 16.8 percent from the same quarter a year ago.

That profit, or net income, came on total revenues of $1.2 billion, which is just over 60 percent higher than the $739.4 million the Columbus-based firm saw a year ago.

The stark revenue increase reflects overall profit growth, but also the impact of merchant specialty firm TransFirst, which came aboard the TSYS revenue stream on April 1 a year ago following its $2.35 billion buyout by TSYS. It was the largest purchase in the history of the global card processor. Those year-over-year quarterly comparisons are expected to even out more in the April-June quarter now under way, with TransFirst moving into its second year under TSYS.

“We are extremely pleased to report an outstanding beginning to 2017 with across-the-board high double-digit growth in our consolidated revenues, income and earnings per share in the first quarter,” TSYS Chairman and Chief Executive Officer Troy Woods said in a statement issued with Tuesday’s earnings report. “We continue to execute on our strategy of diversification and growth of our businesses while maintaining our leadership in technology, product innovation and service to our customers.”

The double-digit aura carried over in other areas of the TSYS report. Earnings per diluted share jumped 16.1 percent from 49 cents a year ago to 57 cents per share in the latest quarter.

Both net revenue and adjusted earnings — which subtract one-time financial items — increased 24 percent and 26.1 percent, respectively, over last year, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were up 24.4 percent.

TSYS, which owns Austin, Texas-based prepaid card marketing and distribution company NetSpend, also raised its total revenue and net revenue projection for this year by $20 million and earnings per share by 11 cents. That’s because the Consumer Financial Protection Bureau has delayed implementation of new rules that will impact NetSpend until April 1, 2018. Woods said his company will continue to study the impact of the delay on NetSpend’s business.

The credit-card processor is now projecting total revenues for 2017 to be in a range between $4.77 billion and $4.87 billion, which would be an increase between 14 percent and 17 percent. Diluted earnings per share are projected to be in a range between $2.25 to $2.32 apiece, which would be 30 percent to 34 percent higher.

Other highlights from the quarter include the reduction of debt by TSYS of $100 million in the quarter, the number it has pledged to reduce each three-month period over two years. The company also announced that Philip McHugh will join it Monday as a TSYS senior executive vice president and president of its merchant segment. The firm also was named among the “World’s Most Ethical” companies by Ethisphere Institute for 2017, the fifth time in the last six years it has made the list.

On Thursday, TSYS will gather for its annual meeting of shareholders inside its downtown Columbus campus auditorium. It will be the final meeting with Jim Blanchard and Jimmy Yancey as directors on the TSYS board, with the two not up for re-election by shareholders. They have served on the board since TSYS became a publicly traded company in 1983, with it still a subsidiary of Synovus Financial Corp. at the time. It was spun off from Synovus as a standalone company in 2007.

Blanchard is a retired chairman and CEO of Synovus, while Yancey is a retired Synovus chairman, president and chief operating officer.

Shares of TSYS stock climbed 50 cents, or just under 1 percent, to $54.31 apiece in trading Tuesday on the New York Stock Exchange. The report was released after the market’s close. The 52-week trading range for TSYS is $46.22 to $56.54 per share.

This story was originally published April 25, 2017 at 5:48 PM with the headline "TSYS racks up $105.9 million profit on $1.2 billion in revenues."