TSYS posts fourth-quarter profit of $60.8 million, sees strong 2013

Entering its 30th year as a publicly traded company, TSYS showed no signs of slowing in its fourth quarter and full-year 2012 earnings report released today.

The global credit-card processor, headquartered in downtown Columbus, posted a profit of $60.8 million, or 33 cents per share, on total revenue of $479 million. Those were up 3.7 percent and 1.5 percent, respectively.

For all of 2012, the company’s profit came in at $244.2 million, or $1.30 per share, on total revenue of $1.87 million. That equates to 13.1 percent and 3.4 percent gains, respectively.

“We ended 2012 with a very solid fourth quarter in every respect,” TSYS Chairman and Chief Executive Officer Phil Tomlinson said on a conference call with stock market analysts after the report’s release.

“Although 2012 ended with a lot of uncertainty with the government’s handling of the potential fiscal cliff, holiday spending certainly improved, at least with what we saw of it,” he said. “TSYS card-issuing clients were ahead of 2011 by 15 percent, if you take North America and International together.”

That momentum is poised to carry over into this year, he said, with the firm projecting earnings per share will grow between 10 and 12 percent over last year’s numbers.

“This is the second year in a row that we’ve guided to double-digit EPS growth and strong top-line revenue growth coming from improved economic confidence and growth in the card and merchant segments,” the CEO said.

He pointed out that same-client transactions should continue to climb this year, while the conversion of about 30 million credit-card accounts are scheduled for conversion to the TSYS in the second half of 2013.

“We’ll continue to build toward the conversion of the Bank of America consumer portfolio in 2014,” Tomlinson said. “We will also plan on implementing new products and services that came with our 2012 acquisitions and our merchant business, and continue to build our international footprint.”

While TSYS hasn’t broken out how many card accounts will come from the Bank of America processing contract, Tomlinson on Tuesday said about 200 million accounts overall are currently in the firm’s conversion pipeline.

The company makes money by authorizing and processing card transactions at retailers and other outlets. It’s back-office work includes handling things such as mailouts, billing statements and other customer service activities.

In the fourth quarter, TSYS experienced gains in most categories, including same-client transactions, point-of-sale transactions and direct-merchant sales volume. For instance, transactions in North America alone rose nearly 13 percent.

TSYS Chief Financial Officer Jim Lipham noted the company bought back 3.2 million shares of its stock for $75 million in 2012.

“We used $190 million to invest in acquisitions, and we returned another $94 million in dividends to our shareholders,” he said on the conference call. “Shareholder return for 2012 was 11.55 percent. So a very good year, we invested a lot of capital.”

Lipham did point out the company’s operating income for the October-December quarter was flat at just under $90 million. He said that number was “influenced heavily” by price concessions, which occurs when its clients negotiate lower prices for TSYS services and products.

Tomlinson mentioned during the conference call his company’s slogan entering its 30th year of trading on the New York Stock Exchange. The tag line is, “Looking back. Moving forward.”

“We believe we’re one of the more tenured companies in the payment industry,” he said. “I’m proud to say we lead the market with a passionate and experienced leadership team, and about 8,700 team members who consistently deliver on great quality and developing long-term relationships and continuous quality improvement.”

Shares of TSYS stock dipped 6 cents, or 0.25 percent, to $23.56 in trading Tuesday. The stock’s 52-week trading range is $20.49 to $25.06 per share.