Electronic payment and money transfer service provider Global Payments Inc. (GPN), Thursday reported a marginal improvement in its first quarter profit, helped mainly by strong performance in its North American and International businesses. Earnings per share were flat due to unfavorable foreign currency impacts, but came in above Street estimates. Looking ahead, the company said it remained confident with the previously provided earnings forecast for fiscal year 2010.
For the first quarter, net income attributable to Atlanta, Georgia-based Global Payments improved marginally to $57.83 million from $57.53 million in the same quarter a year ago. Earnings per share, however, were flat at $0.71, compared to the year-earlier quarter, negatively impacted by $0.07 per share in foreign currency exchange.
On average, twenty-three analysts polled by Thomson Reuters expected earnings of $0.65 per share for the quarter. Analysts' estimate typically excludes one-time items.
Revenue for the first quarter grew 9% to $441.31 million from $405.76 million in the prior-year quarter, exceeding Street estimates of $424.93 million.
Segment wise, revenue from North America Merchant Services, comprising United States and Canada, improved to $303.99 million from $286.64 million, while that from International Merchant Services rose to $105.94 million from $82.32 million in the year-earlier quarter.
On a constant currency basis, revenue and earnings per share growth would have been 14% and 10%, respectively.
Sequentially, Global Payments, in its fourth quarter, reported a net income of $37.56 million or $0.46 per share, compared to $40.81 million or $0.50 per share in the year-ago quarter. Revenues, however, grew 17% to $402.0 million from $343.8 million in the prior-year quarter.
For the quarter under review, revenues from United States were $222.77 million, up from $200.70 million in the same quarter last year. Revenues from Europe amounted to $80.47 million, an increase from $61.60 million in the year-earlier quarter.
Operating income was $92.65 million, compared to $93.10 million in the comparable quarter last year. Operating expenses rose to $348.66 million from $312.66 million in the year-ago quarter.
On June 12, 2009, Global Payments acquired the remaining 49% stake in HSBC Merchant Services in the United Kingdom from HSBC Bank plc for $307.7 million in cash. Under the transaction, Global Payments paid HSBC $439 million in cash to acquire the 51% ownership in the joint venture.
Looking ahead to fiscal 2010, Global Payments said it continues to see earnings in the range of $2.43 to $2.54 per share, reflecting a 9% to 14% growth over fiscal 2009 normalized earnings and annual revenue growth in the range of $1.69 billion to $1.74 billion or 6% to 9% growth over fiscal 2009. Analysts' currently expect annual earnings of $2.50 per share on revenues of $1.72 billion.
On June 15, 2009, brokerage William Blair, upgraded Global Payments from 'Mkt perform' to 'Outperform,' with a mean target of $47.56.
GPN closed Thursday's regular trading at $46.16, down $0.54 or 1.16%, on a volume of 0.63 million shares. In after-hours, the stock further dropped $0.56 or 1.20%, to trade at $46.14. In the last 52-week period, the stock trended in the range of $27.48 to $49.39, with a three-month average volume of 0.48 million shares.
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