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Global Payments Q3 Profit Weak, Adj. EPS Meets View; Backs FY22 Forecast

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Payments technology company Global Payments Inc. reported Monday weak profit in its third quarter, despite higher revenues. Earnings per share, however, grew on lower share count, and adjusted earnings met market estimates. Looking ahead for fiscal 2022, the company continues to expect adjusted earnings above the Wall Street view, and lifted margin forecast.

Further, Global Payments' Board of Directors approved a dividend of $0.25 per share payable December 30, to shareholders of record as of December 16. The Board of Directors has also reauthorized up to $1.5 billion of share repurchase capacity.

In pre-market activity on the NYSE, Global Payments shares were losing around 4.2 percent to trade at $120.

Josh Whipple, Senior Executive Vice President and Chief Financial Officer, said, "We are pleased with our strong financial performance in the third quarter, which was consistent with our expectations despite ongoing macro headwinds... Our 2022 outlook presumes continuing recovery from the pandemic worldwide and a stable global macroeconomic environment throughout the remainder of this calendar year."

For fiscal 2022, Global Payments continues to expect constant currency adjusted net revenue growth of 10 percent to 11 percent over 2021, excluding dispositions.

Further, adjusted earnings per share on a constant currency basis are still expected to be in a range of $9.53 to $9.75, reflecting growth of 17 percent to 20 percent over 2021.

On average, 30 analysts polled by Thomson Reuters expected earnings of $9.39 per share for the year. Analysts' estimates typically exclude special items.

The company also projects adjusted operating margin expansion of up to 170 basis points, an increase from prior outlook of up to 150 basis points.

The company further said it continues to expect the acquisition of EVO and the disposition of Netspend's consumer business to close in the first quarter of 2023, subject to receipt of regulatory approvals and satisfaction of customary closing conditions.

In the third quarter, net income attributable to the company declined 2.1 percent to $290.45 million from last year's $296.74 million. Earnings per share, however, grew 4 percent to $1.05 from $1.01 a year ago.

Adjusted net income attributable was $683.63 million, compared to $637.33 million last year. Adjusted earnings per share were $2.48, compared to $2.18 in the third quarter of 2021.

Analysts expected earnings of $2.48 per share for the quarter.

In the quarter, Operating income dropped 3.4 percent to $386.43 million. Adjusted operating margin has been expanded 240 basis points to 45.2 percent.

Revenues grew 3.8 percent to $2.29 billion from last year's $2.20 billion.

Adjusted net revenues increased 3 percent to $2.06 billion. Excluding the impact of exiting Russia and the Netspend consumer assets, adjusted net revenue increased 9 percent on a constant currency basis.

Analysts estimated revenues of $2.03 billion for the quarter.

Revenus from Merchant Solutions grew 6.7 percent from last year to $1.60 billion, and the growth was 3.8 percent in Issuer Solutions, while revenues from Consumer Solutions fell 19.7 percent.

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