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Total Systems (TSS) Beats on Q4 Earnings, Issues '18 View
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Total System Services, Inc’s fourth-quarter 2017 earnings per share of 82 cents surpassed the Zacks Consensus Estimate by 5.1% and grew 15.5% year over year.
Including $135.9 million of tax benefit from the Tax Cuts and Jobs Act, net income per share came in at $1.31, up 227.4% from the prior year quarter.
Net revenues of $870 million grew 10.8% year over year.
Better-than-expected results were driven by growth strong contribution from all its segments.
The company reported an adjusted EBITDA of $293.3 million, up 10% from the year-ago quarter.
Total System Services, Inc. Price, Consensus and EPS Surprise
In the fourth quarter, net revenues for this segment increased 8.8% year over year to $413.9 million. Total transaction in this segment was 5.9 billion, up 12.2% year over year.
Operating income of $145.6 million was up 9.9% year over year. Operating margin of 35.2% increased 40 basis points (bps) from the year-ago quarter.
Merchant Solutions
Net revenues increased 11.3% to $282.7 million. Dollar sales volume for this segment grew 13% year over year to $32.4 billion.
Operating income advanced 7.2% to $94.9 million, whereas operating margin declined 130 basis points to 33.6%, from the prior-year quarter.
Net Spend
Net revenues increased 16.1% year over year to $186.4 million in the reported quarter. Gross dollar volume for this segment was $7.6 billion, up 15.2% from the prior-year quarter.
Operating income grew 11.5% to $38.8 million, whereas operating margin decreased 90 basis points to 20.8%, from the year-ago quarter.
Financial Update
Total assets decreased 1.2% year over year to $6.3 billion as of Dec 31, 2017.
Total shareholders’ equity climbed to $2.34 billion on Dec 31, 2017, from $2.1 billion, at the end of 2016.
Long-term debt was $3.93 billion as of Dec 31, 2017, down 7.3% from the prior-year quarter.
Free cash flow totaled $660.5 million for the year ended Dec 31, 2017, up 14.8% from the year-ago quarter..
Share Repurchase Update
During the quarter, the company repurchased 3.45 million shares worth $255 million.
2018 Guidance
The company now expects total revenues on a GAAP basis in the range of $3.85-$3.95 billion. On a non-GAAP basis, net revenues are anticipated to be in the range of $3.65-$3.75 billion, reflecting year-over-year growth of 7-10%.
GAAP EPS will likely be in the $2.85-$2.95 band, down 10-7% from the prior-year quarter. Adjusted EPS, attributable to the company’s common shareholders, is expected to be between $4.10-$4.20, reflecting an increase of about 22-25%.
Among the other firms in the sector that are expected to post an earnings beat this quarter, given their favorable Zacks Rank and a positive Earnings ESP are:
Visa Inc. (V - Free Report) carries a Zacks Rank #3 (Hold) and an Earnings ESP of +0.48%. The company is expected to report fiscal Q1 results on Feb 1, 2018.
Green Dot Corp. (GDOT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +1.35%. The company expects to report fourth-quarter results on Feb 28, 2018.
Fiserv Inc. also carries a Zacks Rank #3 and has an Earnings ESP of +0.36%. The company looks forward to report fourth-quarter results on Feb 7, 2018.
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Total Systems (TSS) Beats on Q4 Earnings, Issues '18 View
Total System Services, Inc’s fourth-quarter 2017 earnings per share of 82 cents surpassed the Zacks Consensus Estimate by 5.1% and grew 15.5% year over year.
Including $135.9 million of tax benefit from the Tax Cuts and Jobs Act, net income per share came in at $1.31, up 227.4% from the prior year quarter.
Net revenues of $870 million grew 10.8% year over year.
Better-than-expected results were driven by growth strong contribution from all its segments.
The company reported an adjusted EBITDA of $293.3 million, up 10% from the year-ago quarter.
Total System Services, Inc. Price, Consensus and EPS Surprise
Total System Services, Inc. Price, Consensus and EPS Surprise | Total System Services, Inc. Quote
Segment Results
Issuer Solutions
In the fourth quarter, net revenues for this segment increased 8.8% year over year to $413.9 million. Total transaction in this segment was 5.9 billion, up 12.2% year over year.
Operating income of $145.6 million was up 9.9% year over year. Operating margin of 35.2% increased 40 basis points (bps) from the year-ago quarter.
Merchant Solutions
Net revenues increased 11.3% to $282.7 million. Dollar sales volume for this segment grew 13% year over year to $32.4 billion.
Operating income advanced 7.2% to $94.9 million, whereas operating margin declined 130 basis points to 33.6%, from the prior-year quarter.
Net Spend
Net revenues increased 16.1% year over year to $186.4 million in the reported quarter. Gross dollar volume for this segment was $7.6 billion, up 15.2% from the prior-year quarter.
Operating income grew 11.5% to $38.8 million, whereas operating margin decreased 90 basis points to 20.8%, from the year-ago quarter.
Financial Update
Total assets decreased 1.2% year over year to $6.3 billion as of Dec 31, 2017.
Total shareholders’ equity climbed to $2.34 billion on Dec 31, 2017, from $2.1 billion, at the end of 2016.
Long-term debt was $3.93 billion as of Dec 31, 2017, down 7.3% from the prior-year quarter.
Free cash flow totaled $660.5 million for the year ended Dec 31, 2017, up 14.8% from the year-ago quarter..
Share Repurchase Update
During the quarter, the company repurchased 3.45 million shares worth $255 million.
2018 Guidance
The company now expects total revenues on a GAAP basis in the range of $3.85-$3.95 billion. On a non-GAAP basis, net revenues are anticipated to be in the range of $3.65-$3.75 billion, reflecting year-over-year growth of 7-10%.
GAAP EPS will likely be in the $2.85-$2.95 band, down 10-7% from the prior-year quarter. Adjusted EPS, attributable to the company’s common shareholders, is expected to be between $4.10-$4.20, reflecting an increase of about 22-25%.
Zacks Rank
Total System Services carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Companies in the Finance Sector
Among the other firms in the sector that are expected to post an earnings beat this quarter, given their favorable Zacks Rank and a positive Earnings ESP are:
Visa Inc. (V - Free Report) carries a Zacks Rank #3 (Hold) and an Earnings ESP of +0.48%. The company is expected to report fiscal Q1 results on Feb 1, 2018.
Green Dot Corp. (GDOT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +1.35%. The company expects to report fourth-quarter results on Feb 28, 2018.
Fiserv Inc. also carries a Zacks Rank #3 and has an Earnings ESP of +0.36%. The company looks forward to report fourth-quarter results on Feb 7, 2018.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>