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Global Payments (GPN) Beats Q4 Earnings on LATAM Operations
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Global Payments Inc. (GPN - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $2.65, which beat the Zacks Consensus Estimate of $2.63. The bottom line rose 10% year over year.
Adjusted net revenues improved 8% year over year to $2.19 billion. The top line surpassed the consensus mark of $2.18 billion.
The quarterly results were aided by growth in transaction volumes that led to solid contributions from the Merchant Solutions and Issuer Solutions segments. However, the upside was partly offset by an increase in overall expenses.
Global Payments Inc. Price, Consensus and EPS Surprise
Adjusted operating income of $978.5 million advanced 8.9% year over year in the quarter under review but fell short of our estimate of $984.5 million. Adjusted operating margin improved 30 basis points (bps) year over year to 44.8%.
Total operating expenses of $1.9 billion increased 4.9% year over year in the fourth quarter. The increase was due to higher selling, general and administrative expenses, and net gain on business dispositions. The metric came higher than our estimate of $1.8 billion. Interest and other expenses escalated 39.3% year over year to $169.7 million and outpaced our estimate of $161.6 million.
Segmental Performances
Merchant Solutions: The segment recorded adjusted revenues of $1.7 billion in the fourth quarter, which rose 18.5% year over year. The figure almost touched the Zacks Consensus Estimate. The year-over-year growth resulted from a 20% increase in new integrated partners, point-of-sale growth of 20% and double-digit organic growth across the LATAM region.
The unit’s adjusted operating income advanced 17% year over year to $797.3 million but missed the consensus mark of $817 million and our estimate of $822.6 million.
Issuer Solutions: Adjusted revenues were $530.6 million in the segment, which grew 5.8% year over year in the quarter under review and beat the Zacks Consensus Estimate of $529 million as well as our estimate of $529.6 million. The unit benefited on the back of core issuer growth, a rise in traditional accounts on file and an expanding MineralTree mid-market channel.
Adjusted operating income improved 3.8% year over year to $251 million, higher than the consensus mark of $249 million and our estimate of $242.7 million.
Financial Position (as of Dec 31, 2023)
Global Payments exited the fourth quarter with cash and cash equivalents of $2.1 billion, which grew 4.6% from the 2022-end level.
Total assets of $50.6 billion climbed 12.9% from the figure at 2022 end.
Long-term debt amounted to $15.7 billion, up 27.7% from the figure as of Dec 31, 2022. The current portion of long-term debt totaled $620.6 million at the fourth-quarter end.
Total equity of $23.3 billion rose 3.3% from the 2022-end level.
GPN generated operating cash flows of $2.2 billion in 2023, which inched up 0.2% from the 2022 figure.
Capital Deployment Update
The company bought back shares worth $418.3 million in 2023. Management sanctioned an increase in its share repurchase authorization to $2 billion.
It declared a quarterly dividend of 25 cents per share, which will be paid out on Mar 29, 2024, to its shareholders of record as of Mar 15.
2024 Outlook Unveiled
Adjusted net revenues are anticipated to lie within $9.17-$9.30 billion, which indicates an improvement of 6-7% from the 2023 figure of $8.7 billion.
Adjusted net revenue growth in the Merchant Solutions segment is estimated to witness year-over-year growth of more than 9% in 2024 from the 2023 figure of $6.5 billion. The Issuer Solutions segment’s adjusted net revenues are forecasted to grow between 5% and 6% from the 2023 figure of $2 billion.
Adjusted EPS is anticipated to lie between $11.54 and $11.70 in 2024, which suggests 11-12% growth from the 2023 figure of $10.42. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.
The annual adjusted operating margin is expected to increase up to 50 bps in 2024. The metric in both the segments is projected to witness an increase of up to 30 bps and 50 bps, respectively.
Of the Business Services sector players that have already released fourth-quarter results so far, the bottom-line results of Waste Management, Inc. (WM - Free Report) , Equifax Inc. (EFX - Free Report) and The Western Union Company (WU - Free Report) beat the respective Zacks Consensus Estimate.
Waste Management reported fourth-quarter 2023 adjusted EPS of $1.74, which surpassed the Zacks Consensus Estimate by 13.7% and improved 33.9% year over year. Total revenues of $5.2 billion beat the consensus estimate by a slight margin and increased 5.7% year over year.
The Collection segment recorded revenues of $4.12 billion, up 21.8% from the year-ago quarter’s figure. The Landfill segment’s top line grew 3% year over year to $1.19 billion. Total revenues in the Transfer segment were up 6.1% to $574 million. Adjusted operating EBITDA of $1.56 billion increased 14.6% from the year-ago quarter’s level. The adjusted operating EBITDA margin of WM increased 240 bps to 29.9% from the year-ago quarter.
Equifax’s fourth-quarter 2023 adjusted earnings were $1.81 per share, beating the Zacks Consensus Estimate by 4% and increasing 19.1% from the year-ago figure. Total revenues of $1.33 billion beat the consensus estimate by 1.1% and increased 10.7% from the year-ago figure on a reported basis and 14% on a local currency basis.
Revenues in the Workforce Solutions segment totaled $559.5 million, up 10% from the year-ago quarter’s figure. Revenues in the USIS segment were $427.7 million, up 5% from the year-ago quarter’s level. Adjusted EBITDA of EFX in the fourth quarter of 2023 totaled $446.6 million, reflecting a 20% increase from the year-ago quarter’s level. Adjusted EBITDA margin was 33.7%, which increased 260 bps from the year-ago reported figure.
Western Union reported fourth-quarter 2023 adjusted EPS of 37 cents, which beat the Zacks Consensus Estimate by 2.8%. The bottom line rose 15.6% year over year. Total revenues declined 3.7% year over year on a reported basis or grew 3% on a constant-currency basis to $1.05 billion.
The top line beat the Zacks Consensus Estimate by 4.8%. Adjusted operating margin of 16.1% improved 30 bps year over year. WU’s CMT or Consumer Money Transfer segment reported revenues of $975.5 million, which declined 1% year over year on a reported and constant-currency basis in the quarter under review. Transactions within the CMT segment increased 5.2% year over year. The Consumer Services segment reported revenues of $76.8 million, which declined 1% year over year on a reported basis.
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Global Payments (GPN) Beats Q4 Earnings on LATAM Operations
Global Payments Inc. (GPN - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $2.65, which beat the Zacks Consensus Estimate of $2.63. The bottom line rose 10% year over year.
Adjusted net revenues improved 8% year over year to $2.19 billion. The top line surpassed the consensus mark of $2.18 billion.
The quarterly results were aided by growth in transaction volumes that led to solid contributions from the Merchant Solutions and Issuer Solutions segments. However, the upside was partly offset by an increase in overall expenses.
Global Payments Inc. Price, Consensus and EPS Surprise
Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. Quote
Operating Performance
Adjusted operating income of $978.5 million advanced 8.9% year over year in the quarter under review but fell short of our estimate of $984.5 million. Adjusted operating margin improved 30 basis points (bps) year over year to 44.8%.
Total operating expenses of $1.9 billion increased 4.9% year over year in the fourth quarter. The increase was due to higher selling, general and administrative expenses, and net gain on business dispositions. The metric came higher than our estimate of $1.8 billion. Interest and other expenses escalated 39.3% year over year to $169.7 million and outpaced our estimate of $161.6 million.
Segmental Performances
Merchant Solutions: The segment recorded adjusted revenues of $1.7 billion in the fourth quarter, which rose 18.5% year over year. The figure almost touched the Zacks Consensus Estimate. The year-over-year growth resulted from a 20% increase in new integrated partners, point-of-sale growth of 20% and double-digit organic growth across the LATAM region.
The unit’s adjusted operating income advanced 17% year over year to $797.3 million but missed the consensus mark of $817 million and our estimate of $822.6 million.
Issuer Solutions: Adjusted revenues were $530.6 million in the segment, which grew 5.8% year over year in the quarter under review and beat the Zacks Consensus Estimate of $529 million as well as our estimate of $529.6 million. The unit benefited on the back of core issuer growth, a rise in traditional accounts on file and an expanding MineralTree mid-market channel.
Adjusted operating income improved 3.8% year over year to $251 million, higher than the consensus mark of $249 million and our estimate of $242.7 million.
Financial Position (as of Dec 31, 2023)
Global Payments exited the fourth quarter with cash and cash equivalents of $2.1 billion, which grew 4.6% from the 2022-end level.
Total assets of $50.6 billion climbed 12.9% from the figure at 2022 end.
Long-term debt amounted to $15.7 billion, up 27.7% from the figure as of Dec 31, 2022. The current portion of long-term debt totaled $620.6 million at the fourth-quarter end.
Total equity of $23.3 billion rose 3.3% from the 2022-end level.
GPN generated operating cash flows of $2.2 billion in 2023, which inched up 0.2% from the 2022 figure.
Capital Deployment Update
The company bought back shares worth $418.3 million in 2023. Management sanctioned an increase in its share repurchase authorization to $2 billion.
It declared a quarterly dividend of 25 cents per share, which will be paid out on Mar 29, 2024, to its shareholders of record as of Mar 15.
2024 Outlook Unveiled
Adjusted net revenues are anticipated to lie within $9.17-$9.30 billion, which indicates an improvement of 6-7% from the 2023 figure of $8.7 billion.
Adjusted net revenue growth in the Merchant Solutions segment is estimated to witness year-over-year growth of more than 9% in 2024 from the 2023 figure of $6.5 billion. The Issuer Solutions segment’s adjusted net revenues are forecasted to grow between 5% and 6% from the 2023 figure of $2 billion.
Adjusted EPS is anticipated to lie between $11.54 and $11.70 in 2024, which suggests 11-12% growth from the 2023 figure of $10.42. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.
The annual adjusted operating margin is expected to increase up to 50 bps in 2024. The metric in both the segments is projected to witness an increase of up to 30 bps and 50 bps, respectively.
Zacks Rank
Global Payments currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Business Services Sector Releases
Of the Business Services sector players that have already released fourth-quarter results so far, the bottom-line results of Waste Management, Inc. (WM - Free Report) , Equifax Inc. (EFX - Free Report) and The Western Union Company (WU - Free Report) beat the respective Zacks Consensus Estimate.
Waste Management reported fourth-quarter 2023 adjusted EPS of $1.74, which surpassed the Zacks Consensus Estimate by 13.7% and improved 33.9% year over year. Total revenues of $5.2 billion beat the consensus estimate by a slight margin and increased 5.7% year over year.
The Collection segment recorded revenues of $4.12 billion, up 21.8% from the year-ago quarter’s figure. The Landfill segment’s top line grew 3% year over year to $1.19 billion. Total revenues in the Transfer segment were up 6.1% to $574 million. Adjusted operating EBITDA of $1.56 billion increased 14.6% from the year-ago quarter’s level. The adjusted operating EBITDA margin of WM increased 240 bps to 29.9% from the year-ago quarter.
Equifax’s fourth-quarter 2023 adjusted earnings were $1.81 per share, beating the Zacks Consensus Estimate by 4% and increasing 19.1% from the year-ago figure. Total revenues of $1.33 billion beat the consensus estimate by 1.1% and increased 10.7% from the year-ago figure on a reported basis and 14% on a local currency basis.
Revenues in the Workforce Solutions segment totaled $559.5 million, up 10% from the year-ago quarter’s figure. Revenues in the USIS segment were $427.7 million, up 5% from the year-ago quarter’s level. Adjusted EBITDA of EFX in the fourth quarter of 2023 totaled $446.6 million, reflecting a 20% increase from the year-ago quarter’s level. Adjusted EBITDA margin was 33.7%, which increased 260 bps from the year-ago reported figure.
Western Union reported fourth-quarter 2023 adjusted EPS of 37 cents, which beat the Zacks Consensus Estimate by 2.8%. The bottom line rose 15.6% year over year. Total revenues declined 3.7% year over year on a reported basis or grew 3% on a constant-currency basis to $1.05 billion.
The top line beat the Zacks Consensus Estimate by 4.8%. Adjusted operating margin of 16.1% improved 30 bps year over year. WU’s CMT or Consumer Money Transfer segment reported revenues of $975.5 million, which declined 1% year over year on a reported and constant-currency basis in the quarter under review. Transactions within the CMT segment increased 5.2% year over year. The Consumer Services segment reported revenues of $76.8 million, which declined 1% year over year on a reported basis.