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Global Payments Reports First Quarter 2022 Results

2 Maggio 2022

Reaffirms Outlook for 2022

Signs Letter of Intent with Caixabank for Card Issuing Technologies

Reports Progress On Strategic Review of Netspend Consumer Business

Exits Russian Business

ATLANTA–(BUSINESS WIRE)–Global Payments Inc. (NYSE: GPN) today announced results for the first quarter ended 31 Marzo 2022.

“The resilience of our business continued through the first quarter of 2022 with performance exceeding our expectations despite incremental macro headwinds throughout the period,” said Jeff Sloan, Chief Executive Officer. “We are especially pleased with the results for our Merchant Solutions business, which again demonstrated ongoing momentum as our strategies for differentiated growth continue to win in the marketplace.”

Sloan continued, “We are delighted to announce that Caixabank has now signed a letter of intent memorializing Global Payments as its technology partner for its card issuing businesses following our selection as the finalist company early in 2022. This is the largest new customer LOI for our Issuer Solutions business since 2013 and would more than double our implementation pipeline, providing opportunities for accelerated growth over the next several years. In conjunction with recent wins with a debit focus, our partnership with Caixabank positions Global Payments as a leading debit technology provider across Europe.

“We also continue to make progress on refining our portfolio mix by simplifying the composition of our businesses and maintaining our focus on our core corporate customers. First, we are pleased to report that we have made progress with the strategic review of the Netspend consumer business that we announced this past February.”

Sloan concluded, “Second, in regards to the exit of our Russian business, this has been a difficult time for our team members, customers and partners across the region and especially in Ukraine. We have provided financial and humanitarian support to those impacted.”

First Quarter 2022 Summary

GAAP revenues were $2.16 billion, compared to $1.99 billion in the first quarter of 2021; diluted earnings per share were $0.87 compared to $0.66 in the prior year; and operating margin was 17.4% compared to 13.8% in the prior year.

Adjusted net revenues increased 8% to $1.95 billion, compared to $1.81 billion in the first quarter of 2021.

Adjusted earnings per share increased 14% to $2.07, compared to $1.82 in the first quarter of 2021.

Adjusted operating margin of 41.1% expanded 50 basis points.

2022 Outlook

“We are pleased with our strong financial performance in the first quarter, which exceeded our expectations despite the ongoing impacts of the pandemic, incremental headwinds from the war in Europe and adverse foreign currency exchange rates,” said Paul Todd, Senior Executive Vice President and Chief Financial Officer. “We achieved high-single-digit adjusted net revenue growth, adjusted operating margin expansion and mid-teens adjusted earnings per share growth driven by consistent execution of our technology-enabled strategy.

“For 2022, the company continues to expect adjusted net revenue to be in a range of $8.42 billion to $8.50 billion, reflecting growth of 9% to 10% (10% to 11% on a constant currency basis) over 2021, and adjusted earnings per share to be in a range of $9.45 to $9.67, reflecting growth of 16% to 19% (17% to 20% on a constant currency basis) over 2021. We are raising our expectation for annual adjusted operating margin for 2022 to expand by up to 125 basis points (up to 175 basis points excluding acquisitions), an increase from the prior outlook of up to 100 basis points (up to 150 basis points excluding acquisitions).”

Todd concluded, “This outlook presumes continuing recovery from the pandemic worldwide and a stable global macroeconomic environment throughout 2022.”

Capital Allocation

Global Payments’ Board of Directors approved a dividend of $0.25 per share payable 24 Giugno 2022 to shareholders of record as of 10 Giugno 2022.

Conference Call

Global Payments’ management will host a live audio webcast today, 2 Maggio 2022, at 8:00 a.m. EST to discuss financial results and business highlights. The audio webcast, along with supplemental financial information, can be accessed via the investor relations page of the company’s website at investors.globalpaymentsinc.com. A replay of the audio webcast will be archived on the company’s website following the live event.

Non-GAAP Financial Measures

Global Payments supplements revenues, income, operating income, operating margin and earnings per share determined in accordance with GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this earnings release to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations.

Reconciliations of each of the non-GAAP financial measures to the most directly comparable GAAP measure are included in the schedules to this release.

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with approximately 25,000 team members worldwide, Global Payments is a Fortune 500® company and a member of the S&P 500 with worldwide reach spanning over 170 countries throughout North America, Europe, Asia Pacific and Latin America. For more information, visit www.globalpayments.com and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks, uncertainties and assumptions that could significantly affect the financial condition, results of operations, business plans and the future performance of Global Payments. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Accordingly, we cannot guarantee that our plans and expectations will be achieved. Examples of forward-looking statements include, but are not limited to, statements we make regarding guidance and projected financial results for the year 2022; the effects of the COVID-19 pandemic on our business, including estimates of the effects of the pandemic on our revenues, financial operating results and liquidity; timing and completion of anticipated benefits of acquisitions or strategic initiatives; our success and timing in developing and introducing new services; and future financial and operating results. Although we believe that the plans and expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our plans and expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to factors previously disclosed in Global Payments’ reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects of global economic, political, market, health and social events or other conditions, including the effects and duration of, and actions taken in response to, the COVID-19 pandemic and the evolving situation involving Ukraine and Russia; our ability to meet our liquidity needs in light of the effects of the COVID-19 pandemic or otherwise; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; the effect of a security breach or operational failure on the Company’s business; failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain Visa and Mastercard registration and financial institution sponsorship; the ability to retain, develop and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; our ability to meet environmental, social or governance targets, goals and commitments; the potential effect of climate change including natural disasters; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards on us or our partners and customers, including privacy and cybersecurity laws and regulations; and other events beyond our control, such as acts of terrorism, and other factors included in the “Risk Factors” in our Annual Report on Form 10-K for the year ended 31 Dicembre 2021, and in other documents that we file with the SEC, which are available at https://www.sec.gov. Any forward-looking statements speak only as of the date of this communication or as of the date they were made, and we undertake no obligation to update forward-looking statements, except as required by law.


SCHEDULE 1 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data)

	Three Months Ended
	March 31,
		2022			2021		% Change

Revenues	$	2,156,254		$	1,990,007		8.4	%

Operating expenses:
Cost of service		957,158			925,246		3.4	%
Selling, general and administrative		823,149			789,502		4.3	%
		1,780,307			1,714,748		3.8	%

Operating income		375,947			275,259		36.6	%

Interest and other income		1,711			4,234		(59.6	) %
Interest and other expense		(93,283	)		(83,141	)	12.2	%
		(91,572	)		(78,907	)	16.1	%

Income before income taxes and equity in income of equity method investments		284,375			196,352		44.8	%
Income tax expense		52,218			20,675		152.6	%
Income before equity in income of equity method investments		232,157			175,677		32.1	%
Equity in income of equity method investments, net of tax		17,479			22,733		(23.1	) %
Net income		249,636			198,410		25.8	%
Net income attributable to noncontrolling interests, net of income tax		(4,903	)		(1,729	)	183.6	%
Net income attributable to Global Payments	$	244,733		$	196,681		24.4	%

Earnings per share attributable to Global Payments:
Basic	$	0.87		$	0.66		31.8	%
Diluted	$	0.87		$	0.66		31.8	%

Weighted-average number of shares outstanding:
Basic		282,100			296,425
Diluted		282,567			297,671


SCHEDULE 2 NON-GAAP FINANCIAL MEASURES (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data)

	Three Months Ended
	March 31,
		2022		2021	% Change

Adjusted net revenue	$	1,952,654	$	1,812,218	7.7	%

Adjusted operating income		802,471		735,115	9.2	%

Adjusted net income attributable to Global Payments		584,841		541,363	8.0	%

Adjusted diluted earnings per share attributable to Global Payments	$	2.07	$	1.82	13.7	%

———————————————————————————-

See Schedules 6 and 7 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure and Schedule 8 for a discussion of non-GAAP financial measures.


SCHEDULE 3 SEGMENT INFORMATION (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands)

	Three Months Ended
	31 Marzo 2022						31 Marzo 2021						% Change
	GAAP			Non-GAAP			GAAP			Non-GAAP			GAAP		Non-GAAP

Revenues:
Merchant Solutions	$	1,473,019		$	1,337,193		$	1,267,872		$	1,149,820		16.2	%	16.3	%
Issuer Solutions		511,501			442,543			500,251			439,380		2.2	%	0.7	%
Business and Consumer Solutions		195,772			195,772			243,585			243,585		(19.6	) %	(19.6	) %
Intersegment Elimination		(24,038	)		(22,854	)		(21,701	)		(20,567	)	(10.8	) %	(11.1	) %
	$	2,156,254		$	1,952,654		$	1,990,007		$	1,812,218		8.4	%	7.7	%

Operating income:
Merchant Solutions	$	444,530		$	632,117		$	339,989		$	532,142		30.7	%	18.8	%
Issuer Solutions		58,102			188,733			68,455			189,788		(15.1	) %	(0.6	) %
Business and Consumer Solutions		33,658			51,121			61,923			80,862		(45.6	) %	(36.8	) %
Corporate		(160,343	)		(69,500	)		(195,108	)		(67,677	)	17.8	%	(2.7	) %
	$	375,947		$	802,471		$	275,259		$	735,115		36.6	%	9.2	%

———————————————————————————-

See Schedules 6 and 7 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 8 for a discussion of non-GAAP financial measures.

Note: Amounts may not sum due to rounding.


SCHEDULE 4 CONSOLIDATED BALANCE SHEETS (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except share data)

	31 Marzo 2022			31 Dicembre 2021

ASSETS
Current assets:
Cash and cash equivalents	$	2,045,277		$	1,979,308
Accounts receivable, net		972,961			946,247
Settlement processing assets		1,450,419			1,143,539
Prepaid expenses and other current assets		683,753			641,891
Total current assets		5,152,410			4,710,985
Goodwill		24,793,799			24,813,274
Other intangible assets, net		11,292,243			11,633,709
Property and equipment, net		1,716,257			1,687,586
Deferred income taxes		22,754			12,117
Other noncurrent assets		2,457,797			2,422,042
Total assets	$	45,435,260		$	45,279,713

LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit	$	497,345		$	484,202
Current portion of long-term debt		120,226			78,505
Accounts payable and accrued liabilities		2,550,112			2,542,256
Settlement processing obligations		1,699,491			1,358,051
Total current liabilities		4,867,174			4,463,014
Long-term debt		11,723,798			11,414,809
Deferred income taxes		2,725,980			2,793,427
Other noncurrent liabilities		723,503			739,046
Total liabilities		20,040,455			19,410,296
Commitments and contingencies
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued		—			—
Common stock, no par value; 400,000,000 shares authorized at 31 Marzo 2022 and 31 Dicembre 2021; 281,434,153 issued and outstanding at 31 Marzo 2022 and 284,750,452 issued and outstanding at 31 Dicembre 2021		—			—
Paid-in capital		22,338,086			22,880,261
Retained earnings		3,068,683			2,982,122
Accumulated other comprehensive loss		(247,205	)		(234,182	)
Total Global Payments shareholders’ equity		25,159,564			25,628,201
Noncontrolling interests		235,241			241,216
Total equity		25,394,805			25,869,417
Total liabilities and equity	$	45,435,260		$	45,279,713


SCHEDULE 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands)

	Three Months Ended
	31 Marzo 2022			31 Marzo 2021

Cash flows from operating activities:
Net income	$	249,636		$	198,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		99,665			96,372
Amortization of acquired intangibles		329,007			329,201
Amortization of capitalized contract costs		25,906			21,050
Share-based compensation expense		38,399			37,165
Provision for operating losses and credit losses		28,523			23,405
Noncash lease expense		21,555			27,066
Deferred income taxes		(80,841	)		(56,390	)
Equity in income of equity method investments, net of tax		(17,479	)		(22,733	)
Distribution received on investments		6,022			438
Other, net		6,127			(6,285	)
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable		(34,191	)		(37,141	)
Settlement processing assets and obligations, net		48,198			21,714
Prepaid expenses and other assets		(115,904	)		(33,128	)
Accounts payable and other liabilities		25,377			262
Net cash provided by operating activities		630,000			599,406
Cash flows from investing activities:
Business combinations and other acquisitions, net of cash acquired		(4,726	)		(11,074	)
Capital expenditures		(156,102	)		(86,159	)
Other, net		5			293
Net cash used in investing activities		(160,823	)		(96,940	)
Cash flows from financing activities:
Net borrowings from settlement lines of credit		16,497			108,488
Proceeds from long-term debt		1,529,157			1,987,005
Repayments of long-term debt		(1,176,496	)		(1,575,435	)
Payments of debt issuance costs		(1,706	)		(6,819	)
Repurchases of common stock		(649,654	)		(802,955	)
Proceeds from stock issued under share-based compensation plans		7,940			17,705
Common stock repurchased – share-based compensation plans		(26,295	)		(39,437	)
Distributions to noncontrolling interests		(5,534	)		—
Dividends paid		(70,243	)		(57,574	)
Net cash used in financing activities		(376,334	)		(369,022	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(36,147	)		(21,141	)
Increase in cash, cash equivalents and restricted cash		56,696			112,303
Cash, cash equivalents and restricted cash, beginning of the period		2,123,023			2,089,771
Cash, cash equivalents and restricted cash, end of the period	$	2,179,719		$	2,202,074


SCHEDULE 6 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands, except per share data)

	Three Months Ended 31 Marzo 2022
	GAAP		Net Revenue Adjustments⁽¹⁾			Earnings Adjustments⁽²⁾		Income Taxes on Adjustments⁽³⁾			Non-GAAP

Revenues	$	2,156,254	$	(203,600	)	$	—	$	—		$	1,952,654

Operating income	$	375,947	$	3,612		$	422,913	$	—		$	802,471

Net income attributable to Global Payments	$	244,733	$	3,612		$	423,578	$	(87,082	)	$	584,841

Diluted earnings per share attributable to Global Payments	$	0.87									$	2.07

Diluted weighted average shares outstanding		282,567										282,567

	Three Months Ended 31 Marzo 2021
	GAAP		Net Revenue Adjustments⁽¹⁾			Earnings Adjustments⁽²⁾		Income Taxes on Adjustments⁽³⁾			Non-GAAP

Revenues	$	1,990,007	$	(177,789	)	$	—	$	—		$	1,812,218

Operating income	$	275,259	$	1,749		$	458,107	$	—		$	735,115

Net income attributable to Global Payments	$	196,681	$	1,749		$	450,935	$	(108,002	)	$	541,363

Diluted earnings per share attributable to Global Payments	$	0.66									$	1.82

Diluted weighted average shares outstanding		297,671										297,671

———————————————————————————-
⁽¹⁾	Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For the three months ended 31 Marzo 2022 and 31 Marzo 2021, net revenue adjustments include $3.6 million and $1.7 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

⁽²⁾	For the three months ended 31 Marzo 2022, earnings adjustments to operating income included $329.2 million in cost of services (COS) and $93.7 million in selling, general and administrative expenses (SG&A). Adjustments to COS represent amortization of acquired intangibles of $329.0 million and other items of $0.2 million. Adjustments to SG&A include share-based compensation expense of $38.4 million, acquisition and integration expenses of $51.0 million and other items of $4.3 million.

	For the three months ended 31 Marzo 2021, earnings adjustments to operating income included $329.2 million in COS and $128.9 million in SG&A expenses. Adjustments to COS represent amortization of acquired intangibles of $329.2 million. Adjustments to SG&A include share-based compensation expense of $37.2 million and acquisition and integration expenses of $91.7 million. Net income attributable to Global Payments also reflects the removal of $6.3 million of equity method investment earnings from our interest in a private equity investment fund.

⁽³⁾	Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

	See “Non-GAAP Financial Measures” discussion on Schedule 8.

	Note: Amounts may not sum due to rounding.


SCHEDULE 7 RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED) GLOBAL PAYMENTS INC. AND SUBSIDIARIES (In thousands)

	Three Months Ended 31 Marzo 2022
	GAAP			Net Revenue Adjustments⁽¹⁾			Earnings Adjustments⁽²⁾		Non-GAAP

Revenues:
Merchant Solutions	$	1,473,019		$	(135,826	)	$	—	$	1,337,193
Issuer Solutions		511,501			(68,958	)		—		442,543
Business and Consumer Solutions		195,772			—			—		195,772
Intersegment Eliminations		(24,038	)		1,184			—		(22,854	)
	$	2,156,254		$	(203,600	)	$	—	$	1,952,654

Operating income:
Merchant Solutions	$	444,530		$	80		$	187,508	$	632,117
Issuer Solutions		58,102			3,532			127,099		188,733
Business and Consumer Solutions		33,658			—			17,463		51,121
Corporate		(160,343	)		—			90,843		(69,500	)
	$	375,947		$	3,612		$	422,913	$	802,471

	Three Months Ended 31 Marzo 2021
	GAAP			Net Revenue Adjustments⁽¹⁾			Earnings Adjustments⁽²⁾		Non-GAAP

Revenues:
Merchant Solutions	$	1,267,872		$	(118,052	)	$	—	$	1,149,820
Issuer Solutions		500,251			(60,871	)		—		439,380
Business and Consumer Solutions		243,585			—			—		243,585
Intersegment Eliminations		(21,701	)		1,134			—		(20,567	)
	$	1,990,007		$	(177,789	)	$	—	$	1,812,218

Operating income:
Merchant Solutions	$	339,989		$	294		$	191,859	$	532,142
Issuer Solutions		68,455			1,455			119,878		189,788
Business and Consumer Solutions		61,923			—			18,939		80,862
Corporate		(195,108	)		—			127,431		(67,677	)
	$	275,259		$	1,749		$	458,107	$	735,115