Total System Services Earnings: Margins Expand with Strong Revenues, Profit Increases

S&P 500 (NYSE:SPY) component Total System Services Inc. (NYSE:TSS) reported its results for the third quarter. Total System Services is a payment solutions provider company. The company offers electronic payment processing, merchant services and related services to financial and non-financial institutions globally.

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Total System Services Inc. Earnings Cheat Sheet

Results: Net income for Total System Services Inc. rose to $60.3 million (32 cents per share) vs. $58.1 million (30 cents per share) in the same quarter a year earlier. This marks a rise of 3.7% from the year-earlier quarter.

Revenue: Rose 1.8% to $468.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Total System Services Inc. fell in line with the mean analyst estimate of 32 cents per share. Analysts were expecting revenue of $461.7 million.

Quoting Management: “In August, TSYS formed a joint venture with Central Payment Co., LLC to further strengthen our sales distribution channels in the direct merchant business. Also during the quarter, we spent $61.2 million as we purchased 2.6 million shares of our stock bringing our share repurchases since September 2010 to 12.3 million and a total spend of $227.0 million. We continue to see value in our buyback program, absent a strategic acquisition, and have 7.7 million shares remaining under the plan that expires in April 2014. We also closed a new credit facility of $500 million this quarter with a five-year term loan of $150 million and a five-year revolver of $350 million that included nine banks. This new revolver, along with our free cash flow, will provide us with more financial flexibility as we continue to make investments that we expect to grow our company and enhance shareholder return,” said Tomlinson.

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the second quarter, net income rose 24.1% and in the first quarter, the figure rose 15.6%.

Revenue has increased for four quarters in a row. Revenue increased 3.4% to $462.7 million in the second quarter. The figure rose 7.4% in the first quarter from the year earlier and climbed 7.3% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now fallen in line with estimates for the past two quarters. It reported net income of 30 cents in the second quarter and net income of 31 cents in the first quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to 33 cents per share from 32 cents. For the fiscal year, the average estimate has moved up from $1.28 a share to $1.29 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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