Total System Services Earnings: Rising Revenue Helps Margins Expand, Profit Rises

S&P 500 (NYSE:SPY) component Total System Services Inc. (NYSE:TSS) reported net income above Wall Street’s expectations for the second 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 $66.7 million (35 cents per share) vs. $53.7 million (28 cents per share) in the same quarter a year earlier. This marks a rise of 24.1% from the year-earlier quarter.

Revenue: Rose 3.4% to $462.7 million from the year-earlier quarter.

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

Quoting Management: “Our second quarter results continued to benefit from increases in the number of transactions processed in our issuer processing and indirect merchant acquiring businesses, increases in the dollar volume of transactions in our direct merchant acquiring business, our ongoing management focus on cost controls, and an expected nonrecurring tax benefit. Same client transaction growth in our card issuer processing business increased 12.7%. POS transactions, excluding deconverted clients in our indirect merchant acquiring business, were up 12.4% and sales volume in our direct merchant business was up 9.7%,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS. “Our recently announced renewal and expansion of our relationship with Bank of America was a defining accomplishment for TSYS as we have yet again demonstrated that we can deliver for one of the top credit card issuers in the world. The Bank of America signing, when coupled with the signing of a 12-year contract extension with Royal Bank of Scotland confirms my confidence in our outstanding management team and team members to get the job done,” said Tomlinson.

Key Stats:

The company has now seen its net income increase for three consecutive quarters. In the first quarter, net income rose 15.6% and in the fourth quarter of the last fiscal year, the figure rose 26.9%.

Revenue has risen for the last four quarters. Revenue increased 7.4% to $461.2 million in the first quarter. The figure rose 7.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 6.1% in the third quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of 30 cents per share.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the third quarter is 33 cents per share, up from 32 cents ninety days ago. The average estimate for the fiscal year is $1.29 per share, a rise from $1.28 ninety days ago.

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

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