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

S&P 500 (NYSE:SPY) component Total System Services Inc. (NYSE:TSS) reported its results for the fourth 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 Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Total System Services Inc. rose to $59.9 million (31 cents per share) vs. $47.2 million (24 cents per share) in the same quarter a year earlier. This marks a rise of 26.9% from the year earlier quarter.

Revenue: Rose 7.3% to $472.2 million from the year earlier quarter.

Actual vs. Wall St. Expectations: TSS fell in line with the mean analyst estimate of 31 cents per share. It beat the average revenue estimate of $450.3 million.

Quoting Management: “We are pleased to report that we met or exceeded the high end of our guidance for 2011. Our 2011 results reflect continued strong same client transaction growth of 11.2% in our card issuer processing. The driving forces behind our results were consolidated organic revenue growth of 4.7% for the year, combined with acquisitions in the acquiring space, which added 2.9% to our growth in revenues before reimbursable items,” said Philip W. Tomlinson, chairman and chief executive officer of TSYS.

Key Stats:

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 27.1% and in the second quarter, the figure rose 8.1%.

Revenue has risen the past four quarters. Revenue increased 6.1% to $459.7 million in the third quarter. The figure rose 3.2% in the second quarter from the year earlier and climbed 3.4% in the first quarter from the year-ago quarter.

The company fell in line with estimates last quarter after topping expectations in the previous two quarters. In the third quarter, it topped the mark by 2 cents, and in the second quarter, it was ahead by one cent.

Gross margins grew 2.5 percentage points to 31.6%. The growth seemed to be driven by increased revenue, as the figure rose 7.3% from the year earlier quarter while costs rose 3.5%.

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 first quarter of the next fiscal year has risen to 29 cents per share from 28 cents. Over the past three months, the average estimate for the fiscal year has climbed from $1.11 per to share to $1.14.

Competitors to Watch: Visa Inc. (NYSE:V), Fidelity National Information Services (NYSE:FIS), MasterCard Incorporated (NYSE:MA), Cass Information Systems (NASDAQ:CASS), NetSpend Holdings Inc (NASDAQ:NTSP), Fiserv, Inc. (NASDAQ:FISV), MoneyGram Intl., Inc. (NYSE:MGI), ACI Worldwide Inc (NASDAQ:ACIW), Inc (AMEX:BNX), and Intl. Business Machines Corp. (NYSE:IBM).

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

To contact the reporter on this story: Derek Hoffman at

To contact the editor responsible for this story: Damien Hoffman at