Heartland Payment Systems Reports Adjusted Net Income Increased 73%; Adjusted Earnings Per Share Increased 67% In Fourth Quarter

Heartland Payment Systems, Inc. (NYSE: HPY), one of the nation's largest payment processors, today announced GAAP net income of $11.2 million, or $0.28 per share, for the three months ended December 31, 2011. Adjusted Net Income and Adjusted Earnings per Share were $14.2 million and $0.35, respectively, for the quarter ended December 31, 2011, compared to Adjusted Net Income and Adjusted Earnings per Share of $8.2 million and $0.21, respectively, for the quarter ended December 31, 2010. Adjusted Net Income and Adjusted Earnings per Share are non-GAAP measures that exclude expenses attributable to the processing system intrusion and stock compensation expense, as detailed later in this press release in the section, “Reconciliation of Non-GAAP Financial Measures.”

Highlights for the fourth quarter of 2011 include:

• Small and Mid-Sized Enterprise (SME) quarterly transaction processing volume of $16.8 billion, up 7.1% from the comparable period in 2010
• Quarterly Net Revenue of $125.1 million, up 13.3% from the fourth quarter of 2010
• Operating margin on net revenue of 16.1% compared to 12.9% for the same quarter in 2010
• Same store sales rose 2.5% for the fourth quarter, our seventh consecutive quarter of same store sales growth
• New margin installed of $14.4 million, essentially unchanged from the fourth quarter of 2010

Highlights for fiscal 2011 include:

• Operating margin for the full year up 580 basis points, to 16.2% from 10.4% in 2010
• Same store sales up 2.6% for the full year over 2010
• Full year new margin installed grew for the first time in three years, rising 4.6% for the year

Robert Carr, Chairman and CEO, said, “We ended the year on a high note with double-digit net revenue growth, expanding margins, strong cash flow and operating earnings that increased over 40% in the quarter compared to the same quarter last year. In the quarter, we were successful in both growing our sales organization and setting a new record for relationship manager productivity. Our non-card businesses continue to play an increasingly important role in our overall growth, with K-12 School Solutions making a particularly significant contribution to our results this quarter. Margins are rapidly responding to our productivity enhancements, which is helping generate cash to reinvest in additional growth opportunities. The significant improvement in financial performance achieved this year is a direct result of the growth and productivity improvement strategy initiated in 2010, and provides a solid foundation on which we can build in 2012.”