Heartland Payment Systems Reports Record Quarterly Earnings

Heartland Payment Systems, Inc. (NYSE: HPY), one of the nation's largest payment processors, today announced GAAP net income of $17.8 million, or $0.44 per share, for the three months ended June 30, 2012. Adjusted Net Income and Adjusted Earnings per Share were $20.3 million and $0.50, respectively, for the quarter ended June 30, 2012, compared to Adjusted Net Income and Adjusted Earnings per Share of $13.6 million and $0.34, respectively, for the quarter ended June 30, 2011. Adjusted Net Income and Adjusted Earnings per Share are non-GAAP measures that are detailed later in this press release in the section “Reconciliation of Non-GAAP Financial Measures.”

Highlights for the second quarter of 2012 include:

• Small and Mid-Sized Enterprise (SME) quarterly transaction processing volume of $18.6 billion, up 6.2% from the second quarter of 2011
• Quarterly Net Revenue of $135.3 million, up 10.7% from the second quarter of 2011
• Operating Margin on Net Revenue of 22.0% compared to 17.7% for the same quarter in 2011
• Same store sales rose 2.2% and volume attrition was 12.7% in the second quarter
• New margin installed of $15.1 million, up 20.5% from the second quarter of 2011 and the best quarterly new margin installed performance in three years
• Share-based compensation reduced earnings by $4.0 million pre-tax, or approximately $0.06 per share, compared to $1.7 million, or $0.03 per share in the second quarter of 2011

Robert Carr, Chairman and CEO, said, “Record transaction processing volume and exceptional growth in our non-card businesses in the second quarter drove earnings to a quarterly record. In addition, our operating margin in the quarter exceeded our near term goal as we continue to improve overall efficiency and productivity. New business in the quarter was the best in several years, with new margin installed increasing over 20% from a year ago as our Durbin Dollars marketing campaign continues to bolster results and both our established and newly hired relationship managers achieved individual record levels of new business production. Cash flow in the second quarter was up significantly from the same period a year ago, supporting our strategic growth initiatives, including our Heartland School Solutions' recent acquisition of Lunch Byte, as well as providing the resources to reward our shareholders through dividends and share repurchases. We have made tremendous progress strengthening our organization and expanding our franchise, and are well-positioned to capitalize on the growth opportunities arising across our industry to create value for our shareholders.”

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