Total System Services (TSS) Q1 2012 Earnings Call April 24, 2012 5:00 pm ET Executives Shawn Roberts - Director of Investor Relations Philip W. Tomlinson - Chairman, Chief Executive Officer and Member of Executive Committee James B. Lipham - Chief Financial Officer and Senior Executive Vice President Analysts Darrin D. Peller - Barclays Capital, Research Division James E. Friedman - Susquehanna Financial Group, LLLP, Research Division Jason Kupferberg - Jefferies & Company, Inc., Research Division Bryan Keane - Deutsche Bank AG, Research Division Timothy W. Willi - Wells Fargo Securities, LLC, Research Division Brett Huff - Stephens Inc., Research Division Vasundhara Govil - Morgan Stanley, Research Division David J. Koning - Robert W. Baird & Co. Incorporated, Research Division Roman Leal - Goldman Sachs Group Inc., Research Division Steven Kwok - Keefe, Bruyette, & Woods, Inc., Research Division Ashwin Shirvaikar - Citigroup Inc, Research Division Gregory Smith - Sterne Agee & Leach Inc., Research Division Glenn Greene - Oppenheimer & Co. Inc., Research Division Presentation Operator
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And I'd like to now call your attention to the fact that we'll be making some forward-looking statements about the future operating results of TSYS. These forward-looking statements involve risks and uncertainties. Factors that could cause TSYS' actual results to differ materially from the forward-looking statements are set forth in TSYS' reports filed with the SEC.At this time, I'd like to introduce TSYS' CEO, Phil Tomlinson. Philip W. Tomlinson Thank you, Shawn, and good evening, everybody. I'm excited to share the report of the first quarter results, which were really good, as you've seen in our press release. The key metrics that we used to measure our business exceeded our expectations, which we believe is a direct reflection of an economy that's picking up the pace of improvement, at least in our business. While one quarter doesn't make a year, we think it's a good start. Results were positive in EPS, revenues and net income for the quarter. EPS was $0.30 for the quarter, an increase of 18.6% over 2011. Revenues were $461.2 million, up 7.4%. Revenues before reimbursables were $395.2 million, an increase of 9%. Operating income was $84.8 million, up 16.2% over the same quarter last year. At the enterprise level, we saw healthy increases in transactions, both on the issuer processing side, as well as increases on the acquiring side, in the processing and the direct acquiring. Same client issuer transactions for North America and international combined were up 14.4%. Excluding deconverted accounts, same client point-of-sale transactions in our indirect acquiring business were up 11%. Sales volume for our direct acquiring business was up 20.9% over the same quarter last year. And looking at the economy from a macro level, we see continued healthy decline in both credit card delinquencies and charge-offs quarter-over-quarter. Charge volumes on credit cards have trended upward over the past 3 quarters, which, again, indicate improved consumer confidence, and we see a renewed interest among our issuers, in particular, in offering new credit cards and new products.
As you know, the unemployment rate slowly continues to decline yet the job market and mortgage situation still remains pretty fragile, and consumers continued to carefully manage their finances.I want to take just a few minutes and give you a brief update on our 3 reporting segments before Jim gets into the financial details. First, let's take North America. We had some strong wins this quarter, and you may have seen today's announcement that we signed Huntington bank for issuer processing. And we're also happy to report that we recently entered into a long-term issuer processing agreement with Regions bank to be their payments partner as Regions reenters the credit card business or the card business in general. And we'll be converting that portfolio that they've acquired later this year. We continue to win in the regional banks sector as more of these institutions look to credit cards as a business driver and really a necessary product for their customer base. Also, during the quarter, we successfully completed the BancorpSouth's consumer credit, commercial and debit card portfolio conversions. On international, we're delighted, and you saw the announcement, I hope, Monday afternoon, that Royal Bank of Scotland has extended its issuer processing relationship with us. Our relationship for the U.S. business has been extended for 13 years and the U.K. business for 12.5 years, taking both of them out to the 2025 range. RBS has been a client of TSYS since 2001, and our first client in the U.K. or Europe, and is a real anchor tenant for TSYS, and we couldn't be more proud of this relationship and this extension. Post the Carrefour conversion, the reaction in Brazil has been very positive. We've had some interesting -- we have some really interesting prospects in this market, which continues to see good economic growth. Our joint venture with CUP Data in China UnionPay had a strong finish in 2011. We expect to see an equally strong performance in '12, which is worthy of mention and is a noted addition to our net income. Read the rest of this transcript for free on seekingalpha.com