Magazine article American Banker

Global Payments Posts 3% Decline on Restructuring

Magazine article American Banker

Global Payments Posts 3% Decline on Restructuring

Article excerpt

The merchant processor Global Payments Inc. reported a 3% year-over-year drop in its fiscal fourth-quarter earnings that it attributed to restructuring and stock option expenses.

Factors in the money transfer division's weak performance included continued competitive pricing and lingering immigration issues, the Atlanta company said Thursday.

Global Payments reported net income of $33.1 million for the quarter, which ended June 30. Earnings per share fell 2.4%, to 40 cents.

Excluding the restructuring and options charges, earnings per share were 45 cents, a penny above the average analyst estimate. Revenue rose 17%, to $280.1 million.

For the 12 months that ended June 30, earnings rose 13%, to $142.9 million, and earnings per share rose 14%, to $1.75. Revenue rose 17%, to $1.06 billion.

Paul R. Garcia, Global Payments' chairman, president, and chief executive, said in an earnings call that price pressure faced by its direct merchant sales force was offset by its sales through independent sales organizations.

"The spread for the quarter increased in the low single digits while the spread remained constant for the full year," Mr. Garcia said. "This reflects the favorable impact of smaller merchants added through our ISOs, which generally have higher spreads than larger merchants."

Revenue at the money transfer division, DolEx, fell 3% domestically, to $29.3 million. That was offset somewhat by DolEx's European division.

Mr. Garcia said the difficult year for the domestic money transfer business showed "the impact of a competitive pricing environment," as well as the political controversies over immigration during the past year.

The company expects mid-single-digit to low-double-digit revenue growth for the DolEx division in fiscal 2008, Mr. Garcia said. "More importantly, we expect our money transfer business to improve in the second half of 2008 as we anniversary the impact" of these trends, he said. …

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