Global Payments Inc (GPN) Fiscal 2015 Second Quarter Conference Call Transcript

Brett Huff

I have two quick questions. One is, can you give us, apprise for us the pro forma or the cash EBIT dollars, percentage-wise that Canada contributes now? And then, can you talk a little bit about what the DCC offering there might help? That’s one question.

Then the other is a little bit bigger picture, looking into Fiscal’16. Can you just go over generally what kind of the pros and cons or puts and takes are as we think about more sustainable margin expansion for you all?

I know it’s going to be about 50 basis points this year, as we think about the interchange changes, APT and PayPros integration and things like that.

So, those are the two questions. Thanks.

Cameron M. Bready

I’ll jump in. And I’ll ask either Jeff or David to provide any additional color commentary if they’d like to. First, as it relates to Canada, we’re really not going to provide any more disaggregated data relative to its total contribution on a cash EBIT or operating income basis for North America. I would note on the second part of your question around DCC, it’s a relatively small opportunity for us. It’s obviously something we are prepared to offer to merchants in that marketplace, but we just don’t really see that as being a significant driver for the business as we look to either the balance of FY ’15 or the years beyond.

As we talk about the second part of your question as it relates to margins for 2016.
Let me just start first at a high level. I think what we’ve traditionally said is we anticipate organic margin expansion in this business of 30 to 50 basis points annually. And that’s going to be driven by a variety of factors, and it’s going to ebb and flow a little bit depending on the year, and depending on what some of the headwinds and tailwinds may be.

We’re obviously not in a position to provide ’16 guidance as we sit here today, but we certainly are pretty pleased with the performance we’ve been able to generate thus far for the year, and we’re guiding up 50 basis points for the full FY ’15 Fiscal Year. As we look forward to ’16, we expect some of the tailwinds that we’re seeing in ’15 to continue, and currently the pricing initiatives that you referenced — the lower interchange — are going to be positives, but we also expect to see continued headwinds for FX. We’re going to continue to have to endure those, at least until we get to the middle part of next year, given that a lot of the deterioration we’ve seen, or strength in the US dollar we’ve seen, has been in the recent months, not so much in the first half of Fiscal ’15.