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Visa (V) Charles W. Scharf on Q2 2016 Results - Earnings Call Transcript

Visa, Inc. (NYSE:V)

Q2 2016 Earnings Call

April 21, 2016 5:00 pm ET

Executives

Jack Carsky - Global Head of Investor Relations, Visa, Inc.

Charles W. Scharf - Chief Executive Officer & Director

Vasant M. Prabhu - Chief Financial Officer & Executive Vice President

Analysts

Moshe Ari Orenbuch - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Jason Alan Kupferberg - Jefferies LLC

Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.

James Schneider - Goldman Sachs & Co.

Bryan C. Keane - Deutsche Bank Securities, Inc.

Darrin Peller - Barclays Capital, Inc.

Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.

Matthew P. Howlett - UBS Securities LLC

James Friedman - Susquehanna Financial Group LLLP

Lisa D. Ellis - Sanford C. Bernstein & Co. LLC

Tien-tsin Huang - JPMorgan Securities LLC

Robert Napoli - William Blair & Co. LLC

Christopher R. Donat - Sandler O'Neill & Partners LP

Donald Fandetti - Citigroup Global Markets, Inc. (Broker)

George Mihalos - Cowen & Co. LLC

Operator

Welcome to Visa's fiscal second quarter 2016 earnings conference call. All participants are in a listen-only mode until the question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the conference over to Mr. Jack Carsky, Head of Global Investor Relations. Mr. Carsky, you may begin.

Jack Carsky - Global Head of Investor Relations, Visa, Inc.

Thanks, Sam. Good afternoon, everyone, and welcome to Visa Inc.'s fiscal second quarter earnings conference call. With us today are Charlie Scharf, Visa's Chief Executive Officer; and Vasant Prabhu, Visa's Chief Financial Officer.

This call is currently being webcast over the Internet and is accessible on the Investor Relations section of our website at www.investor.Visa.com. A replay of the webcast will be archived on our site for 90 days. A PowerPoint deck containing the financial and statistical highlights of today's call have been posted to our IR website.

Let me also remind you that this presentation may include forward-looking statements. These statements aren't guarantees of future performance, and our actual results could materially differ as a result of a variety of factors. Additional information concerning those factors is available in our most recent reports on Forms 10-K and 10-Q, which you can find on the SEC's website and the Investor Relations section of our website.

For historical non-GAAP or pro forma related financial information disclosed in this call, the related GAAP measures and other information required by Regulation G of the SEC are available in the financial and statistical summary accompanying today's press release.

And with that, I'll turn the call over to Vasant.

Charles W. Scharf - Chief Executive Officer & Director

Actually, Jack, it's Charlie. I'm going to start on the call.

Jack Carsky - Global Head of Investor Relations, Visa, Inc.

I'm sorry.

Charles W. Scharf - Chief Executive Officer & Director

I appreciate it though. Good afternoon, everyone, thank you for joining us. There are a series of things that I'm going to cover before I do hand it over to Vasant. I'm going to talk a little bit about our second quarter results at a high level, make some comments about the press release we put out about Visa Europe [VE], some general business updates, and then some further comments on how we see the year playing out from here.

So first let me start with our overall results. We reported earnings per share of $0.71, but this includes a one-time gain on currency forward contracts used to mitigate some of the foreign exchange risk associated with the cash portion of the VE purchase. Vasant will cover that in a little bit more detail in his remarks.

If you exclude that gain, adjusted earnings per share of $0.68 grew 7% on a nominal basis and 12% on a constant dollar basis. If you remember, we raised $16 billion in long-term debt in December of last year in anticipation of the VE acquisition, and we absorbed $125 million in interest expense during this quarter, a $0.03 drag on our EPS growth for the quarter. This negatively impacted our EPS growth rate in the quarter by five points. After we close the VE transaction, we will obviously have VE operating income to offset this expense.