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Total Systems (TSS) Beats on Q3 Earnings, Updates '17 View

Total System Services, Inc’s TSS  third-quarter 2017 earnings per share of 88 cents surpassed the Zacks Consensus Estimate by 14.3% and grew 23.9% year over year.

Revenues of $1.2 million also beat the Zacks Consensus Estimate by 2.5%. Further, revenues grew 8.8% year over year.

Better-than-expected results were driven by growth in consolidated and segment operating income margins. The company’s strong organic revenue growth reflects its exceptional execution of strategic goals.

Total expenses of $1.0 billion increased 5.7% year over year due to higher cost of services.

Total System Services, Inc. Price, Consensus and EPS Surprise

 

Total System Services, Inc. Price, Consensus and EPS Surprise | Total System Services, Inc. Quote

 

 

Segments Results

Issuer Solutions

In the third quarter, net revenues for this segment increased 5.8% year over year to $401.1 million. Total transaction for this segment was $5.5 million, up 8.6% year over year.

Operating income of $147.8 million for the segment was up 14.6% year over year. Operating margin of 36.8% increased from 34% in the year-ago quarter.

Merchant Solutions

Net revenues increased 7.4% to $281.8 million from $262.5 million in the year-ago quarter. Dollar sales volume for this segment grew 9.8% year over year to $31.5 million from $28.7 million.

Operating income advanced 13.8% year over year to $103.3 million. Operating margin rose to 36.6% from 34.4% in the year-ago quarter.

Net Spend

Net revenues increased 15.8% year over year to $179.9 million in the reported quarter. Gross dollar volume for this segment was $7.2 billion, up 13.7% year over year.

Operating income grew 18.9% year over year to $48.6 million. Operating margin increased to 27% from 26.3% in the prior-year quarter.

Financial Update

Total assets decreased 2.3% to $6.2 billion as of Sep 30, 2017 from $6.37 billion at year-end 2016.

Total shareholders’ equity climbed to $2.4 billion on Sep 30, 2017 from $2.1 billion at the end of 2016.

Long-term debt was $2.4 billion at quarter end, down from $3.3 billion at 2016 yearend.

Free cash flow totaled $542.7 million for the nine months ended Sep 30, 2017 compared with $443.7 million for the same period in 2016.

Share Repurchase Update

During the quarter, the company repurchased 0.4 million shares worth $27.6 million.

2017 Guidance Up

The company now expects total revenues on a GAAP basis in the range of $4.83-$4.89 billion (previous expectation $4.80-$4.88 billion) reflecting an increase of 16-17%. On a non-GAAP basis, net revenues are anticipated in the range of $3.34-$3.39 billion (previous expectation $3.31-$3.39 billion) reflecting a rise of 10-12%.

GAAP EPS is projected in the range of $2.37-$2.43 (previous expectation $2.30-$2.38), representing a rise of 37-40%. Adjusted EPS attributable to the company’s common shareholders is estimated in the range of $3.29-$3.35 (previous expectation $3.22-$3.30), reflecting an increase of about 18-20%.

Zacks Rank

Total System Services currently carries a Zacks Rank #2 (Buy). You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies in the Finance Sector

Among the other firms in the medical sector that have reported their third-quarter earnings so far, American Express Company AXP, The Travelers Companies, Inc. TRV and Discover Financial Services DFS beat their respective Zacks Consensus Estimate.

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