Business Wire | Aug 3, 2020 06:55AM EDT

Global Payments Reports Second Quarter 2020 Results

Aug. 03, 2020

ATLANTA--(BUSINESS WIRE)--Aug. 03, 2020--Global Payments Inc. (NYSE: GPN) today announced results for the second quarter ended June 30, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200803005127/en/

"We are pleased with our performance in the second quarter, with each month exceeding our post COVID-19 expectations and results improving significantly in May and June. We are also very proud of our team members around the globe for their exceptional and continuous dedication to our customers and the communities in which they live and work despite difficult circumstances," said Jeff Sloan, Chief Executive Officer.

"We continue to make substantial progress on our strategic goals. First, we entered into a new relationship with Amazon Web Services (AWS) to be our preferred cloud provider for our issuer business. We expect our collaboration with AWS to drive innovative payments solutions worldwide; substantially expand our target addressable opportunities; enable best-in-class experiences for our customers and their consumers; and facilitate revenue possibilities with Amazon across all segments of our business. Together with AWS, we will deliver an industry-leading, cloud-based platform to institutions worldwide, bringing transformative technologies to all types of issuers and providing consumers with frictionless digital experiences."

Sloan added, "Second, we are delighted to expand our relationship with longstanding partner CaixaBank by agreeing to meaningfully increase our ownership in our joint venture and extending our partnership through 2040. CaixaBank is one of the largest banks in Europe and is Spain's leading financial group. Their confidence in us further highlights the strength of our differentiated model as the partner of choice to the most sophisticated and complex institutions globally."

Second Quarter 2020 Summary

* GAAP revenues were $1.672 billion, compared to $935 million in the second quarter of 2019; diluted earnings per share were $0.12 compared to $0.77 in the prior year; and operating margin was 6.4%. * Adjusted net revenues declined 14% to $1.521 billion, compared to $1.772 billion in the second quarter of 2019 on a combined basis. * Adjusted earnings per share declined 13% to $1.31, compared to $1.51 in the second quarter of 2019. * Adjusted operating margin was 37.0%, compared to 37.4% in the second quarter of 2019 on a combined basis.

Financial Highlights"We delivered solid financial performance for the second quarter in a challenging environment and are encouraged by the recovery across our businesses, which has continued in July," said Paul Todd, Senior Executive Vice President and Chief Financial Officer. "Our cost actions in response to the pandemic remain on track to deliver $400 million in additional annual run rate expense savings, which is incremental to the at least $350 million of annual run rate expense synergies and at least $125 million in annual run rate revenue synergies we expect to achieve through 2022 related to the TSYS merger."

Todd concluded, "We benefited by entering the crisis in extraordinary condition, and the timing and quantum of our actions taken early on enabled us to substantially exceed our adjusted operating margin expectations for the quarter. Finally, our strong cash flows, together with our investment grade balance sheet and liquidity position, provide us with significant financial flexibility to continue to pursue strategic priorities opportunistically as markets stabilize."

Capital AllocationGlobal Payments' Board of Directors approved a dividend of $0.195 per share payable September 24, 2020 to shareholders of record as of September 10, 2020.

Conference CallGlobal Payments' management will host a live audio webcast today, August 3, 2020, at 8:00 a.m. ET to discuss financial results and business highlights. All interested parties may access the audio webcast via the investor relations page of the company's website at investors.globalpaymentsinc.com. A replay of the audio webcast will be archived on the company's website following the live event.

Non-GAAP Financial MeasuresGlobal Payments supplements revenues, income, operating income, operating margin and earnings per share information determined in accordance with GAAP by providing these measures, and other measures with certain adjustments (such measures being non-GAAP financial measures) on an adjusted basis in this earnings release to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations.

Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included in the schedules to this release.

About Global PaymentsGlobal Payments Inc. (NYSE: GPN) is a leading pure play payments technology company delivering innovative software and services to our customers globally. Our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with nearly 24,000 employees worldwide, Global Payments is a member of the S&P 500 with worldwide reach spanning over 100 countries throughout North America, Europe, Asia Pacific and Latin America. For more information, visit www.globalpaymentsinc.com and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Forward-Looking StatementsCertain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks, uncertainties and assumptions that could significantly affect the financial condition, results of operations, business plans and the future performance of Global Payments. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding the effects of the global pandemic on our business, including estimates of the effects of the pandemic on our revenues and financial operating results, the effects of actions taken by us in response to the pandemic, anticipated benefits of the merger with TSYS, including our future financial and operating results, the combined company's plans, objectives, expectations and intentions, our expected financial and operating results, projected future growth of business, or completion or anticipated benefits of strategic initiatives, and other statements that are not historical facts. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to factors previously disclosed in Global Payments' reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects and duration of global economic, political, market, health and social events or other conditions, including the effects and duration of the global pandemic; regulatory measures or voluntary actions, including social distancing, shelter-in-place orders, reinstating of opening restrictions on nonessential businesses and similar measures imposed or undertaken in an effort to combat the spread of the global pandemic; management's assumptions and projections used in their estimates of the timing and severity of the effects of the global pandemic on our future revenues and results of operations; our ability to meet our liquidity needs in light of the effects of the global pandemic; the outcome of any legal proceedings that may be instituted against Global Payments or its or TSYS' current or former directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of Global Payments and TSYS, including with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the merger when expected or at all; business disruptions from the merger or integration that will harm our business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the merger, including as it relates to the businesses' ability to successfully renew existing client contracts on favorable terms or at all and obtain new clients; failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain Visa and Mastercard registration and financial institution sponsorship; the ability to retain and hire key personnel; the diversion of management's attention from ongoing business operations; the continued availability of capital and financing following the merger; the business, economic and political conditions in the markets in which we operate; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards, including privacy and cybersecurity laws and regulations; and events beyond our control, such as acts of terrorism, and other factors included in the "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019, and in other documents that we file with the SEC, which are available at http://www.sec.gov. Any forward-looking statements speak only as of the date of this communication or as of the date they were made, and we undertake no obligation to update forward-looking statements, except as required by law.

SCHEDULE 1CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands, except per share data)



Three Months Ended Six Months Ended

June 30, June 30,

% % 2020 2019 2020 2019 Change Change



Revenues $ 1,671,952 $ 935,152 78.8 % $ 3,575,550 $ 1,818,190 96.7 %



Operating expenses:

Cost of service 893,740 302,276 195.7 % 1,827,611 607,505 200.8 %

Selling, generaland 670,638 411,150 63.1 % 1,396,386 789,467 76.9 %administrative

1,564,378 713,426 119.3 % 3,223,997 1,396,972 130.8 %



Operating income 107,574 221,726 (51.5 ) 351,553 421,218 (16.5 ) % %



Interest and 2,787 6,176 (54.9 ) 5,293 9,112 (41.9 )other income % %

Interest and (82,855 ) (65,616 ) 26.3 % (175,499 ) (124,697 ) 40.7 %other expense

(80,068 ) (59,440 ) 34.7 % (170,206 ) (115,585 ) 47.3 %



Income beforeincome taxes and ) )equity in income 27,506 162,286 (83.1 % 181,347 305,633 (40.7 %of equity methodinvestments

Income tax (836 ) (32,247 ) (97.4 ) (16,338 ) (56,388 ) (71.0 )expense % %

Income beforeequity in income 26,670 130,039 (79.5 ) 165,009 249,245 (33.8 )of equity method % %investments

Equity in incomeof equity method 12,774 - nm 25,041 - nminvestments, netof tax

Net income 39,444 130,039 (69.7 ) 190,050 249,245 (23.7 ) % %

Net incomeattributable to ) )noncontrolling (2,113 ) (9,581 ) (77.9 % (9,147 ) (16,445 ) (44.4 %interests, netof income tax

Net income ) )attributable to $ 37,331 $ 120,458 (69.0 % $ 180,903 $ 232,800 (22.3 %Global Payments



Earnings pershare attributable toGlobal Payments:

Basic $ 0.12 $ 0.77 (84.4 ) $ 0.60 $ 1.48 (59.5 ) % %

Diluted $ 0.12 $ 0.77 (84.4 ) $ 0.60 $ 1.48 (59.5 ) % %



Weighted-averagenumber of shares outstanding:

Basic 299,140 156,768 299,264 157,141

Diluted 300,246 157,262 300,541 157,638

------------------------------------------------------- nm - not meaningful

SCHEDULE 2NON-GAAP FINANCIAL MEASURES (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands, except per share data)



Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 % 2020 2019 % Change Change



Adjusted net $ 1,520,898 $ 888,418 71.2 % $ 3,249,749 $ 1,721,480 88.8 %revenue



Adjustedoperating $ 562,219 $ 360,694 55.9 % $ 1,236,927 $ 689,326 79.4 %income



Adjusted netincomeattributable $ 394,313 $ 236,830 66.5 % $ 868,157 $ 448,928 93.4 %to GlobalPayments



Adjusteddilutedearnings per )share $ 1.31 $ 1.51 (13.2 % $ 2.89 $ 2.85 1.4 %attributableto GlobalPayments



Non-GAAPInformationwith 2019 on CombinedBasis^(1):



Adjusted net $ 1,520,898 $ 1,771,860 (14.2 ) $ 3,249,749 $ 3,496,973 (7.1 )revenue^(1) % %



Adjusted ) )operating $ 562,219 $ 662,139 (15.1 % $ 1,236,927 $ 1,283,422 (3.6 %income^(1)

------------------------------------------------------- (1) The non-GAAP information for 2019 is presented on a combined basis and includes TSYS results for the three and six months ended 2019 determined in accordance with GAAP applied by TSYS and presented with Global Payments' adjustments to revenue and operating income.

See Schedules 6 and 7 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure.

NON-GAAP FINANCIAL MEASURESGlobal Payments supplements revenues, income, operating income, operating margin and EPS information determined in accordance with U.S. GAAP by providing these measures, and other measures, with certain adjustments (such measures being non-GAAP financial measures) in this document to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. Management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers. Management uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. Adjusted net revenue, adjusted operating income, adjusted operating margin, adjusted net income and adjusted EPS should be considered in addition to, and not as substitutes for, revenues, operating income, net income and EPS determined in accordance with GAAP. The non-GAAP financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

Adjusted net revenue excludes gross-up related payments associated with certain lines of business to reflect economic benefits to the company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses. Adjusted operating income, adjusted net income and adjusted EPS exclude acquisition-related amortization expense, share-based compensation expense, acquisition and integration expense and certain other items, such as unusual, direct and discrete costs due to the global pandemic, specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6 and 7. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenue. The tax rate used in determining the income tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

SCHEDULE 3SEGMENT INFORMATION (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands)

Three Months Ended

June 30, 2020 June 30, 2019 % Change

GAAP Non-GAAP GAAP Non-GAAP^(1) GAAP Non-GAAP



Revenues:

Merchant $ 1,001,555 $ 905,663 $ 929,914 $ 1,150,912 7.7 % (21.3 )%Solutions

Issuer 470,025 414,207 5,238 437,684 nm (5.4 )%Solutions

Business andConsumer 216,722 216,722 - 196,143 nm 10.5 %Solutions

Intersegment (16,350 ) (15,694 ) - (12,879 ) nm (21.9 )%Elimination

$ 1,671,952 $ 1,520,898 $ 935,152 $ 1,771,860 78.8 % (14.2 )%



Operating income:

Merchant $ 175,078 $ 371,476 $ 283,411 $ 521,849 (38.2 ) (28.8 )%Solutions %

Issuer 58,027 177,114 3,596 159,121 nm 11.3 %Solutions

Business andConsumer 48,195 70,105 - 48,230 nm 45.4 %Solutions

Corporate (173,726 ) (56,476 ) (65,281 ) (67,061 ) (166.1 ) 15.8 % %

$ 107,574 $ 562,219 $ 221,726 $ 662,139 (51.5 ) (15.1 )% %

Six Months Ended

June 30, 2020 June 30, 2019 % Change

GAAP Non-GAAP GAAP Non-GAAP^(1) GAAP Non-GAAP



Revenues:

Merchant $ 2,216,824 $ 2,007,007 $ 1,807,696 $ 2,233,455 22.6 % (10.1 )%Solutions

Issuer 973,787 856,193 10,494 876,414 nm (2.3 )%Solutions

Business andConsumer 420,668 420,668 - 415,321 nm 1.3 %Solutions

Intersegment (35,729 ) (34,119 ) - (28,217 ) nm (20.9 )%Elimination

$ 3,575,550 $ 3,249,749 $ 1,818,190 $ 3,496,973 96.7 % (7.1 )%



Operating income:

Merchant $ 479,231 $ 871,901 $ 521,540 $ 994,087 (8.1 ) (12.3 )%Solutions %

Issuer 117,331 351,792 7,035 313,581 nm 12.2 %Solutions

Business andConsumer 79,307 122,591 - 105,989 nm 15.7 %Solutions

Corporate (324,316 ) (109,357 ) (107,357 ) (130,235 ) (202.1 ) 16.0 % %

$ 351,553 $ 1,236,927 $ 421,218 $ 1,283,422 (16.5 ) (3.6 )% %

------------------------------------------------------- nm - not meaningful

(1) The non-GAAP information for 2019 is presented on a combined basis and includes TSYS results for the three and six months ended 2019 determined in accordance with GAAP applied by TSYS and presented with Global Payments' adjustments to revenue and operating income and segment reporting structure.

See Schedules 8 and 9 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 2 for a discussion of non-GAAP financial measures.

SCHEDULE 4CONSOLIDATED BALANCE SHEETS (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands, except share data)

June 30, 2020 December 31, 2019



ASSETS

Current assets:

Cash and cash equivalents $ 1,825,625 $ 1,678,273

Accounts receivable, net 788,697 895,232

Settlement processing assets 1,314,811 1,353,778

Prepaid expenses and other current assets 422,208 439,165

Total current assets 4,351,341 4,366,448

Goodwill 23,679,923 23,759,740

Other intangible assets, net 12,538,621 13,154,655

Property and equipment, net 1,477,635 1,382,802

Deferred income taxes 6,220 6,292

Other noncurrent assets 1,947,737 1,810,225

Total assets $ 44,001,477 $ 44,480,162



LIABILITIES AND EQUITY

Current liabilities:

Settlement lines of credit $ 439,474 $ 463,237

Current portion of long-term debt 833,334 35,137

Accounts payable and accrued liabilities 1,606,028 1,822,166

Settlement processing obligations 1,350,507 1,258,806

Total current liabilities 4,229,343 3,579,346

Long-term debt 8,440,267 9,090,364

Deferred income taxes 2,972,142 3,145,641

Other noncurrent liabilities 726,736 609,822

Total liabilities 16,368,488 16,425,173

Commitments and contingencies

Equity:

Preferred stock, no par value; 5,000,000 shares - - authorized and none issued

Common stock, no par value; 400,000,000 sharesauthorized at June 30, 2020 and December 31,2019; 299,244,326 issued and outstanding at - - June 30, 2020 and 300,225,590 issued andoutstanding at December 31, 2019

Paid-in capital 25,570,582 25,833,307

Retained earnings 2,314,423 2,333,011

Accumulated other comprehensive loss (459,146 ) (310,571 )

Total Global Payments shareholders' equity 27,425,859 27,855,747

Noncontrolling interests 207,130 199,242

Total equity 27,632,989 28,054,989

Total liabilities and equity $ 44,001,477 $ 44,480,162

SCHEDULE 5CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands)

Six Months Ended

June 30, 2020 June 30, 2019



Cash flows from operating activities:

Net income $ 190,050 $ 249,245

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of property and 172,229 82,760 equipment

Amortization of acquired intangibles 628,264 210,993

Amortization of capitalized contract costs 38,070 31,965

Share-based compensation expense 62,805 27,914

Provision for operating losses and bad debts 66,921 18,637

Noncash lease expense 47,770 17,989

Deferred income taxes (96,458 ) (6,483 )

Other, net (14,218 ) 4,480

Changes in operating assets and liabilities, net of the effects of business combinations:

Accounts receivable 56,186 (49,774 )

Settlement processing assets and obligations, net 136,453 (41,715 )

Prepaid expenses and other assets (97,653 ) (148,435 )

Accounts payable and other liabilities (230,130 ) (150,223 )

Net cash provided by operating activities 960,289 247,353

Cash flows from investing activities:

Acquisitions, net of cash acquired (74,095 ) (78,245 )

Capital expenditures (208,384 ) (133,312 )

Other, net 12,188 13,182

Net cash used in investing activities (270,291 ) (198,375 )

Cash flows from financing activities:

Net (repayments of) borrowings from settlement (25,546 ) 32,163 lines of credit

Proceeds from long-term debt 1,867,008 586,000

Repayments of long-term debt (1,809,199 ) (569,119 )

Payments of debt issuance costs (8,006 ) -

Repurchases of common stock (421,162 ) (233,996 )

Proceeds from stock issued under share-based 42,632 12,952 compensation plans

Common stock repurchased - share-based (39,226 ) (11,167 )compensation plans

Distributions to noncontrolling interests - (26,239 )

Dividends paid (116,591 ) (3,137 )

Net cash used in financing activities (510,090 ) (212,543 )

Effect of exchange rate changes on cash (32,556 ) 414

Increase (decrease) in cash and cash equivalents 147,352 (163,151 )

Cash and cash equivalents, beginning of the 1,678,273 1,210,878 period

Cash and cash equivalents, end of the period $ 1,825,625 $ 1,047,727

SCHEDULE 6RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands, except per share data)

Three Months Ended June 30, 2020

Income Net Revenue Earnings GAAP Taxes on Non-GAAP Adjustments^ Adjustments (1) ^(2) Adjustments ^(3)



Revenues $ 1,671,952 $ (151,054 ) $ - $ - $ 1,520,898



Operating $ 107,574 $ 2,685 $ 451,960 $ - $ 562,219 income



Net incomeattributable $ 37,331 $ 2,685 $ 452,443 $ (98,146 ) $ 394,313 to GlobalPayments



Dilutedearnings pershare $ 0.12 $ 1.31 attributableto GlobalPayments



Dilutedweightedaverage 300,246 300,246 sharesoutstanding



Three Months Ended June 30, 2019

Income Net Revenue Earnings GAAP Taxes on Non-GAAP Adjustments^ Adjustments (1) ^(2) Adjustments ^(3)



Revenues $ 935,152 $ (46,734 ) $ - $ - $ 888,418



Operating $ 221,726 $ 4,234 $ 134,734 $ - $ 360,694 income



Net incomeattributable $ 120,458 $ 4,234 $ 135,643 $ (23,505 ) $ 236,830 to GlobalPayments



Dilutedearnings pershare $ 0.77 $ 1.51 attributableto GlobalPayments



Dilutedweightedaverage 157,262 157,262 sharesoutstanding

------------------------------------------------------- (1) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the three months ended June 30, 2020 and June 30, 2019, includes $2.7 million and $4.2 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(2) For the three months ended June 30, 2020, earnings adjustments to operating income included $328.3 million in Cost of Service (COS) and $123.6 million in Selling, General, & Administrative (SG&A) expenses. Adjustments to COS include $314.4 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $11.0 million of other items. Adjustments to SG&A include $35.0 million of share-based compensation expense, $82.2 million of acquisition and integration expenses and $6.4 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

Net income attributable to Global Payments also reflects the removal of a $2.0 million loss associated with the partial sale of an ownership position in a strategic partner.

For the three months ended June 30, 2019, earnings adjustments to operating income include $105.2 million in COS and $29.5 million in SG&A expenses. Adjustments to COS include $104.1 million of amortization of acquired intangibles and $1.1 million of acquisition and integration expenses. Adjustments to SG&A include $16.5 million of share-based compensation expense and $13.0 million of acquisition and integration expenses. Net income attributable to Global Payments also reflects an adjustment to remove a $2.9 million charge to interest expense associated with the bridge facility the company entered into in connection with the proposed TSYS merger.

(3) Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

See "Non-GAAP Financial Measures" discussion on Schedule 2.

SCHEDULE 7UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURESGLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands, except per share data)

Six Months Ended June 30, 2020

Income Net Revenue Earnings GAAP Taxes on Non-GAAP Adjustments^ Adjustments (1) ^(2) Adjustments^ (3)



Revenues $ 3,575,550 $ (325,801 ) $ - $ - $ 3,249,749



Operating $ 351,553 $ 5,584 $ 879,790 $ - $ 1,236,927 income



Net incomeattributable $ 180,903 $ 5,584 $ 885,384 $ (203,714 ) $ 868,157 to GlobalPayments



Dilutedearnings pershare $ 0.60 $ 2.89 attributableto GlobalPayments



Dilutedweightedaverage 300,541 300,541 sharesoutstanding



Six Months Ended June 30, 2019

Income Net Revenue Earnings GAAP Taxes on Non-GAAP Adjustments^ Adjustments (1) ^(2) Adjustments^ (3)



Revenues $ 1,818,190 $ (96,710 ) $ - $ - $ 1,721,480



Operating $ 421,218 $ 8,641 $ 259,467 $ - $ 689,326 income



Net incomeattributable $ 232,800 $ 8,641 $ 258,376 $ (50,889 ) $ 448,928 to GlobalPayments



Dilutedearnings pershare $ 1.48 $ 2.85 attributableto GlobalPayments



Dilutedweightedaverage 157,638 157,638 sharesoutstanding

------------------------------------------------------- (1) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the six months ended June 30, 2020 and June 30, 2019, includes $5.6 million and $8.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(2) For the six months ended June 30, 2020, earnings adjustments to operating income included $648.6 million in COS and $231.1 million in SG&A expenses. Adjustments to COS include $629.2 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $16.5 million of other items. Adjustments to SG&A include $62.8 million of share-based compensation expense, $153.8 million of acquisition and integration expenses and $14.5 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

Net income attributable to Global Payments also reflects the removal of a $8.7 million loss associated with the partial sale of an ownership position in a strategic partner.

For the six months ended June 30, 2019, earnings adjustments to operating income include $214.0 million in COS and $45.5 million in SG&A expenses. Adjustments to COS include $212.1 million of amortization of acquired intangibles and $1.9 million of acquisition and integration expenses. Adjustments to SG&A include $27.9 million of share-based compensation expense and $17.6 million of acquisition and integration expenses. Net income attributable to Global Payments also reflects an adjustment to remove a $2.9 million charge to interest expense associated with the bridge facility the company entered into in connection with the proposed TSYS merger.

(3) Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

See "Non-GAAP Financial Measures" discussion on Schedule 2.

SCHEDULE 8RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)GLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands)

Three Months Ended June 30, 2020

Net Revenue Earnings GAAP Non-GAAP Adjustments^ Adjustments (2) ^(3)



Revenues:

Merchant $ 1,001,555 $ (95,892 ) $ - $ 905,663 Solutions

Issuer 470,025 (55,818 ) - 414,207 Solutions

Business andConsumer 216,722 - - 216,722 Solutions

Intersegment (16,350 ) 656 - (15,694 )Eliminations

$ 1,671,952 $ (151,054 ) $ - $ 1,520,898



Operating income:

Merchant $ 175,078 $ 320 $ 196,078 $ 371,476 Solutions

Issuer 58,027 2,365 116,722 177,114 Solutions

Business andConsumer 48,195 - 21,910 70,105 Solutions

Corporate (173,726 ) - 117,250 (56,476 )

$ 107,574 $ 2,685 $ 451,960 $ 562,219



Three months ended June 30, 2019

Net Revenue Earnings GAAP TSYS^(1) Non-GAAP Adjustments^ Adjustments (2) ^(3)



Revenues:

Merchant $ 929,914 $ 361,194 $ (140,196 ) $ - $ 1,150,912 Solutions

Issuer 5,238 487,517 (55,071 ) - 437,684 Solutions

Business andConsumer - 196,143 - - 196,143 Solutions

Intersegment - (13,552 ) 673 - (12,879 )Eliminations

$ 935,152 $ 1,031,302 $ (194,594 ) $ - $ 1,771,860



Operating income:

Merchant $ 283,411 $ 86,005 $ 4,234 $ 148,199 $ 521,849 Solutions

Issuer 3,596 155,525 - - 159,121 Solutions

Business andConsumer - 34,996 - 13,234 48,230 Solutions

Corporate (65,281 ) (57,438 ) - 55,658 (67,061 )

$ 221,726 $ 219,088 $ 4,234 $ 217,091 $ 662,139

(1) Represents TSYS financial information determined in accordance with GAAP applied by TSYS and presented in Global Payments new segment reporting structure, net of revenues between legacy Global Payments and TSYS considered intercompany revenue following the merger.

(2) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the three months ended June 30, 2020 and June 30, 2019, includes $2.7 million and $4.2 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(3) For the three months ended June 30, 2020, earnings adjustments to operating income included $328.3 million in COS and $123.6 million in SG&A expenses. Adjustments to COS include $314.4 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $11.0 million of other items. Adjustments to SG&A include $35.0 million of share-based compensation expense, $82.2 million of acquisition and integration expenses and $6.4 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

For the three months ended June 30, 2019, earnings adjustments to operating income include $158.9 million in COS and $58.2 million in SG&A expenses. Adjustments to COS include $157.8 million of amortization of acquired intangibles and $1.1 million of acquisition and integration expenses. Adjustments to SG&A include $40.2 million of share-based compensation expense and $18.0 million of acquisition and integration expenses.

See "Non-GAAP Financial Measures" discussion on Schedule 2.

SCHEDULE 9UNAUDITED RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAPMEASURESGLOBAL PAYMENTS INC. AND SUBSIDIARIES(In thousands)

Six Months Ended June 30, 2020

Net Revenue Earnings GAAP Non-GAAP Adjustments^ Adjustments (2) ^(3)



Revenues:

Merchant $ 2,216,824 $ (209,817 ) $ - $ 2,007,007 Solutions

Issuer 973,787 (117,594 ) - 856,193 Solutions

Business andConsumer 420,668 - - 420,668 Solutions

Intersegment (35,729 ) 1,610 - (34,119 )Eliminations

$ 3,575,550 $ (325,801 ) $ - $ 3,249,749



Operating income:

Merchant $ 479,231 $ 517 $ 392,153 $ 871,901 Solutions

Issuer 117,331 5,067 229,394 351,792 Solutions

Business andConsumer 79,307 - 43,284 122,591 Solutions

Corporate (324,316 ) - 214,959 (109,357 )

$ 351,553 $ 5,584 $ 879,790 $ 1,236,927



Six Months Ended June 30, 2019

Net Revenue Earnings GAAP TSYS^(1) Non-GAAP Adjustments^ Adjustments (2) ^(3)



Revenues:

Merchant $ 1,807,696 $ 701,018 $ (275,259 ) $ - $ 2,233,455 Solutions

Issuer 10,494 974,771 (108,851 ) - 876,414 Solutions

Business andConsumer - 415,321 - - 415,321 Solutions

Intersegment $ - (29,536 ) 1,319 - (28,217 )Eliminations

$ 1,818,190 $ 2,061,574 $ (382,791 ) $ - $ 3,496,973



Operating income:

Merchant $ 521,540 $ 161,226 $ 8,641 $ 302,680 $ 994,087 Solutions

Issuer 7,035 306,546 - - 313,581 Solutions

Business andConsumer - 79,521 - 26,468 105,989 Solutions

Corporate (107,357 ) (104,935 ) - 82,057 (130,235 )

$ 421,218 $ 442,358 $ 8,641 $ 411,205 $ 1,283,422

(1) Represents TSYS financial information determined in accordance with GAAP applied by TSYS and presented in Global Payments new segment reporting structure, net of revenues between legacy Global Payments and TSYS considered intercompany revenue following the merger.

(2) Represents adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. Also, for the six months ended June 30, 2020 and June 30, 2019, includes $5.6 million and $8.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

(3) For the six months ended June 30, 2020, earnings adjustments to operating income included $648.6 million in COS and $231.1 million in SG&A expenses. Adjustments to COS include $629.2 million of amortization of acquired intangibles, $2.9 million of acquisition and integration expenses and $16.5 million of other items. Adjustments to SG&A include $62.8 million of share-based compensation expense, $153.8 million of acquisition and integration expenses and $14.5 million of other items. Other items included in COS and SG&A include employee termination benefits and other incremental charges directly related to COVID-19.

For the six months ended June 30, 2019, earnings adjustments to operating income include $322.7 million in COS and $88.5 million in SG&A expenses. Adjustments to COS include $320.8 million of amortization of acquired intangibles and $1.9 million of acquisition and integration expenses. Adjustments to SG&A include $62.3 million of share-based compensation expense and $26.2 million of acquisition and integration expenses.

See "Non-GAAP Financial Measures" discussion on Schedule 2.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200803005127/en/

CONTACT: Investor contact: investor.relations@globalpay.com Winnie Smith 770-829-8478

CONTACT: Media contact: media.relations@globalpay.com Emily Edmonds 770-829-8755