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Total System's (TSS) Q2 Earnings Beat Estimates, View Up

Total System Services, Inc. 's TSS second-quarter 2018 earnings per share of $1.11 surpassed the Zacks Consensus Estimate by 2.7% and surged 30.5% year over year. Exceptional performances by all three segments have contributed to this favorable result.

Total System Services, Inc. Price and EPS Surprise

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

Net revenues were $956.5 million, up 13.3% year over year. The top line also beat the Zacks Consensus Estimate by 2.5%.

The company reported adjusted EBITDA of $345 million, up 12.1% from the year-ago quarter.

Issuer Solutions

In the second quarter, net revenues for this segment increased 7.2% year over year to $421 million driven by 13.3% increase in total transaction year over year.

Operating income of $151 million was up 2.9% year over year. Operating margin of 36% contracted 150 basis points (bps) from the year-ago period.

Merchant Solutions

Net revenues rose 24.3% to $346.4 million. It was mainly backed by Cayan's strong performance and the benefit of the low double-digit organic net revenue growth of pre-Cayan business. Dollar sales volume for the segment grew 29.7% year over year to $40.3 billion.

Operating income increased 22.4% to $124.8 million while operating margin declined 60 basis points to 36% from the prior-year quarter.

Consumer Solutions

Net revenues for this segment amounted to $200 million, up 9.4%, driven by 9.6% growth in GDV and solid contribution across all four distribution channels.

Operating income rose 9.1% to $50.2 million while operating margin contracted 10 basis points to 25.1%.

Financial Position

Total assets jumped 18% from Mar 31, 2018 to $7.5 billion as of Jun 30, 2018.

Total shareholders' equity climbed to $2.5 billion on Jun 30, 2018 from $2.2 billion at the end of March 2018.

Free cash flow for the first six months of 2018 totaled $382.8 million, up 14.1% from the first half of 2017.

2018 Guidance

Driven by strong second-quarter results and favorable expectations for the remaining year, the company has raised its 2018 view. The company expects total revenues on a GAAP basis in the range of $3.9-$4 billion, down 20-18%. On a non-GAAP basis, net revenues are anticipated in the range of $3.7-$3.8 billion, reflecting year-over-year growth of 10-13%.

GAAP EPS will likely be in the $3.02-$3.12 band, down 4-1% from the prior-year quarter. Adjusted EPS is expected between $4.3 and $4.4, reflecting an increase of about 28-31%.

Zacks Rank

Total System Services carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Alliance Data's ADS second-quarter bottom line beat estimates on the back Card Services and LoyaltyOne segment results.

Green Dot Corporation GDOT is set to release second-quarter 2018 earnings on Aug 8 and the consensus mark for the same stands at 63 cents per share, representing improvement from a loss of 14.5% from the year-ago period. The stock carries a Zacks Rank #2 (Buy).

WEX Inc. WEX is slated to release second-quarter 2018 earnings on Aug 2 and the Zacks Consensus Estimate for the same is pegged at $2.03, translating into a year-over-year rise of 61%. The stock has a Zacks Rank of 2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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