[May 01, 2015]

Heartland Payment Systems Reports $0.62 Adjusted Earnings Per Share, a First Quarter Record

Heartland Payment Systems, Inc. (NYSE: HPY), one of the nation's largest payment processors, today announced record first quarter Adjusted Net Income and Adjusted Earnings per Share of $23.1 million and $0.62, respectively, for the quarter ended March 31, 2015. Adjusted Net Income and Adjusted Earnings per Share were $19.4 million and $0.52, respectively, for the quarter ended March 31, 2014. For the first quarter of 2015, Heartland reported GAAP Net Income of $17.2 million, or $0.46 per share. Adjusted Net Income and Adjusted Earnings per Share are non-GAAP measures that are detailed later in this press release in the section "Reconciliation of Non-GAAP Financial Measures."

Highlights for the first quarter of 2015 include:

• New margin installed was an all-time record $21.7 million, a 9.6% increase from the first quarter of 2014
• Same store sales were up 4.4%, contributing to a reduction of net volume attrition to 9.6%, both the best performance in over five years
• Small and Mid-Sized Enterprise (SME) quarterly transaction processing volume was $20.8 billion, up 15.6% from $18.0 billion in the first quarter of 2014
• Quarterly Net Revenue was $190.3 million, up 22.4% from the first quarter of 2014
• Adjusted Operating Margin for the first quarter of 2015 was 20.7%, compared with 20.9% for the first quarter of 2014

Operating results for the first quarter of 2015 include:

• Incremental general and administrative expenses of $2.9 million for the Heartland Summit, $0.9 million for Leaf ($3.2 million total for the first quarter) and $1.0 million for costs associated with acquisitions consummated in the period. All impacted first quarter Operating Margin.
• Stock compensation expense of $4.6 million, an $0.8 million increase
• Depreciation and amortization expense of $5.0 million for acquired intangibles amortization, a $2.7 million increase
• A lower effective tax rate due to partial recognition of benefits of past accumulated losses of Leaf; it is expected the tax rate will return to historical levels in the remaining three quarters of this year

Robert O. Carr, Chairman and CEO, said, "For the fifth consecutive quarter, we increased the rate of growth in our processing volume, driving outstanding growth on both the top and bottom line. With another quarter of record new margin installed and growing momentum across all of our business drivers, the investments we have committed to our people and processes are clearly strengthening the Heartland franchise in the market, laying a solid foundation for sustained growth. We're generating the same success in our non-card businesses, where revenue is up nearly 50 percent from both organic growth as well as the rapid integration of acquisitions, including Payroll 1, which we are pleased to welcome to the Heartland team this quarter. The payments and related industries are increasingly recognizing and rewarding innovation, and Heartland remains committed to investing in our technology to continue to improve the utility and security of our products so that our merchants can enhance the productivity and efficiency of their businesses."

SME card processing volume for the three months ended March 31, 2015 was $20.8 billion, a 15.6% improvement compared to the year-ago period and the fifth consecutive quarter in which the rate of year-over-year card transaction processing growth has accelerated. Core Visa and MasterCard (News - Alert) volume processed in the quarter was up 11.4% compared to the year-ago period. Non-card revenue growth in the quarter was 49% compared to the first quarter of 2014, with strong organic growth supplemented by contributions from recent acquisitions. The operating margin in the quarter reflected the Heartland Summit and costs for acquisitions closed in the quarter, as well as a full quarter of operating expenses for Leaf. The expense from the Heartland Summit will not recur over the remainder of this year and Leaf is winding down. In addition, total expenses reflected a 49% increase in total depreciation and amortization, which, including amounts classified as processing and servicing costs, rose to $14.7 million in the quarter from $9.9 million in the first quarter of last year, primarily due to an increase in the amortization of both system development and acquired intangibles.

Mr. Carr continued, "Heartland Commerce is a focal point of our strategy to offer the industry's most compelling integrated electronic payments processing platform with the highest level of security. We are delighted by the enthusiasm the market - including both dealers and merchants - is showing for our offering, and we are making significant progress integrating operations to leverage our resources and market relationships to extend our technological leadership. Through Heartland Commerce, we are bringing the same best-of-both-worlds integration and security enjoyed by larger merchants to the small to mid-sized merchant community through integrated POS technology incorporating our proprietary out-of-scope solution that eliminates risks inherent in integrated POS in the market. Our goal is to build Heartland Commerce into the leading provider of electronic payments solutions that offers not only the most comprehensive functionality, but an uncompromised level of security."

FULL YEAR 2015 GUIDANCE:

For full year 2015, we expect Net Revenue to grow 17% to 19%, to between approximately $790 million and $800 million, and adjusted EPS to be in the range of $2.78- $2.85. Guidance assumes after-tax share-based compensation and acquisition-related amortization expenses reduce earnings per share by $0.66 for the year and an approximate 39% tax rate.

BOARD DECLARES QUARTERLY DIVIDEND

The Company also announced that the Board of Directors declared a quarterly dividend of $0.10 per common share payable June 15, 2015 to shareholders of record on May 28, 2015.

CONFERENCE CALL

Heartland Payment Systems, Inc. will host a conference call on May 1, 2015 at 8:30 a.m. Eastern Time to discuss financial results and business highlights. Heartland Payment Systems invites all interested parties to listen to its conference call, broadcast through a webcast on the Company's website. To access the call, please visit the Investor Relations portion of the Company's website at: www.heartlandpaymentsystems.com/about/investor-relations. The conference call may be accessed by calling (888)-317-6003. Please provide the operator with PIN number 0530331. The webcast will be archived on the Company's website within two hours of the live call.

ABOUT HEARTLAND

Heartland Payment Systems, Inc. (NYSE: HPY), one of the largest payment processors in the United States, delivers credit/debit/prepaid card processing and security technology through Heartland Secure™ and its comprehensive Heartland breach warranty. Heartland also offers point of sale, mobile commerce, e-Commerce, marketing solutions, payroll solutions, and related business solutions and services to more than 300,000 business and educational locations nationwide.

A FORTUNE 1000 company, Heartland is the founding supporter of the Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. Heartland also established the Sales Professional Bill of Rights to advocate for the rights of sales professionals everywhere.

Forward-looking Statements

This press release contains statements of a forward-looking nature which represent our management's beliefs and assumptions concerning future events. Forward-looking statements involve risks, uncertainties and assumptions and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, including risks and additional factors that are described in the Company's Securities and Exchange Commission filings, including but not limited to the Company's annual report on Form 10-K for the year ended December 31, 2014. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

TABLES FOLLOW

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company provides additional measures of its operating results on a continuing operations basis, namely income from operations, operating margin, net income and earnings per share, which exclude acquisition-related amortization expense and share-based compensation expense. These measures meet the definition of a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company believes that application of these non-GAAP financial measures is appropriate to enhance understanding of its historical performance, its performance relative to its competitors, as well as prospects for its future performance.

This press release contains non-GAAP financial measures. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the three months ended March 31, 2015 and 2014 follows (in thousands except per share data):

[ Back To TMCnet.com's Homepage ]