Heartland Payment Earnings Beat, Rev Lags

Zacks

Heartland Payment Systems, Inc. (HPY) delivered operating net income of 57 cents per share in second quarter of 2013, surpassing the Zacks Consensus Estimate of 50 cents by 14%. Earnings were 26% higher from 45 cents in the prior year quarter.

Including acquisition related amortization of 4 cents; net income came in at 53 cents per share, up 23% year over year.

Behind the headlines

Heartland Payment generated total revenue of $546.6 million, 6.1% year over year. Total revenue lagged the Zacks Consensus Estimate of $556 million by 1.6%.

Net revenue was $149.7 million, up 13.5% year over year.

Total expenses were $513.3 million, increased 5.6% year over year attributable to increase in cost of services as well as general and administrative expenses.

Operating margin on net revenue expanded 30 basis points year over year to 22.3% in the reported quarter.

Reported quarter small and mid-sized enterprise (:SME) quarterly transaction processing volume was $19.3 billion, up 4.2% year over year.

Same store sales increase 1.9% over prior year quarter.

Financial Details

Heartland Payment exited the quarter with $48.7 million in cash and cash equivalents, improving from $48.4 million at 2012 end level.

Long term borrowings decreased to $40 million at quarter end from $50 million at 2012 end.

Cash from operations of Heartland Payment declined to $28.7 million in the first half of 2013 from $47.3 million in the year ago period.

Dividend and Share Repurchase Update

Heartland Payment spent $19 million to buyback 0.6 million shares in the second quarter. The company is left nearly $70.6 million remaining under its existing repurchase authorization.

The board of directors of Heartland Payment approved a quarterly dividend of 7 cents per share. The dividend will be paid on Sep 13, 2013 to shareholders of record on Aug 23, 2013.

Guidance

Heartland Payment expects to generate net revenue in the range of $600 million and $610 million. Net earnings are expected to be between $2.29 and $2.33 per share. This includes 37 cents per share related to acquisition-related amortization and share-based compensation expense.

Performance of other financial transaction service provider

MasterCard Inc. (MA) reported second-quarter 2013 operating earnings per share of $6.96. The results remarkably beat the Zacks Consensus Estimate of $6.32 and significantly surpassed the year-ago quarter figure of $5.65.

Visa Inc.’s (V) fiscal third-quarter (ended Jun 30, 2013) operating earnings of $1.88 per Class A common share comfortably exceeded the Zacks Consensus Estimate of $1.79 and the prior-year quarter figure of $1.56 per share.

Alliance Data Systems Corporation (ADS) reported adjusted earnings of $2.41 per share in the second quarter of 2013. The results beat the Zacks Consensus of Estimate of $2.18 and was ahead of the year-ago figure by 13%.

Zacks Rank

Heartland Payment carries a Zacks Rank #2 (Buy).



 

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