Global Payments(GPN) - 2022 Q4 - Annual Report

Financial Performance - Consolidated revenues for the year ended December 31, 2022 increased to $8,975.5 million, up from$8,523.8 million in the prior year, driven by increased transaction volumes and digital payment solutions adoption [198]. - Consolidated revenues for the year ended December 31, 2022 increased by 5.3% to $8,975.5 million, compared to$8,523.8 million for the prior year [221]. - Merchant Solutions segment revenues increased by 9.5% to $6,204.9 million, driven by growth in transaction volumes and digital payment solutions [222]. - Issuer Solutions segment revenues increased by 3.7$2,245.6 million, supported by transaction volume growth and the acquisition of MineralTree [223]. - Consumer Solutions segment revenues decreased by 20.8% to $620.5 million, impacted by reduced consumer spending and the absence of prior stimulus payments [224]. - Net income attributable to Global Payments decreased to$111.5 million in 2022 from $965.5 million in 2021, reflecting significant changes in financial performance [237]. - Diluted earnings per share fell to$0.40 in 2022 compared to $3.29 in the previous year, driven by the decline in net income and changes in the weighted-average number of shares outstanding [238]. - Net income for 2022 decreased to$143.3 million from $987.9 million in 2021, representing a decline of approximately 85.5$60.3 million in 2022, compared to a comprehensive income of $933.5 million in 2021 [336]. Operating Income and Expenses - Consolidated operating income for 2022 included an$833.1 million goodwill impairment charge and a $127.2 million loss related to the sale of the Merchant Solutions business in Russia [198]. - Consolidated operating income for the year ended December 31, 2022 was$640.2 million, a decrease of 52.9% compared to $1,358.9 million for the prior year [229]. - Operating expenses increased by 16.3$8,335.4 million, with significant contributions from impairment of goodwill and losses on business dispositions [220]. - Selling, general and administrative expenses increased by 3.9% to $3,524.6 million, accounting for 39.3$833.1 million goodwill impairment charge related to its former Business and Consumer Solutions reporting unit [229]. - Corporate expenses decreased to $777.7 million from$836.0 million, primarily due to lower acquisition and integration expenses [228]. Cash Flow and Capital Allocation - Operating activities generated net cash of $2,244.0 million in 2022, down from$2,780.8 million in 2021, primarily due to fluctuations in operating assets and liabilities [245]. - Cash used in investing activities was $675.5 million in 2022, significantly lower than$2,293.8 million in 2021, with $68.8 million allocated for acquisitions and$615.7 million for capital expenditures [246]. - The company had cash and cash equivalents totaling $1,997.6 million as of December 31, 2022, with$713.0 million available for general purposes [242]. - Proceeds from long-term debt amounted to $9,812.3 million in 2022, an increase from$7,057.7 million in 2021, while repayments rose to $7,895.1 million from$4,826.8 million [248]. - The company repurchased common stock for $2,921.3 million in 2022, compared to$2,533.6 million in 2021, with $1,089.9 million remaining under the share repurchase program as of December 31, 2022 [250]. Debt and Financing - The company issued$1.5 billion in convertible notes and entered into a $5.75 billion revolving credit facility to support capital allocation priorities [204]. - The company entered into a$5.75 billion Revolving Credit Facility on August 19, 2022, with a maturity in August 2027 and an initial applicable margin of 1.375% [264][265]. - As of December 31, 2022, there were no borrowings outstanding under the Revolving Credit Facility, with total available commitments of $2.4 billion [266]. - The company recognized$17.3 million in expenses related to commitment fees for a $4.3 billion Bridge Facility during the year ended December 31, 2022 [268]. - As of December 31, 2022, the company was in compliance with all financial covenants under the Revolving Credit Agreement, requiring a leverage ratio of 3.75 to 1.00 and an interest coverage ratio of 3.00 to 1.00 [269]. Market and Strategic Developments - The company entered into a merger agreement to acquire EVO Payments, Inc. for approximately$4 billion, expected to close in Q1 2023 [198]. - The consumer portion of the Netspend business was sold for $1 billion, with$675 million in seller financing, also expected to close in Q1 2023 [198]. - The gaming business was sold for approximately $400 million, with the transaction expected to close in Q1 2023 [198]. - Future capital investments will focus on developing new technologies and expanding into new markets, particularly in sectors previously dominated by paper-based transactions [202]. - The payments technology industry is expected to continue growing, driven by increased merchant acceptance and the migration to digital payment solutions [201]. Goodwill and Impairment - The company recognized a goodwill impairment charge of$833.1 million for its former Business and Consumer Solutions reporting unit during the three months ended June 30, 2022 [283]. - Goodwill decreased to $23.32 billion in 2022 from$24.81 billion in 2021, a reduction of approximately 6.0% [339]. - The fair value of goodwill was $23,300,000,000 as of December 31, 2022, with$9,500,000,000 allocated to the Issuer Solutions reporting unit [319]. Accounting and Compliance - The company maintained effective internal control over financial reporting as of December 31, 2022, according to the audit opinion [325]. - The audit identified critical matters related to revenue recognition and the evaluation of goodwill for impairment, requiring significant auditor judgment [313]. - The company adopted ASU 2021-08 during 2022, impacting how contract assets and liabilities are recognized in business combinations [354]. - The company’s internal control evaluation was based on the criteria established in the Internal Control - Integrated Framework (2013) issued by COSO [325]. Revenue Recognition and Business Segments - The company recognizes revenue for payment services based on a variable consideration model, directly ascribing fees to the distinct day of service [367]. - Issuer Solutions segment revenues are primarily derived from long-term contracts, with processing services representing a stand-ready obligation [372]. - Consumer Solutions revenues consist of fees collected from cardholders, with charges based on transaction activity or subscription plans [379]. - The company capitalizes implementation costs associated with cloud computing arrangements, amortizing them over the term of the applicable hosting arrangement [358]. - The company capitalizes certain costs to obtain contracts with customers, including employee sales commissions, which are amortized over a typical period of three to seven years [387][388].