Global Payments Earnings Call Nuggets: Canada Trends and North America Margins
Global Payments, Inc. (NYSE:GPN) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.
Roman Leal – Goldman Sachs: Maybe we start with Canada and you know what, it’s good to hear you’re reaffirming the expectations of acceleration in the fourth quarter. But this quarter seemed a little bit weaker than what we were expecting. What gives you confidence in that, perhaps, can you walk us through what you saw maybe in January, February, March? Is the trend relatively improving over the last two months?
Jeffrey S. Sloan – President: Yeah, Roman, it’s Jeff. I’m going to start on Canada and David will certainly join me. So, the first thing, I’ll point to David’s commentary, in his prepared remarks is we saw a mid-single decline on spread in the quarter as he described. While we’re not what we want to be, as it relates to spread, that is an improvement as you had mentioned, Roman. That is an improvement in our performance in Canada that we’ve seen over the last number of quarters. So you may remember that in managing Canada, it’s a mix of spread, transaction growth, the economic environment, new sales and controllable costs. Spread has been a big driver over the last number of quarters in terms of results and that mid-single decline that David referenced is important to note. The second thing I would say that we saw in the quarter is a change and a decline in volumes. So, when you look at volume in Canada, and now I’m talking about specifically Visa volume, not just the Global Payments but for the whole country of Canada for Visa we saw a deceleration in those volumes that also impacted at the margin the results that you refer to in the quarter. So we feel like we are tracking well from share point of view against those metrics but we certainly saw a weakening of Visa volume not specific to Global in the quarter. So when we think about the fourth quarter that David alluded to in his prepared remarks we think we have seen some progress, not what we wanted it to be but some progress on spread declines a little bit weaker than economy as reflected in the Visa volumes and in the actions that we have talked about before for the fourth quarter that should help us finish the year as we alluded to. David you want to?
David Mangum – SEVP and CFO: Yes. Just to add a little more color to that. Obviously in the fourth quarter you have heard us say before it’s a pretty important quarter to watch the spread trends and make sure that what we saw annualizing early in the calendar year in terms of the big spread declines from last year really do start to coming in sort of a more manageable level to which you hopefully then can marry transaction growth, which we unfortunately didn’t see in Q3; to then the other opportunities of managed economics of the business with the new assessments coming out and the new opportunities to manage around those assessments, for hopefully greater economic return, in the fourth quarter…