Global Payments Inc.

Overview Key strengths Key risks Large-scale payment processor with a strong market position in North American credit card processing. Willingness to maintain elevated leverage for prolonged periods. Multi-channel go-to-market strategy to gain share in the expanding merchant business. Concentrated exposure to financial institution clients in the card issuing business leads to pricing pressure. Strong margins and free cash flow. Exposure to small- and midsize merchants leads to high churn. Need to invest to remain relevant in highly competitive industry. GPN?s leverage has remained elevated largely due to its sizable acquisition of EVO payments in August 2022. With the acquisition closing in March 2023, alongside completing its divestment of NetSpend in April 2023, the business realigned its strategic focus on merchant

...Despite Global Payments Inc.'s (GPN)'s elevated leverage, the company's strong cash flow generation and capital allocation policy will likely support an improvement in its leverage to the mid-3x area over the next 12 months. GPN's leverage has remained elevated largely due to its sizable acquisition of EVO payments in August 2022. With the acquisition closing in March 2023, alongside completing its divestment of NetSpend in April 2023, the business realigned its strategic focus on merchant processing. The company has also taken a few actions that are modestly credit negative including providing seller financing for its disposition of NetSpend and issuing incremental debt (in the form of convertible notes) for opportunistic repurchase of stock in the quarter ended March 31, 2024. While we still expect GPN will deleverage to the 3.8x area...

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