Record transaction processing and growth in the company's noncard businesses helped merchant processor Heartland Payment Systems Inc. generate a 44% second-quarter lift to its profits.
Net income attributable to Heartland was $17.8 million, up from $12.4 million a year earlier, the company reported July 31. Net revenue after interchange, dues and assessments rose 10.9%, to $135.5 million from $122.2 million.
"New business in the quarter was the best in several years, with new margin installed increasing over 20% from a year ago as our 'Durbin Dollars' marketing campaign continues to bolster results and both our established and newly hired relationship managers achieved individual record levels of new business production," Robert Carr, Heartland's chairman and CEO, stated in the company's earnings release.
'Durbin Dollars' is what Princeton, N.J.-based Heartland calls the pass-through of the Federal Reserve Board's cap on debit card interchange to merchants that became effective Oct. 1.
Small and Mid-Sized Enterprise quarterly transaction processing volume totaled $18.6 billion, up 6.2% from the second quarter of 2011. Same-store sales rose 2.2%, and volume attrition was 12.7%, Heartland said.
Heartland's performance for the quarter was "solid," Thomas C. McCrohan and Leonard A. DeProspo of Janney Capital Markets said in a report published today. The net new margin installed, which is a sign of new business, was the best the company has had in three years at $15.1 million, a 20% boost year over year, they wrote. Though same-store sales were up 2.2%, the growth was down from 2.5% last year, but still "solidly in positive territory," the note said.
Heartland serves about 238,000 merchants in the U.S. and Canada, and about 85% of the company's revenue comes from processing and settling Visa and MasterCard transactions for its merchant customers, according to the analysts.
The processor recently chose Lincoln, Neb., for its "city immersion campaign" marketing push. The company also is securing increased business by helping schools make their foodservice operations more efficient.
In June, Heartland announced changes in leadership positions as the company looks to secure future growth.