24 April 2014

FIS reports FY revenue rise

12 February 2013  |  976 views  |  0 Source: FIS

FIS, the world's largest provider of banking and payments technology, today reported a 3.2% increase in GAAP revenue for the year ended December 31, 2012.

GAAP net earnings from continuing operations attributable to common stockholders rose 11.9% to $540.4 million and increased 15.9% to $1.82 per diluted share in 2012.

Full year 2012 revenue increased 4.6% on an organic basis, excluding the impact of foreign currency and acquisitions. On a non-GAAP basis, adjusted net earnings from continuing operations attributable to common stockholders increased 9.1% to $743.6 million for the year, resulting in $2.50 per diluted share, up 12.6% compared to $2.22 per diluted share in 2011.

Average diluted shares outstanding declined approximately 3% to 298 million in 2012 compared to average diluted shares of 307 million in 2011. Free cash flow increased approximately 9% to $872.8 million for the year, compared to $799.3 million in 2011.

"Our strong performance in 2012 reflects the strength of our operating model and success in executing our business strategy," said Frank Martire, chairman and chief executive officer of FIS. "Consistent with our focus on value creation and disciplined capital allocation, we returned $686 million to shareholders through dividends and share repurchases."

Looking ahead, Martire said, "FIS anticipates continued strong performance in 2013, with 4% to 6% revenue growth (3% to 5% organic) and an expected 11% to 15% increase in adjusted earnings per share."

Fourth Quarter 2012
GAAP revenue from continuing operations increased 2.7% to $1.5 billion in the fourth quarter of 2012, and increased 3.1% on an organic basis compared to the fourth quarter of 2011.

GAAP net earnings from continuing operations attributable to common stockholders grew 21.5% to $145.3 million and rose 22.5% to $0.49 per diluted share, compared to $119.6 million, or $0.40 per diluted share, respectively, in the prior year quarter.

EBITDA totaled $470.3 million in the fourth quarter of 2012, as adjusted, compared to $460.2 million in the 2011 quarter. The EBITDA margin of 31.4% was comparable to the fourth quarter of 2011. Adjusted net earnings from continuing operations increased to $201.4 million, or $0.68 per diluted share, compared to $194.6 million, or $0.65 per diluted share in the prior year quarter.

Fourth quarter 2012 results exclude after-tax acquisition related amortization of $39.8 million, or $0.13 per share, and after-tax charges of $16.3 million, or $0.05 per diluted share, related to accelerated vesting of equity grants and other compensation charges. Fourth quarter 2011 results exclude acquisition related purchase amortization and other items totaling $75.0 million after-tax, or $0.25 per diluted share. These excluded items are outlined in Exhibit E of the press release schedules.

Definitions of non-GAAP financial measures and reconciliations of non-GAAP measures to related GAAP measures are provided in subsequent sections of the press release narrative and supplemental schedules.

Full Year 2012
GAAP revenue for the full year 2012 increased 3.2% to $5.8 billion compared to $5.6 billion in 2011. GAAP net earnings from continuing operations attributable to common stockholders grew to $540.4 million, or $1.82 per diluted share in 2012, compared to $483.1 million, or $1.57 per diluted share, in the prior year.

Revenue increased 4.6% organically in 2012 compared to 2011. EBITDA increased 5.3% to $1.75 billion, as adjusted, compared to EBITDA of $1.66 billion, as adjusted, in the prior year.

The EBITDA margin increased 60 basis points to 30.1%, as adjusted, compared to 29.5% in 2011. Adjusted net earnings from continuing operations attributable to common stockholders increased 9.1% to $743.6 million, or $2.50 per diluted share, which is a 12.6% increase compared to $2.22 per diluted share in 2011. Free cash flow increased to $872.8 million for the full year 2012 compared to $799.3 million in 2011, driven by strong operating results and working capital performance.

Excluded from the 2012 adjusted net earnings are after-tax charges of $28.6 million, or $0.10 per share; charges for payments and accelerated vesting of stock option and restricted stock grants associated with the departure or change in role of certain company executives; debt refinancing costs of $12.2 million after-tax, or $0.04 per share; and after-tax acquisition-related amortization of $162.4 million, or $0.55 per share. Excluded from the 2011 results are acquisition-related purchase amortization and other items totaling $198.4 million after tax, or $0.65 per diluted share. These excluded items are outlined in Exhibit E of the press release schedules.

Definitions of non-GAAP financial measures and reconciliations of non-GAAP measures to related GAAP measures are provided in subsequent sections of the press release narrative and supplemental schedules.

Segment Information

The following is a discussion of fourth quarter and full year results by segment:

Financial Solutions:
Fourth quarter 2012 Financial Solutions revenue increased 8.4% to $578.4 million compared to $533.4 million in the 2011 quarter and rose 6.4% on an organic basis. Financial Solutions EBITDA increased 10.9% to $236.9 million compared to $213.7 million in the fourth quarter of 2011. The EBITDA margin expanded 90 basis points to 41.0% compared to the prior year quarter.

For the full year 2012, Financial Solutions revenue increased 8.2% to $2.2 billion compared to $2.1 billion in 2011 and increased 7.0% on an organic basis. Full year 2012 EBITDA increased 5.1% to $884.2 million compared to $841.1 million in 2011. Financial Solutions full year 2012 EBITDA margin was 39.4% compared to 40.5% in 2011 reflecting a change in revenue mix, higher costs related to information security and infrastructure improvements.

Payment Solutions:
Fourth quarter 2012 Payment Solutions revenue totaled $601.3 million compared to $608.9 million in the 2011 quarter. Payment Solutions revenue increased modestly compared to the prior year quarter, excluding the check-related businesses, which totaled $115.1 million and $125.1 million in the fourth quarters of 2012 and 2011, respectively. Continued growth in network solutions and electronic bill payment was offset by previously disclosed client deconversions. Payment Solutions EBITDA totaled $245.9 million compared to $246.7 million in the fourth quarter of 2011. The EBITDA margin expanded 40 basis points to 40.9% compared to the prior-year quarter.

For the full year 2012, Payment Solutions revenue totaled $2.4 billion, which was comparable to 2011. Payment Solutions revenue increased 2.2% excluding the check related businesses which declined to $438.9 million in 2012 compared to $471.7 million in 2011. Double-digit growth in network solutions and electronic bill payment was offset by previously disclosed client deconversions. Full year 2012 EBITDA increased 6.6% to $968.0 million compared to $907.9 million in 2011, and the EBITDA margin expanded 240 basis points to 40.7% compared to 38.3% in 2011, driven by growth in high margin transaction volumes and disciplined cost management.

International Solutions:
Fourth quarter International Solutions revenue, which included a negative currency impact of $16.7 million, increased 0.7% to $320.9 million, and increased 5.9% on an organic basis, excluding an unfavorable currency impact of $16.7 million. International Solutions EBITDA totaled $89.2 million compared to $92.8 million in the prior-year quarter. The EBITDA margin was 27.8% compared to 29.1% compared to the 2011 quarter.

For the full year 2012, International Solutions revenue totaled $1.2 billion including an unfavorable currency impact of approximately $100 million. International Solutions revenue increased 8.7% on an organic basis fueled by strong growth in professional services and consulting revenue. Full year 2012 EBITDA increased 2.0% to $275.3 million compared to $269.9 million in 2011, and the EBITDA margin expanded 40 basis points to 23.3%.

Corporate/Other:
Corporate costs, as adjusted, totaled $101.7 million in the fourth quarter 2012, compared to $93.0 million in the prior-year quarter. For the year, corporate costs, as adjusted, totaled $382.3 million compared to $361.7 million in 2011. The increase in both periods was due primarily to higher investments associated with information security and enterprise risk management.

Interest expense, net of interest income, declined to $52.7 million in the fourth quarter of 2012 compared to $64.5 million in the 2011 quarter. Full year interest expense, net of interest income, declined to $222.7 million in 2012 compared to $258.8 million in 2011, reflecting lower borrowing rates and a reduction in total debt outstanding.

The effective tax rate was 34% in the fourth quarter of 2012 and 33% for the full year, which is comparable to the prior periods.

Balance Sheet and Cash Flow
Cash and cash equivalents totaled $517.6 million as of December 31, 2012. Debt outstanding totaled approximately $4.4 billion as of December 31, 2012, down from $4.8 billion as of as of year-end 2011.

Net cash provided by operations totaled $1.0 billion for the year, including tax payments of approximately $105 million related to the sale of the healthcare business, compared to $1.2 billion in 2011. Capital expenditures totaled $296.1 million compared to $300.3 million in the prior year. Free cash flow, which excludes settlement activity related to the payments businesses and tax payments related to the sale of the healthcare business, increased to $872.8 million for full year 2012, compared to $799.3 million in 2011.

FIS repurchased 14.0 million shares of its common stock at a total cost of approximately $451 million in 2012, including 5.7 million shares repurchased in the fourth quarter at a total cost of approximately $200 million. Approximately $650 million remains under the existing share repurchase authorization. The company paid shareholder dividends totaling $235 million in 2012, compared to $60 million in 2011.

2013 Outlook
FIS provided its outlook for revenue growth and earnings in 2013 as follows:

  • Reported revenue growth of 4% to 6%
  • Organic revenue growth of 3% to 5%
  • EBITDA margin expansion of 30 to 50 basis points, as adjusted
  • EPS from continuing operations of $2.77 to $2.87, as adjusted, an increase of 11% to 15% compared to $2.50 per share in 2012 

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