FIS™ (FIS), a global leader in banking and payments technology as well as consulting and outsourcing solutions, today reported a 2014 revenue increase of six percent on a GAAP basis to $6.4 billion from $6.1 billion a year earlier.
GAAP net earnings from continuing operations attributable to common stockholders increased to $690.5 million, or $2.39 per diluted share, compared to $490.0 million, or $1.67 per diluted share in 2013.
Full year 2014 revenue increased five percent on an organic basis from the prior year, which adjusts for the impact of acquisitions and changes in foreign currency. 2014 adjusted EBITDA increased five percent to $1.9 billion from $1.8 billion a year earlier and non-GAAP adjusted net earnings from continuing operations attributable to common stockholders increased to $895 million from $830 million in 2013. Adjusted net earnings per diluted share increased ten percent to $3.10 from $2.82 in 2013. Full year non-GAAP adjusted net earnings from continuing operations adjusts for costs pertaining to acquisition-related purchase amortization expense of $0.51 per share, refinancing costs of $0.09 per share, and acquisition, integration, and severance costs of $0.09 per share, and includes $0.02 per share related to contract settlement revenue.
“FIS delivered another year of strong earnings and cash flow allowing us to return $750 million to our shareholders through share repurchases and dividends,” said Gary Norcross, president and chief executive officer, FIS. “Our deep client relationships across the globe delivered key business wins and growth in 2014. We look to maintain this positive momentum in 2015 as we continue to deliver value to our clients and shareholders.”
Fourth Quarter 2014
Revenue increased to $1.7 billion from $1.6 billion in the fourth quarter of 2013 or seven percent on a reported basis. GAAP net earnings from continuing operations attributable to common stockholders were $202.4 million, or $0.71 per diluted share, compared to $74.2 million, or $0.25 per diluted share in the prior year quarter.
Fourth quarter 2014 revenue increased five percent on an organic basis, which adjusts for the impact of acquisitions and changes in foreign currency, from the prior year quarter. Non-GAAP adjusted net earnings from continuing operations attributable to common stockholders increased to $249.3 million in the fourth quarter of 2014 from $219.8 million in the prior year quarter. Adjusted net earnings per diluted share increased 16 percent to $0.87 per share from $0.75 per share in the fourth quarter 2013. Fourth quarter 2014 non-GAAP adjusted net earnings from continuing operations excludes costs pertaining to acquisition-related purchase amortization expense of $0.12 per share and acquisition, integration, and severance costs of $0.04 per share. Adjusted EBITDA increased to $525.6 million in the fourth quarter of 2014, up nine percent from $484.0 million in the prior year quarter, while adjusted EBITDA margin was 31.1 percent, an increase of 30 basis points, compared to 30.8 percent in the prior year quarter.
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
Fourth quarter 2014 revenue increased four percent on an organic basis and seven percent on a reported basis to $645.4 million from $603.5 million a year earlier reflecting growth in implementation and consulting services and risk and compliance solutions. Adjusted EBITDA increased six percent to $253.2 million from $239.7 million a year ago. Adjusted EBITDA margin was 39.2 percent compared to 39.7 percent a year earlier, reflecting a change in revenue mix.
Full year 2014 revenue increased four percent on an organic basis and six percent on a reported basis to $2.5 billion from $2.3 billion a year earlier driven by continued growth in consulting, mobile banking and risk and compliance solutions. Full year adjusted EBITDA increased four percent to $980.0 million compared to $937.9 million in 2013 and adjusted EBITDA margin decreased 70 basis points to 39.3 percent resulting primarily from lower termination fees compared to the prior period.
Fourth quarter 2014 revenue increased three percent on an organic basis and five percent on a reported basis to $647.2 million from $618.3 million a year earlier driven by strong transaction growth in network solutions, increased card production, and payment processing volumes. Adjusted EBITDA increased five percent to $274.9 million from $261.9 million a year earlier. Adjusted EBITDA margin expanded ten basis points to 42.5 percent reflecting transaction growth on our fraud and debit processing platforms.
Full year 2014 revenue increased two percent on an organic and reported basis to $2.5 billion. Full year adjusted EBITDA increased two percent to $1.1 billion compared to $1.0 billion in 2013. Adjusted EBITDA margin decreased 30 basis points to 42.0 percent driven primarily by lower termination fees in 2014.
Fourth quarter 2014 revenue increased 11 percent on an organic basis and 13 percent on a reported basis to $397.7 million from $351.9 million a year earlier, primarily driven by growth in implementation and consulting services. Adjusted EBITDA increased seven percent to $102.9 million from $96.0 million in the prior year period. Adjusted EBITDA margin was 25.9 percent, compared to 27.3 percent in the prior year period reflecting incremental consulting and services revenue.
Full year 2014 revenue increased 11 percent on an organic basis and 12 percent on a reported basis to $1.4 billion from $1.3 billion including strong growth in EMEA, Asia, and professional services. Full year adjusted EBITDA increased six percent to $319.6 million compared to $302.8 million in 2013. Adjusted EBITDA margin decreased 140 basis points to 22.5 percent from 23.9 percent reflecting incremental consulting and services revenue.
Fourth quarter 2014 corporate costs, as adjusted, were $105.4 million, down from $113.6 million in the prior year period. For the year, corporate costs, as adjusted, were $427.3 million down from $445.0 million in the prior year. The decrease for both periods reflects management’s commitment to aggressive cost management.
Interest expense, net of interest income, decreased to $36.8 million in the fourth quarter down from $43.4 million a year earlier. Full year interest expense, net of interest income, decreased to $157.5 million, or down 16 percent, from $188.2 million in 2013, primarily the result of lower borrowing costs.
The effective tax rate was 33 percent in the fourth quarter and 32 percent for the full year.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $492.8 million as of Dec. 31, 2014. Debt outstanding totaled approximately $5.1 billion compared to $4.5 billion as of year-end 2013.
Net cash provided by operations was $1.2 billion for the year compared to $1.1 billion in 2013. Capital expenditures increased to $371.2 million from $336.2 million in 2013. Free cash flow was $864.3 million for the year, compared to $826.2 million in the prior year.
FIS repurchased approximately 8.7 million common shares at a total cost of approximately $476 million and an average cost of $54.89 per share in 2014. The company paid shareholder dividends totaling $275 million in 2014, or a seven percent increase, compared to $256 million in 2013.
2015 Outlook
FIS’ outlook for revenue growth and earnings per share in 2015 is as follows:
- Revenue growth of 5 to 7 percent
- Adjusted EPS from continuing operations of $3.37 to $3.49, an increase of 9 to 13 percent compared to $3.10 per share in 2014
- Free cash flow is expected to approximate adjusted net earnings.
Full figures available here.