FIS ( FIS ), the worlds largest provider of banking and payments technology, today reported a 2013 revenue increase of 5 percent on a reported basis to $6.1 billion from $5.8 billion a year earlier.
GAAP net earnings from continuing operations attributable to common stockholders was $491.2 million, or $1.67 per diluted share, compared to $540.4 million, or $1.82 per diluted share in 2012. GAAP net earnings in 2013 includes previously announced charges for amended acquisition-related earn-out and incentive plan provisions of $0.48 per share attributable to Capcos performance and growth expectations, and debt refinancing costs of $0.14 per share.
Full year 2013 revenue increased 5 percent on an organic basis from the prior year, which excludes the impact of acquisitions and changes in foreign currency. Adjusted EBITDA increased 5 percent to $1.84 billion and adjusted EBITDA margin increased 10 basis points to 30.2 percent. Adjusted net earnings from continuing operations attributable to common stockholders increased to $831.3 million from $743.6 million in 2012. Adjusted net earnings per diluted share increased 13 percent to $2.83 from $2.50 in 2012.
FIS delivered another year of record adjusted earnings driven by successful execution of our global growth strategy. These results mark our third consecutive year of 5 percent organic revenue growth and our sixth consecutive year of double-digit adjusted EPS growth, said Frank Martire, chairman and CEO of FIS. Strong cash flow allowed FIS to return $732 million in share repurchases and dividends to our shareholders in 2013 while increasing investment for future growth. The significant increase in the new share repurchase authorization and dividend reflect our confidence in FIS long-term growth strategy and deep client relationships.
FIS scale, solution breadth and financial industry expertise enable clients to succeed in this era of rapid financial services evolution.
We enter 2014 focused on continuin... g to deliver significant value to our clients and shareholders," continued Martire. "We expect 2014 revenue growth of 4.5 percent to 6.5 percent fueled by increased investment in global growth initiatives and adjusted earnings per share growth of 8 percent to 12 percent."
Fourth Quarter 2013
Revenue increased to $1.6 billion from $1.5 billion in the fourth quarter 2012 or 5 percent on a reported and organic basis. GAAP net earnings from continuing operations attributable to common stockholders were $76.4 million, or $0.26 per diluted share, compared to $145.3 million, or $0.49 per diluted share in the prior year quarter. Fourth quarter 2013 GAAP net earnings include the previously announced charge for amended acquisition-related earn-out and incentive plan provisions related to Capco of $0.35 per share, acquisition-related purchase amortization of $0.13 per share and international restructuring charges of $0.02 per share.
Adjusted EBITDA increased 4 percent to $486.9 million from $470.3 million in the fourth quarter 2012. Adjusted EBITDA margin was 30.8 percent compared to 31.4 percent in the prior year quarter reflecting growth in consulting and services, and higher corporate expenses. Adjusted net earnings from continuing operations attributable to common stockholders increased 10 percent to $222.0 million from $201.4 million in the fourth quarter 2012. Adjusted net earnings per diluted share increased 12 percent to $0.76 from $0.68 in the fourth quarter 2012.
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.
Fourth quarter 2013 revenue increased 4 percent on a reported and organic basis to $603.5 million from $578.4 million a year earlier reflecting growth in consulting and digital delivery channels. Adjusted EBITDA increased 1 percent to $239.7 million from $236.9 million a year ago. Adjusted EBITDA margin was 39.7 percent compared to 41.0 percent a year earlier, reflecting a change in revenue mix.
Full year 2013 revenue increased 4 percent to $2.3 billion from $2.2 billion a year earlier and rose 3 percent on an organic basis driven by growth in consulting and services. Full year adjusted EBITDA increased 6 percent to $937.9 million compared to $884.2 million in 2012 and adjusted EBITDA margin increased 60 basis points to 40.0 percent. Higher termination fees also contributed to full year results.
Fourth quarter 2013 revenue increased 3 percent on a reported and organic basis to $618.3 million from $601.3 million a year earlier. Revenue from check-related businesses was $110.3 million, down 4 percent from the prior year quarter. Adjusted EBITDA increased 7 percent to $261.9 million from $245.9 million a year earlier. Adjusted EBITDA margin expanded 150 basis points to 42.4 percent.
Full year 2013 revenue increased 3 percent on a reported and organic basis to $2.5 billion from $2.4 billion a year earlier driven by continued growth in image and output solutions, loyalty programs, network solutions and bill payment, and higher termination fees. Revenue from check-related businesses was $434.6 million in 2013, down 1 percent from 2012. Full year adjusted EBITDA increased 7 percent to $1.0 billion compared to $968.0 million in 2012. Adjusted EBITDA margin increased 160 basis points to 42.3 percent.
Fourth quarter 2013 revenue increased 11 percent to $357.1 million from $320.9 million a year earlier. Revenue rose 13 percent on an organic basis including double digit growth in Latin America and continued growth in Europe and Asia. Adjusted EBITDA increased 11 percent to $98.9 million from $89.2 million in the prior-year quarter, and adjusted EBITDA margin was 27.7 percent, compared to 27.8 percent in the prior-year quarter reflecting continued strong demand for consulting and professional services and increased processing revenue, partially offset by lower license revenue.
Full year 2013 revenue increased 8 percent to $1.3 billion from $1.2 billion a year earlier and rose 11 percent on an organic basis including double digit growth in Latin America and Asia. Full year adjusted EBITDA increased 11 percent to $304.3 million compared to $275.3 million in 2012. Adjusted EBITDA margin increased 60 basis points to 23.9 percent.
Fourth quarter 2013 corporate costs, as adjusted, were $113.6 million, up from $101.7 million in the prior-year quarter. For the year, corporate costs, as adjusted, were $445.0 million, up from $382.3 million in the prior year. The increase for both periods reflects higher sales and marketing expense and an increase in health-care expense. The full year expense increase also reflects increased investment in security and risk management.
Interest expense, net of interest income, decreased to $43.4 million in the fourth quarter from $52.7 million a year earlier. Full year interest expense, net of interest income, decreased to $188.2 million from $222.7 million in 2012, resulting from lower borrowing costs.
The non-GAAP effective tax rate was 33.1 percent in the fourth quarter and 32.4 percent for the full year, compared to 34.0 percent and 32.7 percent in the prior year periods, respectively.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $547.5 million as of Dec. 31, 2013. Debt outstanding totaled approximately $4.5 billion compared to $4.4 billion as of year-end 2012.
Net cash provided by operations was $1.1 billion for the year compared to $1.0 billion in 2012. Capital expenditures increased to $336.2 million from $296.1 million in 2012 reflecting incremental growth investment. Free cash flow was $826.2 million for the year, compared to $872.8 million in the prior year, reflecting higher cash tax payments and incremental capital expenditures in 2013.
FIS repurchased approximately 10.7 million common shares at a total cost of approximately $476 million and an average cost of $44.58 per share in 2013, including fourth quarter purchases of approximately 2.5 million shares at a total cost of approximately $126 million. The company paid shareholder dividends totaling $256 million in 2013, compared to $235 million in 2012.
- FIS' outlook for revenue growth and earnings per share in 2014 is as follows:
- Revenue growth of 4.5 to 6.5 percent
- Adjusted EPS from continuing operations of $3.05 to $3.16, an increase of 8 to 12 percent compared to $2.83 per share in 2013
- Free cash flow is expected to approximate adjusted net earnings