Fiserv, Inc. (Nasdaq:FISV), a leading provider of information management systems and services to the financial and health benefit industries, today reported revenues and earnings for the second quarter of 2006.
Total revenues for the quarter increased 10 percent to $1,093.2 million compared to $996.4 million in 2005. Earnings per share for the quarter were $0.66 compared to $0.59 in 2005. Earnings per share from continuing operations were $0.63 for the quarter compared to adjusted earnings per share of $0.57 for the second quarter of 2005.
For the six months ended June 30, 2006, total revenues increased 11 percent to $2,189.9 million compared to $1,969.5 million in 2005. Earnings per share for the first six months of 2006 and 2005 were $1.30. Earnings per share from continuing operations were up 16 percent to $1.26 for the first six months of 2006 versus adjusted earnings per share of $1.09 in 2005.
"Earnings for the quarter exceeded our expectations after an exceptionally strong first quarter," said Jeff Yabuki, president and chief executive officer of Fiserv. "Our stronger than expected first half financial performance provides us with increased confidence that we will achieve our full year earnings and organic revenue growth targets while continuing to invest for the future."
"We've had very good performance in our sales and business development activities this year and are well ahead of the prior year. That performance, in combination with especially strong sales activity in last year's fourth quarter, positions us to deliver solid organic revenue growth in the second half of 2006 and into 2007," said Yabuki.
Other business and operating highlights for the second quarter and first half of 2006:
- Cash flow from operations increased 13 percent for the first six months to $283 million and capital expenditures were $96 million in the first half of the year
- Fiserv Electronic Funds Transfer (EFT) had strong sales activity for the first half of 2006 signing 111 new clients of which nearly 80 percent were sales within the Fiserv client base
- Fiserv's BillMatrix group signed several marquee clients in the second quarter including BMW Financial Services, Liberty Mutual Insurance and Entergy & First Energy utilities which further demonstrates our industry leadership in the expedited bill payment space
- Fiserv Health signed multi-year agreements with three new clients to provide pharmacy benefit and administration services beginning in July. These new client agreements are estimated to generate incremental, full-year revenue of $190-$230 million, and when including the prescription product pass-through costs in revenues and expenses, will have estimated operating margins in the low single digits
- Fiserv repurchased 2.8 million shares of its common stock in the second quarter for a total of 8.2 million shares during the first six months of 2006. The company had 4.9 million shares authorized for repurchase as of June 30, 2006
- Fiserv completed one acquisition in the quarter, Insurance Wholesalers, Inc., a lead generation and wholesale firm for term and universal life insurance products, to enhance the company's insurance distribution capabilities.
At the start of the third quarter, Fiserv announced the acquisition of The Jerome Group LLC, a full-service direct marketing firm and digital print provider, to enhance Fiserv's Output Solutions division's ability to help clients build loyalty and drive new revenues.
OUTLOOK FOR 2006
The company increased its full-year 2006 continuing operations earnings estimate to be within a range of $2.48 to $2.54 per share. Fiserv's previous guidance was $2.46 to $2.53 per share. The primary reason for the change is a one-time tax benefit realized in the second quarter of $3.1 million, or $0.02 per share, which is related to a change in a state tax law during the quarter. The company's effective income tax rate for the second half of 2006 is estimated to be 38.5 percent.
The company also reaffirmed its 2006 adjusted internal revenue growth rates (excluding customer reimbursements and prescription product revenues) to be in the mid-single digits for the Financial and Investment segments and low to mid-single digits in the Health segment.
On January 1, 2006, the company adopted Statement of Financial Accounting Standards No. 123 (revised 2004) "Share-Based Payment" ("SFAS 123R") that requires companies to expense the value of employee stock purchase plans, stock option grants and similar awards. The company adopted SFAS 123R under the modified prospective method, which requires the application of SFAS 123R in 2006 to new awards and to awards modified, repurchased, or cancelled after the effective date. Additionally, compensation cost for the portion of outstanding awards for which service had not been rendered (such as unvested options) that were outstanding as of January 1, 2006 shall be recognized as the remaining services are rendered.
Share-based compensation expense for the second quarter of 2006 was $5.5 million, or $0.02 per share, and for the six month period ended June 30, 2006 was $19.3 million, or $0.07 per share. Share-based compensation expense is estimated to be approximately $0.01 to $0.02 per share per quarter for the remainder of 2006 with a full year impact of $0.09 to $0.11 per share.Download the document now 46.4 kb (Adobe Acrobat Document)