Fiserv (NASDAQ: FISV), a leading provider of technology solutions, today reported financial results for the second quarter of 2007.
Total revenues increased 12 percent to $1.18 billion for the second quarter of 2007 compared with $1.06 billion in 2006. For the first six months of 2007, total revenues were $2.37 billion compared with $2.12 billion in 2006.
Total earnings per share for the second quarter of 2007 were $0.64, with earnings per share from continuing operations of $0.62. Adjusted earnings per share from continuing operations for the second quarter of 2007 increased 15 percent to $0.68 compared with $0.59 in 2006. Total earnings per share for the first six months of 2007 were $1.30, with earnings per share from continuing operations of $1.25. Adjusted earnings per share from continuing operations were $1.31 in the first six months of 2007 compared with $1.20 in 2006. Adjusted earnings per share in 2007 exclude a $0.06 charge in the insurance segment in the second quarter of 2007.
Overall adjusted operating margin for the quarter increased 110 basis points to 23.4 percent compared with 22.3 percent in the prior year. Financial segment adjusted operating margin was up 180 basis points to 25.4 percent for the quarter and was up 240 basis points to 25.1 percent for the first six months compared with the prior period. Adjusted internal revenue growth for the financial segment was 5 percent for the quarter.
"Our businesses delivered solid performance in the quarter and we remain on track to achieve our full-year targets," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "Our financial segment once again led the company's performance with continued growth in revenue and margin expansion."
Other business and operating highlights for the second quarter of 2007 included:
- Free cash flow from continuing operations for the first half of 2007 was up 14 percent over 2006 to $209 million;
- The company repurchased 3.4 million shares of its common stock in the second quarter at an average price of $54.88, bringing the total shares repurchased to more than 6.0 million for the first six months of 2007;
- Fiserv EFT completed 44 new sales in the quarter, with 89 percent made within the Fiserv core client base;
- Fiserv signed 62 new clients in the quarter for its electronic bill payment services and now has more than 560 electronic bill pay clients;
- Wachovia Corporation selected Fiserv to provide item processing production services for its Western United States region, including the recent acquisitions of Western Financial and GoldenWest Financial. In addition, Fiserv continues to provide complete remittance and lockbox processing services for Wachovia's growing payments business;
- GMAC ResCap migrated the 1.2 million loan account portfolio of Homecomings Financial onto the Fiserv Loan Servicing Platform and signed a five-year contract renewal for the continued use of the platform;
- Pittsburgh-based Dollar Bank signed a seven-year agreement to license the Fiserv Loan Servicing Platform in order to consolidate the servicing of its 28,000 consumer and 18,000 mortgage loans onto a single technology platform.
FISERV INVESTMENT SUPPORT SERVICES (FISERV ISS) SALE IMPACT
As announced previously, the company also signed definitive agreements in the quarter to sell its Fiserv ISS operations in two separate transactions. One transaction is expected to close by the end of 2007 and the other in early 2008. The company anticipates gross proceeds from the transactions of approximately $350 million (approximately $250 million after taxes and transaction-related expenses). This amount includes return of the net capital and excludes contingent payments. The company also has the opportunity to earn additional cash consideration of up to $100 million in 2008 based on the achievement of certain revenue targets over the twelve months subsequent to closing.
Fiserv ISS results are reported in discontinued operations. Fiserv ISS generated $0.02 in earnings per share in the quarter. Those results were negatively impacted by incremental transaction-related expenses of $1.6 million, or $0.01 per share in the quarter.
"The announced sale of our Fiserv ISS business will allow us to better focus on businesses where we have a clear long-term competitive advantage. We will redeploy the capital from the sale to enhance long-term shareholder value," said Yabuki.
OUTLOOK FOR 2007
The company has revised its full-year 2007 continuing operations earnings per share guidance to reflect the results of Fiserv ISS as discontinued operations. This guidance excludes the charge of $16.9 million ($0.06 per share) in the second quarter in the insurance segment:
Previous 2007 EPS Guidance - $2.86 - $2.94 per share
Less: Discontinued Operations Related to Fiserv ISS - ($0.12 per share)
New 2007 Adjusted EPS Guidance-Continuing Operations - $2.74 - $2.82 per share
"The announced sale of Fiserv ISS should be slightly accretive to our 2007 adjusted earnings per share from continuing operations growth rate. We now expect full-year growth within a range of 14-17 percent over 2006," said Yabuki.
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