Fiserv (NASDAQ:FISV), the leading global provider of financial services technology solutions, today reported financial results for the second quarter of 2009.
These financial results reflect the disposition of a 51% interest in Fiserv's insurance operations ("Fiserv Insurance") in July of 2008.
Total GAAP revenue was $1.03 billion for the second quarter of 2009 compared with $1.29 billion in 2008. Total adjusted revenue decreased 3 percent to $983 million for the second quarter of 2009 compared with $1.02 billion in 2008, due primarily to declines in the home equity loan processing business. For the first six months of 2009, total GAAP revenue was $2.08 billion compared with $2.60 billion in 2008 and total adjusted revenue was $1.97 billion compared with $2.04 billion in 2008.
GAAP earnings per share for the second quarter were $0.90 compared with $0.60 for the second quarter of 2008, which include earnings per share from continuing operations of $0.73 and $0.62, respectively. GAAP earnings per share for the first half were $1.56 compared with $2.60 for the first half of 2008, which include earnings per share from continuing operations of $1.39 and $1.22, respectively.
Adjusted earnings per share from continuing operations were up 7 percent to $0.90 for the quarter compared with $0.84 in 2008. For the first six months of 2009, adjusted earnings per share were up 9 percent to $1.78 compared with $1.63 in 2008. Adjusted internal revenue declined by 4 percent in both the second quarter and the first six months of 2009.
Adjusted operating margin was 27.9 percent both in the second quarter and the first six months of 2009, an increase of 190 basis points and 200 basis points, respectively, over the prior-year periods. The increase in operating margin was primarily from growth in higher-margin revenue, favorable changes in the company's business mix and operating efficiency.
"Our solid earnings and margin results in the face of continuing economic challenges once again demonstrated the strength of our business model," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "We complemented our economic performance with a number of new significant client relationships resulting from the combination of leading solutions and our enhanced go-to-market approach."
Second Quarter Highlights
* Adjusted operating income in the payments segment increased 10 percent to $147 million in the quarter, and adjusted operating margin increased 240 basis points to 31.0 percent. The margin expansion resulted from growth in higher-margin revenue and continued cost synergy savings associated with the CheckFree acquisition;
* Operating margin in the financial segment increased 250 basis points in the quarter to 28.1 percent through ongoing cost efficiencies and strength in the account processing business;
* Free cash flow was $293 million for the first six months of 2009, a decrease of 7% compared with the prior-year period, due primarily to the timing of estimated income tax payments and the expected significant decline in contract termination fees;
* The company expanded its payments footprint in the quarter by signing 102 clients for its electronic bill payment services and 58 clients for its EFT/debit service;
* The company repurchased 1.0 million shares of its common stock in the second quarter and 1.8 million shares in the first six months of 2009;
* The company signed a number of new and expanded multi-year client relationships in the quarter:
- American Savings Bank, a $5.2 billion institution headquartered in Honolulu, Hawaii, signed an agreement for a complete, enterprise-wide banking solution centered upon the Signature Bank Platform from Fiserv. The agreement integrates 20 additional Fiserv solutions including online banking, electronic billing and payment, image capture, risk management and channel management;
- The Fauquier Bank, a community bank in Virginia with $526 million in assets, signed an agreement to use Fiserv's enterprise-wide solutions based on the Premier Bank Platform. The agreement covers several solutions from Fiserv including EFT, risk management, electronic billing and payment, payments network, electronic document delivery and financial accounting solutions;
- Macatawa Bank, headquartered in Holland, Mich. with $2.1 billion in assets, signed an agreement for the Premier Bank Platform from Fiserv. The bank will also implement financial accounting solutions from Fiserv and other related ancillary applications to enhance integration and customer service;
- The PNC Financial Services Group, Inc., a $286 billion financial services organization headquartered in Pittsburgh, signed an agreement to convert its electronic bill pay system for National City Corporation, a subsidiary of PNC. This puts PNC among the top five electronic bill payment clients for Fiserv.
* Other noteworthy client additions in the quarter included:
- Bangkok Bank, Thailand's largest bank, recently launched Mobile MoneySM from Fiserv to provide a mobile banking and payments solution to its customers. With $47.9 billion in assets and more than 800 branches, the bank is one of the only banks in Thailand using an international mobile banking solution;
- MB Financial Bank, a $9 billion institution operating in the Chicago metropolitan area, recently acquired Heritage Community Bank. With Fiserv as a partner, the bank was able to rapidly integrate the Bank's customers to the Signature Bank Platform from Fiserv in less than 90 days. Since first deploying Fiserv technology in 1995, MB Financial has acquired and merged eight financial institutions with assets ranging from $227 million to $2.6 billion, increasing its assets from $700 million in 1995 to $9 billion today;
- We Energies, headquartered in Milwaukee, Wis., signed a multi-year agreement for bill payment services using BillMatrix(R) On Demand Payments from Fiserv. Serving 2.4 million metered customers in Wisconsin and Michigan's Upper Peninsula, We Energies is a principal utility for Wisconsin Energy Corporation, one of the nation's premier energy companies with more than $12 billion of assets.
Outlook for 2009
Fiserv affirmed its expectations for full-year 2009 adjusted earnings per share from continuing operations in a range of $3.61 to $3.75, which represents growth of 10 to 14 percent compared with $3.29 in 2008. The company expects positive second half 2009 adjusted internal revenue growth, resulting in full-year adjusted internal revenue growth in a range of -2 to 1 percent.
The adjusted earnings per share outlook excludes the impact of extraordinary gains or charges, merger and integration costs and amortization of acquisition-related intangible assets.
"Solid execution continues to serve as the catalyst for strong growth in earnings and free cash flow in the face of a more challenging revenue growth environment," said Yabuki.
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