Fiserv posts Q1 net income fall

Source: Fiserv

Fiserv, Inc. (FISV), a leading global provider of financial services technology solutions, today reported financial results for the first quarter of 2013.

The company acquired Open Solutions Inc. ("Open Solutions"), a leading provider of collaborative, enterprise account processing technology for financial institutions, on January 14, 2013 and sold its fitness club business ("Club Solutions") on March 14, 2013. Accordingly, the results for Open Solutions have been included since the acquisition date, and the financial results of Club Solutions are reported as discontinued operations for all periods presented.

GAAP revenue in the quarter was $1.15 billion compared with $1.10 billion in the first quarter of 2012. Adjusted revenue was $1.08 billion in the first quarter compared with $1.02 billion in 2012, an increase of 6 percent.

GAAP earnings per share from continuing operations for the first quarter was $0.87, which included merger and integration expenses attributed to the Open Solutions acquisition of $0.19 per share, compared with $0.94 in the first quarter of 2012. Adjusted earnings per share from continuing operations in the first quarter increased 13 percent to $1.33 compared with $1.18 in the comparable quarter of 2012.

"Our first quarter results are in line with expectations, and we are on-track to achieve our targeted results for the year," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "We are pleased with our progress on the integration of Open Solutions and the positive client reaction to our broad array of leading solutions."

First Quarter 2013

  • Adjusted revenue grew 6 percent in the quarter to $1.08 billion compared with $1.02 billion in the prior year period.
  • Adjusted internal revenue growth in the quarter was flat, with 2 percent growth in the Payments segment offset by a 2 percent decline in the Financial segment.
  • Adjusted earnings per share increased 13 percent to $1.33 in the first quarter compared with $1.18 in the prior year period.
  • Free cash flow grew 28 percent in the quarter to $232 million compared with $181 million in the prior year period.
  • Adjusted operating margin decreased 30 basis points in the quarter to 28.4 percent compared with the prior year period.
  • Sales performance in the quarter increased 25 percent over the first quarter of 2012.
  • On January 14, 2013 the company acquired Open Solutions, adding 3,300 clients, including 800 new account processing clients, the majority of which are on DNA™, a real-time, open technology account processing platform. During the quarter, the company signed five new DNA clients, the most in any quarter since 2011.
  • The company repurchased 0.8 million shares of common stock for $67 million in the first quarter and, as of March 31, 2013, had approximately 4.8 million shares remaining under its current share repurchase authorization.
  • The company signed 90 Mobiliti™ clients in the quarter and has added nearly 1,500 mobile banking clients to date.
  • The company signed 89 Popmoney® clients to the payment network in the quarter, which now includes more than 1,900 financial institutions.
  • The company signed 78 electronic bill payment clients and 36 debit processing clients in the quarter.

Outlook for 2013

Fiserv continues to expect 2013 adjusted revenue growth to be in excess of 10 percent and adjusted internal revenue growth to be in a range of 3 to 4 percent. Adjusted earnings per share has been revised for the Club Solutions divestiture and is expected to be in a range of $5.84 to $6.03, which represents growth of 15 to 19 percent over 2012.

"We anticipate sequentially stronger performance this year as we benefit from the onboarding of new sales and the Open Solutions acquisition," said Yabuki.

 

Fiserv, Inc.  
Condensed Consolidated Statements of Income  
(In millions, except per share amounts, unaudited)  
               
    Three Months Ended  
    March 31,  
      2013           2012    
Revenue              
Processing and services   $ 966         $ 898    
Product     186           199    
Total revenue     1,152           1,097    
               
Expenses              
Cost of processing and services     522           494    
Cost of product 1     190           159    
Selling, general and administrative     229           205    
Total expenses 1     941           858    
               
Operating income     211           239    
Interest expense - net     (41 )         (43 )  
               
Income from continuing operations before income taxes              
and income from investment in unconsolidated affiliate     170           196    
Income tax provision     (58 )         (67 )  
Income from investment in unconsolidated affiliate     5           3    
Income from continuing operations 1     117           132    
Income (loss) from discontinued operations 2     -           -    
               
Net income   $ 117         $ 132    
               
GAAP earnings per share - diluted:              
Continuing operations 1   $ 0.87         $ 0.94    
Discontinued operations 2     -           -    
Total 3   $ 0.86         $ 0.94    
               
Diluted shares used in computing earnings per share     135.1           140.5    
                       

1 The results for 2013 include the acquisition of Open Solutions since January 14, 2013. The company incurred merger and integration expenses attributed to the acquisition of $40 million, or $0.19 per share, in the first quarter of 2013 (see page 6).

 

2 The company divested its Club Solutions business on March 14, 2013. Accordingly, the financial results of Club Solutions are reported as discontinued operations for all periods presented. Club Solutions revenue for the full year of 2012 was $46 million.

 

3 Earnings per share is calculated using actual, unrounded amounts.

 

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