First Data posts Q3 results

Source: First Data

First Data Corporation (NYSE: FDC), a global leader in commerce-enabling technology and solutions, today reported financial results for the third quarter ended September 30, 2015.

Consolidated revenue for the third quarter was $2.9 billion, up 5% versus the prior year period. Segment revenue, which modifies consolidated revenue for pass-through items and other impacts, was $1.8 billion for the quarter, up 4% versus the prior year period, or up 7% excluding currency impacts.

For the third quarter, the net loss attributable to First Data was $126 million, a $109 million improvement from the $235 million loss in the prior year period. Adjusted net income, which modifies net income for items such as debt extinguishment charges, amortization of acquisition intangibles, stock-based compensation, restructuring costs and other non-normal course items, was $191 million, up $5 million versus the prior year period as improved operating performance and reduced interest expense was largely offset by the non-recurrence of tax benefits in the year-ago period.

Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) was $703 million, up 7% versus the prior year period. Adjusted EBITDA margin for the quarter was 39.1%, up 130 basis points versus the prior year period.

“We are pleased to report healthy growth in both revenue and adjusted EBITDA coupled with margin expansion,” said Frank Bisignano, First Data Chairman and CEO. “We have made significant investments in innovative solutions, geographic expansion, our sales force, controls and infrastructure, each of them important steps in our ongoing transformation. The third quarter and the past few weeks also marked additional milestones in our efforts to transform our balance sheet with the $2.8 billion IPO and further debt refinancings.”

Segment Results

Global Business Solutions (GBS) provides retail point-of-sale merchant acquiring and eCommerce services, next-generation offerings such as mobile payment services, as well as the company's cloud-based Clover® point-of-sale operating system and its marketplace of proprietary and third-party business apps. Approximately 75% of GBS revenue is generated in North America.

Segment revenue for the third quarter was $1.0 billion, up 2% versus the prior year period, or up 6% on a constant currency basis. Within geographic regions, North America revenue of $813 million increased 4% versus the prior year period primarily due to growth in product sales and transactions. EMEA revenue was $134 million, down 8%, or up 6% on a constant currency basis, driven primarily by increased transaction growth.

Segment EBITDA was $431 million, up 4% versus the prior year period. Segment EBITDA margin for the third quarter was 41.8%, up 80 basis points versus the prior year period.

Global Financial Solutions (GFS) provides credit and retail private-label card processing, output services and next-generation offerings, such as its VisionPLUS Flex software, which enables card issuers to manage all of their payments-related products and services as a single, integrated “one-stop-shop” solution. Approximately 55% of GFS revenue is generated in North America and approximately 30% is generated in EMEA.

Segment revenue for the third quarter was $391 million, up 3% versus the prior year period, or up 9% on a constant currency basis. Within geographic regions, North America revenue of $232 million was up 11% primarily due to growth from existing clients and increased card personalization volume due to EMV demand. EMEA revenue was $114 million, down 5%, or up 8% on a constant currency basis, due to growth from existing clients and higher professional services fees.

Segment EBITDA was $145 million, up 9% versus the prior year period. Segment EBITDA margin for the third quarter was 37.1%, up 190 basis points versus the prior year period.

Network & Security Solutions (NSS) provides a wide range of network services such as Electronic Funds Transfer (EFT) Network Solutions, Stored Value Network Solutions, and Security and Fraud Management Solutions. Virtually all of NSS revenue is generated in North America.

Segment revenue for the third quarter was $374 million, up 9% versus the prior year period. Revenue growth in the quarter was primarily driven by transaction growth in EFT Network Solutions, growth in merchant security solutions and increased stored value volume.

Segment EBITDA was $162 million, up 7% versus the prior year period. Segment EBITDA margin for the third quarter was 43.3%, down 70 basis points versus the prior year period.

Cash Flow

For the third quarter, the company generated $234 million in cash flow from operations, up $24 million versus the prior year period. The company finished the quarter with approximately $1.0 billion in unrestricted liquidity.

Improvements to Capital Structure

As previously announced, on July 10, 2015, First Data closed on new term loans totaling approximately $1 billion comprising $725 million in dollar denominated loans and €250 million in euro denominated loans, with an interest rate of LIBOR plus 375 basis points. The proceeds of these term loans were used to repay a portion of the $1.6 billion, 7.375% senior secured first lien notes due 2019 along with fees and expenses. The new term loans mature in July 2022.

Additionally, on August 11, 2015, First Data issued $1.2 billion in first lien senior secured notes with an interest rate of 5.375%. The proceeds of these notes were used to call the remaining $640 million, 7.375% senior secured first lien notes due 2019 and the entire $510 million, 8.875% senior secured first lien notes due in 2020, along with fees and expenses. The new notes mature in August 2023.

Recent Events

$2.8 billion Initial Public Offering

In October 2015, First Data will have raised approximately $2.8 billion from issuing approximately 176,000,000 shares of Class A common stock at a price of $16 per share.

The company intends to use the net proceeds from the offering to redeem all $510 million aggregate principal amount of its 11.25% senior unsecured notes due 2021, approximately $1.8 billion aggregate principal amount of its 12.625% senior unsecured notes due 2021, and to pay applicable premiums and related fees and expenses, and for general corporate purposes. 

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