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Fidelity National Information: Fis Reports Fourth Quarter And Full Year 2015 Results

The following excerpt is from the company's SEC filing.

Full year 2015

Revenue of $6.6 billion

EPS from continuing operations of $2.21, or $3.22 on an adjusted basis

Free cash flow of $920.9 million

Fourth quarter 2015

Revenue of $1.9 billion

EPS from continuing operations of $0.35, or $0.93 on an adjusted basis

Free cash flow of $399.1 million

(NYSE:FIS), a global leader in financial services technology, today reported a full year 2015 revenue increase of three percent to $6.6 billion. The increase was seven percent on an adjusted constant currency basis. GAAP net earnings from continuing operations attributable to common stockholders was $638.8 million, or $2.21 per diluted share, compared to $690.5 million, or $2.39 per diluted share in 2014.

2015 full year adjusted EBITDA increased five percent to $2.0 billion. The increase was eight percent on a constant currency basis. Non-GAAP adjusted net earnings from continuing operations attributable to common stockholders increased four percent to $930.4 million. Adjusted net earnings per diluted share increased four percent to $3.22 from $3.10 in 2014. Full year non-GAAP adjusted net earnings from continuing operations adjusts for acquisition-related deferred revenue adjustments of $0.10 per share, acquisition, integration, and severance costs of $0.45 per share, a $0.19 per share benefit from gains on divestitures, global restructuring of $0.10 per share, and purchase accounting amortization expense of $0.54 per share.

“The resilience of our business model characterized by highly recurring revenues and operational efficiencies allowed us to deliver strong cash flows and earnings,” said Gary Norcross, president and chief executive officer, FIS. “The end-of-year closing of the SunGard acquisition allows us to leverage our newly expanded IP-led solutions portfolio to create deeper and broader relationships with our more than 20,000 clients. The acquisition creates a solid foundation for meeting our 2016 goals and driving long-term value creation for our shareholders.”

Fourth Quarter 2015

The quarter ending December 31, 2015, benefitted from the acquisition, increasing reported revenue eleven percent to $1.9 billion from $1.7 billion in the fourth quarter of 2014, or eighteen percent on an adjusted constant currency basis. GAAP net earnings from continuing operations attributable to common stockholders was $105.5 million, or $0.35 per diluted share, compared to $202.4 million, or $0.71 per diluted share in the prior year quarter.

Non-GAAP adjusted net earnings from continuing operations attributable to common stockholders increased to $278.4 million in the fourth quarter of 2015 from $249.3 million in the prior year quarter. Adjusted net earnings per diluted share increased seven percent to $0.93 per share from $0.87 per share in the fourth quarter 2014. Fourth quarter non-GAAP adjusted net earnings from continuing operations adjusts for acquisition-related deferred revenue adjustments of $0.10 per share, acquisition, integration, and severance costs of $0.26 per share, a $0.03 per share tax impact from the sale of our gaming industry check warranty business earlier in the year, and costs pertaining to acquisition-related purchase accounting amortization expense of $0.19 per share.

Adjusted EBITDA increased nineteen percent to $624.1 million in the fourth quarter of 2015 from $525.6 million in the prior year quarter and was up twenty-one percent on a constant currency basis. Adjusted EBITDA margin was 32.5 percent compared to 31.1 percent in the prior year period.

Definitions of non-GAAP financial measures and reconciliations of non-GAAP measures to related GAAP measures are provided in subsequent sections of the press release narrative and supplemental schedules.

Segment Information

Integrated Financial Solutions:

Fourth quarter revenue on a reported basis grew three percent to $1.02 billion from $989.3 million in the fourth quarter of 2014. Adjusted EBITDA increased to $405.3 million from $394.2 million in the fourth quarter of 2014, while adjusted EBITDA margin was 39.7 percent compared to 39.8 percent in the prior year period.

Full year 2015 revenue increased two percent on a reported basis to $3.93 billion from $3.86 billion in the prior year. Full year adjusted EBITDA increased two percent to $1.57 billion compared to $1.54 billion in 2014, and adjusted EBITDA margin increased to 40.0 percent compared to 39.8 percent in the prior year period.

Global Financial Solutions:

Fourth quarter revenue on a reported basis increased twenty-nine percent to $902.2 million from $701.0 million in the fourth quarter of 2014 and increased thirty-eight percent on a constant currency basis. Adjusted EBITDA increased to $259.0 million from $173.1 million in the fourth quarter of 2014, while adjusted EBITDA margin expanded to 28.7 percent compared to 24.7 percent in the prior year period. This segment’s results include earnings from SunGard, following the acquisition which closed on November 30, 2015.

Full year 2015 revenue increased six percent on a reported basis to $2.72 billion from $2.56 billion in the prior year. Full year adjusted EBITDA increased fifteen percent to $628.9 million compared to $545.7 million in 2014 and adjusted EBITDA margin increased to 23.1 percent compared to 21.3 percent in the prior year period.

Corporate / Other:

Fourth quarter corporate operating loss as reported increased $172.0 million to $290.4 million due largely to acquisition-related expenses. On an adjusted basis, fourth quarter 2015 corporate operating loss decreased four percent to $40.2 million compared to $41.7 million in the prior year quarter. Fourth quarter interest expense, net of interest income, increased to $74.6 million from $36.8 million in the fourth quarter 2014. The effective tax rate was 36.7 percent in the fourth quarter and 36.5 percent for the full year 2015.

The effective tax rate on an adjusted basis was 33.4 percent in the fourth quarter and 33.1 percent for the full year 2015.

Balance Sheet and Cash Flow

Cash and cash equivalents totaled $687.6 million as of December 31, 2015. Debt outstanding totaled approximately $11.51

billion compared to $5.07 billion as of year-end 2014, reflecting the incremental debt issued in conjunction with the SunGard acquisition.

Net cash provided by operations was $1.14 billion and adjusted cash flow from operations was $1.34 billion for the year. Capital expenditures increased to $415.3 million from $371.2 million in 2014. Free cash flow was $920.9 million for the year, compared to $864.3 million in the prior year.

In the first half of 2015, FIS repurchased approximately 4.5

million common shares at a total cost of approximately $300 million and an average cost of $66.10 per share. The company paid shareholder dividends totaling approximately $305 million in 2015 compared to $275 million in 2014.

2016 Outlook

FIS’ outlook for revenue growth and earnings per share in 2016 is as follows:

Organic revenue growth of 3 to 4 percent

Adjusted EPS from continuing operations of $3.70 to $3.80, an increase of 15 to 18 percent compared to $3.22 per share in 2015

Free cash flow is expected to approximate adjusted net earnings

Webcast

FIS will announce fourth quarter and full-year 2015 financial results on Tuesday, February 9 prior to market open. The company will sponsor a live webcast of its earnings conference call with the investment community, beginning at 8:30 a.m. (EST) Tuesday, February 9. To access the webcast, go to the

Investor Relations

section of FIS’ homepage,

www.fisglobal.com

. A replay will be available after the conclusion of the live webcast.

Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, the company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. For these reasons, management also uses these measures in part to assess its performance.

These non-GAAP measures include constant currency revenue, adjusted revenue, EBITDA, adjusted EBITDA and adjusted EBITDA margin, adjusted net earnings from continuing operations (including per share amounts), adjusted cash flow from operations, free cash flow and organic revenue.

Adjusted revenue (2014) includes reported revenue and is increased by $9 million for a negotiated contract cash settlement for the extinguishment of certain contractual minimums with a reseller. Although the 2014 cash settlement has no contractual performance obligation, under GAAP the cash settlement revenue is amortized in this circumstance over the remaining relationship with the reseller.

Adjusted revenue (2015) includes reported revenue and is increased to adjust for the purchase accounting deferred revenue adjustment to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard but was not recognized due to GAAP purchase accounting adjustments.

Constant currency revenue is reported revenue excluding the impact of fluctuations in foreign currency exchange rates in the current year.

Adjusted constant currency basis reflects adjusted revenue excluding the impact of fluctuations in foreign currency exchange...


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