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Fidelity National Information: Fis Reports Third Quarter 2015 Results

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

Revenue of $1.6 billion

EPS from continuing operations of $0.62, or $0.90 on an adjusted basis

million returned to shareholders through dividends

(NYSE:FIS), a global leader in banking and payments technology as well as consulting and outsourcing solutions, today reported that third quarter revenue was $1.6 billion, down two percent on a reported basis from the prior year quarter and up three percent on a constant currency basis. GAAP net earnings from continuing operations attributable to common stockholders was $177 million, or $0.62 per dilut ed share, compared to $152 million, or $0.53 per diluted share in the prior year quarter.

Non-GAAP adjusted net earnings from continuing operations attributable to common stockholders was $255 million for the quarter, or $0.90 per share. Third quarter 2015 non-GAAP adjusted net earnings from continuing operations excludes acquisition-related purchase price amortization of $0.12 per share, acquisition, integration and severance costs of $0.12 per share, and the divestiture of its gaming assets of $0.03 per share. Adjusted EBITDA increased to $530 million in the third quarter 2015, up nine percent from $488 million in the prior year quarter, while adjusted EBITDA margin expanded 320 basis points to 33.6 percent from 30.4 percent in the prior year quarter.

“In a difficult macro-economic environment, we delivered earnings growth in-line with our expectations," said Gary Norcross, president and chief executive officer, FIS. “Additionally, our announced strategic acquisition of SunGard, combining our global delivery scale and proven track record of integrating acquired assets, clearly aligns with our long-term growth and performance goals and we believe this will be a long-term value creator for FIS.”

For the nine months ended September 30, 2015, GAAP revenue was $4.7 billion. GAAP net earnings from continuing operations attributable to common stockholders increased to $533 million, or $1.87 per diluted share, from $488 million, or $1.69 per diluted share, in the prior year period. Adjusted net earnings attributable to common stockholders increased to $2.29 per diluted share from $2.23 per diluted share 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

The following is a review of third quarter 2015 results by segment:

Integrated Financial Solutions:

Revenue on a reported basis grew one percent to $971 million from $964 million in the third quarter 2014. Adjusted EBITDA increased to $408 million from $386 million in the third quarter 2014, while adjusted EBITDA margin expanded 200 basis points to 42.0 percent compared to 40.0 percent in the prior year period.

Global Financial Solutions:

On a reported basis, revenue decreased five percent to $609 million from $642 million in the third quarter 2014. Revenue increased six percent on a constant currency basis. Adjusted EBITDA increased eleven percent to $157 million from $141 million in the third quarter of 2014, while adjusted EBITDA margin expanded 380 basis points to 25.8 percent compared to 22.0 percent in the prior year period.

Corporate/Other:

GAAP corporate costs totaled $128 million in the third quarter 2015 compared to $110 million in the prior year quarter. Corporate costs, as adjusted, totaled $35 million in the third quarter 2015 compared to $39 million in the prior year quarter. Interest expense, net of interest income, decreased to $36 million from $38 million in the third quarter 2014, reflecting lower costs resulting from previous debt refinancing activities. The effective GAAP tax rate was 36 percent, or 33 percent on an adjusted basis.

Balance Sheet and Cash Flow

Cash and cash equivalents totaled $442 million as of September 30, 2015, while debt outstanding totaled $5.0 billion.

Net cash provided by operations year-to-date was $698 million and adjusted cash flow from operations was $828 million. Year-to-date capital expenditures totaled $306 million, resulting in free cash flow of $522 million for the first nine months of 2015.

The company paid shareholder dividends of $73 million in the third quarter of 2015.

Webcast

FIS will host a webcast on November 3, 2015, to discuss third quarter 2015 results beginning at 8:30 a.m. ET. To listen to the live event and to access a supplemental slide presentation, go to the Investor Relations section at www.fisglobal.com and click on “News and Events.” A webcast replay will be available on FIS’ Investor Relations web site, and a telephone replay will be available through November 17, 2015 by dialing 800.475.6701 (U.S.) or 320.365.3844 (International). The access code is 363923. To access a .PDF version of this release and accompanying financial tables, go to

www.investor.fisglobal.com.

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 and free cash flow.

Constant currency revenue is reported revenue excluding the impact of fluctuations in foreign currency exchange rates in the current year. Growth in revenue presented for 2015 year to date on a constant currency basis reflects a comparison of constant currency revenue for 2015 against 2014 adjusted 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.

EBITDA is earnings from continuing operations before interest, taxes, depreciation and amortization.

Adjusted EBITDA excludes certain costs and other transactions which management deems non-recurring or unusual in nature, the removal of which improves comparability of operating results across reporting periods.

Adjusted net earnings from continuing operations excludes the after tax impact of certain costs and other transactions which management deems non-recurring or unusual in nature, the removal of which improves comparability of operating results across reporting periods. It also excludes the after tax impact of acquisition related amortization which is recurring.

Adjusted net earnings per diluted share, or adjusted EPS, is equal to adjusted net earnings divided by weighted average diluted shares outstanding.

Adjusted cash flow from operations is GAAP cash flow from operations as adjusted for the net change in settlement assets and obligations, and excludes certain transactions that are closely associated with non-operating activities or are otherwise non-recurring or unusual in nature and not indicative of future operating cash flows.

Free cash flow is adjusted operating cash flow less capital expenditures. Free cash flow does not represent our residual cash flow available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the specific adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS web site,

About FIS

FIS is a global leader in banking and payments technology as well as consulting and...


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