July 19, 2011 04:06 PM Eastern Daylight Time
FIS Announces Second Quarter Results
- Revenue of $1.44 billion, up 13.4%; organic growth of 5.8%
- EPS of $0.55, as adjusted, up 17.0%
- Free cash flow of $195 million
JACKSONVILLE, Fla.--(BUSINESS WIRE)--FIS™ (NYSE:FIS), the world’s largest provider of banking and payments technology, today reported financial results for the quarter ended June 30, 2011.
“These results reflect our ongoing focus on expanding client relationships, driving operational excellence and further extending our market leadership position.”
GAAP Results
Revenue from continuing operations increased 13.4% to $1.44 billion in the second quarter of 2011, compared to $1.27 billion in the second quarter of 2010. GAAP net earnings from continuing operations attributable to common stockholders totaled $129.3 million, or $0.42 per diluted share, in the second quarter of 2011, compared to $94.9 million, or $0.25 per diluted share, in the prior year quarter.
Non-GAAP Results
Adjusted revenue growth was 13.0% in the second quarter of 2011, and organic revenue growth was 5.8%. EBITDA increased 5.9% to $414.5 million, compared to EBITDA of $391.5 million, as adjusted, in the second quarter of 2010. EBITDA margin was 28.8% in the second quarter of 2011, compared to 30.7%, as adjusted, in the prior year quarter. The current year quarter reflects strong growth in lower margin services revenue, the addition of Capco and approximately $5.0 million of integration, severance and merger and acquisition costs that are included in the current period.
Adjusted net earnings from continuing operations totaled $171.7 million, or $0.55 per diluted share, compared to $181.0 million, or $0.47 per diluted share, in the second quarter of 2010. Integration, severance and merger and acquisition costs reduced second quarter 2011 adjusted earnings by approximately $0.01 per share. Free cash flow increased to $195.3 million compared to free cash flow of $107.5 million, as adjusted, in the 2010 quarter. 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.
“We are pleased with the continued revenue momentum and the strong growth in earnings per share,” commented Frank Martire, president and chief executive officer of FIS. “These results reflect our ongoing focus on expanding client relationships, driving operational excellence and further extending our market leadership position.”
Segment Information
The following is a discussion of second quarter results by segment:
- Financial Solutions:
Second quarter 2011 Financial Solutions revenue increased 12.7% to $516.5 million compared to $458.3 million in the 2010 quarter, driven by growth in account processing, higher services revenue, and the addition of Capco’s North American operations. Financial Solutions revenue increased 5.2% on an organic basis. Financial Solutions EBITDA increased 3.5% to $208.3 million compared to $201.3 million in the second quarter of 2010. The EBITDA margin was 40.3% compared to 43.9% in the prior year quarter, reflecting strong growth in lower margin services revenue and the addition of Capco.
- Payment Solutions:
Second quarter 2011 Payment Solutions revenue totaled $632.0 million compared to $630.6 million in the 2010 quarter. The consolidation of our merchant processing platforms resulted in utilization of the net method to account for certain merchant interchange fees which negatively impacted year-over-year comparisons by $17.8 million. In addition, declining check usage negatively impacted revenue growth by $1.2 million. Payment Solutions revenue increased 4.1% excluding the impact of the gross-to-net accounting mentioned above and the check related businesses. Payment Solutions EBITDA increased 2.9% to $238.9 million in the second quarter of 2011 compared to EBITDA of $232.2 million in the 2010 quarter. The EBITDA margin improved to 37.8% compared to 36.8% in the prior year quarter.
- International Solutions:
International Solutions revenue increased 57.8% to $293.0 million compared to $185.7 million in the 2010 quarter. The growth was driven by higher payment volumes in Brazil, increased license revenue and the addition of Capco’s international operations. International Solutions revenue increased 25.2% on an organic basis. International Solutions EBITDA increased 44.3% to $61.2 million compared to $42.4 million in the second quarter of 2010. The EBITDA margin was 20.9% compared to 22.8% in the prior year quarter, reflecting the addition of Capco.
- Corporate/Other:
Corporate expense totaled $93.9 million in the second quarter 2011, compared to $84.4 million in the prior year quarter. Net interest expense totaled $65.8 million compared to $19.3 million in the prior year quarter due primarily to the recapitalization completed in the third quarter of 2010. The effective tax rate declined to 32.0% in the second quarter of 2011 compared to 37.0% in the prior year, reflecting a one-time benefit in the current year quarter.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $427.3 million as of June 30, 2011. Debt outstanding declined to approximately $4.9 billion as of June 30, 2011. Capital expenditures totaled $68.0 million in the second quarter of 2011, compared to $76.0 million in capital expenditures in the prior year quarter.
Free cash flow totaled $195.3 million in the second quarter of 2011 compared to adjusted free cash flow of $107.5 million in the 2010 quarter.
2011 Outlook
FIS reiterated its full year outlook for 2011 as follows:
- Revenue growth of 9% to 11% (4% to 6% organic revenue growth);
- EBITDA growth of 7% to 9%, reflecting a higher proportion of consulting and services revenue;
- Adjusted net earnings per share from continuing operations of $2.24 to $2.34;
- Free cash flow is expected to approximate adjusted net earnings in 2011
