6% Revenue Growth Delivers Record $6.4 Billion in Revenue; 10% Adjusted EPS Growth for the Year
Full year 2014
Fourth quarter 2014
JACKSONVILLE, Fla., February 5, 2015 – FIS™ (NYSE: FIS), a global leader in banking and payments technology as well as consulting and outsourcing solutions, today reported a 2014 revenue increase of six percent on a GAAP basis to $6.4 billion from $6.1 billion a year earlier. GAAP net earnings from continuing operations attributable to common stockholders increased to $690.5 million, or $2.39 per diluted share, compared to $490.0 million, or $1.67 per diluted share in 2013.
Full year 2014 revenue increased five percent on an organic basis from the prior year, which adjusts for the impact of acquisitions and changes in foreign currency. 2014 adjusted EBITDA increased five percent to $1.9 billion from $1.8 billion a year earlier and non-GAAP adjusted net earnings from continuing operations attributable to common stockholders increased to $895 million from $830 million in 2013. Adjusted net earnings per diluted share increased ten percent to $3.10 from $2.82 in 2013. Full year non-GAAP adjusted net earnings from continuing operations adjusts for costs pertaining to acquisition-related purchase amortization expense of $0.51 per share, refinancing costs of $0.09 per share, and acquisition, integration, and severance costs of $0.09 per share, and includes $0.02 per share related to contract settlement revenue.
“FIS delivered another year of strong earnings and cash flow allowing us to return $750 million to our shareholders through share repurchases and dividends,” said Gary Norcross, president and chief executive officer, FIS. “Our deep client relationships across the globe delivered key business wins and growth in 2014. We look to maintain this positive momentum in 2015 as we continue to deliver value to our clients and shareholders.”
Fourth Quarter 2014
Revenue increased to $1.7 billion from $1.6 billion in the fourth quarter of 2013 or seven percent on a reported basis. GAAP net earnings from continuing operations attributable to common stockholders were $202.4 million, or $0.71 per diluted share, compared to $74.2 million, or $0.25 per diluted share in the prior year quarter.
Fourth quarter 2014 revenue increased five percent on an organic basis, which adjusts for the impact of acquisitions and changes in foreign currency, from the prior year quarter. Non-GAAP adjusted net earnings from continuing operations attributable to common stockholders increased to $249.3 million in the fourth quarter of 2014 from $219.8 million in the prior year quarter. Adjusted net earnings per diluted share increased 16 percent to $0.87 per share from $0.75 per share in the fourth quarter 2013. Fourth quarter 2014 non-GAAP adjusted net earnings from continuing operations excludes costs pertaining to acquisition-related purchase amortization expense of $0.12 per share and acquisition, integration, and severance costs of $0.04 per share. Adjusted EBITDA increased to $525.6 million in the fourth quarter of 2014, up nine percent from $484.0 million in the prior year quarter, while adjusted EBITDA margin was 31.1 percent, an increase of 30 basis points, compared to 30.8 percent in the prior year 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.
Fourth quarter 2014 revenue increased four percent on an organic basis and seven percent on a reported basis to $645.4 million from $603.5 million a year earlier reflecting growth in implementation and consulting services and risk and compliance solutions. Adjusted EBITDA increased six percent to $253.2 million from $239.7 million a year ago. Adjusted EBITDA margin was 39.2 percent compared to 39.7 percent a year earlier, reflecting a change in revenue mix.
Full year 2014 revenue increased four percent on an organic basis and six percent on a reported basis to $2.5 billion from $2.3 billion a year earlier driven by continued growth in consulting, mobile banking and risk and compliance solutions. Full year adjusted EBITDA increased four percent to $980.0 million compared to $937.9 million in 2013 and adjusted EBITDA margin decreased 70 basis points to 39.3 percent resulting primarily from lower termination fees compared to the prior period.
Fourth quarter 2014 revenue increased three percent on an organic basis and five percent on a reported basis to $647.2 million from $618.3 million a year earlier driven by strong transaction growth in network solutions, increased card production, and payment processing volumes. Adjusted EBITDA increased five percent to $274.9 million from $261.9 million a year earlier. Adjusted EBITDA margin expanded ten basis points to 42.5 percent reflecting transaction growth on our fraud and debit processing platforms.
Full year 2014 revenue increased two percent on an organic and reported basis to $2.5 billion. Full year adjusted EBITDA increased two percent to $1.1 billion compared to $1.0 billion in 2013. Adjusted EBITDA margin decreased 30 basis points to 42.0 percent driven primarily by lower termination fees in 2014.
Fourth quarter 2014 revenue increased 11 percent on an organic basis and 13 percent on a reported basis to $397.7 million from $351.9 million a year earlier, primarily driven by growth in implementation and consulting services. Adjusted EBITDA increased seven percent to $102.9 million from $96.0 million in the prior year period. Adjusted EBITDA margin was 25.9 percent, compared to 27.3 percent in the prior year period reflecting incremental consulting and services revenue.
Full year 2014 revenue increased 11 percent on an organic basis and 12 percent on a reported basis to $1.4 billion from $1.3 billion including strong growth in EMEA, Asia, and professional services. Full year adjusted EBITDA increased six percent to $319.6 million compared to $302.8 million in 2013. Adjusted EBITDA margin decreased 140 basis points to 22.5 percent from 23.9 percent reflecting incremental consulting and services revenue.
Fourth quarter 2014 corporate costs, as adjusted, were $105.4 million, down from $113.6 million in the prior year period. For the year, corporate costs, as adjusted, were $427.3 million down from $445.0 million in the prior year. The decrease for both periods reflects management’s commitment to aggressive cost management.
Interest expense, net of interest income, decreased to $36.8 million in the fourth quarter down from $43.4 million a year earlier. Full year interest expense, net of interest income, decreased to $157.5 million, or down 16 percent, from $188.2 million in 2013, primarily the result of lower borrowing costs.
The effective tax rate was 33 percent in the fourth quarter and 32 percent for the full year.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $492.8 million as of Dec. 31, 2014. Debt outstanding totaled approximately $5.1 billion compared to $4.5 billion as of year-end 2013.
Net cash provided by operations was $1.2 billion for the year compared to $1.1 billion in 2013. Capital expenditures increased to $371.2 million from $336.2 million in 2013. Free cash flow was $864.3 million for the year, compared to $826.2 million in the prior year.
FIS repurchased approximately 8.7 million common shares at a total cost of approximately $476 million and an average cost of $54.89 per share in 2014. The company paid shareholder dividends totaling $275 million in 2014, or a seven percent increase, compared to $256 million in 2013.
FIS’ outlook for revenue growth and earnings per share in 2015 is as follows:
FIS will announce fourth quarter and full-year 2014 financial results on Thurs., Feb. 5 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) on Feb. 5. 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 organic revenue, adjusted revenue, EBITDA, adjusted EBITDA and adjusted EBITDA margin, adjusted cash flow from operations, adjusted net earnings (including per share amounts) and free cash flow.
Organic revenue includes reported revenue (adjusted revenue for 2014) plus pre-acquisition revenue for companies acquired during the applicable reporting periods. Organic revenue excludes the impact of foreign currency fluctuation in 2014.
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 (2014 comparative data) includes the contract cash settlement revenue and excludes certain acquisition, integration and severance costs.
Adjusted EBITDA (2013 comparative data) excludes adjustments related to the 2010 acquisition of Capco and certain International restructuring charges.
Adjusted net earnings (2014 comparative data) excludes the after-tax impact of certain acquisition, integration, severance and refinancing costs as well as acquisition-related amortization and includes the after-tax impact of adjusted revenue.
Adjusted net earnings (2013 comparative data) excludes the after-tax impact of acquisition related amortization, a net benefit related to a gain on the mFoundry acquisition, certain International restructuring charges, debt issuance and refinancing costs and adjustments related to the Capco acquisition.
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 (2014 comparative data) is GAAP cash flow from operations as adjusted for the net change in settlement assets and obligations, and excludes certain payments for contingent purchase price and incentive compensation programs associated with the 2010 acquisition of Capco and the premium paid related to the early redemption of senior notes.
Adjusted cash flow from operations (2013 comparative data) is GAAP cash flow from operations as adjusted for the net change in settlement assets and obligations and excludes the premium paid related to the early redemption of senior notes.
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 net earnings. 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 are provided in the Investor Relations section of the FIS Web site, www.fisglobal.com.
FIS is a global leader in banking and payments technology as well as consulting and outsourcing solutions. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 130 countries. Headquartered in Jacksonville, Fla., FIS employs more than 40,000 people worldwide and holds leadership positions in payment processing and banking solutions. Providing software, services and outsourcing of the technology that drives financial institutions, FIS is 426 on the Fortune 500 and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com.
This news release and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about future revenue, organic revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”), earnings per share and margin expansion, as well as other statements about our expectations, hopes, intentions, or strategies regarding the future, are forward-looking statements. These statements relate to future events and our future results, and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Any statements that refer to beliefs, expectations, projections or other characterizations of future events or circumstances and other statements that are not historical facts are forward-looking statements.
Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to include, without limitation:
Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.
For More Information:
Ellyn Raftery, +1.904.438.6083
Chief Marketing Officer
FIS Global Marketing and Corporate Communications
Peter Gunnlaugsson, +1.904.438.6603
Senior Vice President
FIS Investor Relations