Metavante Announces Second Quarter Results
- Revenue growth of 7 percent for the quarter; 8 percent for the first half
- Segment operating income up 10 percent
- EPS of $0.31; cash EPS of $0.36
- Maintaining full year guidance
- Organic revenue growth 4% to 6%
- Diluted earnings per share $1.15 to $1.20
- Diluted cash earnings per share $1.36 to $1.41
MILWAUKEE, July 28, 2008 - Metavante Technologies, Inc. (NYSE:MV) today reported second quarter 2008 revenue of $424.8 million, up 7 percent compared to $395.7 million in the second quarter of 2007. Organic growth was driven by higher transaction volumes in the payment businesses and higher professional services activity. Acquisitions added approximately 1 percentage point to the growth rate.
Segment operating income for the second quarter of 2008 was $117.9 million, an increase of 10 percent compared to the second quarter of 2007. The segment operating margin for the second quarter of 2008 improved to 27.8 percent, an increase of 0.6 percentage points compared to the second quarter of 2007.
Net income for the second quarter of 2008 was $36.9 million, or $0.31 per share. Cash net income for the second quarter of 2008 was $43.7 million, or $0.36 per share. Comparison of either of these financial metrics to prior year results is not meaningful due to the significantly different capital structure of the company prior to the separation from Marshall & Ilsley Corporation in November 2007.
EBITDA in the second quarter of 2008 was $121.0 million, an increase of 9 percent compared to adjusted EBITDA of $111.2 million in the second quarter of 2007.
Cash provided by operating activities for the first half of 2008 was $148.3 million, compared to $155.3 million in the first half of 2007. Free cash flow for the first half of 2008 was $82.5 million, compared to $83.4 million in the first half of 2007.
Commenting on the results, Frank R. Martire, president and chief executive officer, said, “Our second quarter results met our expectations and completed a good first half of the year. Organic growth was solid, and benefited from success in prior periods cross-selling our comprehensive product portfolio and capturing new business. The combination of operating leverage and cost productivity allowed us to continue to make additional investments in future growth while still improving current profitability.”
Cash net income (including per share amounts), EBITDA, adjusted EBITDA, and free cash flow are non-GAAP financial measures. These measures should not be considered substitutes for GAAP measures. See the attachments to this release under “Non-GAAP Financial Measures” for an explanation of these measures and reconciliations to GAAP financial measures.
Financial Solutions Group (FSG)
Metavante's Financial Solutions Group offers a comprehensive suite of technology and business services that are critical to a financial institution's ability to attract, expand, and service existing and prospective customers.
FSG's second quarter 2008 revenue was $164.2 million, an increase of 6 percent compared to $155.3 million in the second quarter of 2007. Segment operating income for the second quarter of 2008 was $37.6 million compared to $40.5 million in the second quarter of 2007. The decline in segment operating income was due to revenue mix, price, and increased investments in product development, which more than offset the benefit of higher volume. Segment operating margin was 22.9 percent in the second quarter of 2008 compared to 26.1 percent in the second quarter of 2007.
Payment Solutions Group (PSG)
Metavante's Payment Solutions Group (PSG) offers one of the industry's most comprehensive suites of payment products and services, including credit, debit and prepaid debit card management, a national payments network in NYCE, as well as specialized solutions to facilitate government and healthcare payments.
PSG's second quarter 2008 revenue was $260.6 million, an increase of 8 percent compared to $240.4 million in the second quarter of 2007. Segment operating income in the second quarter of 2008 was $80.3 million compared to $67.0 million in the second quarter of 2007. The increase in segment operating income was driven by the benefits of cost actions taken in the Image business in the fourth quarter of 2007 and operating leverage in other business units. Segment operating margin was 30.8 percent in the second quarter of 2008 compared to 27.9 percent in the second quarter of 2007.
Interest expense in the second quarter of 2008 was $18.4 million higher than the second quarter of 2007 as a result of borrowings incurred in connection with the separation from Marshall & Ilsley Corporation in November 2007.
The effective tax rate in the second quarter of 2008 was 37 percent compared to 35 percent in the second quarter of 2007. The increase in the effective tax rate is primarily due to the expiration of the research and development tax credit for federal tax purposes on December 31, 2007.
Commenting on the outlook, Martire added, “At the mid-point of our fiscal year, it is becoming increasingly apparent that 2008 will be another good year for Metavante. Continued strong execution, coupled with some stability in consumer spending behavior and customer investment during the second half, should enable us to deliver full year financial results consistent with our guidance. While we remain focused on closing a solid 2008, we also recognize that sustaining organic growth in 2009 and beyond requires us to work harder to sign new business in a challenging economic environment, and continue to make investments in technologies and capabilities that will drive future growth.”
The full year 2008 guidance provided by the company in April 2008 is outlined below.
A conference call to discuss our financial results will take place today at 8:30 a.m. EDT. The call will be webcast and accessible on the investor relations section of Metavante's website at (www.metavante.com). The accompanying slides will also be available on Metavante's website. A replay of the audio will be available on the website following the call.
Metavante Technologies, Inc. (NYSE:MV) is the parent company of Metavante Corporation. Metavante Corporation delivers banking and payments technologies to over 8,000 financial services firms and businesses worldwide. Metavante products and services drive account processing for deposit, loan and trust systems, image-based and conventional check processing, electronic funds transfer, consumer healthcare payments, electronic presentment and payment, business transformation services, and payment network solutions including the NYCE Network, a leading ATM/PIN debit network. Metavante (www.metavante.com) is headquartered in Milwaukee.
Cautionary Language Regarding Forward-Looking StatementsThis press release contains 'forward-looking statements' intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those that express a plan, belief, expectation, estimation, anticipation, intent, contingency, future development or similar expression, and can generally be identified as forward-looking because they include words such as 'believes,' 'anticipates,' 'expects,' 'should” or words of similar importance. Statements that describe our objectives or goals are also forward-looking statements. The forward-looking statements in this press release involve significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, could cause actual results to differ materially from our current expectations. The factors that may affect our results include, among others, our debt level, restrictions and limitations in our credit facilities, our competitive industry, changes in customer demand for our products or services, general changes in economic conditions, risks of damage to our data centers or associated infrastructure, additional costs and requirements associated with our public company status, foreign currency fluctuations, intellectual property risks, effect of regulation on our business, network and operational risks, loss of significant customers and customer consolidation risks, risks associated with future acquisitions, and other factors discussed in Metavante's Annual Report on Form 10-K under the heading 'Risk Factors”, and other filings with the SEC. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements. Readers are cautioned not to place undue reliance upon forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date hereof.
*Full Financial Tables Provided In PDF Below