- Results demonstrated the power and durability of FIS’ unique
business model
- Increased revenue 40% on a reported basis and (7)% on an
organic basis to $2,962 million
- Achieved annual run-rate revenue synergies of approximately
$115 million and annual run-rate expense synergies in excess of
$700 million
- Earned Diluted EPS (GAAP) of $0.03 and Adjusted EPS of
$1.15
- Generated net cash provided by operating activity of $1,231
million and free cash flow of $655 million
FIS™ (NYSE:FIS), a global leader in financial services
technology, today reported its second quarter 2020 results.
Second Quarter 2020
Results
On a GAAP basis, revenue increased 40% to $2,962 million,
primarily driven by the July 31, 2019 acquisition of Worldpay, Inc.
(Worldpay). Net earnings attributable to common stockholders was
$19 million or $0.03 per diluted share.
On an organic basis, revenue decreased 7% compared to the prior
year period, primarily due to reduced consumer spending trends
caused by shelter-in-place, lockdown orders and other impacts
associated with the ongoing COVID-19 pandemic. Organic growth was
also impacted by a headwind of approximately 2%, or $60 million,
associated with the U.S. tax filing deadline transitioning from the
second quarter to the third quarter of 2020. Adjusted EBITDA margin
expanded by 150 basis points (bps) over the prior year period to
39.1%, primarily driven by disciplined expense management as well
as the acquisition of Worldpay and achievement of associated
synergies. Adjusted net earnings were $718 million or $1.15 per
diluted share.
“Our second quarter results reflect our ability to leverage the
strength of our broad portfolio and the resiliency of our business
model to successfully position FIS in attractive markets and
execute on our growth strategy,” said Gary Norcross, FIS chairman,
president and chief executive officer. “Throughout the pandemic, we
have continued to invest in our technology and solutions, as our
clients look for new and innovative ways to operate their
businesses. As we continue to drive value to our shareholders, we
embrace our responsibility to strive for sustained social change
both domestically and globally.”
($ millions, except per share data,
unaudited)
Three Months Ended June
30,
%
Organic
2020
2019
Change
Growth
Revenue
$
2,962
$
2,112
40%
(7)%
Merchant Solutions
812
97
*
(25)%
Banking Solutions
1,479
1,357
9%
4%
Capital Market Solutions
629
594
6%
3%
Corporate and Other
42
64
(35)%
*
Adjusted EBITDA
$
1,157
$
794
46%
Adjusted EBITDA Margin
39.1
%
37.6
%
150 bps
Net earnings attributable to FIS common
stockholders (GAAP)
$
19
$
154
(88)%
Diluted EPS (GAAP)
$
0.03
$
0.47
(94)%
Adjusted net earnings
$
718
$
424
69%
Adjusted EPS
$
1.15
$
1.30
(12)%
* Indicates comparison not meaningful
Segment Information
- Merchant Solutions: Second quarter revenue increased
significantly to $812 million, primarily reflecting the Worldpay
acquisition. On an organic basis, revenue decreased 25% when
compared to the prior year period, primarily due to reduced
consumer spending trends caused by shelter-in-place, lockdown
orders, travel restrictions and other impacts associated with the
ongoing COVID-19 pandemic. Organic growth was also impacted by a
headwind of approximately 6%, or $60 million, associated with the
U.S. tax filing deadline transitioning from the second quarter to
the third quarter of 2020. Adjusted EBITDA margin was 40.8%.
- Banking Solutions: Second quarter revenue increased 9% to
$1,479 million. On an organic basis, revenue increased 4% when
compared to the prior year period as strong growth in core
processing was partially offset by a headwind of approximately 1%
associated with the decline in transaction-related revenue caused
by shelter-in-place and lockdown orders and other impacts
associated with the ongoing COVID-19 pandemic. Adjusted EBITDA
margin was 41.1%.
- Capital Market Solutions: Second quarter revenue increased 6%
to $629 million. On an organic basis, revenue increased 3% when
compared to the prior year period driven by growth in our buy and
sell-side solutions. Adjusted EBITDA margin was 45.6%.
- Corporate and Other: Second quarter revenue decreased 35% to
$42 million. Adjusted EBITDA loss was $69 million, including $76
million of corporate expenses.
Integration Update
The Company achieved annual run-rate synergies exiting the
second quarter of 2020 as follows:
- Revenue synergies of approximately $115 million, including the
origination of additional new bank referral agreements, debit
routing benefits and Premium Payback product cross-selling wins
during the second quarter.
- Expense synergies in excess of $700 million, including
approximately $350 million of operational expense savings,
approximately $275 million of interest expense savings and
approximately $90 million of depreciation and amortization
savings.
The integration of the Worldpay acquisition and achievement of
associated synergies are progressing well ahead of schedule. As a
result, the Company remains on track to meet or exceed its
previously stated revenue and expense synergy targets for both
year-end 2020 and 2022.
Balance Sheet and Cash
Flows
As of June 30, 2020, the Company had $3,467 million of available
liquidity, including $1,183 million of cash and cash equivalents
and $2,284 million of capacity available under its revolving credit
facility. Debt outstanding totaled $19,868 million with an
effective weighted average interest rate of 1.7%.
Second quarter net cash provided by operating activities was
$1,231 million, and free cash flow was $655 million. Additionally,
FIS paid dividends of $217 million during the quarter.
COVID-19 Update
COVID-19 continued to impact our financial results in the second
quarter of 2020. In certain locations, where government lockdowns
and shelter in place orders have been loosened, consumer spending
impacting our Merchant Solutions payments volume and transaction
revenue have partially recovered, while certain verticals like
travel, entertainment and hospitality continue to be significantly
impacted. The Company’s revenue continues to be impacted by payment
processing volumes within our Merchant Solutions segment and, to a
lesser extent transaction volumes within our Banking Solutions
segment, but both have started to improve in the second quarter of
2020. In response to COVID-19, we are continuing to take several
actions to manage discretionary expenses, including prohibiting
most travel and decreasing third-party spending as well as
accelerating automation and functional alignment across the
organization. The Company’s liquidity remains strong and improved
this quarter, as noted above.
As a result of government lockdowns, we have successfully
outfitted employees to provide services from home or transferred
work to other locations. Nearly 95% of our employees remain in a
work-from-home status and have been effectively outfitted to
continue to provide all necessary services to our clients. We will
continue this work-from-home status in most locations this year, as
the safety of our employees is our top priority. FIS has also
helped its clients and communities through this period by providing
virtual terminals, waiving certain fees for small merchants,
contributing masks and supplies to the communities in which it does
business, leveraging our Real Time Lending service to help banking
clients process loans and foreclosures under the CARES Act,
assisting a number of U.S. states to enable online purchasing of
food for Supplemental Nutrition Assistance Program (SNAP) benefit
recipients under a pilot program run by the U.S. Department of
Agriculture (USDA) and donating to a number of hard hit communities
and groups of impacted people therein. For its employees, the
Company has expanded sick leave for employees affected by COVID-19,
expanded telemedicine internationally, provided special pay for
certain employees involved in critical infrastructure who could not
work from home, and expanded its FIS Cares program to benefit
employees in need around the world.
Webcast
FIS will sponsor a live webcast of its earnings conference call
with the investment community beginning at 8:30 a.m. (EST) Tuesday,
August 4, 2020. 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.
About FIS
FIS is a leading provider of technology solutions for merchants,
banks and capital markets firms globally. Our over 55,000 people
are dedicated to advancing the way the world pays, banks and
invests by applying our scale, deep expertise and data-driven
insights. We help our clients use technology in innovative ways to
solve business-critical challenges and deliver superior experiences
for their customers. Headquartered in Jacksonville, Florida, FIS is
a Fortune 500® company and is a member of Standard & Poor’s
500® Index.
To learn more, visit www.fisglobal.com. Follow FIS on Facebook,
LinkedIn and Twitter (@FISGlobal).
FIS 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 in the United States. 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, we have provided certain non-GAAP financial
measures.
These non-GAAP measures include constant currency revenue,
organic revenue growth, EBITDA, adjusted EBITDA, adjusted EBITDA
margin, adjusted net earnings, adjusted EPS, and free cash flow.
These non-GAAP measures may be used in this release and/or in the
attached supplemental financial information.
We believe these non-GAAP measures help investors better
understand the underlying fundamentals of our business. As further
described below, the non-GAAP revenue and earnings measures
presented eliminate items management believes are not indicative of
FIS’ operating performance. The constant currency and organic
revenue growth measures adjust for the effects of exchange rate
fluctuations, while organic revenue growth also adjusts for
acquisitions and divestitures, giving investors further insight
into our performance. Finally, free cash flow provides further
information about the ability of our business to generate cash. For
these reasons, management also uses these non-GAAP measures in its
assessment and management of FIS’ performance.
Constant currency revenue represents reported revenue
excluding the impact of fluctuations in foreign currency exchange
rates in the current period.
Organic revenue growth is constant currency revenue, as
defined above, for the current period compared to an adjusted
revenue base for the prior period, which is adjusted to add
pre-acquisition revenue of acquired businesses for a portion of the
prior year matching the portion of the current year for which the
business was owned, and subtract pre-divestiture revenue for
divested businesses for the portion of the prior year matching the
portion of the current year for which the business was not owned,
for any acquisitions or divestitures by FIS.
EBITDA reflects earnings from continuing operations
before interest, taxes, depreciation and amortization.
Adjusted EBITDA is EBITDA, as defined above, excluding
certain costs and other transactions which management deems
non-operational in nature, the removal of which improves
comparability of operating results across reporting periods. This
measure is reported to the chief operating decision maker for
purposes of making decisions about allocating resources to the
segments and assessing their performance. For this reason, adjusted
EBITDA, as it relates to our segments, is presented in conformity
with Accounting Standards Codification 280, Segment Reporting, and
is excluded from the definition of non-GAAP financial measures
under the Securities and Exchange Commission's Regulation G and
Item 10(e) of Regulation S-K.
Adjusted EBITDA margin reflects adjusted EBITDA, as
defined above, divided by revenue.
Adjusted net earnings excludes the impact of certain
costs and other transactions which management deems non-operational
in nature, the removal of which improves comparability of operating
results across reporting periods. It also excludes the impact of
acquisition-related purchase accounting amortization and equity
method investment earnings (loss), both of which are recurring.
Adjusted EPS reflects adjusted net earnings, as defined
above, divided by weighted average diluted shares outstanding.
Free cash flow reflects net cash provided by operating
activities, adjusted for the net change in settlement assets and
obligations and excluding certain transactions that are closely
associated with non-operating activities or are otherwise
non-operational in nature and not indicative of future operating
cash flows, 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 website,
www.fisglobal.com.
Forward-Looking
Statements
This earnings 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 anticipated financial outcomes,
including any earnings guidance of the Company, projected revenue
or expense synergies, business and market conditions, outlook,
foreign currency exchange rates, deleveraging plans, expected
dividends and share repurchases, the Company’s sales pipeline and
anticipated profitability and growth, as well as other statements
about our expectations, beliefs, 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 to which forward-looking
statements are subject include the following, without
limitation:
- the outbreak of the novel coronavirus (“COVID-19”) and measures
to reduce its spread, including the impact of governmental or
voluntary actions such as business shutdowns and stay-at-home
orders;
- the duration of the COVID-19 pandemic and its impacts,
including the general impact of an economic recession, reductions
in consumer and business spending, and instability of the financial
markets across the globe;
- the economic and other impacts of COVID-19 on our clients which
affect the sales of our solutions and services and the
implementation of such solutions;
- the risk of losses in the event of defaults by merchants (or
other parties) to which we extend credit in our card settlement
operations or in respect of any chargeback liability, either of
which could adversely impact liquidity;
- changes in general economic, business and political conditions,
including those resulting from COVID-19 or other pandemics,
intensified international hostilities, acts of terrorism, changes
in either or both the United States and international lending,
capital and financial markets and currency fluctuations;
- the risk that the Worldpay transaction will not provide the
expected benefits or that we will not be able to achieve the cost
or revenue synergies anticipated;
- the risk that the integration of FIS and Worldpay will be more
difficult, time-consuming or expensive than anticipated;
- the risk that other acquired businesses will not be integrated
successfully or that the integration will be more costly or more
time-consuming and complex than anticipated;
- the risk that cost savings and other synergies anticipated to
be realized from other acquisitions may not be fully realized or
may take longer to realize than expected;
- the risks of doing business internationally;
- the effect of legislative initiatives or proposals, statutory
changes, governmental or other applicable regulations and/or
changes in industry requirements, including privacy and
cybersecurity laws and regulations;
- the risks of reduction in revenue from the elimination of
existing and potential customers due to consolidation in, or new
laws or regulations affecting, the banking, retail and financial
services industries or due to financial failures or other setbacks
suffered by firms in those industries;
- changes in the growth rates of the markets for our
solutions;
- failures to adapt our solutions to changes in technology or in
the marketplace;
- internal or external security breaches of our systems,
including those relating to unauthorized access, theft, corruption
or loss of personal information and computer viruses and other
malware affecting our software or platforms, and the reactions of
customers, card associations, government regulators and others to
any such events;
- the risk that implementation of software, including software
updates, for customers or at customer locations or employee error
in monitoring our software and platforms may result in the
corruption or loss of data or customer information, interruption of
business operations, outages, exposure to liability claims or loss
of customers;
- the reaction of current and potential customers to
communications from us or regulators regarding information
security, risk management, internal audit or other matters;
- competitive pressures on pricing related to the decreasing
number of community banks in the U.S., the development of new
disruptive technologies competing with one or more of our
solutions, increasing presence of international competitors in the
U.S. market and the entry into the market by global banks and
global companies with respect to certain competitive solutions,
each of which may have the impact of unbundling individual
solutions from a comprehensive suite of solutions we provide to
many of our customers;
- the failure to innovate in order to keep up with new emerging
technologies, which could impact our solutions and our ability to
attract new, or retain existing, customers;
- an operational or natural disaster at one of our major
operations centers;
- failure to comply with applicable requirements of payment
networks or changes in those requirements;
- fraud by merchants or bad actors; and
- other risks detailed in the “Risk Factors” and other sections
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, in our quarterly reports on Form 10-Q and in our
other filings with the Securities and Exchange Commission.
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.
Fidelity National Information
Services, Inc.
Earnings Release Supplemental
Financial Information
August 4, 2020
Exhibit A
Condensed Consolidated Statements
of Earnings - Unaudited for the three and six months ended June 30,
2020 and 2019
Exhibit B
Condensed Consolidated Balance
Sheets - Unaudited as of June 30, 2020 and December 31, 2019
Exhibit C
Condensed Consolidated Statements
of Cash Flows - Unaudited for the six months ended June 30, 2020
and 2019
Exhibit D
Supplemental Non-GAAP Financial
Information - Unaudited for the three and six months ended June 30,
2020 and 2019
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three and six months ended June
30, 2020 and 2019
FIDELITY NATIONAL INFORMATION
SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS —
UNAUDITED (In millions, except per share amounts)
Exhibit A
Three months ended June 30,
Six months ended June 30,
2020
2019
2020
2019
Revenue
$
2,962
$
2,112
$
6,039
$
4,169
Cost of revenue
2,046
1,404
4,134
2,785
Gross profit
916
708
1,905
1,384
Selling, general, and administrative
expenses
870
317
1,751
678
Operating income
46
391
154
706
Other income (expense):
Interest expense, net
(88
)
(72
)
(167
)
(147
)
Other income (expense), net
74
(120
)
34
(172
)
Total other income (expense), net
(14
)
(192
)
(133
)
(319
)
Earnings (loss) before income taxes and
equity method investment earnings (loss)
32
199
21
387
Provision (benefit) for income taxes
4
40
(27
)
72
Equity method investment earnings
(loss)
(7
)
(4
)
(8
)
(11
)
Net earnings
21
155
40
304
Net (earnings) loss attributable to
noncontrolling interest
(2
)
(1
)
(5
)
(2
)
Net earnings attributable to FIS common
stockholders
$
19
$
154
$
35
$
302
Net earnings per share-basic attributable
to FIS common stockholders
$
0.03
$
0.48
$
0.06
$
0.93
Weighted average shares
outstanding-basic
618
324
617
323
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.03
$
0.47
$
0.06
$
0.92
Weighted average shares
outstanding-diluted
625
327
625
327
FIDELITY NATIONAL INFORMATION
SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED
(In millions, except per share amounts)
Exhibit B
June 30,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents
$
1,183
$
1,152
Settlement deposits and merchant float
2,697
2,882
Trade receivables, net
3,104
3,242
Contract assets
150
124
Settlement receivables
834
647
Other receivables
299
337
Prepaid expenses and other current
assets
333
308
Total current assets
8,600
8,692
Property and equipment, net
887
900
Goodwill
51,940
52,242
Intangible assets, net
14,589
15,798
Software, net
3,292
3,204
Other noncurrent assets
2,535
2,303
Deferred contract costs, net
799
667
Total assets
$
82,642
$
83,806
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities
$
2,063
$
2,374
Settlement payables
4,214
4,228
Deferred revenue
846
817
Short-term borrowings
3,217
2,823
Current portion of long-term debt
1,777
140
Total current liabilities
12,117
10,382
Long-term debt, excluding current
portion
14,874
17,229
Deferred income taxes
4,091
4,281
Other noncurrent liabilities
2,287
2,406
Deferred revenue
40
52
Total liabilities
33,409
34,350
Redeemable noncontrolling interest
176
—
Equity:
FIS stockholders’ equity:
Preferred stock $0.01 par value
—
—
Common stock $0.01 par value
6
6
Additional paid in capital
45,736
45,358
Retained earnings
3,753
4,161
Accumulated other comprehensive earnings
(loss)
(358
)
(33
)
Treasury stock, at cost
(94
)
(52
)
Total FIS stockholders’ equity
49,043
49,440
Noncontrolling interest
14
16
Total equity
49,057
49,456
Total liabilities, redeemable
noncontrolling interest and equity
$
82,642
$
83,806
FIDELITY NATIONAL INFORMATION
SERVICES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS —
UNAUDITED (In millions)
Exhibit C
Six months ended June 30,
2020
2019
Cash flows from operating activities:
Net earnings
$
40
304
Adjustment to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
1,830
736
Amortization of debt issue costs
16
10
Acquisition-related financing foreign
exchange
—
104
Loss (gain) on sale of businesses,
investments and other
3
17
Stock-based compensation
125
43
Deferred income taxes
(118
)
(68
)
Net changes in assets and liabilities, net
of effects from acquisitions and foreign currency:
Trade and other receivables
105
93
Contract assets
(28
)
1
Settlement activity
172
(27
)
Prepaid expenses and other assets
(153
)
(140
)
Deferred contract costs
(252
)
(174
)
Deferred revenue
22
39
Accounts payable, accrued liabilities and
other liabilities
(149
)
(118
)
Net cash provided by operating
activities
1,613
820
Cash flows from investing
activities:
Additions to property and equipment
(110
)
(57
)
Additions to software
(457
)
(228
)
Acquisitions, net of cash acquired
(469
)
—
Net proceeds from sale of businesses and
investments
—
43
Other investing activities, net
90
(42
)
Net cash provided by (used in) investing
activities
(946
)
(284
)
Cash flows from financing
activities:
Borrowings
27,025
19,201
Repayment of borrowings and other
financing obligations
(27,196
)
(10,028
)
Debt issuance costs
—
(71
)
Proceeds from stock issued under
stock-based compensation plans
274
86
Treasury stock activity
(49
)
(423
)
Dividends paid
(433
)
(226
)
Other financing activities, net
(18
)
(24
)
Net cash provided by (used in) financing
activities
(397
)
8,515
Effect of foreign currency exchange rate
changes on cash
(23
)
2
Net increase (decrease) in cash and cash
equivalents
247
9,053
Cash and cash equivalents, beginning of
period
3,211
703
Cash and cash equivalents, end of
period
$
3,458
$
9,756
FIDELITY NATIONAL INFORMATION
SERVICES, INC. SUPPLEMENTAL NON-GAAP ORGANIC REVENUE GROWTH —
UNAUDITED (In millions)
Exhibit D
Three months ended June 30,
2020
2019
Constant
Currency
In Year
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustments (1)
Base
Growth
Merchant Solutions
$
812
$
5
$
817
$
97
$
986
$
1,083
(25
)
%
Banking Solutions
1,479
15
1,494
1,357
87
1,443
4
%
Capital Market Solutions
629
4
633
594
20
615
3
%
Corporate and Other
42
—
42
64
—
64
(35
)
%
Total
$
2,962
$
24
$
2,986
$
2,112
$
1,093
$
3,206
(7
)
%
Six months ended June 30,
2020
2019
Constant
Currency
In Year
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustments (1)
Base
Growth
Merchant Solutions
$
1,747
$
9
$
1,756
$
147
$
1,873
$
2,020
(13
)
%
Banking Solutions
2,941
25
2,965
2,730
170
2,900
2
%
Capital Market Solutions
1,260
6
1,266
1,167
39
1,206
5
%
Corporate and Other
91
—
92
125
—
125
(27
)
%
Total
$
6,039
$
40
$
6,079
$
4,169
$
2,083
$
6,252
(3
)
%
Amounts in tables may not sum or calculate due to rounding.
(1)
In year adjustments primarily include
adding revenue from the Worldpay and Virtus acquisitions.
FIDELITY NATIONAL INFORMATION
SERVICES, INC. SUPPLEMENTAL NON-GAAP CASH FLOW MEASURES — UNAUDITED
(In millions)
Exhibit D (continued)
Three months ended
Six months ended
June 30, 2020
June 30, 2020
Net cash provided by operating
activities
$
1,231
$
1,613
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
208
299
Settlement activity
(541
)
(172
)
Adjusted cash flows from operations
898
1,740
Capital expenditures (2)
(243
)
(546
)
Free cash flow
$
655
$
1,194
Three months ended
Six months ended
June 30, 2019
June 30, 2019
Net cash provided by operating
activities
$
526
$
820
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
46
90
Tax payments on divestitures (3)
10
10
Settlement activity
(29
)
27
Adjusted cash flows from operations
553
947
Capital expenditures
(140
)
(285
)
Free cash flow
$
413
$
662
Free cash flow reflects adjusted cash flows from operations less
capital expenditures (additions to property and equipment and
additions to software, excluding capital spend related to the
construction of our new headquarters). Free cash flow does not
represent our residual cash flows available for discretionary
expenditures, since we have mandatory debt service requirements and
other non-discretionary expenditures that are not deducted from the
measure.
(1)
Adjusted cash flows from operations and
free cash flow for the three and six months ended June 30, 2020 and
2019 exclude cash payments for certain acquisition, integration and
other costs, net of related tax impact. The related tax impact
totaled $32 million and $11 million for the three months and $47
million and $21 million for the six months ended June 30, 2020 and
2019, respectively.
(2)
Capital expenditures for free cash flow
for the three and six months ended June 30, 2020 exclude $18
million and $21 million in capital spend related to the
construction of our new headquarters.
(3)
Adjusted cash flows from operations and
free cash flow exclude tax payments made in 2019 related to the
sale of Reliance Trust Company of Delaware and the unwinding of the
Brazilian Venture recognized during 2018.
FIDELITY NATIONAL INFORMATION
SERVICES, INC. SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS —
UNAUDITED (In millions, except per share amounts)
Exhibit E
Three months ended June 30,
Six months ended June 30,
2020
2019
2020
2019
Net earnings attributable to FIS common
stockholders
$
19
$
154
$
35
$
302
Provision (benefit) for income taxes
4
40
(27
)
72
Interest expense, net
88
72
167
147
Other, net
(65
)
125
(21
)
185
Operating income, as reported
46
391
154
706
Depreciation and amortization, excluding
purchase accounting amortization
237
193
468
388
Non-GAAP adjustments:
Purchase accounting amortization (1)
678
175
1,362
348
Acquisition, integration and other costs
(2)
196
35
420
81
Adjusted EBITDA
$
1,157
$
794
$
2,404
$
1,523
See notes to Exhibit E.
FIDELITY NATIONAL INFORMATION
SERVICES, INC. SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS —
UNAUDITED (In millions, except per share amounts)
Exhibit E (continued)
Three months ended June 30,
Six months ended June 30,
2020
2019
2020
2019
Earnings (loss) before income taxes and
equity method investment earnings (loss)
$
32
$
199
$
21
$
387
(Provision) benefit for income taxes
(4
)
(40
)
27
(72
)
Equity method investment earnings
(loss)
(7
)
(4
)
(8
)
(11
)
Net (earnings) loss attributable to
noncontrolling interest
(2
)
(1
)
(5
)
(2
)
Net earnings attributable to FIS common
stockholders
19
154
35
302
Non-GAAP adjustments:
Purchase accounting amortization (1)
678
175
1,362
348
Acquisition, integration and other costs
(2)
202
46
426
146
Loss (gain) on sale of businesses and
investments (3)
—
—
—
6
Debt financing activities (4)
—
102
—
102
Non-operating (income) expense (5)
(74
)
—
(34
)
—
Equity method investment (earnings) loss
(6)
7
4
8
11
(Provision) benefit for income taxes on
non-GAAP adjustments
(114
)
(57
)
(277
)
(113
)
Total non-GAAP adjustments
699
270
1,485
500
Adjusted net earnings
$
718
$
424
$
1,520
$
802
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.03
$
0.47
$
0.06
$
0.92
Non-GAAP adjustments:
Purchase accounting amortization (1)
1.08
0.54
2.18
1.06
Acquisition, integration and other costs
(2)
0.32
0.14
0.68
0.45
Loss (gain) on sale of businesses and
investments (3)
—
—
—
0.02
Debt financing activities (4)
—
0.31
—
0.31
Non-operating (income) expense (5)
(0.12
)
—
(0.05
)
—
Equity method investment (earnings) loss
(6)
0.01
0.01
0.01
0.03
(Provision) benefit for income taxes on
non-GAAP adjustments
(0.18
)
(0.17
)
(0.44
)
(0.35
)
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.15
$
1.30
$
2.43
$
2.46
Weighted average shares
outstanding-diluted
625
327
625
327
Amounts in table may not sum or calculate due to rounding.
See notes to Exhibit E.
FIDELITY NATIONAL INFORMATION
SERVICES, INC. SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS —
UNAUDITED (In millions, except per share amounts)
Exhibit E (continued)
Notes to Unaudited - Supplemental GAAP to Non-GAAP
Reconciliations for the three and six months ended June 30, 2020
and 2019.
The adjustments are as follows:
(1)
This item represents purchase price
amortization expense on all intangible assets acquired through
various Company acquisitions, including customer relationships,
contract value, trademarks and tradenames, and technology assets.
The Company has excluded the impact of this amortization expense as
such amounts can be significantly impacted by the timing and/or
size of acquisitions. Although the Company excludes these amounts
from its non-GAAP expenses, the Company believes that it is
important for investors to understand that such intangible assets
contribute to revenue generation. Amortization of assets that
relate to past acquisitions will recur in future periods until such
assets have been fully amortized. Any future acquisitions may
result in the amortization of future assets.
(2)
This item represents acquisition and
integration costs primarily related to the acquisition of Worldpay
and certain other costs including those associated with data center
consolidation activities of $22 million and $17 million for the
three months and $40 million and $25 million for the six months
ended June 30, 2020 and 2019, respectively.
(3)
This item represents the net pre-tax loss
(gain) on sale of businesses and investments during the six months
ended June 30, 2019.
(4)
This item primarily represents the
non-cash foreign currency impact of non-hedged Euro- and Pound
Sterling-denominated notes issued during the three months ended
June 30, 2019 to finance the Worldpay acquisition.
(5)
Non-operating income (expense) consists of
other income and expense items outside of the Company’s operating
activities. For the three and six months ended June 30, 2020 this
item primarily represents foreign currency transaction
remeasurement gains and losses and the fair value adjustment on
convertible Visa Inc. Series B preferred stock and related
contingent value rights liability from the Worldpay
acquisition.
(6)
This item represents our equity method
investment earnings or loss and is predominantly due to our equity
ownership interest in Cardinal Holdings, LP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200804005298/en/
Ellyn Raftery, 904.438.6083 Chief Marketing Officer FIS Global
Marketing and Corporate Communications
Ellyn.Raftery@fisglobal.com
Nathan Rozof, CFA, 904.438.6918 Executive Vice President FIS
Corporate Finance and Investor Relations
Nathan.Rozof@fisglobal.com
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