- Increased revenue 10% while generating strong profitability and
cash flow, demonstrating superior execution
- Achieved annual run-rate revenue synergies and operational
expense synergies of approximately $600 million and $475 million,
respectively
- Repurchased $1.2 billion in shares, tripling the pace of first
and second quarter buybacks
FIS® (NYSE:FIS), a global leader in financial services
technology, today reported its third quarter 2021 results.
“Our team continues to execute exceptionally well,” said Gary
Norcross, FIS Chairman and Chief Executive Officer. “We’re
successfully leveraging our broad portfolio and global reach to
speed innovation. Further, our robust cash flow enabled us to
accelerate share buybacks during the third quarter without
sacrificing our ability to execute our growth-focused M&A
strategy.”
Third Quarter 2021
On a GAAP basis, revenue grew by more than $300 million, or 10%,
to $3.5 billion. Net earnings attributable to common stockholders
was $158 million or $0.26 per diluted share.
On an organic basis, which excludes the impact of foreign
exchange, revenues also grew 10%. Adjusted EBITDA grew 17% to $1.6
billion. Adjusted EBITDA margin expanded by 270 basis points (bps)
to 45.2%, primarily due to high contribution margins from revenue
growth as well as ongoing revenue and expense synergies. Adjusted
net earnings increased 21% to $1.1 billion and adjusted net
earnings per share increased 22% to $1.73 per diluted share.
($ millions, except per share data,
unaudited)
Three Months Ended September
30,
%
Organic
2021
2020
Change
Growth1
Revenue
$
3,507
$
3,197
10%
10%
Merchant Solutions
1,161
1,017
14%
13%
Banking Solutions
1,610
1,488
8%
8%
Capital Market Solutions
654
587
11%
10%
Corporate and Other
82
105
(21)%
Adjusted EBITDA
$
1,585
$
1,357
17%
Adjusted EBITDA Margin
45.2
%
42.5
%
270 bps
Net earnings attributable to FIS common
stockholders (GAAP)
$
158
$
20
*
Diluted EPS (GAAP)
$
0.26
$
0.03
*
Adjusted net earnings
$
1,070
$
887
21%
Adjusted EPS
$
1.73
$
1.42
22%
* Indicates comparison not meaningful
1 Organic growth excludes the impact of
foreign currency exchange fluctuation (FX) as there was no M&A
impact during the quarter
Operating Segment
Information
- Merchant Solutions: Revenue grew 14%, including a 4%
headwind created by the unusual shift of the U.S. tax reporting
deadline in 2020 to July 15 from April 15. As compared to the third
quarter of 2019 (pro forma for the Worldpay acquisition), revenue
grew 16% to $1.2 billion as the global economy continues to recover
from the ongoing pandemic. Adjusted EBITDA increased 23% over the
prior year period to $600 million. Adjusted EBITDA margin expanded
380 basis points to 51.7%, primarily due to high contribution
margins from new revenue as well as ongoing synergies. To further
increase transparency, FIS is publishing quarterly volume and
transaction data for its Merchant segment, and third quarter
performance is described in the following paragraph. Please see the
“Additional Merchant Disclosure” section below for historical
quarterly volume and transaction data, dating back to the first
quarter of 2019. Proforma results are included for the first three
quarters of 2019. During the third quarter, Global Volume increased
17% to $530 billion, and Transactions increased 11% to 12.0
billion. As compared to the third quarter of 2019, Global Volume
grew 23% and Transactions grew 13%. Volume growth in excess of
transaction growth reflects an increase in the average dollar value
of each transaction (or increased average ticket) during the
period. As compared to 2019, the pace of average ticket increase
slowed in the third quarter relative to that of the first and
second quarters, contributing to the continued improvement in
revenue yield on volume.
- Banking Solutions: Revenue grew 8% to $1.6 billion.
Banking’s strong third quarter performance is primarily due to new
sales execution. On an organic basis, which excludes the impact of
FX, revenue also increased 8%. Adjusted EBITDA increased 14% to
$742 million. Adjusted EBITDA margin expanded 250 basis points over
the prior year period to 46.1%, primarily due to revenue mix, high
contribution margins from new revenue, and ongoing synergies
related to the Worldpay acquisition.
- Capital Market Solutions: Revenue grew 11% to $654
million. Capital Market’s strong third quarter performance is
primarily due to robust sales of end-to-end SaaS solutions and
includes an approximate 2% benefit from the timing of renewals. On
an organic basis, which excludes the impact of FX, revenue
increased 10%. Adjusted EBITDA increased 20% to $316 million.
Adjusted EBITDA margin expanded 330 basis points over the prior
year period to 48.4%, primarily due to high contribution margins
from new revenue and revenue mix.
Integration Update
The Company achieved synergies related to the Worldpay
acquisition, exiting the third quarter of 2021 as follows:
- Revenue synergies of approximately $600 million on an annual
run-rate basis, including strong cross-selling wins spanning the
Premium Payback loyalty network, digital banking, issuer, core
software and data wins. The Company expects to achieve its $700
million annual run-rate revenue synergy target by the end of the
year.
- Cost synergies of approximately $875 million, including
approximately $475 million of operating expense synergies. The
Company expects to achieve its $900 million annual run-rate expense
synergy target by the end of the year, including operating expense
synergies of approximately $500 million.
Balance Sheet and Cash
Flows
As of September 30, 2021, debt outstanding totaled $19.8
billion. Third quarter net cash provided by operating activities
was $1.8 billion, and free cash flow was $1.1 billion.
FIS paid dividends of $238 million and repurchased $1.2 billion
in shares during the third quarter. The company tripled its pace of
share repurchase during the third quarter as compared to that of
the first and second quarters and has repurchased $2.0 billion in
shares year-to-date. The company has 85 million shares remaining
under its existing 100 million share repurchase authorization.
Full-Year 2021 GAAP
Guidance
($ millions, except share data)
FY 2021
Revenue
$13,900 - $14,000
Diluted EPS
$0.70 - $0.80
Full-Year 2021 Non-GAAP
Guidance
($ millions, except share data)
FY 2021
Revenue (GAAP)
$13,900 - $14,000
Adjusted EPS
$6.50 - $6.60
Additional Merchant
Disclosure
2019 1
2020
2021
1Q
2Q
3Q
4Q
FY
1Q
2Q
3Q
4Q
FY
1Q
2Q
3Q
Revenue ($M)
$937
$1,083
$1,003
$1,090
$4,113
$935
$812
$1,017
$1,003
$3,767
$966
$1,177
$1,161
Growth (Reported)
7%
8%
4%
8%
7%
—%
(25)%
1%
(8)%
(8)%
3%
45%
14%
Growth vs 2019
3%
9%
16%
Global Volume2 ($B)
$400
$432
$430
$461
$1,723
$420
$399
$452
$486
$1,756
$468
$539
$530
Growth
(1)%
4%
5%
6%
4%
5%
(8)%
5%
5%
2%
12%
35%
17%
Growth vs 2019
17%
25%
23%
US Volume2 ($B)
$291
$316
$315
$338
$1,260
$311
$306
$336
$357
$1,310
$349
$398
$392
Growth
6%
8%
9%
10%
8%
7%
(3)%
7%
6%
4%
12%
30%
17%
Growth vs 2019
20%
26%
25%
Transactions (B)
9.8
10.4
10.6
11.2
41.9
10.5
9.3
10.8
11.3
41.8
10.7
11.7
12.0
Growth
2%
4%
3%
2%
3%
7%
(11)%
2%
1%
—%
2%
26%
11%
Growth vs 2019
10%
12%
13%
1 2019 results are pro forma for the
Worldpay acquisition.
2 Volume refers to the total dollar value
of the transactions processed during the stated period.
COVID-19 Update
We have continued to prioritize investments in solutions and
services that help address the needs of our clients throughout the
ongoing global pandemic in order to increase the Company’s
potential to accelerate revenue growth. During the third quarter,
the Company’s revenue growth continued to recover as COVID-19’s
impact on our financial results lessened due to the continued
opening of markets, offset in part by the COVID-19 variants.
Webcast
FIS will sponsor a live webcast of its earnings conference call
with the investment community beginning at 8:30 a.m. (EDT)
Thursday, November 4, 2021. 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 employees 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 ranks
#241 on the 2021 Fortune 500 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, 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 and excludes revenue from Corporate
and Other, 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.
As described below, our Adjusted EBITDA and Adjusted Net
Earnings measures also exclude incremental and direct costs
resulting from the COVID-19 pandemic. Management believes that this
adjustment may help investors understand the longer-term
fundamentals of our underlying business.
Constant currency revenue represents reported operating
segment 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. When referring to
organic revenue growth, revenues from our Corporate and Other
segment, which is comprised of revenue from non-strategic
businesses, are excluded.
Adjusted EBITDA reflects net earnings before interest,
other income (expense), taxes, equity method investment earnings
(loss), and depreciation and amortization, and excludes certain
costs and other transactions that management deems non-operational
in nature, the removal of which improves comparability of operating
results across reporting periods. It also excludes incremental and
direct costs resulting from the COVID-19 pandemic. 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. It
also excludes incremental and direct costs resulting from the
COVID-19 pandemic.
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, including incremental and direct costs resulting from
the COVID-19 pandemic, less capital expenditures excluding capital
expenditures related to the Company’s new headquarters. 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 or projections 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, or other characterizations of
future events or circumstances, 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.
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 or recurrence of the novel coronavirus and any
related variants (“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 in certain
geographies;
- the duration, including any recurrence, of the COVID-19
pandemic and its impacts, including reductions in consumer and
business spending, and instability of the financial markets in
heavily impacted areas 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 and results of
operations;
- 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 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;
- the amount, declaration and payment of future dividends is at
the discretion of our Board of Directors and depends on, among
other things, our investment opportunities, results of operations,
financial condition, cash requirements, future prospects, the
duration and impact of the COVID-19 pandemic, and other factors
that may be considered relevant by our Board of Directors,
including legal and contractual restrictions;
- 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;
- the risk that policies and resulting actions of the current
administration in the U.S. may result in additional regulations and
executive orders, as well as additional regulatory and tax
costs;
- 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, 2020, 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
November 4, 2021
Exhibit A
Condensed Consolidated Statements of
Earnings - Unaudited for the three and nine months ended September
30, 2021 and 2020
Exhibit B
Condensed Consolidated Balance Sheets -
Unaudited as of September 30, 2021 and December 31, 2020
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the nine months ended September 30, 2021 and
2020
Exhibit D
Supplemental Non-GAAP Financial
Information - Unaudited for the three and nine months ended
September 30, 2021 and 2020
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three and nine months ended
September 30, 2021 and 2020
Exhibit F
Supplemental GAAP to Non-GAAP
Reconciliations on Guidance - Unaudited for the full year ended
December 31, 2021
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS — UNAUDITED
(In millions, except per share
amounts)
Exhibit A
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
Revenue
$
3,507
$
3,197
$
10,205
$
9,236
Cost of revenue
2,178
2,104
6,431
6,238
Gross profit
1,329
1,093
3,774
2,998
Selling, general, and administrative
expenses
989
862
2,972
2,613
Asset impairments
202
—
202
—
Operating income
138
231
600
385
Other income (expense):
Interest expense, net
(46
)
(84
)
(169
)
(252
)
Other income (expense), net
110
(4
)
(58
)
31
Total other income (expense), net
64
(88
)
(227
)
(221
)
Earnings before income taxes and equity
method investment earnings (loss)
202
143
373
164
Provision (benefit) for income taxes
41
121
246
94
Equity method investment earnings
(loss)
—
—
6
(9
)
Net earnings
161
22
133
61
Net (earnings) loss attributable to
noncontrolling interest
(3
)
(2
)
(7
)
(7
)
Net earnings attributable to FIS common
stockholders
$
158
$
20
$
126
$
54
Net earnings per share-basic attributable
to FIS common stockholders
$
0.26
$
0.03
$
0.20
$
0.09
Weighted average shares
outstanding-basic
613
620
618
618
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.26
$
0.03
$
0.20
$
0.09
Weighted average shares
outstanding-diluted
619
627
623
626
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS — UNAUDITED
(In millions, except per share
amounts)
Exhibit B
September 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,390
$
1,959
Settlement deposits and merchant float
3,572
3,252
Trade receivables, net
3,468
3,314
Settlement receivables
761
662
Other receivables
331
317
Prepaid expenses and other current
assets
489
394
Total current assets
10,011
9,898
Property and equipment, net
846
887
Goodwill
52,796
53,268
Intangible assets, net
12,040
13,928
Software, net
3,141
3,370
Other noncurrent assets
1,921
1,574
Deferred contract costs, net
935
917
Total assets
$
81,690
$
83,842
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities
$
2,470
$
2,482
Settlement payables
5,342
4,934
Deferred revenue
868
881
Short-term borrowings
3,484
2,750
Current portion of long-term debt
463
1,314
Total current liabilities
12,627
12,361
Long-term debt, excluding current
portion
15,833
15,951
Deferred income taxes
4,118
4,017
Other noncurrent liabilities
1,767
1,967
Deferred revenue
52
59
Total liabilities
34,397
34,355
Redeemable noncontrolling interest
176
174
Equity:
FIS stockholders’ equity:
Preferred stock $0.01 par value
—
—
Common stock $0.01 par value
6
6
Additional paid in capital
46,366
45,947
Retained earnings
2,840
3,440
Accumulated other comprehensive earnings
(loss)
156
57
Treasury stock, at cost
(2,263
)
(150
)
Total FIS stockholders’ equity
47,105
49,300
Noncontrolling interest
12
13
Total equity
47,117
49,313
Total liabilities, redeemable
noncontrolling interest and equity
$
81,690
$
83,842
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS — UNAUDITED
(In millions)
Exhibit C
Nine months ended September
30,
2021
2020
Cash flows from operating activities:
Net earnings
$
133
$
61
Adjustment to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
2,981
2,760
Amortization of debt issue costs
22
24
Asset impairments
202
—
Loss (gain) on sale of businesses,
investments and other
(233
)
3
Loss on extinguishment of debt
528
—
Stock-based compensation
320
182
Deferred income taxes
(35
)
(24
)
Net changes in assets and liabilities, net
of effects from acquisitions and foreign currency:
Trade and other receivables
(229
)
78
Settlement activity
575
594
Prepaid expenses and other assets
(350
)
(169
)
Deferred contract costs
(323
)
(354
)
Deferred revenue
(12
)
(50
)
Accounts payable, accrued liabilities and
other liabilities
118
(81
)
Net cash provided by operating
activities
3,697
3,024
Cash flows from investing
activities:
Additions to property and equipment
(193
)
(186
)
Additions to software
(684
)
(652
)
Acquisitions, net of cash acquired
—
(469
)
Net proceeds from sale of businesses and
investments
370
—
Other investing activities, net
(90
)
92
Net cash provided by (used in) investing
activities
(597
)
(1,215
)
Cash flows from financing
activities:
Borrowings
40,569
37,125
Repayment of borrowings and other
financing obligations
(40,644
)
(37,646
)
Debt issuance costs
(74
)
—
Net proceeds from stock issued under
stock-based compensation plans
87
302
Treasury stock activity
(2,113
)
(102
)
Dividends paid
(724
)
(650
)
Other financing activities, net
(138
)
(222
)
Net cash provided by (used in) financing
activities
(3,037
)
(1,193
)
Effect of foreign currency exchange rate
changes on cash
(57
)
8
Net increase (decrease) in cash and cash
equivalents
6
624
Cash and cash equivalents, beginning of
period
4,030
3,211
Cash and cash equivalents, end of
period
$
4,036
$
3,835
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL NON-GAAP ORGANIC
REVENUE GROWTH — UNAUDITED
(In millions)
Exhibit D
Three months ended September
30,
2021
2020
Constant
Currency
Organic
Revenue
FX
Revenue
Revenue
Growth (1)
Merchant Solutions
$
1,161
$
(17
)
$
1,144
$
1,017
13
%
Banking Solutions
1,610
(4
)
1,606
1,488
8
%
Capital Market Solutions
654
(6
)
647
587
10
%
Corporate and Other
82
—
82
105
Total
$
3,507
$
(27
)
$
3,479
$
3,197
10
%
Nine months ended September
30,
2021
2020
Constant
Currency
Organic
Revenue
FX
Revenue
Revenue
Growth (1)
Merchant Solutions
$
3,303
$
(70
)
$
3,233
$
2,764
17
%
Banking Solutions
4,729
(21
)
4,708
4,394
7
%
Capital Market Solutions
1,908
(28
)
1,880
1,777
6
%
Corporate and Other
265
(3
)
262
301
Total
$
10,205
$
(122
)
$
10,083
$
9,236
10
%
Amounts in tables may not sum or calculate due to rounding.
(1)
Organic growth excludes the impact of
foreign currency exchange rates in the current period, acquisition
or divestiture impact from the prior periods (which was not
meaningful in the periods presented), and Corporate and Other
revenue from the current and prior periods.
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL NON-GAAP CASH
FLOW MEASURES — UNAUDITED
(In millions)
Exhibit D (continued)
Three months ended
Nine months ended
September 30, 2021
September 30, 2021
Net cash provided by operating
activities
$
1,833
$
3,697
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
117
383
Settlement activity
(565
)
(575
)
Adjusted cash flows from operations
1,385
3,505
Capital expenditures (2)
(238
)
(797
)
Free cash flow
$
1,147
$
2,708
Three months ended
Nine months ended
September 30, 2020
September 30, 2020
Net cash provided by operating
activities
$
1,411
$
3,024
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
140
438
Settlement activity
(422
)
(594
)
Adjusted cash flows from operations
1,129
2,868
Capital expenditures (2)
(263
)
(808
)
Free cash flow
$
866
$
2,060
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 nine months ended September 30,
2021 and 2020 exclude cash payments for certain acquisition,
integration and other costs (see Note 2 to Exhibit E), net of
related tax impact. The related tax impact totaled $20 million and
$23 million for the three months and $65 million and $70 million
for the nine months ended September 30, 2021 and 2020,
respectively.
(2)
Capital expenditures for free cash flow
exclude capital spend related to the construction of our new
headquarters totaling $27 million and $9 million for the three
months and $80 million and $30 million for the nine months ended
September 30, 2021 and 2020, respectively.
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL GAAP TO NON-GAAP
RECONCILIATIONS — UNAUDITED
(In millions, except per share
amounts)
Exhibit E
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
Net earnings attributable to FIS common
stockholders
$
158
$
20
$
126
$
54
Provision (benefit) for income taxes
41
121
246
94
Interest expense, net
46
84
169
252
Other, net
(107
)
6
59
(15
)
Operating income, as reported
138
231
600
385
Depreciation and amortization, excluding
purchase accounting amortization
344
238
918
705
Non-GAAP adjustments:
Purchase accounting amortization (1)
714
693
2,063
2,055
Acquisition, integration and other costs
(2)
187
195
629
616
Asset impairments (3)
202
—
202
—
Adjusted EBITDA
$
1,585
$
1,357
$
4,412
$
3,761
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 September
30,
Nine months ended September
30,
2021
2020
2021
2020
Earnings before income taxes and equity
method investment earnings (loss)
$
202
$
143
$
373
$
164
(Provision) benefit for income taxes
(41
)
(121
)
(246
)
(94
)
Equity method investment earnings
(loss)
—
—
6
(9
)
Net (earnings) loss attributable to
noncontrolling interest
(3
)
(2
)
(7
)
(7
)
Net earnings attributable to FIS common
stockholders
158
20
126
54
Non-GAAP adjustments:
Purchase accounting amortization (1)
714
693
2,063
2,055
Acquisition, integration and other costs
(2)
247
195
689
622
Asset impairments (3)
202
—
202
—
Non-operating (income) expense (4)
(110
)
4
58
(31
)
Equity method investment (earnings) loss
(5)
—
—
(6
)
9
Tax rate change (6)
—
103
178
103
(Provision) benefit for income taxes on
non-GAAP adjustments
(141
)
(128
)
(423
)
(405
)
Total non-GAAP adjustments
912
867
2,761
2,353
Adjusted net earnings
$
1,070
$
887
$
2,887
$
2,407
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.26
$
0.03
$
0.20
$
0.09
Non-GAAP adjustments:
Purchase accounting amortization (1)
1.15
1.11
3.31
3.28
Acquisition, integration and other costs
(2)
0.40
0.31
1.11
0.99
Asset impairments (3)
0.33
—
0.32
—
Non-operating (income) expense (4)
(0.18
)
0.01
0.09
(0.05
)
Equity method investment (earnings) loss
(5)
—
—
(0.01
)
0.01
Tax rate change (6)
—
0.16
0.29
0.16
(Provision) benefit for income taxes on
non-GAAP adjustments
(0.23
)
(0.20
)
(0.68
)
(0.65
)
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.73
$
1.42
$
4.63
$
3.85
Weighted average shares
outstanding-diluted
619
627
623
626
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 nine months ended September 30,
2021 and 2020. 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.
For the three and nine months ended September 30, 2021, this item
also includes $42 million of incremental amortization expense
associated with shortened estimated useful lives and accelerated
amortization methods for certain acquired software driven by the
Company's Platform initiatives that primarily include enabling
clients to easily consume the breadth of our capabilities using
microservices as well as process automation and consolidation of
technology platforms to speed new solution and service innovation
over approximately the next three years. The Company has excluded
the impact of purchase price 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 additional intangible assets.
(2)
This item represents acquisition and
integration costs primarily related to the acquisition of Worldpay
as well as certain other costs, including costs associated with the
Company's Platform initiatives, described in Note (1), totaling $64
million for the three and nine months ended September 30, 2021.
This item also includes costs related to data center consolidation
activities totaling $4 million and $20 million for the three months
and $32 million and $60 million for the nine months ended September
30, 2021 and 2020, respectively. The Company also recorded
incremental charges directly related to COVID-19 of $14 million and
$41 million for the three months and $33 million and $56 million
for the nine months ended September 30, 2021 and 2020,
respectively. For the nine months ended September 30, 2021, this
item also includes $104 million in accelerated stock compensation
expense to reflect the impact of establishing a Qualified
Retirement Equity Program that modified unvested equity awards
outstanding at January 1, 2021. For the three and nine months ended
September 30, 2021, for purposes of calculating Adjusted net
earnings, this item also includes $60 million of incremental
amortization expense associated with shortened estimated useful
lives and accelerated amortization methods for certain software and
deferred contract cost assets driven by the Company's Platform
initiatives, described in Note (1), which were instituted in the
third quarter.
(3)
For the three and nine months ended
September 30, 2021, this item represents impairment of certain
software and deferred contract cost assets driven by the Company's
Platform initiatives described in Note (1).
(4)
Non-operating (income) expense primarily
consists of other income and expense items outside of the Company's
operating activities, including fair value adjustments on certain
non-operating assets and liabilities and foreign currency
transaction remeasurement gains and losses. For the three and nine
months ended September 30, 2021, this item includes net gains on
equity security investments without readily determinable fair
values of $126 million and $214 million, respectively. For the nine
months ended September 30, 2021, this item also includes $225
million related to the gain on the sale of our equity ownership
interest in Cardinal Holdings, LP and a loss on extinguishment of
debt of approximately $528 million relating to tender premiums,
make-whole amounts, and fees; the write-off of unamortized bond
discounts and debt issuance costs; and losses on related derivative
instruments.
(5)
This item represents our equity method
investment earnings or loss and was predominantly due to our equity
ownership interest in Cardinal Holdings, LP, which was sold on
April 29, 2021.
(6)
For the nine months ended September 30,
2021, this item represents the one-time net remeasurement of
certain deferred tax liabilities due to the increase in the U.K.
corporate statutory tax rate from 19% to 25% effective April 1,
2023, enacted on June 10, 2021. For the 2020 periods, this item
represents the one-time net remeasurement of certain deferred tax
liabilities due to the increase in the U.K. corporate statutory tax
rate from 17% to 19% enacted on July 22, 2020.
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL GAAP TO NON-GAAP
RECONCILIATIONS ON GUIDANCE — UNAUDITED
(In millions, except per share
amounts)
Exhibit F
Year ended
December 31, 2021
Low
High
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.70
$
0.80
Estimated adjustments (1)
5.80
5.80
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
6.50
$
6.60
(1)
Estimated adjustments include purchase
accounting amortization, acquisition, integration and other costs,
asset impairments, equity method investment earnings (loss) and
other items, net of tax impact.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104005225/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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