- Increased revenue 7% on a GAAP basis and 8% on an organic basis
to $3.7 billion
- Generated Diluted EPS of $0.45 and Adjusted EPS of $1.73
- Repurchased $300 million in shares
- After 14 years of distinguished service, James “Woody” Woodall
to step down from his position as CFO, effective November 4, 2022,
with Deputy CFO Erik Hoag to succeed Mr. Woodall as Corporate
Executive Vice President and Chief Financial Officer
FIS® (NYSE:FIS), a global leader in financial services
technology, today reported its second quarter 2022 results.
“I’m very pleased with the strong financial results we delivered
this quarter,” said Gary Norcross, FIS Chairman and Chief Executive
Officer. “These results are a testament to the value we bring to
our clients by executing our business strategy, investing for
growth and bringing innovative and end-to-end offerings to market.
In an uncertain macro environment, the durability of our financial
model is also a significant advantage for FIS. We reduced our
leverage to 2.9 times, and our robust free cash flow allowed us to
return approximately $600 million in capital to shareholders during
the second quarter through share repurchase and dividends.”
Second Quarter 2022
On a GAAP basis, revenue increased by approximately $240
million, or 7% as compared to the prior-year period, to $3.7
billion. Net earnings attributable to common stockholders were $277
million or $0.45 per diluted share.
On an organic basis, revenue increased 8% as compared to the
prior-year period when excluding the impact of changes in foreign
currency exchange rates and inorganic contribution from
acquisitions and divestitures. On a constant currency basis,
revenue increased 9%. Adjusted net earnings increased 5% as
compared to the prior-year period to $1.1 billion, and adjusted net
earnings per share increased 7% to $1.73 per diluted share.
($ millions, except per share data,
unaudited)
Three Months Ended June
30,
%
Constant
Organic
2022
2021
Change
Currency
Growth
Revenue
$
3,719
$
3,475
7%
9%
8%
Merchant Solutions
1,302
1,177
11%
14%
12%
Banking Solutions
1,663
1,578
5%
6%
6%
Capital Market Solutions
663
630
5%
7%
7%
Corporate and Other
91
90
1%
3%
Adjusted EBITDA
$
1,599
$
1,520
5%
Adjusted EBITDA Margin
43.0
%
43.7
%
(70) bps
Net earnings attributable to FIS common
stockholders (GAAP)
$
277
$
341
*
Diluted EPS (GAAP)
$
0.45
$
0.55
*
Adjusted net earnings
$
1,056
$
1,004
5%
Adjusted EPS
$
1.73
$
1.61
7%
* Indicates comparison not meaningful
Operating Segment
Information
- Banking Solutions: Revenue increased by 5% on a GAAP
basis, and 6% on an organic basis, as compared to the prior-year
period to $1.7 billion, primarily due to ramping large client wins
contributing to 7% recurring revenue growth. Adjusted EBITDA margin
contracted by 130 basis points as compared to the prior-year period
to 44.3%, primarily due to difficult comparisons created by the
high contribution margins associated with term fees and
pandemic-related revenue in the prior-year period as well as
ongoing wage inflation.
- Capital Market Solutions: Revenue increased by 5% on a
GAAP basis and 7% on an organic basis as compared to the prior-year
period to $663 million, primarily due to strong new sales momentum
contributing to 10% recurring revenue growth. Adjusted EBITDA
increased by 9% as compared to the prior-year period to $317
million. Adjusted EBITDA margin expanded by 140 basis points over
the prior-year period to 47.8%, primarily due to focused expense
management and continued operating leverage.
- Merchant Solutions: Revenue increased by 11% on a GAAP
basis, 14% on a constant currency basis and 12% on an organic basis
as compared to the prior-year period to $1.3 billion, including
approximately one percentage point of headwind due to the
Russia/Ukraine conflict. Adjusted EBITDA margin contracted by 280
basis points to 47.1%, primarily due to high contribution margins
associated with e-commerce revenue affected by the Russia/Ukraine
conflict, investment in geographic expansion to support our Global
eCommerce business, and accelerated investment in e-commerce and
Payrix sales channels to capitalize on developing secular growth
trends.
- Corporate and Other: Second quarter revenue
increased by 1% as compared to the prior-year period to $91
million, including the continuing wind down of non-strategic
businesses. Adjusted EBITDA loss was $69 million, including $89
million of corporate expenses.
Balance Sheet and Cash
Flows
As of June 30, 2022, debt outstanding totaled $18.5 billion.
Second quarter net cash provided by operating activities was $1,024
million, and free cash flow was $806 million.
On July 13, FIS issued $2.5 billion of U.S. dollar senior notes
at a weighted average interest rate of 4.95%. The Company used the
net proceeds from the Senior Notes offering to repay debt under its
commercial paper programs.
Having reached its targeted leverage of 2.9 times debt to
EBITDA, FIS resumed share repurchase under its existing 100 million
share authorization. In addition to repurchasing approximately $300
million in shares, FIS also paid a total of $287 million in
dividends during the second quarter.
FIS continues to expect to primarily utilize free cash flow
through the end of 2023 to return capital to shareholders through
continued share repurchase and dividends.
Departure of Officer
The Company announced that James “Woody” Woodall will step down
from his position as Corporate Executive Vice President and Chief
Financial Officer, effective November 4, 2022, after over 14 years
of distinguished service with the Company. The Company also
announced the promotion of its Deputy Chief Financial Officer, Erik
Hoag, to succeed Mr. Woodall as Corporate Executive Vice President
and Chief Financial Officer, effective November 4, 2022. To ensure
a smooth transition of the Chief Financial Officer
responsibilities, Woodall will remain with the Company through a
transitionary period as Chief Financial Officer Emeritus.
Updates Full-Year 2022 Guidance Based
on Macro Factors and Divestitures
The Company updated its full-year 2022 guidance to reflect
changing macroeconomic factors including the impact of foreign
exchange rates and increased interest rates. Additionally, the
Company successfully announced the signing of two non-strategic
divestitures. These factors are the primary drivers for the
revision to the Company’s full-year 2022 guidance.
Third Quarter and Full-Year 2022 GAAP
Guidance
($ millions, except share data)
Q3 2022
FY 2022
Revenue
$3,580 - $3,635
$14,615 - $14,700
Diluted EPS
$0.40 - $0.50
$1.75 - $2.05
Third Quarter and Full-Year 2022
Non-GAAP Guidance
($ millions, except share data)
Q3 2022
FY 2022
Revenue (GAAP)
$3,580 - $3,635
$14,615 - $14,700
Adjusted EPS
$1.74 - $1.78
$7.00 - $7.10
Webcast
FIS will sponsor a live webcast of its earnings conference call
with the investment community beginning at 8:30 a.m. (EDT)
Thursday, August 4, 2022. 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 financial
institutions and businesses of all sizes and across any industry
globally. We enable the movement of commerce by unlocking the
financial technology that powers the world’s economy. Our employees
are dedicated to advancing the way the world pays, banks and
invests through our trusted innovation, system performance and
flexible architecture. 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 member of the Fortune 500® and the
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, a
recession, intensified international hostilities, acts of
terrorism, increased rates of inflation, changes in either or both
the United States and international lending, capital and financial
markets or currency fluctuations;
- the risk that 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 synergies anticipated to be
realized from 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 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;
- the amount and timing of any future share repurchases is
subject to, among other things, our share price, our other
investment opportunities and cash requirements, our results of
operations and financial condition, our future prospects and other
factors that may be considered relevant by our Board of Directors
and management;
- 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, 2021, 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, 2022
Exhibit A
Condensed Consolidated Statements of
Earnings - Unaudited for the three and six months ended June 30,
2022 and 2021
Exhibit B
Condensed Consolidated Balance Sheets -
Unaudited as of June 30, 2022, and December 31, 2021
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the six months ended June 30, 2022 and
2021
Exhibit D
Supplemental Non-GAAP Financial
Information - Unaudited for the three and six months ended June 30,
2022 and 2021
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three and six months ended June
30, 2022 and 2021
Exhibit F
Supplemental GAAP to Non-GAAP
Reconciliations on Guidance - Unaudited for the three months ended
September 30, 2022, and full year ended December 31, 2022
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,
2022
2021
2022
2021
Revenue
$
3,719
$
3,475
$
7,210
$
6,699
Cost of revenue
2,234
2,135
4,475
4,253
Gross profit
1,485
1,340
2,735
2,446
Selling, general, and administrative
expenses
1,082
977
2,117
1,983
Asset impairments
29
—
87
—
Operating income
374
363
531
463
Other income (expense):
Interest expense, net
(47
)
(48
)
(90
)
(122
)
Other income (expense), net
30
324
92
(170
)
Total other income (expense), net
(17
)
276
2
(292
)
Earnings (loss) before income taxes and
equity method investment earnings (loss)
357
639
533
171
Provision (benefit) for income taxes
77
302
132
205
Equity method investment earnings
(loss)
—
5
—
6
Net earnings (loss)
280
342
401
(28
)
Net (earnings) loss attributable to
noncontrolling interest
(3
)
(1
)
(4
)
(4
)
Net earnings (loss) attributable to FIS
common stockholders
$
277
$
341
$
397
$
(32
)
Net earnings (loss) per share-basic
attributable to FIS common stockholders
$
0.46
$
0.55
$
0.65
$
(0.05
)
Weighted average shares
outstanding-basic
608
619
609
620
Net earnings (loss) per share-diluted
attributable to FIS common stockholders
$
0.45
$
0.55
$
0.65
$
(0.05
)
Weighted average shares
outstanding-diluted
611
624
612
620
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS — UNAUDITED
(In millions, except per share
amounts)
Exhibit B
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
1,688
$
2,010
Settlement assets
4,334
4,020
Trade receivables, net
3,520
3,772
Other receivables
251
355
Prepaid expenses and other current
assets
913
551
Total current assets
10,706
10,708
Property and equipment, net
881
949
Goodwill
52,004
53,330
Intangible assets, net
10,018
11,539
Software, net
3,176
3,299
Other noncurrent assets
1,876
2,137
Deferred contract costs, net
959
969
Total assets
$
79,620
$
82,931
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities
$
2,856
$
2,864
Settlement payables
5,154
5,295
Deferred revenue
728
779
Short-term borrowings
3,642
3,911
Current portion of long-term debt
3,148
1,617
Total current liabilities
15,528
14,466
Long-term debt, excluding current
portion
11,755
14,825
Deferred income taxes
3,786
4,193
Other noncurrent liabilities
1,861
1,915
Total liabilities
32,930
35,399
Redeemable noncontrolling interest
175
174
Equity:
FIS stockholders’ equity:
Preferred stock $0.01 par value
—
—
Common stock $0.01 par value
6
6
Additional paid in capital
46,634
46,466
Retained earnings
2,709
2,889
Accumulated other comprehensive earnings
(loss)
(200
)
252
Treasury stock, at cost
(2,643
)
(2,266
)
Total FIS stockholders’ equity
46,506
47,347
Noncontrolling interest
9
11
Total equity
46,515
47,358
Total liabilities, redeemable
noncontrolling interest and equity
$
79,620
$
82,931
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS — UNAUDITED
(In millions)
Exhibit C
Six months ended June 30,
2022
2021
Cash flows from operating activities:
Net earnings (loss)
$
401
$
(28
)
Adjustment to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
1,988
1,924
Amortization of debt issuance costs
15
15
Asset impairments
87
—
Loss (gain) on sale of businesses,
investments and other
(5
)
(230
)
Loss on extinguishment of debt
—
528
Stock-based compensation
145
241
Deferred income taxes
(386
)
87
Net changes in assets and liabilities, net
of effects from acquisitions and foreign currency:
Trade and other receivables
114
(171
)
Settlement activity
(106
)
10
Prepaid expenses and other assets
(250
)
(308
)
Deferred contract costs
(190
)
(212
)
Deferred revenue
(30
)
35
Accounts payable, accrued liabilities and
other liabilities
137
(27
)
Net cash provided by operating
activities
1,920
1,864
Cash flows from investing
activities:
Additions to property and equipment
(173
)
(143
)
Additions to software
(579
)
(470
)
Settlement of net investment hedge
cross-currency interest rate swaps
645
(17
)
Net proceeds from sale of businesses and
investments
—
367
Other investing activities, net
(22
)
(60
)
Net cash provided by (used in) investing
activities
(129
)
(323
)
Cash flows from financing
activities:
Borrowings
30,789
26,969
Repayment of borrowings and other
financing obligations
(31,358
)
(27,696
)
Debt issuance costs
—
(74
)
Net proceeds from stock issued under
stock-based compensation plans
15
76
Treasury stock activity
(378
)
(908
)
Dividends paid
(574
)
(486
)
Other financing activities, net
(96
)
(136
)
Net cash provided by (used in) financing
activities
(1,602
)
(2,255
)
Effect of foreign currency exchange rate
changes on cash
(392
)
(31
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(203
)
(745
)
Cash, cash equivalents and restricted
cash, beginning of period
4,283
4,030
Cash, cash equivalents and restricted
cash, end of period
$
4,080
$
3,285
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL NON-GAAP ORGANIC
REVENUE GROWTH — UNAUDITED
(In millions)
Exhibit D
Three months ended June 30,
2022
2021
Constant
Acquisition &
Currency
Divestiture
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustment
Base
Growth
Merchant Solutions
$
1,302
$
35
$
1,337
$
1,177
$
16
$
1,193
12
%
Banking Solutions
1,663
10
1,673
1,578
—
1,578
6
%
Capital Market Solutions
663
13
676
630
—
630
7
%
Corporate and Other
91
2
92
90
—
90
N/A
Total (1)
$
3,719
$
60
$
3,779
$
3,475
$
16
$
3,491
8
%
Six months ended June 30,
2022
2021
Constant
Acquisition &
Currency
Divestiture
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustment
Base
Growth
Merchant Solutions
$
2,414
$
47
$
2,461
$
2,143
$
28
$
2,171
13
%
Banking Solutions
3,308
15
3,323
3,119
—
3,119
7
%
Capital Market Solutions
1,321
18
1,339
1,255
—
1,255
7
%
Corporate and Other
167
3
170
182
—
182
N/A
Total (1)
$
7,210
$
82
$
7,293
$
6,699
$
28
6,727
9
%
Amounts in tables may not sum or calculate
due to rounding.
(1) Total organic growth excludes
Corporate and Other.
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, 2022
June 30, 2022
Net cash provided by operating
activities
$
1,024
$
1,920
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
145
282
Settlement activity
(56
)
106
Adjusted cash flows from operations
1,113
2,308
Capital expenditures (2)
(307
)
(715
)
Free cash flow
$
806
$
1,593
Three months ended
Six months ended
June 30, 2021
June 30, 2021
Net cash provided by operating
activities
$
1,028
$
1,864
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
149
267
Settlement activity
112
(10
)
Adjusted cash flows from operations
1,289
2,121
Capital expenditures (2)
(284
)
(560
)
Free cash flow
$
1,005
$
1,561
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, 2022 and
2021, 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 $26 million and $25 million
for the three months and $50 million and $45 million for the six
months ended June 30, 2022 and 2021, respectively.
(2)
Capital expenditures for free cash flow
exclude capital spend related to the construction of our new
headquarters totaling $33 million and $30 million for the three
months and $37 million and $53 million for the six months ended
June 30, 2022 and 2021, respectively.
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,
2022
2021
2022
2021
Net earnings (loss) attributable to FIS
common stockholders
$
277
$
341
$
397
$
(32
)
Provision (benefit) for income taxes
77
302
132
205
Interest expense, net
47
48
90
122
Other, net
(27
)
(328
)
(88
)
168
Operating income, as reported
374
363
531
463
Depreciation and amortization, excluding
purchase accounting amortization
347
297
710
575
Non-GAAP adjustments:
Purchase accounting amortization (1)
628
675
1,278
1,349
Acquisition, integration and other costs
(2)
221
185
410
440
Asset impairments (3)
29
—
87
—
Adjusted EBITDA
$
1,599
$
1,520
$
3,016
$
2,827
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,
2022
2021
2022
2021
Earnings (loss) before income taxes and
equity method investment earnings (loss)
$
357
$
639
$
533
$
171
(Provision) benefit for income taxes
(77
)
(302
)
(132
)
(205
)
Equity method investment earnings
(loss)
—
5
—
6
Net (earnings) loss attributable to
noncontrolling interest
(3
)
(1
)
(4
)
(4
)
Net earnings (loss) attributable to FIS
common stockholders
277
341
397
(32
)
Non-GAAP adjustments:
Purchase accounting amortization (1)
628
675
1,278
1,349
Acquisition, integration and other costs
(2)
263
185
504
440
Asset impairments (3)
29
—
87
—
Non-operating (income) expense (4)
(30
)
(324
)
(92
)
170
Equity method investment (earnings) loss
(5)
—
(5
)
—
(6
)
Tax rate change (6)
—
178
—
178
(Provision) benefit for income taxes on
non-GAAP adjustments
(111
)
(46
)
(214
)
(282
)
Total non-GAAP adjustments
779
663
1,563
1,849
Adjusted net earnings
$
1,056
$
1,004
$
1,960
$
1,817
Net earnings (loss) per share-diluted
attributable to FIS common stockholders
$
0.45
$
0.55
$
0.65
$
(0.05
)
Non-GAAP adjustments:
Purchase accounting amortization (1)
1.03
1.08
2.09
2.16
Acquisition, integration and other costs
(2)
0.43
0.30
0.82
0.70
Asset impairments (3)
0.05
—
0.14
—
Non-operating (income) expense (4)
(0.05
)
(0.52
)
(0.15
)
0.27
Equity method investment (earnings) loss
(5)
—
(0.01
)
—
(0.01
)
Tax rate change (6)
—
0.29
—
0.28
(Provision) benefit for income taxes on
non-GAAP adjustments
(0.18
)
(0.07
)
(0.35
)
(0.45
)
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.73
$
1.61
$
3.20
$
2.91
Weighted average shares
outstanding-diluted (7)
611
624
612
625
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, 2022 and 2021.
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, technology assets, trademarks and trade names. For
the three and six months ended June 30, 2022, this item also
includes $17 million and $43 million, respectively, of incremental
amortization expense associated with shortened estimated useful
lives and accelerated amortization methods for certain acquired
software driven by the Company's platform modernization. Our
platform modernization focuses on accelerating the modernization of
our strategic applications and sunsetting of our redundant
platforms and creating a componentized cloud-native set of
capabilities that can be consumed by clients as end-to-end business
applications or as individual components. 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 future assets.
(2)
This item represents acquisition and
integration costs primarily related to the acquisition of Worldpay
as well as certain other costs, including $80 million for the three
months and $160 million for the six months ended June 30, 2022,
respectively, primarily associated with the Company's platform
modernization described in Note (1). For the six months ended June
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, as well as $12 million and
$28 million related to data center consolidation activities for the
three and six months ended June 30, 2021, respectively. The Company
also recorded charges directly related to COVID-19 of $10 million
for the three months and $19 million for the six months ended June
30, 2021. For purposes of calculating Adjusted net earnings, this
item includes $42 million and $94 million of incremental
amortization expense for the three and six months ended June 30,
2022, respectively, associated with shortened estimated useful
lives and accelerated amortization methods for certain software and
deferred contract cost assets driven by the Company's platform
modernization described in Note (1). The incremental amortization
expenses are included in the Depreciation and amortization,
excluding purchase accounting amortization line item within the
Adjusted EBITDA reconciliation.
(3)
For the three and six months ended June
30, 2022, this item includes $26 million related to impairment of a
non-strategic business. For the six months ended June 30, 2022,
this item also includes impairment of real estate-related assets as
a result of office space reductions.
(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 six
months ended June 30, 2022, this item includes net gains on equity
security investments without readily determinable fair values of $6
million and $47 million, respectively. For the three and six months
ended June 30, 2021, this item also includes $225 million related
to the gain on the sale of our equity ownership interest in
Cardinal Holdings, LP. In addition, for the six months ended June
30, 2021, this item includes 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)
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.
(7)
For the six months ended June 30, 2021,
Adjusted net earnings is a gain, while the corresponding GAAP
amount for the period is a loss. As a result, in calculating
Adjusted net earnings per share-diluted for this period, the
weighted average shares outstanding-diluted amount of approximately
625 million shares used in the calculation includes approximately 5
million shares that in accordance with GAAP are excluded from the
calculation of the GAAP Net loss per share-diluted for the period,
due to their anti-dilutive impact.
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL GAAP TO NON-GAAP
RECONCILIATIONS ON GUIDANCE — UNAUDITED
(In millions, except per share
amounts)
Exhibit F
Three months ended
Year ended
September 30, 2022
December 31, 2022
Low
High
Low
High
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.40
$
0.50
$
1.75
$
2.05
Estimated adjustments (1)
1.34
1.28
5.25
5.05
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.74
$
1.78
$
7.00
$
7.10
(1) Estimated adjustments include purchase
accounting amortization, acquisition, integration and other costs,
and other items, net of tax impact.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220804005221/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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