- Fourth quarter revenue grew 1%, and full-year 2022 revenue grew
5%
- Fourth quarter GAAP Diluted EPS was $(29.28), and fourth
quarter Adjusted EPS decreased 11% to $1.71
- Full-year 2022 GAAP Diluted EPS was $(27.68), and full-year
2022 Adjusted EPS increased 2% to $6.65
- Announces first quarter and full-year 2023 outlook
- Provides update on previously announced Enterprise
Transformation Program
- Separately announces plans to pursue a tax-free spin-off of
Merchant Solutions business
- Recorded non-cash goodwill impairment charge of $17.6 billion
related to Merchant Solutions reporting unit
FIS® (NYSE:FIS), a global leader in financial services
technology, today reported its fourth quarter and full-year 2022
results.
"We delivered fourth quarter results consistent with our
expectations in our Banking and Capital Markets businesses.
Revenues and margins in our Merchant Solutions business came under
slightly more pressure than anticipated as a result of increasing
recessionary impacts in the UK and a shifting of consumer spend
from goods to services in the US," said FIS CEO and President
Stephanie Ferris. "2023 marks a year of recommitment for FIS,
recommitting to our strengths in delivering on our cloud-native and
digitally-focused solutions encompassing core, lending, risk,
payments and trading platforms to help our clients innovate faster
and achieve their growth. Our recently communicated Enterprise
Transformation Program and this morning's announcement about the
planned spin-off of our Merchant Solutions business are two
strategic initiatives we are undertaking to improve efficiency,
strengthen the strategic and operational focus of the two companies
and capitalize on growth opportunities, which in turn will pave the
best and highest-potential path forward for FIS shareholders,
clients and colleagues."
Fourth Quarter 2022
On a GAAP basis, consolidated revenue increased 1% as compared
to the prior-year period to approximately $3.7 billion. Net
earnings (loss) attributable to common stockholders were $(17.4)
billion or $(29.28) per diluted share. The Company recorded a
non-cash goodwill impairment charge of $17.6 billion related to the
Merchant Solutions reporting unit in the quarter.
On an organic basis, revenue increased 4% as compared to the
prior-year period primarily due to strong recurring revenue growth
and professional services in Banking, increased Merchant volumes
and continued strength in Capital Markets. Adjusted EBITDA margin
contracted by 320 basis points (bps) over the prior-year period to
43.2%. Adjusted net earnings were approximately $1.0 billion, and
Adjusted EPS decreased by 11% as compared to the prior-year period
to $1.71 per share.
($ millions, except per share data,
unaudited)
Three Months Ended December
31,
%
Constant
Organic
2022
2021
Change
Currency
Growth
Revenue
$
3,714
$
3,672
1%
3%
4%
Banking Solutions
1,717
1,667
3%
4%
4%
Merchant Solutions
1,178
1,193
(1)%
2%
1%
Capital Market Solutions
771
716
8%
10%
10%
Corporate and Other
48
96
(50)%
(48)%
Adjusted EBITDA
$
1,605
$
1,705
(6)%
Adjusted EBITDA Margin
43.2
%
46.4
%
(320) bps
Net earnings (loss) attributable to FIS
common stockholders (GAAP)
$
(17,365
)
$
291
*
Diluted EPS (GAAP)
$
(29.28
)
$
0.47
*
Adjusted net earnings
$
1,019
$
1,179
(14)%
Adjusted EPS
$
1.71
$
1.92
(11)%
* Indicates comparison not meaningful
Full-Year 2022
On a GAAP basis, consolidated revenue increased 5% as compared
to the prior year to approximately $14.5 billion. Net earnings
(loss) attributable to common stockholders were $(16.7) billion or
$(27.68) per diluted share and reflected the non-cash goodwill
impairment charge of $17.6 billion that was recorded in the fourth
quarter related to the Merchant Solutions reporting unit.
On an organic basis, revenue increased 7% as compared to the
prior year primarily due to the ramp-up of new client wins in
Banking, increased Merchant volumes and strong new sales in Capital
Markets driving recurring revenue growth. Adjusted EBITDA margin
contracted by 150 basis points (bps) over the prior year to 42.6%,
primarily due to lower-margin revenue mix and cost inflation,
partially offset by continued expense management and operating
leverage. Adjusted net earnings were $4.0 billion, and Adjusted EPS
increased by 2% as compared to the prior year to $6.65 per
share.
($ millions, except per share data,
unaudited)
Twelve Months Ended December
31,
%
Constant
Organic
2022
2021
Change
Currency
Growth
Revenue
$
14,528
$
13,877
5%
6%
7%
Banking Solutions
6,706
6,396
5%
6%
6%
Merchant Solutions
4,773
4,496
6%
9%
8%
Capital Market Solutions
2,763
2,624
5%
7%
7%
Corporate and Other
286
361
(21)%
(19)%
Adjusted EBITDA
$
6,195
$
6,117
1%
Adjusted EBITDA Margin
42.6
%
44.1
%
(150) bps
Net earnings (loss) attributable to FIS
common stockholders (GAAP)
$
(16,720
)
$
417
*
Diluted EPS (GAAP)
$
(27.68
)
$
0.67
*
Adjusted net earnings
$
4,033
$
4,066
(1)%
Adjusted EPS
$
6.65
$
6.55
2%
* Indicates comparison not meaningful
Operating Segment
Information
- Banking Solutions: Fourth quarter revenue increased by
3% on a GAAP basis, and 4% on an organic basis, as compared to the
prior-year period to approximately $1.7 billion primarily due to
higher recurring revenue from payments volumes and professional
services. Adjusted EBITDA margin contracted by 400 basis points as
compared to the prior-year period to 40.7% primarily driven by
lower-margin revenue mix and cost inflation. Full-year revenue
increased by 5% on a GAAP basis, and 6% on an organic basis, as
compared to the prior year to approximately $6.7 billion primarily
due to the ramp-up of several large contracts. Adjusted EBITDA
margin contracted 230 basis points over the prior year to 42.6%,
primarily driven by lower-margin revenue mix and cost
inflation.
- Merchant Solutions: Fourth quarter revenue decreased by
1% on a GAAP basis, and increased 1% on an organic basis as
compared to the prior-year period to approximately $1.2 billion
primarily due to ongoing e-commerce strength. Adjusted EBITDA
margin contracted by 450 basis points as compared to the prior-year
period to 47.8% primarily due to lower-margin revenue mix and cost
inflation. In the quarter, global volume increased 2% on a reported
basis, and 5% on a constant currency basis, as compared to the
prior-year period to $580 billion. US volume increased 4%, and
transactions increased 3%, as compared to the prior-year period.
Excluding the impact of a large PayFac client, global volume
increased 3% on a reported basis and 6% on a constant currency
basis, US volume increased 5%, and transactions increased 3% as
compared to the prior-year period. Full-year revenue increased by
6% on a GAAP basis, and increased 8% on an organic basis, as
compared to the prior year to approximately $4.8 billion primarily
due to the global economic recovery from the COVID-19 pandemic and
ongoing e-commerce strength. Adjusted EBITDA margin contracted by
300 basis points as compared to the prior year to 47.3% primarily
due to lower-margin revenue mix and cost inflation. For the year,
global volume increased 5% on a reported basis, and 7% on a
constant currency basis, as compared to the prior year to $2.2
trillion. US volume increased 6% and transactions increased 4% as
compared to the prior year. Excluding the impact of a large PayFac
client, global volume increased 5% on a reported basis and 8% on a
constant currency basis, US volume increased 7%, and transactions
increased 4% as compared to the prior year.
Additional Merchant
Disclosure
Three Months Ended December
31,
%
Constant
2022
2021
Change
Currency
Revenue ($M)
$
1,178
$
1,193
(1)%
2%
Global Volume1 ($B)
$
580
$
568
2%
5%
US Volume1 ($B)
$
440
$
425
4%
Transactions2 (B)
13
13
3%
Twelve Months Ended December
31,
%
Constant
2022
2021
Change
Currency
Revenue ($M)
$
4,773
$
4,496
6%
9%
Global Volume1 ($B)
$
2,200
$
2,104
5%
7%
US Volume1 ($B)
$
1,659
$
1,564
6%
Transactions2 (B)
49
47
4%
1 Volume refers to the total dollar value
of the transactions processed during the stated period.
2 Transaction refers to an instance of
buying or selling a good or service in exchange for money.
- Capital Market Solutions: Fourth quarter revenue
increased by 8% on a GAAP basis, and 10% on an organic basis, as
compared to the prior-year period to approximately $771 million
primarily due to strong revenue growth from new sales momentum.
Adjusted EBITDA margin expanded by 220 basis points over the
prior-year period to 54.4% primarily due to strong software sales,
continued expense management and operating leverage. Full-year
revenue increased by 5% on a GAAP basis and 7% on an organic basis
as compared to the prior year to approximately $2.8 billion
primarily due to strong recurring revenue growth from new sales
momentum. Adjusted EBITDA margin expanded by 140 basis points as
compared to the prior year to 49.8% primarily due to continued
expense management and operating leverage.
- Corporate and Other: Fourth quarter revenue
decreased by 50% as compared to the prior-year period to $48
million primarily due to the divestitures of non-strategic
businesses as well as client attrition in our non-strategic
businesses. Adjusted EBITDA loss was $76 million, including $94
million of corporate expenses. Full-year revenue decreased by 21%
as compared to the prior year to $286 million. Adjusted EBITDA loss
was $292 million, including $365 million of corporate
expenses.
Balance Sheet and Cash
Flows
As of December 31, 2022, debt outstanding totaled $20.1 billion.
Fourth quarter net cash provided by operating activities was
approximately $1.1 billion, and free cash flow was $643 million. In
the quarter, the Company returned $788 million to shareholders
through $508 million of share repurchases and $280 million of
dividends paid. For the year, net cash provided by operating
activities was approximately $3.9 billion, and free cash flow was
approximately $2.9 billion. For the year, the Company returned
approximately $3.0 billion to shareholders through approximately
$1.83 billion of share repurchases and approximately $1.14 billion
of dividends paid.
On January 26, 2023, FIS' Board of Directors approved an
increase to the regular quarterly dividend to $0.52 per common
share from $0.47 previously. The dividend is payable March 24,
2023, to FIS shareholders of record as of close of business on
March 10, 2023.
Update on Enterprise Transformation
Program
The Company is increasing its cash savings target as part of the
previously announced Enterprise Transformation Program, now branded
Future Forward, from $500 million+ to $1.25 billion of expected
cash savings by year end 2024, consisting of $600 million of
operating expense savings, $300 million of capital expense savings
and $350 million of savings from the reduction or elimination of
acquisition, integration and transformation-related expenses, in
each case prior to the effects of the proposed spin-off of the
Merchant Solutions business.
Planned Spin-Off of Merchant Solutions
Business
In a separate press release issued today, FIS announced plans
for a tax-free spin-off of its Merchant Solutions business. The
planned separation will create two independent companies with
enhanced strategic and operational focus and enable more tailored
capital allocation and investment decisions to unlock growth. The
Company expects the spin-off to be completed within the next 12
months.
First Quarter and Full-Year 2023
Guidance
($ millions, except share data)
1Q 2023
FY 2023
Revenue
$3,375 - $3,425
$14,200 - $14,450
Diluted EPS (GAAP)
$0.05 - $0.20
$1.25 - $1.75
Adjusted EPS (Non-GAAP)
$1.17 - $1.23
$5.70 - $6.00
Webcast
FIS will sponsor a live webcast of its conference call with the
investment community to discuss earnings and the proposed spin-off
beginning at 8:30 a.m. (EST) on Monday, February 13, 2023. 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.
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 (loss) before
interest, other income (expense), taxes, equity method investment
earnings (loss), and depreciation and amortization, and excludes
certain costs, such as impairment expense, and other transactions
that management deems non-operational in nature, or that otherwise
improve the comparability of operating results across reporting
periods by their exclusion. For 2021, 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, such as impairment expense, and other transactions which
management deems non-operational in nature, or that otherwise
improve the comparability of operating results across reporting
periods by their exclusion. These include, among others, 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, 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, projected revenue
or expense synergies or dis-synergies, business and market
conditions, outlook, foreign currency exchange rates, deleveraging
plans, expected dividends and share repurchases of the Company and,
following the proposed spin-off, of the Merchant Solutions
business, the Company’s and the Merchant Solutions business’ sales
pipeline and anticipated profitability and growth, the outcome of
our previously announced comprehensive assessment, as well as other
statements about our expectations, beliefs, intentions, or
strategies regarding the future, or other characterizations of
future events or circumstances, including statements with respect
to certain assumptions and strategies of the Company and the
Merchant Solutions business following the proposed spin-off, the
anticipated benefits of the spin-off, and the expected timing of
completion of the spin-off are forward-looking statements. These
statements may be identified by words such as “expect,”
“anticipate,” “intend,” “plan,” “believe,” “will,” “should,”
“could,” “would,” “project,” “continue,” “likely,” and similar
expressions, and include statements reflecting future results or
guidance, statements of outlook and various accruals and estimates.
These statements relate to future events and our future results and
involve a number of risks and uncertainties. In addition, the
amount of the goodwill impairment charge announced today is based
in part on estimates of future performance, so this announcement
should also be considered a forward-looking statement.
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 these forward-looking statements. The risks and
uncertainties to which forward-looking statements are subject
include the following, without limitation:
- 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 or interest, changes in
either or both the United States and international lending, capital
and financial markets or currency fluctuations;
- 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;
- 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, 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;
- uncertainties as to the timing of the potential separation of
the Merchant Solutions business or whether it will be
completed;
- risks associated with the impact, timing or terms of the
proposed spin-off;
- risks associated with the expected benefits and costs of the
proposed spin-off, including the risk that the expected benefits of
the proposed spin-off will not be realized within the expected
timeframe, in full or at all, and the risk that conditions to the
proposed spin-off will not be satisfied and/or that the proposed
spin-off will not be completed within the expected timeframe, on
the expected terms or at all;
- the expected qualification of the proposed spin-off as a
tax-free transaction for U.S. federal income tax purposes,
including whether or not an IRS ruling will be obtained;
- the risk that any consents or approvals required in connection
with the proposed spin-off will not be received or obtained within
the expected timeframe, on the expected terms or at all;
- risks associated with expected financing transactions
undertaken in connection with the proposed spin-off and risks
associated with indebtedness incurred in connection with the
proposed spin-off, including the potential inability to access or
reduced access to the capital markets or increased cost of
borrowings, including as a result of a credit rating
downgrade;
- the risk that dis-synergy costs, costs of restructuring
transactions and other costs incurred in connection with the
proposed spin-off will exceed our estimates or otherwise adversely
affect our business or operations;
- the impact of the proposed spin-off on our businesses and the
risk that the proposed spin-off may be more difficult,
time-consuming or costly than expected, including the impact on our
resources, systems, procedures and controls, diversion of
management’s attention and the impact on relationships with
customers, governmental authorities, suppliers, employees and other
business counterparties;
- 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, in our
current reports on Form 8-K 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
February 13, 2023
Exhibit A
Condensed Consolidated Statements of
Earnings (Loss) - Unaudited for the three months and years ended
December 31, 2022 and 2021
Exhibit B
Condensed Consolidated Balance Sheets -
Unaudited as of December 31, 2022 and 2021
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the years ended December 31, 2022 and
2021
Exhibit D
Supplemental Non-GAAP Financial
Information - Unaudited for the three months and years ended
December 31, 2022 and 2021
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three months and years ended
December 31, 2022 and 2021
Exhibit F
Supplemental GAAP to Non-GAAP
Reconciliations on Guidance - Unaudited for the three months ending
March 31, 2023, and year ending December 31, 2023
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS) — UNAUDITED
(In millions, except per share
amounts)
Exhibit A
Three months ended
Years ended
December 31,
December 31,
2022
2021
2022
2021
Revenue
$
3,714
$
3,672
$
14,528
$
13,877
Cost of revenue
2,196
2,251
8,820
8,682
Gross profit
1,518
1,421
5,708
5,195
Selling, general and administrative
expenses
1,025
966
4,118
3,938
Asset impairments
17,605
—
17,709
202
Operating income (loss)
(17,112
)
455
(16,119
)
1,055
Other income (expense):
Interest expense, net
(109
)
(46
)
(275
)
(214
)
Other income (expense), net
12
7
63
(52
)
Total other income (expense), net
(97
)
(39
)
(212
)
(266
)
Earnings (loss) before income taxes and
equity method investment earnings (loss)
(17,209
)
416
(16,331
)
789
Provision (benefit) for income taxes
153
125
377
371
Equity method investment earnings
(loss)
—
—
—
6
Net earnings (loss)
(17,362
)
291
(16,708
)
424
Net (earnings) loss attributable to
noncontrolling interest
(3
)
—
(12
)
(7
)
Net earnings (loss) attributable to FIS
common stockholders
$
(17,365
)
$
291
$
(16,720
)
$
417
Net earnings (loss) per share-basic
attributable to FIS common stockholders
$
(29.28
)
$
0.48
$
(27.68
)
$
0.68
Weighted average shares
outstanding-basic
593
609
604
616
Net earnings (loss) per share-diluted
attributable to FIS common stockholders
$
(29.28
)
$
0.47
$
(27.68
)
$
0.67
Weighted average shares
outstanding-diluted
593
614
604
621
FIDELITY NATIONAL INFORMATION
SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS —
UNAUDITED (In millions, except per share amounts)
Exhibit B
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
2,188
$
2,010
Settlement assets
5,855
4,020
Trade receivables, net
3,699
3,772
Other receivables
493
355
Prepaid expenses and other current
assets
583
551
Total current assets
12,818
10,708
Property and equipment, net
862
949
Goodwill
34,276
53,330
Intangible assets, net
8,956
11,539
Software, net
3,238
3,299
Other noncurrent assets
2,048
2,137
Deferred contract costs, net
1,080
969
Total assets
$
63,278
$
82,931
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities
$
2,754
$
2,864
Settlement payables
6,752
5,295
Deferred revenue
788
779
Short-term borrowings
3,797
3,911
Current portion of long-term debt
2,133
1,617
Total current liabilities
16,224
14,466
Long-term debt, excluding current
portion
14,207
14,825
Deferred income taxes
3,550
4,193
Other noncurrent liabilities
1,891
1,915
Total liabilities
35,872
35,399
Redeemable noncontrolling interest
180
174
Equity:
FIS stockholders’ equity:
Preferred stock $0.01 par value
—
—
Common stock $0.01 par value
6
6
Additional paid in capital
46,735
46,466
(Accumulated deficit) retained
earnings
(14,971
)
2,889
Accumulated other comprehensive earnings
(loss)
(360
)
252
Treasury stock, at cost
(4,192
)
(2,266
)
Total FIS stockholders’ equity
27,218
47,347
Noncontrolling interest
8
11
Total equity
27,226
47,358
Total liabilities, redeemable
noncontrolling interest and equity
$
63,278
$
82,931
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS — UNAUDITED
(In millions)
Exhibit C
Years ended December 31,
2022
2021
Cash flows from operating
activities:
Net earnings (loss)
$
(16,708
)
$
424
Adjustments to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
3,846
4,015
Amortization of debt issue costs
31
30
Asset impairments
17,709
202
Loss (gain) on sale of businesses,
investments and other
(53
)
(227
)
Loss on extinguishment of debt
—
528
Stock-based compensation
215
383
Deferred income taxes
(544
)
(81
)
Net changes in assets and liabilities, net
of effects from acquisitions and foreign currency:
Trade and other receivables
(155
)
(552
)
Settlement activity
287
653
Prepaid expenses and other assets
(319
)
(526
)
Deferred contract costs
(479
)
(453
)
Deferred revenue
21
23
Accounts payable, accrued liabilities and
other liabilities
88
391
Net cash provided by operating
activities
3,939
4,810
Cash flows from investing
activities:
Additions to property and equipment
(268
)
(320
)
Additions to software
(1,122
)
(931
)
Settlement of net investment hedge
cross-currency interest rate swaps
726
(24
)
Acquisitions, net of cash acquired
—
(767
)
Net proceeds from sale of businesses and
investments
50
370
Other investing activities, net
241
(99
)
Net cash provided by (used in) investing
activities
(373
)
(1,771
)
Cash flows from financing
activities:
Borrowings
75,335
54,073
Repayment of borrowings and other
financing obligations
(74,410
)
(53,440
)
Debt issuance costs
(23
)
(74
)
Net proceeds from stock issued under
stock-based compensation plans
57
121
Treasury stock activity
(1,938
)
(2,114
)
Dividends paid
(1,138
)
(961
)
Other financing activities, net
(456
)
(143
)
Net cash provided by (used in) financing
activities
(2,573
)
(2,538
)
Effect of foreign currency exchange rate
changes on cash
(463
)
(248
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
530
253
Cash, cash equivalents and restricted
cash, beginning of year
4,283
4,030
Cash, cash equivalents and restricted
cash, end of year
$
4,813
$
4,283
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL NON-GAAP ORGANIC
REVENUE GROWTH — UNAUDITED
(In millions)
Exhibit D
Three months ended December
31,
2022
2021
Constant
Acquisition &
Currency
Divestiture
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustment
Base
Growth (1)
Banking Solutions
$
1,717
$
12
$
1,729
$
1,667
$
—
$
1,667
4
%
Merchant Solutions
1,178
42
1,220
1,193
17
1,210
1
%
Capital Market Solutions
771
20
791
716
—
716
10
%
Corporate and Other
48
2
50
96
—
96
N/A
Total
$
3,714
$
76
$
3,790
$
3,672
$
17
$
3,689
4
%
Years ended December 31,
2022
2021
Constant
Acquisition &
Currency
Divestiture
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustment
Base
Growth (1)
Banking Solutions
$
6,706
$
48
$
6,754
$
6,396
$
—
$
6,396
6
%
Merchant Solutions
4,773
138
4,911
4,496
61
4,557
8
%
Capital Market Solutions
2,763
58
2,820
2,624
—
2,624
7
%
Corporate and Other
286
7
294
361
—
361
N/A
Total
$
14,528
$
251
$
14,779
$
13,877
$
61
$
13,938
7
%
Amounts in table 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
Year ended
December 31, 2022
December 31, 2022
Net cash provided by operating
activities
$
1,140
$
3,939
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
106
573
Settlement activity
(325
)
(287
)
Adjusted cash flows from operations
921
4,225
Capital expenditures (2)
(278
)
(1,306
)
Free cash flow
$
643
$
2,919
Three months ended
Year ended
December 31, 2021
December 31, 2021
Net cash provided by operating
activities
$
961
$
4,810
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
139
523
Settlement activity
75
(653
)
Adjusted cash flows from operations
1,175
4,680
Capital expenditures (2)
(330
)
(1,127
)
Free cash flow
$
845
$
3,553
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 months and years ended December 31,
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 $17 million and
$24 million for the three months and $85 million and $89 million
for years ended December 31, 2022 and 2021, respectively.
(2)
Capital expenditures for free cash flow
exclude capital spend related to the construction of our new
headquarters totaling $30 million and $44 million for the three
months and $85 million and $124 million for the years ended
December 31, 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
Years ended
December 31,
December 31,
2022
2021
2022
2021
Net earnings (loss) attributable to FIS
common stockholders
$
(17,365
)
$
291
$
(16,720
)
$
417
Provision (benefit) for income taxes
153
125
377
371
Interest expense, net
109
46
275
214
Other, net
(9
)
(7
)
(51
)
53
Operating income (loss), as reported
(17,112
)
455
(16,119
)
1,055
Depreciation and amortization, excluding
purchase accounting amortization
327
332
1,361
1,251
Non-GAAP adjustments:
Purchase accounting amortization (1)
599
701
2,485
2,764
Acquisition, integration and other costs
(2)
186
217
759
845
Asset impairments (3)
17,605
—
17,709
202
Adjusted EBITDA
$
1,605
$
1,705
$
6,195
$
6,117
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
Years ended
December 31,
December 31,
2022
2021
2022
2021
Earnings (loss) before income taxes and
equity method investment earnings (loss)
$
(17,209
)
$
416
$
(16,331
)
$
789
(Provision) benefit for income taxes
(153
)
(125
)
(377
)
(371
)
Equity method investment earnings
(loss)
—
—
—
6
Net (earnings) loss attributable to
noncontrolling interest
(3
)
—
(12
)
(7
)
Net earnings (loss) attributable to FIS
common stockholders
(17,365
)
291
(16,720
)
417
Non-GAAP adjustments:
Purchase accounting amortization (1)
599
701
2,485
2,764
Acquisition, integration and other costs
(2)
206
268
903
956
Asset impairments (3)
17,605
—
17,709
202
Non-operating (income) expense (4)
(12
)
(7
)
(63
)
52
Equity method investment (earnings) loss
(5)
—
—
—
(6
)
Tax rate change (6)
—
—
—
178
(Provision) benefit for income taxes on
non-GAAP adjustments
(14
)
(74
)
(281
)
(497
)
Total non-GAAP adjustments
18,384
888
20,753
3,649
Adjusted net earnings
$
1,019
$
1,179
$
4,033
$
4,066
Net earnings (loss) per share-diluted
attributable to FIS common stockholders
$
(29.18
)
$
0.47
$
(27.55
)
$
0.67
Non-GAAP adjustments:
Purchase accounting amortization (1)
1.01
1.14
4.09
4.45
Acquisition, integration and other costs
(2)
0.35
0.44
1.49
1.54
Asset impairments (3)
29.59
—
29.17
0.33
Non-operating (income) expense (4)
(0.02
)
(0.01
)
(0.10
)
0.08
Equity method investment (earnings) loss
(5)
—
—
—
(0.01
)
Tax rate change (6)
—
—
—
0.29
(Provision) benefit for income taxes on
non-GAAP adjustments
(0.02
)
(0.12
)
(0.46
)
(0.80
)
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.71
$
1.92
$
6.65
$
6.55
Weighted average shares
outstanding-diluted (7)
595
614
607
621
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 months and years ended
December 31, 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. This
item also includes $1 million and $30 million, for the three months
ended and $53 million and $72 million for the year ended December
31, 2022 and 2021, 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 Worldpay acquisition as
well as certain other costs, including $93 million and $76 million
for the three months and $313 million and $139 million for the year
ended December 31, 2022 and 2021, respectively, primarily
associated with the Company's platform modernization described in
Note (1) and the Company's Enterprise Transformation Program. These
other costs also included severance and other termination expenses
associated with enterprise cost control initiatives and changes in
senior management totaling $42 million and $2 million for the three
months and $102 million and $18 million for the years ended
December 31, 2022 and 2021, respectively. These other costs also
included stock-based compensation expense, primarily resulting from
one-time performance-related awards, totaling $4 million and $24
million for the three months and $98 million and $137 million for
the years ended December 31, 2022 and 2021, respectively. For the
year ended December 31, 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. This item
also includes costs related to data center consolidation activities
totaling $7 million and $43 million for the three months and year
ended December 31, 2021, respectively. The Company also recorded
charges directly related to COVID-19 of $11 million and $44 million
for the three months and year ended December 31, 2021,
respectively. For purposes of calculating Adjusted net earnings,
this item also includes $20 million and $51 million for the three
months ended and $143 million and $111 million for the years ended
December 31, 2022 and 2021, respectively, 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
modernization, described in Note (1), which was instituted in the
third quarter of 2021.
(3)
For the three months and year ended
December 31, 2022, this item primarily represents a $17.6 billion
impairment of goodwill related to the Merchant Solutions reporting
unit due its estimated fair value being less than its carrying
value based on slowing growth projections for the business driven
by worsening macroeconomic conditions, including rising interest
rates, inflation, and slowing growth in the U.S. and Europe, as
well as a sustained decline in our share price and the effects of
changing market dynamics affecting our SMB portfolio which is
migrating from card-present offerings to embedded payments. For the
year ended December 31, 2022, this item also includes $121 million
of impairments related to real estate, a non-strategic business and
certain software assets. For the year ended December 31, 2021, this
item represents an impairment of certain software and deferred
contract cost assets driven by the Company's platform modernization
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. This item includes the
impact of changes in fair value of certain preferred stock assets
and related liabilities owed to former legacy Worldpay owners,
representing a net change of $1 million and $41 million for the
three months ended and $64 million and $53 million for the years
ended December 31, 2022 and 2021, respectively. This item also
includes an impairment loss of $78 million for the three months and
year ended December 31, 2022, and net gains of $0 million and $4
million for the three months ended and $52 million and $218
million, for the year ended December 31, 2022 and 2021,
respectively, on equity security investments without readily
determinable fair values. For the year ended December 31, 2021,
this item 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 year ended December 31, 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.
(7)
For the three months and year ended
December 31, 2022, Adjusted net earnings is a gain, while the
corresponding GAAP amount for these periods is a loss. As a result,
in calculating Adjusted net earnings per share-diluted for these
periods, the weighted average shares outstanding-diluted amount of
approximately 595 million and 607 million shares used in the
calculation includes approximately 2 million and 3 million shares
for the three months and year ended December 31, 2022,
respectively, that in accordance with GAAP are excluded from the
calculation of the GAAP Net loss per share-diluted for the periods,
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 ending
Year ending
March 31, 2023
December 31, 2023
Low
High
Low
High
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.05
$
0.20
$
1.25
$
1.75
Estimated adjustments (1)
1.12
1.03
4.45
4.25
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.17
$
1.23
$
5.70
$
6.00
(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/20230213005213/en/
Ellyn Raftery, 904.438.6083 Chief Marketing & Communications
Officer FIS Global Marketing & Corporate Communications
Ellyn.Raftery@fisglobal.com George Mihalos, 904.438.6438 Senior
Vice President FIS Investor Relations
Georgios.Mihalos@fisglobal.com
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