- Increased first quarter revenue 1% on a GAAP basis and 3% on an
organic basis to $3.5 billion
- Generated first quarter GAAP Diluted EPS of $0.24 and Adjusted
EPS of $1.29
- Announces increase to full-year 2023 outlook
FIS® (NYSE:FIS), a global leader in financial services
technology, today reported its first quarter 2023 results.
“We are very pleased with our strong start to the year,
surpassing our financial targets for the first quarter, raising our
full-year guidance and making meaningful progress with our
previously announced spin-off of our Merchant business,” said FIS
CEO and President Stephanie Ferris. “We are also beginning to see
positive results from our Future Forward enterprise transformation
program and its focus on driving a more efficient, effective and
growth-enabled FIS. As economies remain challenged by macroeconomic
uncertainties, FIS’ diversified client base remains a position of
strength and we are continuing to unlock financial technology for
our clients to drive the financial world forward.”
First Quarter 2023
On a GAAP basis, consolidated revenue increased 1% as compared
to the prior-year period to approximately $3.5 billion. Net
earnings attributable to common stockholders were $140 million or
$0.24 per diluted share.
On an organic basis, consolidated revenue increased 3% 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 190 basis points (bps) over
the prior-year period to 38.7%. Adjusted net earnings were
approximately $767 million, and Adjusted EPS decreased by 12% as
compared to the prior-year period to $1.29 per diluted share.
($ millions, except per share data,
unaudited)
Three Months Ended March
31,
%
Constant
Organic
2023
2022
Change
Currency
Growth
Revenue
$
3,510
$
3,492
1%
2%
3%
Banking Solutions
1,685
1,659
2%
2%
2%
Merchant Solutions
1,105
1,112
(1)%
2%
2%
Capital Market Solutions
663
627
6%
7%
7%
Corporate and Other
57
94
(39)%
(37)%
Adjusted EBITDA
$
1,359
$
1,418
(4)%
Adjusted EBITDA Margin
38.7
%
40.6
%
(190) bps
Net earnings attributable to FIS common
stockholders (GAAP)
$
140
$
120
17%
Diluted EPS (GAAP)
$
0.24
$
0.20
20%
Adjusted net earnings
$
767
$
904
(15)%
Adjusted EPS
$
1.29
$
1.47
(12)%
Operating Segment
Information
- Banking Solutions: First quarter revenue increased by 2%
on a GAAP basis, and 2% on an organic basis as compared to the
prior-year period to $1.7 billion primarily due to higher recurring
revenue from processing volumes and professional services. Adjusted
EBITDA margin contracted by 250 basis points as compared to the
prior-year period to 40.1% primarily driven by revenue mix.
- Merchant Solutions: First quarter revenue decreased by
1% on a GAAP basis, and increased 2% on an organic basis as
compared to the prior-year period to $1.1 billion primarily due to
ongoing e-commerce strength and increased volumes. Adjusted EBITDA
margin contracted by 350 basis points to 43.5% primarily due to
revenue mix. In the quarter, global volume increased 7% on a
reported basis, and 9% on a constant currency basis, as compared to
the prior-year period to $551 billion. US volume increased 7%, and
transactions increased 6% as compared to the prior-year
period.
Additional Merchant
Disclosure
Three Months Ended March
31,
%
Constant
2023
2022
Change
Currency
Revenue ($M)
$
1,105
$
1,112
(1)%
2%
Global Volume1 ($B)
$
551
$
517
7%
9%
US Volume1 ($B)
$
411
$
383
7%
Transactions2 (B)
12.1
11.4
6%
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: First quarter revenue
increased by 6% on a GAAP basis, and 7% on an organic basis as
compared to the prior-year period to $663 million primarily due to
strong recurring revenue growth. Adjusted EBITDA margin expanded by
30 basis points over the prior-year period to 48.2% primarily due
to strong contribution margins from revenue growth.
- Corporate and Other: Revenue decreased by 39% as
compared to the prior-year period to $57 million primarily due to
the divestitures of non-strategic businesses. Adjusted EBITDA loss
was $118 million, including $133 million of corporate expenses.
Consistent with historical practice, the Company regularly assesses
its portfolio of assets and reclassified certain businesses from
Capital Markets to Banking Solutions and to the Corporate and Other
segment in the quarter ended March 31, 2023, and recast all
prior-period segment information presented. Revenue from the
reclassified businesses during the quarter ended March 31, 2023,
represented less than 1% of consolidated revenue for the
period.
Balance Sheet and Cash
Flows
As of March 31, 2023, debt outstanding totaled $20.0 billion.
First quarter net cash provided by operating activities was $632
million, and free cash flow was $641 million. In the quarter, the
Company returned $309 million of capital to shareholders through
dividends paid. The Company remains committed to maintaining a
targeted dividend payout ratio of 35% of adjusted net earnings.
Update on Enterprise Transformation
Program (Future Forward)
As of March 31, 2023, the Company achieved annualized Future
Forward cash savings over $210 million. Savings included over $100
million of operational expense savings and over $110 million of
capital expense savings. The Company is reiterating its previously
communicated target of $1.25B of expected cash savings across the
enterprise exiting 2024 (on a run-rate basis, with respect to
operational and capital expense savings), prior to the effects of
the planned spin-off of the Merchant Solutions business.
Planned Spin-Off of Merchant Solutions
Business Update
The Company continues to make progress on the tax-free spin-off
of its Merchant Solutions business. The planned separation will
create two independent companies with enhanced strategic and
operational focus and enable more tailored capital allocation and
investment decisions to unlock growth. As previously communicated,
the spin-off, which is subject to customary conditions, is expected
to be completed by early 2024.
Second Quarter and Full-Year 2023
Guidance
($ millions, except share data)
2Q 2023
FY 2023
Revenue
$3,675 - $3,725
$14,285 - $14,535
Diluted EPS (GAAP)
$0.30 - $0.40
$1.30 - $1.80
Adjusted EPS (Non-GAAP)
$1.45 - $1.50
$5.76 - $6.06
Webcast
FIS will sponsor a live webcast of its earnings conference call
with the investment community beginning at 8:00 a.m. (EDT) on
Thursday, April 27, 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 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. 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 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, less capital expenditures. Free cash flow does not
represent our residual cash flow available for discretionary
expenditures, since we have mandatory debt service requirements and
other non-discretionary expenditures that are not deducted from the
measure.
Any non-GAAP measures should be considered in context with the
GAAP financial presentation and should not be considered in
isolation or as a substitute for GAAP measures. Further, FIS’
non-GAAP measures may be calculated differently from similarly
titled measures of other companies. Reconciliations of these
non-GAAP measures to related GAAP measures, including footnotes
describing the 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, accruals and estimates, 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 pipelines and anticipated profitability
and growth, assumptions and strategies of the Company and the
Merchant Solutions business following the proposed spin-off, the
anticipated benefits of the spin-off, the expected timing of
completion of the spin-off, 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 may
be identified by words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “will,” “should,” “could,” “would,” “project,”
“continue,” “likely,” and similar expressions. 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:
- 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 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;
- risks associated with the impact or terms of the previously
announced proposed spin-off of the Company’s Merchant Solutions
business, including the impact on our businesses, 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;
- risks associated with the expected benefits 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;
- failure to obtain 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 reaction of current and potential customers to
communications from us or regulators regarding information
security, risk management, internal audit or other matters;
- 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 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;
- major bank failures or sustained financial market
illiquidity;
- 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, 2022, 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
April 27, 2023
Exhibit A
Condensed Consolidated Statements of
Earnings - Unaudited for the three months ended March 31, 2023 and
2022
Exhibit B
Condensed Consolidated Balance Sheets -
Unaudited as of March 31, 2023, and December 31, 2022
Exhibit C
Condensed Consolidated Statements of Cash
Flows - Unaudited for the three months ended March 31, 2023 and
2022
Exhibit D
Supplemental Non-GAAP Financial
Information - Unaudited for the three months ended March 31, 2023
and 2022
Exhibit E
Supplemental GAAP to Non-GAAP
Reconciliations - Unaudited for the three months ended March 31,
2023 and 2022
Exhibit F
Supplemental GAAP to Non-GAAP
Reconciliations on Guidance - Unaudited for the three months ending
June 30, 2023, and year ending December 31, 2023
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS — UNAUDITED
(In millions, except per share
amounts)
Exhibit A
Three months ended March 31,
2023
2022
Revenue
$
3,510
$
3,492
Cost of revenue
2,169
2,242
Gross profit
1,341
1,250
Selling, general, and administrative
expenses
1,004
1,035
Asset impairments
—
58
Operating income
337
157
Other income (expense):
Interest expense, net
(137
)
(43
)
Other income (expense), net
(11
)
61
Total other income (expense), net
(148
)
18
Earnings before income taxes
189
175
Provision (benefit) for income taxes
48
54
Net earnings
141
121
Net (earnings) loss attributable to
noncontrolling interest
(1
)
(1
)
Net earnings attributable to FIS common
stockholders
$
140
$
120
Net earnings per share-basic attributable
to FIS common stockholders
$
0.24
$
0.20
Weighted average shares
outstanding-basic
592
610
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.24
$
0.20
Weighted average shares
outstanding-diluted
593
614
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS — UNAUDITED
(In millions, except per share
amounts)
Exhibit B
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,871
$
2,188
Settlement assets
4,425
5,855
Trade receivables, net
3,476
3,699
Other receivables
486
493
Prepaid expenses and other current
assets
708
583
Total current assets
10,966
12,818
Property and equipment, net
838
862
Goodwill
34,424
34,276
Intangible assets, net
8,531
8,956
Software, net
3,222
3,238
Other noncurrent assets
1,988
2,048
Deferred contract costs, net
1,109
1,080
Total assets
$
61,078
$
63,278
LIABILITIES, REDEEMABLE
NONCONTROLLING INTEREST AND EQUITY
Current liabilities:
Accounts payable, accrued and other
liabilities
$
2,465
$
2,754
Settlement payables
5,331
6,752
Deferred revenue
825
788
Short-term borrowings
3,968
3,797
Current portion of long-term debt
2,139
2,133
Total current liabilities
14,728
16,224
Long-term debt, excluding current
portion
13,905
14,207
Deferred income taxes
3,494
3,550
Other noncurrent liabilities
1,847
1,891
Total liabilities
33,974
35,872
Redeemable noncontrolling interest
—
180
Equity:
FIS stockholders’ equity:
Preferred stock $0.01 par value
—
—
Common stock $0.01 par value
6
6
Additional paid in capital
46,802
46,735
(Accumulated deficit) retained
earnings
(15,141
)
(14,971
)
Accumulated other comprehensive earnings
(loss)
(364
)
(360
)
Treasury stock, at cost
(4,206
)
(4,192
)
Total FIS stockholders’ equity
27,097
27,218
Noncontrolling interest
7
8
Total equity
27,104
27,226
Total liabilities, redeemable
noncontrolling interest and equity
$
61,078
$
63,278
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS — UNAUDITED
(In millions)
Exhibit C
Three months ended March 31,
2023
2022
Cash flows from operating
activities:
Net earnings
$
141
$
121
Adjustment to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
895
1,013
Amortization of debt issuance costs
8
7
Asset impairments
—
58
Stock-based compensation
20
57
Deferred income taxes
(41
)
(112
)
Net changes in assets and liabilities, net
of effects from acquisitions and foreign currency:
Trade and other receivables
214
62
Settlement activity
(189
)
(162
)
Prepaid expenses and other assets
(153
)
(152
)
Deferred contract costs
(118
)
(73
)
Deferred revenue
61
55
Accounts payable, accrued liabilities and
other liabilities
(206
)
22
Net cash provided by operating
activities
632
896
Cash flows from investing
activities:
Additions to property and equipment
(48
)
(108
)
Additions to software
(231
)
(304
)
Settlement of net investment hedge
cross-currency interest rate swaps
(10
)
135
Other investing activities, net
(4
)
(13
)
Net cash provided by (used in) investing
activities
(293
)
(290
)
Cash flows from financing
activities:
Borrowings
20,233
15,902
Repayment of borrowings and other
financing obligations
(20,582
)
(16,609
)
Debt issuance costs
(2
)
—
Net proceeds from stock issued under
stock-based compensation plans
47
33
Treasury stock activity
(14
)
(77
)
Dividends paid
(309
)
(287
)
Payments on tax receivable agreement
(94
)
(46
)
Purchase of noncontrolling interest
(173
)
—
Other financing activities, net
(2
)
(1
)
Net cash provided by (used in) financing
activities
(896
)
(1,085
)
Effect of foreign currency exchange rate
changes on cash
86
(103
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(471
)
(582
)
Cash, cash equivalents and restricted
cash, beginning of period
4,813
4,283
Cash, cash equivalents and restricted
cash, end of period
$
4,342
$
3,701
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL NON-GAAP ORGANIC
REVENUE GROWTH — UNAUDITED
(In millions)
Exhibit D
Three months ended March 31,
2023
2022
Constant
Acquisition &
Currency
Divestiture
Adjusted
Organic
Revenue
FX
Revenue
Revenue
Adjustment
Base
Growth (1)
Banking Solutions
$
1,685
$
8
$
1,693
$
1,659
$
—
$
1,659
2
%
Merchant Solutions
1,105
25
1,130
1,112
—
1,112
2
%
Capital Market Solutions
663
10
673
627
—
627
7
%
Corporate and Other
57
1
59
94
—
94
N/A
Total
$
3,510
$
44
$
3,555
$
3,492
$
—
$
3,492
3
%
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
Three months ended
March 31, 2023
March 31, 2022
Net cash provided by operating
activities
$
632
$
896
Non-GAAP adjustments:
Acquisition, integration and other
payments (1)
99
136
Settlement activity
189
162
Adjusted cash flows from operations
920
1,194
Capital expenditures (2)
(279
)
(408
)
Free cash flow
$
641
$
786
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 ended March 31, 2023 and 2022,
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 $16 million and $24 million for the
three months ended March 31, 2023 and 2022, respectively.
(2)
Capital expenditures for free cash flow
exclude capital spend related to the construction of our new
headquarters totaling $4 million for the three months ended March
31, 2022.
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
SUPPLEMENTAL GAAP TO NON-GAAP
RECONCILIATIONS — UNAUDITED
(In millions, except per share
amounts)
Exhibit E
Three months ended March 31,
2023
2022
Net earnings attributable to FIS common
stockholders
$
140
$
120
Provision (benefit) for income taxes
48
54
Interest expense, net
137
43
Other, net
12
(60
)
Operating income, as reported
337
157
Depreciation and amortization, excluding
purchase accounting amortization
347
363
Non-GAAP adjustments:
Purchase accounting amortization (1)
548
650
Acquisition, integration and other costs
(2)
127
190
Asset impairments (3)
—
58
Adjusted EBITDA
$
1,359
$
1,418
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 March 31,
2023
2022
Earnings before income taxes
$
189
$
175
(Provision) benefit for income taxes
(48
)
(54
)
Net (earnings) loss attributable to
noncontrolling interest
(1
)
(1
)
Net earnings attributable to FIS common
stockholders
140
120
Non-GAAP adjustments:
Purchase accounting amortization (1)
548
650
Acquisition, integration and other costs
(2)
146
242
Asset impairments (3)
—
58
Non-operating (income) expense (4)
11
(61
)
(Provision) benefit for income taxes on
non-GAAP adjustments
(78
)
(105
)
Total non-GAAP adjustments
627
784
Adjusted net earnings
$
767
$
904
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.24
$
0.20
Non-GAAP adjustments:
Purchase accounting amortization (1)
0.92
1.06
Acquisition, integration and other costs
(2)
0.25
0.39
Asset impairments (3)
—
0.09
Non-operating (income) expense (4)
0.02
(0.10
)
(Provision) benefit for income taxes on
non-GAAP adjustments
(0.13
)
(0.17
)
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.29
$
1.47
Weighted average shares
outstanding-diluted
593
614
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 ended March 31,
2023 and 2022.
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 $26
million for the three months ended March 31, 2022, 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. 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 costs primarily comprised of the
following:
Three months ended
March 31,
2023
2022
Acquisition and integration
$
9
$
48
Enterprise transformation, including
Future forward and platform modernization
76
80
Severance and other termination expenses
associated with enterprise cost control initiatives and changes in
senior management
28
11
Planned spin-off of the Merchant Solutions
business
11
—
Stock-based compensation, primarily from
certain performance-based awards
—
24
Other, including divestiture-related
expenses, enterprise costs control and other initiatives
3
28
Subtotal
127
190
Accelerated amortization (a)
19
52
Total
$
146
$
242
Amounts in table may not sum due to
rounding.
(a)
For purposes of calculating Adjusted net
earnings, this item includes 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. 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 months ended March 31, 2022, this item primarily
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.
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
June 30, 2023
December 31, 2023
Low
High
Low
High
Net earnings per share-diluted
attributable to FIS common stockholders
$
0.30
$
0.40
$
1.30
$
1.80
Estimated adjustments (1)
1.15
1.10
4.46
4.26
Adjusted net earnings per share-diluted
attributable to FIS common stockholders
$
1.45
$
1.50
$
5.76
$
6.06
(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/20230427005250/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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