- Q4 consolidated revenue of $3,150
million, up 7%; Full year consolidated revenue of $12,052 million,
up 4%
- Q4 total segment revenue of $1,949
million, up 7%, or up 4% on an organic constant currency basis(a);
Full year total segment revenue of $7,428 million, up 4% on both a
reported and organic constant currency basis
- Q4 net income of $948 million, improved
$756 million, diluted EPS of $1.00; Full year net income of $1,465
million, improved $1,045 million, diluted EPS of $1.56
- Q4 adjusted net income of $416 million,
adjusted diluted EPS of $0.44, up 13%; Full year adjusted net
income of $1,425 million, adjusted diluted EPS of $1.52, up
15%
- Q4 total segment EBITDA of $848
million, up 10%, or up 8% on an organic constant currency basis;
Full year total segment EBITDA of $3,072 million, up 6% on both a
reported and organic constant currency basis
- Q4 cash flow from operations of $465
million, free cash flow of $280 million; Full year cash flow from
operations of $2,047 million, free cash flow of $1,359 million
- 2018 guidance provided
First Data Corporation (NYSE: FDC), a global leader in
commerce-enabling technology and solutions, today reported
financial results for the fourth quarter and full year ended
December 31, 2017. Consolidated revenue for the fourth quarter
was $3,150 million, up 7% versus the prior year period. Total
segment revenue was $1,949 million for the quarter, up 7% versus
the prior year period, or up 4% on an organic constant currency
basis.
Net income attributable to First Data for the fourth quarter of
2017 was $948 million, or $1.00 per diluted share, up significantly
from $192 million, or $0.21 per diluted share, in the fourth
quarter of 2016. The increase was primarily driven by significant
discrete tax items in the current period, described below in
"Income Tax (Benefit) / Expense", improved operating results and
lower interest expense.
Adjusted net income, which modifies net income attributable to
First Data for items such as debt extinguishment charges,
stock-based compensation, amortization of acquisition intangibles,
restructuring costs, discrete tax items and other items, was $416
million, or $0.44 per diluted share, up 14% and 13%, respectively,
from fourth quarter of 2016, primarily driven by improved operating
results and lower interest expense.
Total segment earnings before interest, taxes, depreciation, and
amortization (total segment EBITDA) in the fourth quarter 2017 was
$848 million, up 10% versus the prior year period, or up 8% on an
organic constant currency basis, driven by revenue growth and
expense management.
“The fourth quarter capped a solid year of performance for First
Data as we executed across all aspects of our strategy and
delivered financial results that met our guidance," said First Data
Chairman and CEO Frank Bisignano. “We generated growth, invested in
innovation and strategic M&A to further enhance our
industry-leading products and services, and generated substantial
cash flow, while maintaining our focus on expense management. As we
enter 2018, we are well positioned as a technology leader with the
right capabilities to help our customers grow their business and
generate solid revenue growth and cash flow for our shareholders,"
Bisignano added.
Segment Results
Global Business Solutions (GBS)
Fourth quarter 2017 GBS segment revenue was $1,131 million, up
10% versus the prior year period, or up 4% on an organic constant
currency basis. Within geographic regions, North America revenue of
$852 million was up 6% versus the prior year period, or flat on an
organic constant currency basis. Within GBS North America, revenue
growth in non-JV channels was offset by softness in JV channel
revenue. EMEA revenue was $158 million, up 19% versus the prior
year period, or up 10% on an organic constant currency basis,
primarily driven by strong growth in the United Kingdom and
Germany. Latin America revenue was $78 million, up 44% versus the
prior year period, or up 52% on an organic constant currency basis,
driven by continued strong results in Brazil and Argentina. APAC
revenue was $43 million, up 26% versus the prior year period, or up
24% on an organic constant currency basis primarily driven by
growth in India.
Fourth quarter 2017 GBS segment expenses were $637 million, up
10% versus the prior year period, or up 3% on an organic constant
currency basis.
Fourth quarter 2017 GBS segment EBITDA was $494 million, up 11%
versus the prior year period, or up 7% on an organic constant
currency basis. Segment EBITDA margin improved 20 basis points to
43.7% in the quarter.
Global Financial Solutions (GFS)
Fourth quarter 2017 GFS segment revenue was $412 million, down
1% versus the prior year period on both a reported and organic
constant currency basis. Within geographic regions, North America
revenue of $242 million was down 3% versus the prior year period on
both a reported and organic constant currency basis, largely driven
by the non-recurrence of a previously disclosed termination fee in
the prior year period. North America card accounts on file grew 6%
year over year. EMEA revenue was $112 million, up 3% versus the
prior year period, or up 2% on an organic constant currency basis,
driven by growth in the United Kingdom. Latin America revenue was
$32 million, down 3% versus the prior year period, or up 2% on an
organic constant currency basis, primarily driven by growth in
Argentina, partly offset by the non-recurrence of a prior year
benefit from a client contract modification. APAC revenue was $26
million, up 13% versus the prior year period, or up 6% on an
organic constant currency basis primarily driven by new and
existing client growth across the region.
Fourth quarter 2017 GFS segment expenses were $228 million, down
6% versus the prior year period on both a reported and organic
constant currency basis, driven by solid expense management.
Fourth quarter 2017 GFS segment EBITDA was $184 million, up 6%
versus the prior year period on both a reported and organic
constant currency basis. Segment EBITDA margin improved 300 basis
points to 44.7% in the quarter.
Network & Security Solutions (NSS)
Fourth quarter 2017 NSS segment revenue was $406 million, up 4%
versus the prior year period, or up 6% on an organic constant
currency basis. Within NSS's primary businesses, Stored Value
revenue grew 19% in the quarter benefiting from strong growth in
both its open and closed loop gift card businesses and a client
contract modification; Security and Fraud revenue grew 4%; and EFT
revenue was flat.
Fourth quarter 2017 NSS segment expenses were $197 million, down
4% versus the prior year period, or down 1% on an organic constant
currency basis.
Fourth quarter 2017 NSS segment EBITDA was $209 million, up 14%
versus the prior year period on both a reported and organic
constant currency basis. Segment EBITDA margin improved 450 basis
points to 51.5% in the quarter.
Income Tax (Benefit) / Expense
Fourth quarter 2017 income tax (benefit) / expense was ($663)
million, representing a change of $687 million from expense of $24
million in the prior year period. The change in income taxes in the
current year period was driven by multiple discrete tax items,
primarily the non-cash effects of the reversal of the valuation
allowance against deferred tax assets associated with U.S. federal
net operating loss carryforwards ("U.S. federal NOLs") and the net
write down of deferred tax accounts upon the enactment of the Tax
Cuts and Jobs Act.
Full year 2017 income tax (benefit) / expense was ($729)
million, representing a change of $810 million from expense of $81
million in the prior year period. The change in income taxes in
2017 was driven by multiple discrete tax items including the
discrete tax items discussed above.
The effective tax rate in calculating adjusted net income in the
fourth quarter and full year 2017, was approximately 12% and 10%,
respectively.
Cash Flow
In the fourth quarter 2017, cash flow from operations was $465
million, up $14 million compared to $451 million in the prior year
period. Free cash flow, which First Data defines as cash flow from
operations, less capital expenditures, distributions to minority
interests and other, was $280 million in the current quarter, up
$10 million from $270 million in the prior year period as increased
segment EBITDA and lower cash interest payments were largely offset
by the unfavorable timing impact of settlement flows on working
capital.
Full year 2017 cash flow from operations was $2,047 million,
down $64 million from $2,111 million in 2016. Full year free cash
flow was $1,359 million, up $143 million from $1,216 million in
2016. The increase in full year free cash flow was primarily driven
by growth in total segment EBITDA and a reduction in cash interest
paid in 2017 compared to 2016, partially offset by increased cash
taxes and capital expenditures in 2017 compared to the prior year,
and the unfavorable timing impact of settlement flows on working
capital.
Capital Structure
Total borrowings at December 31, 2017 increased to $19.2 billion
from $18.5 billion a year ago, reflecting increased borrowings
related to the acquisitions of BluePay, CardConnect and Acculynk in
2017, partially offset by debt paydowns and divestitures that
occurred throughout the year. Net debt of $18.6 billion at December
31, 2017, increased by $445 million in 2017.
On November 15, 2017, the Company closed on new term loans
totaling approximately $3.9 billion with an interest rate of LIBOR
plus 225 basis points maturing in April 2024. The proceeds of the
term loans were used to redeem approximately $3.9 billion of term
loans with an interest rate of LIBOR plus 250 basis points. The
interest rate on the new term loans may be reduced by 25 basis
points in the future based on the Company's corporate family debt
rating. The expected annualized cash interest savings derived from
this transaction is approximately $10 million.
On November 29, 2017, the Company incurred an aggregate
principal amount of $250 million in new term loans with an interest
rate of LIBOR plus 175 basis points maturing in June 2020. The
proceeds of the new term loans, together with cash on hand and
other available financing, were used to acquire BluePay Holdings,
Inc.
2018 Guidance
The guidance provided below holds foreign exchange rates
constant versus the year-ago comparable period ("constant
currency").
Key metric guidance for full year 2018:
- Total segment revenue: 5% to 7% (range
includes a net benefit attributable to the full year impact of
previously announced major acquisitions and dispositions of
approximately 2 percentage points)
- Total segment EBITDA: 7% to 9% (range
includes a net benefit attributable to the full year impact of
previously announced major acquisitions and dispositions of
approximately 1.5 percentage points)
- Adjusted diluted EPS: $1.35 to
$1.40
- Effective tax rate: 27% to 29%
- Free cash flow: $1.4 billion+
See "2018 Non-GAAP Guidance Reconciliation" in the financial
tables of this press release for reconciliations of non-GAAP
guidance measures to the most directly comparable GAAP
measures.
The effective tax rate range of 27% to 29% in 2018 is
significantly higher than the effective tax rate achieved in 2017
as a result of the reversal of the valuation allowance against
deferred tax assets associated with U.S. federal NOLs in the fourth
quarter of 2017, as discussed in "Income Tax (Benefit) / Expense",
above. The reversal of the valuation allowance has no impact on
First Data's U.S. federal NOL balance, and the company estimates
that it will be largely shielded from U.S. federal cash taxes
through the end of 2020.
Investor Conference Call
The company will host a conference call and webcast on Monday,
February 12, 2018, at 8 a.m. ET to review the fourth quarter 2017
financial results.
To listen to the call, dial +1 (844) 826-3033 (U.S.) or +1 (412)
317-5172 (outside the U.S.) at least 10 minutes prior to the start
of the call. The call will be webcast on the “Investor Relations”
section of the First Data website at investor.firstdata.com where
an accompanying slide presentation will also be available.
Non-GAAP Measures
To supplement the company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, or GAAP, the company uses non-GAAP measures of certain
financial performance. These non-GAAP measures include total
segment revenue, total segment expense, total segment EBITDA,
adjusted net income, adjusted net income per diluted share, free
cash flow and net debt. The company has included non-GAAP measures
because management believes that they help to facilitate
comparisons of the company's operating results between periods. The
company believes the non-GAAP measures provide useful information
to both management and users of our financial statements by
excluding certain expenses, gains and losses that may not be
indicative of its core operating results and business outlook. In
disclosing year-over-year comparisons, the company has chosen to
present non-GAAP measures because it believes that these measures
provide users of our financial statements a consistent basis for
reviewing the company's performance across different periods.
These non-GAAP measures are not in accordance with, or an
alternative to, measures prepared in accordance with GAAP and may
be different from non-GAAP measures used by other companies. In
addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with the company's results of operations as
determined in accordance with GAAP. These measures should only be
used to evaluate the company's results of operations in conjunction
with the corresponding GAAP measures.
Reconciliation to the most directly comparable GAAP measure of
all non-GAAP measures can be found in the tables included in this
press release.
The company excludes certain items and other adjustments from
total segment revenue, total segment expense, total segment EBITDA,
adjusted net income and adjusted net income per diluted share. See
reconciliations for a complete list of items excluded from non-GAAP
measures.
Adjusted net income is a non-GAAP financial measure used by
management that provides an alternative view of performance.
Adjusted net income excludes amortization of acquisition-related
intangibles, stock-based compensation, restructuring costs and
other items affecting comparability and, therefore, are not
reflective of continuing operating performance. Management believes
that the presentation of adjusted net income provides users of our
financial statements greater transparency into ongoing results of
operations allowing them to better compare our results from period
to period.
The company uses free cash flow, a non-GAAP measure. Free cash
flow is defined as cash flow used in/provided by operating
activities less capital expenditures, distributions to minority
interest, and other. The company considers free cash flow to be a
liquidity measure that provides useful information to management
and users of our financial statements about the amount of cash
generated by the business which can then be used to, among other
things, reduce debt outstanding.
The company also uses net debt, a non-GAAP measure. Net debt is
defined as total long-term borrowings plus short-term and current
portion of long-term borrowings, at par value, excluding lines of
credit used for settlement purposes, less cash and cash
equivalents. The company believes that net debt provides additional
insight on its level and management of leverage.
Certain financial measures (revenue, expenses and EBITDA) in
this release are presented excluding the estimated impact of
foreign currency changes (constant currency). To present this
information, monthly results in the current period for entities
reporting in currencies other than United States dollars are
translated into United States dollars at the average exchange rates
in effect during the corresponding month of the prior fiscal year,
rather than the actual average exchange rates in effect during the
current fiscal year. Once translated, each month in the period is
added together to calculate the constant currency current period
results. The company believes that such non-GAAP constant currency
financial measures are useful to investors, lenders and other
creditors because such information enables them to measure the
impact of currency fluctuations on these measures from period to
period.
About First Data
First Data (NYSE: FDC) is a global leader in commerce-enabling
technology and solutions, serving approximately six million
business locations and 4,000 financial institutions in more than
100 countries around the world. The company’s 22,000
owner-associates are dedicated to helping companies, from start-ups
to the world’s largest corporations, conduct commerce every day by
securing and processing more than 3,000 transactions per second and
$2.4 trillion per year.
(a) Organic constant currency growth (“Organic CC growth”)
is defined as reported growth adjusted for the following: (1)
excludes the impacts of year-over-year currency rate changes in the
current period; (2) excludes the results of significant
divestitures (including the impact of our Digital Banking Joint
Venture) in the prior year period; and (3) includes the results of
significant acquisitions in the prior year period.
First Data Corporation
Consolidated Statements of
Operations
(Unaudited)
(in millions, except shares and per
share data)
Three months ended December 31, Twelve months
ended December 31, 2017 2016
%Change
ConstantCurrency%Change
2017 2016
%Change
ConstantCurrency%Change
Revenue: Transaction and processing service fees (a)
$ 1,775 $ 1,647 8 % 7 % $ 6,757 $ 6,600 2 % 2 % Product sales and
other (a) 356 346 3 % 2 % 1,372 1,239
11 % 11 % Total revenues (excluding reimbursable items) 2,131 1,993
7 % 6 % 8,129 7,839 4 % 4 % Reimbursable debit network fees,
postage, and other 1,019 950 7 % 7 % 3,923
3,745 5 % 5 % Total revenues 3,150 2,943 7 % 6
% 12,052 11,584 4 % 4 % Expenses: Cost of services
(exclusive of items shown below) 674 715 (6 )% (7 )% 2,763 2,855 (3
)% (3 )% Cost of products sold 92 86 7 % 7 % 359 337 7 % 7 %
Selling, general, and administrative 571 472 21 % 20 % 2,178 2,035
7 % 7 % Depreciation and amortization 259 236 10 % 8 % 972 949 2 %
2 % Other operating expenses 35 4 NM NM 143 61
NM NM Total expenses (excluding reimbursable items) 1,631
1,513 8 % 7 % 6,415 6,237 3 % 3 % Reimbursable debit network fees,
postage, and other 1,019 950 7 % 7 % 3,923
3,745 5 % 5 % Total expenses 2,650 2,463 8 % 7
% 10,338 9,982 4 % 4 % Operating profit 500
480 4 % 1,714 1,602 7 % Interest expense, net
(231 ) (258 ) (10 )% (937 ) (1,068 ) (12 )% Loss on debt
extinguishment (8 ) (12 ) (33 )% (80 ) (70 ) 14 % Other income 23
3 NM 16 17 (6 )% Income before income
taxes and equity earnings in affiliates 284 213 33 % 713 481 48 %
Income tax (benefit) expense (663 ) 24 NM (729 ) 81 NM Equity
earnings in affiliates 55 62 (11 )% 222 260
(15 )% Net income 1,002 251 299 % 1,664 660 152 % Less: Net
income attributable to noncontrolling interests and redeemable
noncontrolling interest 54 59 (8 )%
199 240 (17 )% Net income attributable to First Data
Corporation $ 948 $ 192 394 % $ 1,465 $ 420
249 % Net income per share: Basic $ 1.03 $ 0.21 390 %
$ 1.60 $ 0.47 240 % Diluted $ 1.00 $ 0.21 376 % $ 1.56 $ 0.46 239 %
Weighted-average common shares outstanding: Basic
918,726,777 905,966,452 915,870,759 901,671,872 Diluted 945,035,811
929,375,020 939,767,019 921,001,863 NM represents not meaningful
(a)
Includes processing fees, administrative
service fees, and other fees charged to merchant alliances
accounted for under the equity method of $53 million and $215
million for the three and twelve months ended December 31, 2017,
respectively, and $48 million and $198 million for the comparable
periods in 2016.
First Data CorporationSelected
Consolidated Balance Sheet and Cash Flow
Data(Unaudited)(in millions)
SELECTED CONSOLIDATED BALANCE SHEET DATA
As of As of December 31, 2017
December 31, 2016 Cash and cash equivalents $ 498 $
385 Settlement assets 20,363 14,795 Total assets 48,269 40,292
Short-term and current portion of long-term borrowings 1,271
358 Settlement obligations 20,363 14,795 Long-term borrowings
17,927 18,131 Total liabilities 42,183 36,088 Redeemable
noncontrolling interest 72 73 Total First Data Corporation
stockholders' equity 3,152 1,220 Noncontrolling interests 2,862
2,911 Total equity 6,014 4,131
SELECTED CONSOLIDATED CASH
FLOW DATA Three months ended December 31,
Twelve months ended December 31, 2017
2016 2017 2016 Source/(Use) of
cash Net cash provided by operating activities (a) $ 465 $ 451
$ 2,047 $ 2,111 Net cash used in investing activities (893 ) (49 )
(1,950 ) (387 ) Net cash provided by (used in) financing activities
419 (476 ) 9 (1,734 )
Supplemental cash flow data Cash
interest payments on long-term debt (b) $ 205 $ 249 $ 889 $ 1,008
(a) The twelve months ended December 31, 2016 includes a
$102 million reclassification related to settlement activities to
conform certain domestic and international businesses to our global
policies, which increased "Cash and cash equivalents" and decreased
"Accounts receivable, net" in our consolidated balance sheet.
(b) For purposes of this schedule, cash interest payments on
long-term debt excludes interest on capital leases and interest on
foreign lines of credit.
First Data Corporation
Summary Segment Data
(Unaudited)
(in millions)
Three months ended December 31, Twelve months
ended December 31, 2017 2016
%ChangeB/(W)
OrganicCC
%Change(e)B/(W)
2017 2016
%ChangeB/(W)
OrganicCC
%Change(e) B/(W)
Total segment revenue $ 1,949 $ 1,830 7 % 4 % $ 7,428 $ 7,141 4 % 4
% Adjustments: Non wholly owned entities (a) 15 21 (29 )% 64 80 (20
)% Independent Sales Organization (ISO) commission expense (b) 167
142 18 % 637 618 3 % Reimbursable debit network fees, postage, and
other 1,019 950 7 % 3,923 3,745 5 %
Consolidated revenue $ 3,150 $ 2,943 7 % $ 12,052
$ 11,584 4 % Segment revenue: Global Business
Solutions $ 1,131 $ 1,026 10 % 4 % $ 4,262 $ 4,063 5 % 4 % Global
Financial Solutions 412 415 (1 )% (1 )% 1,623 1,593 2 % 3 % Network
& Security Solutions 406 389 4 % 6 % 1,543
1,485 4 % 4 % Total segment revenue $ 1,949 $ 1,830
7 % 4 % $ 7,428 $ 7,141 4 % 4 %
Three months ended December 31, Twelve months ended
December 31, 2017 2016
%ChangeB/(W)
OrganicCC
%Change(e)B/(W)
2017 2016
%ChangeB/(W)
OrganicCC
%Change(e) B/(W)
Total segment expenses $ 1,101 $ 1,059 (4 )% (1 )% $ 4,356 $ 4,249
(3 )% (2 )% Adjustments: Non wholly owned entities (a) 19 18 (6 )%
69 70 1 % Independent Sales Organization (ISO) commission expense
(b) 167 142 (18 )% 637 618 (3 )% Reimbursable debit network fees,
postage and other 1,019 950 (7 )% 3,923 3,745 (5 )% Depreciation
and amortization 259 236 (10 )% 972 949 (2 )% Stock-based
compensation 62 49 (27 )% 245 263 7 % Other (c) 23 9
(156 )% 136 88 (55 )% Consolidated expenses $ 2,650
$ 2,463 (8 )% $ 10,338 $ 9,982 (4 )%
Segment expenses: Global Business Solutions $ 637 $ 580 (10
)% (3 )% $ 2,438 $ 2,338 (4 )% (3 )% Global Financial Solutions 228
242 6 % 6 % 937 947 1 % — % Network & Security Solutions 197
206 4 % 1 % 814 819 1 % — % Corporate 39 31 (26 )%
(26 )% 167 145 (15 )% (15 )% Total segment expenses $
1,101 $ 1,059 (4 )% (1 )% $ 4,356 $ 4,249
(3 )% (2 )%
First Data Corporation
Summary Segment Data
(Unaudited)
(in millions)
Three months ended December 31, Twelve months
ended December 31, 2017 2016
%Change B/(W)
OrganicCC
%Change(e)
B/(W)
2017 2016
%ChangeB/(W)
OrganicCC
%Change(e)B/(W)
Total Segment EBITDA $ 848 $ 771 10 % 8 % $ 3,072 $ 2,892 6 % 6 %
Adjustments: Non wholly owned entities (a) 9 6 50 % 30 30 — %
Depreciation and amortization (259 ) (236 ) 10 % (972 ) (949 ) 2 %
Interest expense, net (231 ) (258 ) (10 )% (937 ) (1,068 ) (12 )%
Loss on debt extinguishment (8 ) (12 ) (33 )% (80 ) (70 ) 14 %
Other items (d) (12 ) (6 ) 100 % (132 ) (71 ) 86 % Income tax
expense 663 (24 ) NM 729 (81 ) NM Stock-based compensation (62 )
(49 ) 27 % (245 ) (263 ) (7 )% Net income (loss) attributable to
First Data Corporation $ 948 $ 192 394 % $ 1,465
$ 420 249 % Segment EBITDA: Global Business
Solutions $ 494 $ 446 11 % 7 % $ 1,824 $ 1,725 6 % 5 % Global
Financial Solutions 184 173 6 % 6 % 686 646 6 % 8 % Network &
Security Solutions 209 183 14 % 14 % 729 666 9 % 9 % Corporate (39
) (31 ) (26 )% (26 )% (167 ) (145 ) (15 )% (15 )% Total Segment
EBITDA $ 848 $ 771 10 % 8 % $ 3,072 $ 2,892
6 % 6 % NM represents not meaningful “B” means results in
2017 are better than results in 2016 “(W)” means results are worse
(a)
Net adjustment to reflect our
proportionate share of the results of our investments in businesses
accounted for under the equity method and consolidated subsidiaries
with noncontrolling ownership interests. Segment revenue for our
significant affiliates is reflected based on our proportionate
share of the results of our investments in businesses accounted for
under the equity method and consolidated subsidiaries with
noncontrolling ownership interests. For other affiliates, we
include equity earnings in affiliates, excluding amortization
expense, in segment revenue. In addition, our segment measures
reflect revenue-based commission payments to Independent Sales
Organizations (ISOs).
(b)
Retail Independent Sales Organization
commissions are presented within Selling, general, and
administrative expense in the unaudited consolidated statements of
operations but are netted in segment revenues for segment
reporting.
(c)
Includes restructuring, certain retention
bonuses, non-normal course litigation and regulatory settlements,
asset impairments, debt issuance costs, and acquisition integration
costs.
(d)
Items noted within (c) above and "Other
income (expense)" as presented in the unaudited consolidated
statements of operations, which includes divestitures, derivative
gains (losses), non-operating foreign currency gains (losses) and
the gain on Visa Europe share sale.
(e)
Organic constant currency growth (“Organic
CC growth”) is defined as reported growth adjusted for the
following: (1) excludes the impacts of year-over-year currency rate
changes in the current period; (2) excludes the results of
significant divestitures (including the impact of our Digital
Banking Joint Venture) in the prior year period; and (3) includes
the results of significant acquisitions in the prior year
period.
First Data Corporation
Organic Constant Currency
Growth
(Unaudited)
(in millions)
Three months ended December 31, Twelve months
ended December 31, 2017 2016
% B/(W) 2017 2016
% B/(W) Total segment revenue $ 1,949 $ 1,830 7 % $
7,428 $ 7,141 4 % Currency impact (17 ) — 16 —
Acquisitions/Divestitures(a) — 34 — 40
Organic constant currency(b) segment revenue growth $ 1,932
$ 1,864 4 % $ 7,444 $ 7,181 4 % GBS
revenue $ 1,131 $ 1,026 10 % $ 4,262 $ 4,063 5 % Currency impact
(11 ) — 2 — Acquisitions/Divestitures(a) — 47 —
53 Organic constant currency(b) GBS revenue growth $
1,120 $ 1,073 4 % $ 4,264 $ 4,116 4 %
GBS NA revenue $ 852 $ 805 6 % $ 3,262 $ 3,176 3 % Currency
impact (1 ) — (1 ) — Acquisitions/Divestitures(a) — 47
— 84 Organic constant currency(b) GBS NA
revenue growth $ 851 $ 852 — % $ 3,261 $ 3,260
— % GBS APAC revenue $ 43 $ 34 26 % $ 152 $ 159 (4 )%
Currency impact (1 ) — (3 ) — Acquisitions/Divestitures(a) —
— — (31 ) Organic constant currency(b) GBS APAC
revenue growth $ 42 $ 34 24 % $ 149 $ 128
16 % GFS revenue $ 412 $ 415 (1 )% $ 1,623 $ 1,593 2
% Currency impact (7 ) — 13 — Acquisitions/Divestitures(a) —
(6 ) — (6 ) Organic constant currency(b) GFS revenue growth
$ 405 $ 409 (1 )% $ 1,636 $ 1,587 3 %
GFS EMEA revenue $ 112 $ 109 3 % $ 444 $ 433 3 % Currency
impact (7 ) — 13 — Acquisitions/Divestitures(a) — (6 ) —
(6 ) Organic constant currency(b) GFS EMEA revenue growth $
105 $ 103 2 % $ 457 $ 427 7 %
NSS revenue $ 406 $ 389 4 % $ 1,543 $ 1,485 4 %
Acquisitions/Divestitures(a) — (7 ) — (7 ) Organic
constant currency(b) NSS revenue growth $ 406 $ 382 6
% $ 1,543 $ 1,478 4 %
Three
months ended December 31, Twelve months ended December
31, 2017 2016 % B/(W)
2017 2016 % B/(W)
Total segment expense $ 1,101 $ 1,059 (4 )% $ 4,356 $
4,249 (3 )% Currency impact (11 ) — 3 —
Acquisitions/Divestitures(a) — 22 — 22
Organic constant currency(b) segment expense growth $ 1,090
$ 1,081 (1 )% $ 4,359 $ 4,271 (2 )% GBS
expense $ 637 $ 580 (10 )% $ 2,438 $ 2,338 (4 )% Currency impact (8
) — (4 ) — Acquisitions/Divestitures(a) — 33 —
33 Organic constant currency(b) GBS expense growth $ 629
$ 613 (3 )% $ 2,434 $ 2,371 (3 )%
Three months ended December 31, Twelve months
ended December 31, 2017 2016 %
B/(W) 2017 2016 % B/(W) GFS
expense $ 228 $ 242 6 % $ 937 $ 947 1 % Currency impact (4 ) — 7 —
Acquisitions/Divestitures(a) — (4 ) — (4 ) Organic
constant currency(b) GFS expense growth $ 224 $ 238 6
% $ 944 $ 943 — % NSS expense $ 197 $ 206 4 %
$ 814 $ 819 1 % Acquisitions/Divestitures(a) — (7 ) —
(7 ) Organic constant currency(b) NSS expense growth $ 197 $
199 1 % $ 814 $ 812 — %
Three months
ended December 31, Twelve months ended December 31,
2017 2016 % B/(W) 2017
2016 % B/(W) Total segment EBITDA $ 848 $ 771 10 % $
3,072 $ 2,892 6 % Currency impact (5 ) — 13 —
Acquisitions/Divestitures(a) — 13 —
18
Organic constant currency(b) Segment EBITDA growth $ 843 $
784 8 % $ 3,085 $
2,910
6 % GBS EBITDA $ 494 $ 446 11 % $ 1,824 $ 1,725 6 %
Currency impact (3 ) — 6 — Acquisitions/Divestitures(a) — 14
—
20
Organic constant currency(b) GBS EBITDA growth $ 491
$ 460 7 % $ 1,830 $
1,745
5 % GFS EBITDA $ 184 $ 173 6 % $ 686 $ 646 6 %
Currency impact (2 ) — 7 — Acquisitions/Divestitures(a) — (2
) — (2 ) Organic constant currency(b) GFS EBITDA growth $
182 $ 171 6 % $ 693 $ 644 8 %
NSS EBITDA $ 209 $ 183 14 % $ 729 $ 666 9 %
Acquisitions/Divestitures(a) — — — —
Organic constant currency(b) NSS EBITDA growth $ 209 $ 183
14 % $ 729 $ 666 9 % B” means results in 2017
are better than results in 2016 “(W)” means results are worse
(a)
“Acquisitions/Divestitures" pertains to
the following 2017 activity: the acquisitions of CardConnect and
BluePay in GBS North America; the formation of the Digital Banking
JV in NSS (treated as a 50% Digital Banking revenue divestiture);
and the divestiture of the GFS Baltics business. This line also
pertains to the Australian ATM divestiture in GBS APAC in 2016.
(b)
Organic constant currency growth (“Organic
CC growth”) is defined as reported growth adjusted for the
following: (1) excludes the impacts of year-over-year currency rate
changes in the current period; (2) excludes the results of
significant divestitures (including the impact of our Digital
Banking Joint Venture) in the prior year period; and (3) includes
the results of significant acquisitions in the prior year
period.
First Data Corporation
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(in millions, except shares and per
share data)
ADJUSTED NET INCOME RECONCILIATION
Three months ended December 31, Twelve months
ended December 31, 2017 2016 %
Change 2017 2016 %
Change Net income attributable to First Data Corporation
$ 948 $ 192 394 % $ 1,465 $ 420 249 % Adjustments:
Stock based compensation 62 49 27 % 245 263 (7 )% Loss on debt
extinguishment 8 12 (33 )% 80 70 14 % Amortization of acquisition
intangibles and deferred financing costs(a) 108 104 4 % 403 422 (5
)% Loss (gain) of disposal of businesses (18 ) 3 NM (18 ) 34 NM
Visa Europe settlement gain — — NM — (29 ) NM Restructuring 20 (2 )
NM 83 49 69 %
Intercompany foreign exchange (loss)
gain
(5 ) 2 NM 1 (19 ) NM Fees paid on debt modification — 11 (100 )% 10
29 (66 )% Impairments, litigation, and other(b) 11 (2 ) NM 24 11
118 % Deal integration costs 1 — NM 27 — NM Mark-to-market
adjustment for derivatives and euro-denominated debt(c) — — NM — 5
NM Income tax on above items and discrete tax items(d) (719 ) (4 )
NM (895 ) (35 ) NM Adjusted net income $ 416 $ 365 14
% $ 1,425 $ 1,220 17 % Adjusted net income per
share: Basic $ 0.45 $ 0.40 13 % $ 1.56 $ 1.35 16 % Diluted $ 0.44 $
0.39 13 % $ 1.52 $ 1.32 15 % Weighted-average common shares
used to compute adjusted net income per share: Basic 918,726,777
905,966,452 915,870,759 901,671,872 Diluted 945,035,811 929,375,020
939,767,019 921,001,863 NM represents not meaningful
(a)
Represents amortization of intangibles
established in connection with the 2007 Merger and acquisitions we
have made since 2007, excluding the percentage of our consolidated
amortization of acquisition intangibles related to non wholly owned
consolidated alliances equal to the portion of such alliances owned
by our alliance partners. This line also includes amortization
related to deferred financing costs of $5 million and $6 million
for the three months ended December 31, 2017 and 2016,
respectively, and $17 million and $17 million, respectively, for
the twelve months ended December 31, 2017 and 2016.
(b)
Represents impairments, non-normal course
litigation and regulatory settlements, investments gains (losses),
divestitures, and other, as applicable to the periods
presented.
(c)
Represents mark-to-market activity related
to our undesignated hedges.
(d)
The tax effect of the adjustments between
our GAAP and adjusted results takes into account the tax treatment
and related tax rate(s) that apply to each adjustment in the
applicable tax jurisdiction(s). Generally, this results in a tax
impact at the U.S. effective tax rate for certain adjustments,
including the majority of amortization of intangible assets,
deferred financing costs, stock compensation, and loss on debt
extinguishment; whereas the tax impact of other adjustments,
including restructuring expense, depends on whether the amounts are
deductible in the respective tax jurisdictions and the applicable
effective tax rate(s) in those jurisdictions. "Income tax on above
items and discrete tax items" also includes the impact of
significant discrete tax items impacting Net income attributable to
First Data Corporation.
First Data Corporation
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(in millions)
FREE CASH FLOW RECONCILIATION Three
months ended December 31, Twelve months ended December
31, 2017 2016 Change
2017 2016 Change
Net cash provided by operating
activities
$ 465 $ 451 $ 14 $ 2,047 $ 2,111 $ (64 ) Capital expenditures (128
) (126 ) (2 ) (518 ) (477 ) (41 )
Distribution to minority interest and
other
(57 ) (55 ) (2 ) (170 ) (418 ) 248 Free cash flow $ 280 $
270 10 $ 1,359 $ 1,216 143
NET DEBT
RECONCILIATION As of As of December 31,
2017 December 31, 2016 Total long-term borrowings $
17,927 $ 18,131 Total short-term and current portion of long-term
borrowings 1,271 358 Total borrowings 19,198 18,489
Unamortized discount and unamortized deferred financing costs 126
156 Total borrowings at par 19,324 18,645 Less:
Settlement lines of credit and other arrangements 205 84
Gross debt 19,119 18,561
Less: Cash and cash equivalents
498 385 Net debt $ 18,621 $ 18,176
First Data Corporation
Operating Data
(Unaudited)
(in millions)
Three months endedDecember
31,
Twelve months endedDecember
31,
2017 2016
%Change
2017 2016
%Change
GBS: North America merchant transactions (a)
12,754 12,004 6 % 49,248 46,372 6 % International merchant
transactions (b) 2,587 2,408 7 % 9,760 8,246 18 %
GFS: North America card accounts on file (c) 906 855 6 %
International card accounts on file (d) 170 151 13 %
NSS: Network transactions (EFT and Stored Value) (e) 6,109
5,543 10 % 22,114 20,258 9 % (a) North American merchant
transactions include acquired Visa and MasterCard credit and
signature debit, American Express and Discover, debit, electronic
benefits transactions, processed-only and gateway customer
transactions at the POS. North American merchant transactions
reflect 100% of alliance transactions. (b) International
transactions include Visa, MasterCard, and other payment network
merchant acquiring transactions for clients outside the U.S. and
Canada. Transactions include credit, signature debit, PIN-debit
POS, POS gateway, and ATM transactions. (c) North America card
accounts on file reflect the total number of bankcard credit and
retail credit accounts as of the end of the periods presented. (d)
International card accounts on file reflect the total number of
bankcard and retail accounts outside the United States and Canada
as of the end of the periods presented. (e) Network transactions
include the debit issuer processing transactions, STAR Network
issuer transactions, and closed loop and open loop POS
transactions.
First Data Corp
2018 Non-GAAP Guidance
Reconciliation
(Unaudited)
Consolidated Revenue to Total Segment Revenue
FY 2018 vs. FY 2017 Consolidated revenue (at reported
rates)
~4-6% Adjustments: +Non wholly owned entities
+Reimbursable postage and other Total segment revenue (reported)
~5-7% Memo: Total segment revenue (at constant currency)
~5-7% Net Income to Total Segment EBITDA
FY 2018 vs. FY 2017 Net income attributable to FDC(1)
~(40%) - (60%) Adjustments +Depreciation and amortization
+Interest Expense, net +Income tax expense +Stock Based
Compensation + Other(2) Total segment EBITDA (reported)
~7-9% Memo: total segment EBITDA (at constant currency)
~7-9% Net Income to Adj. Net Income
FY 2018 Net income attributable to FDC
$0.80-$0.85
Adjustments (note: adjustments represent positive balances)
+Stock-based compensation +Amortization of acquisition intangibles
and deferred financing cost +Other(3) Adjusted Net Income
$1.35-$1.40 Cash Flow From Operations to Free Cash
Flow FY 2018 Cash (used in) / provided by
operating activities
$2.1B+ +Adjustments(4) Free cash flow
(use)/source
$1.4B+ (1)
Reflects a significant increase in tax
expense in 2018 primarily driven by the Q4 2017 release of a
valuation allowance against deferred tax assets associated with the
U.S. federal NOL. The reversal of the valuation allowance resulted
in a significant non-cash tax benefit in Q4 2017 and the recording
of a normalized book tax rate in 2018.
(2) Includes non wholly owned entities adjustment, loss on debt
extinguishment, as well as other items. (3)
Includes loss on debt extinguishment,
gain/loss on divestitures, restructuring, impairment, litigation
and other, as well as the impact of tax expense/(benefit) of the
adjusted items.
(4)
Includes capital expenditures and
distributions to minority interest and other.
First Data Corporation
Forward Looking Statements
Notice to Investors, Prospective Investors and the Investment
Community; Cautionary Information Regarding Forward-Looking
Statements
Certain matters we discuss in our public statements may
constitute forward-looking statements. You can identify
forward-looking statements because they contain words such as
“believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,”
“plans,” “estimates,” or “anticipates” or similar expressions which
concern our strategy, plans, projections or intentions. Examples of
forward-looking statements include, but are not limited to, all
statements we make relating to revenue, earnings before net
interest expense, income taxes, depreciation, and amortization
(EBITDA), earnings, margins, growth rates, and other financial
results for future periods. By their nature, forward-looking
statements speak only as of the date they are made; are not
statements of historical fact or guarantees of future performance;
and are subject to risks, uncertainties, assumptions or changes in
circumstances that are difficult to predict or quantify. Actual
results could differ materially and adversely from our
forward-looking statements due to a variety of factors, including
the following: (1) adverse impacts from global economic, political,
and other conditions affecting trends in consumer, business, and
government spending; (2) our ability to anticipate and respond to
changing industry trends, including technological changes and
increasing competition; (3) our ability to successfully renew
existing client contracts on favorable terms and obtain new
clients; (4) our ability to prevent a material breach of security
of any of our systems; (5) our ability to implement and improve
processing systems to provide new products, improve functionality,
and increase efficiencies; (6) the successful management of our
merchant alliance program which involves several alliances not
under our sole control and each of which acts independently of the
others; (7) our successful management of credit and fraud risks in
our business units and merchant alliances, particularly in the
context of eCommerce and mobile markets; (8) consolidation among
financial institution clients or other client groups that impacts
our client relationships; (9) our ability to use our net operating
losses without restriction to offset income for US tax purposes;
(10) our ability to improve our profitability and maintain
flexibility in our capital resources through the implementation of
cost savings initiatives; (11) the acquisition or disposition of a
material business or assets; (12) our ability to successfully value
and integrate acquired businesses; (13) our high degree of
leverage; (14) adverse impacts from currency exchange rates or
currency controls imposed by any government or otherwise; (15)
changes in the interest rate environment that increase interest on
our borrowings or the interest rate at which we can refinance our
borrowings; (16) the impact of new or changes in current laws,
regulations, credit card association rules, or other industry
standards; and (17) new lawsuits, investigations, or proceedings,
or changes to our potential exposure in connection with pending
lawsuits, investigations or proceedings, and various other factors
set forth in our Annual Report on Form 10-K for the period ended
December 31, 2016, including but not limited to, Item 1 - Business,
Item 1A - Risk Factors, and Item 7 - Management’s Discussion and
Analysis of Financial Condition and Results of
Operations. Except as required by law, we do not intend to
revise or update any forward-looking statement as a result of new
information, future developments or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180212005626/en/
Peter PoillonInvestor RelationsFirst
Data212-266-3565Peter.Poillon@firstdata.comLiidia
LiuksilaPublic RelationsFirst
Data212-515-0174Liidia.Liuksila@firstdata.com
First Data (NYSE:FDC)
Historical Stock Chart
From Apr 2024 to May 2024
First Data (NYSE:FDC)
Historical Stock Chart
From May 2023 to May 2024