First Data Corporation (NYSE:FDC), a global leader in
commerce-enabling technology, in connection with entering into a
definitive merger agreement to combine with Fiserv, Inc. (Fiserv),
today reported preliminary financial results for the fourth quarter
and full year ended December 31, 2018, and preliminary full
year 2019 guidance.
Preliminary fourth quarter and full year 2018
results:
First Data expects to report fourth quarter and full year 2018
consolidated revenue of approximately $2,399 million and $9,498
million, respectively. Consolidated revenue in 2018 was negatively
impacted by the adoption of new accounting standards required under
ASC 606, which impacted comparability relative to the prior period,
resulting in fourth quarter and full year declines of 24% and 21%,
respectively.
The company expects to report fourth quarter total segment
revenue of approximately $2,185 million, up 5% on a reported
constant currency basis(a), or up 6% on an organic constant
currency basis(b). The company expects full year total segment
revenue of $8,657 million, up 7% on a reported constant currency
basis(a), or up 6% on an organic constant currency basis(b). The
segment revenue metrics for the fourth quarter and the full year
are adjusted to apply the New Reporting Standards(c) to both 2018
and 2017, providing comparability for the aforementioned
year-over-year growth rates.
The company expects to report fourth quarter net income
attributable to First Data diluted EPS of approximately $0.17, and
adjusted earnings per diluted share of approximately $0.38. For the
full year 2018, the company expects to report net income
attributable to First Data diluted EPS of approximately $1.05, and
adjusted earnings per diluted share of approximately $1.41.
The preliminary fourth quarter and full year 2018 figures
provided in this press release are unaudited and subject to
revision. Final results for the fourth quarter and year ended
December 31, 2018, will be provided in a press release on or about
February 7, 2019.
Preliminary full year 2019 guidance:
First Data expects to generate full year 2019 organic constant
currency revenue growth(b) in the range of 5% to 6%. Additionally,
the company expects to generate adjusted earnings per diluted share
growth in the low double digits.
The company will provide final detailed guidance with our fourth
quarter earnings press release on or about February 7, 2019. The
preliminary 2019 guidance does not include any impact related to
the transaction with Fiserv.
Agreement to combine with Fiserv
In a separate joint press release issued today, First Data
announced that it will enter into a definitive merger agreement to
combine with Fiserv in an all-stock transaction. The transaction
will position the combined entity as a global leader in the
payments and fintech industry. The press release is available in
the “Investor Relations” section of www.firstdata.com.
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) Reported constant currency 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 and (2) is adjusted to retrospectively apply the New
Reporting Standards to the prior year period.
(b) Organic constant currency 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 in the
prior year period; (3) includes the results of significant
acquisitions in the prior year period; and (4) is adjusted to
retrospectively apply the New Reporting Standards to the prior year
period.
(c) See Form 8-K filed on April 16, 2018, for
full description of the New Reporting Standards and their impact on
2017 results.
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, adjusted EPS, and growth rates for these metrics
compared to prior periods. 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.
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. These measures
should only be used to evaluate the Company's results of operations
in conjunction with the corresponding GAAP measures. Additional
information about non-GAAP financial measures, including
reconciliation to the most directly comparable GAAP measure of all
non-GAAP measures can be found in the tables included in this press
release.
Forward-Looking Statements
The preliminary financial results for the fourth quarter and
full year 2018 represent the most current information available to
management and reflect estimates and assumptions. The company’s
actual results may differ materially from these preliminary results
due to the completion of the company’s financial closing
procedures, final adjustments and other developments that may arise
between the date of this press release and the time that financial
results for the fourth quarter and full year 2018 are finalized.
The foregoing preliminary financial results have not been compiled
or examined by our independent registered public accounting firm
nor have our independent registered public accounting firm
performed any procedures with respect to this information or
expressed any opinion or any form of assurance of such information.
These preliminary financial results should not be viewed as a
substitute for full financial statements prepared in accordance
with U.S. GAAP or as a measure of performance. In addition, these
preliminary financial results are not necessarily indicative of the
results to be achieved for any future period.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding anticipated internal revenue
growth, adjusted earnings per share and adjusted earnings per share
growth.
Certain of the matters discussed in this communication 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 strategy, plans, projections or intentions. Examples of
forward-looking statements include, but are not limited to, all
statements made relating to revenue, earnings before net interest
expense, income taxes, depreciation and amortization, 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. In addition to factors previously
disclosed in First Data’s and Fiserv’s reports filed with the
Securities and Exchange Commission (“SEC”) and those identified
elsewhere in this communication, the following factors, among
others, could cause actual results to differ materially from
forward-looking statements or historical performance: the
occurrence of any event, change or other circumstances that could
give rise to the right of one or both of First Data and Fiserv to
terminate the definitive merger agreement between First Data and
Fiserv; the outcome of any legal proceedings that may be instituted
against First Data, Fiserv or their respective stockholders,
shareholders or directors; the ability to obtain regulatory
approvals and meet other closing conditions to the merger,
including the risk that regulatory approvals required for the
merger are not obtained or are obtained subject to conditions that
are not anticipated or that are material and adverse to First
Data’s or Fiserv’s business; a delay in closing the merger; the
ability to obtain approval by First Data stockholders and Fiserv
shareholders on the expected terms and schedule; difficulties and
delays in integrating the First Data and Fiserv businesses,
including with respect to implementing systems to prevent a
material security breach of any internal systems or to successfully
manage credit and fraud risks in business units; failing to fully
realizing anticipated cost savings and other anticipated benefits
of the merger; business disruptions from the proposed merger that
will harm First Data’s or Fiserv’s business, including current
plans and operations; potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the merger, including as it relates to First Data’s
or Fiserv’s ability to successfully renew existing client contracts
on favorable terms or at all and obtain new clients; certain
restrictions during the pendency of the merger that may impact
First Data’s or Fiserv’s ability to pursue certain business
opportunities or strategic transactions; the ability of First Data
or Fiserv to retain and hire key personnel; uncertainty as to the
long-term value of the common stock of Fiserv following the merger;
the continued availability of capital and financing following the
merger; the business, economic and political conditions in the
markets in which First Data and Fiserv operate; the impact of new
or changes in current laws, regulations, credit card association
rules or other industry standards, including privacy and
cybersecurity laws and regulations; and events beyond First Data’s
or Fiserv’s control, such as acts of terrorism.
Any forward-looking statements speak only as of the date of this
communication or as of the date they were made, and neither First
Data nor Fiserv undertakes any obligation to update forward-looking
statements. For a more detailed discussion of these factors, also
see the information under the captions “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in First Data’s and Fiserv’s most recent
reports on Form 10-K for the year ended December 31, 2017, and any
material updates to these factors contained in any of First Data’s
and Fiserv’s future filings.
As for the forward-looking statements that relate to future
financial results and other projections, actual results will be
different due to the inherent uncertainties of estimates, forecasts
and projections and may be better or worse than projected and such
differences could be material. Given these uncertainties, you
should not place any reliance on these forward-looking statements.
Annualized, pro forma, projected and estimated numbers are used for
illustrative purpose only, are not forecasts and may not reflect
actual results.
First
Data Corporation Reconciliation of Non-GAAP Financial
Measures (Unaudited) (in millions)
Three months ended December 31, Twelve months ended
December 31, Organic CC % Organic CC %
2018(a)
2017 % Change
Change(c)
2018(a)
2017 % Change
Change(c)
Consolidated Revenues $ 2,399 $ 3,150 (24 )% $ 9,498 $ 12,052 (21
)% Adjustments: Non wholly owned entities(b) (9 ) (15 ) (40 )% (23
) (64 ) (64 )% Reimbursable items (205 ) (1,019 ) (80
)% (818 ) (3,923 ) (79 )% Total Segment Revenues $
2,185 $ 2,116 3 % 6 % $ 8,657 $ 8,065 7
% 6 %
(a) All amounts shown for the three and
twelve months ended December 31, 2018, are preliminary and
unaudited
(b) 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.
(c) 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 in the prior year period; (3) includes the
results of significant acquisitions in the prior year period; and
(4) is adjusted to retrospectively apply New Reporting Standards to
the prior year period.
First Data
Corporation Reconciliation of Non-GAAP Financial
Measures (Unaudited) (in millions)
Three months ended December 31, Twelve months ended
December 31,
2018(a)
2017 % B/(W)(c)
2018(a)
2017 % B/(W)(c) Reported FDC segment revenue $
2,185 $ 2,116 3 % $ 8,657 $ 8,065 7 % New revenue standard
adjustments (ASC 606) — 31 — 103 FDC segment revenue (comparable
accounting) 2,185 2,147 2 % 8,657 8,168 6 % Currency impact 61 — 80
— FDC CC adjusted segment revenue 2,246 2,147 5 % 8,737 8,168 7 %
Acquisitions/Divestitures — (25 ) —
104 Organic CC FDC segment revenue growth(b) $ 2,246
$ 2,122 6 % $ 8,737 $ 8,272 6 %
(a) All amounts shown for the three and
twelve months ended December 31, 2018, are preliminary and
unaudited
(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 in the prior year period; (3) includes the
results of significant acquisitions in the prior year period; and
(4) is adjusted to retrospectively apply New Reporting Standards to
the prior year period.
(c) “B” means results in 2018 are better than
results in 2017 “(W)” means results are worse.
First Data
Corporation Reconciliation of Non-GAAP Financial
Measures (Unaudited) (in millions)
ADJUSTED NET INCOME RECONCILIATION Three months
ended December 31, Twelve months ended December 31,
2018(a)
2017 % Change
2018(a)
2017 % Change Net income attributable to First Data
Corporation $ 162 $ 948 (83 )% $ 1,005 $ 1,465 (31 )% Adjustments:
Stock-based compensation 56 62 (10 )% 248 245 1 % Loss on debt
extinguishment 150 8
NM
153 80
NM
Amortization of acquisition intangibles and deferred financing
costs(b) 101 108 (6 )% 413 403 2 % Other(c) 14 9 56 % (90 ) 127
NM
Discrete tax adjustment(d) — 12
NM
— 11
NM
Income tax on above items and discrete tax items(e)(f) (119
) (735 ) (84 )% (375 ) (911 ) (59 )% Adjusted
net income attributable to First Data Corporation $ 364 $
412 (12 )% $ 1,354 $ 1,420 (5 )% Net
income attributable to First Data per share: Basic $ 0.17 $ 1.03
(83 )% $ 1.08 $ 1.60 (33 )% Diluted $ 0.17 $ 1.00 (83 )% $ 1.05 $
1.56 (33 )% Adjusted net income per share: Basic $ 0.39 $
0.45 (13 )% $ 1.46 $ 1.55 (6 )% Diluted $ 0.38 $ 0.44 (13 )% $ 1.41
$ 1.51 (6 )% Weighted-average common shares used to compute
adjusted net income per share: Basic 933 919 2 % 929 916 1 %
Diluted 961 945 2 % 957 940 2 %
NM represents not meaningful
(a) All amounts shown for the three and
twelve months ended December 31, 2018, are preliminary and
unaudited
(b) 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.
(c) See "Other operating expense, net" and
"Other income (expense)" in our unaudited consolidated statements
of income in Part I of this form 10-Q.
(d) Prior to January 1, 2018, we excluded the
impact of all discrete tax items from Adjusted Net Income and
Diluted Adjusted Net Income per Share. We will no longer exclude
certain discrete items which were deemed to be recurring in nature.
We retrospectively adjusted the prior period results presented in
these unaudited consolidated financial statements.
(e) We exclude from Adjusted net income
certain discrete tax item, such as tax law changes, tax impact of
mergers and acquisitions, valuation allowance releases, and tax
reserves related to issues that arose before KKR acquired us within
a quarter.
(f) 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.
First Data Corporation Reconciliation of Non-GAAP
Financial Measures (Unaudited) (in millions)
Consolidated Revenue Growth to Total Segment Organic
Revenue Growth FY 2019 vs. FY 2018
Consolidated revenue (at reported rates)
~2.0 - 3.0%
Adjustments: +Non wholly owned entities +Reimbursable postage and
other +Currency Impact +Divestiture Impact Memo: Total organic
revenue growth (at constant currency)
~5.0 - 6.0%
Net Income Per Diluted Share to Adjusted Net Income Per
Diluted Share FY 2019 vs. FY 2018 Net income
attributable to FDC per diluted share
Negative Low Single
Digits(1) Adjustments (note: adjustments represent positive
balances) +Stock-based compensation +Amortization of acquisition
intangibles and deferred financing cost +Other(2) Adjusted net
income per diluted share
Low Double Digits
(1) Impacted by the non-recurrence of a
significant one-time tax benefit recorded in 2018.
(2) 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. Full year 2018 included a significant one-time tax
benefit which is not expected to recur in 2019.
IMPORTANT ADDITIONAL INFORMATION AND
WHERE TO FIND IT
This communication is being made in respect of the proposed
merger transaction between First Data and Fiserv. In connection
with the proposed merger, Fiserv will file with the SEC a
registration statement on Form S-4 that will include the joint
proxy and consent solicitation statement of First Data and Fiserv
and a prospectus of Fiserv, as well as other relevant documents
regarding the proposed transaction. A definitive joint
proxy/consent solicitation statement/prospectus will also be sent
to First Data stockholders and Fiserv shareholders. This
communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction. INVESTORS ARE URGED TO READ
THE REGISTRATION STATEMENT AND THE JOINT PROXY AND CONSENT
SOLICITATION STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT
BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the joint proxy and consent solicitation
statement/prospectus, as well as other filings containing
information about First Data and Fiserv, may be obtained at the
SEC’s Internet site (http://www.sec.gov). You will also be able to
obtain these documents, free of charge, from First Data by
accessing First Data’s website at investor.firstdata.com or from
Fiserv by accessing Fiserv’s website at investors.fiserv.com.
Copies of the joint proxy and consent solicitation
statement/prospectus can also be obtained, free of charge, by
directing a request to First Data Investor Relations at Investor
Relations, First Data, 5565 Glenridge Connector NE, Suite 2000,
Atlanta, GA 30342, by calling 212-266-3565, or by sending an e-mail
to peter.poillon@firstdata.com or to Fiserv Investor Relations at
Investor Relations, Fiserv, 255 Fiserv Drive Brookfield, WI 53045,
by calling 800-425-3478 or by sending an e-mail to
investor.relations@fiserv.com.
First Data and Fiserv and certain of their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies from First Data stockholders and Fiserv
shareholders in respect of the transaction described in the joint
proxy and consent solicitation statement/prospectus. Information
regarding First Data’s directors and executive officers is
contained in First Data’s Annual Report on Form 10-K for the year
ended December 31, 2017, and its Proxy Statement on Schedule 14A,
dated March 29, 2018, which are filed with the SEC. Information
regarding Fiserv’s directors and executive officers is contained in
Fiserv’s Annual Report on Form 10-K for the year ended December 31,
2017, and its Proxy Statement on Schedule 14A, dated April 10,
2018, which are filed with the SEC. Additional information
regarding the interests of those participants and other persons who
may be deemed participants in the transaction may be obtained by
reading the joint proxy and consent solicitation
statement/prospectus regarding the proposed merger when it becomes
available. Free copies of this document may be obtained as
described in the preceding paragraph.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190116005377/en/
Peter PoillonInvestor RelationsFirst
Data212-266-3565Peter.Poillon@firstdata.comAndrea
DuffyPublic RelationsFirst Data212-515-0174Andrea.Duffy@firstdata.com
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