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First Data Reports Second Quarter 2014 Financial Results
[July 31, 2014]

First Data Reports Second Quarter 2014 Financial Results


(ENP Newswire Via Acquire Media NewsEdge) ENP Newswire - 31 July 2014 Release date- 30072014 - ATLANTA - First Data Corporation today reported record financial results for the second quarter ended June 30, 2014.

Consolidated revenue for the second quarter was $2.8 billion, a new record, up $128 million, or 5%, compared to a year ago. The strong performance in the quarter was driven, in part, by a $55 million increase in reimbursable line items and an increase in merchant and card services revenue. Adjusted revenue, which excludes certain items including debit network fees, was up 4% year over year to $1.8 billion, which also constituted a new record. The quarter also saw the announcement of a historic private placement of $3.5 billion to transform the company's capital structure.



For the second quarter, the net loss attributable to First Data was $35 million, compared to a loss of $189 million a year ago, representing an 82% improvement. This improvement was largely driven by a $112 million increase in operating profit year over year. The quarter was also favorably impacted by an $80 million after-tax gain on the sale of Electronic Funds Source, LLC, a business in which First Data had a minority interest. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $669 million, up $36 million, or 6%, compared to $633 million in the second quarter of 2013 on rising revenue. EBITDA was negatively impacted by $20 million from several items in the International segment. EBITDA margin for the quarter was 38%, up 100 basis points versus prior year.

For the quarter, the company generated $427 million in cash flow from operations after $264 million in cash interest payments. The company finished the quarter with $1.3 billion in unrestricted liquidity.


'The extraordinary work that our team has done to begin to transform First Data over the past year is showing strong results, though we are all clear-eyed about the hard work, and continued transformation, that lies ahead for our company,' said Frank Bisignano, Chairman and CEO of First Data. 'The company's year of transformation was validated, and our strategy for the future was endorsed, by the $3.5 billion in new equity we received from investors who share our vision for helping our clients - thousands of financial institutions and millions of merchants around the world - grow their business,' Bisignano added.

Segment Results Merchant Solutions segment revenue for the second quarter was $945 million, up $17 million, compared to $928 million in the same quarter of 2013. Merchant acquiring revenue was up 3% on higher volumes and network incentives, offset by lower yield. Transaction growth was 4%, and credit mix was 71%. The average ticket was $76.89, flat compared to a year ago. Product revenue was down 1% due to the continued decline in check processing, offset by growth in prepaid revenue. Segment EBITDA was $456 million, up 6% compared to $429 million in the same quarter of 2013. Improvements in revenue and cost reductions in core operations drove the EBITDA improvement. EBITDA margin for the second quarter was 48%. During the quarter, Merchant Solutions expanded its distribution effectiveness by adding 17 bank referral agreements, 12 new independent sales organizations, and two revenue sharing alliances.

Financial Services segment revenue for the second quarter was $357 million, up 6% compared to the same quarter of 2013 on new business and volume growth. Average active card accounts on file were up 15% compared to the prior year, primarily driven by new card portfolios and organic growth. Debit transactions were up 4% year over year. Segment EBITDA was $183 million, up $32 million or 21%, compared to $151 million in the same quarter of 2013 as a result of cost reductions and revenue growth. EBITDA margin for the second quarter improved to 51%. During the quarter Financial Services renewed more than 225 contracts with financial institutions.

International segment revenue for the second quarter was $448 million, up $23 million, or 5%, compared to $425 million a year ago. On a constant currency basis, segment revenue was up $27 million, or 6%. Merchant acquiring revenue grew 7% on higher volumes while issuing revenue grew 6% on organic growth and new card portfolios. Segment EBITDA was $111 million, down $4 million, or 4%, compared to the same quarter of 2013. Expenses in the quarter were negatively impacted by $20 million for an uncollectable settlement receivable, a litigation settlement and a provision for a merchant-related credit loss. EBITDA margin for the second quarter was 25%.

Recent Events Completed $3.5 billion private placement On July 11, First Data Holdings Inc., the direct parent company of First Data, completed the issuance of approximately $3.5 billion of its common equity in a private placement. The net proceeds from the private placement, along with an additional $350 million of 2018 Term Loans, were used to strengthen the company's balance sheet through repaying approximately $3.4 billion of debt, allowing the company to focus additional capital on accelerating its transformation to a solutions and innovation company that helps First Data clients grow their businesses. The $3.5 billion comprising the private placement includes $1.5 billion from existing investors and $2 billion from new investors, including a diverse group of pension funds, mutual funds, asset managers and wealthy individuals.

Additionally, in July, First Data repriced approximately $5.7 billion of 2018 Term Loans, reducing the interest rate by 50 basis points and saving over $25 million in annual interest expense. The new investment, combined with the refinancing and other actions by the company, results in annual interest savings of nearly $440 million ($228 million in cash interest savings) through the parent company level financial statements.

Introduced two new solutions for SMBs During the quarter First Data introduced two new solutions for small to medium businesses (SMB), PerkaTM and InsighticsSM. The PerkaTM solution is a digital loyalty marketing platform, an alternative to traditional paper and plastic card-based incentive programs. With PerkaTM, virtually any merchant can customize and launch a mobile loyalty program that works on all cell phones, creating customer loyalty and driving growth.

InsighticsSM is innovative cloud-based software that unlocks the power of big data behind payment transactions to give SMB merchants the ability to monitor key business metrics affecting their business, better understand customers to engage effectively, and derive more value from marketing and loyalty programs to grow revenue.

Non-GAAP Measures In certain circumstances, results have been presented that are non-GAAP (generally accepted accounting principles) measures and should be viewed in addition to, and not in lieu of, the company's reported results. Reconciliations to comparable GAAP measures are available in the accompanying schedules and in the 'Investor Relations' section of the company's website at investor.firstdata.com.

Investor Conference Call The company will host a conference call and webcast on Wednesday, July 30, 2014, at 10:00 a.m. EDT to review the second quarter 2014 financial results.

To listen to the call, dial 800-708-4540 (U.S.) or 847-619-6397 (outside the U.S.); passcode 37638896,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 and a slide presentation to accompany the call will also be available on the website.

A replay of the call will be available through August 13, 2014, at 888-843-7419 (U.S.) or 630-652-3042 (outside the U.S.); passcode 37638896 and via webcast at investor.firstdata.com.

Please note: Other than the replay, First Data has not authorized, and disclaims responsibility for any recording, replay or distribution of any transcription of this call.

Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive client revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction. More information about the company is available on FirstData.com as well as on Twitter, LinkedIn, Facebook and YouTube.

Contact: Nancy Etheridge Vice President, Communications First Data 404-890-2300 [email protected] Rich Wilhelm Director, Investor Relations First Data 404-890-3000 [email protected] (c) 2014 Electronic News Publishing -

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