TMCnet News
First Data Reports Second Quarter 2017 Financial ResultsFirst Data Corporation (NYSE: FDC), a global leader in commerce-enabling technology, today reported financial results for the second quarter ended June 30, 2017. Consolidated revenue for the second quarter was $3.0 billion, up 3% versus the prior year period, or up 4% excluding currency impacts. Total segment revenue was $1.8 billion for the quarter, up 3% versus the prior year period, or up 5% excluding the impacts from currency and the divestiture of the Australian ATM business that occurred at the end of the third quarter of 2016. Net income attributable to First Data for the second quarter of 2017 was $185 million, or $0.20 per diluted share. This represents a 22% increase from the second quarter of 2016 net income of $152 million, or an 18% increase in net income per diluted share from $0.17 in the prior year period. Adjusted net income, which modifies net income for items such as debt extinguishment charges, stock-based compensation, amortization of acquisition intangibles, restructuring costs and other items, was $378 million, or $0.40 per diluted share. This represents a 17% increase from the second quarter of 2016 adjusted net income of $323 million, or a 14% increase in adjusted net income per diluted share from $0.35 in the prior year period. The increase was primarily driven by improved operating results and lower interest expense. Total segment earnings before interest, taxes, depreciation, and amortization (total segment EBITDA) in the second quarter 2017 was $786 million, up 5% versus the prior year period, or up 7% excluding impacts from currency and the Australian ATM divestiture. Total reported segment EBITDA margin improved 100 basis points to 42.5% in the quarter. "The second quarter delivered record quarterly revenue and earnings as we continue to see good new business momentum and improved customer retention across our business segments," said First Data Chairman and CEO Frank Bisignano. "As we enter the latter half of 2017, we are focused on initiatives to continue the momentum across our global businesses, maintaining an appropriate balance between investing and managing costs, while also driving improved cash flow. We reiterate our full-year 2017 and medium-term financial guidance," Bisignano added. Segment Results Global Business Solutions (GBS) Second quarter 2017 GBS segment revenue was $1.1 billion, up 3% versus the prior year period, or up 5% excluding the impacts from currency and the Australian ATM divestiture. Within geographic regions, North America revenue of $826 million was up 1% versus the prior year period as growth in non-JV revenue was partly offset by an anticipated decline in JV revenue. EMEA revenue was $140 million, flat versus the prior year, or up 6% excluding currency impacts, primarily driven by growth in the United Kingdom and Germany. Latin America revenue was $64 million, up 56%, or up 60% excluding currency impacts, driven by strong results in Brazil and Argentina. APAC revenue was $36 million, down 12%, or up 13% excluding impacts from currency and the Australian ATM divestiture, primarily driven by growth in India. Second quarter 2017 GBS segment expenses were $583 million, down 1% versus the prior year period, or up 1% excluding the impacts from currency and the Australian ATM divestiture. Second quarter 2017 GBS segment EBITDA was $483 million, up 8% versus the prior year period, or up 9% excluding impacts from currency and the Australian ATM divestiture. Segment EBITDA margin improved 210 basis points to 45.3% in the quarter. Global Financial Solutions (GFS) Second quarter 2017 GFS segment revenue was $402 million, up 2% versus the prior year period, or up 4% excluding currency impacts. Within geographic regions, North America revenue of $233 million was down 1%, as growth in processing revenue was more than offset by a decline in card personalization revenue. North America GFS card accounts on file grew 6% year over year. EMEA revenue was $110 million, up 2%, or up 10% excluding currency impacts, primarily driven by internal growth and new business primarily in the United Kingdom. Latin America revenue was $34 million, up 10%, or up 14% excluding currency impacts, driven by growth in Argentina and Colombia. APAC revenue was $25 million, up 25%, or up 24% excluding currency impacts, primarily driven by growth in Australia. Second quarter 2017 GFS segment expenses were $235 million, flat versus the prior year period, or up 2% excluding currency impacts. Second quarter 2017 GFS segment EBITDA was $167 million, up 4% versus the prior year period, or up 7% excluding currency impacts. Segment EBITDA margin improved 100 basis points to 41.5% in the quarter. Network & Security Solutions (NSS) Second quarter 2017 NSS segment revenue was $381 million, up 4% versus the prior year period. Stored Value revenue grew low-double digits, Security and Fraud revenue grew low single digits, and EFT revenue was flat. Second quarter 2017 NSS segment expenses were $201 million, up 1% versus the prior year period. Second quarter 2017 NSS segment EBITDA was $180 million, up 8% versus the prior year period. Segment EBITDA margin improved 180 basis points to 47.2% in the quarter. Cash Flow In the second quarter 2017, cash flow from operations was $580 million, up $58 million compared to $522 million in the prior year period. Free cash flow, which the Company defines as cash flow from operations less capital expenditures, distributions to minority interests and other, was $448 million in the current quarter, up $140 million compared to $308 million in the prior year period, primarily driven by lower cash interest payments and improved operating results. Capital Structure Total borrowings at June 30, 2017 were reduced to $18.3 billion, from $18.5 billion at December 31, 2016. Net debt at June 30, 2017 declined $304 million to $17.9 billion, from $18.2 billion at December 31, 2016. As previously disclosed, in April 2017, the Company closed on a new term loan totaling $4.2 billion with an interest rate of LIBOR plus 250 basis points maturing in April 2024. The proceeds of the term loan were used to redeem a $4.2 billion term loan with an interest rate of LIBOR plus 300 basis points maturing in March 2021. In June 2017, the Company closed on a new term loan totaling $3.8 billion with an interest rate of LIBOR plus 225 basis points maturing in July 2022. The proceeds of the term loan were used to redeem $3.8 billion of U.S. and euro-denominated term loans with interest rates ranging from LIBOR plus 300 basis points to LIBOR plus 325 basis points. On June 28, 2017, the Company entered into an amendment to its Receivable Financing Agreement. The amendment increased the borrowing capacity of the facility from $240 million to $600 million, reduced the interest rate from LIBOR plus 200 basis points to LIBOR plus 150 basis points, and extended the termination date from January 2019 to June 2020. The aggregate annualized cash interest savings derived from the above transactions is approximately $50 million. CardConnect Acquisition As previously disclosed, on July 6, 2017, the Company announced the successful completion of First Data's tender offer to purchase the outstanding shares of CardConnect Corp. common stock. CardConnect's results will be consolidated in the results of First Data's GBS business as of July 6, 2017. Divestiture On July 25, 2017, First Data entered into an agreement to divest all of its businesses in the Baltics (Lithuania, Latvia and Estonia) for €73 million (approximately $85 million). The deal is expected to close in the third quarter of 2017. The businesses were reported within the GFS segment. Innovation First Data continues to invest in innovation to differentiate itself as a leader in commerce-enabling solutions. Below are examples of innovative solutions that the company introduced during the second quarter:
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, total segment EBITDA margin, 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, total segment EBITDA margin, 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 additional insight on performance. Adjusted net income excludes amortization of acquisition-related intangibles, stock-based compensation, restructuring costs and other items affecting comparability and, therefore, provides a more complete understanding 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 revenue measures 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 revenue growth is a key indication of how First Data is progressing from period to period and the non-GAAP constant currency financial measure is useful to investors, lenders and other creditors because such information enables them to measure the impact of currency fluctuations on the company's revenue from period to period. Investor Conference Call The company will host a conference call and webcast on Monday, August 7, 2017, at 8 a.m. ET to review the second 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 also be webcast on the "Investor Relations" section of the First Data website at investor.firstdata.com along with a slide presentation to accompany the call. A replay of the call will be available through September 7, 2017, at +1 (877) 344-7529 (U.S.) or +1 (412) 317-0088 (outside the U.S.); passcode 10109727 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. About First Data First Data Corporation (NYSE: FDC) is a global leader in commerce-enabling technology, serving approximately six million business locations and 4,000 financial institutions in more than 100 countries around the world. The company's 24,000 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 2,800 transactions per second and $2.2 trillion per year.
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 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/20170807005428/en/ |