Exhibit 99.1 | ||
Press Release |
For more information contact: | |
Media Relations: Britt Zarling Vice President, Corporate Communications Fiserv, Inc. 678-375-1595 britt.zarling@fiserv.com | Investor Relations: Paul Seamon Vice President, Investor Relations Fiserv, Inc. 262-879-5727 paul.seamon@fiserv.com |
For Immediate Release |
Press Release |
• | Adjusted revenue increased 2 percent in the second quarter to $1.32 billion and 4 percent in the first six months of 2017 to $2.64 billion, compared to the prior year periods. |
• | Internal revenue growth for the company was 3 percent in the second quarter, with 3 percent growth in both the Payments segment and Financial segment. |
• | Internal revenue growth for the company was 4 percent in the first six months of 2017, with 4 percent growth in the Payments segment and 3 percent growth in the Financial segment. |
• | Adjusted earnings per share increased 10 percent in the second quarter to $1.19 and increased 14 percent in the first six months of 2017 to $2.43 compared to the prior year periods. |
• | Adjusted operating margin increased 10 basis points to 32.0 percent in the second quarter and expanded 40 basis points to 32.3 percent in the first six months of 2017 compared to the prior year periods. |
• | Free cash flow increased 26 percent to $555 million in the first six months of 2017 compared to the prior year period. A cash distribution from StoneRiver of $31 million related to the sale of a business has been excluded from the company's free cash flow results for the first six months of 2017. |
• | The company repurchased 2.5 million shares of common stock for $295 million in the second quarter and 5.9 million shares of common stock for $684 million in the first six months of 2017. As of June 30, 2017, the company had 14.6 million remaining shares authorized for repurchase. |
• | In June 2017, the company made a recommended cash offer to acquire Monitise plc for approximately £70 million ($89 million). The transaction is subject to certain conditions including Monitise shareholder approval (full details of the offer can be found on our website, Fiserv.com). |
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Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Processing and services | $ | 1,186 | $ | 1,159 | $ | 2,364 | $ | 2,281 | |||||||
Product | 200 | 204 | 416 | 413 | |||||||||||
Total revenue | 1,386 | 1,363 | 2,780 | 2,694 | |||||||||||
Expenses | |||||||||||||||
Cost of processing and services | 573 | 547 | 1,143 | 1,100 | |||||||||||
Cost of product | 175 | 180 | 357 | 361 | |||||||||||
Selling, general and administrative | 276 | 274 | 553 | 532 | |||||||||||
Gain on sale of business | (10 | ) | — | (10 | ) | — | |||||||||
Total expenses | 1,014 | 1,001 | 2,043 | 1,993 | |||||||||||
Operating income | 372 | 362 | 737 | 701 | |||||||||||
Interest expense | (44 | ) | (40 | ) | (86 | ) | (80 | ) | |||||||
Interest and investment income (loss) - net | 2 | — | 2 | (7 | ) | ||||||||||
Income before income taxes and income from investment in unconsolidated affiliate | 330 | 322 | 653 | 614 | |||||||||||
Income tax provision | (109 | ) | (110 | ) | (211 | ) | (259 | ) | |||||||
Income from investment in unconsolidated affiliate | — | — | 26 | 146 | |||||||||||
Net income | $ | 221 | $ | 212 | $ | 468 | $ | 501 | |||||||
GAAP earnings per share - diluted | $ | 1.02 | $ | 0.94 | $ | 2.15 | $ | 2.21 | |||||||
Diluted shares used in computing earnings per share | 216.3 | 225.6 | 217.8 | 226.5 | |||||||||||
Earnings per share is calculated using actual, unrounded amounts. |
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Fiserv, Inc. | |||||||||||||||
Reconciliation of GAAP to | |||||||||||||||
Adjusted Net Income and Adjusted Earnings Per Share | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP net income | $ | 221 | $ | 212 | $ | 468 | $ | 501 | |||||||
Adjustments: | |||||||||||||||
Merger, integration and other costs 1 | 15 | 7 | 29 | 23 | |||||||||||
Severance costs | 7 | 4 | 19 | 8 | |||||||||||
Amortization of acquisition-related intangible assets | 40 | 40 | 78 | 80 | |||||||||||
Tax impact of adjustments 2 | (21 | ) | (18 | ) | (42 | ) | (39 | ) | |||||||
StoneRiver and other investment activity 3 | — | — | (26 | ) | (139 | ) | |||||||||
Tax impact of StoneRiver and other investment activity 2 | — | — | 9 | 52 | |||||||||||
Gain on sale of business 4 | (10 | ) | — | (10 | ) | — | |||||||||
Tax impact of gain on sale of business 2 | 5 | — | 5 | — | |||||||||||
Adjusted net income | $ | 257 | $ | 245 | $ | 530 | $ | 486 | |||||||
GAAP earnings per share | $ | 1.02 | $ | 0.94 | $ | 2.15 | $ | 2.21 | |||||||
Adjustments - net of income taxes: | |||||||||||||||
Merger, integration and other costs 1 | 0.04 | 0.02 | 0.08 | 0.06 | |||||||||||
Severance costs | 0.02 | 0.01 | 0.06 | 0.02 | |||||||||||
Amortization of acquisition-related intangible assets | 0.12 | 0.11 | 0.24 | 0.23 | |||||||||||
StoneRiver and other investment activity 3 | — | — | (0.08 | ) | (0.39 | ) | |||||||||
Gain on sale of business 4 | (0.02 | ) | — | (0.02 | ) | — | |||||||||
Adjusted earnings per share | $ | 1.19 | $ | 1.08 | $ | 2.43 | $ | 2.14 |
1 | Merger, integration and other costs include acquisition and related integration costs of $13 million in 2017 and $16 million in 2016, and certain costs associated with the achievement of the company's operational effectiveness objectives of $16 million in 2017 and $7 million in 2016, including expenses related to data center consolidation activities. |
2 | The tax impact of adjustments is calculated using tax rates of 33 percent and 35 percent in 2017 and 2016, respectively, which approximates the company's annual effective tax rate for the respective years, exclusive of the actual tax impacts associated with StoneRiver transactions and the gain on sale of business. |
3 | Represents the company's share of net gains on the disposition of a business and a business interest at StoneRiver, as well as a non-cash write-off of a $7 million investment in 2016. |
4 | Represents the gain on the sale of the company's Australian item processing business. |
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Fiserv, Inc. | |||||||||||||||
Financial Results by Segment | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total Company | |||||||||||||||
Revenue | $ | 1,386 | $ | 1,363 | $ | 2,780 | $ | 2,694 | |||||||
Output Solutions postage reimbursements | (64 | ) | (71 | ) | (139 | ) | (149 | ) | |||||||
Deferred revenue purchase accounting adjustments | 1 | 2 | 2 | 2 | |||||||||||
Adjusted revenue | $ | 1,323 | $ | 1,294 | $ | 2,643 | $ | 2,547 | |||||||
Operating income | $ | 372 | $ | 362 | $ | 737 | $ | 701 | |||||||
Merger, integration and other costs | 15 | 7 | 29 | 23 | |||||||||||
Severance costs | 7 | 4 | 19 | 8 | |||||||||||
Amortization of acquisition-related intangible assets | 40 | 40 | 78 | 80 | |||||||||||
Gain on sale of business | (10 | ) | — | (10 | ) | — | |||||||||
Adjusted operating income | $ | 424 | $ | 413 | $ | 853 | $ | 812 | |||||||
Operating margin | 26.8 | % | 26.6 | % | 26.5 | % | 26.0 | % | |||||||
Adjusted operating margin | 32.0 | % | 31.9 | % | 32.3 | % | 31.9 | % | |||||||
Payments and Industry Products ("Payments") | |||||||||||||||
Revenue | $ | 779 | $ | 763 | $ | 1,573 | $ | 1,512 | |||||||
Output Solutions postage reimbursements | (64 | ) | (71 | ) | (139 | ) | (149 | ) | |||||||
Deferred revenue purchase accounting adjustments | 1 | 1 | 2 | 1 | |||||||||||
Adjusted revenue | $ | 716 | $ | 693 | $ | 1,436 | $ | 1,364 | |||||||
Operating income | $ | 238 | $ | 237 | $ | 497 | $ | 462 | |||||||
Merger, integration and other costs | 1 | 1 | 2 | 1 | |||||||||||
Adjusted operating income | $ | 239 | $ | 238 | $ | 499 | $ | 463 | |||||||
Operating margin | 30.5 | % | 31.1 | % | 31.6 | % | 30.5 | % | |||||||
Adjusted operating margin | 33.3 | % | 34.3 | % | 34.7 | % | 33.9 | % | |||||||
Financial Institution Services ("Financial") | |||||||||||||||
Revenue | $ | 623 | $ | 612 | $ | 1,243 | $ | 1,211 | |||||||
Deferred revenue purchase accounting adjustments | — | 1 | — | 1 | |||||||||||
Adjusted revenue | $ | 623 | $ | 613 | $ | 1,243 | $ | 1,212 | |||||||
Operating income | $ | 214 | $ | 202 | $ | 410 | $ | 397 | |||||||
Operating margin | 34.3 | % | 33.0 | % | 33.0 | % | 32.8 | % | |||||||
Adjusted operating margin | 34.3 | % | 33.0 | % | 33.0 | % | 32.8 | % | |||||||
Corporate and Other | |||||||||||||||
Revenue | $ | (16 | ) | $ | (12 | ) | $ | (36 | ) | $ | (29 | ) | |||
Operating loss | $ | (80 | ) | $ | (77 | ) | $ | (170 | ) | $ | (158 | ) | |||
Merger, integration and other costs | 14 | 6 | 27 | 22 | |||||||||||
Severance costs | 7 | 4 | 19 | 8 | |||||||||||
Amortization of acquisition-related intangible assets | 40 | 40 | 78 | 80 | |||||||||||
Gain on sale of business | (10 | ) | — | (10 | ) | — | |||||||||
Adjusted operating loss | $ | (29 | ) | $ | (27 | ) | $ | (56 | ) | $ | (48 | ) | |||
See page 3 for disclosures related to the use of non-GAAP financial measures. | |||||||||||||||
Operating margin percentages are calculated using actual, unrounded amounts. |
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Fiserv, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In millions, unaudited) | |||||||
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 468 | $ | 501 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 137 | 122 | |||||
Amortization of acquisition-related intangible assets | 78 | 80 | |||||
Share-based compensation | 33 | 39 | |||||
Excess tax benefits from share-based awards | — | (37 | ) | ||||
Deferred income taxes | — | 5 | |||||
Income from investment in unconsolidated affiliate | (26 | ) | (146 | ) | |||
Dividends from unconsolidated affiliate | 31 | 140 | |||||
Non-cash impairment charges | 10 | 17 | |||||
Gain on sale of business | (10 | ) | — | ||||
Other operating activities | (1 | ) | (2 | ) | |||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||
Trade accounts receivable | 59 | 3 | |||||
Prepaid expenses and other assets | (21 | ) | (38 | ) | |||
Accounts payable and other liabilities | (47 | ) | 37 | ||||
Deferred revenue | (20 | ) | (34 | ) | |||
Net cash provided by operating activities | 691 | 687 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (136 | ) | (145 | ) | |||
Payments for acquisitions of businesses, net of cash acquired | (78 | ) | (265 | ) | |||
Proceeds from sale of business | 19 | — | |||||
Other investing activities | 1 | 2 | |||||
Net cash used in investing activities | (194 | ) | (408 | ) | |||
Cash flows from financing activities | |||||||
Debt proceeds | 1,173 | 1,249 | |||||
Debt repayments | (1,005 | ) | (991 | ) | |||
Proceeds from issuance of treasury stock | 47 | 47 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (713 | ) | (633 | ) | |||
Excess tax benefits from share-based awards | — | 37 | |||||
Net cash used in financing activities | (498 | ) | (291 | ) | |||
Net change in cash and cash equivalents | (1 | ) | (12 | ) | |||
Cash and cash equivalents, beginning balance | 300 | 275 | |||||
Cash and cash equivalents, ending balance | $ | 299 | $ | 263 |
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Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 299 | $ | 300 | |||
Trade accounts receivable – net | 845 | 902 | |||||
Prepaid expenses and other current assets | 488 | 526 | |||||
Total current assets | 1,632 | 1,728 | |||||
Property and equipment – net | 396 | 405 | |||||
Intangible assets – net | 1,807 | 1,833 | |||||
Goodwill | 5,435 | 5,373 | |||||
Other long-term assets | 415 | 404 | |||||
Total assets | $ | 9,685 | $ | 9,743 | |||
Liabilities and Shareholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 1,148 | $ | 1,242 | |||
Current maturities of long-term debt | 95 | 95 | |||||
Deferred revenue | 464 | 483 | |||||
Total current liabilities | 1,707 | 1,820 | |||||
Long-term debt | 4,646 | 4,467 | |||||
Deferred income taxes | 773 | 762 | |||||
Other long-term liabilities | 168 | 153 | |||||
Total liabilities | 7,294 | 7,202 | |||||
Shareholders' equity | 2,391 | 2,541 | |||||
Total liabilities and shareholders' equity | $ | 9,685 | $ | 9,743 |
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Internal Revenue Growth 1 | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | ||
Payments Segment | 3% | 4% | ||
Financial Segment | 3% | 3% | ||
Total Company | 3% | 4% |
1 | Internal revenue growth is measured as the increase in adjusted revenue (see page 8) for the current period excluding acquired revenue and revenue attributable to dispositions, divided by adjusted revenue from the prior year period excluding revenue attributable to dispositions. In the second quarter of 2017, acquired revenue was $2 million (all in the Financial segment), and revenue in the comparable prior year period attributable to dispositions was $8 million (all in the Financial segment). During the first six months of 2017, acquired revenue was $18 million ($14 million in the Payments segment and $4 million in the Financial segment), and revenue in the comparable prior year period attributable to dispositions was $12 million (all in the Financial segment). |
Free Cash Flow | Six Months Ended June 30, | |||||||
2017 | 2016 | |||||||
Net cash provided by operating activities | $ | 691 | $ | 687 | ||||
Capital expenditures | (136 | ) | (145 | ) | ||||
Adjustments: | ||||||||
Severance, merger and integration payments | 42 | 20 | ||||||
StoneRiver cash distributions | (31 | ) | (140 | ) | ||||
Other | (3 | ) | 4 | |||||
Tax payments on adjustments | (8 | ) | 16 | |||||
Free cash flow | $ | 555 | $ | 442 |
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