Exhibit 99.1 | ||
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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 |
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• | Adjusted revenue increased 7 percent to $1.44 billion in the fourth quarter of 2017 and 4 percent to $5.42 billion for the full year compared to the prior year periods. |
• | Internal revenue growth for the company was 6 percent in the fourth quarter of 2017, with 7 percent growth in the Payments segment and 5 percent growth in the Financial segment. |
• | Internal revenue growth for the company was 4 percent for the full year, with 5 percent growth in the Payments segment and 3 percent growth in the Financial segment. |
• | Adjusted earnings per share increased 22 percent to $1.41 in the fourth quarter of 2017 and 16 percent to $5.12 for the full year compared to the prior year periods. |
• | Adjusted operating margin increased 190 basis points to 34.0 percent in the fourth quarter of 2017 and 60 basis points to 32.8 percent for the full year compared to the prior year periods. |
• | Free cash flow increased 13 percent to $1.22 billion for the full year compared to the prior year. Cash distributions from StoneRiver of $45 million were not included in the company's free cash flow results in 2017. |
• | The company repurchased 9.7 million shares of common stock for $1.17 billion in 2017, which included 1.5 million shares of common stock for $189 million in the fourth quarter. As of December 31, 2017, the company had 10.7 million remaining shares authorized for repurchase. |
• | In December 2017, we executed a definitive agreement to sell the retail voucher business acquired as part of the Monitise acquisition for £37 million. The sale was completed on January 10, 2018. |
• | In early 2018, we were named one of FORTUNE Magazine World's Most Admired Companies® for the fifth consecutive year. The company received high category marks in innovation, use of corporate assets and long-term investment value. |
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Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Processing and services | $ | 1,270 | $ | 1,184 | $ | 4,833 | $ | 4,625 | |||||||
Product | 246 | 247 | 863 | 880 | |||||||||||
Total revenue | 1,516 | 1,431 | 5,696 | 5,505 | |||||||||||
Expenses | |||||||||||||||
Cost of processing and services | 576 | 561 | 2,291 | 2,212 | |||||||||||
Cost of product | 202 | 200 | 733 | 747 | |||||||||||
Selling, general and administrative | 313 | 295 | 1,150 | 1,101 | |||||||||||
Gain on sale of business | — | — | (10 | ) | — | ||||||||||
Total expenses | 1,091 | 1,056 | 4,164 | 4,060 | |||||||||||
Operating income | 425 | 375 | 1,532 | 1,445 | |||||||||||
Interest expense | (45 | ) | (42 | ) | (176 | ) | (163 | ) | |||||||
Interest and investment income (loss) - net | — | — | 2 | (7 | ) | ||||||||||
Income from continuing operations before income taxes and income from investment in unconsolidated affiliate | 380 | 333 | 1,358 | 1,275 | |||||||||||
Income tax (provision) benefit | 151 | (119 | ) | (158 | ) | (492 | ) | ||||||||
Income from investment in unconsolidated affiliate | 1 | 1 | 32 | 147 | |||||||||||
Income from continuing operations | 532 | 215 | 1,232 | 930 | |||||||||||
Income from discontinued operations | 14 | — | 14 | — | |||||||||||
Net income | $ | 546 | $ | 215 | $ | 1,246 | $ | 930 | |||||||
GAAP earnings per share - diluted | |||||||||||||||
Continuing operations | $ | 2.50 | $ | 0.98 | $ | 5.71 | $ | 4.15 | |||||||
Discontinued operations | 0.07 | — | 0.07 | — | |||||||||||
Total | $ | 2.57 | $ | 0.98 | $ | 5.78 | $ | 4.15 | |||||||
Diluted shares used in computing earnings per share | 212.5 | 219.9 | 215.6 | 223.9 | |||||||||||
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 December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP income from continuing operations | $ | 532 | $ | 215 | $ | 1,232 | $ | 930 | |||||||
Adjustments: | |||||||||||||||
Merger, integration and other costs 1 | 22 | 17 | 74 | 58 | |||||||||||
Severance costs | 2 | 4 | 24 | 15 | |||||||||||
Amortization of acquisition-related intangible assets | 42 | 39 | 159 | 158 | |||||||||||
Tax impact of adjustments 2 | (22 | ) | (21 | ) | (85 | ) | (81 | ) | |||||||
StoneRiver and other investment activity 3 | (1 | ) | — | (32 | ) | (139 | ) | ||||||||
Tax impact of StoneRiver and other investment activity 2 | — | — | 11 | 52 | |||||||||||
Gain on sale of business 4 | — | — | (10 | ) | — | ||||||||||
Tax impact of gain on sale of business 2 | — | — | 5 | — | |||||||||||
Tax benefit 5 | (275 | ) | — | (275 | ) | — | |||||||||
Adjusted net income | $ | 300 | $ | 254 | $ | 1,103 | $ | 993 | |||||||
GAAP earnings per share from continuing operations | $ | 2.50 | $ | 0.98 | $ | 5.71 | $ | 4.15 | |||||||
Adjustments - net of income taxes: | |||||||||||||||
Merger, integration and other costs 1 | 0.07 | 0.05 | 0.23 | 0.17 | |||||||||||
Severance costs | — | 0.01 | 0.07 | 0.04 | |||||||||||
Amortization of acquisition-related intangible assets | 0.13 | 0.12 | 0.49 | 0.46 | |||||||||||
StoneRiver and other investment activity 3 | — | — | (0.09 | ) | (0.39 | ) | |||||||||
Gain on sale of business 4 | — | — | (0.02 | ) | — | ||||||||||
Tax benefit 5 | (1.30 | ) | — | (1.28 | ) | — | |||||||||
Adjusted earnings per share | $ | 1.41 | $ | 1.16 | $ | 5.12 | $ | 4.43 |
1 | Merger, integration and other costs include acquisition and related integration costs of $47 million in 2017 and $36 million in 2016, and certain costs associated with the achievement of the company's operational effectiveness objectives of $27 million in 2017 and $22 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 discrete income tax benefits associated with The Tax Cuts and Jobs Act and 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. |
5 | Represents discrete income tax benefits associated with The Tax Cuts and Jobs Act enacted in December 2017. |
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Fiserv, Inc. | |||||||||||||||
Financial Results by Segment | |||||||||||||||
(In millions, unaudited) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total Company | |||||||||||||||
Revenue | $ | 1,516 | $ | 1,431 | $ | 5,696 | $ | 5,505 | |||||||
Output Solutions postage reimbursements | (77 | ) | (79 | ) | (281 | ) | (300 | ) | |||||||
Deferred revenue purchase accounting adjustments | 4 | 2 | 8 | 6 | |||||||||||
Adjusted revenue | $ | 1,443 | $ | 1,354 | $ | 5,423 | $ | 5,211 | |||||||
Operating income | $ | 425 | $ | 375 | $ | 1,532 | $ | 1,445 | |||||||
Merger, integration and other costs | 22 | 17 | 74 | 58 | |||||||||||
Severance costs | 2 | 4 | 24 | 15 | |||||||||||
Amortization of acquisition-related intangible assets | 42 | 39 | 159 | 158 | |||||||||||
Gain on sale of business | — | — | (10 | ) | — | ||||||||||
Adjusted operating income | $ | 491 | $ | 435 | $ | 1,779 | $ | 1,676 | |||||||
Operating margin | 28.1 | % | 26.1 | % | 26.9 | % | 26.2 | % | |||||||
Adjusted operating margin | 34.0 | % | 32.1 | % | 32.8 | % | 32.2 | % | |||||||
Payments and Industry Products ("Payments") | |||||||||||||||
Revenue | $ | 865 | $ | 806 | $ | 3,234 | $ | 3,090 | |||||||
Output Solutions postage reimbursements | (77 | ) | (79 | ) | (281 | ) | (300 | ) | |||||||
Deferred revenue purchase accounting adjustments | 4 | 1 | 8 | 3 | |||||||||||
Adjusted revenue | $ | 792 | $ | 728 | $ | 2,961 | $ | 2,793 | |||||||
Operating income | $ | 284 | $ | 240 | $ | 1,034 | $ | 943 | |||||||
Merger, integration and other costs | 4 | 1 | 7 | 3 | |||||||||||
Adjusted operating income | $ | 288 | $ | 241 | $ | 1,041 | $ | 946 | |||||||
Operating margin | 33.0 | % | 29.8 | % | 32.0 | % | 30.5 | % | |||||||
Adjusted operating margin | 36.4 | % | 33.1 | % | 35.1 | % | 33.8 | % | |||||||
Financial Institution Services ("Financial") | |||||||||||||||
Revenue | $ | 668 | $ | 643 | $ | 2,530 | $ | 2,477 | |||||||
Deferred revenue purchase accounting adjustments | — | 1 | — | 3 | |||||||||||
Adjusted revenue | $ | 668 | $ | 644 | $ | 2,530 | $ | 2,480 | |||||||
Operating income | $ | 235 | $ | 217 | $ | 849 | $ | 823 | |||||||
Operating margin | 35.1 | % | 33.7 | % | 33.5 | % | 33.2 | % | |||||||
Adjusted operating margin | 35.1 | % | 33.7 | % | 33.5 | % | 33.2 | % | |||||||
Corporate and Other | |||||||||||||||
Revenue | $ | (17 | ) | $ | (18 | ) | $ | (68 | ) | $ | (62 | ) | |||
Operating loss | $ | (94 | ) | $ | (82 | ) | $ | (351 | ) | $ | (321 | ) | |||
Merger, integration and other costs | 18 | 16 | 67 | 55 | |||||||||||
Severance costs | 2 | 4 | 24 | 15 | |||||||||||
Amortization of acquisition-related intangible assets | 42 | 39 | 159 | 158 | |||||||||||
Gain on sale of business | — | — | (10 | ) | — | ||||||||||
Adjusted operating loss | $ | (32 | ) | $ | (23 | ) | $ | (111 | ) | $ | (93 | ) | |||
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) | |||||||
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 1,246 | $ | 930 | |||
Adjustment for discontinued operations | (14 | ) | — | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and other amortization | 274 | 253 | |||||
Amortization of acquisition-related intangible assets | 159 | 158 | |||||
Share-based compensation | 63 | 68 | |||||
Excess tax benefits from share-based awards | — | (51 | ) | ||||
Deferred income taxes | (247 | ) | 21 | ||||
Income from investment in unconsolidated affiliate | (32 | ) | (147 | ) | |||
Dividends from unconsolidated affiliate | 45 | 151 | |||||
Non-cash impairment charges | 18 | 17 | |||||
Gain on sale of business | (10 | ) | — | ||||
Other operating activities | (4 | ) | (2 | ) | |||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||
Trade accounts receivable | (75 | ) | (88 | ) | |||
Prepaid expenses and other assets | (55 | ) | (68 | ) | |||
Accounts payable and other liabilities | 54 | 178 | |||||
Deferred revenue | 61 | 11 | |||||
Net cash provided by operating activities | 1,483 | 1,431 | |||||
Cash flows from investing activities | |||||||
Capital expenditures, including capitalization of software costs | (287 | ) | (290 | ) | |||
Payments for acquisitions of businesses, net of cash acquired | (384 | ) | (265 | ) | |||
Proceeds from sale of business | 17 | — | |||||
Purchases of investments | (10 | ) | (1 | ) | |||
Other investing activities | 7 | 2 | |||||
Net cash used in investing activities | (657 | ) | (554 | ) | |||
Cash flows from financing activities | |||||||
Debt proceeds | 2,310 | 2,126 | |||||
Debt repayments | (1,985 | ) | (1,863 | ) | |||
Proceeds from issuance of treasury stock | 78 | 79 | |||||
Purchases of treasury stock, including employee shares withheld for tax obligations | (1,223 | ) | (1,245 | ) | |||
Excess tax benefits from share-based awards | — | 51 | |||||
Net cash used in financing activities | (820 | ) | (852 | ) | |||
Change in cash and cash equivalents | 6 | 25 | |||||
Net cash flows from discontinued operations | 19 | — | |||||
Cash and cash equivalents, beginning balance | 300 | 275 | |||||
Cash and cash equivalents, ending balance | $ | 325 | $ | 300 |
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Fiserv, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions, unaudited) | |||||||
December 31, | |||||||
2017 | 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 325 | $ | 300 | |||
Trade accounts receivable – net | 997 | 902 | |||||
Prepaid expenses and other current assets | 603 | 526 | |||||
Assets held for sale | 50 | — | |||||
Total current assets | 1,975 | 1,728 | |||||
Property and equipment – net | 390 | 405 | |||||
Intangible assets – net | 1,882 | 1,833 | |||||
Goodwill | 5,590 | 5,373 | |||||
Other long-term assets | 452 | 404 | |||||
Total assets | $ | 10,289 | $ | 9,743 | |||
Liabilities and Shareholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 1,383 | $ | 1,242 | |||
Current maturities of long-term debt | 3 | 95 | |||||
Deferred revenue | 552 | 483 | |||||
Total current liabilities | 1,938 | 1,820 | |||||
Long-term debt | 4,897 | 4,467 | |||||
Deferred income taxes | 552 | 762 | |||||
Other long-term liabilities | 171 | 153 | |||||
Total liabilities | 7,558 | 7,202 | |||||
Shareholders' equity | 2,731 | 2,541 | |||||
Total liabilities and shareholders' equity | $ | 10,289 | $ | 9,743 |
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Internal Revenue Growth 1 | Three Months Ended December 31, 2017 | Year Ended December 31, 2017 | ||
Payments Segment | 7% | 5% | ||
Financial Segment | 5% | 3% | ||
Total Company | 6% | 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 fourth quarter of 2017, acquired revenue was $19 million ($15 million in the Payments segment and $4 million in the Financial segment), and revenue in the comparable prior year period attributable to dispositions was $9 million (all in the Financial segment). Full year 2017 acquired revenue was $49 million ($38 million in the Payments segment and $11 million in the Financial segment), and revenue in the comparable prior year period attributable to dispositions was $29 million (all in the Financial segment). |
Free Cash Flow | Year Ended December 31, | |||||||
2017 | 2016 | |||||||
Net cash provided by operating activities | $ | 1,483 | $ | 1,431 | ||||
Capital expenditures | (287 | ) | (290 | ) | ||||
Adjustments: | ||||||||
Severance, merger and integration payments | 84 | 54 | ||||||
StoneRiver cash distributions | (45 | ) | (151 | ) | ||||
Other | (3 | ) | 7 | |||||
Tax payments on adjustments | (9 | ) | 33 | |||||
Free cash flow | $ | 1,223 | $ | 1,084 |
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2017 adjusted earnings per share 1 | $ | 5.12 | |
Estimated impact of the Lending Transaction | (0.16 | ) | |
2017 adjusted earnings per share, excluding the Lending Transaction | $ | 4.96 | |
2018 adjusted earnings per share outlook | $6.05 - $6.30 | ||
2018 adjusted earnings per share growth outlook | 22% - 27% |