10-QPeriod: Q1 FY2009

Fidelity National Information Services, Inc. Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 6, 2009For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) reported its first-quarter 2009 results, demonstrating resilience amidst challenging economic conditions. The company experienced a slight decrease in overall revenue primarily due to unfavorable foreign currency fluctuations, but showed improved profitability metrics. Operating income rose significantly, driven by successful cost reduction initiatives and enhanced operating efficiencies across its segments. The company also provided updates on its significant pending acquisition of Metavante Technologies, Inc., expected to close in the third quarter of 2009. This strategic move, alongside ongoing efforts to manage expenses and optimize operations, positions FIS for continued performance. Investors should note the impact of discontinued operations from the prior year, which significantly influences year-over-year net earnings comparisons, and the company's focus on core business strengths and cost management.

Financial Highlights

30 data points
Beta

Revenue

$794.10M

22.1% Gross Margin

Net Income

$33.00M

4.2% Net Margin

EPS (Diluted)

$0.17

Cash & Equivalents

$272.00M

Free Cash Flow

$147.90M

Financial Statements
Beta
Revenue$794.10M
Gross Profit$175.70M
SG&A Expenses$95.90M
Operating Income$79.80M
Interest Expense$31.20M
Net Income$33.00M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)190.00M
Shares Outstanding (Diluted)191.60M

Key Highlights

  • 1Total revenues decreased by 3.9% to $797.8 million in Q1 2009 compared to $830.3 million in Q1 2008, largely due to unfavorable foreign currency adjustments.
  • 2Gross profit margin improved to 25.5% in Q1 2009 from 21.9% in Q1 2008, attributed to cost reduction efforts and improved operating efficiency.
  • 3Operating income significantly increased to $81.9 million in Q1 2009 from $51.2 million in Q1 2008, reflecting better cost management and operational efficiencies.
  • 4Net earnings attributable to FIS were $33.0 million ($0.17 per diluted share) in Q1 2009, a decrease from $70.5 million ($0.36 per diluted share) in Q1 2008, primarily due to the absence of significant gains from discontinued operations in the current period.
  • 5The company announced a pending merger with Metavante Technologies, Inc., expected to close in Q3 2009, and entered into private placement agreements with affiliates of Thomas H. Lee Partners and FNF to raise approximately $250 million.
  • 6Long-term debt as of March 31, 2009, was $2,327.7 million, with a total debt of $2,460.5 million, and the company maintained compliance with its debt covenants.
  • 7Cash flow from operations was $162.9 million in Q1 2009, slightly down from $168.2 million in Q1 2008, with the prior year including significant contributions from discontinued operations (LPS).

Frequently Asked Questions

In the first quarter of 2009, FIS saw a slight decrease in revenue to $797.8 million from $830.3 million in the prior year, mainly due to foreign currency impacts. However, operating income increased significantly to $81.9 million from $51.2 million, driven by cost controls and efficiency gains, leading to improved gross and operating margins. Net earnings attributable to FIS decreased to $33.0 million from $70.5 million, largely because the prior year's results benefited from discontinued operations.

The most significant strategic development is the announcement of the merger agreement with Metavante Technologies, Inc., which is expected to close in the third quarter of 2009. Additionally, FIS entered into agreements for a private placement of its common stock with affiliates of Thomas H. Lee Partners and FNF, raising approximately $250 million in anticipation of the merger.

As of March 31, 2009, FIS had approximately $2,460.5 million in debt, with $2,327.7 million classified as long-term. The company reported $272.0 million in cash and cash equivalents. FIS generated $162.9 million in cash from operating activities in the first quarter of 2009 and stated that operational cash flows are expected to be sufficient to cover operating requirements and debt service, barring unusual circumstances. The company confirmed compliance with all debt covenants.

FIS acknowledges the challenging economic environment for financial institutions and businesses. The company is focusing on managing costs and capital expenditures prudently, including headcount reductions and decreased capital spending. They believe their business model, with a significant portion of recurring revenue from outsourcing solutions, is resilient. While software sales and professional services are considered more discretionary and at risk, the company is adapting to market trends and expects outsourcing demand to potentially increase as clients seek to reduce fixed costs.