01—Abstract
Summary
Summary of the 10-Q filed May 6, 2009. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Total 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.
- Gross profit margin improved to 25.5% in Q1 2009 from 21.9% in Q1 2008, attributed to cost reduction efforts and improved operating efficiency.
- Operating income significantly increased to $81.9 million in Q1 2009 from $51.2 million in Q1 2008, reflecting better cost management and operational efficiencies.
- Net 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.
- The 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.
- Long-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.
- Cash 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).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2009, Fidelity National Information Services, Inc. kept $0.04.
- Revenue$794.1M100.0%
- Cost of revenue−$618.4M77.9%
- Gross profit$175.7M22.1%
- Operating costs−$95.9M12.1%
- Operating income$79.8M10.0%
- Interest, other & tax−$46.8M5.9%
- Net income$33.0M4.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2009filed May 6, 2009Financial Statements
| 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 |
05—Questions
Frequently Asked Questions
What is the financial performance of FIS in the first quarter of 2009 compared to the first quarter of 2008?
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.
What are the key strategic developments or events for FIS during this period?
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.
How is the company managing its debt and liquidity?
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.
What is the outlook for FIS given the current economic climate?
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.
06—Continue