10-QPeriod: Q1 FY2010

Fidelity National Information Services, Inc. Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 5, 2010For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) reported strong financial results for the quarter ended March 31, 2010, driven significantly by the acquisition of Metavante in October 2009. Revenue surged by 57.4% year-over-year to $1,249.6 million, primarily due to the consolidation of Metavante's operations and increased demand for software and professional services. This revenue growth, combined with effective synergy realization and cost management initiatives stemming from the Metavante integration, led to a substantial increase in operating income, which more than doubled to $183.8 million. Net earnings attributable to FIS common stockholders also saw a significant rise to $93.6 million, translating to $0.25 per diluted share, compared to $33.0 million or $0.17 per diluted share in the prior year's period. Despite increased operating expenses, largely due to integration costs and stock-based compensation related to the Metavante acquisition, the company demonstrated improved operational efficiency with a higher gross margin (27.4% vs. 22.1%) and operating margin (14.7% vs. 10.0%). The company also made progress in managing its debt, with a reduction in long-term debt. Cash flow from operations was robust at $271.6 million, providing ample resources for operations and debt service. Overall, the results reflect a successful integration of Metavante and a solid operational performance in a challenging economic environment.

Financial Highlights

53 data points
Beta

Revenue

$1.24B

27.9% Gross Margin

Net Income

$93.60M

7.6% Net Margin

EPS (Diluted)

$0.25

Total Assets

$13.83B

Cash & Equivalents

$463.90M

Free Cash Flow

$250.80M

Financial Statements
Beta
Revenue$1.24B
Gross Profit$344.60M
SG&A Expenses$157.20M
Operating Expenses$1.05B
Operating Income$187.40M
Interest Expense$28.20M
Net Income$93.60M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)373.30M
Shares Outstanding (Diluted)379.90M

Key Highlights

  • 1Revenue increased by 57.4% to $1,249.6 million, largely driven by the Metavante acquisition.
  • 2Operating income more than doubled to $183.8 million, with operating margin improving to 14.7% from 10.0% year-over-year.
  • 3Net earnings attributable to FIS common stockholders rose significantly to $93.6 million, or $0.25 per diluted share, from $33.0 million, or $0.17 per diluted share, in the prior year.
  • 4Gross margin improved to 27.4% from 22.1%, attributed to Metavante synergies and cost efficiencies.
  • 5Cash flow from operations was strong at $271.6 million, an increase from $162.9 million in the prior year.
  • 6The company repurchased 1.4 million shares of common stock for $32.2 million under its new repurchase program.
  • 7Long-term debt decreased from $3,016.6 million to $2,815.6 million, excluding current portions.

Frequently Asked Questions

The primary driver of the significant revenue increase was the acquisition of Metavante, which was completed on October 1, 2009. The results of Metavante are now consolidated into FIS's financial statements, contributing substantially to the reported revenue and overall financial performance.

The Metavante acquisition had a positive impact on profitability. While there were incremental integration costs and increased SG&A expenses, the synergies realized from the acquisition, coupled with improved operational efficiencies, led to a significant increase in gross profit and operating income. The company's operating margin expanded considerably.

The company has shown a commitment to managing its debt. Long-term debt, excluding current portions, decreased from $3,016.6 million at December 31, 2009, to $2,815.6 million at March 31, 2010. The strong cash flow generated from operations provides the company with the capacity to service its debt obligations.

The company disclosed several legal matters. Most notably, the litigation related to the Metavante merger was settled and approved by the court in March 2010, and the settlement was not material to the company. Other matters, such as the Driver's Privacy Protection Act litigation and the Lehman Brothers claim, are ongoing but the company believes they will not have a material impact on its financial position or results of operations, with the Lehman matter having been settled.