Summary
Fidelity National Information Services, Inc. (FIS) reported solid revenue growth for the first six months of 2011, driven by acquisitions (notably Capco) and increased demand for professional and processing services. Despite a significant increase in interest expense due to a 2010 leveraged recapitalization, the company demonstrated improved operating income and margins, largely due to revenue growth and effective expense management. The company's international segment, particularly in Brazil, and its Financial Solutions Group (FSG) were key contributors to this growth. While the Payment Solutions segment saw relatively flat revenue, its operating income remained strong. Regulatory changes like the Dodd-Frank Act and Durbin Amendment present both challenges and opportunities, with FIS positioning itself to benefit from new debit transaction rules. Looking ahead, FIS continues to explore strategic acquisitions, though a potential bid for Misys was withdrawn. The company maintains a strong focus on managing its debt, with cash flows from operations projected to cover operational needs and debt service. Investors should note the ongoing impact of the 2010 recapitalization on interest expenses and share count, as well as the company's strategic approach to navigating industry consolidation and evolving regulatory landscapes.
Financial Highlights
55 data points| Revenue | $1.41B |
| Gross Profit | $423.90M |
| SG&A Expenses | $169.30M |
| Operating Expenses | $1.16B |
| Operating Income | $254.60M |
| Net Income | $123.50M |
| EPS (Basic) | $0.41 |
| EPS (Diluted) | $0.40 |
| Shares Outstanding (Basic) | 303.60M |
| Shares Outstanding (Diluted) | 310.90M |
Key Highlights
- 1Revenue increased by 12.7% to $2,825.1 million for the first six months of 2011 compared to the prior year, driven by acquisitions and increased demand for services.
- 2Operating income rose significantly by 27.3% to $472.8 million for the first six months of 2011, reflecting revenue growth and improved operational efficiency.
- 3The Financial Solutions Group (FSG) and International Solutions Group (ISG) segments showed notable revenue and operating income growth, with ISG benefiting from foreign currency exchange rates.
- 4Despite a substantial increase in interest expense (up 186% for six months) due to the 2010 leveraged recapitalization, overall net earnings attributable to FIS common stockholders grew by 17.6% to $216.3 million for the first six months of 2011.
- 5The company's diluted EPS from continuing operations increased to $0.73 for the first six months of 2011, up from $0.50 in the prior year, even with a reduced weighted average share count.
- 6FIS is actively managing its market risks through interest rate swaps and foreign currency forward contracts, with a focus on hedging debt obligations and foreign-denominated transactions.
- 7The company reiterated its commitment to a quarterly dividend of $0.05 per common share and expects operational cash flows to adequately fund its requirements and debt obligations.