Summary
Fidelity National Information Services (FIS) reported solid revenue growth in the nine months ended September 30, 2011, driven by acquisitions and increased demand for professional services and processing, although profit margins experienced some compression due to a higher mix of lower-margin professional services revenue. The company's international segment, particularly in Brazil and Europe, showed notable growth, bolstered by a weaker US dollar, despite some challenges in specific European economies. Management highlighted strategic initiatives, including the acquisition of Capco and the ongoing shift towards electronic payments, which are expected to fuel future revenue streams. Despite a challenging economic environment, FIS demonstrated resilience with increased operating income driven by higher revenues and the absence of significant impairment charges seen in the prior year. However, higher interest expenses due to increased debt from a 2010 recapitalization impacted net earnings. The company's financial position remains stable, with sufficient cash flow from operations to cover its requirements and ongoing dividend payments, though it continues to manage leverage and covenants associated with its credit facilities. Regulatory changes, such as the Durbin Amendment, present both potential risks and opportunities for FIS, with the company positioning itself to capitalize on shifts in payment transaction volumes.
Financial Highlights
55 data points| Revenue | $1.40B |
| Gross Profit | $432.90M |
| SG&A Expenses | $159.70M |
| Operating Expenses | $1.13B |
| Operating Income | $273.20M |
| Net Income | $136.30M |
| EPS (Basic) | $0.45 |
| EPS (Diluted) | $0.44 |
| Shares Outstanding (Basic) | 300.90M |
| Shares Outstanding (Diluted) | 306.80M |
Key Highlights
- 1Total revenue increased by 9.8% to $4.25 billion for the nine months ended September 30, 2011, compared to the same period in 2010, primarily due to acquisitions and increased demand for professional and processing services.
- 2Operating income grew by 36.8% to $749.2 million for the nine months ended September 30, 2011, compared to $547.6 million in the prior year, driven by revenue growth and the absence of significant impairment charges from 2010.
- 3The International Solutions Group (ISG) demonstrated strong revenue growth of 32.4% for the nine months, benefiting from credit card volumes in Brazil, European business expansion, and favorable foreign currency translation.
- 4Net earnings attributable to FIS common stockholders increased by 19.7% to $352.6 million for the nine months ended September 30, 2011, compared to $293.9 million in the prior year.
- 5Despite revenue growth, gross margin decreased slightly to 29.7% for the nine months ended September 30, 2011, from 30.8% in the prior year, primarily due to a higher proportion of lower-margin professional services revenue following acquisitions.
- 6Interest expense increased significantly by 85.9% for the nine months ended September 30, 2011, due to higher debt levels resulting from the 2010 leveraged recapitalization.
- 7The company maintained its quarterly dividend of $0.05 per common share and expects cash flows from operations to be sufficient to fund operational requirements and debt payments.