Summary
Fidelity National Information Services, Inc. (FIS) reported mixed financial results for the third quarter and first nine months of 2018 compared to the prior year. While overall revenue saw a slight decline, driven by divestitures and foreign currency headwinds, the company demonstrated resilience through growth in key areas like retail payments and North American banking/payments solutions. Significant operational improvements and cost management initiatives, particularly noted in the Global Financial Solutions and Corporate and Other segments, contributed to enhanced Adjusted EBITDA margins. The company is actively managing its portfolio through strategic divestitures, such as the recent sale of the Certegy Check Services business unit and the agreement to unwind the Brazilian Venture. These moves, while impacting reported revenue, are aimed at streamlining operations and focusing on higher-margin businesses. FIS remains committed to shareholder returns through dividends and an ongoing share repurchase program, indicating confidence in its future financial stability and strategic direction.
Financial Highlights
55 data points| Revenue | $2.08B |
| Cost of Revenue | $1.36B |
| Gross Profit | $720.00M |
| SG&A Expenses | $283.00M |
| Operating Income | $342.00M |
| Net Income | $154.00M |
| EPS (Basic) | $0.47 |
| EPS (Diluted) | $0.47 |
| Shares Outstanding (Basic) | 328.00M |
| Shares Outstanding (Diluted) | 331.00M |
Key Highlights
- 1Revenue for the three months ended September 30, 2018, decreased by 0.6% to $2,084 million, and for the nine months ended September 30, 2018, decreased by 3.8% to $6,256 million, primarily due to divestitures of consulting businesses and the sale of the Certegy Check Services business unit, partially offset by growth in retail payments and North American banking/payments solutions.
- 2Adjusted EBITDA margins showed improvement, with Integrated Financial Solutions (IFS) seeing a 30 basis point increase to 45.5% for the quarter and a 50 basis point increase to 44.0% for the nine months, and Global Financial Solutions (GFS) increasing significantly by 420 basis points to 38.8% for the quarter and 480 basis points to 35.5% for the nine months, attributed to cost management and the impact of divestitures.
- 3The company recorded a $95 million pre-tax asset impairment charge in the third quarter of 2018 related to the agreement to unwind the Brazilian Venture with Banco Bradesco.
- 4The unwinding of the Brazilian Venture is expected to result in an annualized reduction of approximately $200 million in reported revenue, with minimal impact on net earnings, and is anticipated to be completed in the first half of 2019.
- 5Net earnings attributable to FIS common stockholders increased substantially to $154 million ($0.47 per diluted share) for the third quarter of 2018, up from $59 million ($0.18 per diluted share) in the prior year. For the nine months, net earnings rose to $548 million ($1.65 per diluted share) from $327 million ($0.98 per diluted share) in 2017.
- 6The company paid a quarterly dividend of $0.32 per common share on September 28, 2018, and maintained a share repurchase program with approximately $2.8 billion capacity remaining as of September 30, 2018.
- 7Foreign currency exchange rates, particularly a stronger U.S. Dollar against the Brazilian Real, had an adverse impact on reported revenue, with an estimated $30 million unfavorable impact in the third quarter and $9 million for the nine months of 2018.