• Fourth quarter 2012 consolidated revenue of $2.8 billion, up 3%; adjusted revenue of $1.8 billion, up 1%
  • Fourth quarter net loss attributable to First Data $179 million; adjusted EBITDA of $656 million, flat year-over-year
  • Generated $767 million in operating cash flow for 2012 and ended the quarter with $1.8 billion in unrestricted liquidity

ATLANTA, Jan. 29, 2013 – First Data Corporation today reported its financial results for the fourth quarter ended December 31, 2012. Consolidated revenue for the fourth quarter was $2.8 billion, up $69 million, or 3%, compared to a year ago, primarily driven by a $55 million increase in debit network fees. Adjusted revenue, which excludes certain items including debit network fees, increased $18 million, or 1%, year-over-year to $1.8 billion.

For the fourth quarter, the net loss attributable to First Data was $179 million, compared to a loss of $69 million a year ago. The change was primarily due to a $59 million pre-tax gain recognized in other income and expense in the prior year upon disposition of a business in connection with the formation of an alliance and the establishment of valuation allowances against state net operating loss carry forwards in the current year. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $656 million, essentially flat compared to $655 million in the fourth quarter of 2011.

Consolidated revenue for the full year 2012 was $10.7 billion, flat year-over-year due to revenue growth in the global merchant acquiring business offset by lower debit network fees. Full-year adjusted revenue increased 3% to $6.76 billion. The full-year net loss attributable to First Data was $701 million, $185 million higher than the loss reported a year ago. Operating profit improved 14% or $132 million, but was more than offset by an increase in interest expense and a decline in other income and expense driven by mark-to-market losses on interest rate swaps as well as the prior year one-time gain described above. For 2012, adjusted EBITDA was $2.44 billion, up $187 million, or 8%, compared to $2.25 billion in 2011 driven by revenue growth and flat expenses.

First Data generated $767 million in operating cash flow, after $1.8 billion in cash interest payments for the full year and finished the quarter with $1.8 billion in unrestricted liquidity—$324 million in cash available for corporate use plus $1.5 billion under the revolving credit facility.

“Despite a challenging economic environment, we grew adjusted revenues by 3% and adjusted EBITDA by 8% for the full year 2012 on growth in our global acquiring business and cost containment,” said Chief Executive Officer, Jonathan J. Judge. “We continue to make investments in new product innovation around our merchant base including next-generation tablet-based point-of-sale systems. As the payments industry continues to evolve through the convergence of offline, online and mobile payments First Data intends to help lead the way in Universal Commerce.”

Segment Results

Retail and Alliance Services segment revenue for the fourth quarter was $931 million, up $5 million, or 1%, compared to $926 million in 2011. Merchant revenue was up 1%, driven by higher volume offset by lower yield. Transaction growth was 6% and credit mix was 71%. Regional average ticket was $69, up slightly compared to a year ago. Product revenue was up 1% as growth in prepaid open-loop was offset by declining check-processing. Segment EBITDA was $418 million, up $2 million, or 1%, compared to 2011. Margin for the fourth quarter was maintained at 45%. During the quarter, Retail and Alliance Services added eight bank referral agreements and seven new independent sales organizations.

Full-year Retail and Alliance Services segment revenue was $3.6 billion, up $221 million, or 7%, compared to $3.4 billion in 2011. Revenue was driven by 5% transaction and volume growth, lower debit interchange rates and new processing revenue from the Bank of America Merchant Services alliance, partially offset by pressure on yield. Growth in prepaid and point of sale equipment was mostly offset by declines in check processing. During the year, Retail and Alliance Services added 40 new independent sales organizations, 21 bank referral agreements and 5 new revenue sharing agreements. For 2012, segment EBITDA was $1.6 billion, up $187 million or 13%, compared to $1.4 billion in 2011. Margin improved 260 basis points to 44%.

Financial Services segment revenue for the fourth quarter was $349 million, down $5 million or 1%, compared to $354 million in the same quarter of 2011. Volume growth and new business was offset by lost business and price compression. In addition, revenues were impacted by the divestiture of two small businesses providing information and check clearing services. Active card accounts on file were up 18% compared to the prior year, primarily driven by a new customer conversion during the first quarter of 2012. Absent this impact, active card accounts on file were up 3%. Debit issuer transactions were down 14%, impacted by a previously disclosed customer deconversion. Absent this impact, debit issuer transactions were up 6% on new STAR network business and continued growth from existing customers partially offset by lost business. Segment EBITDA was $146 million, down $12 million or 8%, compared to $158 million in 2011. Margin for the fourth quarter was 42% versus 45% in the prior year. During the quarter, Financial Services renewed more than 560 contracts with financial institutions.

Full-year Financial Services segment revenue was $1.4 billion, up $11 million, or 1%, compared to 2011. New business and volume growth offset lost business and price compression. Segment EBITDA for 2012 was $603 million, up $10 million or 2%, compared to $593 million in 2011. Margin was maintained at 43%. During the year, Financial Services renewed more than 1,670 contracts with financial institutions.

International segment revenue for the fourth quarter was $462 million, up $20 million, or 5%, compared to $441 million in the prior year. On a constant currency basis, segment revenue was up 6%. Merchant acquiring revenue, on a constant currency basis, grew 8% on higher transaction volumes. Issuing revenue, on a constant currency basis, increased 3% as software license fees and higher transaction volumes were partially offset by lost business. Segment EBITDA was $151 million, up $20 million or 15%, compared to $131 million in 2011. Foreign currency had a negligible impact in the fourth quarter. Margin improved to 33%, up 300 basis points.

Full-year International segment revenue was $1.7 billion, down $43 million or 2%, compared to 2011. Segment revenue on a constant currency basis was up 2%. Segment EBITDA was $484 million, up $30 million or 6%, compared to $454 million for 2011. On a constant currency basis, segment EBITDA was up $48 million or 10%. Margin improved 240 basis points to 28% on cost reductions. Changes in foreign currency rates resulted in an $18 million unfavorable impact to EBITDA for the full year.

Non-GAAP Measures
In certain circumstances, results have been presented that are non-GAAP (generally accepted accounting principles) measures and should be viewed in addition to, and not in lieu of, the company's reported results. Reconciliations to comparable GAAP measures are available in the accompanying schedules and in the "Investor Relations" section of the company's website at investor.firstdata.com.

Investor Conference Call
The company will host an investor conference call and webcast on Tuesday, January 29 at 10 a.m. EDT to review fourth quarter 2012 financial results. First Data Chief Financial Officer Ray Winborne will lead the call and will be joined by Chief Executive Officer Jonathan J. Judge.

The webcast of the call and accompanying slide presentation will be available on the “Investor Relations” section of the First Data website at investor.firstdata.com.

To listen to the call, dial 888-771-4371 (U.S.) or 847-585-4405 (outside the U.S.); pass code 34004456, at least 10 minutes prior to the start of the call.

A replay of the call will be available through February 12, 2013, at 888-843-7419 (U.S.) or 630-652-3042 (outside the U.S.); pass code 34004456# and via webcast at investor.firstdata.com.

Please note: All statements made by First Data officers on this call are the property of First Data and subject to copyright protection. Other than the replay, First Data has not authorized, and disclaims responsibility for, any recording, replay or distribution of any transcription of this call.

Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive customer revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.

Contact:
Chip Swearngan
Senior Vice President, Communications and Investor Relations
First Data
404-890-3000
chip.swearngan@firstdata.com

First Data 2012 4rd Quarter Financials - Download the PDF (64KB)