First Data Reports First Quarter 2018 Financial Results and Raises Financial Guidance for Full Year

  • Total segment revenue of $2,080 million, up 11% reported(a), up 10% on a comparable accounting basis(b), up 5% on an organic constant currency basis(c)
  • Consolidated revenue of $2,282 million, impacted by the adoption of ASC 606
  • Net income attributable to First Data diluted EPS of $0.11, up 175%
  • Adjusted diluted EPS of $0.29, up 6%
  • Total segment EBITDA of $730 million, up 12% reported(a), up 14% on a comparable accounting basis(b), up 10% on an organic constant currency basis(c)
  • Cash flow from operations of $534 million; free cash flow of $368 million
  • Total borrowings declined $186 million; net debt declined $239 million in quarter
  • Raising full year 2018 guidance for segment revenue growth, segment EBITDA growth and adjusted EPS

 

NEW YORK, April 30, 2018 - First Data Corporation (NYSE: FDC), a global leader in commerce-enabling technology, today reported financial results for the first quarter ended March 31, 2018. Total segment revenue was $2,080 million for the quarter, up 11% versus the prior year period on a reported basis(a), up 10% on a comparable accounting basis(b), or up 5% on an organic constant currency basis(c). Consolidated revenue for the first quarter was $2,282 million, impacted by the adoption of ASC 606.

Net income attributable to First Data for the first quarter of 2018 was $101 million, or $0.11 per diluted share, up 181% and 175%, respectively, from comparable figures in the first quarter of 2017. The increase in net income attributable to First Data was primarily driven by the non-recurrence of $56 million of debt extinguishment charges that were incurred in the prior year period and improved operating results in the current period.

Adjusted net income, which modifies net income for items such as debt extinguishment charges, stock-based compensation, amortization of acquisition intangibles, restructuring costs, certain discrete tax items and other items, was $279 million, or $0.29 per diluted share, up 8% and 6%, respectively, from comparable figures in the first quarter of 2017. The increase was primarily driven by improved operating results partially offset by a normalized adjusted effective tax rate in the current period.

Total segment earnings before interest, taxes, depreciation, and amortization (total segment EBITDA) in the first quarter of 2018 was $730 million, up 12% versus the prior year period on a reported basis(a), up 14% on a comparable accounting basis(b), or up 10% on an organic constant currency basis(c). Total segment EBITDA margin was 35.1%, up 40 basis points versus the prior year period on a reported basis(a), or up 110 basis points on a comparable accounting basis(b).

“We had an excellent start to 2018. We continued to execute against key initiatives across our business, delivering strong financial performance and positioning us to raise our guidance for the year,” said First Data Chairman and CEO Frank Bisignano. “We further expanded Clover's market presence, our cutting-edge ISV business continued to rapidly gain share, our international businesses again delivered strong growth, and our backlog of new enterprise deals continued to expand and ramp," Bisignano added.

 

Segment Results

 

Global Business Solutions (GBS)

First quarter 2018 GBS segment revenue was $1,318 million, up 18% versus the prior year period on a reported basis(a), up 15% on a comparable accounting basis(b), or up 7% on an organic constant currency basis(c). Within geographic regions, North America revenue of $1,014 million was up 15% versus the prior year period on a reported basis(a), up 12% on a comparable accounting basis(b), or up 4% on an organic constant currency basis(c), driven by strong growth in the Partner Solutions and the Direct channels, partially offset by a modest decline in JV channel revenue. EMEA revenue was $168 million, up 20% on a reported basis(a), up 19% on a comparable accounting basis(b), or up 4% on an organic constant currency basis(c). Latin America revenue was $88 million, up 49% on a reported basis, up 38% on a comparable accounting basis(b), or up 52% on an organic constant currency basis(c), driven by strong results in Brazil and Argentina. APAC revenue was $48 million, up 21% on both a reported and comparable accounting basis(a) (b), or up 15% on an organic constant currency basis(c), driven by good growth throughout the region.

First quarter 2018 GBS segment EBITDA was $434 million, up 14% versus the prior year period on a reported basis(a), up 16% on a comparable accounting basis(b), or up 10% on an organic constant currency basis(c). Reported segment EBITDA margin was 32.9% in the quarter, down 130 basis points versus the prior year period on a reported basis(a), or up 40 basis points on a comparable accounting basis(b).

 

Global Financial Solutions (GFS)

First quarter 2018 GFS segment revenue was $400 million, up 2% versus the prior year period on both a reported and comparable accounting basis(a) (b), or up 1% on an organic constant currency basis(c). Within geographic regions, North America revenue of $228 million was down 3% on a reported basis(a), down 2% on both a comparable accounting basis and on an organic constant currency basis(b) (c), driven by recent long-term renewals. EMEA revenue was $110 million, up 9% versus the prior year period on a reported basis(a), up 11% on a comparable accounting basis(b), or up 5% on an organic constant currency basis(c). Latin America revenue was $31 million, down 6% versus the prior year period on a reported basis, down 17% on a comparable accounting basis(b), or down 11% on an organic constant currency basis(c), driven by the non-recurrence of license resolution fees in the prior year period. APAC revenue was $31 million, up 32% versus the prior year period on a reported basis, up 45% on a comparable accounting basis(b), or up 39% on an organic constant currency basis(c), driven by strong growth across the region.

First quarter 2018 GFS segment EBITDA was $166 million, up 8% versus the prior year period on both a reported and comparable accounting basis(a) (b), or up 6% on an organic constant currency basis(c). Reported segment EBITDA margin was 41.5% in the quarter, up 230 basis points versus the prior year period on a reported basis(a), or up 220 basis points on a comparable accounting basis(b).

 

Network & Security Solutions (NSS)

First quarter 2018 NSS segment revenue was $362 million, flat versus the prior year period on a reported basis(a), up 4% on a comparable accounting basis(b), or up 7% on an organic constant currency basis(c). Within NSS's primary businesses, Stored Value revenue grew mid-teens in the quarter, and both the Security and Fraud unit and the EFT unit revenue grew mid-single digits.

First quarter 2018 NSS segment EBITDA was $175 million, up 13% versus the prior year period on reported, comparable accounting and organic constant currency bases(a) (b) (c). Reported segment EBITDA margin was 48.3% in the quarter, up 510 basis points versus the prior year period on a reported basis(a), or up 330 basis points on a comparable accounting basis.

 

Cash Flow

In the first quarter 2018, cash flow from operations was $534 million, up $113 million compared to $421 million in the prior year period. Free cash flow, which the Company defines as cash flow from operations less capital expenditures, distributions to minority interests and other, was $368 million in the current quarter, up $107 million compared to $261 million in the prior year period, primarily driven by improved operating results and working capital improvements in the current period.

 

Capital Structure

First Data's total borrowings at March 31, 2018 decreased by $186 million to $19,012 million, from $19,198 million at December 31, 2017. The decrease was driven by debt paydowns during the period. Net debt at March 31, 2018 decreased by $239 million to $18,382 million, from $18,621 million at December 31, 2017.

 

Updated 2018 Full Year Financial Guidance

The updated guidance provided below holds foreign exchange rates constant versus the year-ago comparable period ("constant currency"), and applies the New Reporting Standards to the referenced year ago period.

  • Total segment revenue growth: 6% to 7%, compared to previously disclosed guidance of 5% to 7%. Both ranges include a net benefit attributable to the full year impact of previously announced major acquisitions and dispositions of approximately 2 percentage points.
  • Total segment EBITDA growth: 8% to 10%, compared to previously disclosed guidance of 7% to 9%. Both ranges include a net benefit attributable to the full year impact of previously announced major acquisitions and dispositions of approximately 1.5 percentage points.
  • Adjusted diluted EPS: $1.42 to $1.47, compared to previously disclosed guidance of $1.35 to $1.40.
  • Adjusted Effective tax rate: Approximately 25%, compared to previously disclosed guidance of 27% to 29%.
  • Free cash flow: $1.4 billion+, remains unchanged from previously disclosed guidance.

See "2018 Non-GAAP Guidance Reconciliation" in the financial tables of this press release for reconciliations of non-GAAP guidance measures to the most directly comparable GAAP measures.

 

Investor Conference Call

The company will host a conference call and webcast on Monday, April 30, 2018, at 8 a.m. ET to review the first quarter 2018 financial results.

To listen to the call, dial +1 (844) 826-3033 (U.S.) or +1 (412) 317-5172 (outside the U.S.) at least 10 minutes prior to the start of the call. The call will also be webcast on the “Investor Relations” section of the First Data website at investor.firstdata.com along with a slide presentation to accompany the call.

A replay of the call will be available through May 30, 2018, at +1 (877) 344-7529 (U.S.) or +1 (412) 317-0088 (outside the U.S.); passcode 10118288 and via webcast at investor.firstdata.com.

Please note: Other than the replay, First Data has not authorized, and disclaims responsibility for any recording, replay or distribution of any transcription of this call.

 

Non-GAAP Measures

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, the company uses non-GAAP measures of certain financial performance. These non-GAAP measures include total segment revenue, total segment expense, total segment EBITDA, adjusted net income, adjusted net income per diluted share, free cash flow and net debt. The company has included non-GAAP measures because management believes that they help to facilitate comparisons of the company's operating results between periods. The company believes the non-GAAP measures provide useful information to both management and users of our financial statements by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook. These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These measures should only be used to evaluate the company's results of operations in conjunction with the corresponding GAAP measures. Additional information about non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measure of all non-GAAP measures can be found in the tables included in this press release.

 

About First Data

First Data (NYSE: FDC) is a global leader in commerce-enabling technology and solutions, serving approximately six million business locations and 4,000 financial institutions in more than 100 countries around the world. The company’s 22,000 owner-associates are dedicated to helping companies, from start-ups to the world’s largest corporations, conduct commerce every day by securing and processing more than 3,000 transactions per second and $2.4 trillion per year.

 

(a) GAAP growth rates -- Consolidated revenue, segment revenue and segment EBITDA reflect New Reporting Standards, including the modified retrospective application of ASC 606 (the New Revenue Standard). See Form 8-K filed on April 16, 2018, for full description of the New Reporting Standards and their impact on 2017 results.
(b) Non-GAAP growth rates -- Growth rate adjusted to retrospectively apply ASC 606 to the prior year period, providing a consistent basis of accounting to both periods.
(c) Non-GAAP growth rates -- Organic constant currency growth (“Organic CC growth”) is defined as reported growth adjusted for the following: (1) excludes the impacts of year-over-year currency rate changes in the current period; (2) excludes the results of significant divestitures in the prior year period; (3) includes the results of significant acquisitions in the prior year period; and (4) is adjusted to retrospectively apply ASC 606 to the prior year period.

 

Contact

Peter Poillon
Investor Relations
First Data
212-266-3565
Peter.Poillon@firstdata.com
 
Liidia Liuksila
Public Relations
First Data
212-515-0174
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