FIS Updates First Quarter 2020 Financial Guidance Based on Impact of COVID-19
FIS has been carefully monitoring and assessing the effects of COVID-19 as conditions continue to evolve, and our thoughts are with the individuals and families who have been affected by the virus. The company has focused on the health and safety of its employees and local communities, and prioritized investments and products that help address the needs of our clients during this unprecedented time. As a critical infrastructure provider, FIS continues to serve our clients around the globe.
Our clients and communities have urgent needs, and FIS is doing its part to enable merchants and financial institutions by facilitating the distribution of funds from government relief programs in the
Prior to the impacts from COVID-19 spreading across the globe, FIS achieved strong revenue growth. As
During the first quarter of 2020, we now estimate that our Merchant Solutions segment revenue will increase significantly over the prior year period, primarily due to the acquisition of Worldpay, with organic growth estimated to be approximately flat; our Banking Solutions segment revenue will increase approximately 7% over the prior year period with organic growth estimated to be approximately 1%; and our Capital Market Solutions segment revenue will increase approximately 9% over the prior year period with organic growth estimated to be approximately 7%. Segment revenue growth is primarily being impacted by declines in payment processing volumes within our Merchant Solutions segment as well as lower issuer processing, debit network and account transaction volumes within our Banking Solutions segment.
In response to COVID-19, we are taking several actions to manage discretionary expenses and achieve cost synergies, including limiting travel, reducing incentive compensation and decreasing third-party spending as well as accelerating automation and functional alignment across the organization.
During the first quarter of 2020, we now estimate that we will generate Diluted EPS of
While we remain confident in the long-term fundamentals of our business, due to the speed at which the COVID-19 situation is developing and the unknown duration of this pandemic event, we are withdrawing our Full-Year 2020 financial guidance. We anticipate providing further updates and details on our first quarter 2020 earnings call.
About FIS
FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our over 55,000 people are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in
To learn more, visit www.fisglobal.com. Follow FIS on Facebook, LinkedIn and Twitter (@FISGlobal).
FIS Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in
We believe these non-GAAP measures help investors better understand the underlying fundamentals of our business. As further described below, the non-GAAP revenue measures presented eliminate items management believes are not indicative of FIS’ operating performance. The organic revenue growth measures adjust for the effects of exchange rate fluctuations, as well as for acquisitions and divestitures, giving investors further insight into our performance. For these reasons, management also uses these non-GAAP measures in its assessment and management of FIS’ performance.
Organic revenue growth is constant currency revenue, as defined below, for the current period compared to a revenue base for the prior period, which is adjusted to add pre-acquisition revenue of acquired businesses for a portion of the prior year matching the portion of the current year for which the business was owned, and to subtract pre-divestiture revenue for divested businesses for the portion of the prior year matching the portion of the current year for which the business was not owned, for any acquisitions or divestitures by FIS.
Constant currency revenue represents reported revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.
Adjusted EPS, or Adjusted net earnings per diluted share, reflects adjusted net earnings, as defined below, from continuing operations divided by weighted average diluted shares outstanding.
Adjusted net earnings excludes the impact of certain costs and other transactions which management deems non-operational in nature, the removal of which improves comparability of operating results across reporting periods. It also excludes the impact of acquisition-related purchase accounting amortization and equity method investment earnings (loss), both of which are recurring.
Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the specific adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS website, www.fisglobal.com.
Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of the
Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to include the following, without limitation:
- the outbreak of the novel coronavirus (“COVID-19”) and measures to reduce its spread, including the impact of governmental or voluntary actions such as business shutdowns and stay-at-home orders;
-
changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, intensified international hostilities, acts of terrorism, changes in either or both
the United States and international lending, capital and financial markets and currency fluctuations; - the risk of losses in the event of defaults by merchants (or other parties) to which we extend credit in our card settlement operations or for any chargeback liability;
- the risk that the Worldpay transaction will not provide the expected benefits or that we will not be able to achieve the cost or revenue synergies anticipated;
- the risks of doing business internationally;
- the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;
- the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
- changes in the growth rates of the markets for our solutions;
- failures to adapt our solutions to changes in technology or in the marketplace;
- internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
- failure to comply with applicable requirements of payment networks or changes in those requirements;
- fraud by merchants or bad actors; and
-
other risks detailed under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended
December 31, 2019 and in our other filings with theSecurities and Exchange Commission .
Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Reconciliation
Three months ended |
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||||||||
Low |
High |
|||||||
Consolidated estimated GAAP revenue growth |
|
49 |
% |
|
|
50 |
% |
|
Estimated adjustments(1) |
|
(48 |
)% |
|
(48 |
)% |
||
Consolidated estimated organic revenue growth |
|
1 |
% |
|
|
2 |
% |
|
|
|
|
|
|||||
Diluted estimated EPS |
$ |
(0.10 |
) |
|
$ |
0.00 |
|
|
Estimated adjustments(2) |
$ |
1.36 |
|
|
$ |
1.28 |
|
|
Adjusted estimated EPS |
$ |
1.26 |
|
|
$ |
1.28 |
|
(1)
|
Estimated adjustments to the prior year period needed to create a comparable base year for organic revenue growth include the addition of pre-acquisition revenue associated with the acquisition of Worldpay, Inc. and the purchase of majority interest in |
|
|
(2)
|
Estimated adjustments for the first quarter 2020 include purchase accounting amortization, acquisition, integration and other costs, equity method investment earnings (loss) and other items, net of tax impact. Adjusted EPS in the prior year base was |
Three months ended |
|||
|
|||
Merchant Solutions estimated GAAP revenue growth |
1,364 |
% |
|
Estimated adjustments(3) |
(1,364 |
)% |
|
Merchant Solutions estimated organic revenue growth |
- |
|
|
Banking Solutions estimated GAAP revenue growth |
7 |
% |
|
Estimated adjustments(3) |
(6 |
)% |
|
Banking Solutions estimated organic revenue growth |
1 |
% |
|
Capital Market Solutions estimated GAAP revenue growth |
9 |
% |
|
Estimated adjustments(4) |
(2 |
)% |
|
Capital Market Solutions estimated organic revenue growth |
7 |
% |
(3)
|
Estimated adjustments to the prior year period needed to create a comparable base year for organic revenue growth include the addition of pre-acquisition revenue associated with the acquisition of Worldpay, Inc. Estimated adjustments for the first quarter 2020 include the addition or subtraction of revenue associated with foreign currency translation. The effect of the foregoing estimated adjustments are shown on a combined basis. Merchant Solutions segment adjusted combined organic revenue in the prior year base period was |
|
|
(4)
|
Estimated adjustments to the prior year period needed to create a comparable base year for organic revenue growth include the addition of pre-acquisition revenue associated with the purchase of majority interest in |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200413005450/en/
For More Information
Chief Marketing Officer
Ellyn.Raftery@fisglobal.com
Executive Vice President
FIS Corporate Finance and Investor Relations
Nathan.Rozof@fisglobal.com
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