(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | ||||
Trading | Name of each exchange | |||
Title of each class | Symbol(s) | on which registered | ||
Exhibit | Description | |
99.1 | Press release of Fidelity National Information Services, Inc. dated August 6, 2019 regarding financial results for the three and six months ended June 30, 2019 for FIS and Worldpay, Inc. and combined company guidance for 2019. | |
99.2 | Worldpay, Inc. supplemental financial information for the three and six months ended June 30, 2019. | |
99.3 | Combined company supplemental financial information. | |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
Fidelity National Information Services, Inc. | ||||
Date: August 6, 2019 | By: | /s/ James W. Woodall | ||
Name: | James W. Woodall | |||
Title: | Corporate Executive Vice President and Chief Financial Officer | |||
Fidelity National Information Services, Inc. | ||||
Date: August 6, 2019 | By: | /s/ Katy T. Thompson | ||
Name: | Katy T. Thompson | |||
Title: | Corporate Senior Vice President and Chief Accounting Officer |
Exhibit | Description | |
99.1 | ||
99.2 | ||
99.3 | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
• | FIS GAAP revenue flat; organic revenue increased 5 percent |
• | FIS Diluted EPS of $0.47; Adjusted EPS of $1.78 |
• | Worldpay GAAP revenue increased 7 percent; constant currency revenue increased 8 percent |
• | Worldpay Diluted EPS of $0.46; Adjusted EPS of $1.24 |
• | FIS issues consolidated guidance for third and fourth quarter 2019, including the impact of the Worldpay acquisition, which closed on July 31, 2019 |
($ millions, except per share data, unaudited) | Three Months Ended June 30, | |||||||||||
% | Organic | |||||||||||
2019 | 2018 | Change | Growth | |||||||||
Revenue | $ | 2,112 | $ | 2,106 | — | 5% | ||||||
Integrated Financial Solutions | 1,179 | 1,124 | 5% | 6% | ||||||||
Global Financial Solutions | 865 | 899 | (4)% | 4% | ||||||||
Corporate and Other | 68 | 83 | (18)% | 3% | ||||||||
Adjusted EBITDA | $ | 794 | $ | 757 | 5% | |||||||
Adjusted EBITDA Margin | 37.6 | % | 35.9 | % | 170 bps | |||||||
Net earnings attributable to FIS common stockholders (GAAP) | $ | 154 | $ | 212 | (27)% | |||||||
Diluted EPS (GAAP) | $ | 0.47 | $ | 0.64 | (27)% | |||||||
Adjusted net earnings | $ | 582 | $ | 544 | 7% | |||||||
Adjusted EPS | $ | 1.78 | $ | 1.63 | 9% |
• | Integrated Financial Solutions (IFS): |
• | Global Financial Solutions (GFS): |
• | Corporate and Other: |
($ millions, except per share data, unaudited) | Three Months Ended June 30, | |||||||||||
% | CC % | |||||||||||
2019 | 2018 | Change | Change | |||||||||
Revenue | $ | 1,073 | $ | 1,007 | 7% | 8% | ||||||
Technology Solutions | 466 | 402 | 16% | 18% | ||||||||
Merchant Solutions | 520 | 520 | — | 2% | ||||||||
Issuer Solutions | 87 | 85 | 2% | 2% | ||||||||
Adjusted EBITDA | $ | 561 | $ | 493 | 14% | |||||||
Adjusted EBITDA Margin | 52.3 | % | 49.0 | % | 330 bps | |||||||
Net income (loss) attributable to Worldpay (GAAP) | $ | 143 | $ | (3 | ) | NM | ||||||
Net income (loss) per diluted share attributable to Worldpay (GAAP) | $ | 0.46 | $ | (0.01 | ) | NM | ||||||
Adjusted net income | $ | 387 | $ | 327 | 18% | |||||||
Adjusted net income per share | $ | 1.24 | $ | 1.04 | 19% |
• | Technology Solutions: |
• | Merchant Solutions: |
• | Issuer Solutions: |
($ millions, unaudited) | Three Months Ended June 30, | |||||||||||
% | Organic | |||||||||||
2019 | 2018 | Change | Growth | |||||||||
Adjusted combined revenue | $ | 3,185 | $ | 3,114 | 2% | 6% | ||||||
Merchant Solutions | 1,098 | 1,017 | 8% | 10% | ||||||||
Banking Solutions | 1,493 | 1,495 | — | 5% | ||||||||
Capital Market Solutions | 594 | 584 | 2% | 3% | ||||||||
Corporate and Other | — | 18 | NM | NM | ||||||||
Adjusted combined EBITDA | $ | 1,330 | $ | 1,211 | 10% | |||||||
Adjusted combined EBITDA margin | 41.8 | % | 38.9 | % | 290 bps |
($ millions, except share data) | Q3 2019 | Q4 2019 | ||
Revenue | $2,775 - $2,800 | $3,285 - $3,330 | ||
Net earnings | $75 - $300 | $300 - $510 | ||
Diluted EPS | $0.14 - $0.57 | $0.48 - $0.82 |
($ millions, except share data) | Q3 2019 | Q4 2019 | ||
Revenue (GAAP) | $2,775 - $2,800 | $3,285 - $3,330 | ||
Adjusted EBITDA | $1,145 - $1,160 | $1,470 - $1,500 | ||
Adjusted EPS (Prior Method): Excludes amortization of purchase accounting intangibles only | $1.33 - $1.37 | $1.47 - $1.53 | ||
Adjusted EPS (New Method): Excludes all depreciation and amortization | $1.69 - $1.72 | $1.80 - $1.84 |
• | 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 risk that the integration of FIS and Worldpay will be more difficult, time-consuming or expensive than anticipated; |
• | the risk of customer loss or other business disruption in connection with the Worldpay transaction, or of the loss of key employees; |
• | the fact that unforeseen liabilities of FIS or Worldpay may exist; |
• | the risk that acquired businesses will not be integrated successfully, or that the integration will be more costly or more time-consuming and complex than anticipated; |
• | the risk that cost savings and other synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected; |
• | the risks of doing business internationally; |
• | changes in general economic, business and political conditions, including the possibility of 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 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; |
• | the risk that implementation of software (including software updates) for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers; |
• | the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters; |
• | competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers; |
• | the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers; |
• | the failure to meet financial goals to grow the business in Brazil after the unwinding of the Brazilian Venture; |
• | the risks of reduction in revenue from the loss of existing and/or potential customers in Brazil after the unwinding of the Brazilian Venture; |
• | an operational or natural disaster at one of our major operations centers; |
• | failure to comply with applicable requirements of payment networks or card schemes or changes in those requirements; |
• | fraud by merchants or bad actors; and |
• | other risks detailed in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and in our other filings with the Securities and Exchange Commission. |
Ellyn Raftery, 904.438.6083 | Nathan Rozof, CFA, 866.254.4811 | |
Chief Marketing Officer | Executive Vice President | |
FIS Global Marketing and Corporate Communications | FIS Investor Relations | |
Ellyn.Raftery@fisglobal.com | Nathan.Rozof@fisglobal.com |
Exhibit A | Condensed Consolidated Statements of Earnings - Unaudited for the three and six months ended June 30, 2019 and 2018 |
Exhibit B | Condensed Consolidated Balance Sheets - Unaudited as of June 30, 2019 and December 31, 2018 |
Exhibit C | Condensed Consolidated Statements of Cash Flows - Unaudited for the six months ended June 30, 2019 and 2018 |
Exhibit D | Supplemental Non-GAAP Financial Information - Unaudited for the three and six months ended June 30, 2019 and 2018 |
Exhibit E | Supplemental GAAP to Non-GAAP Reconciliations - Unaudited for the three and six months ended June 30, 2019 and 2018 |
Exhibit F | Supplemental GAAP to Non-GAAP Reconciliations on Guidance - Unaudited for the three months ended September 30 and December 31, 2019 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | $ | 2,112 | $ | 2,106 | $ | 4,169 | $ | 4,172 | |||||||
Cost of revenue | 1,404 | 1,414 | 2,785 | 2,828 | |||||||||||
Gross profit | 708 | 692 | 1,384 | 1,344 | |||||||||||
Selling, general and administrative expenses | 317 | 339 | 678 | 697 | |||||||||||
Operating income | 391 | 353 | 706 | 647 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (72 | ) | (73 | ) | (147 | ) | (144 | ) | |||||||
Other income (expense), net | (120 | ) | (4 | ) | (172 | ) | (2 | ) | |||||||
Total other income (expense), net | (192 | ) | (77 | ) | (319 | ) | (146 | ) | |||||||
Earnings before income taxes and equity method investment earnings (loss) | 199 | 276 | 387 | 501 | |||||||||||
Provision (benefit) for income taxes | 40 | 51 | 72 | 85 | |||||||||||
Equity method investment earnings (loss) | (4 | ) | (7 | ) | (11 | ) | (8 | ) | |||||||
Net earnings | 155 | 218 | 304 | 408 | |||||||||||
Net (earnings) loss attributable to noncontrolling interest | (1 | ) | (6 | ) | (2 | ) | (14 | ) | |||||||
Net earnings attributable to FIS common stockholders | $ | 154 | $ | 212 | $ | 302 | $ | 394 | |||||||
Net earnings per share-basic attributable to FIS common stockholders | $ | 0.48 | $ | 0.64 | $ | 0.93 | $ | 1.20 | |||||||
Weighted average shares outstanding-basic | 324 | 329 | 323 | 329 | |||||||||||
Net earnings per share-diluted attributable to FIS common stockholders | $ | 0.47 | $ | 0.64 | $ | 0.92 | $ | 1.18 | |||||||
Weighted average shares outstanding-diluted | 327 | 333 | 327 | 334 |
Exhibit B | |||||||
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 9,756 | $ | 703 | |||
Settlement deposits | 538 | 700 | |||||
Trade receivables, net | 1,366 | 1,472 | |||||
Contract assets | 122 | 123 | |||||
Settlement receivables | 289 | 281 | |||||
Other receivables | 137 | 166 | |||||
Prepaid expenses and other current assets | 297 | 288 | |||||
Total current assets | 12,505 | 3,733 | |||||
Property and equipment, net | 541 | 587 | |||||
Goodwill | 13,542 | 13,545 | |||||
Intangible assets, net | 2,863 | 3,132 | |||||
Computer software, net | 1,798 | 1,795 | |||||
Other noncurrent assets | 1,049 | 503 | |||||
Deferred contract costs, net | 561 | 475 | |||||
Total assets | $ | 32,859 | $ | 23,770 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable, accrued and other liabilities | $ | 1,030 | $ | 1,099 | |||
Settlement payables | 792 | 972 | |||||
Deferred revenue | 788 | 739 | |||||
Short-term borrowings | 1,507 | 267 | |||||
Current portion of long-term debt | 53 | 48 | |||||
Total current liabilities | 4,170 | 3,125 | |||||
Long-term debt, excluding current portion | 16,682 | 8,670 | |||||
Deferred income taxes | 1,295 | 1,360 | |||||
Other long-term liabilities | 664 | 326 | |||||
Deferred revenue | 56 | 67 | |||||
Total liabilities | 22,867 | 13,548 | |||||
Equity: | |||||||
FIS stockholders’ equity: | |||||||
Preferred stock $0.01 par value | — | — | |||||
Common stock $0.01 par value | 4 | 4 | |||||
Additional paid in capital | 10,887 | 10,800 | |||||
Retained earnings | 4,599 | 4,528 | |||||
Accumulated other comprehensive earnings (loss) | (438 | ) | (430 | ) | |||
Treasury stock, at cost | (5,067 | ) | (4,687 | ) | |||
Total FIS stockholders’ equity | 9,985 | 10,215 | |||||
Noncontrolling interest | 7 | 7 | |||||
Total equity | 9,992 | 10,222 | |||||
Total liabilities and equity | $ | 32,859 | $ | 23,770 |
Exhibit C | |||||||
Six months ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 304 | $ | 408 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 736 | 706 | |||||
Amortization of debt issue costs | 10 | 9 | |||||
Acquisition-related financing foreign exchange | 104 | — | |||||
Loss (gain) on sale of businesses and investments | — | (6 | ) | ||||
Loss (gain) other | 17 | — | |||||
Loss on extinguishment of debt | — | 1 | |||||
Stock-based compensation | 43 | 45 | |||||
Deferred income taxes | (68 | ) | (24 | ) | |||
Net changes in assets and liabilities, net of effects from acquisitions and foreign currency: | |||||||
Trade and other receivables | 93 | 189 | |||||
Contract assets | 1 | (3 | ) | ||||
Settlement activity | (27 | ) | 13 | ||||
Prepaid expenses and other assets | (140 | ) | (11 | ) | |||
Deferred contract costs | (174 | ) | (119 | ) | |||
Deferred revenue | 39 | (2 | ) | ||||
Accounts payable, accrued liabilities and other liabilities | (118 | ) | (383 | ) | |||
Net cash provided by operating activities | 820 | 823 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (57 | ) | (83 | ) | |||
Additions to computer software | (228 | ) | (233 | ) | |||
Net proceeds from sale of businesses and investments | 43 | 49 | |||||
Other investing activities, net | (42 | ) | (6 | ) | |||
Net cash provided by (used in) investing activities | (284 | ) | (273 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings | 19,201 | 5,703 | |||||
Repayment of borrowings and other financing obligations | (10,028 | ) | (5,521 | ) | |||
Debt issuance costs | (71 | ) | (24 | ) | |||
Proceeds from exercise of stock options | 86 | 203 | |||||
Treasury stock activity | (423 | ) | (637 | ) | |||
Dividends paid | (226 | ) | (211 | ) | |||
Other financing activities, net | (24 | ) | (2 | ) | |||
Net cash provided by (used in) financing activities | 8,515 | (489 | ) | ||||
Effect of foreign currency exchange rate changes on cash | 2 | (43 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 9,053 | 18 | |||||
Cash and cash equivalents, at beginning of period | 703 | 665 | |||||
Cash and cash equivalents, at end of period | $ | 9,756 | $ | 683 |
Three months ended June 30, 2018 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Revenue | $ | 1,124 | $ | 899 | $ | 83 | $ | 2,106 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Acquisition deferred revenue adjustment (1) | — | — | 1 | 1 | |||||||||||
Adjusted revenue | $ | 1,124 | $ | 899 | $ | 84 | $ | 2,107 |
Six months ended June 30, 2018 | |||||||||||||||
Integrated Financial Solutions | Global Financial Solutions | Corporate and Other | Consolidated | ||||||||||||
Revenue | $ | 2,185 | $ | 1,826 | $ | 161 | $ | 4,172 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Acquisition deferred revenue adjustment (1) | — | — | 3 | 3 | |||||||||||
Adjusted revenue | $ | 2,185 | $ | 1,826 | $ | 164 | $ | 4,175 |
(1) | See note (3) to Exhibit E. |
Exhibit D (continued) | ||||||||||||||||||||||||||
Three months ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||
Constant | ||||||||||||||||||||||||||
Currency | Adjusted | In Year | Adjusted | Organic | ||||||||||||||||||||||
Revenue | FX | Revenue | Revenue | Adjustments (1) | Base | Growth | ||||||||||||||||||||
Integrated Financial Solutions | $ | 1,179 | $ | 1 | $ | 1,180 | $ | 1,124 | $ | (9 | ) | $ | 1,115 | 5.8 | % | |||||||||||
Global Financial Solutions | 865 | 17 | 882 | 899 | (53 | ) | 846 | 4.2 | % | |||||||||||||||||
Corporate and Other | 68 | — | 68 | 84 | (18 | ) | 66 | 2.9 | % | |||||||||||||||||
Total | $ | 2,112 | $ | 18 | $ | 2,130 | $ | 2,107 | $ | (80 | ) | $ | 2,027 | 5.1 | % |
Six months ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||
Constant | ||||||||||||||||||||||||||
Currency | Adjusted | In Year | Adjusted | Organic | ||||||||||||||||||||||
Revenue | FX | Revenue | Revenue | Adjustments (1) | Base | Growth | ||||||||||||||||||||
Integrated Financial Solutions | $ | 2,309 | $ | 2 | $ | 2,311 | $ | 2,185 | $ | (17 | ) | $ | 2,168 | 6.6 | % | |||||||||||
Global Financial Solutions | 1,728 | 42 | 1,769 | 1,826 | (113 | ) | 1,713 | 3.3 | % | |||||||||||||||||
Corporate and Other | 132 | — | 133 | 164 | (36 | ) | 129 | 3.5 | % | |||||||||||||||||
Total | $ | 4,169 | $ | 44 | $ | 4,213 | $ | 4,175 | $ | (165 | ) | $ | 4,010 | 5.1 | % |
(1) | In year adjustments primarily include removing revenue from the Certegy Check Services business unit in North America, the Reliance Trust Company of Delaware and the Kingstar divestitures and the unwinding of the Brazilian Venture. |
Exhibit D (continued) | |||||||
Three months ended | Six months ended | ||||||
June 30, 2019 | June 30, 2019 | ||||||
Net cash provided by operating activities | $ | 526 | $ | 820 | |||
Non-GAAP adjustments: | |||||||
Acquisition, integration and other payments (1) | 46 | 90 | |||||
Tax payments on divestitures (2) | 10 | 10 | |||||
Settlement activity | (29 | ) | 27 | ||||
Adjusted cash flows from operations | 553 | 947 | |||||
Capital expenditures | (140 | ) | (285 | ) | |||
Free cash flow | $ | 413 | $ | 662 |
Three months ended | Six months ended | ||||||
June 30, 2018 | June 30, 2018 | ||||||
Net cash provided by operating activities | $ | 469 | $ | 823 | |||
Non-GAAP adjustments: | |||||||
Acquisition, integration and other payments (1) | 34 | 61 | |||||
Tax payments on divestitures (2) | — | 19 | |||||
Debt financing activities (3) | 1 | 1 | |||||
Settlement activity | (11 | ) | (13 | ) | |||
Adjusted cash flows from operations | 493 | 891 | |||||
Capital expenditures | (144 | ) | (316 | ) | |||
Free cash flow | $ | 349 | $ | 575 |
(1) | Adjusted cash flows from operations and free cash flow for the three and six months ended June 30, 2019 and 2018 exclude cash payments for certain acquisition, integration and other costs, net of related tax impact. The related tax impact totaled $11 million and $8 million for the three months and $21 million and $15 million for the six months ended June 30, 2019 and 2018, respectively. |
(2) | Adjusted cash flows from operations and free cash flow exclude tax payments made in 2019 related to the sale of Reliance Trust Company of Delaware and the unwinding of the Brazilian Venture recognized during 2018. Adjusted cash flows from operations and free cash flow exclude tax payments made in 2018 related to the sale of Capco consulting business and risk and compliance consulting business recognized during 2017. |
(3) | Adjusted cash flows from operations and free cash flow for the three and six months ended June 30, 2018 exclude the $1 million one-time bond premium payment on the redemption of our senior notes due October 2018. |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net earnings attributable to FIS common stockholders | $ | 154 | $ | 212 | $ | 302 | $ | 394 | ||||||||
Provision (benefit) for income taxes | 40 | 51 | 72 | 85 | ||||||||||||
Interest expense, net | 72 | 73 | 147 | 144 | ||||||||||||
Other, net | 125 | 17 | 185 | 24 | ||||||||||||
Operating income, as reported | 391 | 353 | 706 | 647 | ||||||||||||
FIS non-GAAP adjustments: | ||||||||||||||||
Depreciation and amortization (1) | 368 | 354 | 736 | 706 | ||||||||||||
Acquisition, integration and other costs (2) | 35 | 49 | 81 | 106 | ||||||||||||
Acquisition deferred revenue adjustment (3) | — | 1 | — | 3 | ||||||||||||
Adjusted EBITDA | $ | 794 | $ | 757 | $ | 1,523 | $ | 1,462 |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Earnings before income taxes and equity method investment earnings (loss) | $ | 199 | $ | 276 | $ | 387 | $ | 501 | ||||||||
Provision (benefit) for income taxes | 40 | 51 | 72 | 85 | ||||||||||||
Equity method investment earnings (loss) | (4 | ) | (7 | ) | (11 | ) | (8 | ) | ||||||||
Net (earnings) loss attributable to noncontrolling interest | (1 | ) | (6 | ) | (2 | ) | (14 | ) | ||||||||
Net earnings attributable to FIS common stockholders | 154 | 212 | 302 | 394 | ||||||||||||
FIS non-GAAP adjustments: | ||||||||||||||||
Depreciation and amortization (1) | 368 | 354 | 736 | 706 | ||||||||||||
Acquisition, integration and other costs (2) | 46 | 49 | 146 | 106 | ||||||||||||
Acquisition deferred revenue adjustment (3) | — | 1 | — | 3 | ||||||||||||
Loss (gain) on sale of businesses and investments (4) | — | 1 | 6 | (2 | ) | |||||||||||
Debt financing activities (5) | 102 | 1 | 102 | 1 | ||||||||||||
Equity method investment earnings (loss) (6) | 4 | 7 | 11 | 8 | ||||||||||||
Provision for income taxes on non-GAAP adjustments | (92 | ) | (81 | ) | (186 | ) | (172 | ) | ||||||||
Total non-GAAP adjustments | 428 | 332 | 815 | 650 | ||||||||||||
Adjusted net earnings, net of tax | $ | 582 | $ | 544 | $ | 1,117 | $ | 1,044 | ||||||||
Net earnings per share - diluted attributable to FIS common stockholders | $ | 0.47 | $ | 0.64 | $ | 0.92 | $ | 1.18 | ||||||||
FIS non-GAAP adjustments: | ||||||||||||||||
Depreciation and amortization (1) | 1.13 | 1.06 | 2.25 | 2.11 | ||||||||||||
Acquisition, integration and other costs (2) | 0.14 | 0.15 | 0.45 | 0.32 | ||||||||||||
Acquisition deferred revenue adjustment (3) | — | — | — | 0.01 | ||||||||||||
Loss (gain) on sale of businesses and investments (4) | — | — | 0.02 | (0.01 | ) | |||||||||||
Debt financing activities (5) | 0.31 | — | 0.31 | — | ||||||||||||
Equity method investment earnings (loss) (6) | 0.01 | 0.02 | 0.03 | 0.02 | ||||||||||||
Provision for income taxes on non-GAAP adjustments | (0.28 | ) | (0.24 | ) | (0.57 | ) | (0.51 | ) | ||||||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders | $ | 1.78 | $ | 1.63 | $ | 3.42 | $ | 3.13 | ||||||||
Weighted average shares outstanding-diluted | 327 | 333 | 327 | 334 |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Reconciliation of adjusted net earnings: | ||||||||||||||||
Adjusted net earnings, net of tax (New Method) | $ | 582 | $ | 544 | $ | 1,117 | $ | 1,044 | ||||||||
Less: depreciation and amortization of non-purchase accounting assets (1) | 193 | 169 | 388 | 338 | ||||||||||||
Plus: tax on depreciation and amortization of non-purchase accounting assets (1) | 36 | 33 | 73 | 66 | ||||||||||||
Adjusted net earnings, net of tax (Prior Method) | $ | 425 | $ | 408 | $ | 802 | $ | 772 |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Reconciliation of adjusted net earnings per share - diluted attributable to FIS common stockholders: | ||||||||||||||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders (New Method) | $ | 1.78 | $ | 1.63 | $ | 3.42 | $ | 3.13 | ||||||||
Less: depreciation and amortization of non-purchase accounting assets (1) | 0.59 | 0.51 | 1.19 | 1.01 | ||||||||||||
Plus: tax on depreciation and amortization of non-purchase accounting assets (1) | 0.11 | 0.10 | 0.22 | 0.20 | ||||||||||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders (Prior Method) | $ | 1.30 | $ | 1.23 | $ | 2.45 | $ | 2.31 |
(1) | This item represents the impact of depreciation and amortization expense. The Company has excluded the impact of depreciation of fixed assets and amortization of intangibles as such amounts can be significantly impacted by the timing and/or size of acquisitions. Although the Company excludes these amounts from its non-GAAP expenses, the Company believes that it is important for investors to understand that such tangible and intangible assets contribute to revenue generation. Depreciation and amortization of assets, including those that relate to past acquisitions, will recur in future periods until such assets have been fully depreciated or amortized. Any future acquisitions may result in the depreciation and/or amortization of future assets. Within the depreciation and amortization item, $193 million and $169 million for the three months and $388 million and $338 million for the six months ended June 30, 2019 and 2018, respectively, consist of depreciation and amortization of non-purchase accounting assets. The tax effects related to depreciation and amortization of non-purchase accounting assets are $36 million and $33 million for the three months and $73 million and $66 million for the six months ended June 30, 2019 and 2018, respectively. |
(2) | This item represents acquisition and integration costs primarily related to the acquisition of Worldpay and certain other costs including those associated with data center consolidation activities of $17 million and $25 million for the three and six months ended June 30, 2019, respectively. For the 2018 periods, this item represents acquisition and integration costs primarily related to the SunGard acquisition and certain other costs. |
(3) | This item represents the impact of the purchase accounting adjustment to reduce SunGard's deferred revenues to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard under GAAP if the acquisition had not occurred, but was not recognized due to GAAP purchase accounting requirements. The year ended December 31, 2018 was the final year impacted by this purchase accounting adjustment. |
(4) | This item represents the net pre-tax loss (gain) on sale of businesses and investments during the three months ended June 30, 2018 and six months ended June 30, 2019 and 2018. |
(5) | This item primarily represents the non-cash foreign currency impact of non-hedged Euro- and Pound Sterling-denominated notes issued during the three months ended June 30, 2019 to finance the Worldpay acquisition. For the 2018 periods, this item represents the write-off of certain previously capitalized debt issuance costs and the payment of a bond premium associated with the early redemption of our senior notes due October 2018 during June 2018. |
(6) | This item represents our equity method investment earnings or loss and is predominantly due to our equity ownership interest in Cardinal Holdings, LP. |
Three months ended | Three months ended | |||||||||||||||
September 30, 2019 | December 31, 2019 | |||||||||||||||
Low | High | Low | High | |||||||||||||
Net earnings | $ | 75 | $ | 300 | $ | 300 | $ | 510 | ||||||||
Estimated adjustments (1) | 1,070 | 860 | 1,170 | 990 | ||||||||||||
Adjusted EBITDA | $ | 1,145 | $ | 1,160 | $ | 1,470 | $ | 1,500 | ||||||||
Net earnings per share - diluted attributable to FIS common stockholders | $ | 0.14 | $ | 0.57 | $ | 0.48 | $ | 0.82 | ||||||||
Estimated adjustments (2) | 1.19 | 0.80 | 0.99 | 0.71 | ||||||||||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders (Prior Method) | $ | 1.33 | $ | 1.37 | $ | 1.47 | $ | 1.53 | ||||||||
Net earnings per share - diluted attributable to FIS common stockholders | $ | 0.14 | $ | 0.57 | $ | 0.48 | $ | 0.82 | ||||||||
Estimated adjustments (2) | 1.55 | 1.15 | 1.32 | 1.02 | ||||||||||||
Adjusted net earnings per share - diluted attributable to FIS common stockholders (New Method) | $ | 1.69 | $ | 1.72 | $ | 1.80 | $ | 1.84 |
(1) | Estimated adjustments include acquisition, integration and other costs and other items. |
(2) | Estimated adjustments include depreciation and amortization, acquisition, integration and other costs, equity method investment earnings (loss) and other items, net of tax impact. |
Schedule 1 | ||
Schedule 2 | ||
Schedule 3 | ||
Schedule 4 | ||
Schedule 5 | ||
Schedule 6 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||
Revenue | $ | 1,073.0 | $ | 1,006.8 | 7 | % | $ | 2,043.0 | $ | 1,857.5 | 10 | % | ||||||||
Sales and marketing | 304.0 | 283.4 | 7 | % | 594.9 | 549.4 | 8 | % | ||||||||||||
Other operating costs | 173.5 | 185.5 | (6 | )% | 354.5 | 340.6 | 4 | % | ||||||||||||
General and administrative | 105.6 | 136.8 | (23 | )% | 233.0 | 386.9 | (40 | )% | ||||||||||||
Depreciation and amortization | 253.4 | 287.9 | (12 | )% | 517.8 | 495.1 | 5 | % | ||||||||||||
Income (loss) from operations | 236.5 | 113.2 | 109 | % | 342.8 | 85.5 | 301 | % | ||||||||||||
Interest expense—net | (69.2 | ) | (79.9 | ) | (13 | )% | (141.3 | ) | (155.1 | ) | (9 | )% | ||||||||
Non-operating income (expense)(1) | (4.2 | ) | (22.0 | ) | (81 | )% | (0.7 | ) | (30.6 | ) | (98 | )% | ||||||||
Income (loss) before applicable income taxes | 163.1 | 11.3 | NM | 200.8 | (100.2 | ) | NM | |||||||||||||
Income tax expense (benefit) | 18.6 | 12.8 | 45 | % | 18.2 | (0.4 | ) | NM | ||||||||||||
Net income (loss) | 144.5 | (1.5 | ) | NM | 182.6 | (99.8 | ) | NM | ||||||||||||
Less: Net income attributable to non-controlling interests | (1.2 | ) | (1.4 | ) | (14 | )% | (2.9 | ) | (0.7 | ) | 314 | % | ||||||||
Net income (loss) attributable to Worldpay, Inc. | $ | 143.3 | $ | (2.9 | ) | NM | $ | 179.7 | $ | (100.5 | ) | NM | ||||||||
Net income (loss) per share attributable to Worldpay, Inc. Class A common stock: | ||||||||||||||||||||
Basic | $ | 0.46 | $ | (0.01 | ) | NM | $ | 0.59 | $ | (0.35 | ) | NM | ||||||||
Diluted(2) | $ | 0.46 | $ | (0.01 | ) | NM | $ | 0.58 | $ | (0.35 | ) | NM | ||||||||
Shares used in computing net income (loss) per share of Class A common stock: | ||||||||||||||||||||
Basic | 311,029,474 | 296,204,304 | 306,562,681 | 284,868,484 | ||||||||||||||||
Diluted | 313,083,818 | 296,204,304 | 312,834,187 | 284,868,484 |
(1) | Non-operating income (expense) primarily consists of other income and expense items outside of the Company’s operating activities. |
(2) | Up until March 18, 2019, we were structured as a C corporation and Worldpay Holding’s structure as a pass-through entity for tax purposes, the numerator in the diluted net income per share calculation was adjusted to reflect the Company’s income tax expense at an expected effective tax rate assuming the conversion of the Class B units of Worldpay Holding into shares of our Class A common stock. During the three and six months ended June 30, 2018, approximately 15.0 million and 15.1 million, respectively, weighted average Class B units of Worldpay Holding were excluded in computing diluted net income per share because including them would have an antidilutive effect. As the Class B units of Worldpay Holding were not included, the numerator used in the calculation of diluted net income per share was equal to the numerator used in the calculation of basic net income per share for the three and six months ended June 30, 2018. Additionally, due to the net loss for the three and six months ended June 30, 2018, any remaining potentially dilutive securities were also excluded from the denominator in computing dilutive net income per share. Since March 18, 2019, all Class B units are no longer outstanding and for the three months ended June 30, 2019, the methodology above is not applicable and diluted earnings per share is computed by dividing net income attributable to Worldpay, Inc. by the weighted-average shares outstanding during the period and the impact of securities that have a diluted effect on earnings per share. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Loss) income before applicable income taxes | $ | — | $ | — | $ | 200.8 | $ | — | |||||||
Taxes | — | — | 19.9 | — | |||||||||||
Net income (loss) | $ | 143.3 | $ | (2.9 | ) | $ | 180.9 | $ | (100.5 | ) | |||||
Diluted shares | 313,083,818 | 296,204,304 | 312,834,187 | 284,868,484 | |||||||||||
Diluted EPS | $ | 0.46 | $ | (0.01 | ) | $ | 0.58 | $ | (0.35 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||
Income (loss) before applicable income taxes | $ | 163.1 | $ | 11.3 | NM | $ | 200.8 | $ | (100.2 | ) | NM | ||||||||||
Non-GAAP Adjustments: | |||||||||||||||||||||
Transition, acquisition and integration costs(1) (2) | 46.2 | 52.8 | (13 | )% | 88.6 | 230.2 | (62 | )% | |||||||||||||
Share-based compensation(2) | 24.6 | 39.0 | (37 | )% | 57.6 | 56.2 | 2 | % | |||||||||||||
Intangible amortization and depreciation expense (2) (3) | 215.1 | 252.7 | (15 | )% | 441.3 | 425.5 | 4 | % | |||||||||||||
Non-operating (income) expense(4) | 4.2 | 22.0 | (81 | )% | 0.7 | 30.6 | (98 | )% | |||||||||||||
Non-GAAP adjusted income before applicable income taxes | 453.2 | 377.8 | 20 | % | 789.0 | 642.3 | 23 | % | |||||||||||||
Less: Adjustments | |||||||||||||||||||||
Adjusted tax expense(5) | 65.1 | 50.3 | 29 | % | 107.5 | 77.8 | 38 | % | |||||||||||||
Adjusted tax rate | 14 | % | 13 | % | 14 | % | 12 | % | |||||||||||||
Other(6) | 1.0 | 0.4 | 150 | % | 1.4 | 0.7 | 100 | % | |||||||||||||
Adjusted net income | $ | 387.1 | $ | 327.1 | 18 | % | $ | 680.1 | $ | 563.8 | 21 | % | |||||||||
Adjusted net income per share | $ | 1.24 | $ | 1.04 | 19 | % | $ | 2.17 | $ | 1.87 | 16 | % | |||||||||
Adjusted shares outstanding(7) | 313,083,818 | 313,431,291 | 312,834,187 | 302,127,796 |
(1) | Represents acquisition and integration costs incurred in connection with our acquisitions, charges related to employee terminations and other transition activities. |
(2) | Below are the adjustments to Other operating costs, General and administrative and Depreciation and amortization. |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||||||||||||
Transition, Acquisition & Integration | Share-Based Compensation | Intangible Amortization and Depreciation Expense | Transition, Acquisition & Integration | Share-Based Compensation | Intangible Amortization and Depreciation Expense | ||||||||||||||||||
Other operating costs | $ | 26.0 | $ | — | $ | — | $ | 27.0 | $ | — | $ | — | |||||||||||
General and administrative | 20.2 | 24.6 | — | 25.8 | 39.0 | — | |||||||||||||||||
Depreciation and amortization | — | — | 215.1 | — | — | 252.7 | |||||||||||||||||
Total adjustments | $ | 46.2 | $ | 24.6 | $ | 215.1 | $ | 52.8 | $ | 39.0 | $ | 252.7 |
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||
Transition, Acquisition & Integration | Share-Based Compensation | Intangible Amortization and Depreciation Expense | Transition, Acquisition & Integration | Share-Based Compensation | Intangible Amortization and Depreciation Expense | ||||||||||||||||||
Other operating costs | $ | 46.5 | $ | — | $ | — | $ | 37.2 | $ | — | $ | — | |||||||||||
General and administrative | 42.1 | 57.6 | — | 193.0 | 56.2 | — | |||||||||||||||||
Depreciation and amortization | — | — | 441.3 | — | — | 425.5 | |||||||||||||||||
Total adjustments | $ | 88.6 | $ | 57.6 | $ | 441.3 | $ | 230.2 | $ | 56.2 | $ | 425.5 |
(3) | Represents amortization of intangible assets acquired through business combinations and customer portfolio and related asset acquisitions as well as depreciation of acquired software. |
(4) | See note (1) in Schedule 1. |
(5) | Represents adjusted income tax expense to reflect a projected effective tax rate of 20.1% for 2019 and 19.8% for 2018, including the tax effect of adjustments described above. Adjusted tax expense includes tax benefits due to: (1) the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, (2) the tax basis step up associated with our separation from Fifth Third Bank and (3) the purchase or exchange of Class B units of Worldpay Holding, net of payment obligations under tax receivable agreements. The effective tax rate is expected to remain at 20.1% for the remainder of 2019. |
(6) | Represents the non-controlling interest, net of adjusted income tax expense, associated with a consolidated joint venture. |
(7) | The adjusted shares outstanding include 15.0 million and 15.1 million of weighted average Class B units that are excluded from the GAAP dilutive net income per share calculation for the three and six months ended June 30, 2018. Additionally, the three and six months ended June 30, 2018 also include other potentially dilutive securities that are excluded from the GAAP dilutive net income per share calculation. As of June 30, 2019 all Class B units have been converted to Class A common stock and are therefore included in the Company’s shares outstanding. |
Three Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue | $ | 466.2 | $ | 401.6 | 16 | % | ||||
Sales and marketing | 124.6 | 98.1 | 27 | % | ||||||
Segment profit | $ | 341.6 | $ | 303.5 | 13 | % |
Six Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue | $ | 893.5 | $ | 738.0 | 21 | % | ||||
Sales and marketing | 243.0 | 194.0 | 25 | % | ||||||
Segment profit | $ | 650.5 | $ | 544.0 | 20 | % |
Three Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue | $ | 520.0 | $ | 520.4 | — | % | ||||
Sales and marketing | 172.9 | 179.0 | (3 | )% | ||||||
Segment profit | $ | 347.1 | $ | 341.4 | 2 | % |
Six Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue | $ | 979.4 | $ | 952.6 | 3 | % | ||||
Sales and marketing | 338.9 | 342.8 | (1 | )% | ||||||
Segment profit | $ | 640.5 | $ | 609.8 | 5 | % |
Three Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue | $ | 86.8 | $ | 84.8 | 2 | % | ||||
Sales and marketing | 6.5 | 6.3 | 3 | % | ||||||
Segment profit | $ | 80.3 | $ | 78.5 | 2 | % |
Six Months Ended June 30, | ||||||||||
2019 | 2018 | % Change | ||||||||
Revenue | $ | 170.1 | $ | 166.9 | 2 | % | ||||
Sales and marketing | 13.0 | 12.6 | 3 | % | ||||||
Segment profit | $ | 157.1 | $ | 154.3 | 2 | % |
June 30, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 288.6 | $ | 196.5 | ||||
Accounts receivable—net | 1,681.0 | 1,694.8 | ||||||
Settlement assets and merchant float | 5,126.8 | 3,132.3 | ||||||
Prepaid expenses | 91.5 | 80.0 | ||||||
Other | 567.6 | 526.1 | ||||||
Total current assets | 7,755.5 | 5,629.7 | ||||||
Property, equipment and software—net | 1,105.5 | 1,074.1 | ||||||
Intangible assets—net | 2,740.9 | 3,127.8 | ||||||
Goodwill | 14,100.3 | 14,137.9 | ||||||
Deferred taxes | 1,176.2 | 789.9 | ||||||
Other assets | 219.0 | 129.1 | ||||||
Total assets | $ | 27,097.4 | $ | 24,888.5 | ||||
Liabilities and equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 1,276.8 | $ | 1,188.7 | ||||
Settlement obligations | 5,918.5 | 3,723.6 | ||||||
Current portion of notes payable | 218.5 | 225.7 | ||||||
Current portion of tax receivable agreement obligations | 28.5 | 73.1 | ||||||
Deferred income | 30.2 | 25.1 | ||||||
Current maturities of finance lease obligations | 20.0 | 22.7 | ||||||
Other | 658.2 | 630.3 | ||||||
Total current liabilities | 8,150.7 | 5,889.2 | ||||||
Long-term liabilities: | ||||||||
Notes payable | 6,944.0 | 7,622.1 | ||||||
Tax receivable agreement obligations | 890.2 | 590.8 | ||||||
Finance lease obligations | 24.3 | 34.3 | ||||||
Deferred taxes | 345.1 | 473.7 | ||||||
Other | 197.3 | 74.4 | ||||||
Total long-term liabilities | 8,400.9 | 8,795.3 | ||||||
Total liabilities | 16,551.6 | 14,684.5 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Total equity (1) | 10,545.8 | 10,204.0 | ||||||
Total liabilities and equity | $ | 27,097.4 | $ | 24,888.5 |
(1) | Includes equity attributable to non-controlling interests. |
Six Months Ended | |||||||
June 30, 2019 | June 30, 2018 | ||||||
Operating Activities: | |||||||
Net income (loss) | $ | 182.6 | $ | (99.8 | ) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization expense | 517.8 | 495.1 | |||||
Amortization of customer incentives | 15.1 | 12.6 | |||||
Amortization and write-off of debt issuance costs | 1.9 | 72.9 | |||||
Gain on foreign currency forward | — | (35.9 | ) | ||||
Share-based compensation expense | 57.6 | 56.2 | |||||
Deferred tax (benefit) expense | (28.6 | ) | 27.3 | ||||
Tax receivable agreements non-cash items | (3.4 | ) | (6.4 | ) | |||
Other | (1.5 | ) | 1.2 | ||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 9.1 | (50.3 | ) | ||||
Net settlement assets and obligations | 20.6 | 105.7 | |||||
Prepaid and other assets | 19.4 | (33.4 | ) | ||||
Accounts payable and accrued expenses | 113.4 | (159.6 | ) | ||||
Other liabilities | 31.5 | (6.8 | ) | ||||
Net cash provided by operating activities | 935.5 | 378.8 | |||||
Investing Activities: | |||||||
Purchases of property and equipment | (175.5 | ) | (103.1 | ) | |||
Acquisition of customer portfolios and related assets and other | (12.7 | ) | (51.1 | ) | |||
Purchase of interest rate caps | — | (8.1 | ) | ||||
Proceeds from foreign currency forward | — | 71.5 | |||||
Cash acquired in acquisitions, net of cash used | — | 1,405.8 | |||||
Other | 9.1 | — | |||||
Net cash (used in) provided by investing activities | (179.1 | ) | 1,315.0 | ||||
Financing Activities: | |||||||
Proceeds from issuance of long-term debt | — | 2,951.8 | |||||
Borrowings on revolving credit facility | 4,204.0 | 2,598.0 | |||||
Repayment of revolving credit facility | (4,254.0 | ) | (2,823.0 | ) | |||
Repayment of debt and finance lease obligations | (643.5 | ) | (2,590.3 | ) | |||
Payment of debt issuance costs | — | (91.1 | ) | ||||
Proceeds from issuance of Class A common stock under employee stock plans | 16.7 | 14.9 | |||||
Repurchase of Class A common stock (to satisfy tax withholding obligations) | (20.0 | ) | (11.7 | ) | |||
Settlement and payments under certain tax receivable agreements | (69.7 | ) | (140.6 | ) | |||
Distributions to non-controlling interests | (3.3 | ) | (6.4 | ) | |||
Net cash provided by (used in) financing activities | (769.8 | ) | (98.4 | ) | |||
Net (decrease) increase in cash and cash equivalents | (13.4 | ) | 1,595.4 | ||||
Cash and cash equivalents—Beginning of period | 2,581.3 | 1,272.2 | |||||
Effect of exchange rate changes on cash | (18.7 | ) | (139.2 | ) | |||
Cash and cash equivalents—End of period | $ | 2,549.2 | $ | 2,728.4 | |||
Cash Payments: | |||||||
Interest | $ | 125.3 | $ | 149.3 | |||
Income taxes | 22.6 | 6.2 | |||||
Non-cash Items: | |||||||
Issuance of tax receivable agreements | $ | 327.9 | $ | 120.9 |
Six Months Ended | ||||||||
June 30, 2019 | June 30, 2018 | |||||||
Cash and cash equivalents on the Condensed Consolidated Financial Statements | $ | 288.6 | $ | 367.7 | ||||
Other restricted cash (in other current assets) | 546.0 | 487.5 | ||||||
Merchant float (in settlement assets and merchant float) | 1,714.6 | 1,873.2 | ||||||
Total cash and cash equivalents per the Consolidated Statements of Cash Flows | $ | 2,549.2 | $ | 2,728.4 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||
Net income (loss) | $ | 144.5 | $ | (1.5 | ) | NM | $ | 182.6 | $ | (99.8 | ) | NM | |||||||||
Income tax expense (benefit) | 18.6 | 12.8 | 45 | % | 18.2 | (0.4 | ) | NM | |||||||||||||
Non-operating (income) expense(1) | 4.2 | 22.0 | (81 | )% | 0.7 | 30.6 | (98 | )% | |||||||||||||
Interest expense—net | 69.2 | 79.9 | (13 | )% | 141.3 | 155.1 | (9 | )% | |||||||||||||
Share-based compensation | 24.6 | 39.0 | (37 | )% | 57.6 | 56.2 | 2 | % | |||||||||||||
Transition, acquisition and integration costs(2) | 46.2 | 52.8 | (13 | )% | 88.6 | 230.2 | (62 | )% | |||||||||||||
Depreciation and amortization | 253.4 | 287.9 | (12 | )% | 517.8 | 495.1 | 5 | % | |||||||||||||
Adjusted EBITDA | $ | 560.7 | $ | 492.9 | 14 | % | $ | 1,006.8 | $ | 867.0 | 16 | % |
(1) | See note (1) in Schedule 1. |
(2) | See notes (1) and (2) in Schedule 2. |
• | Exhibit A shows the historical adjusted revenue, adjusted EBITDA, and adjusted net earnings on a total combined company basis, including combined company non-GAAP adjustments; |
• | Exhibit B shows the historical adjusted combined segment revenue under the new segment reporting structure that the Company will use on a go forward basis and organic revenue adjustments to arrive at adjusted combined revenue organic base. |
Exhibit A | Adjusted Combined Consolidated Revenue, EBITDA, and Net Earnings — Unaudited | |
Exhibit B | Adjusted Combined Segment Revenue — Unaudited |
Q1 2018 (1) | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 (1) | Q1 2019 | Q2 2019 | ||||||||||||||||||||||
Revenue | $ | 2,066 | $ | 2,106 | $ | 2,084 | $ | 2,167 | $ | 8,423 | $ | 2,057 | $ | 2,112 | ||||||||||||||
Worldpay revenue | 915 | 1,007 | 1,018 | 1,050 | 3,990 | 970 | 1,073 | |||||||||||||||||||||
Acquisition deferred revenue (6) | 2 | 1 | 1 | — | 4 | — | — | |||||||||||||||||||||
Adjusted combined revenue (2) | $ | 2,983 | $ | 3,114 | $ | 3,103 | $ | 3,217 | $ | 12,417 | $ | 3,027 | $ | 3,185 | ||||||||||||||
Operating income | 294 | 353 | 342 | 469 | 1,458 | 315 | 391 | |||||||||||||||||||||
Worldpay operating income | (63 | ) | 113 | 78 | 175 | 303 | 106 | 237 | ||||||||||||||||||||
Adjusted combined operating income (3) | 231 | 466 | 420 | 644 | 1,761 | 421 | 628 | |||||||||||||||||||||
Combined non-GAAP adjustments: | ||||||||||||||||||||||||||||
Depreciation and amortization | 566 | 642 | 683 | 632 | 2,523 | 632 | 621 | |||||||||||||||||||||
Acquisition, integration and other costs (4) | 291 | 102 | 63 | 93 | 549 | 88 | 81 | |||||||||||||||||||||
Asset impairments (5) | — | — | 95 | — | 95 | — | — | |||||||||||||||||||||
Acquisition deferred revenue adjustment (6) | 2 | 1 | 1 | — | 4 | — | — | |||||||||||||||||||||
Adjusted combined EBITDA (7) | $ | 1,090 | $ | 1,211 | $ | 1,262 | $ | 1,369 | $ | 4,932 | $ | 1,141 | $ | 1,330 | ||||||||||||||
Adjusted combined EBITDA margin (8) | 36.5 | % | 38.9 | % | 40.7 | % | 42.6 | % | 39.7 | % | 37.7 | % | 41.8 | % | ||||||||||||||
Net earnings | $ | 182 | $ | 212 | $ | 154 | $ | 299 | $ | 847 | $ | 148 | $ | 154 | ||||||||||||||
Worldpay net earnings | (138 | ) | (3 | ) | 3 | 111 | (27 | ) | 36 | 143 | ||||||||||||||||||
Adjusted combined net earnings before non-GAAP adjustments (9) | 44 | 209 | 157 | 410 | 820 | 184 | 297 | |||||||||||||||||||||
Combined non-GAAP adjustments: | — | |||||||||||||||||||||||||||
Purchase accounting amortization (10) | 363 | 438 | 471 | 406 | 1,678 | 399 | 390 | |||||||||||||||||||||
Acquisition, integration and other costs (4) | 291 | 102 | 63 | 93 | 549 | 143 | 92 | |||||||||||||||||||||
Asset impairments (5) | — | — | 95 | — | 95 | — | — | |||||||||||||||||||||
Acquisition deferred revenue adjustment (6) | 2 | 1 | 1 | — | 4 | — | — | |||||||||||||||||||||
Loss (gain) on sale of businesses and investments (11) | (3 | ) | 1 | 54 | 3 | 55 | 6 | — | ||||||||||||||||||||
Debt financing activities (12) | — | 1 | — | — | 1 | — | 102 | |||||||||||||||||||||
Equity method investment earnings (loss) (13) | — | 7 | 4 | 4 | 15 | 7 | 4 | |||||||||||||||||||||
Non-operating (income) expense (14) | 9 | 22 | 4 | 8 | 43 | (3 | ) | 4 | ||||||||||||||||||||
Adjusted tax expense (15) | (45 | ) | (31 | ) | (49 | ) | (70 | ) | (195 | ) | (37 | ) | (42 | ) | ||||||||||||||
(Provision) benefit for Income taxes on non-GAAP adjustments | (58 | ) | (48 | ) | (67 | ) | 3 | (170 | ) | (57 | ) | (56 | ) | |||||||||||||||
Total non-GAAP adjustments | 559 | 493 | 576 | 447 | 2,075 | 458 | 494 | |||||||||||||||||||||
Adjusted combined net earnings (16) | $ | 603 | $ | 702 | $ | 733 | $ | 857 | $ | 2,895 | $ | 642 | $ | 791 |
Q1 2018 (1) | Q2 2018 | Q3 2018 | Q4 2018 | FY 2018 | Q1 2019 | Q2 2019 | ||||||||||||||||||||||
Merchant Solutions | $ | 892 | $ | 1,017 | $ | 978 | $ | 1,031 | $ | 3,918 | $ | 951 | $ | 1,098 | ||||||||||||||
Banking Solutions | 1,477 | 1,495 | 1,524 | 1,564 | 6,060 | 1,504 | 1,493 | |||||||||||||||||||||
Capital Market Solutions | 596 | 584 | 589 | 622 | 2,391 | 572 | 594 | |||||||||||||||||||||
Corporate and Other | 18 | 18 | 12 | — | 48 | — | — | |||||||||||||||||||||
Adjusted combined revenue | $ | 2,983 | $ | 3,114 | $ | 3,103 | $ | 3,217 | $ | 12,417 | $ | 3,027 | $ | 3,185 | ||||||||||||||
Organic adjustments: | ||||||||||||||||||||||||||||
Merchant Solutions | — | — | — | — | — | — | — | |||||||||||||||||||||
Banking Solutions | (67 | ) | (61 | ) | (60 | ) | (70 | ) | (258 | ) | — | — | ||||||||||||||||
Capital Market Solutions | (1 | ) | — | — | — | (1 | ) | — | — | |||||||||||||||||||
Corporate and Other | (18 | ) | (18 | ) | (12 | ) | — | (48 | ) | — | — | |||||||||||||||||
Adjusted combined revenue organic adjustments (17) | (86 | ) | (79 | ) | (72 | ) | (70 | ) | (307 | ) | — | — | ||||||||||||||||
Organic base: | ||||||||||||||||||||||||||||
Merchant Solutions | 892 | 1,017 | 978 | 1,031 | 3,918 | 951 | 1,098 | |||||||||||||||||||||
Banking Solutions | 1,410 | 1,434 | 1,464 | 1,494 | 5,802 | 1,504 | 1,493 | |||||||||||||||||||||
Capital Market Solutions | 595 | 584 | 589 | 622 | 2,390 | 572 | 594 | |||||||||||||||||||||
Corporate and Other | 1 | — | — | — | 1 | — | — | |||||||||||||||||||||
Adjusted combined revenue organic base | $ | 2,898 | $ | 3,035 | $ | 3,031 | $ | 3,147 | $ | 12,111 | $ | 3,027 | $ | 3,185 |
(1) | Amounts include the 15-day stub period results between January 1, 2018 and January 15, 2018 for Worldpay Group plc prior to its acquisition by Worldpay. |
(2) | Adjusted combined revenue consists of revenue, of both FIS and Worldpay, increased to reverse the purchase accounting deferred revenue adjustment made upon the acquisition by FIS of SunGard. As discussed in note (6) below, the deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard under GAAP but was not recognized due to GAAP purchase accounting adjustments. |
(3) | Adjusted combined operating income represents the operating income of both FIS and Worldpay, calculated based on the combined company revenue and operating expenses. |
(4) | This item represents acquisition and integration costs primarily related to FIS’ acquisition of SunGard and Worldpay’s acquisition of Worldpay Group plc, and certain other costs including those associated with data center consolidation activities. |
(5) | This item represents asset impairments for assets held for sale prior to being transferred to Banco Bradesco upon closing of the agreement to unwind the Brazilian Venture as well as impairments of the goodwill and contract intangible asset associated with the Brazilian Venture. |
(6) | This item represents the impact of the purchase accounting adjustment to reduce SunGard's deferred revenues to estimated fair value, determined as fulfillment cost plus a normal profit margin. The deferred revenue adjustment represents revenue that would have been recognized in the normal course of business by SunGard under GAAP if FIS' acquisition had not occurred, but was not recognized due to GAAP purchase accounting requirements. |
(7) | Adjusted combined EBITDA is EBITDA, earnings from continuing operations before interest, taxes, depreciation and amortization, excluding certain costs and other transactions which management deems non-operational in nature and are listed above, the removal of which improves comparability of operating results across reporting periods. |
(8) | Adjusted combined EBITDA margin reflects adjusted combined EBITDA divided by adjusted combined revenue. |
(9) | Adjusted combined net earnings before non-GAAP adjustments reflects combined company net earnings to shareholders. |
(10) | This item represents purchase price amortization expense on all intangible assets acquired through various acquisitions, including customer relationships, contract value, trademarks and tradenames, non-compete agreements and technology assets acquired. The Company has excluded the impact of purchase accounting amortization of intangibles as such amounts can be significantly impacted by the timing and/or size of acquisitions. Although the Company excludes these amounts from its non-GAAP expenses, the Company believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Purchase accounting amortization of intangible assets will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in purchase price amortization of future intangible assets. |
(11) | This item represents the net pre-tax loss (gain) on sale of businesses and investments. |
(12) | This item primarily represents the non-cash foreign currency impact of non-hedged Euro- and Pound Sterling-denominated notes issued to finance the Worldpay acquisition. |
(13) | This item represents our equity method investment earnings or loss and is predominantly due to the Company's equity ownership interest in Cardinal Holdings, LP. |
(14) | This item represents Worldpay’s non-operating income (expense) primarily consisting of other income and expense items outside of operating activities. |
(15) | This item represents adjusted income tax expense to reflect a projected effective tax rate for the period for Worldpay, including the tax effect of Worldpay adjustments described above. Adjusted tax expense includes tax benefits due to (1) |
(16) | Adjusted combined net earnings represents combined company net earnings adjusted for the impacts of the items listed above. |
(17) | Organic adjustments represent the removal of revenue related to business divestitures for the periods presented. |