- 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
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.
First Data Corporation
Consolidated Statements of
Operations
(Unaudited)
(in millions, except per share
data)
Three months ended March 31, 2018
2017 Revenues: Revenues excluding reimbursable items
$ 2,084 $ 1,882 Reimbursable items 198 919 Total
revenues 2,282 2,801 Expenses: Cost of revenues
(exclusive of items shown below) 779 781 Selling, general, and
administrative 647 525 Depreciation and amortization 250 228 Other
operating expenses 60 22 Total expenses (excluding
reimbursable items) 1,736 1,556 Reimbursable items 198 919
Total expenses 1,934 2,475 Operating profit
348 326 Interest expense, net (233 ) (233 ) Loss on
debt extinguishment — (56 ) Other expense (3 ) (1 ) Income before
income taxes and equity earnings in affiliates 112 36 Income tax
expense 27 12 Equity earnings in affiliates 49 55 Net
income 134 79 Less: Net income attributable to noncontrolling
interests and redeemable noncontrolling interest 33 43
Net income attributable to First Data Corporation $ 101
$ 36 Net income attributable to First Data
Corporation per share: Basic $ 0.11 $ 0.04 Diluted $ 0.11 $ 0.04
Weighted-average common shares outstanding: Basic 923 910
Diluted 946 931
The 2018 results include the impact of
adopting ASC 606 (the New Revenue Standard), while the 2017 results
are stated under ASC 605 (the Legacy Revenue Standard).
First Data Corporation
Selected Consolidated Balance Sheet and
Cash Flow Data
(Unaudited)
(in millions)
SELECTED CONSOLIDATED BALANCE SHEET DATA
As of As of March 31, 2018
December 31, 2017 Cash and cash equivalents $ 586 $
498 Settlement assets 17,547 20,363 Total assets 45,415 48,269
Short-term and current portion of long-term borrowings 1,104
1,271 Settlement obligations 17,547 20,363 Long-term borrowings
17,908 17,927 Total liabilities 39,125 42,183 Redeemable
noncontrolling interest 78 72 Total First Data Corporation
stockholders' equity 3,365 3,152 Noncontrolling interests 2,847
2,862 Total equity 6,212 6,014
SELECTED CONSOLIDATED CASH FLOW
DATA
Three months endedMarch
31,
2018 2017 Source/(Use) of cash Net cash
provided by operating activities $ 534 $ 421 Net cash used in
investing activities (143 ) (116 ) Net cash used in financing
activities (304 ) (187 )
Supplemental cash flow data Cash
interest payments(a) $ 237 $ 245 (a) For purposes of
this schedule, cash interest payments excludes interest on capital
leases and interest on foreign lines of credit.
First Data Corporation
Summary Segment Data
(Unaudited)
(in millions)
Three months ended March 31, 2018
2017
%Change
Organic CC%
Change(c)
Consolidated Revenues $ 2,282 $ 2,801 (19 )% Adjustments: Non
wholly owned entities(a) (4 ) (10 ) (60 )% Reimbursable items (198
) (919 ) (78 )% Total Segment Revenues $ 2,080 $ 1,872
11 % 5 % Segment Revenues: Global Business
Solutions $ 1,318 $ 1,118 18 % 7 % Global Financial Solutions 400
393 2 % 1 % Network & Security Solutions 362 361
— % 7 % Total Segment Revenues $ 2,080 $ 1,872 11 % 5
%
Three months ended March 31, 2018
2017
%Change
Organic CC%
Change(c)
Net income attributable to First Data Corporation $ 101 $ 36 181 %
Adjustments: Non wholly owned entities(a) (18 ) (6 )
NM
Depreciation and amortization 250 228 10 % Interest expense, net
233 233 — % Loss on debt extinguishment — 56 NM Other items(b) 63
26 NM Income tax expense 27 12 NM Stock-based compensation 74
65 14 % Total Segment EBITDA $ 730 $ 650
12 % 10 % Segment EBITDA: Global Business Solutions $
434 $ 382 14 % 10 % Global Financial Solutions 166 154 8 % 6 %
Network & Security Solutions 175 156 13 % 13 % Corporate (45 )
(42 ) (7 )% (7 )% Total Segment EBITDA $ 730 $ 650 12
% 10 % NM represents not meaningful (a) Net
adjustment to reflect our proportionate share of the results of our
investments in businesses accounted for under the equity method and
consolidated subsidiaries with noncontrolling ownership interests.
Segment revenue for our significant affiliates is reflected based
on our proportionate share of the results of our investments in
businesses accounted for under the equity method and consolidated
subsidiaries with noncontrolling ownership interests. For other
affiliates, we include equity earnings in affiliates, excluding
amortization expense, in segment revenue. (b) Includes
restructuring, non-normal course litigation and regulatory
settlements, debt issuance expenses, deal and deal integration
costs, Other expense as presented in the unaudited consolidated
statements of operations, which includes divestitures, derivative
gains (losses), non-operating foreign currency gains (losses), and
other as applicable to the periods presented. (c) 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 New
Reporting Standards to the prior year period.
First Data Corporation
Summary Segment Data
(Unaudited)
(in millions)
SEGMENT REVENUE
RECONCILIATION
Three months ended March 31, 2018
2017 % B/(W)(b) FDC segment revenue $
2,080 $ 1,872 11% New revenue standard adjustments (ASC 606) — 17
FDC adjusted segment revenue 2,080 1,889 10% Currency impact
(28
) — FDC CC adjusted segment revenue
2,052
1,889 9% Acquisitions/Divestitures(c) — 58 Organic CC
FDC segment revenue growth(a) $
2,052
$ 1,947 5% GBS segment revenue $ 1,318 $ 1,118
18% New revenue standard adjustments (ASC 606) — 32 GBS adjusted
segment revenue 1,318 1,150 15% Currency impact (15 ) —
Acquisitions/Divestitures(c) — 71 Organic CC GBS
segment revenue growth(a) $ 1,303 $ 1,221 7%
GBS NA segment revenue $ 1,014 $ 880 15% New revenue standard
adjustments (ASC 606) — 26 GBS NA adjusted segment revenue 1,014
906 12% Currency impact (1 ) — Acquisitions/Divestitures(c) —
71 Organic CC GBS NA segment revenue growth(a) $
1,013 $ 977 4% GBS EMEA segment revenue $ 168
$ 140 20% New revenue standard adjustments (ASC 606) — 1 GBS EMEA
adjusted segment revenue 168 141 19% Currency impact (20 ) —
Acquisitions/Divestitures(c) — — Organic CC GBS EMEA
segment revenue growth(a) $ 148 $ 141 4% GBS
APAC segment revenue $ 48 $ 39 21% New revenue standard adjustments
(ASC 606) — — GBS APAC adjusted segment revenue 48 39 21% Currency
impact (3 ) — Acquisitions/Divestitures(c) — —
Organic CC GBS APAC segment revenue growth(a) $ 45 $ 39
15% GBS LATAM segment revenue $ 88 $ 59 49% New
revenue standard adjustments (ASC 606) — 5 GBS LATAM adjusted
segment revenue 88 64 38% Currency impact 9 —
Acquisitions/Divestitures(c) — — Organic CC GBS LATAM
segment revenue growth(a) $ 97 $ 64 52% GFS
segment revenue $ 400 $ 393 2% New revenue standard adjustments
(ASC 606) — (1 ) GFS adjusted segment revenue 400 392 2% Currency
impact (12 ) — Acquisitions/Divestitures(c) — (6 ) Organic
CC GFS segment revenue growth(a) $ 388 $ 386 1%
Three months ended March 31, 2018 2017
% B/(W)(b) GFS NA segment revenue $ 228 $ 236 (3)%
New revenue standard adjustments (ASC 606) — (2 ) GFS NA adjusted
segment revenue 228 234 (2)% Currency impact — —
Acquisitions/Divestitures(c) — — Organic CC GFS NA
segment revenue growth(a) $ 228 $ 234 (2)% GFS
EMEA segment revenue $ 110 $ 101 9% New revenue standard
adjustments (ASC 606) — (1 ) GFS EMEA adjusted segment revenue 110
100 11% Currency impact (13 ) — Acquisitions/Divestitures(c) —
(6 ) Organic CC GFS EMEA segment revenue growth(a) $ 97
$ 94 5% GFS APAC segment revenue $ 31 $
23 32% New revenue standard adjustments (ASC 606) — (2 ) GFS APAC
adjusted segment revenue 31 21 45% Currency impact (1 ) —
Acquisitions/Divestitures(c) — — Organic CC GFS APAC
segment revenue growth(a) $ 30 $ 21 39% GFS
LATAM segment revenue $ 31 $ 33 (6)% New revenue standard
adjustments (ASC 606) — 4 GFS LATAM adjusted segment revenue 31 37
(17)% Currency impact 2 — Acquisitions/Divestitures(c) — —
Organic CC GFS LATAM segment revenue growth(a) $ 33 $
37 (11)% NSS segment revenue $ 362 $ 361 —% New
revenue standard adjustments (ASC 606) — (14 ) NSS adjusted segment
revenue 362 347 4% Currency impact — — Acquisitions/Divestitures(c)
— (7 ) Organic CC NSS segment revenue growth(a) $ 362
$ 340 7%
SEGMENT EBITDA
RECONCILIATION
Three months ended March 31, 2018
2017 % B/(W)(b) FDC segment EBITDA $
730 $ 650 12% New revenue standard adjustments (ASC 606) — (8 ) FDC
adjusted segment EBITDA 730 642 14% Currency impact (5 ) — FDC CC
adjusted segment EBITDA 725 642 13% Acquisitions/Divestitures(c) —
18 Organic CC FDC segment EBITDA growth(a) $ 725
$ 660 10% GBS segment EBITDA $ 434 $ 382 14%
New revenue standard adjustments (ASC 606) — (8 ) GBS adjusted
segment EBITDA 434 374 16% Currency impact (2 ) —
Acquisitions/Divestitures(c) — 20 Organic CC GBS
segment EBITDA growth(a) $ 432 $ 394 10% GFS
segment EBITDA $ 166 $ 154 8% New revenue standard adjustments (ASC
606) — — GFS adjusted segment EBITDA 166 154 8% Currency impact (3
) — Acquisitions/Divestitures(c) — (2 ) Organic CC GFS
segment EBITDA growth(a) $ 163 $ 152 6% NSS
segment EBITDA $ 175 $ 156 13% New revenue standard adjustments
(ASC 606) — — NSS adjusted segment EBITDA 175 156 13% Currency
impact — — Acquisitions/Divestitures(c) — — Organic
CC NSS segment EBITDA growth(a) $ 175 $ 156 13%
(a) 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 New Reporting Standards to the
prior year period. (b) “B” means results in 2018 are better than
results in 2017 “(W)” means results are worse. (c)
“Acquisitions/Divestitures" includes the following 2017 activity:
the acquisitions of CardConnect and BluePay in GBS North America;
the formation of the digital banking JV in NSS (treated as a 50%
digital banking revenue divestiture), and the divestiture of the
GFS Baltics business.
First Data Corporation
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(in millions, except per share
data)
ADJUSTED NET INCOME RECONCILIATION Three
months ended March 31, 2018 2017
% Change Net income attributable to First Data Corporation $
101 $ 36 181% Adjustments: Stock-based compensation 74 65 14% Loss
on debt extinguishment — 56 NM Amortization of acquisition
intangibles and deferred financing costs(a) 106 95 12%
Restructuring 32 23 39% Intercompany foreign exchange gain 3 1 200%
Impairment, litigation, and other(b) 10 (1 ) NM Deal and
integration costs 7 —
NM
Income tax on above items and discrete tax items(c) (54 ) (17 ) NM
Adjusted net income attributable to First Data Corporation $ 279
$ 258 8% Adjusted net income per share: Basic
$ 0.30 $ 0.28 7% Diluted $ 0.29 $ 0.28 6% Weighted-average
common shares used to compute adjusted net income per share: Basic
923 910 1% Diluted 946 931 2% NM represents not meaningful
(a)
Represents amortization of acquisition
intangibles, excluding the percentage of our consolidated
amortization of acquisition intangibles related to non wholly owned
consolidated alliances equal to the portion of such alliances owned
by our alliance partners. This line also includes amortization
related to deferred financing costs of $5 million and $4 million
for the three months ended March 31, 2018 and 2017,
respectively.
(b) Represents impairments, non-normal course litigation and
regulatory settlements, investments gains (losses), divestitures,
and other, as applicable to the periods presented. (c)
The tax effect of the adjustments between
our GAAP and adjusted results takes into account the tax treatment
and related tax rate(s) that apply to each adjustment in the
applicable tax jurisdiction(s). Generally, this results in a tax
impact at the U.S. effective tax rate for certain adjustments,
including the majority of amortization of intangible assets,
deferred financing costs, stock compensation, and loss on debt
extinguishment; whereas the tax impact of other adjustments,
including restructuring expense, depends on whether the amounts are
deductible in the respective tax jurisdictions and the applicable
effective tax rate(s) in those jurisdictions. "Income tax on above
items and discrete tax items" also includes the impact of
significant discrete tax items impacting Net income attributable to
First Data Corporation.
First Data Corporation
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
(in millions, except per share
data)
FREE CASH FLOW RECONCILIATION Three months
ended March 31, 2018 2017
Change Net cash provided by operating activities $
534 $ 421 $ 113 Capital expenditures (139 ) (117 ) (22 )
Distribution and dividends paid to noncontrolling interests and
redeemable noncontrolling interest and other (27 ) (43 ) 16 Free
cash flow $ 368 $ 261 $ 107
NET DEBT
RECONCILIATION As of As of March
31, 2018 December 31, 2017 Total long-term borrowings $
17,908 $ 17,927 Total short-term and current portion of long-term
borrowings 1,104 1,271 Total borrowings 19,012 19,198
Unamortized discount and unamortized deferred financing costs 120
126 Total borrowings at par 19,132 19,324 Less: Settlement
lines of credit and other arrangements 164 205 Gross debt
excluding settlement lines of credit and other arrangements 18,968
19,119 Less: Cash and cash equivalents 586 498 Net debt $
18,382 $ 18,621
First Data Corporation
Operating Data
(Unaudited)
(in millions)
Three months ended March 31, 2018
2017 % Change GBS: North America
merchant transactions(a) 12,121 11,483 6% International merchant
transactions(b) 2,497 2,227 12%
GFS: North America
card accounts on file(c) 908 867 5% International card accounts on
file(d) 179 156 15%
NSS: Network transactions (EFT
Network and Stored Value)(e) 5,950 5,114 16% (a)
North American merchant transactions include acquired Visa and
MasterCard credit and signature debit, American Express and
Discover, PIN-debit, electronic benefits transactions,
processed-only and gateway customer transactions at the POS. North
American merchant transactions reflect 100% of alliance
transactions. (b)
International transactions include Visa,
MasterCard, and other payment network merchant acquiring
transactions for clients outside the U.S. and Canada. Transactions
include credit, signature debit, PIN-debit POS, POS gateway, and
ATM transactions. International merchant transactions reflect 100%
of alliance transactions.
(c)
North America card accounts on file
reflect the total number of bankcard credit and retail credit
accounts as of the end of the periods presented.
(d) International card accounts on file reflect the total number of
bankcard and retail accounts outside the United States and Canada
as of the end of the periods presented. (e) Network transactions
include the debit issuer processing transactions, STAR Network
issuer transactions, Payroll and Gift Solutions and POS
transactions.
First Data Corporation
2018 Non-GAAP Guidance
Reconciliation
(Unaudited)
(in millions)
Consolidated Revenue to Total Segment
Revenue
FY 2018 vs. FY 2017
Consolidated revenue (at reported rates) 2018 at ASC 606 vs. 2017
at ASC 605
~(20%)
Adjustments:
+Non wholly owned entities +Reimbursable postage and other +ASC 606
Adjustments Total segment revenue (reported)
~6-7%
Memo: Total segment revenue (at constant
currency)
~6-7%
Net Income to Total Segment
EBITDA
FY 2018 vs. FY 2017
Net income attributable to FDC(1) 2018 at ASC 606 vs. 2017 at ASC
605
~(35%) - (45%)
Adjustments +Depreciation and amortization +Interest Expense, net
+Income tax expense +Stock Based Compensation +ASC 606 Adjustments
+ Other(2) Total segment EBITDA (reported)
~8-10%
Memo: total segment EBITDA (at constant
currency)
~8-10%
Net Income to Adj. Net Income
FY 2018
Net income attributable to FDC(1)
$0.90-$0.95
Adjustments (note: adjustments represent positive balances)
+Stock-based compensation +Amortization of acquisition intangibles
and deferred financing cost +ASC 606 Adjustments +Other(3) Adjusted
Net Income
$1.42-$1.47
Cash Flow From Operations to Free Cash
Flow
FY 2018
Cash (used in) / provided by operating activities
$2.1B+
+Adjustments(4) Free cash flow (use)/source
$1.4B+
(1) Reflects a significant increase in tax expense in
2018 primarily driven by the Q4 2017 release of a valuation
allowance against deferred tax assets associated with the U.S.
federal NOL. The reversal of the valuation allowance resulted in a
significant non-cash tax benefit in Q4 2017 and the recording of a
normalized book tax rate in 2018. (2) Includes non wholly owned
entities adjustment, loss on debt extinguishment, as well as other
items. (3) Includes loss on debt extinguishment, gain/loss on
divestitures, restructuring, impairment, litigation and other, as
well as the impact of tax expense/(benefit) of the adjusted items.
(4)
Includes capital expenditures and
distributions to minority interest and other.
First Data Corporation
Forward Looking Statements
Notice to Investors, Prospective Investors and the Investment
Community; Cautionary Information Regarding Forward-Looking
Statements
Certain matters we discuss in our public statements may
constitute forward-looking statements. You can identify
forward-looking statements because they contain words such as
“believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,”
“plans,” “estimates,” or “anticipates” or similar expressions which
concern our strategy, plans, projections or intentions. Examples of
forward-looking statements include, but are not limited to, all
statements we make relating to revenue, earnings before net
interest expense, income taxes, depreciation, and amortization
(EBITDA), earnings, margins, growth rates, and other financial
results for future periods. By their nature, forward-looking
statements speak only as of the date they are made; are not
statements of historical fact or guarantees of future performance;
and are subject to risks, uncertainties, assumptions or changes in
circumstances that are difficult to predict or quantify. Actual
results could differ materially and adversely from our
forward-looking statements due to a variety of factors, including
the following: (1) adverse impacts from global economic, political,
and other conditions affecting trends in consumer, business, and
government spending; (2) our ability to anticipate and respond to
changing industry trends, including technological changes and
increasing competition; (3) our ability to successfully renew
existing client contracts on favorable terms and obtain new
clients; (4) our ability to prevent a material breach of security
of any of our systems; (5) our ability to implement and improve
processing systems to provide new products, improve functionality,
and increase efficiencies; (6) the successful management of our
merchant alliance program which involves several alliances not
under our sole control and each of which acts independently of the
others; (7) our successful management of credit and fraud risks in
our business units and merchant alliances, particularly in the
context of eCommerce and mobile markets; (8) consolidation among
financial institution clients or other client groups that impacts
our client relationships; (9) our ability to use our net operating
losses without restriction to offset income for US tax purposes;
(10) our ability to improve our profitability and maintain
flexibility in our capital resources through the implementation of
cost savings initiatives; (11) the acquisition or disposition of
material business or assets; (12) our ability to successfully value
and integrate acquired businesses; (13) our high degree of
leverage; (14) adverse impacts from currency exchange rates or
currency controls imposed by any government or otherwise; (15)
changes in the interest rate environment that increase interest on
our borrowings or the interest rate at which we can refinance our
borrowings; (16) the impact of new or changes in current laws,
regulations, credit card association rules, or other industry
standards; and (17) new lawsuits, investigations, or proceedings,
or changes to our potential exposure in connection with pending
lawsuits, investigations or proceedings, and various other factors
set forth in our Annual Report on Form 10-K for the period ended
December 31, 2017, including but not limited to, Item 1 - Business,
Item 1A - Risk Factors, and Item 7 - Management’s Discussion and
Analysis of Financial Condition and Results of
Operations. Except as required by law, we do not intend to
revise or update any forward-looking statement as a result of new
information, future developments or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20180430005569/en/
Peter PoillonInvestor RelationsFirst
Data212-266-3565Peter.Poillon@firstdata.comorLiidia LiuksilaPublic
RelationsFirst
Data212-515-0174Liidia.Liuksila@firstdata.com
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