Fidelity National Information Services, Inc. · NYSE:FIS
Fidelity National Information Services — Q4 2020 Earnings Presentation
34 slides from Fidelity National Information Services's earnings presentation, Feb 9, 2021
Slide 1: Fourth Quarter 2020 Earnings Call
FOURTH QUARTER 2020 EARNINGS CALL February 9, 2021
Slide 2: Speakers
SPEAKERS BUSINESS & Gary Norcross STRATEGY Chairman, President and UPDATE Chief Executive Officer FINANCIAL RESULTS & Woody Woodall Chief Financial Officer GUIDANCE
Slide 3: Disclosures
DISCLOSURES Forward-looking Statements Our discussions today, including this presentation and any comments made by management, contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Any statements that refer to future events or circumstances, including our futur
Slide 4: Business & Strategy Update
BUSINESS & STRATEGY UPDATE
Slide 5: Exceptional Performance in Challenging Environment
EXCEPTIONAL PERFORMANCE IN CHALLENGING ENVIRONMENT Q4 RESULTS FY RESULTS TOTAL ADJUSTED ADJUSTED TOTAL ADJUSTED ADJUSTED REVENUE EPS EBITDA MARGIN REVENUE EPS EBITDA MARGIN 3.3 BILLION $1.62 12.6 BILLION $5.46 3% 45% +60 (3)% 42% +120 BPS BPS (1)% - Flat (ORGANIC) 21% (1)% (ORGANIC) SEGMENT REVENUE
Slide 6: 2020 Accomplishments Provide Confidence in 2021 Outlook
2020 ACCOMPLISHMENTS PROVIDE CONFIDENCE IN 2021 OUTLOOK GROWTH & EXPANSION OPERATIONAL EFFICIENCY RESULTS Successfully combining unique breadth of REVENUE SYNERGY NEW PRODUCT ENTERPRISE TRANSFORMATION capabilities to serve our clients in new and innovative ways Largest eCom Retailer Investing in: Fa
Slide 7: Winning Share in Banking
WINNING SHARE IN BANKING Strategic technology investment and differentiated competitive position 2020 Accomplishments 2020 Notable Client Wins Modern Banking Platform • Three recent bank wins now live • Modern Banking Platform expected to contribute $100M in revenue in 2021 +8% $3.5B +23% 15 %1 • Ch
Slide 8: Winning Share in Merchant
WINNING SHARE IN MERCHANT Leading authorization rates, global reach, omnichannel and integrated payments technologies 2020 Payments $-volume (year-over-year % change)1 2020 Notable Client Wins • The world’s 2nd largest eCom retailer to begin processing eCom transactions with FIS +1% +2% +32% Food De
Slide 9: Winning Share in Capital Markets
WINNING SHARE IN CAPITAL MARKETS Leading end-to-end solutions and growing mix of SAAS-based recurring revenue FY & 4Q 2020 Accomplishments (year-over-year % change in TCV) 2020 Notable Client Wins Global Investment Bank • Selected our cleared derivative suite including reconciliations, trade allocat
Slide 10: Financial Results
FINANCIAL RESULTS
Slide 11: Consolidated Financial Results
CONSOLIDATED FINANCIAL RESULTS 4Q 2020 RESULTS REVENUE ($ in millions) Accelerated growth in Banking and Capital Markets • Flat organic revenue growth as growth in Banking and Capital 4Q20 $3,316 Markets was offset by COVID impact in Merchant • Adjusted EBITDA margin expanded 60 basis points (bps) y
Slide 12: Segment Results
SEGMENT RESULTS REVENUE ($ in millions) BANKING SOLUTIONS • Organic revenue growth accelerated to 5% driven by strong execution 4Q20 $1,551 • Organic revenue growth includes ~1.5% headwind associated with lower termination fees 4Q19 • Anticipate mid-to-high single digit organic revenue growth in 202
Slide 13: Merchant Solutions Portfolio Mix
MERCHANT SOLUTIONS PORTFOLIO MIX Lower-yield verticals grew while higher-yield verticals declined in 2020, creating a future tailwind as economies reopen 1 2020 Volume 2020 Volume (% of FIS total) (year-over-year % change) eCommerce U.S. U.K. Verticals with Potential for strong growth continued duri
Slide 14: Strong Balance Sheet, Cash Flow and Liquidity
STRONG BALANCE SHEET, CASH FLOW AND LIQUIDITY BALANCE SHEET AND CASH FY 2020 LIQUIDITY POSITION FY 2020 FLOW Free Cash Flow $3.0B Cash and Cash Equivalents $2.0B 1 2 Debt Paydown $1.6B Available Borrowing Capacity $2.6B Dividends Paid $0.9B Total Liquidity $4.6B Total Debt $20.0B Weighted Average In
Slide 15: Strategic Capital Allocation to Maximize Shareholder Value
STRATEGIC CAPITAL ALLOCATION TO MAXIMIZE SHAREHOLDER VALUE Our capital allocation priorities are unchanged 1 INVEST FOR GROWTH 2 RETURN CAPITAL SHARE ORGANIC M&A DIVIDENDS REPURCHASE Aggressively Targeting high- Initiated 100 million Consistent 10- investing in growth assets share repurchase 15% div
Slide 16: FY 2021 Adjusted EBITDA Margin Bridge
FY 2021 ADJUSTED EBITDA MARGIN BRIDGE 100 bps (150) bps 300 – 350 bps ~45% 42% FY 2020 Adj. EBITDA Operating Leverage Synergies 2020 Short-Term Cost FY 2021 Adj. EBITDA Margin Actions Margin • Operating Leverage: Incremental margins of ~80%, primarily driven by recovery in Merchant, underlying expan
Slide 17: Detailed 1Q and FY 2021 Guidance
DETAILED 1Q AND FY 2021 GUIDANCE ($ millions, except per share data) METRICS 1Q 2021 GUIDANCE FY 2021 GUIDANCE Revenue $3,130 - $3,160 $13,500 - $13,700 Organic Revenue Growth 1% - 2% 8% - 9% Adjusted EBITDA $1,250 - $1,280 $6,000 - $6,150 Year-over-year Growth 0% - 3% 14% - 17% Margin Expansion (50
Slide 18: Appendix
APPENDIX
Slide 19: 4Q 2020 Consumer Spending Trends
4Q 2020 CONSUMER SPENDING TRENDS 1 Merchant Monthly Volume and Transaction Trends Dollar Volume Transaction Count 5% 5% 4% 3% 3% 1% 1% 0% October November December Q4 • Consumer spending shifting to non-discretionary verticals and to large-enterprise merchants • Difference between Dollar Volume and
Slide 20: 1Q 2021 Guidance – Additional Assumptions
1Q 2021 GUIDANCE – ADDITIONAL ASSUMPTIONS ($ millions) METRICS 1Q 2021 GUIDANCE Positive F/X Impact to Revenue ~$25 Corporate and Other Revenue Growth ~(10)% Depreciation and Amortization ~$275 (Excluding Purchase Price Amortization) Net Interest Expense ~$75 Effective Tax Rate ~14.5% Weighted Avera
Slide 21: FY 2021 Guidance – Additional Assumptions
FY 2021 GUIDANCE – ADDITIONAL ASSUMPTIONS ($ millions) METRICS FY 2021 GUIDANCE Positive F/X Impact to Revenue ~$75 Corporate and Other Revenue Growth ~(10)% Depreciation and Amortization ~$1,130 (Excluding Purchase Price Amortization) Net Interest Expense ~$290 Effective Tax Rate ~14.5% Weighted Av
Slide 22: 2020 Organic Base
2020 ORGANIC BASE ($ millions) Organic Base 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 Banking Solutions $ 1,444 $ 1,462 $ 1,488 $ 1,551 $ 5,944 Merchant Solutions 935 812 1,017 1,003 3,767 Capital Market Solutions 597 593 587 663 2,440 Operating Segment Total $ 2,976 $ 2,867 $ 3,092 $ 3,217 $ 12,152 T
Slide 23: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance or projec
Slide 24: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS • 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
Slide 25: FIS Use of Non-GAAP Financial Information
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 the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizi
Slide 26: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED DECEMBER 31, 2020 MERCHANT BANKING CAPITAL MARKET CORPORATE TOTAL SOLUTIONS SOLUTIONS SOLUTIONS AND OTHER Revenue $1,003 $1,551 $663 $99 $3,316 FX (7) 3 (7) - (11) Constant Currency Revenue $997 $1,554 $656 $99
Slide 27: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) YEAR ENDED DECEMBER 31, 2020 MERCHANT BANKING CAPITAL MARKET CORPORATE TOTAL SOLUTIONS SOLUTIONS SOLUTIONS AND OTHER Revenue $3,767 $5,944 $2,440 $401 $12,552 FX (9) 32 (5) 2 20 Constant Currency Revenue $3,758 $5,976 $2,435 $403
Slide 28: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED DECEMBER 31, 2020 2019 Net earnings (loss) attributable to FIS common stockholders $103 $(158) Provision (benefit) for income taxes 2 (19) Interest expense, net 82 95 Other, net (20) 205 Operating income, as rep
Slide 29: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) YEAR ENDED DECEMBER 31, 2020 2019 Net earnings (loss) attributable to FIS common stockholders $158 $298 Provision (benefit) for income taxes 96 100 Interest expense, net 334 337 Other, net (36) 234 Operating income, as reported $5
Slide 30: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED DECEMBER 31, 2020 2019 Earnings (loss) before income taxes and equity method investment earnings (loss) $102 $(183) (Provision) benefit for income taxes (2) 19 Equity method investment earnings (loss) 2 7 Net (e
Slide 31: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) YEAR ENDED DECEMBER 31, 2020 2019 Earnings (loss) before income taxes and equity method investment earnings (loss) $266 $413 (Provision) benefit for income taxes (96) (100) Equity method investment earnings (loss) (6) (10) Net (ea
Slide 32: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED DECEMBER 31, 2020 Net cash provided by operating activities $1,417 Non-GAAP adjustments: Acquisition, integration and other payments 109 Settlement activity (268) Adjusted cash flows from operations $1,258 Capit
Slide 33: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) YEAR ENDED DECEMBER 31, 2020 Net cash provided by operating activities $4,442 Non-GAAP adjustments: Acquisition, integration and other payments 545 Settlement activity (862) Adjusted cash flows from operations $4,125 Capital expen
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Fidelity National Information Services — Q4 2020 Earnings Presentation on 6ix