Fidelity National Information Services, Inc. · NYSE:FIS

Fidelity National Information Services — Q4 2017 Earnings Presentation

37 slides from Fidelity National Information Services's earnings presentation, Feb 6, 2018

  1. Slide 1: Fourth Quarter 2017 Earnings Call

    Fourth Quarter 2017 Earnings Call February 6, 2018 ©2018 FIS and/or its subsidiaries. All Rights Reserved.

  2. Slide 2: Agenda

    Agenda TOPIC SPEAKER Gary Norcross Business Summary President and CEO Woody Woodall Financial Summary Chief Financial Officer 2

  3. 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

  4. Slide 4: Business Summary

    Business Summary Gary Norcross President and CEO 4

  5. Slide 5: Full-Year 2017 Highlights

    Full-Year 2017 Highlights • $9.1 BILLION adjusted revenue • $4.42 adjusted EPS • GENERATED exceptional margin expansion • DELIVERED strong free cash flow • SIGNIFICANT returns to shareholders 5

  6. Slide 6: Fourth Quarter Business Update

    Fourth Quarter Business Update • Integrated Financial Solutions (IFS) – Strong growth in banking, wealth and digital – Operational efficiencies drove improved margins • Global Financial Solutions (GFS) – Strong client renewals for our buy-side solutions – Exceptional margin expansion and structural

  7. Slide 7: Strategic Growth Levers

    Strategic Growth Levers • EXECUTE on differentiating capabilities • CAPITALIZE on global scale • INVEST for long-term success 7

  8. Slide 8: Financial Summary

    Financial Summary Woody Woodall Chief Financial Officer 8

  9. Slide 9: Consolidated Results

    Consolidated Results Fourth quarter (Q4) and full-year (FY) 2017 ($ millions, except per share data) METRICS Q4 2017 Y-o-Y vs Q4 2016 Adj. Revenue $ 2,329 3.1% Organic(1) Adj. EBITDA $ 881 4.1% Adj. EBITDA Margin 37.8% 340 bps Adj. EPS $ 1.36 19.3% METRICS FY 2017 Y-o-Y vs FY 2016 Adj. Revenue $ 9,1

  10. Slide 10: Integrated Financial Solutions

    Integrated Financial Solutions Fourth quarter (Q4) and full-year (FY) 2017 ($ millions) METRICS Q4 2017 Y-o-Y vs Q4 2016 Revenue $ 1,200 5.6% Organic(1) Adj. EBITDA $ 498 5.3% Adj. EBITDA Margin 41.5% 20 bps METRICS FY 2017 Y-o-Y vs FY 2016 Revenue $ 4,630 2.8% Organic(1) Adj. EBITDA $ 1,868 3.9% Ad

  11. Slide 11: Integrated Financial Solutions

    Integrated Financial Solutions Revenue Contribution Revenue Composition – Q4 ($ millions) RECURRING REVENUE | 87% Fourth Organic Full Organic Quarter Growth Year Growth Banking and Wealth $ 492 8.5% $ 1,959 4.0% PROF. SERVICES | 8% Payments 496 5.0% 1,863 1.0% OTHER | 5% Corporate and Digital 213 0.

  12. Slide 12: Global Financial Solutions

    Global Financial Solutions Fourth quarter (Q4) and full-year (FY) 2017 ($ millions) METRICS Q4 2017 Y-o-Y vs Q4 2016 Revenue $ 1,046 3.1% Organic(1) Adj. EBITDA $ 442 7.5% Adj. EBITDA Margin 42.3% 630 bps METRICS FY 2017 Y-o-Y vs FY 2016 Revenue $ 4,138 3.1% Organic(1) Adj. EBITDA $ 1,415 9.6% Adj.

  13. Slide 13: Global Financial Solutions

    Global Financial Solutions Revenue Contribution Revenue Composition – Q4 ($ millions) RECURRING REVENUE | 67% Fourth Organic Full Organic Quarter Growth Year Growth Institutional and PROF. SERVICES | 18% $ 613 5.0% $ 2,144 2.8% Wholesale Banking and Payments 432 0.5% 1,665 3.1% Consulting - - 329 n/

  14. Slide 14: Corporate and Other

    Corporate and Other Fourth quarter (Q4) and full-year (FY) 2017 ($ millions) METRICS Q4 2017 Y-o-Y vs Q4 2016 Adj. Revenue $ 83 (23.0)% Organic(1) Adj. EBITDA $ (60) n/a Corporate Expense $ 79 (10.0)% METRICS FY 2017 Y-o-Y vs FY 2016 Adj. Revenue $ 362 (16.8)% Organic(1) Adj. EBITDA $ (215) n/a Corp

  15. Slide 15: Cash Flow and Capital Allocation

    Cash Flow and Capital Allocation • Cash flow generation – Free cash flow of $551 million in Q4 2017 – Free cash flow of $1,595 million in FY 2017 – FCF conversion rate of 120% in Q4 2017 and 108% in FY 2017 • Maintaining a strong balance sheet – $8.8 billion debt outstanding as of December 31, 2017

  16. Slide 16: Tax Legislation Overview

    Tax Legislation Overview • Impact to Q4 2017 financials – Revaluation of tax liabilities – GAAP net earnings benefit of ~$780 million or $2.32 diluted EPS • FY 2018 effective tax rate of ~20% • 2018 tax benefit funding investments – Up to $100 million of incremental investment – Expand employee bene

  17. Slide 17: FY 2016 – 2017 ASC 606 Restatement Impact

    FY 2016 – 2017 ASC 606 Restatement Impact (($ millions, except per share data, unaudited) 2016 2017 ASC 606 Overview Revenue Revenue Primary changes: $9,433 ($411) $9,130 ($455) $9,022 $8,675 • Net revenue for pass- through fees (~80% of revenue change) • License revenue from early Reported Restated

  18. Slide 18: Full-Year 2018 Guidance Summary

    Full-Year 2018 Guidance Summary ($ millions, except per share data) METRICS GUIDANCE Consolidated Revenue ~$8,480 – $8,560 Organic Growth 2.5% – 3.5% Adjusted EBITDA Margin 36% – 37% Adjusted EPS $5.10 – $5.30 Year-over-year growth(1) 19% – 24% (1) Represents growth compared to a restated for 606 ba

  19. Slide 19: Competitive Business Model

    Competitive Business Model • GENERATE strong cash flow • MAINTAIN attractive balance sheet • INVEST in growth 19

  20. Slide 20: Appendix

    APPENDIX His

  21. Slide 21: FY 2018 Guidance – Additional Assumptions

    FY 2018 Guidance – Additional Assumptions METRICS GUIDANCE Current F/X Outlook Minimal impact Adjusted D&A ~$660 – $680 million (Excludes Purchase Accounting Amort.) Net Interest Expense ~$280 million Effective Tax Rate ~20% Net Minority Interest ~$27 million (Includes Equity Income) Capital Expendi

  22. Slide 22: Full-Year 2017 Organic Revenue Base

    Full-Year 2017 Organic Revenue Base METRICS ($ millions) FY 2017 Consolidated 605 Adjusted Revenue $9,130 Impact of 606 Adjustment $(455) Impact of M&A Activity(1) $(410) FY 2017 Consolidated 606 Organic Base $8,265 (1) Reflects impact of PS&E, Consulting and Kingstar divestitures. Assumes Kingstar

  23. Slide 23: Organic Revenue Adjustments

    Organic Revenue Adjustments Q1 – Q4 2017 ($ millions) METRICS Q1 2017 Q2 2017 Q3 2017 Q4 2017 Integrated Financial Solutions $(10) $(10) $(5) - Global Financial Solutions $(141) $(158) $(53) $(15) Corporate and Other $(18) - - - Consolidated FIS $(169) $(168) $(58) $(15) 23

  24. Slide 24: Consolidated Q4 GAAP to Organic Growth Bridge

    Consolidated Q4 GAAP to Organic Growth Bridge ($ millions) Fourth Quarter 2016 Fourth Quarter 2017 $2,550 $2,550 $2,500 $2,500 $15 $2,450 $2,445 $2,450 $2,400 $2,400 $2,350 $2,350 $2,329 $2,307 $2,300 $2,300 - $(22) $2,250 $2,238 $2,250 $2,200 $(222) $2,200 $2,150 $2,150 $2,100 $2,100 $2,050 $2,050

  25. Slide 25: Consolidated FY GAAP to Organic Growth Bridge

    Consolidated FY GAAP to Organic Growth Bridge ($ millions) Full-Year 2016 Full-Year 2017 $9,500 $9,500 $192 $9,400 $9,400 $9,300 $9,300 $9,241 $9,200 $9,200 $9,123 $7 $9,109 $9,100 $9,100 $(21) $9,000 $9,000 $8,931 $8,900 $(502) $8,900 $8,800 $8,800 $8,700 $8,700 $8,600 $8,600 FY 2016 Deferred M&A F

  26. Slide 26: 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 of the Co

  27. Slide 27: Forward-looking Statements

    Forward-looking Statements • 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 firm

  28. Slide 28: Non-GAAP Financial Information and Reconciliation

    Non-GAAP Financial Information and Reconciliation 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 s

  29. Slide 29: Non-GAAP Financial Information and Reconciliation

    Non-GAAP Financial Information and Reconciliation Adjusted revenue consists of processing and services revenue, increased to reverse the purchase accounting deferred revenue adjustment made upon the acquisition of SunGard. The deferred revenue adjustment represents revenue that would have been recog

  30. Slide 30: Non-GAAP Financial Information and Reconciliation

    Non-GAAP Financial Information and Reconciliation Adjusted net earnings from continuing operations excludes the impact of certain costs and other transactions which management deems non-operational in nature, the removal of which improves comparability of operating results across reporting periods.

  31. Slide 31: Organic Revenue Growth Calculation

    Organic Revenue Growth Calculation Fourth quarter (Q4) 2017 ($ millions) Three months ended December 31, 2017 Integrated Global Financial Financial Corporate Solutions Solutions and Other Consolidated Processing and services revenue $ 1,200 $ 1,046 $ 83 $ 2,329 Non-GAAP adjustments: Acquisition defe

  32. Slide 32: Organic Revenue Growth Calculation

    Organic Revenue Growth Calculation Full-year (FY) 2017 ($ millions) Year ended December 31, 2017 Integrated Global Financial Financial Corporate Solutions Solutions and Other Consolidated Processing and services revenue $ 4,630 $ 4,138 $ 355 $ 9,123 Non-GAAP adjustments: Acquisition deferred revenue

  33. Slide 33: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials ($ millions, unaudited) Three months ended Year ended December 31, December 31, 2017 2016 2017 2016 Net earnings from continuing operations attributable to FIS $ 988 $ 207 $ 1,319 $ 567 Provision (benefit) for income taxes (581) 117 (319) 317 Interest ex

  34. Slide 34: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials ($ millions, except per share data, unaudited) Three months ended December 31, Year ended December 31, 2017 2016 2017 2016 Earnings from continuing operations before income taxes and equity method investment earnings $ 419 $ 333 $ 1,036 $ 906 Provision (

  35. Slide 35: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials ($ millions, unaudited) Three months ended Year ended December 31, 2017 December 31, 2017 Net cash provided by operating activities $ 662 $ 1,741 Non-GAAP adjustments: Acquisition, integration and severance payments 27 101 Tax payments on divestitures 3

  36. Slide 36: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials (unaudited) Year ended December 31, 2018 Low High Consolidated GAAP revenue increase/(decrease) (2.5)% (1.5)% Estimated adjustments 5.0% 5.0% Consolidated organic revenue increase/(decrease) 2.5% 3.5% IFS GAAP revenue increase/(decrease) 1.5% 2.5% Estima

  37. Slide 37: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials (unaudited) Year ended December 31, 2018 Low High Diluted EPS $ 3.00 $ 3.35 Estimated adjustments 2.10 1.95 Adjusted EPS $ 5.10 $ 5.30 Net earnings from continuing operations margin 11.5% 13.0% Estimated adjustments 24.5% 24.0% Adjusted EBITDA margin 36.

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