Fidelity National Information Services, Inc. · NYSE:FIS
Fidelity National Information Services — Q3 2022 Earnings Presentation
30 slides from Fidelity National Information Services's earnings presentation, Nov 3, 2022
Slide 1: Third Quarter 2022 Earnings Call
THIRD QUARTER 2022 EARNINGS CALL November 3, 2022
Slide 2: Speakers
SPEAKERS BUSINESS Gary Norcross Chairman and OVERVIEW Chief Executive Officer OPERATIONAL [] UPDATE Stephanie Ferris President FINANCIAL RESULTS & Erik Hoag Deputy 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 Overview
BUSINESS OVERVIEW
Slide 5: Third Quarter Financials
THIRD QUARTER FINANCIALS TOTAL ADJUSTED SEGMENT REVENUE PERFORMANCE REVENUE EPS 3.6 1.74 BILLION 5% ORGANIC 1% GROWTH $1.7B $1.2B $671M 6% ORG GROWTH 5% ORG GROWTH 6% ORG GROWTH (2) ADJUSTED BACKLOG EBITDA MARGIN 43% ADJ. EBITDA 47% ADJ. EBITDA 49% ADJ. EBITDA 22.5 BILLION MARGIN ORGANIC GROWTH EX.
Slide 6: Evolving Industry Backdrop
EVOLVING INDUSTRY BACKDROP Observing early indicators of a broader economic slowdown CAPITAL BANKING MERCHANT MARKETS Sales cycle elongation although US consumer shifting spend Shift to SaaS offerings driving pipeline remains robust behavior revenue consistency Demand remains strong for next-generat
Slide 7: Taking Aggressive Action Given Macroeconomic Challenges
TAKING AGGRESSIVE ACTION GIVEN MACROECONOMIC CHALLENGES ACTIONS WE’RE TAKING TODAY: Fortifying Balance Sheet – Remain Committed to Current Investment Grade Credit Ratings Do not anticipate taking out incremental debt for share repurchase in 2023 Continue to believe share repurchase best use of
Slide 8: Operational Update
OPERATIONAL UPDATE
Slide 9: Enterprise Transformation Program
ENTERPRISE TRANSFORMATION PROGRAM We are reducing our …through targeted actions …to drive value creation spend base... that put the customer at the center... Capex $1.1B • Operating structure streamlining Target spend reduction • Capital spend reduction $8.9B • Third-party spend reduction • Early st
Slide 10: Banking Solutions & Capital Markets
BANKING SOLUTIONS & CAPITAL MARKETS Highly recurring revenue streams supported by multi-year bank modernization initiatives BANKING SOLUTIONS CAPITAL MARKETS +6% ~43% (320) bps +6% ~49% 90 bps Revenue Growth Adj. EBITDA Adj. EBITDA Margin Revenue Growth Adj. EBITDA Adj. EBITDA Key Metrics Organic Ma
Slide 11: Merchant Solutions
MERCHANT SOLUTIONS Leading global eCommerce and enterprise-scale provider of platforms MERCHANT SOLUTIONS CAGR VS 2019 (CONSTANT CURRENCY) 9% 9% 8% 7% 6% 6% +5% ~47% (1) (430) bps Revenue Growth Adj. EBITDA Adj. EBITDA Margin Organic Margin Contraction 1Q 2022 2Q 2022 3Q 2022 Revenue Global Volume M
Slide 12: Financial Results & Guidance
FINANCIAL RESULTS & GUIDANCE
Slide 13: 3Q 2022 Financial Results
3Q 2022 FINANCIAL RESULTS CONSOLIDATED FINANCIAL RESULTS REVENUE ($ in millions) • Revenue increased 5% on an organic basis, reflecting strength in 3Q 22 $3,604 Banking and Capital Markets offset by softness in Merchant UK • Adjusted EBITDA $1.6B and Adjusted EPS of $1.74 3Q 21 SEGMENT FINANCIAL RES
Slide 14: Balance Sheet and Free Cash Flow
BALANCE SHEET AND FREE CASH FLOW RETURN OF CAPITAL 3Q 2022 STRONG BALANCE SHEET 3Q 2022 Free Cash Flow $684M Total Debt $18.9B Dividends Paid $284M Weighted Average Interest Rate 2.0% Shares Repurchased / $ Spent 11M / ~$1B Leverage Ratio 2.9x 3Q 2022 Call-Outs: • Returned ~$1.3B of capital to share
Slide 15: Capital Allocation Philosophy
CAPITAL ALLOCATION PHILOSOPHY FORTIFYING THE View rock-solid balance sheet as competitive 1 BALANCE SHEET advantage Reaffirming commitment to increase dividend 2 DIVIDEND GROWTH 20%+ until reaching ~35% payout ratio 3 RETURN CAPITAL TO Share repurchase continues to be default use SHAREHOLDERS of Fre
Slide 16: Full Year 2022 Guidance Update
FULL YEAR 2022 GUIDANCE UPDATE ($ millions, except per share data) METRICS REVENUE ADJ. EBITDA ADJ. EPS FY 2022 Guidance MP (as of 8/4/22) $14,660 $6,525 $7.05 Operational Macro Impact $(95) $(95) $(0.13) Inflation and Cost Pressure $60 $(90) $(0.13) Sales Timing / Execution $(105) $(90) $(0.13) 3Q
Slide 17: Full Year 2022 Guidance
FULL YEAR 2022 GUIDANCE ($ millions, except per share data) METRICS 4Q 2022 FY 2022 Revenue $3,656 - $3,706 $14,470 - $14,520 Organic Revenue Growth ~3% - 4% ~6% - 7% Adjusted EBITDA $1,579 - $1,619 $6,170 - $6,210 Adjusted EBITDA Margin ~43.2% - 43.7% ~42.6% - 42.8% Adjusted EPS $1.66 - $1.72 $6.60
Slide 18: Looking Ahead…
LOOKING AHEAD… For a description of non-GAAP measures and a reconciliation of GAAP to non-GAAP measures, see Appendix. 18
Slide 19: Appendix
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Slide 20: FY 2022 Guidance – Additional Assumptions
FY 2022 GUIDANCE – ADDITIONAL ASSUMPTIONS ($ millions) METRICS FY 2022 GUIDANCE Negative F/X Impact to Revenue ~$250 Corporate and Other Revenue ~$280 Depreciation and Amortization(1) ~$1,225 (Excluding Purchase Price Amortization) Net Interest Expense ~$280 Effective Tax Rate ~14% Weighted Average
Slide 21: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance or projec
Slide 22: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS • competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry
Slide 23: FIS Use of Non-GAAP Financial Information
FIS USE OF NON-GAAP FINANCIAL INFORMATION Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizi
Slide 24: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2022 BANKING MERCHANT CAPITAL MARKET CORPORATE TOTAL SOLUTIONS SOLUTIONS SOLUTIONS AND OTHER Revenue $1,680 $1,180 $671 $73 $3,604 FX 21 49 20 2 92 Constant Currency Revenue $1,702 $1,230 $691 $74
Slide 25: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2022 Net cash provided by operating activities $878 Non-GAAP adjustments: Acquisition, integration and other payments (1) 187 Settlement activity (67) Adjusted cash flows from operations $998 Capit
Slide 26: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2022 2021 Net earnings attributable to FIS common stockholders $249 $158 Provision (benefit) for income taxes 91 41 Interest expense, net 76 46 Other, net 46 (107) Operating income, as reported $46
Slide 27: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2022 2021 Earnings before income taxes and equity method investment earnings (loss) $345 $202 (Provision) benefit for income taxes (91) (41) Net (earnings) loss attributable to noncontrolling inter
Slide 28: Notes to Unaudited Supplemental GAAP to Non-GAAP Reconciliations
NOTES TO UNAUDITED - SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS (1) This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions, including customer relationships, contract value, technology assets, trademarks and trade names. Thi
Slide 29: Reconciliation of GAAP to Non-GAAP Financials on Guidance
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ON GUIDANCE (unaudited) SEPTEMBER 30, 2022 2021 CHANGE GROWTH (1) Backlog (2) $22.5 $22.0 $0.5 1% Estimated adjustments (3) 0% Organic Backlog 1% (1) Backlog growth percentage may not calculate due to rounding. (2) Backlog reflects the approximate transa
Slide 30: Reconciliation of GAAP to Non-GAAP Financials on Guidance
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ON GUIDANCE (unaudited) THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, 2022 DECEMBER 31, 2022 LOW HIGH Net earnings per share-diluted attributable to FIS common stockholders $0.39 $0.49 $1.45 $1.55 Estimated adjustments (1) $1.27 $1.23 $5.15 $5.11 A
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