- Q3 consolidated revenue of $3.1
billion, up 5%
- Q3 total segment revenue of $1.9
billion, up 5%; up 3% on an organic constant currency basis(a)
- Q3 net income of $296 million, up 124%;
diluted EPS of $0.31, up 121%
- Q3 adjusted net income of $373 million,
up 20%; adjusted diluted EPS of $0.40, up 18%
- Q3 total segment EBITDA of $787
million, up 6%; up 5% on an organic constant currency basis(a)
- Q3 cash flow from operations of $581
million; free cash flow of $370 million
- Announced definitive agreement to
acquire BluePay
First Data Corporation (NYSE: FDC), a global leader in
commerce-enabling technology, today reported financial results for
the third quarter ended September 30, 2017. Consolidated
revenue for the third quarter was $3.1 billion, up 5% versus the
prior year period. Total segment revenue was $1.9 billion for the
quarter, up 5% versus the prior year period, or up 3% on an organic
constant currency basis.
Net income attributable to First Data for the third quarter of
2017 was $296 million, or $0.31 per diluted share, up 124% and
121%, respectively, from third quarter of 2016 comparable figures.
The increase in net income attributable to First Data was driven by
a significant discrete tax item in the current period (see "Income
Tax (Benefit) / Expense," below), improved operating results and
lower interest expense.
Adjusted net income, which modifies net income for items such as
debt extinguishment charges, stock-based compensation, amortization
of acquisition intangibles, restructuring costs, discrete tax items
and other items, was $373 million, or $0.40 per diluted share, up
20% and 18%, respectively, from third quarter of 2016 comparable
figures. The increase was primarily driven by improved operating
results and lower interest expense.
Total segment earnings before interest, taxes, depreciation, and
amortization (total segment EBITDA) in the third quarter 2017 was
$787 million, up 6% versus the prior year period, or up 5% on an
organic constant currency basis.
“During the quarter we saw solid results in our GFS and NSS
segments with strong performances across all of our international
businesses,” said First Data Chairman and CEO Frank Bisignano. “We
continue to make significant progress in establishing First Data as
a major player in the ISV market, driven by the addition of
CardConnect’s cutting-edge ISV product suite and the highly
complementary acquisition of BluePay, which brings to us innovative
Card-Not-Present integrated solutions,” Bisignano added.
Segment Results
Global Business Solutions (GBS)
Third quarter 2017 GBS segment revenue was $1.1 billion, up 5%
versus the prior year period, or up 2% on an organic constant
currency basis. Within geographic regions, North America revenue of
$833 million was up 2% versus the prior year period or down 3% on
an organic constant currency basis. The North America region's
results were negatively impacted by the non-recurrence of
previously disclosed unusual items that benefited the prior year
period's results and a decline in JV revenue. EMEA revenue was $150
million, up 9% versus the prior year, or up 6% on an organic
constant currency basis, primarily driven by growth in the United
Kingdom and Germany. Latin America revenue was $72 million, up 53%,
or up 61% on an organic constant currency basis, driven by strong
results in Brazil and Argentina. APAC revenue was $39 million, down
8%, or up 18% on an organic constant currency basis, primarily
driven by growth in India.
Third quarter 2017 GBS segment expenses were $629 million, up 7%
versus the prior year period, or up 3% on an organic constant
currency basis.
Third quarter 2017 GBS segment EBITDA was $465 million, up 2%
versus the prior year period, or flat on an organic constant
currency basis. Reported segment EBITDA margin declined 100 basis
points to 42.5% in the quarter.
Global Financial Solutions (GFS)
Third quarter 2017 GFS segment revenue was $416 million, up 5%
versus the prior year period both on a reported and organic
constant currency basis. Within geographic regions, North America
revenue of $238 million was up 1%, driven by good processing
revenue growth largely offset by a decline in card personalization
revenue. North America GFS card accounts on file grew 6% year over
year. EMEA revenue was $121 million, up 7% both on a reported and
organic constant currency basis, driven by internal growth and new
business. Latin America revenue was $33 million, up 22%, or up 24%
on an organic constant currency basis, driven by growth in
Argentina. APAC revenue was $24 million, up 14%, or up 13% on an
organic constant currency basis, primarily driven by growth in
Australia.
Third quarter 2017 GFS segment expenses were $236 million, down
1% versus the prior year period on both a reported and organic
constant currency basis.
Third quarter 2017 GFS segment EBITDA was $180 million, up 14%
versus the prior year period on both a reported and organic
constant currency basis. Reported segment EBITDA margin improved
350 basis points to 43.3% in the quarter.
Network & Security Solutions (NSS)
Third quarter 2017 NSS segment revenue was $395 million, up 5%
versus the prior year period. Within NSS's primary businesses,
Stored Value revenue grew 16% in the quarter, Security and Fraud
revenue grew 5%, and EFT revenue declined 3%.
Third quarter 2017 NSS segment expenses were $211 million, flat
versus the prior year period.
Third quarter 2017 NSS segment EBITDA was $184 million, up 11%
versus the prior year period. Reported segment EBITDA margin
improved 270 basis points to 46.6% in the quarter.
Income Tax (Benefit)/Expense
Third quarter 2017 income tax (benefit) / expense was a benefit
of $(106) million, representing a change of $130 million from
expense of $24 million in the prior year period. The significant
change in income taxes in the current year period was primarily
driven by discrete tax items in the quarter including a $132
million benefit associated with the release of a valuation
allowance as a result of deferred tax liabilities recorded in
connection with the accounting for the purchase of CardConnect in
the current quarter.
Cash Flow
In the third quarter 2017, cash flow from operations was $581
million, down $171 million compared to $752 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 $370 million in the current
quarter, down $57 million compared to $427 million in the prior
year period, primarily driven by the non-recurrence of a derivative
settlement that occurred in the prior year period and timing
impacts on settlement flows from day-of-week differences at
respective period's quarter ends, partially offset by lower cash
interest payments and improved operating results in the current
period.
Capital Structure
First Data's total borrowings at September 30, 2017
increased to $18.6 billion, from $18.5 billion at December 31,
2016. The increase is a result of the recent acquisitions of
CardConnect in July 2017, and Acculynk earlier in the year,
partially offset by debt paydowns and divestitures. Net debt
increased $32 million over the same timeframe.
BluePay Acquisition
As previously disclosed, on October 20, 2017, the Company
announced that it has entered into an agreement to acquire BluePay
Holdings, Inc., a provider of technology-enabled payment processing
for merchants in the U.S. and Canada. BluePay is one of First
Data’s largest distribution partners with a strong focus on
software-enabled payments and Card-Not-Present transactions. The
transaction is subject to customary closing conditions and is
expected to close in the fourth quarter.
Innovation
First Data continues to invest in innovation to differentiate
itself as a leader in commerce-enabling solutions. Below are
examples of innovative solutions that the company introduced
recently:
- Disburse-to-debit: First Data's
innovative solution for the gig economy allows businesses to
disburse funds in real-time directly to a debit card. Faster
payouts lead to increased loyalty, satisfaction, and reduced costs
for businesses.
- Breeze mobile apps: First Data and
CareCloud joined forces to introduce the mobile app, Breeze. Backed
by the power of First Data's Clover platform, Breeze’s mobile and
web apps allow patients to manage their doctor appointments from
their smart device, fill out necessary insurance and medical forms,
and manage payments anywhere, anytime.
- Apple/Clover launch: First Data and
Apple announced the enablement of Apple Pay loyalty and gift cards
through integration with First Data’s Clover platform. Developers
and third party loyalty providers will also be able to leverage the
Clover platform to facilitate Apple Pay for merchant clients. First
Data’s Clover Go devices will be available in Apple retail stores
across the U.S.
- UnionPay International partnership:
First Data and UnionPay International will partner to expand
UnionPay card acceptance in the United States, both with in-store
and online purchases. The partnership allows Chinese visitors to
use their UnionPay chip credit and debit cards at First Data’s U.S.
merchant clients.
- Amazon Pay mobile app accepted through
First Data's Clover POS: certain restaurants utilizing First Data's
Clover POS can now accept takeout orders directly from the Amazon
mobile app.
- Financial Services developer portal:
First Data has launched a developer portal for our financial
services clients in North America. This portal offers an extensive
catalog of APIs to streamline how our issuing clients engage with
us. Through the developer portal, our clients can now introduce
enhancements and changes to their solutions faster and in a more
frictionless way.
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, total
segment EBITDA margin, 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. In disclosing year-over-year comparisons, the company has
chosen to present non-GAAP measures because it believes that these
measures provide users of our financial statements a consistent
basis for reviewing the company's performance across different
periods.
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. Non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with the company's results of operations as
determined in accordance with GAAP. These measures should only be
used to evaluate the company's results of operations in conjunction
with the corresponding GAAP measures.
Reconciliation to the most directly comparable GAAP measure of
all non-GAAP measures can be found in the tables included in this
press release.
The company excludes certain items and other adjustments from
total segment revenue, total segment expense, total segment EBITDA,
total segment EBITDA margin, adjusted net income and adjusted net
income per diluted share. See reconciliations for a complete list
of items excluded from non-GAAP measures.
Adjusted net income is a non-GAAP financial measure used by
management that provides additional insight on performance.
Adjusted net income excludes amortization of acquisition-related
intangibles, stock-based compensation, restructuring costs, deal
integration costs, and other items affecting comparability and,
therefore, provides a more complete understanding of continuing
operating performance. Management believes that the presentation of
adjusted net income provides users of our financial statements
greater transparency into ongoing results of operations allowing
them to better compare our results from period to period.
The company uses free cash flow, a non-GAAP measure. Free cash
flow is defined as cash flow used in/provided by operating
activities less capital expenditures, distributions to minority
interest, and other. The company considers free cash flow to be a
liquidity measure that provides useful information to management
and users of our financial statements about the amount of cash
generated by the business which can then be used to, among other
things, reduce debt outstanding.
The company also uses net debt, a non-GAAP measure. Net debt is
defined as total long-term borrowings plus short-term and current
portion of long-term borrowings, at par value, excluding lines of
credit used for settlement purposes, less cash and cash
equivalents. The company believes that net debt provides additional
insight on its level and management of leverage.
Certain revenue and expense measures in this release are
presented excluding the estimated impacts of foreign currency
changes ("Constant currency"). To present this information, monthly
results in the current period for entities reporting in currencies
other than United States dollars are translated into United States
dollars at the average exchange rates in effect during the
corresponding month of the prior fiscal year, rather than the
actual average exchange rates in effect during the current fiscal
year. Once translated, each month in the period is added together
to calculate the constant currency current period results. The
company believes that revenue growth is a key indication of how
First Data is progressing from period to period and the non-GAAP
constant currency financial measure is useful to investors, lenders
and other creditors because such information enables them to
measure the impact of currency fluctuations on the company's
revenue from period to period.
Certain non-GAAP measures (segment revenue, segment expense and
segment EBITDA) in this release are presented excluding the
estimated impacts of foreign currency changes and acquisitions and
divestitures ("Organic constant currency"). To present this
information, results are adjusted as described above for currency
fluctuations, and are further adjusted to exclude the results of
significant divestitures in the prior year period, and include the
results of significant acquisitions in the prior year period. The
company believes that revenue, expense and EBITDA growth are key
indications of how First Data is progressing from period to period
and the non-GAAP organic constant currency financial measures are
useful to investors, lenders and other creditors because such
information enables them to measure the impact of currency
fluctuations and recent acquisitions and divestitures on the
company's revenue, expenses and EBITDA from period to period.
Investor Conference Call
The company will host a conference call and webcast on Monday,
October 30, 2017, at 8 a.m. ET to review the third quarter 2017
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 November 30,
2017, at +1 (877) 344-7529 (U.S.) or +1 (412) 317-0088 (outside the
U.S.); passcode 10112524 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.
About First Data
First Data Corporation (NYSE: FDC) is a global leader in
commerce-enabling technology, serving approximately six million
business locations and 4,000 financial institutions in more than
100 countries around the world. The company’s 24,000
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 2,800 transactions per second and
$2.2 trillion per year.
(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; and (3) includes the results
of significant acquisitions in the prior year period. Impacts to
growth rates from acquisitions/divestitures only relate to the GBS
segment.
First Data Corporation
Consolidated Statements of Operations (Unaudited)
(in millions, except per share data) Three months
ended September 30, Nine months ended September 30,
Constant
Constant Currency Currency % %
% % 2017 2016 Change
Change 2017 2016 Change
Change Revenues: Transaction and processing service fees(a)
$ 1,733 $ 1,693 2 % 2 % $ 4,982 $ 4,953 1 % 1 % Product sales and
other(a) 348 307 13 % 14 % 1,016 893 14
% 15 % Total revenues (excluding reimbursable items) 2,081 2,000 4
% 4 % 5,998 5,846 3 % 3 % Reimbursable debit network fees, postage,
and other 995 936 6 % 6 % 2,904 2,795 4
% 4 % Total revenues 3,076 2,936 5 % 5 % 8,902
8,641 3 % 3 % Expenses: Cost of services (exclusive of items
shown below) 698 711 (2 )% (2 )% 2,089 2,140 (2 )% (2 )% Cost of
products sold 96 87 10 % 9 % 267 251 6 % 7 % Selling, general, and
administrative 564 499 13 % 13 % 1,607 1,563 3 % 3 % Depreciation
and amortization 248 237 5 % 4 % 713 713 — % — % Other operating
expenses 57 12 375 % 375 % 108 57 89 %
91 % Total expenses (excluding reimbursable items) 1,663 1,546 8 %
7 % 4,784 4,724 1 % 2 % Reimbursable debit network fees, postage,
and other 995 936 6 % 6 % 2,904 2,795 4
% 4 % Total expenses 2,658 2,482 7 % 7 % 7,688
7,519 2 % 2 % Operating profit 418 454 (8 )%
1,214 1,122 8 % Interest expense, net (234 ) (263 )
(11 )% (706 ) (810 ) (13 )% Loss on debt extinguishment (1 ) (3 )
(67 )% (72 ) (58 ) 24 % Other (expense) income (4 ) (30 ) (87 )% (7
) 14 (150 )% Income before income taxes and equity earnings
in affiliates 179 158 13 % 429 268 60 % Income tax (benefit)
expense (106 ) 24 (542 )% (66 ) 57 (216 )% Equity earnings in
affiliates 55 66 (17 )% 167 198 (16 )%
Net income 340 200 70 % 662 409 62 % Less: Net income attributable
to noncontrolling interests and redeemable noncontrolling interest
44 68 (35 )% 145 181 (20 )% Net income
attributable to First Data Corporation $ 296 $ 132
124 % $ 517 $ 228 127 % Net income
attributable to First Data Corporation per share: Basic $ 0.32 $
0.15 113 % $ 0.57 $ 0.25 128 % Diluted $ 0.31 $ 0.14 121 % $ 0.55 $
0.25 120 % Weighted-average common shares outstanding: Basic
918 905 915 900 Diluted 944 923 938 918
NM represents not meaningful
(a) Includes processing fees, administrative service
fees, and other fees charged to merchant alliances accounted for
under the equity method of $56 million and $162 million for the
three and nine months ended September 30, 2017, respectively, and
$52 million and $150 million for the comparable periods in 2016.
First Data Corporation Selected
Consolidated Balance Sheet and Cash Flow Data
(Unaudited) (in millions) SELECTED
CONSOLIDATED BALANCE SHEET DATA As of As
of September 30, 2017 December 31, 2016
Cash and cash equivalents $ 502 $ 385 Settlement assets 15,139
14,795 Total assets 41,645 40,292 Short-term and current
portion of long-term borrowings 854 358 Settlement obligations
15,139 14,795 Long-term borrowings 17,795 18,131 Total liabilities
36,609 36,088 Redeemable noncontrolling interest 72 73
Total First Data Corporation stockholders' equity 2,098
1,220 Noncontrolling interests 2,866 2,911 Total equity 4,964 4,131
SELECTED CONSOLIDATED CASH FLOW DATA Three
months ended Nine months ended September 30,
September 30, 2017 2016 2017
2016 Source/(Use) of cash Net cash provided by
operating activities $ 581 $ 752 $ 1,582 $ 1,660 Net cash used in
investing activities (818 ) (128 ) (1,057 ) (338 ) Net cash
provided by (used in) financing activities 252 (435 ) (410 ) (1,258
)
Supplemental cash flow data Cash interest payments(a) $
231 $ 279 $ 684 $ 759
(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 September 30, Nine months ended
September 30, %
Organic CC
%
Organic CC
2017 2016 Change
% Change(e)
2017 2016 Change
% Change(e)
Consolidated Revenues $ 3,076 $ 2,936 5 % $ 8,902 $ 8,641 3 %
Adjustments: Non wholly owned entities(a) (14 ) (25 ) (44 )% (49 )
(59 ) (17 )% Independent Sales Organization (ISO) commission
expense(b) (162 ) (155 ) 5 % (470 ) (476 ) (1 )% Reimbursable debit
network fees, postage, and other (995 ) (936 ) 6 % (2,904 ) (2,795
) 4 % Total Segment Revenues $ 1,905 $ 1,820 5 % 3 %
$ 5,479 $ 5,311 3 % 4 % Segment
Revenues: Global Business Solutions $ 1,094 $ 1,045 5 % 2 % $ 3,131
$ 3,037 3 % 3 % Global Financial Solutions 416 397 5 % 5 % 1,211
1,178 3 % 5 % Network & Security Solutions 395 378
5 % 5 % 1,137 1,096 4 % 4 % Total Segment
Revenues $ 1,905 $ 1,820 5 % 3 % $ 5,479 $
5,311 3 % 4 %
Three months ended September
30, Nine months ended September 30, %
Organic CC
%
Organic CC
2017 2016 Change
% Change(e)
2017 2016 Change
% Change(e)
Consolidated Expenses $ 2,658 $ 2,482 7 % $ 7,688 $ 7,519 2 %
Adjustments: Non wholly owned entities(a) (15 ) (16 ) (6 )% (50 )
(52 ) (4 )% Independent Sales Organization (ISO) commission
expense(b) (162 ) (155 ) 5 % (470 ) (476 ) (1 )% Reimbursable debit
network fees, postage, and other (995 ) (936 ) 6 % (2,904 ) (2,795
) 4 % Depreciation and amortization (248 ) (237 ) 5 % (713 ) (713 )
— % Stock-based compensation (62 ) (43 ) 44 % (183 ) (214 ) (14 )%
Other(c) (58 ) (14 ) 314 % (113 ) (79 ) 43 % Total Segment Expenses
$ 1,118 $ 1,081 3 % 1 % $ 3,255 $ 3,190
2 % 2 % Segment Expenses: Global Business Solutions $ 629 $
590 7 % 3 % $ 1,801 $ 1,758 2 % 3 % Global Financial Solutions 236
239 (1 )% (1 )% 709 705 1 % 2 % Network & Security Solutions
211 212 — % — % 617 613 1 % 1 % Corporate 42 40 5 % 5
% 128 114 12 % 12 % Total Segment Expenses $ 1,118
$ 1,081 3 % 1 % $ 3,255 $ 3,190 2 % 2 %
Three months ended
September 30, Nine months ended September 30, %
Organic CC
%
Organic CC
2017 2016 Change
% Change(e)
2017 2016 Change
% Change(e)
Net income attributable to First Data Corporation $ 296 $ 132 124 %
$ 517 $ 228 127 % Adjustments: Non wholly owned entities(a) (9 ) (7
) 29 % (21 ) (24 ) (13 )% Depreciation and amortization 248 237 5 %
713 713 — % Interest expense, net 234 263 (11 )% 706 810 (13 )%
Loss on debt extinguishment 1 3 (67 )% 72 58 24 % Other items(d) 61
44 39 % 120 65 85 % Income tax expense (106 ) 24 NM (66 ) 57 (216
)% Stock-based compensation 62 43 44 % 183 214
(14 )% Total Segment EBITDA $ 787 $ 739 6 % 5
% $ 2,224 $ 2,121 5 % 5 % Segment EBITDA:
Global Business Solutions $ 465 $ 455 2 % — % $ 1,330 $ 1,279 4 % 4
% Global Financial Solutions 180 158 14 % 14 % 502 473 6 % 8 %
Network & Security Solutions 184 166 11 % 11 % 520 483 8 % 8 %
Corporate (42 ) (40 ) 5 % 5 % (128 ) (114 ) 12 % 12 % Total Segment
EBITDA $ 787 $ 739 6 % 5 % $ 2,224 $ 2,121
5 % 5 % Net income attributable to First Data
Corporation margin: 9.6 % 4.5 % 5.8 % 2.6 % Total segment EBITDA
margin: 41.3 % 40.6 % 70bps 40.6 % 39.9 % 70bps
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. In addition,
our segment measures reflect revenue-based commission payments to
Independent Sales Organizations (ISOs). (b) Retail Independent
Sales Organization commissions are presented within Selling,
general, and administrative expense in the unaudited consolidated
statements of operations but are netted in segment revenues for
segment reporting. (c) Includes restructuring, certain retention
bonuses, non-normal course litigation and regulatory settlements,
asset impairments, deal costs, and debt issuance costs. (d) Items
noted within (c) above and "Other income (expense)" as presented in
the unaudited consolidated statements of operations, which includes
divestitures, derivative gains (losses), non-operating foreign
currency gains (losses) and the gain on Visa Europe share sale. (e)
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; and (3) includes the results of significant
acquisitions in the prior year period. Impacts to growth rates from
acquisitions/divestitures only relate to the GBS segment.
First Data Corporation Summary Segment Data
(Unaudited) (in millions)
SEGMENT REVENUE
RECONCILIATION
Three months ended September 30, Nine
months ended September 30, 2017 2016
% Change 2017 2016 %
Change Total Segment revenue $ 1,905 $ 1,820 5 % $ 5,479 $
5,311 3 % Currency impact (3 ) — 33 —
Acquisitions/Divestitures
— 26 — 6
Organic constant currency(a) segment
revenue growth
$ 1,902 $ 1,846 3 % $ 5,512 $ 5,317 4 %
GBS revenue $ 1,094 $ 1,045 5 % $ 3,131 $ 3,037 3 % Currency
impact (3 ) — 12 —
Acquisitions/Divestitures
— 26 — 6
Organic constant currency(a) GBS revenue
growth
$ 1,091 $ 1,071 2 % $ 3,143 $ 3,043 3 %
GBS NA revenue $ 833 $ 819 2 % $ 2,410 $ 2,371 2 % Currency impact
(1 ) — — —
Acquisitions/Divestitures
— 36 — 36
Organic constant currency(a) GBS NA
revenue growth
$ 832 $ 855 (3 )% $ 2,410 $ 2,407 — %
GBS APAC revenue $ 39 $ 43 (8 )% $ 109 $ 125 (13 )% Currency
impact — — (2 ) —
Acquisitions/Divestitures
— (10 ) — (31 )
Organic constant currency(a) GBS APAC
revenue growth
$ 39 $ 33 18 % $ 107 $ 94 14 %
SEGMENT EXPENSE
RECONCILIATION
Three months ended September 30, Nine months ended
September 30, 2017 2016 % Change
2017 2016 % Change Total Segment expense $
1,118 $ 1,081 3 % $ 3,255 $ 3,190 2 % Currency impact (4 ) — 14 —
Acquisitions/Divestitures
— 17 — —
Organic constant currency(a) segment
expense growth
$ 1,114 $ 1,098 1 % $ 3,269 $ 3,190 2 %
GBS expense $ 629 $ 590 7 % $ 1,801 $ 1,758 2 % Currency
impact (3 ) — 3 —
Acquisitions/Divestitures
— 17 — —
Organic constant currency(a) GBS expense
growth
$ 626 $ 607 3 % $ 1,804 $ 1,758 3 %
SEGMENT EBITDA
RECONCILIATION
Three months ended September 30, Nine months ended
September 30, 2017 2016 % Change
2017 2016 % Change Total Segment EBITDA $ 787
$ 739 6 % $ 2,224 $ 2,121 5 % Currency impact 1 — 18 —
Acquisitions/Divestitures
— 9 — 6
Organic constant currency(a) segment
EBITDA growth
$ 788 $ 748 5 % $ 2,242 $ 2,127 5 %
GBS EBITDA $ 465 $ 455 2 % $ 1,330 $ 1,279 4 % Currency
impact 1 — 9 —
Acquisitions/Divestitures
— 9 — 6
Organic constant currency(a) GBS EBITDA
growth
$ 466 $ 464 — % $ 1,339 $ 1,285 4 %
(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; and (3) includes the results
of significant acquisitions in the prior year period. Impacts to
growth rates from acquisitions/divestitures only relate to the GBS
segment.
First Data Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited) (in millions, except per share data)
ADJUSTED NET INCOME RECONCILIATION
Three months ended September 30, Nine months ended
September 30, 2017 2016 %
Change 2017 2016 % Change
Net income attributable to First Data Corporation $ 296 $ 132 124 %
$ 517 $ 228 127 % Adjustments: Stock-based compensation 62 43 44 %
183 214 (14 )% Loss on debt extinguishment(a) 1 3 (67 )% 72 58 24 %
Mark-to-market adjustment for derivatives and euro-denominated
debt(b) — — NM — 5 (100 )% Amortization of acquisition intangibles
and deferred financing costs(c) 106 104 2 % 295 318 (7 )% Loss on
disposal of businesses — 31 NM — 31 NM Visa Europe settlement gain
— — NM — (29 ) NM Restructuring 24 6 300 % 63 51 24 % Intercompany
foreign exchange gain (loss) 2 (2 ) (200 )% 6 (21 ) (129 )% Fees
paid on debt modification 1 — NM 10 18 (44 )% Impairment,
litigation, and other(d) 10 6 67 % 13 13 — % Deal and integration
costs 21 — NM 26 — NM Income tax on above items and discrete tax
items(e) (150 ) (11 ) NM (176 ) (31 ) NM Adjusted net income $ 373
$ 312 20 % $ 1,009 $ 855 18 %
Adjusted net income per share: Basic $ 0.41 $ 0.34 21 % $ 1.10 $
0.95 16 % Diluted $ 0.40 $ 0.34 18 % $ 1.08 $ 0.93 16 %
Weighted-average common shares used to compute adjusted net income
per share: Basic 918 905 1 % 915 900 2 % Diluted 944 923 2 % 938
918 2 %
NM represents not meaningful
(a) Represents costs associated with debt
restructuring activities on extinguished debt. (b) Represents
mark-to-market activity related to our undesignated hedges. (c)
Represents amortization of intangibles established in connection
with the 2007 Merger and acquisitions we have made since 2007,
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 $4 million for the three months ended
September 30, 2017 and 2016, respectively, and $12 million and $11
million, respectively, for the nine months ended September 30, 2017
and 2016. (d) Represents impairments, non-normal course litigation
and regulatory settlements, investments gains (losses),
divestitures, and other, as applicable to the periods presented.
(e) 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 (loss) 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 September 30, Nine months ended September
30, 2017 2016 Change
2017 2016 Change Net cash
provided by operating activities $ 581 $ 752 $ (171 ) $ 1,582 $
1,660 $ (78 ) Capital expenditures (134 ) (119 ) (15 ) (390 ) (351
) (39 ) Distribution to minority interest and other (77 ) (206 )
129 (113 ) (363 ) 250 Free cash flow $ 370 $ 427 (57
) $ 1,079 $ 946 133
NET DEBT RECONCILIATION As of As of
September 30, 2017 December 31, 2016 Total long-term
borrowings $ 17,795 $ 18,131 Total short-term and current portion
of long-term borrowings 854 358 Total borrowings
18,649 18,489 Unamortized discount and unamortized deferred
financing costs 140 156 Total borrowings at par
18,789 18,645 Less: Settlement lines of credit and other
arrangements (79 ) (84 ) Gross debt 18,710 18,561 Less: Cash and
cash equivalents (502 ) (385 ) Net debt $ 18,208 $ 18,176
First Data Corporation
Operating Data (Unaudited) (in millions)
Three months ended September 30, Nine months ended
September 30, 2017 2016 %
Change 2017 2016 % Change
GBS: North America merchant transactions(a) 12,517 11,881 5
% 36,494 34,368 6 % International merchant transactions(b) 2,453
2,087 18 % 7,173 5,801 24 %
GFS: North America card
accounts on file(c) 894 844 6 % International card accounts on
file(d) 166 147 13 %
NSS: Network transactions (EFT
and Stored Value)(e) 5,539 5,040 10 % 16,005 14,715 9 % (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 transaction for the three
and nine months ended September 30, 2016 reflected an updated count
of 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. International card accounts on file as of
September 30, 2016 reflect an updated cards on account total. (e)
Network transactions include the debit issuer processing
transactions, STAR Network issuer transactions, Payroll and Gift
Solutions and POS transactions.
First Data CorporationForward 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, 2016, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171030005491/en/
Peter PoillonInvestor RelationsFirst
Data212-266-3565Peter.Poillon@firstdata.comorLiidia
LiuksilaPublic RelationsFirst
Data212-515-0174Liidia.Liuksila@firstdata.com
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