Press release

FIS Reports First Quarter 2021 Results

0
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FIS® (NYSE:FIS), a global leader in financial services technology, today reported its first quarter 2021 results.

“FIS is off to a very strong start to the year, exceeding our expectations and increasing our outlook for the rest of the year,” said Gary Norcross, FIS chairman and chief executive officer. “Our continued focus on innovation and transformation is enabling our clients to modernize their environments and engage with their customers in dynamic new ways. I’m pleased that our unique value propositions will enable FIS to continue accelerating revenue growth and driving shareholder value as we advance how the world pays, banks and invests.”

First Quarter 2021

On a GAAP basis, consolidated revenue increased 5% to $3,223 million. Net earnings (loss) attributable to common stockholders was $(373) million or $(0.60) per diluted share, which includes expense of approximately $528 million related to our recent debt refinancing.

On an organic basis, revenue increased 4% as growth accelerated across all three operating segments. Adjusted EBITDA margin expanded by 10 basis points (bps) over the prior year period to 40.6% as the operating segments’ high contribution margins more than offset increased corporate expense associated with unwinding last year’s COVID-19 related cost actions, including full funding for employee bonuses. Adjusted net earnings were $814 million or $1.30 per diluted share.

($ millions, except per share data, unaudited)

 

Three Months Ended March 31,

 

 

 

 

 

 

%

 

Organic

 

 

2021

 

2020

 

Change

 

Growth

Revenue

 

$

3,223

 

 

$

3,078

 

 

5%

 

4%

Merchant Solutions

 

966

 

 

935

 

 

3%

 

1%

Banking Solutions

 

1,540

 

 

1,444

 

 

7%

 

6%

Capital Market Solutions

 

625

 

 

597

 

 

5%

 

3%

Corporate and Other

 

92

 

 

102

 

 

(9)%

 

 

Adjusted EBITDA

 

$

1,308

 

 

$

1,247

 

 

5%

 

 

Adjusted EBITDA Margin

 

40.6

%

 

40.5

%

 

10 bps

 

 

Net earnings (loss) attributable to FIS common stockholders (GAAP)

 

$

(373)

 

 

$

15

 

 

*

 

 

Diluted EPS (GAAP)

 

$

(0.60)

 

 

$

0.02

 

 

*

 

 

Adjusted net earnings

 

$

814

 

 

$

802

 

 

2%

 

 

Adjusted EPS

 

$

1.30

 

 

$

1.28

 

 

2%

 

 

* Indicates comparison not meaningful

Segment Information

  • Merchant Solutions:

    First quarter revenue increased 3% to $966 million. On an organic basis, revenue increased 1%, primarily due to strength in North America and eCommerce, including significantly ramping volumes on our new acquiring platform. COVID-19 impacts on the travel and airlines vertical as well as continued lockdowns in the U.K. created a headwind of approximately 5% during the first quarter. Adjusted EBITDA margin expanded 150 basis points over the prior year period to 46.7%.
  • Banking Solutions:

    First quarter revenue increased 7% to $1,540 million. On an organic basis, revenue increased 6%, primarily due to continued ramping revenue from recent client wins. Adjusted EBITDA margin expanded 90 basis points over the prior year period to 43.3%.
  • Capital Market Solutions:

    First quarter revenue increased 5% to $625 million. On an organic basis, revenue increased 3%, primarily due to recent strong new sales performance. Adjusted EBITDA margin expanded 140 basis points over the prior year period to 46.2%.

Integration Update

The Company achieved annual run-rate synergies related to the Worldpay acquisition, exiting the first quarter of 2021 as follows:

  • Revenue synergies of approximately $300 million on an annual run-rate basis, including ongoing execution of cross-sell opportunities, bank referral agreements, geographic expansion, ramping volumes and Merchant SMB sales initiatives.
  • Reflecting strong attainment of revenue synergies to date and improved outlook, the Company increased its revenue synergy targets. Annual run-rate revenue synergies are expected to be approximately $600 million exiting 2021, an increase of $200 million above the previous target of $400 million, and to be approximately $700 million exiting 2022, an increase of $150 million above the previous target of $550 million.
  • More than doubled the Company’s initial cost synergy target of $400 million on an annual run-rate basis, including approximately $425 million of operating expense synergies. The Company continues to expect operating expense synergies to reach approximately $500 million on an annual run-rate basis exiting 2021.

Balance Sheet and Cash Flows

As of March 31, 2021, debt outstanding totaled $19,439 million. The Company refinanced a portion of its higher interest rate bonds in the first quarter and now expects full-year 2021 net interest expense to be approximately $230 million.

First quarter net cash provided by operating activities was $836 million, and free cash flow was $556 million.

FIS paid dividends of $244 million and repurchased approximately 2.8 million shares during the quarter for $400 million at an average price of $143.01 per share.

Second Quarter and Full-Year 2021 GAAP Guidance

($ millions, except share data)

 

2Q 2021

 

FY 2021

Revenue

 

$3,365 – $3,390

 

$13,650 – $13,750

Diluted EPS

 

$0.55 – $0.65

 

$1.30 – $1.60

Second Quarter and Full-Year 2021 Non-GAAP Guidance

($ millions, except share data)

 

2Q 2021

 

FY 2021

Revenue (GAAP)

 

$3,365 – $3,390

 

$13,650 – $13,750

Adjusted EPS

 

$1.52 – $1.55

 

$6.35 – $6.55

COVID-19 Update

We have continued to prioritize investments in solutions and services that help address the needs of our clients throughout the ongoing global pandemic in order to increase the Company’s potential to accelerate revenue growth. During the first quarter, the Company’s revenue growth accelerated across all three operating segments as COVID-19’s impact on our financial results lessened due to the gradual opening of markets, particularly those which were affected by the accessibility and effective roll out of vaccines.

Webcast

FIS will sponsor a live webcast of its earnings conference call with the investment community beginning at 8:30 a.m. (EDT) Thursday, May 6, 2021. To access the webcast, go to the Investor Relations section of FIS’ homepage, www.fisglobal.com. A replay will be available after the conclusion of the live webcast.

About FIS

FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our employees are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company and is a member of Standard & Poor’s 500® Index.

To learn more, visit www.fisglobal.com. Follow FIS on Facebook, LinkedIn and Twitter (@FISGlobal).

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 summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures.

These non-GAAP measures include constant currency revenue, organic revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings, adjusted EPS, and free cash flow. These non-GAAP measures may be used in this release and/or in the attached supplemental financial information.

We believe these non-GAAP measures help investors better understand the underlying fundamentals of our business. As further described below, the non-GAAP revenue and earnings measures presented eliminate items management believes are not indicative of FIS’ operating performance. The constant currency and organic revenue growth measures adjust for the effects of exchange rate fluctuations, while organic revenue growth also adjusts for acquisitions and divestitures and excludes revenue from Corporate and Other, giving investors further insight into our performance. Finally, free cash flow provides further information about the ability of our business to generate cash. For these reasons, management also uses these non-GAAP measures in its assessment and management of FIS’ performance.

As described below, our Adjusted EBITDA and Adjusted Net Earnings measures also exclude incremental and direct costs resulting from the COVID-19 pandemic. Management believes that this adjustment may help investors understand the longer-term fundamentals of our underlying business.

Constant currency revenue represents reported operating segment revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.

Organic revenue growth is constant currency revenue, as defined above, for the current period compared to an adjusted revenue base for the prior period, which is adjusted to add pre-acquisition revenue of acquired businesses for a portion of the prior year matching the portion of the current year for which the business was owned, and subtract pre-divestiture revenue for divested businesses for the portion of the prior year matching the portion of the current year for which the business was not owned, for any acquisitions or divestitures by FIS. When referring to organic revenue growth, revenues from our Corporate and Other segment, which is comprised of revenue from non-strategic businesses, are excluded.

Adjusted EBITDA reflects net earnings before interest, other income (expense), taxes, equity method investment earnings (loss), and depreciation and amortization, and excludes certain costs and other transactions that management deems non-operational in nature, the removal of which improves comparability of operating results across reporting periods. It also excludes incremental and direct costs resulting from the COVID-19 pandemic. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission’s Regulation G and Item 10(e) of Regulation S-K.

Adjusted EBITDA margin reflects adjusted EBITDA, as defined above, divided by revenue.

Adjusted net earnings 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. It also excludes the impact of acquisition-related purchase accounting amortization and equity method investment earnings (loss), both of which are recurring. It also excludes incremental and direct costs resulting from the COVID-19 pandemic.

Adjusted EPS reflects adjusted net earnings, as defined above, divided by weighted average diluted shares outstanding.

Free cash flow reflects net cash provided by operating activities, adjusted for the net change in settlement assets and obligations and excluding certain transactions that are closely associated with non-operating activities or are otherwise non-operational in nature and not indicative of future operating cash flows, including incremental and direct costs resulting from the COVID-19 pandemic, less capital expenditures excluding capital expenditures related to the Company’s new headquarters. Free cash flow does not represent our residual cash flow available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the specific adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS website, www.fisglobal.com.

Forward-Looking Statements

This earnings release 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 projections of the Company, projected revenue or expense synergies, business and market conditions, outlook, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases, the Company’s sales pipeline and anticipated profitability and growth, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, or other characterizations of future events or circumstances, are forward-looking statements. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management.

Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:

  • the outbreak or recurrence of the novel coronavirus (“COVID-19”) and measures to reduce its spread, including the impact of governmental or voluntary actions such as business shutdowns and stay-at-home orders;
  • the duration, including any recurrence, of the COVID-19 pandemic and its impacts, including the impact of an economic recession in certain markets, reductions in consumer and business spending, and instability of the financial markets in heavily impacted areas across the globe;
  • the economic and other impacts of COVID-19 on our clients which affect the sales of our solutions and services and the implementation of such solutions;
  • the risk of losses in the event of defaults by merchants (or other parties) to which we extend credit in our card settlement operations or in respect of any chargeback liability, either of which could adversely impact liquidity and results of operations;
  • changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, intensified international hostilities, acts of terrorism, changes in either or both the United States and international lending, capital and financial markets and currency fluctuations;
  • the risk that the Worldpay transaction will not provide the expected benefits or that we will not be able to achieve the revenue synergies anticipated;
  • the risk that other acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;
  • the risk that cost savings and other synergies anticipated to be realized from other acquisitions may not be fully realized or may take longer to realize than expected;
  • the risks of doing business internationally;
  • the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;
  • 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 firms in those industries;
  • changes in the growth rates of the markets for our solutions;
  • failures to adapt our solutions to changes in technology or in the marketplace;
  • internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
  • the risk that implementation of software, including software updates, for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers;
  • the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;
  • the risk that policies and resulting actions of the current administration in the U.S. may result in additional regulations and executive orders, as well as additional regulatory and tax costs;
  • 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 into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers;
  • the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers;
  • an operational or natural disaster at one of our major operations centers;
  • failure to comply with applicable requirements of payment networks or changes in those requirements;
  • fraud by merchants or bad actors; and
  • other risks detailed in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, in our quarterly reports on Form 10-Q and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.

Fidelity National Information Services, Inc.

Earnings Release Supplemental Financial Information

May 6, 2021

 

Exhibit A

Condensed Consolidated Statements of Earnings (Loss) – Unaudited for the three months ended March 31, 2021 and 2020

 

 

Exhibit B

Condensed Consolidated Balance Sheets – Unaudited as of March 31, 2021 and December 31, 2020

 

 

Exhibit C

Condensed Consolidated Statements of Cash Flows – Unaudited for the three months ended March 31, 2021 and 2020

 

 

Exhibit D

Supplemental Non-GAAP Financial Information – Unaudited for the three months ended March 31, 2021 and 2020

 

 

Exhibit E

Supplemental GAAP to Non-GAAP Reconciliations – Unaudited for the three months ended March 31, 2021 and 2020

 

 

Exhibit F

Supplemental GAAP to Non-GAAP Reconciliations on Guidance – Unaudited for the three months ended June 30, 2021 and year ended December 31, 2021

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)— UNAUDITED

(In millions, except per share amounts)

Exhibit A

 

 

 

 

 

Three months ended March 31,

 

2021

 

2020

Revenue

$

3,223

 

 

$

3,078

 

Cost of revenue

2,118

 

 

2,089

 

Gross profit

1,105

 

 

989

 

Selling, general, and administrative expenses

1,006

 

 

881

 

Operating income

99

 

 

108

 

Other income (expense):

 

 

 

Interest expense, net

(74)

 

 

(80)

 

Other income (expense), net

(493)

 

 

(39)

 

Total other income (expense), net

(567)

 

 

(119)

 

Earnings (loss) before income taxes and equity method investment earnings (loss)

(468)

 

 

(11)

 

Provision (benefit) for income taxes

(97)

 

 

(30)

 

Equity method investment earnings (loss)

1

 

 

(1)

 

Net earnings (loss)

(370)

 

 

18

 

Net (earnings) loss attributable to noncontrolling interest

(3)

 

 

(3)

 

Net earnings (loss) attributable to FIS common stockholders

$

(373)

 

 

$

15

 

 

 

 

 

Net earnings (loss) per share-basic attributable to FIS common stockholders

$

(0.60)

 

 

$

0.02

 

Weighted average shares outstanding-basic

621

 

 

616

 

Net earnings (loss) per share-diluted attributable to FIS common stockholders

$

(0.60)

 

 

$

0.02

 

Weighted average shares outstanding-diluted

621

 

 

625

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

(In millions, except per share amounts)

 

 

 

Exhibit B

 

 

 

 

 

March 31,

2021

 

December 31,

2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,039

 

 

$

1,959

 

Settlement deposits and merchant float

2,919

 

 

3,252

 

Trade receivables, net

3,508

 

 

3,314

 

Settlement receivables

703

 

 

662

 

Other receivables

470

 

 

317

 

Prepaid expenses and other current assets

466

 

 

394

 

Total current assets

9,105

 

 

9,898

 

Property and equipment, net

863

 

 

887

 

Goodwill

53,069

 

 

53,268

 

Intangible assets, net

13,315

 

 

13,928

 

Software, net

3,382

 

 

3,370

 

Other noncurrent assets

1,624

 

 

1,574

 

Deferred contract costs, net

959

 

 

917

 

Total assets

$

82,317

 

 

$

83,842

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued and other liabilities

$

2,370

 

 

$

2,482

 

Settlement payables

4,735

 

 

4,934

 

Deferred revenue

964

 

 

881

 

Short-term borrowings

2,537

 

 

2,750

 

Current portion of long-term debt

602

 

 

1,314

 

Total current liabilities

11,208

 

 

12,361

 

Long-term debt, excluding current portion

16,300

 

 

15,951

 

Deferred income taxes

4,115

 

 

4,017

 

Other noncurrent liabilities

1,986

 

 

1,967

 

Deferred revenue

59

 

 

59

 

Total liabilities

33,668

 

 

34,355

 

 

 

 

 

Redeemable noncontrolling interest

175

 

 

174

 

 

 

 

 

Equity:

 

 

 

FIS stockholders’ equity:

 

 

 

Preferred stock $0.01 par value

 

 

 

Common stock $0.01 par value

6

 

 

6

 

Additional paid in capital

46,152

 

 

45,947

 

Retained earnings

2,823

 

 

3,440

 

Accumulated other comprehensive earnings (loss)

124

 

 

57

 

Treasury stock, at cost

(645)

 

 

(150)

 

Total FIS stockholders’ equity

48,460

 

 

49,300

 

Noncontrolling interest

14

 

 

13

 

Total equity

48,474

 

 

49,313

 

Total liabilities, redeemable noncontrolling interest and equity

$

82,317

 

 

$

83,842

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(In millions)

 

 

 

Exhibit C

 

 

 

 

 

Three months ended March 31,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net earnings (loss)

$

(370)

 

 

$

18

 

Adjustment to reconcile net earnings (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

953

 

 

914

 

Amortization of debt issue costs

7

 

 

8

 

Loss (gain) on sale of businesses, investments and other

(1)

 

 

2

 

Loss on extinguishment of debt

528

 

 

 

Stock-based compensation

157

 

 

56

 

Deferred income taxes

(22)

 

 

(108)

 

Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:

 

 

 

Trade and other receivables

(219)

 

 

96

 

Settlement activity

122

 

 

(368)

 

Prepaid expenses and other assets

(129)

 

 

40

 

Deferred contract costs

(113)

 

 

(150)

 

Deferred revenue

89

 

 

86

 

Accounts payable, accrued liabilities and other liabilities

(166)

 

 

(211)

 

Net cash provided by operating activities

836

 

 

383

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Additions to property and equipment

(69)

 

 

(55)

 

Additions to software

(229)

 

 

(251)

 

Acquisitions, net of cash acquired

 

 

(402)

 

Other investing activities, net

(23)

 

 

92

 

Net cash provided by (used in) investing activities

(321)

 

 

(616)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

Borrowings

13,858

 

 

10,958

 

Repayment of borrowings and other financing obligations

(14,364)

 

 

(10,391)

 

Debt issuance costs

(74)

 

 

 

Proceeds from stock issued under stock-based compensation plans

73

 

 

176

 

Treasury stock activity

(494)

 

 

(46)

 

Dividends paid

(244)

 

 

(216)

 

Other financing activities, net

(136)

 

 

(4)

 

Net cash provided by (used in) financing activities

(1,381)

 

 

477

 

 

 

 

 

Effect of foreign currency exchange rate changes on cash

(40)

 

 

(15)

 

Net increase (decrease) in cash and cash equivalents

(906)

 

 

229

 

Cash and cash equivalents, beginning of period

4,030

 

 

3,211

 

Cash and cash equivalents, end of period

$

3,124

 

 

$

3,440

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP ORGANIC REVENUE GROWTH — UNAUDITED

(In millions)

 

 

 

 

 

 

 

 

 

 

Exhibit D

 

Three months ended March 31,

 

2021

 

2020

 

 

 

 

 

 

Constant

 

 

 

 

 

 

 

 

 

Currency

 

 

 

Organic

 

Revenue

 

FX

 

Revenue

 

Revenue

 

Growth (1)

Merchant Solutions

$

966

 

 

$

(21)

 

 

$

945

 

 

$

935

 

 

1

%

Banking Solutions

1,540

 

 

(4)

 

 

1,536

 

 

1,444

 

 

6

%

Capital Market Solutions

625

 

 

(10)

 

 

615

 

 

597

 

 

3

%

Corporate and Other

92

 

 

(1)

 

 

91

 

 

102

 

 

 

Total

$

3,223

 

 

$

(36)

 

 

$

3,187

 

 

$

3,078

 

 

4

%

Amounts in tables may not sum or calculate due to rounding.

(1)

Organic growth excludes the impact of foreign currency exchange rates in the current period, acquisition or divestiture impact from the prior period, as applicable, and Corporate and Other revenue from the current and prior periods.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP CASH FLOW MEASURES — UNAUDITED

(In millions)

Exhibit D (continued)

 

 

 

 

 

Three months ended

 

March 31, 2021

 

March 31, 2020

Net cash provided by operating activities

$

836

 

 

$

383

 

Non-GAAP adjustments:

 

 

 

Acquisition, integration and other payments (1)

117

 

 

91

 

Settlement activity

(122)

 

 

368

 

Adjusted cash flows from operations

831

 

 

842

 

Capital expenditures (2)

(275)

 

 

(303)

 

Free cash flow

$

556

 

 

$

539

 

 

 

 

 

Free cash flow reflects adjusted cash flows from operations less capital expenditures (additions to property and equipment and additions to software, excluding capital spend related to the construction of our new headquarters). Free cash flow does not represent our residual cash flows available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

(1)

Adjusted cash flows from operations and free cash flow for the three months ended March 31, 2021 and 2020 exclude cash payments for certain acquisition, integration and other costs (see Note 2 to Exhibit E), net of related tax impact. The related tax impact totaled $20 million and $15 million for the three months ended March 31, 2021 and 2020, respectively.

 

 

(2)

Capital expenditures for free cash flow for the three months ended March 31, 2021 and 2020 exclude $23 million and $3 million, respectively, in capital spend related to the construction of our new headquarters.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit E

 

 

Three months ended March 31,

 

 

2021

 

2020

Net earnings (loss) attributable to FIS common stockholders

 

$

(373)

 

 

$

15

 

Provision (benefit) for income taxes

 

(97)

 

 

(30)

 

Interest expense, net

 

74

 

 

80

 

Other, net

 

495

 

 

43

 

 

 

 

 

 

Operating income, as reported

 

99

 

 

108

 

Depreciation and amortization, excluding purchase accounting amortization

 

279

 

 

230

 

Non-GAAP adjustments:

 

 

 

 

Purchase accounting amortization (1)

 

674

 

 

684

 

Acquisition, integration and other costs (2)

 

256

 

 

225

 

Adjusted EBITDA

 

$

1,308

 

 

$

1,247

 

See Notes to Exhibit E.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit E (continued)

 

 

Three months ended March 31,

 

 

2021

 

2020

Earnings (loss) before income taxes and equity method investment earnings (loss)

 

$

(468)

 

 

$

(11)

 

(Provision) benefit for income taxes

 

97

 

 

30

 

Equity method investment earnings (loss)

 

1

 

 

(1)

 

Net (earnings) loss attributable to noncontrolling interest

 

(3)

 

 

(3)

 

Net earnings (loss) attributable to FIS common stockholders

 

(373)

 

 

15

 

Non-GAAP adjustments:

 

 

 

 

Purchase accounting amortization (1)

 

674

 

 

684

 

Acquisition, integration and other costs (2)

 

256

 

 

225

 

Non-operating (income) expense (3)

 

493

 

 

39

 

Equity method investment (earnings) loss (4)

 

(1)

 

 

1

 

(Provision) benefit for income taxes on non-GAAP adjustments

 

(235)

 

 

(162)

 

Total non-GAAP adjustments

 

1,187

 

 

787

 

Adjusted net earnings

 

$

814

 

 

$

802

 

 

 

 

 

 

Net earnings per share-diluted attributable to FIS common stockholders

 

$

(0.60)

 

 

$

0.02

 

Non-GAAP adjustments:

 

 

 

 

Purchase accounting amortization (1)

 

1.08

 

 

1.09

 

Acquisition, integration and other costs (2)

 

0.41

 

 

0.36

 

Non-operating (income) expense (3)

 

0.79

 

 

0.06

 

Equity method investment (earnings) loss (4)

 

 

 

 

(Provision) benefit for income taxes on non-GAAP adjustments

 

(0.38)

 

 

(0.26)

 

Adjusted net earnings per share-diluted attributable to FIS common stockholders

 

$

1.30

 

 

$

1.28

 

Weighted average shares outstanding-diluted (5)

 

626

 

 

625

 

Amounts in table may not sum or calculate due to rounding.

See Notes to Exhibit E.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit E (continued)

Notes to Unaudited – Supplemental GAAP to Non-GAAP Reconciliations for the three months ended March 31, 2021 and 2020.

The adjustments are as follows:

 

(1)

This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions, including customer relationships, contract value, trademarks and tradenames, and technology assets. The Company has excluded the impact of this amortization expense as such amounts can be significantly impacted by the timing and/or size of acquisitions. Although the Company excludes these amounts from its non-GAAP expenses, the Company believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of assets that relate to past acquisitions will recur in future periods until such assets have been fully amortized. Any future acquisitions may result in the amortization of future assets.

 

 

(2)

This item represents acquisition and integration costs primarily related to the acquisition of Worldpay and certain other costs including those associated with data center consolidation activities of $15 million and $18 million for the three months ended March 31, 2021 and 2020, respectively, and incremental charges directly related to COVID-19 of $9 million and $3 million for the three months ended March 31, 2021 and 2020, respectively. For the three months ended March 31, 2021, this item also includes $104 million in accelerated stock compensation expense to reflect the impact of establishing a Qualified Retirement Equity Program that modified unvested equity awards outstanding at January 1, 2021.

 

 

(3)

Non-operating (income) expense primarily consists of other income and expense items outside of the Company’s operating activities, including fair value adjustments on certain non-operating assets and liabilities and foreign currency transaction remeasurement gains and losses. For the three months ended March 31, 2021, this item also includes loss on extinguishment of debt of approximately $528 million relating to tender premiums, make-whole amounts, and fees; the write-off of unamortized bond discounts and debt issuance costs; and losses on related derivative instruments.

 

 

(4)

This item represents our equity method investment earnings or loss and is predominantly due to our equity ownership interest in Cardinal Holdings, LP.

 

 

(5)

For the three months ended March 31, 2021, Adjusted net earnings is a gain, while the corresponding GAAP amount for the period is a loss. As a result, in calculating Adjusted net earnings per share-diluted for this period, the weighted average shares outstanding-diluted amount of approximately 626 million shares used in the calculation includes approximately 5 million shares that in accordance with GAAP are excluded from the calculation of the GAAP Net loss per share-diluted for the period, due to their anti-dilutive impact.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit F

 

Three months Ended

 

Year ended

 

June 30, 2021

 

December 31, 2021

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

Net earnings (loss) per share-diluted attributable to FIS common stockholders

$

0.55

 

 

$

0.65

 

 

$

1.30

 

 

$

1.60

 

 

 

 

 

 

 

 

 

Estimated adjustments (1)

0.97

 

 

0.90

 

 

5.05

 

 

4.95

 

 

 

 

 

 

 

 

 

Adjusted net earnings per share-diluted attributable to FIS common stockholders

$

1.52

 

 

$

1.55

 

 

$

6.35

 

 

$

6.55

 

(1)

Estimated adjustments include purchase accounting amortization, acquisition, integration and other costs, equity method investment earnings (loss) and other items, net of tax impact.