Fiserv Reports Second Quarter 2013 Results

Fiserv Reports Second Quarter 2013 Results

4 percent adjusted internal revenue growth for the quarter;

Adjusted EPS increases 18 percent to $1.50;

Free cash flow increases 22 percent for the first six months;

Full year 2013 revenue and earnings guidance affirmed

BROOKFIELD, Wis.--(BUSINESS WIRE)-- Fiserv, Inc. (NAS: FISV) , a leading global provider of financial services technology solutions, today reported financial results for the second quarter of 2013.

GAAP revenue in the second quarter was $1.20 billion compared with $1.09 billion in the second quarter of 2012. Adjusted revenue was $1.14 billion in the second quarter compared with $1.02 billion in 2012, an increase of 12 percent. For the first six months of 2013, GAAP revenue was $2.35 billion compared with $2.18 billion for the first six months of 2012. Adjusted revenue was $2.22 billion in the first half of 2013 compared with $2.04 billion in the same period in 2012, an increase of 9 percent.

GAAP earnings per share from continuing operations in the second quarter was $1.13 compared with $1.17 in the second quarter of 2012. GAAP earnings per share from continuing operations for the first six months of 2013 was $2.00, which included Open Solutions merger and integration expenses of $0.27 per share, compared with $2.11 for the first six months of 2012.

Adjusted earnings per share from continuing operations in the second quarter increased 18 percent to $1.50 compared with $1.27 in 2012. Adjusted earnings per share from continuing operations in the first six months of 2013 increased 16 percent to $2.83 compared with $2.45 in 2012.

"Our strong second quarter results included revenue and earnings acceleration in-line with our full-year expectations," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "Performance was led by 7 percent adjusted internal revenue growth in our Payments segment, solid sales and excellent free cash flow."

Second Quarter 2013

• Adjusted revenue grew 12 percent in the quarter to $1.14 billion and increased 9 percent year-to-date to $2.22 billion over the prior year periods.

• Adjusted internal revenue growth in the quarter was 4 percent for the company, driven by 7 percent growth in the Payments segment and 2 percent growth in the Financial segment.

• Adjusted internal revenue grew 2 percent for the first six months of 2013, with 4 percent growth in the Payments segment. Financial segment adjusted internal revenue was flat compared to the first six months of 2012.

• Adjusted earnings per share increased 18 percent in the quarter to $1.50 and increased 16 percent in the first six months of 2013 to $2.83, as compared to the prior year periods.

• Free cash flow grew 22 percent in the first six months of 2013 to $359 million compared with $294 million in the prior year period.

• Adjusted operating margin was 30.5 percent in the quarter, an increase of 110 basis points compared to the second quarter of 2012, and increased 50 basis points to 29.5 percent in the first six months of 2013, compared with the prior year period.

• Sales performance year-to-date is up 9 percent compared with the first half of 2012.

• The company signed five new DNA^TM account processing clients in the quarter and 10 for the first half of the year.

• The company received a $122 million cash distribution in the quarter from StoneRiver Group, L.P. ("StoneRiver"), a joint venture in which the company owns a 49% interest.

• The company repurchased 2.3 million shares of common stock in the quarter for $204 million and 3.1 million shares through June 30, 2013 for $271 million. As of June 30, 2013, the company had 2.4 million shares remaining under its current share repurchase authorization.

• The company signed 98 Mobiliti^™ clients in the quarter, for a total of 188 for the year, and has added nearly 1,600 mobile banking clients to date.

• The company signed 64 Popmoney^® clients in the quarter and the network now includes nearly 2,000 financial institutions.

• The company signed 71 electronic bill payment clients and 38 debit processing clients in the quarter.

Outlook for 2013

Fiserv continues to expect 2013 adjusted revenue growth to be in excess of 10 percent, adjusted internal revenue growth to be ina range of 3 to 4 percent, and adjusted earnings per share to be in a range of $5.84 to $6.03, which represents growth of 15 to 19 percent over 2012.

"We are pleased with our performance in the quarter and believe we are on track to achieve our 2013 financial objectives," said Yabuki.

Earnings Conference Call

The company will discuss its second quarter 2013 results on a conference call and webcast at 4 p.m. CT on Tuesday, July 30, 2013. To register for the event, go to www.fiserv.com and click on the Q2 Earnings webcast link. Supplemental materials will be available in the "Investor Relations" section of the website.

About Fiserv

Fiserv, Inc. (NAS: FISV) is a leading global technology provider serving the financial services industry, driving innovation in payments, processing services, risk and compliance, customer and channel management, and business insights and optimization. For more information, visit www.fiserv.com.

Non-GAAP Financial Measures and Other Information

In this earnings release, we supplement our reporting of information determined in accordance with GAAP, such as revenue, operating income, operating margin, income from continuing operations, earnings per share and net cash provided by operating activities, with "adjusted revenue," "adjusted internal revenue growth," "adjusted operating income," "adjusted operating margin," "adjusted income from continuing operations," "adjusted earnings per share" and "free cash flow." Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses enhance our shareholders' ability to evaluate our performance because such items do not reflect how we manage our operations. Therefore, we exclude these items from GAAP revenue, operating income, operating margin, income from continuing operations, earnings per share and net cash provided by operating activities to calculate these non-GAAP measures.

Examples of non-cash or other items may include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions, non-cash intangible asset amortization expense associated with acquisitions, non-cash impairment charges, severance costs, merger costs, certain integration expenses related to acquisitions and certain discrete tax benefits. We exclude these items to more clearly focus on the factors we believe are pertinent to the management of our operations, and we use this information to allocate resources to our various businesses.

Free cash flow and adjusted internal revenue growth are non-GAAP financial measures and are described on page 10. We believe free cash flow is useful to measure the funds generated in a given period that are available for strategic capital decisions. We believe adjusted internal revenue growth is useful because it presents revenue growth excluding the impact of acquisitions and dispositions and postage reimbursements in our Output Solutions business and includes deferred revenue purchase accounting adjustments. We believe this supplemental information enhances our shareholders' ability to evaluate and understand our core business performance.

These non-GAAP measures should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, income from continuing operations, earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP. These non-GAAP measures reflect management's judgment of particular items and may not be comparable to similarly titled measures reported by other companies.

The results for 2013 include the acquisition of Open Solutions since January 14, 2013. The company divested its Club Solutions business on March 14, 2013. Accordingly, the financial results of Club Solutions are reported as discontinued operations for all periods presented.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated adjusted revenue, adjusted internal revenue, adjusted earnings per share, and adjusted earnings per share growth. Statements can generally be identified as forward-looking because they include words such as "believes," "anticipates," "expects," "could," "should" or words of similar meaning. Statements that describe the company's future plans, objectives or goals are also forward-looking statements. Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that may affect the company's results include, among others: the impact on the company's business of the current state of the economy, including the risk of reduction in revenue resulting from decreased spending on the products and services that the company offers; legislative and regulatory actions in the United States and internationally, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations; the company's ability to successfully integrate acquisitions, including Open Solutions, into its operations; changes in client demand for the company's products or services; pricing or other actions by competitors; the impact of the company's strategic initiatives; the company's ability to comply with government regulations, including privacy regulations; and other factors included in the company's filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2012 and in other documents that the company files with the SEC. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.