Adjusted earnings per share increases 6 percent to $0.95;
Company affirms 2010 revenue and earnings guidance
Fiserv, Inc. (NASDAQ: FISV), the leading global provider of financial services technology solutions, today reported financial results for the first quarter of 2010.
Total GAAP revenue in the first quarter of 2010 was $1.01 billion compared with $1.02 billion in the first quarter of 2009. Total adjusted revenue decreased 1 percent to $954 million in the first quarter compared with $968 million in 2009.
GAAP earnings per share from continuing operations for the first quarter was $0.80 compared with $0.68 in 2009. Total GAAP earnings per share, including discontinued operations, was $0.79 for the first quarter compared with $0.66 in 2009. Adjusted earnings per share from continuing operations in the first quarter increased 6 percent to $0.95 compared with $0.90 in the first quarter of 2009.
âSolid performance by our recurring revenue-based businesses in the quarter produced financial results inline with our expectations,â said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. âWe are funding new product investments in several strategic
areas to provide innovation the market demands, while delivering value for our shareholders in the short and long term.â
First Quarter 2010
â¢ Total adjusted revenue decreased 1 percent in the quarter to $954 million compared with the first quarter of 2009, due primarily to a decrease in project revenue in the companyâs Output Solutions division, lower license and consulting revenue, and volume declines in
â¢ The companyâs adjusted operating margin declined 20 basis points to 28.9 percent in the quarter compared to the first quarter of 2009, which was the companyâs highest margin quarter of 2009. The slight decline in operating margin resulted primarily from decreases in higher margin revenue and planned investments in new products. Adjusted operating margin in the quarter increased 80 basis points sequentially.
â¢ Free cash flow increased 15 percent over the prior year period to a record quarterly level of $225 million.
â¢ On March 1, 2010, the company announced that its Board of Directors authorized the repurchase of an additional five million shares of the companyâs common stock. During the quarter, the company repurchased 1.4 million shares for $67 million and has 5.8 million
shares remaining under its existing repurchase authorizations as of March 31, 2010.
â¢ The company continued to expand its consumer payments footprint in the quarter by signing 93 electronic bill payment clients and 46 debit clients, of which the majority were competitive takeaways.
â¢ The company signed a number of new and expanded client relationships in the quarter:
â¢ American Bank of Texas, a $1.1 billion institution based in Sherman, Texas, selected ReservelinkÂ® from Fiserv to fully automate its deposit reclassification processes and generate additional investment income by enhancing the management of reserve requirements and non-earning assets. The bank also utilizes Merchant Source CaptureTM and Consumer Source Captureâ¢ solutions from Fiserv.
â¢ The Charles Schwab Corporation launched six new managed portfolios of exchangetraded funds in Schwab Managed PortfoliosTM ETFs, leveraging the Investment Services technology platform from Fiserv. Schwab services 7.8 million client brokerage accounts
and $1.49 trillion in client assets from 300 offices globally.
â¢ Coastal Federal Credit Union, a $2.1 billion institution with 195,000 members headquartered in Raleigh, North Carolina, expanded their relationship with Fiserv to include the CheckFreeÂ® RXPÂ® online bill payment and presentment solution. Coastal, which already utilizes account processing and online banking solutions from Fiserv, also plans to implement the financial overview experience which combines online banking and bill payment functionality into a single, integrated user portal.
â¢ First National Bank Alaska, the largest locally owned and operated bank in Alaska, expanded its relationship with Fiserv. With 30 branches in 18 communities throughout the state, First National will integrate Fiservâs debit solutions into its account processing
platform, PremierÂ® from Fiserv.
â¢ Home Federal Bank, headquartered in Nampa, Idaho, agreed to implement the PrecisionTM bank platform from Fiserv. With 22 full-service banking offices and one commercial loan center, the bank also will use additional Fiserv solutions including the 3 Fiserv Clearing Network, CheckFree RXP, WireXchangeÂ®, PrologueTM modules, EFT Processing and AML Manager.
â¢ Lambton Financial Credit Union Limited of Sarnia, Ontario chose the advanced Acumenâ¢ account processing platform from Fiserv, citing its integrated loan processing capability as essential to the credit unionâs growth strategy. The state-of-the-art Canadian service bureau, and feature-rich functionality of Acumen, also were key considerations that led Lambton to become the 15th Canadian credit union to choose Acumen for core banking since January 2008.
â¢ SunTrust Banks, Inc., headquartered in Atlanta and one of the nationâs largest banking organizations with $174 billion in assets, expanded its relationship with Fiserv. SunTrust selected Mobile Moneyâ¢ from Fiserv to provide clients with a broader range of mobile
account access options, supporting the bankâs overall mobile financial services strategy.
â¢ The Union Bank Company, located in Columbus Grove, Ohio, selected the Premier bank platform and outsourced processing services from Fiserv. Additionally, the bank chose a suite of complementary Fiserv solutions to introduce innovative new services to
its customers. The suite includes eComâ¢ and eCorp â¢ for Premier, CheckFree RXP, Mobile Money, Branch Source Captureâ¢ and other solutions. The Union Bank Company is a subsidiary of United Bancshares, Inc. (NASDAQ: UBOH), which had $616 million in
assets as of December 31, 2009.
â¢ United Central Bank (UCB), a $2.6 billion asset institution based in Garland, Texas selected the Premier bank platform from Fiserv for outsourced account processing. Recognized as the â2010 Large 7(a) Lender of the Yearâ by the Small Business Administration, UCB chose more than 15 complementary Fiserv solutions, including online banking, bill payment, EFT, item processing, anti-money laundering and Branch Source Capture for its 32 locations in 8 states.
â¢ United Prairie Bank, with $526 million in assets and 15 locations across Minnesota, has expanded a 25-year relationship with Fiserv by choosing the Premier bank platform and outsourced processing services from Fiserv. In addition, the bank selected solutions
such as online banking and bill pay, EFT, the Fiserv Clearing Network and Merchant Source Capture.
â¢ U.S. Bancorp, with $282 billion in assets and the parent company of U.S. Bank, the fifth largest commercial bank in the United States, signed a multi-year renewal agreement with Fiserv for CheckFree RXP, the market leading bill payment and presentment
Outlook for 2010
Fiserv continues to expect full year adjusted earnings per share from continuing operations to be in a range of $3.96 to $4.07, which represents growth of 8 to 11 percent compared with 2009. The company also expects 2010 adjusted internal revenue growth to be in a range of 1 to 3 percent. The adjusted earnings per share outlook excludes the impact of extraordinary items, merger and integration costs, and the amortization of acquisition-related intangible assets.
âWe expect momentum from the combination of our strong business model and an intense focus on market opportunities to accelerate revenue and earnings growth throughout the year, consistent with our 2010 guidance,â said Yabuki.
Earnings Conference Call
The company will discuss its first quarter 2010 results on a conference call and Webcast at 4 p.m. CST on Thursday, April 29, 2010. To register for the event, go to www.fiserv.com and click on the Q1 Earnings Webcast icon. Supplemental materials and an accompanying presentation will be available in the âFor Investorsâ section of the website.
Use of Non-GAAP Financial Measures
We supplement our reporting of revenue, operating income, income from continuing operations and earnings per share information determined in accordance with GAAP by using âadjusted revenue,â âadjusted operating income,â âadjusted income from continuing operations,â âadjusted earnings per share from continuing operations,â âadjusted operating margin,â âfree cash flowâ and âadjusted internal revenue growthâ in this earnings release. Management believes that adjustments for certain non-cash or unusual revenue or expense items, and the exclusion of certain pass-through revenue and expenses, enhance our shareholdersâ 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, income from continuing operations and earnings per share to calculate these non-GAAP measures. Examples of non-cash or unusual items may include, but are not limited to, non-cash intangible
asset amortization expense associated with acquisitions, severance costs, merger and integration expenses and non-cash deferred revenue adjustments arising from acquisitions. We exclude these items to more clearly focus on the factors we believe are pertinent to the management of our operations. We regularly report our adjusted results to our chief executive officer, who uses this information to allocate resources to our various businesses.
Free cash flow and adjusted internal revenue growth are described in detail on pages 10 and 12. Adjusted internal revenue growth percentage is a non-GAAP financial measure that we believe is useful to investors because it presents revenue growth excluding acquired revenue, postage reimbursements in our Output Solutions business and deferred revenue purchase accounting
adjustments. We believe this supplemental information enhances our shareholdersâ 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, income from continuing operations and earnings per share or any other amount determined in accordance with GAAP. These non-GAAP measures reflect managementâs judgment of particular items and may not be comparable to similarly titled measures reported by other companies.