Fidelity National Information Services, Inc. (FIS)
Q1 2010 Earnings Call
April 27, 2010 5:00 pm ET
Mary Waggoner – Senior Vice President of Investor Relations
Frank Martire – President, Chief Executive Officer
Mike Hayford – Chief Financial Officer
Gary Norcross – Chief Operating Officer
George Scanlon – Executive Vice President of Finance
David Koning - Robert W. Baird & Co., Inc.
Glenn Greene - Oppenheimer & Co.
Greg Smith - Duncan Williams Inc.
Daniel Perlin - RBC Capital Markets
Brett Huff - Stephens, Inc.
Kartik Mehta - Northcoast Research
Bryan Keane - Credit Suisse
John Kraft - D. A. Davidson & Co.
James Kissane - BofA Merrill Lynch
Tien-Tsin Huang - J. P. Morgan
David Parker - Lazard Capital Markets
Julio Quinteros - Goldman Sachs
Karl Keirstead - Kaufman Bros.
Previous Statements by FIS
» Fidelity National Information Services, Inc. Q4 2009 Earnings Call Transcript
» Fidelity National Information Services, Inc. Q3 2009 Earnings Call Transcript
» Fidelity National Information Services, Inc. Q2 2009 Earnings Call Transcript
Thank you Shannon and thanks to everyone joining us on the line. Today’s earnings press release and supplemental Slide presentation have been posted to our website at fisglobal.com. A webcast replay of the audio portion of the call will also be available on the website later this evening.
Frank Martire, President and Chief Executive Officer, will provide an overview of first quarter results and operational highlights. Mike Hayford, Chief Financial Officer, will follow with the detailed financial report. Joining us for the Q&A portion of the discussion will be Gary Norcross, Chief Operating Officer, and George Scanlon, Executive Vice President of Finance.
Unless otherwise stated, references to revenue and EBITDA growth rates will be on a pro forma basis to include results from Metavante in all periods. Today’s comments will contain references to non-GAAP results in order to provide more meaningful comparisons between the periods presented. Reconciliations between GAAP and non-GAAP results are provided in the attached press release.
The discussion will also contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC. The company expressly disclaims any duty to update or revise the forward-looking statements including guidance.
The presentation will begin with Slide number 4. I will now turn the call over to Frank Martire.
Thank you Mary. Good afternoon and thanks to everyone joining us on the call. We are very pleased with the strong first quarter results. Revenue growth and earnings came in better than we had expected, thanks to higher software and professional services, solid transaction growth and prudent cost management.
First quarter revenue increased 3.8% to $1.3 billion, then grew 1.8% in constant currency. The EBITDA margin expanded 340 basis points to 28.8%, driven primarily by merger related cost savings and a modest improvement in revenue mix. Adjusted earnings came in at $0.41 per share, and free cash flow was strong at $241 million for the quarter.
We are meeting or exceeding all the major integration milestones, and are on track to achieve our targeted cost savings of $260 million. We exceeded our expectations for $43 million in realized savings in the first quarter, and we are confident that we will achieve the targeted incremental savings of $150 million for 2010.
During the quarter we successfully consolidated a number of regional data centers into our strategic command centers in Brown Deer, Wisconsin and Little Rock, Arkansas. And we also completed the disaster recovery in-sourcing project as scheduled by April 18. We are particularly pleased with the progress we have made in integrating our sales teams and executing our unified, go to market strategy.
This strong performance demonstrates our ability to integrate and successfully manage all aspects of our business. While we have a full agenda in 2010, our employees are doing a great job staying focused on serving our clients and driving operational excellence.
We continue to see evidence of increased confidence among our clients regarding the outlook for bank spending. Sales were strong in the first quarter, particularly for new core processing clients, and the community of banking in mid tier space, such as Cardinal Bank; First Federal Bank of the Midwest; and Boiling Springs Savings Bank of New Jersey.
Our success is being driven by the added value that we deliver to our clients including superior feature functionality, product breadth and a reputation for strong client engagement, all of which help our clients improve customer retention rates and compete more effectively. We continue to expand client relationships in the large and regional bank space, including two Top 100 banks that have chosen FIS as their new core processing partner. Also, we announced this morning Cole Taylor Bank, a $4 billion bank based in Chicago, has selected the IVS core processing platform in addition to our e-banking and bill payment solutions.
These examples clearly demonstrate the excellent job that our sales team is doing to identify and close new opportunities. We look forward to sharing more success stories with you in the future.
We are also excited about the revenue synergies we have obtained as a result of the combination. Approximately 30% of our new contract done in the quarter was generated by merger related cross sales. The resulting wins span multiple product offerings and include Touchpoint, NICE Network Services, loan origination software, business e-banking and bill payment. I’d like to highlight a couple more of the cross sale wins we were able to attain from the top 50 banks. The first is a long-term systematic user will convert to our bill payment platform in 2011. The second will implement a component of Touchpoint across its bridge network over the next 18 months.