Fiserv Announces Preliminary Fourth Quarter and Full Year 2018 Results and 2019 Outlook
GAAP revenue growth of 2 percent in the quarter and for the year;
GAAP EPS from continuing operations decrease of approximately 43 percent in the quarter and relatively consistent for the year;
Internal revenue growth of approximately 4.5 percent in the quarter and for the year;
Adjusted EPS increase of 24 to 25 percent in the quarter and approximately 25 percent for the year;
Company preliminarily expects 2019 internal revenue growth of 4.5 to 5 percent and adjusted EPS growth of 10 to 14 percent
Preliminary Fourth Quarter and Full Year 2018 GAAP Results
GAAP earnings per share from continuing operations is expected to be in
the range of
Preliminary Fourth Quarter and Full Year 2018 Non-GAAP Results
Internal revenue growth for the company is expected to be approximately 4.5 percent for both the fourth quarter and full year 2018.
Adjusted earnings per share is expected to be in the range of
Preliminary Outlook for 2019
Agreement to Combine with
In a separate press release issued today,
Use of Non-GAAP Financial Measures
In this preliminary earnings release, the company supplements its reporting of information determined in accordance with GAAP, such as revenue, income from continuing operations and earnings per share from continuing operations, with "adjusted revenue," "internal revenue growth," "adjusted net income," "adjusted earnings per share" and "adjusted earnings per share, as adjusted for the Lending Transaction." Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses should enhance shareholders' ability to evaluate the company's performance, as such measures provide additional insights into the factors and trends affecting its business. Therefore, the company excludes these items from GAAP revenue, income from continuing operations and earnings per share from continuing operations to calculate these non-GAAP measures. The corresponding reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are included in this preliminary earnings release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash and other items described below that are excluded from the non-GAAP outlook measures. See page 9 for additional information regarding the company's forward-looking non-GAAP financial 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, charges associated with early debt extinguishment, merger and integration costs, certain costs associated with the achievement of the company's operational effectiveness objectives, gains or losses from dispositions and unconsolidated affiliates, and certain discrete tax benefits and expenses. The company excludes these items to more clearly focus on the factors management believes are pertinent to its operations, and management uses this information to make operating decisions, including the allocation of resources to the company's various businesses.
Internal revenue growth is a non-GAAP financial measure and is described on page 8. Management believes internal revenue growth is useful because it presents revenue growth excluding acquisitions, dispositions and the impact of postage reimbursements in the company's Output Solutions business, and including deferred revenue purchase accounting adjustments. Management believes this supplemental information enhances shareholders' ability to evaluate and understand the company's core business performance.
These non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, income from continuing operations and earnings per share from continuing operations or any other amount determined in accordance with GAAP.
The preliminary financial results for the fourth quarter and full year 2018 represent the most current information available to management and reflect estimates and assumptions. The company’s actual results may differ materially from these preliminary results due to the completion of the company’s financial closing procedures, final adjustments and other developments that may arise between the date of this press release and the time that financial results for the fourth quarter and full year 2018 are finalized. The foregoing preliminary financial results have not been compiled or examined by our independent registered public accounting firm nor have our independent registered public accounting firm performed any procedures with respect to this information or expressed any opinion or any form of assurance of such information. These preliminary financial results should not be viewed as a substitute for full financial statements prepared in accordance with U.S. GAAP or as a measure of performance. In addition, these preliminary financial results are not necessarily indicative of the results to be achieved for any future period.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated internal revenue growth, 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
could cause Fiserv’s actual results to differ materially include, among
others: the possibility that the parties may be unable to achieve
expected synergies and operating efficiencies in the transaction within
the expected time frames or at all and to successfully integrate the
|Reconciliation of GAAP to|
|Adjusted Net Income and Adjusted Earnings Per Share|
|(In millions, except per share amounts, unaudited)|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|GAAP income from continuing operations||$||286-290||$||532||$||1,187-1,191||$||1,232|
|Merger, integration and other costs 1||14||22||89||74|
|Amortization of acquisition-related intangible assets||43||42||163||159|
|Loss on early debt extinguishment 2||6||—||14||—|
|Lending Transaction impact 3||—||(16||)||—||(50||)|
|Tax impact of adjustments 4||(15||)||(17||)||(63||)||(68||)|
|Gain on sale of businesses 5||—||—||(227||)||(10||)|
|Tax impact of gain on sale of businesses 4||—||—||77||5|
|Unconsolidated affiliate activities 6||4||(1||)||7||(32||)|
|Tax impact of unconsolidated affiliate activities 4||(1||)||—||(2||)||11|
|Tax reform 7||—||(275||)||19||(275||)|
|Adjusted net income||$||339-343||$||289||$||1,281-1,285||$||1,070|
|GAAP earnings per share from continuing operations||$||0.71-0.72||$||1.25||$||2.87-2.88||$||2.86|
|Adjustments - net of income taxes:|
|Merger, integration and other costs 1||0.03||0.03||0.17||0.11|
|Amortization of acquisition-related intangible assets||0.08||0.07||0.31||0.25|
|Loss on early debt extinguishment 2||0.01||—||0.03||—|
|Lending Transaction impact 3||—||(0.03||)||—||(0.08||)|
|Gain on sale of businesses 5||—||—||(0.37||)||(0.01||)|
|Unconsolidated affiliate activities 6||0.01||—||0.01||(0.05||)|
|Tax reform 7||—||(0.65||)||0.05||(0.64||)|
|Adjusted earnings per share||$||0.84-0.85||$||0.68||$||3.10-3.11||$||2.48|
|Diluted shares used in computing earnings per share||404.7||424.9||413.7||431.3|
Merger, integration and other costs include acquisition and related
integration costs of
$46 millionin 2018 and $47 millionin 2017, and certain costs associated with the achievement of the company's operational effectiveness objectives of $43 millionin 2018 and $27 millionin 2017, primarily consisting of expenses related to data center consolidation activities.
Represents the loss on early debt extinguishment associated with the
company’s cash tender and redemption of its
$450 millionaggregate principal amount of 4.625% senior notes.
- Represents the earnings attributable to the disposed 55 percent interest of the company's Lending Solutions business.
- The tax impact of adjustments is calculated using tax rates of 22 percent and 33 percent in 2018 and 2017, respectively, which approximates the company's annual effective tax rate for the respective years, exclusive of federal tax reform effects and the actual tax impacts associated with the gain on sale of businesses and unconsolidated affiliate activities.
- Represents the gains on the Lending Transaction in 2018 and the sale of the company's Australian item processing business in 2017.
- Represents the company's share of the net gains on the sales of businesses at StoneRiver and the company's share of amortization of acquisition-related intangible assets on the Lending Transaction.
Represents discrete income tax effects associated with federal tax
reform and subsequent guidance issued by the
Internal Revenue Service.
See pages 2-3 for disclosures related to the use of non-GAAP financial measures.
Earnings per share is calculated using actual, unrounded amounts.
|Adjusted Revenue and Internal Revenue Growth|
|($ in millions, unaudited)|
|Three Months Ended||Year Ended|
|Adjusted Revenue||December 31,||December 31,|
|Output Solutions postage reimbursements||(79||)||(77||)||(285||)||(281||)|
|Deferred revenue purchase accounting adjustments||—||4||3||8|
|Internal Revenue Growth (1)||Three Months Ended||Year Ended|
|December 31, 2018||December 31, 2018|
1 Internal revenue growth is measured as the increase in adjusted revenue (see above) for the current period excluding acquired revenue and revenue attributable to dispositions, divided by adjusted revenue from the prior year period excluding revenue attributable to dispositions.
In the fourth quarter of 2018, acquired revenue was
Full year 2018 acquired revenue was
Full Year Forward-Looking Non-GAAP Financial Measures
Internal Revenue Growth - The company's internal revenue growth outlook for 2019 excludes acquisitions, dispositions, and the impact of postage reimbursements in its Output Solutions business, and includes deferred revenue purchase accounting adjustments. These adjustments are subject to variability and are anticipated to increase 2019 GAAP revenue growth by approximately 1 percentage point as compared to the internal revenue growth rate.
Adjusted Earnings Per Share - The company's adjusted earnings per
share outlook for 2019 excludes certain non-cash or other items which
should enhance shareholders' ability to evaluate the company's
performance, as such measures provide additional insights into the
factors and trends affecting its business. Non-cash or other items may
be significant and 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, charges associated with early debt
extinguishment, merger and integration costs, certain costs associated
with the achievement of the company's operational effectiveness
objectives, gains or losses from dispositions and unconsolidated
affiliates, and certain discrete tax benefits and expenses. The company
estimates that the amortization expense with respect to acquired
intangible assets as of
The company's adjusted earnings per share growth outlook for 2019 reflects 2018 performance as adjusted for the Lending Transaction.
|2018 adjusted earnings per share 1||$3.10 - $3.11|
|Lending Transaction impact||(0.02)|
|2018 adjusted earnings per share, as adjusted for the Lending Transaction||$3.08 - $3.09|
|2019 adjusted earnings per share outlook||$3.39 - $3.52|
|2019 adjusted earnings per share growth outlook||10% - 14%|
1 See page 6 for a reconciliation of GAAP earnings per share from continuing operations to adjusted earnings per share.
See pages 2-3 for disclosures related to the use of non-GAAP financial measures.
Additional Information and Where to Find It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy or sell any securities or a solicitation
of a proxy or of any vote or approval. This press release may be deemed
to be solicitation material in respect of the proposed transaction
contemplated by the Agreement and Plan of Merger, dated as of
When available, shareholders will be able to obtain copies of the
registration statement, including the joint proxy/consent solicitation
statement/prospectus and any other documents that may be filed with the
Participants in the Solicitation
Vice President, Corporate Communications
Vice President, Investor Relations