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Fiserv releases second-quarter 2011 financial results

The company's adjusted income increases 13 percent, while its net income falls 29 percent from the same quarter last year.

July 26, 2011

Fiserv Inc., a global provider of financial services technology solutions, yesterday released its financial results for Q2 2011. Net income for the company fell to $90 million (62 cents per share) versus $127 million (83 cents per share) a year earlier. This is a decline of 29.1 percent from the same quarter a year ago.

GAAP revenue in the second quarter 2011 was $1.07 billion compared with $1.02 billion in the second quarter of 2010. Adjusted revenue increased 3 percent to $1 billion in the second quarter compared with $970 million in 2010.

For the first six months of 2011, total GAAP revenue was $2.11 billion compared with $2.03 billion in 2010, and total adjusted revenue was $1.99 billion compared with $1.92 billion in 2010.

GAAP earnings per share from continuing operations for the second quarter of 2011 was $0.67, which included a loss from early debt extinguishment of $0.26 per share, compared with $0.85 in 2010. GAAP earnings per share from continuing operations for the first six months of 2011 was $1.45, which included a loss from early debt extinguishment and severance expenses of $0.34 per share, compared with $1.65 in 2010.

Adjusted earnings per share from continuing operations in the second quarter increased 13 percent to $1.13 compared with $1.00 in 2010. Adjusted earnings per share from continuing operations for the first six months of 2011 was up 10 percent to $2.15 compared with $1.95 in 2010.

"Our focused execution in the quarter, highlighted by another solid performance in the payments segment, led to continued revenue growth and double-digit gains in adjusted EPS," said Jeffery Yabuki, president and CEO of Fiserv. "As important, our highly valued and differentiated solutions led us to record the largest quarterly sales attainment in the company's history."

Second-quarter 2011

• Adjusted internal revenue growth was 3 percent in the quarter, consisting of 5 percent growth in the payments segment and 2 percent growth in the financial segment.

• Adjusted operating margin was 29.3 percent in the quarter, up 100 basis points sequentially, and down 30 basis points compared with the prior year's second quarter.

• Adjusted earnings per share increased 13 percent to $1.13 in the quarter compared with $1.00 in the prior year period.

• Free cash flow was $335 million in the first six months of 2011 compared with $353 million in the first six months of 2010, a decrease of 5 percent.

• Fiserv entered into a definitive agreement to acquire CashEdge Inc., a provider of consumer and business payments solutions such as account-to-account transfer, account opening and funding, data aggregation, small business payments, and person-to-person payments, for $465 million in cash. The acquisition is expected to close by the end of the third quarter and should advance Fiserv's digital payments and channel strategies.

• The company repurchased 2.6 million shares of common stock in the quarter for $163 million and 6.9 million shares in the first six months of 2011 for a total of $424 million. The company also announced a new 7.5 million share repurchase authorization in the quarter and, as of June 30, 2011, had approximately 6.7 million shares remaining under the authorization.

• The company raised $1.0 billion of proceeds in a public offering of 5-year and 10-year senior notes in the quarter with a weighted average interest rate and term of 3.8 percent and 7 years, respectively. The company used the proceeds to retire the remaining $1.0 billion of the company's 6.125 percent senior notes due in 2012; $700 million were repurchased in June and $300 million were redeemed in July.

• Eleven new and expanded FI client relationships occurred in the quarter.

Outlook for 2011

Fiserv continues to expect 2011 adjusted internal revenue growth to be in a range of 2 to 4 percent. The company also expects 2011 adjusted earnings per share to be in a range of $4.42 to $4.54, which represents growth of 9 to 12 percent over $4.05 in 2010.

"We have taken several important strategic steps this year that should further strengthen the profile of the company, and are on track to achieve our 2011 outlook," Yabuki said.