Fidelity National Information Services Management Discusses Q2 2012 Results - Earnings Call Transcript

Fidelity National Information Services (FIS)

Q2 2012 Earnings Call

July 17, 2012 5:00 pm ET

Executives

Mary K. Waggoner - Senior Vice President of Investor Relations

Frank R. Martire - Chairman, Chief Executive Officer and Member of Executive Committee

Gary A. Norcross - President and Chief Operating Officer

Michael D. Hayford - Chief Financial Officer and Corporate Executive Vice President

Analysts

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Glenn Greene - Oppenheimer & Co. Inc., Research Division

David Togut - Evercore Partners Inc., Research Division

Gregory Smith - Sterne Agee & Leach Inc., Research Division

John Kraft - D.A. Davidson & Co., Research Division

Julio C. Quinteros - Goldman Sachs Group Inc., Research Division

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Ashish Sabadra - Deutsche Bank AG, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the FIS Second Quarter Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Ms. Mary Waggoner, Senior Vice President, Investor Relations. Please go ahead.

Mary K. Waggoner

Thank you, Paul. Welcome to everyone joining us today for our second quarter earnings report. Joining me today are Frank Martire, Chairman and Chief Executive Officer; Gary Norcross, President and Chief Operating Officer; and Mike Hayford, Chief Financial Officer. Today's news release and supplemental slide presentation have been posted to our website at fisglobal.com. A replay of today's presentation will be available shortly after the call.

Please refer to the Safe Harbor language on Slide 3 of the presentation. Today's discussion will 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 undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

As a reminder, today's discussion will focus on results from continuing operations, reflecting the reclassification of our Healthcare business as a discontinued operation. Also included in discontinued operations are expenses related to our former BPO operation in Brazil.

Today's remarks will also include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented, as outlined on Slide 4. Reconciliations between GAAP and non-GAAP results are provided in the attachment to the press release and the supplemental slide presentation.

Now if you will turn your attention to Slide 6, I will turn the call over to Frank Martire. Frank?

Frank R. Martire

Thanks, Mary. Good afternoon, everyone, and thank you for joining us on today's call. I'll begin today's business review with a brief summary of our financial performance and business highlights for the second quarter. Gary will follow with the operations report, and Mike will provide additional insight into our financial results and our outlook for the remainder of the year.

We are very pleased with our strong second quarter financial results. Organic revenue growth was 5.1%, driven by continued solid performance across all businesses. EBITDA increased 7.7%, and the EBITDA margin expanded 120 basis points to 30%. Earnings per share totaled $0.66, which represents a 22% increase compared to the second quarter of 2011. As you can see from the chart on the right, we have seen steady improvement in organic growth, driven by execution of our business plan and improved confidence within the banking industry compared to 2009.

I will now continue with Slide 7. In June, we announced a definitive agreement to divest our Healthcare business. The sale is consistent with our primary focus on serving financial institutions and operating in markets where we have meaningful scale. We expect to complete the sale by the end of the third quarter. We'll provide additional details regarding the transaction later on the call.

We continue to maintain a strong focus on serving our clients and expanding relationships. I recently visited with several key clients and business leaders across the United States as well as Europe and Brazil. The feedback from these meetings provided me with even greater confidence that our time, efforts and resources are focused in the areas that are most important to our clients and that the overall business strategy is working. Finding new sources of growth, improving overall profitability and differentiating through institutions from the competition rank high on our clients' list of priorities, as do managing risk and regulatory compliance. Our proven ability to deliver industry-leading solutions and provide value to our clients through leverage and scale are among the many advantages that FIS brings to our clients.

During the second quarter, I met with several clients to provide them with an update on our business and the improvements we are making in the area of information security and risk management. These conversations have been very productive. Gary will provide more detail later on the call. I am very pleased with our strong performance through the first half of 2012, and we are positioned to achieve our full-year objectives.

As always, our management team and employees are focused on serving our clients, executing the strategy that we communicated at our Investor Day in February and driving value for our shareholders.

Now I will turn it over to Gary for the business report. Gary?

Gary A. Norcross

Thanks, Frank, and thanks to everyone for being with us today. My presentation begins on Slide 9. I'll cover some of the business highlights for the quarter and provide updates on information security and the status of the M&I migration plan.

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