First Data EPS Up 20% From Recurring Operations to $0.65
- Reported EPS Grows 19% Over 2001 Pro Forma EPS -
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DENVER, April 11 /PRNewswire-FirstCall/ -- First Data Corp. (NYSE: FDC), a global leader in electronic commerce and payment services, achieved strong revenue and earnings growth in the first quarter, Chief Executive Officer Charlie Fote reported today. Earnings per share from recurring operations were $0.65, an increase of 20% over first quarter 2001 pro forma EPS of $0.54. After non-recurring items, reported EPS was $0.63, an increase of 19% over first quarter 2001 pro forma EPS of $0.53. All references to pro forma figures in this release relate to the pro forma impact on 2001 results of Statement of Financial Accounting Standards No. 142 (SFAS 142) to eliminate goodwill amortization expense. Revenues from recurring operations were up 8% from $1.605 billion to $1.727 billion. This marks the company's 12th consecutive quarter of double-digit earnings per share growth.
``We are excited to deliver another solid quarter,'' said Fote. ``Our focus remains on operating our core businesses with discipline, making acquisitions that fit, increasing international growth and offering enterprise-wide solutions. With this discipline and focus, we remain confident in our stated guidance for the year of 14-17% revenue growth and 15-18% EPS growth.''
Operating Highlights
First Data executed agreements that will continue to provide growth in its
core businesses and adjacent markets. During the quarter:
-- First Data finalized a merchant alliance agreement with SunTrust
Banks, Inc. This agreement expands a long-standing relationship with
SunTrust, strengthening First Data's presence in the Southeast and
Mid-Atlantic States.
-- The United States Postal Service extended its debit and credit
processing relationship with First Data Merchant Services through 2005
through an agreement with one of its bank partners.
-- First Data's Card Issuing segment had significant new contract
signings, renewals and extensions including: Citi Commerce Solutions,
National City Bank, Direct Merchants Credit Card Bank, N.A., Advanta,
PREMIER Bankcard, The Dunlap Company and a number of international
agreements through its PaySys division.
-- Emerging Payments introduced TurboCharge, which allows individual tax
filers to pay taxes via credit card. govONE Solutions offers this
service in partnership with Intuit, through Quicken(R) TurboTax(R)
software products.
Since the beginning of April:
-- Western Union acquired 100% of Paymap Inc., a financial services
company that develops and markets innovative electronic payment
services. Western Union will leverage its existing commercial
distribution network and brand equity to offer Paymap's innovative
services to Western Union customers.
-- Merchant Services and one of its Alliance bank partners announced a
payment processing agreement with Allied Domecq QSR, owner of the
Dunkin' Donuts(R), Baskin Robbins(R) and Togo's Eateries(R) Inc.,
restaurant brands. Allied Domecq operates more than 10,000 locations
worldwide.
Financial Highlights
-- EPS from recurring operations increased 20% to $0.65 for the
first quarter on net income of $252 million, compared to 2001 pro
forma results of $0.54. (Note: Recurring operations exclude
non-recurring items and the results of divested and discontinued
businesses.)
-- Reported first quarter EPS of $0.63 represents a growth of 19% over
first quarter 2001 pro forma EPS of $0.53.
-- Reported first quarter net income of $244 million represents a growth
of 14% over first quarter 2001 pro forma net income of $214 million.
-- During the quarter, the company incurred non-recurring after-tax
charges of $8 million, including $5 million in restructuring charges
primarily related to the merchant segment and $3 million related to
write-downs of investments in technology companies.
-- During the first quarter, First Data generated approximately
$260 million in free cash flow after capital expenditures due to
continued strong operating results from the three core business
segments.
Business Segment Highlights
Payment Services, comprised largely of Western Union and representing more than 40% of First Data revenue, again delivered solid quarterly performance, reporting revenue growth of 15% (16% after adjusting for currency fluctuations) to $719 million. Profits, on a pro forma basis, were up 35% to $230 million. Global demand for money transfers, increased demand for stored-value cards and solid expense management combined to help Payment Services deliver solid operating results.
Western Union International money transfer transactions increased 33%, and revenue increased 23% (26% after adjusting for currency fluctuations). The Western Union global agent network grew 20% to 124,000 locations.
During the quarter, Western Union and the Agricultural Bank of China agreed to extend their money transfer relationship for five years, into 2006. Western Union also signed key agents in Uzbekistan to become the first money transfer company to offer services in that country. Western Union purchased a 25% equity interest in Christopher C. Varvias & Associates S.A., its money transfer agent in Greece with a network of more than 540 locations in 80 cities throughout the country.
ValueLink, the company's stored-value service, increased transactions by 60% in the quarter to more than 149 million transactions. In March, Tower Records selected ValueLink to assume marketing, management and implementation of their stored-value program.
Card Issuing Services, the world's largest third-party card processor, accounts for approximately 26% of First Data's revenue. Profit growth was 10% to $85 million on a pro forma basis. As anticipated, revenue of $452 million decreased by 4%. As of March 31, accounts on file had grown to 317 million, up from 312 million at year-end 2001. Card Issuing has nearly 70 million retail, debit and bankcard accounts in the pipeline for conversion, with 12 million accounts scheduled for conversion in 2002.
As a result of the additional contract renewals and extensions signed this quarter, more than 94% of the card processing business is contractually committed through mid 2004. The Card Issuing North American system redesign continues to be on schedule, with a number of projects installed during the first quarter.
Card Issuing is also successfully executing on its international growth plans. During the quarter, PaySys International signed agreements to provide software and other services for Banorte in Mexico, Industrial & Commercial Bank of China, Development Bank of Singapore, and an Internet banking service provider in the U. K. named cahoot.
In February, First Data introduced First Data Statementlook(SM), an Internet service that provides card issuers a powerful tool for consumers to view monthly statements and make payments online. Through collaborative product development within First Data, the service allows issuers to offer multiple payment options to cardholders including online using the Western Union MoneyZap service or through walk-in cash payments at any of the more than 40,000 Western Union Agent locations in the U. S.
Merchant Services, comprised primarily of First Data Merchant Services and TeleCheck, accounts for approximately 33% of the company's revenues. Revenues grew 14% for the first quarter to $578 million. Profit growth was 15% to $143 million on a pro forma basis. Merchant processing transactions grew 13% for the first quarter to 2.2 billion.
The segment initiated several expense management moves, including the implementation of enhanced risk management programs to reduce check losses in TeleCheck, a strong focus on expense reductions including a moderate reduction in force in First Data Merchant Services, and a continued focus on obtaining synergies from the 2001 acquisitions of NYCE and TASQ.
The TeleCheck business continues to expand merchant use of electronic check acceptance (ECA), which converts paper checks into electronic transactions at the point of sale. In the first quarter, it handled approximately 30 million ECA transactions, a growth rate of 126%.
First Data Merchant Services continues to actively pursue expansion both internationally and domestically. In February, Merchant Services entered into a marketing agreement with VISA Desjardins, the largest VISA issuer and acquirer in Quebec, Canada to provide MasterCard acquiring to VISA Desjardins merchants. In addition, the focus on providing increased functionality for addressing the needs of the petroleum industry has led to the signing of a processing agreement with CITGO Petroleum Corporation.
The segment has been focused on providing expanded debit processing including direct connections to the debit networks. This effort has led to increased debit transaction volumes with some of its largest merchants including Home Depot.
Emerging Payments, First Data's eONE Global business, reported $27 million in revenue for the quarter, a growth rate of 26% over last year.
During the quarter, eONE Global announced an initiative with Vodafone Group Plc and T-Mobile International AG to create an interoperable mobile payment platform to accelerate customer and merchant adoption of mobile transactions. The companies are looking to launch the open platform toward the end of the year, with an initial roll out in Europe, and will continue their effort to secure other network operators to participate in the payment platform.
govONE Solutions, which handles consumer and business payments to governments, renewed a major Electronic Funds Transfer (EFT) agreement with a volume of approximately 1 million transactions processed annually. govONE Solutions currently provides EFT payment services for more than 20 states, enabling businesses and consumers to pay federal, state and local taxes.
Emerging Issues Task Force Issue No. 01-14
Effective January 1, 2002, First Data adopted Emerging Issues Task Force Issue No. 01-14 (EITF 01-14), Income Statement Characterization of Reimbursements Received for ``Out-of-Pocket'' Expenses Incurred. EITF 01-14 was formerly known as Topic No. D-103. EITF 01-14 requires reimbursements First Data receives for out-of-pocket expenses to be recorded as revenue. Prior to the adoption of EITF 01-14, First Data netted the out-of-pocket reimbursements from customers with the applicable out-of-pocket expenditures. Out-of-pocket expenses primarily include postage and telecommunication expenditures. Comparative financial statements for the prior periods have been reclassified to comply with the new regulation, and a detailed schedule is attached.
Conference Call
First Data will hold a conference call today at 8:00 a.m. EDT to discuss the Company's first quarter financial performance. Charlie Fote, president and chief executive officer, and Kim Patmore, chief financial officer, will host the call. The call will be open to the public. The conference call can be accessed by calling 888-831-9087 (in the U. S.) or 712-257-2383 (internationally) and passcode: FDC. A replay of the call is available at 800-873-2013 (no passcode required) through 5 p.m. EDT on April 18.
This call will be broadcast on the company's website at www.firstdata.com . Interested parties are encouraged to click on the webcast link 10-15 minutes prior to the start of the conference call. |
