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First Data (FDC) Beats on Q1 Earnings, Raises 2018 Guidance
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First Data Corporation reported better-than-expected first-quarter 2018 results.
Adjusted earnings of 29 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The figure increased 3.6% on a year-over-year basis driven by enhanced operating results and partially offset by a normalized adjusted effective tax rate.
Total segment revenues came it at $2.1 billion, outpacing the consensus mark by $176 million. The figure was up 11% year over year on a reported basis, 10% on a comparable accounting basis and 5% on an organic constant-currency basis. Consolidated revenues totaled $2.3 billion, which were up 19% year over year. Top-line growth was driven by an innovative product and services portfolio, and expanding enterprise business.
Meanwhile, integration of two recent acquisitions, CardConnect and BluePay, are proving accretive to the company. These acquired entities have started making significant revenue contributions from the fourth quarter of 2017 and the momentum is expected to continue going forward.
We observe that First Data shares have rallied 14.5% over the past year, outperforming the 7.1% gain of the industry it belongs to.
Segments in Detail
First Data has three reportable segments: Global Business Solutions (GBS), Global Financial Solutions (GFS) and Network & Security Solutions (NSS).
Global Business Solutions: This segment generated revenues of $1.3 billion, which grew 18% year over year on a reported basis, 15% on a comparable accounting basis and 7% on an organic constant currency basis. Growth was driven by strong geographical market results across Latin America, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) regions.
Strong growth in Argentina and Brazil drove Latin America revenues. APAC revenues were driven by solid growth throughout the region.
Global Financial Solutions: Revenues from this segment came in $400 million, up 2% year over year on both a reported and comparable accounting basis, and 1% on an organic constant-currency basis. The improvement can be attributed to higher revenues from EMEA and APAC, partially offset by lower revenues from North America and Latin America.
Network & Security Solutions: This segment generated revenues of $362 million, flat year over year on reported basis, up 4% on a comparable accounting basis and up 7% on an organic constant-currency basis. The upside was driven by strength across the Stored Value, Security and Fraud, and EFT units.
Operating Performance
Segmental EBITDA came in at $730 million, up 12% year over year on a reported basis, 14% on a comparable accounting basis and 10% on an organic constant-currency basis.
Segment EBITDA margin of 35.1% improved 40 bps year over year on a reported basis and 110 basis points on a comparable accounting basis.
Excluding amortization of acquisition intangibles, restructuring costs, stock-based compensation and other items, First Data reported adjusted net income of $279 million compared with $258 million in the year-ago quarter.
At the end of the first quarter, cash and cash equivalents balance was $586 million compared with $498 million in the previous quarter. Long-term debt was $17.9 billion flat with the fourth quarter.
The company generated $534 million in cash from operating activities and spent $139 million on capex. Free cash flow in the first quarter was $368 million, up from $280 million, in the prior quarter.
Raised 2018 View
First Data expects adjusted earnings for 2018 to be between $1.42 per share and 1.47 per share compared with the previous guidance of $1.35-$1.40 per share.
For 2018, the company expects segment revenue growth between 6% and 7% compared with the previous guidance of 5-7%. Total segment EBITDA is expected to grow in a range of 8-9%, up from the previously guided range of 7-9%.
Adjusted effective tax rate is anticipated to be 25%. The previously guided range was 27-29%. Projected free cash flow of $1.4 billion for 2018 remains unchanged.
Investors interested in the broader Business Services sector are keenly awaiting first-quarter earnings reports from key players like Automatic Data Processing (ADP - Free Report) , Republic Services (RSG - Free Report) and The Dun & Bradstreet Corp. (DNB - Free Report) . While Automatic Data Processing and Republic Services are slated to report quarterly numbers on May 2, Dun & Bradstreet will release its results on May 9.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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First Data (FDC) Beats on Q1 Earnings, Raises 2018 Guidance
First Data Corporation reported better-than-expected first-quarter 2018 results.
Adjusted earnings of 29 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The figure increased 3.6% on a year-over-year basis driven by enhanced operating results and partially offset by a normalized adjusted effective tax rate.
Total segment revenues came it at $2.1 billion, outpacing the consensus mark by $176 million. The figure was up 11% year over year on a reported basis, 10% on a comparable accounting basis and 5% on an organic constant-currency basis. Consolidated revenues totaled $2.3 billion, which were up 19% year over year. Top-line growth was driven by an innovative product and services portfolio, and expanding enterprise business.
Meanwhile, integration of two recent acquisitions, CardConnect and BluePay, are proving accretive to the company. These acquired entities have started making significant revenue contributions from the fourth quarter of 2017 and the momentum is expected to continue going forward.
We observe that First Data shares have rallied 14.5% over the past year, outperforming the 7.1% gain of the industry it belongs to.
Segments in Detail
First Data has three reportable segments: Global Business Solutions (GBS), Global Financial Solutions (GFS) and Network & Security Solutions (NSS).
Global Business Solutions: This segment generated revenues of $1.3 billion, which grew 18% year over year on a reported basis, 15% on a comparable accounting basis and 7% on an organic constant currency basis. Growth was driven by strong geographical market results across Latin America, Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) regions.
Strong growth in Argentina and Brazil drove Latin America revenues. APAC revenues were driven by solid growth throughout the region.
Global Financial Solutions: Revenues from this segment came in $400 million, up 2% year over year on both a reported and comparable accounting basis, and 1% on an organic constant-currency basis. The improvement can be attributed to higher revenues from EMEA and APAC, partially offset by lower revenues from North America and Latin America.
Network & Security Solutions: This segment generated revenues of $362 million, flat year over year on reported basis, up 4% on a comparable accounting basis and up 7% on an organic constant-currency basis. The upside was driven by strength across the Stored Value, Security and Fraud, and EFT units.
Operating Performance
Segmental EBITDA came in at $730 million, up 12% year over year on a reported basis, 14% on a comparable accounting basis and 10% on an organic constant-currency basis.
Segment EBITDA margin of 35.1% improved 40 bps year over year on a reported basis and 110 basis points on a comparable accounting basis.
Excluding amortization of acquisition intangibles, restructuring costs, stock-based compensation and other items, First Data reported adjusted net income of $279 million compared with $258 million in the year-ago quarter.
First Data Corporation Net Income (TTM)
First Data Corporation Net Income (TTM) | First Data Corporation Quote
Balance Sheet and Cash Flow
At the end of the first quarter, cash and cash equivalents balance was $586 million compared with $498 million in the previous quarter. Long-term debt was $17.9 billion flat with the fourth quarter.
The company generated $534 million in cash from operating activities and spent $139 million on capex. Free cash flow in the first quarter was $368 million, up from $280 million, in the prior quarter.
Raised 2018 View
First Data expects adjusted earnings for 2018 to be between $1.42 per share and 1.47 per share compared with the previous guidance of $1.35-$1.40 per share.
For 2018, the company expects segment revenue growth between 6% and 7% compared with the previous guidance of 5-7%. Total segment EBITDA is expected to grow in a range of 8-9%, up from the previously guided range of 7-9%.
Adjusted effective tax rate is anticipated to be 25%. The previously guided range was 27-29%. Projected free cash flow of $1.4 billion for 2018 remains unchanged.
Zacks Rank & Other Releases
First Datahas a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting first-quarter earnings reports from key players like Automatic Data Processing (ADP - Free Report) , Republic Services (RSG - Free Report) and The Dun & Bradstreet Corp. (DNB - Free Report) . While Automatic Data Processing and Republic Services are slated to report quarterly numbers on May 2, Dun & Bradstreet will release its results on May 9.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>