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First Data (FDC) Q1 Earnings Match Estimates, Revenues Beat

Zacks Equity Research

First Data Corporation's FDC first-quarter 2019 adjusted earnings per share (EPS) of 31 cents came in line with the Zacks Consensus Estimate and were ahead of the year-ago figure by 2 cents. The bottom line benefited from improved operating results, partially offset by unfavorable foreign currency movements and a higher adjusted tax rate in the current period.

Total segment revenues of $2.12 billion beat the consensus estimate by $34 million. The top line was up 2% year over year on a reported basis and 8% on an organic constant currency basis. Consolidated revenues of $2.32 billion were up 1% year over year on the back of solid segment revenue growth, partially offset by the impact of recent divestitures in Global Financial Solutions and unfavorable foreign currency movements.

First Data is being acquired by Fiserv FISV in a $22 billion all-stock deal. Subject to customary closing conditions and regulatory approvals, the deal is expected to close during the second half of 2019.

So far this year, shares of First Data have gained 52.4% compared with 39.8% rise of the industry it belongs to.

 

Let’s check out the numbers in detail.

Segments in Detail

The Global Business Solutions segment generated revenues of $1.39 billion, which grew 5% year over year on a reported basis and 10% on an organic constant currency basis.

Global Financial Solutions revenues came in at $369 million, down 8% year over year on a reported basis but up 9% on an organic constant-currency basis.

Network & Security Solutions segment generated revenues of $361 million, which were flat year over year on a reported as well as organic constant-currency basis.

Operating Results

Total segment EBITDA came in at $754 million, up 3% year over year on a reported basis and 10% on an organic constant currency basis. Total segment EBITDA margin was 35.6%, up 80 basis points on an organic constant currency basis

Operating profit increased 22.1% year over year to $425 million. Total expenses declined 2.2% from the year-ago quarter level of $1.89 billion.

First Data Corporation Price, Consensus and EPS Surprise

 

First Data Corporation Price, Consensus and EPS Surprise | First Data Corporation Quote

Balance Sheet & Cash Flow

First Data exited first-quarter 2019 with cash and cash equivalents of $619 million compared with $555 million at the end of the prior quarter. Long-term debt was $16.3 billion compared with $16.4 billion at the end of the previous quarter.

The company generated $615 million of cash from operating activities in the reported quarter. Free cash flow was $397 million. Capital expenditures were $166 million.

2019 Guidance

First Data reaffirmed its 2019 guidance that excludes impacts of its merger with Fiserv. For total segment revenues, management expects organic constant currency growth of 5-6%. Total segment EBITDA is expected to register 6-8% growth on organic constant currency basis. Adjusted earnings are expected in the range of $1.55-$1.58 per share. Full-year free cash flow is projected to be more than $1.5 billion.

Zacks Rank & Upcoming Releases

Currently, First Data carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting first-quarter 2019 reports of key players like FLEETCOR Technologies FLT, Gartner IT and Equifax EFX. While FLEETCOR and Gartner are slated to report on May 7, Equifax is scheduled to release results on May 10.

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