Fidelity National Information Services, Inc. reports 32.9% Net Income decline in 2018 while 1.9 pp EBITDA Margin growth from 32.3% to 34.2%
02/12/2019 • About Fidelity National Information Services, Inc. (
$FIS) • By InTwits
Fidelity National Information Services, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 34.2% in 2018 vs. 32.3% in 2017 vs. 29.9% in 2014
- Fidelity National Information Services, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $546m in FY2018, $402m in FY2017, $433m in FY2016, $3,603m in FY2015, $3,853m in FY2014
- In the last 5 years the company invested considerably less than D&A: $699m vs. $5,254m. In 2018 this situation was still the same: CAPEX was 127 while D&A was 1,420
- The company has business model with low profitability: ROIC is 7.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.9x while industry average is 2.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Fidelity National Information Services, Inc.'s Revenue decreased on 2.8%. Annual revenue decline showed slowdown in 18Q4 - revenue showed almost no change in 18Q4. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.9 pp from 32.3% to 34.2% in 2018. During 2014-2018 EBITDA Margin bottomed in 2015 at 26.8% and was growing since that time.
Gross Margin increased slightly on 0.73 pp from 33.2% to 33.9% in 2018. SG&A as a % of Revenue decreased slightly on 1.2 pp from 16.6% to 15.4% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2016 at 19.3% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. During 2014-2018 SBC as a % of Revenue topped in 2017 at 1.2%.
Net Income margin decreased on 4.5 pp from 14.5% to 10.0% in 2018. The efficient tax rate was 19.7% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.5% in 2018. Fidelity National Information Services, Inc.'s CAPEX/Revenue decreased slightly on 0.51 pp from 2.0% in 2015 to 1.5% in 2018. It's average CAPEX/Revenue for the last three years was 1.6%. CAPEX as a % of Revenue stuck to a declining trend at -0.20 pp per annum in 2014-2018.
Accounts receivable as a % of Revenue decreased slightly on 1.3 pp from 18.7% to 17.5% in 2018.
Return on investment
The company operates at low ROIC (7.0%) and ROE (8.1%). ROIC showed almost no change in 2018. ROE decreased on 4.2 pp from 12.3% to 8.1% in 2018. During 2014-2018 ROIC bottomed in 2016 at 5.3% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.9x and Debt / EBITDA is 3.1x. Net Debt / EBITDA decreased slightly on 0.017x from 2.9x to 2.9x in 2018. Debt increased on 2.5% while cash increased on 5.7%. During 2014-2018 Net Debt/EBITDA topped in 2015 at 6.1x and was declining since that time.
Fidelity National Information Services, Inc. has no short term refinancing risk: cash is higher than short term debt (223.2%).
Valuation and dividends
The company's trades at EV/EBITDA 15.2x and P/E 42.0x.
The company paid 49.8% of Net Income as dividends in 2018. Dividends grew on average at 8.9% per annum in the last 5 years).
Management team
The company's CEO Gary A Norcross is a founder and has spent 1 year with the company. CEO total compensation was
$18,442,389 in 2018 which included
$1,200,000 salary. The company's CFO is James W Woodall "Woody". James W Woodall "Woody" has 6 years tenure at the company.
At the end of financial year the company had 0.31% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 47,000 employees. The number of employees dropped on 11.3%. Average revenue per employee in 2018 was
$179,213 and it increased on 9.6%.
Financial and operational results
FY ended 12/31/2018
Fidelity National Information Services, Inc. ($FIS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 6,414 | 6,596 | 8,831 | 8,668 | 8,423 | -2.8% |
| Gross Profit | 2,085 | 2,201 | 2,936 | 2,874 | 2,854 | -0.7% |
| SG&A | 815 | 1,102 | 1,707 | 1,442 | 1,301 | -9.8% |
| EBITDA | 1,917 | 1,768 | 2,382 | 2,798 | 2,878 | 2.9% |
| EBIT | 1,271 | 1,099 | 1,229 | 1,432 | 1,458 | 1.8% |
| Tax | 335 | 379 | 291 | -321 | 208 | |
| Net Income | 679 | 632 | 525 | 1,261 | 846 | -32.9% |
| Stock Based Compensation | 16 | 69 | 105 | 107 | 84 | -21.5% |
Balance Sheet
|
|---|
| Cash | 493 | 682 | 683 | 665 | 703 | 5.7% |
| Accounts Receivable | 1,126 | 1,731 | 1,639 | 1,624 | 1,472 | -9.4% |
| Short Term Debt | 13 | 15 | 332 | 1,045 | 315 | -69.9% |
| Long Term Debt | 5,055 | 11,429 | 10,146 | 7,718 | 8,670 | 12.3% |
Cash flow
|
|---|
| Capex | 149 | 133 | 145 | 145 | 127 | -12.4% |
| Dividends | 275 | 305 | 341 | 385 | 421 | 9.4% |
| Acquisitions | 595 | 1,720 | | | | |
Ratios
|
|---|
| Revenue growth | 5.8% | 2.8% | 33.9% | -1.8% | -2.8% | |
| EBITDA growth | 12.9% | -7.8% | 34.7% | 17.5% | 2.9% | |
|
|---|
| Gross Margin | 32.5% | 33.4% | 33.2% | 33.2% | 33.9% | 0.7% |
| EBITDA Margin | 29.9% | 26.8% | 27.0% | 32.3% | 34.2% | 1.9% |
| EBIT Margin | 19.8% | 16.7% | 13.9% | 16.5% | 17.3% | 0.8% |
| SG&A, % of revenue | 12.7% | 16.7% | 19.3% | 16.6% | 15.4% | -1.2% |
| SBC, % of revenue | 0.3% | 1.0% | 1.2% | 1.2% | 1.0% | -0.2% |
| Net Income Margin | 10.6% | 9.6% | 5.9% | 14.5% | 10.0% | -4.5% |
| CAPEX, % of revenue | 2.3% | 2.0% | 1.6% | 1.7% | 1.5% | -0.2% |
|
|---|
| ROIC | 10.4% | 6.1% | 5.3% | 6.5% | 7.0% | 0.5% |
| ROE | 10.3% | 8.0% | 5.5% | 12.3% | 8.1% | -4.2% |
| Net Debt/EBITDA | 2.4x | 6.1x | 4.1x | 2.9x | 2.9x | -0.0x |
People
|
|---|
| Insider ownership | 0.3% | 0.3% | 0.3% | 0.3% | 0.3% | 0.0% |
| Employees | 40,000 | 55,000 | 55,000 | 53,000 | 47,000 | -11.3% |
| Revenue/Employee, th. $ | 160 | 120 | 161 | 164 | 179 | 9.6% |
Fidelity National Information Services, Inc. ($FIS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,066 | 2,106 | 2,084 | 2,167 | | -3.8% | -6.7% | -0.6% | 0.0% |
| EBITDA | 646 | 707 | 696 | 829 | | 11.8% | -0.6% | -4.3% | 6.0% |
| Net Income | 182 | 212 | 154 | 299 | | 41.1% | 52.5% | 161.0% | -68.0% |
Balance Sheet
|
|---|
| Cash | 725 | 683 | 632 | 703 | | 2.8% | -13.1% | -12.2% | 5.7% |
| Short Term Debt | 1,036 | 38 | 40 | 315 | | 195.2% | -87.2% | -86.5% | -69.9% |
| Long Term Debt | 8,040 | 8,854 | 8,998 | 8,670 | | -12.2% | -6.0% | 2.1% | 12.3% |
Ratios
|
|---|
| Gross Margin | 31.6% | 32.9% | 34.5% | 36.5% | | 1.0% | 0.2% | 0.7% | 1.0% |
| EBITDA Margin | 31.3% | 33.6% | 33.4% | 38.3% | | 4.4% | 2.1% | -1.3% | 2.2% |
| Net Income Margin | 8.8% | 10.1% | 7.4% | 13.8% | | 2.8% | 3.9% | 4.6% | -29.3% |
Peers in Data Processing & Outsourced S
Below you can find Fidelity National Information Services, Inc. benchmarking vs. other companies in Data Processing & Outsourced S industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.6% | 11.8% | 7.5% |
|---|
| Fidelity National Information Services, Inc. ($FIS) | | 2.8% | 33.9% | -1.8% | -2.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| Fidelity National Information Services, Inc. ($FIS) | 32.5% | 33.4% | 33.2% | 33.2% | 33.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.2% | 20.6% | 19.2% |
|---|
| Fidelity National Information Services, Inc. ($FIS) | 29.9% | 26.8% | 27.0% | 32.3% | 34.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.2% |
|---|
| Fidelity National Information Services, Inc. ($FIS) | 2.3% | 2.0% | 1.6% | 1.7% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 14.1% | 13.1% | 11.7% | 10.7% | 12.1% |
|---|
| Fidelity National Information Services, Inc. ($FIS) | 10.4% | 6.1% | 5.3% | 6.5% | 7.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.4x | 0.5x | 1.3x | 2.3x | 2.0x |
|---|
| Fidelity National Information Services, Inc. ($FIS) | 2.4x | 6.1x | 4.1x | 2.9x | 2.9x |
