First Data reported its financial results for the first quarter of 2007. Consolidated revenues were up 12% to $1.8 billion. Free cash flow was $232 million and operating cash flow from continuing operations was $440 million. Earnings per share was $0.24 excluding items or $0.23 from continuing operations. The items were primarily related to a non cash impairment charge from the wind-down of the Official Check and Money Order business.
First quarter 2007 earnings per share of $0.24 excluding items represents strong growth of 20% over first quarter 2006 earnings per share of $0.20 excluding items. First quarter 2006 earnings per share from continuing operations of $0.28 (reflective of the Western Union spin-off) includes a favorable $0.08 of items, primarily due to a SFAS 133 derivative accounting restatement.
“We have enjoyed an excellent quarter and a great start to the year. Underlying these results were strong individual performances from each of our three main business segments,” said Ric Duques, chairman and chief executive officer. “I’m proud to report that our 29,000 employees around the world delivered another quarter of results that met or exceeded our expectations.”
Revenues for Commercial Services and Financial Institution Services each grew 9% and First Data International grew revenues 39%. Results reflected continued progress in executing our four key strategies: 1) Growing the core business; 2) Expanding product offerings; 3) Improving the overall cost structure, and; 4) Expanding the business globally.
Segment Results
Commercial Services
For the quarter, Commercial Services generated revenue of $1.0 billion, a growth rate of 9% or 5% excluding reimbursable debit network fees. Operating profit was $225 million, up 5%. As anticipated, the first quarter was impacted by the buyout of a revenue sharing agreement with Discover Financial Services. Excluding the Discover buyout, operating profit growth was 9%. Margin improved to 29.6% excluding reimbursable debit network fees and the Discover buyout. Reported margin for the quarter was 22.1%.
Financial Institution Services
For the quarter, Financial Institution Services generated revenue of $485 million, up 9% or 7% excluding reimbursables. Operating profit was $97 million, up 15%. Operating profit improved due to continued progress in cost-cutting initiatives. Margin for the quarter improved to 19.9% from 18.9%, or to 31.0% from 28.8% excluding reimbursables.
First Data International
For the quarter, First Data International generated revenue of $367 million, up 39%. Revenue growth on a constant currency basis, excluding acquisitions and divestitures, was 9%. Operating profit was $35 million, up 20% and margin was 9.5%, which included $7 million of incremental investments in data center consolidation, platform initiatives and strategic business development. These incremental investments negatively impacted margin by approximately two percentage points during the quarter.
Outlook
On April 1, 2007, First Data entered into an agreement to be acquired by an affiliate of Kohlberg Kravis Roberts & Co. in a transaction with a total value of approximately $29 billion or $34 per share in cash. For the full year 2007, First Data affirmed its earnings per share guidance from continuing operations in the range of $1.20-$1.26. This guidance excludes costs related to the aforementioned proposed transaction as well as costs related to the wind-down of the Official Check and Money Order business, which the company is not able to accurately estimate at this time.
Non-GAAP Measures
In certain circumstances, results have been presented that are non-GAAP measures and should be viewed in addition to, and not in lieu of, the company’s reported results. Reconciliations to comparable GAAP (generally accepted accounting principles) measures are available in the accompanying schedules and in the “Invest” section of the company’s web site at www.firstdata.com.
About First Data
First Data Corp. (NYSE: FDC) is a leading provider of electronic commerce and payment solutions for businesses worldwide. Serving over 5 million merchant locations, 1,900 card issuers and their customers, First Data powers the global economy by making it easy, fast and secure for people and businesses around the world to buy goods and services using virtually any form of payment. The company’s portfolio of services and solutions includes merchant transaction processing services; credit, debit, private-label, gift, payroll and other prepaid card offerings; fraud protection and authentication solutions; electronic check acceptance services through TeleCheck; as well as Internet commerce and mobile payment solutions. The company’s STAR Network offers PIN-secured debit acceptance at 2 million ATM and retail locations. For more information, visit www.firstdata.com.
For complete details on First Data’s first quarter performance visit CardData ([www.carddata.com][1]).
[1]: http://www.carddata.com
