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Financial News Release

Download PDF First Data Q1 2014 News Release with Schedules
First Data Reports First Quarter 2014 Financial Results
  • First quarter consolidated revenue of $2.6 billion, up 2%; adjusted revenue of $1.6 billion, up 2%
  • First quarter net loss attributable to First Data was $201 million, a 41% improvement over prior year
  • Adjusted EBITDA of $614 million, up 18%; EBITDA margin expanded 500 basis points
  • Partnered with Visa and MasterCard on Common EMV Debit Solution
  • Brought best-in-class minds in security together to host Cyber Security Symposium
  • Rolled Out Small Business Solutions at TRANSACT 14

ATLANTA, April 30, 2014 – First Data Corporation today reported its financial results for the first quarter ended March 31, 2014. Consolidated revenue for the first quarter was $2.6 billion, up $49 million, or 2%, compared to a year ago, primarily driven by a $30 million increase in reimbursable debit network fees, postage and other, and an increase in card services revenue. Adjusted revenue, which excludes certain items including debit network fees, was up 2% year-over-year at $1.6 billion.

For the first quarter, the net loss attributable to First Data was $201 million, compared to a loss of $337 million a year ago on a $93 million improvement in operating income. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $614 million, up $93 million, or 18%, compared to $520 million in the first quarter of 2013, driven by an improvement in revenue and operating expenses. EBITDA margin for the quarter was 37%, up 500 basis points versus prior year.

For the quarter, the company had a net use of $44 million in cash flow from operations after $603 million in cash interest payments. The company finished the quarter with $758 million in unrestricted liquidity.

“First Data delivered a very good quarter, generating double-digit EBITDA growth with solid top line growth in International and steadily improving results in Financial Services,” said First Data Chairman and CEO Frank Bisignano. “We are winning in the marketplace, and we are running the company better – increasing operating effectiveness and efficiency, resulting in better client delivery and margin expansion across the business.”

Segment Results
The company has changed the name of the Retail and Alliance Services segment to Merchant Solutions, reflecting the company’s ongoing transformation from a processing company to a solutions and technology provider.

Merchant Solutionssegment revenue for the first quarter was $856 million, down $5 million, compared to $861 million in the same quarter of 2013. Merchant acquiring revenue was flat on higher volumes offset by lower yield. Transaction growth was 5%, and credit mix was 71%. Average ticket was $78, up 1% compared to a year ago. Product revenue was down 2% due to the continued decline in check processing, offset by growth in equipment revenue. Segment EBITDA was $370 million, up 4% compared to $354 million in the same quarter of 2013. Cost reductions in core operations drove the EBITDA improvement. EBITDA margin for the first quarter was 43%. During the quarter Merchant Solutions added 22 new independent sales organizations, 19 bank referral agreements and one revenue sharing alliance.

Financial Services segment revenue for the first quarter was $349 million, up 5% compared to the same quarter of 2013 on new business and volume growth. The prior year quarter was also negatively impacted by 1% for a price concession to resolve a customer dispute. Average active card accounts on file were up 15% compared to the prior year, primarily driven by new card portfolios and organic growth. Debit issuer transactions were up 1% year-over-year. Segment EBITDA was $173 million, up $40 million or 30%, compared to $133 million in the same quarter of 2013, as a result of cost reductions and revenue growth mentioned above. EBITDA margin for the first quarter improved to 50%. During the quarter Financial Services renewed more than 250 contracts with financial institutions.

International segment revenue for the first quarter was $421 million, up $12 million, or 3%, compared to $409 million. On a constant currency basis, segment revenue was up $29 million, or 7%. Merchant acquiring revenue grew 5% on higher volumes while issuing revenue grew 9% on organic growth and new card portfolios. Segment EBITDA was $128 million, up $28 million, or 28%, compared to the same quarter of 2013. On a constant currency basis, segment EBITDA was up $39 million. Two expense credits, an operating tax credit and a gain on the revaluation of settlement assets, favorably impacted EBITDA by $21 million. EBITDA margin for the first quarter was 30%.

Recent Events

Rolled Out Small Business Solutions
On April 9, First Data rolled out Small Business Solutions (SBS), a new solution designed to help SMBs better manage their business. The new SBS is integrated into Clover Station, First Data’s open, cloud-based platform, which allows SMBs to manage inventory, track revenues and generate reports that distill transaction data into powerful intelligence. Merchants can customize and grow their Clover Station’s capabilities by adding apps from the ever-expanding Clover App Market. The SBS also includes features such as analytics, TransArmor and Perka, a cloud-hosted mobile loyalty marketing program. The SBS gives a small business everything they need to accept payments and run their business more efficiently.

Announced Partnerships with Visa and MasterCard for EMV Solution
During the quarter First Data announced separate agreements with Visa and MasterCard in which First Data’s STAR® Network will participate in each card network’s common U.S. Debit EMV solution. These agreements, combined with other recent industry announcements, provide a cost-effective solution to issuers, acquirers and merchants, and accelerate the ability for EMV functionality to be implemented across the U.S.

Cyber Security Summit
On March 17 and 18 First Data hosted a Cyber Security Symposium in New York, assembling a broad contingent of our colleagues and clients, as well as media and industry analysts, for an investigation into how businesses can defend themselves against cyber-attacks. The purpose was simple, to bring these parties together in order to build an ecosystem of protection against the common threat of cybercrime.

Non-GAAP Measures
In certain circumstances, results have been presented that are non-GAAP (generally accepted accounting principles) measures and should be viewed in addition to, and not in lieu of, the company's reported results. Reconciliations to comparable GAAP measures are available in the accompanying schedules and in the "Investor Relations" section of the company's website at investor.firstdata.com.

Investor Conference Call
The company will host a conference call and webcast on Wednesday, April 30, 2014, at 10:00 a.m. EDT to review the first quarter 2014 financial results. Chairman and Chief Executive Officer Frank Bisignano and Chief Financial Officer Ray Winborne will lead the call.

The call will be webcast on the “Investor Relations” section of the First Data website at http://investor.firstdata.com and a slide presentation to accompany the call will also be available on the website.

To listen to the call, dial 800-708-4540 (U.S.) or 847-619-6397(outside the U.S.); pass code 36916432, at least 10 minutes prior to the start of the call.

A replay of the call will be available through May 14, 2014, at 888-843-7419 (U.S.) or 630-652-3042 (outside the U.S.); pass code 36916432 and at http://investor.firstdata.com.

Please note: All statements made by First Data officers on this call are the property of First Data and subject to copyright protection. Other than the replay, First Data has not authorized, and disclaims responsibility for, any recording, replay or distribution of any transcription of this call.
Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive client revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction. More information about the company is available on FirstData.com as well as on Twitter, LinkedIn, Facebook and YouTube.

Contact:
Laura Ford Barefoot
Vice President, Communications
First Data
404-890-2300
mediarelations@firstdata.com