Fidelity National Information Services Inc (FIS) 2014 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the FIS first-quarter earnings call. At this time all lines are in a listen-only mode. Later we will conduct a question-and-answer session; instructions will be given to you at that time. (Operator Instructions). As a reminder today's conference call is being recorded.

I would now like to turn the conference over to Nancy Murphy. Please go ahead.

Thank you, Cynthia. Good morning, everyone, and welcome to our first-quarter 2014 earnings conference call. Frank Martire, Chairman and Chief Executive Officer, will begin with a summary of our financial performance. Gary Norcross, President and Chief Operating Officer, will follow with an operations report. Woody Woodall, Chief Financial Officer, will continue with a detailed financial review.

Today's news release and the supplemental slide presentation are available on our website at FISGlobal.com.

Let me remind you that today's remarks will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise except as required by law. Please refer to the Safe Harbor language on slide three of the presentation.

Today's remarks will also include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented. These non-GAAP measures are outlined on slide four. Reconciliations between the GAAP and non-GAAP results are provided in the attachments to the press release.

With that, I will turn the call over to Frank to discuss the financial highlights on slide six. Frank?

Thanks, Nancy. Good morning, everyone, and thank you for joining us on today's call. I am pleased to open the morning call by reporting that the first quarter proved to be another strong quarter for FIS. We delivered profitable growth and invested in our solutions, people and innovation enabling our clients to succeed.

Our performance is in line with our expectations reinforcing our confidence in our 2014 outlook.

Looking at details of the quarter, our first-quarter topline growth was driven by positive results across all business segments. Revenue increased 4% organically year-over-year to $1.5 billion. Adjusted earnings per share rose 10% year-over-year to $0.68. Finally, we returned a record $245 million to our shareholders in dividends and share repurchases. By all accounts this is a healthy start to think year and a strong foundation for achieving our 2014 goals.

The year-over-year and long-term results we have driven highlight the strength of our operating model and continued steady execution.

I will now turn the call over to Gary for our business strategy and operating highlights. Gary?

Thanks, Frank, and thanks again to everyone for joining us this morning.

As Frank discussed, we are off to a strong start for the year. Our continued solid sales execution, client focus and emphasis on operational efficiency translate to consistent, profitable growth for FIS.

In the quarter, we had strong sales with good deal flow and key competitive wins. We further strengthened our pipeline across all segments and markets providing strong line of sight on the full year. We affirmed our investment strategy to aggressively pursue the global financial institution market with early indications that this focus is driving traction in this space.

We recognized key wins in each of our target markets reflecting a steady trend to outsource more technology, development and front and back office functions to providers like FIS who demonstrate results and offer scalable solutions.

In North America, we are proud of several competitive core takeaway wins this quarter. Of these competitive wins, we would like to Umpqua Bank, a $22 billion bank undergoing significant transformation. Umpqua is nationally recognized for its progressive management, innovative use of technology and high-level customer service making it an honor to be selected as their partner. In this new relationship, Umpqua will move from a competitor's in-house solution to an outsourced FIS solution where we will implement a full range of capabilities including our core processing, payment and many of our ancillary solutions.

Umpqua's implementation to FIS solutions is scheduled in the first quarter of 2015. This significant win highlights the value FIS delivers to growing financial institutions who are in need of best-in-class solutions, leading domain expertise, and the efficiency of a single source provider.

Additionally we are pleased to add to our client base a national financial institution located in Kansas looking to extend services to their under banked customers and prospects. This financial institution chose FIS newly launched GenNOW solution, a turnkey brandable solution that combines the strength of our digital and reloadable prepaid card capabilities targeted for young and mobile customers. This solution provides clients with new sources of revenue by attracting and retaining customers who are increasingly turning to alternative financial services providers for their financial needs.

In addition, FIS will provide all back-office processing and marketing support to help them promote the solution nationally to customers. FIS GenNOW was officially launched in April this year.

Earlier this month, we wrapped up our largest North American user conference for the year with over 2000 people in attendance. Based on many of the one-on-one conversations I had, the overall tone of the conference was much more bullish than in recent years. Many of our clients are focused on driving new solution expansion and growing market share.

In our international market, operational performance remained strong. We marked new sales wins at Thailand's TISCO Bank, Pagos Mobilis, and others in the quarter. We continue to gain good momentum for project deployments and to extend established customer relationships through add-on business.

Turning to existing international projects, I was in London recently and the Sainsbury project is progressing nicely. Additionally, the India ATM project is on target with their multiyear deployment program. As for future growth for the first time in decades we are seeing an increase in the issuance of the number of new banking license creating new opportunities to support start-up banks in EMEA and A-Pac where we have a very strong presence. Our pipeline remains full and our full-year outlook in our international market remains strong and on target.

As I mentioned earlier, we are pleased with the progress we are making in the global financial institution market. The early favorable results affirm our decision to invest in go-to-market talent in order to aggressively pursue these large complex and transformational deals. In the quarter, we saw strong traction in new sales and solid pipeline development. Our go-to-market model is working. We have hired strong expertise with impressive industry domain experience and deep consultative capability at the C-Suite level.

Through their collective talent, they are developing a robust pipeline. As an example, we have seen significant expansion of the strategic outsourcing engagement with a global financial advisory firm first announced in early 2013 which has now more than doubled in size through our expanded relationship efforts.

Additionally since the quarter close, we have finalized another large strategic outsourcing engagement adding to our growing credentials as transformational experts. By any measure for FIS, this new engagement is a large strategic win.

In all markets, financial institutions are looking to the future with renewed energy and a focus on rekindling growth while meeting greater efficiency, risk and compliance requirements. Overall we are winning more large transformational deals across our markets. During the last two years, we more than doubled the number of large deals closed and more than tripled the annual contract value for large deals compared to the prior two-year period in 2010 and 2011.

We define large deals as greater than $25 million in contract value. Our strategy is working. These wins reflect FIS commitment to deeply understand and respond to our clients' strategic requirements and substantiate the investments we are making.

In summary, before I turn it over to Woody, we are very pleased with our healthy start to the year. We had a strong selling quarter underscored by competitive wins and new and expanded client implementations that are transformational in nature. We have a solid pipeline giving us confidence in our ability to deliver on our growth objectives. We continue to strategically invest in key markets and innovative solutions to drive profitable growth.

Now I will turn it over to Woody for the financial report.

Thanks, Gary. I will begin on slide 11 with a summary of our consolidated results for the quarter.

Consolidated revenue increased to $1.5 billion, up 4% on an organic basis after normalizing for currency of acquisitions driven by continued growth in all segments. Adjusted EBITDA increased 4% to $445 million and the EBITDA margin expanded 10 basis points from the prior year quarter to 29.1%.

Adjusted net earnings from continuing operations increased to $197 million from $182 million and adjusted earnings per share increase 10% to $0.68 from $0.62 in the 2013 quarter. Implementation of deals previously sold combined with continued strength in international markets, consulting and services contributed to the positive performance. These results are consistent with our expectations and outlook for the year.

We are particularly pleased to have delivered solid growth over difficult comparisons from 2013. As we discussed in prior quarters, termination fees in 2013 related to the BMO M&I merger resulted in a revenue headwind in Q1 2014 of approximately 100 basis points. We anticipate a similar headwind in the second quarter.

Now I will continue on slide 12 with a review of segment results. Financial Solutions revenue was $587 million, an increase of 2% on an organic basis reflecting growth in ebanking solutions including mobile and consulting and services. Financial Solutions EBITDA was $227 million while EBITDA margin was 38.7% compared to 39.6% in the prior year. The margin decrease primarily reflects lower termination fees and license fees compared to the first quarter of 2013, revenue mix and investments in the global financial institution market.

Turning to slide 13, Payment Solutions revenue increased 3% to $629 million on an organic basis, reflecting growth in image and output and card solutions. Payment Solutions adjusted EBITDA increased 2% to $264 million in the quarter. EBITDA margin of 42.1% was about flat with the first quarter of 2013.

Moving to slide 14, international revenue was $314 million and grew 10% organically in the quarter. Organic growth across all major regions including continued strong demand for consulting and services in Europe contributed to the increase.

International EBITDA was $59 million, in line with the prior year. EBITDA margin was 18.8% compared to 20.3% in the prior year quarter reflecting incremental investment in the global financial institution market we discussed last quarter and lower license revenue.

As Gary mentioned, we are pleased with the early results in the global financial institutions market. We are on track with our incremental investment of approximately $30 million in 2014 to capitalize on this opportunity. The first-quarter results include $8 million related to this investment.

Corporate expense was $105 million, down $12 million from the prior year period. The improvement was driven by lower administrative expenses, lower legal costs and reduced consulting costs compared to the first quarter of 2013. We expect corporate expenses to average approximately $110 million per quarter for the remainder of the year.

Moving on to a reconciliation of GAAP to non-GAAP EPS on slide 15. GAAP earnings totaled $0.53 per share compared to $0.50 per diluted share in the first quarter of 2013. GAAP results are adjusted to exclude $0.13 per share in acquisition related purchase amortization and include $0.02 per share related to a contract settlement. This 2014 cash settlement of $9 million extinguishes certain minimums under our contract with a reseller.

Moving on to cash flow on slide 16. Adjusted cash flow from operations totaled $248 million, up from $221 million in the first quarter 2013. Capital expenditures of $90 million were in line with our expectation of investing 5.5% to 6% of revenue in 2014. Free cash flow increased to $158 million compared to $148 million from the first quarter of 2013.

Turning to slide 17, we continue to execute on our capital allocation priorities of investing for growth, maintaining a strong balance sheet, and returning cash to shareholders. In the first quarter we returned $245 million to shareholders including $70 million in dividends and $175 million to repurchase 3.2 million shares in the open market. The share repurchase program reduced our weighted average diluted shares to 291.9 million in the first quarter from 295.5 million last year. At the end of the quarter, basic and diluted shares outstanding were 286.8 million and 290.5 million, respectively. Consistent with recent practice we expect to repurchase shares throughout the course of 2014.

Debt outstanding totaled $4.8 billion as of March 31 with a weighted average interest rate of 3.6% at quarter end. Our leverage ratio was 2.6 times. This sequential increase in leverage is related to the timing of cash flow and is in line with our 2014 plan. We continue to target our leverage ratio at or slightly below 2.5 times debt to EBITDA.

Moving on to slide 18, we are reaffirming our outlook for 2014 including organic revenue growth of 4.5% to 6.5%; adjusted EBITDA growth in line with organic revenue growth; adjusted earnings per share in a range of $3.05 to $3.16, reflecting growth of 8% to 12%; and free cash flow approximating adjusted net earnings.

In summary, we are very pleased with our positive start to the year. Implementation of significant new contract signings from 2013, a strong sales pipelines and opportunities to expand client relationships in the global markets we serve, reinforce our confidence in our growth outlook.

That concludes our prepared remarks. Operator, we can now open the line for questions.

(Operator Instructions). David Togut, Evercore.

Thank you and good morning. Congratulations on continued double-digit growth internationally.

Just to dig into that a little bit, Gary, you mentioned that India ATM was ramping nicely. Can you give us a little detail as to what the revenue ramp looks like on India ATM? That is a large contract and clearly pretty material to revenue.

Well, Dave, and we talked about, once we get fully ramped on that business, it is going to drive $100 million a year in revenue for us. I can tell you that India right now is the fastest-growing area within the region from a revenue standpoint. It's got great organic growth. The team is doing a great job. In fact I am due to be over there next week with some of the team just getting another update on the deployment.

We are also seeing opportunities even outside of our circles to expand our existing business. So India is going to be a great story for us for not only today but the coming years. It is just going to be a great growth story.

David, in thinking about that, we also had the women's bank there. We are starting to see some revenue come on from that. If you look at the overall double-digit growth international aggregated, I would tell you that India is a tailwind of that, it is growing faster than our overall international revenue growth.

I see. That helps. And just shifting over to Brazil, can you update us on the growth in accounts you saw on the joint venture with Banco Bradesco?

Yes, if you look at Latin America in the aggregate, it grew still right at double-digit growth. We put some headwind in our plan related to overall economic and GDP growth in Brazil. However, we continue to see account and card growth in Brazil and are pleased with its execution this year.

Given what is going on in Brazil from the economy, it is actually performing well and consistent with our plan and we saw good growth in the card base.

Great. And, Gary, you referenced in your remarks the signing of a large strategic outsourcing agreement right after the close of the quarter. Can you flesh that out a little bit in terms of how large it might be (multiple speakers)?

As I said, I kind of gave some highlights. We view large deals of anything north of $25 million in contract value and this one will be substantially north of that. It is a nice contract for us. We will be bringing out more information as we work with the client on announcement but we are excited about that opportunity and frankly, Dave, we are seeing that all across all of our markets.

We are just seeing -- even if you look at Umpqua Bank, you are looking at very, very large deals where banks are outsourcing these things to FIS and it is full range of not only software in that example but back-office services. And then the one that we forecasted there, that one is much more of a transformational services engagement but great traction and reaffirms our bullishness on the whole GFI market.

We also saw the pipeline increase significantly as well so all of those things are good indicators that our investments are paying off.

What is very nice about it, David, it is not an isolated one or two. We have a very strong pipeline consistent with the deals that we are signing and that we feel really optimistic about.

That is very encouraging. Just a quick final question from me. Gary, you referenced consulting strength in Europe I believe. Can you just elaborate on just Capco on a global basis what you are seeing growth-wise in the US and international?

Yes, I think that was my comment, David, so I will follow-up on it. We saw good growth in Europe. We continue to see sort of Western Europe improve as they come out of their economic challenges from the past and the demand for consulting has been very strong. Additionally, we have also seen very good growth and continue to see good growth in Capco in the US so definitely would not say one is better than the other. Both are seeing very good double-digit growth.

David, when we look at it and we have looked at Capco, and what we are referring to here is both on an international front and on the domestic front that we have seen this growth so that makes us feel obviously really good about it.

Congrats on the strong results.

Appreciate it.

Brett Huff, Stephens Inc.

Good morning and congrats on a nice quarter. A couple of quick questions. One, can you tell us a little bit about the deal stats again, Gary? You ran through some -- you have doubled the amount and tripled the amount that you used to have and I think you were talking about the $25 million plus deals. Can you just go over those again? I thought that was an important point and I missed it.

We have just started looking at it. The size of the deals we kind of talked about this on a number of calls but the size and the complexity of the deals that we are now signing continues to increase which is really exciting for us and we are seeing it across all markets and so several years ago if we were to sign a contract for greater than $25 million, that was a really large deal and still is a really large deal by any definition. But what we saw when we looked at the last two year's comparison to the prior two years, we have seen that the number of deals have more than doubled in what we have signed in the last two years over the prior two years and then the contract value is more than triple.

There's a lot of things driving that. Frankly we keep pointing to this trend towards outsourcing, go back to Umpqua that was in-house today and fully move into outsourcing. The contract value on that engagement is significantly incremental over what an in-house engagement would be. But for the bank, they are saving money because they are able to go deploy that and leverage our scale and ability. So huge win.

When you look at some of the transformational stuff we are doing in the GFI space, we are now the largest financial institutions and the world are looking to wholesale outsource significant areas of back-office and services. So we are very excited about what we are seeing around these large contracts.

If you just go over the last couple of quarters on just the ones we have announced because we haven't come close to announcing them all, but if you think about Umpqua, if you think about Sainsbury, if you think about Guaranteed, if you think about MCX, be India ATM, these things just keep going so it is exciting to see what is going on in our sales channels.

Thanks, that is helpful. The second question was I think you guys announced a debit switch win -- I think it was Saudi Arabia or Middle East somewhere. Can you give us any details on that?

We did win one over in Saudi Arabia, relatively small in nature but just continued to show the demand and the exposure that we are having outside the US and we are becoming more of a household name in the financial technology market outside the US as well.

We have talked about, Brett, in past quarters it is interesting when you go around the various regions of the world what we are really known for. In a number of regions of the world we are really starting to be known as the payments provider in the switching and fraud side of the payments. And so we signed a number of those deals over the last several years and so we continue to gain traction around those products.

Last question from me. On MCX, can you give us an update on that?

Well, we continue to progress nicely in working with MCX, they have been a great partner. We continue to rollout the capabilities they contracted with us for and continue to drive revenue on that front. Obviously we are looking forward to when MCX launches because we will see a nice ramp if it is successful in our revenue stream.

And so once again, we continue to have to wait for MCX to disclose when they are going forward in the market but we continue to build out the capabilities they are looking for.

That is great. That is what I need. Thanks and congrats again.

Bryan Keane, Deutsche Bank.

Hi, this is Ashish Sabadra calling on behalf of Bryan Keane. Just a quick question, just a follow-up on the international question that was asked earlier. It looks like you have pretty solid momentum but it could slow down a bit from the fourth quarter. So as you we look through the year, should we see things ramp up considering all the great initiatives going around the world? I was just wondering if you could provide some more color on how should we think about international for the rest of the year and the growth drivers? Thanks.

So first on the sequential quarter question, keep in mind while we continue to see a strong trend toward outsourcing as we have talked in the past, our international business is lagging a little bit in the US so it is still from an outsourcing standpoint, so it still does quite a bit of the license business and Q4 is always a big license month in general for us.

So if you look back historically, it is not uncommon for us to see our growth rate sequentially drop from Q4 to Q1 so this was exactly what we planned and exactly what we expected.

But to your latter point about all of the deals we have in queue and the implementing of those deals, we are very excited about the accelerate growth in the back half of the year and so once again, you see that very consistently with that international segment over the prior years. So we have got very high visibility into that and very comfortable that we are going to have a good year in international.

If you look at it, our results are very much in line with our expectations but the enthusiasm and the optimism is based on a very, very strong sales pipeline and so we look at it and we say we should do very well.

That is great, that's great. Just a quick one on the investment -- thanks for providing that color. But just wondering if you could provide some more color on the resource ramp up, how do you expect the resources to ramp up through the rest of the year?

And if you also could comment on the productivity of those resources, when do you expect those resources to be more productive? It looks like you have a pretty solid pipeline so if you could just provide more color on the resources that you are ramping up? Thanks.

Yes, I think we talked about $8 million of investment we spent in the first quarter. I would tell you that the majority of the lead partners on the engagements have been identified. We continue to build out the operating teams below them, the go-to-market teams below them. That will continue to ramp throughout 2014.

Gary talked about two items that were proof points. One, it was a doubling of the existing size of the contract with an existing outsourcing agreement where we are seeing traction and ability to go in and upsell into those larger accounts. The second was the contract signing we just had after quarter end that was another significant outsourcing deal. So we've got a couple of proof points. We also have good pipeline visibility so we are encouraged with the early traction of the investment we have made.

Yes, and just to build on that, one of the things we have looked for as we have built out these go-to-market teams is we have looked for people that have experience in these specific account. So what we want to do is make sure that as these teams are hired and put together that the ramp is very, very short and bringing that experience about the account and then deploying FIS into the opportunities is what we are looking for.

And as Woody just highlighted, those two indicators are very good indicators of early traction. The pipeline that we referenced throughout the call is a third very good indicator of traction with that investment.

That is great. One final question for me. The Umpqua deal that you announced today, that is very interesting. So I was just wondering if you look at other similar large banks, do you see a portion of these for them to move from in-house to outsourced solution? What is really driving, it is more the regulations, cost efficiency, or all of the above and any additional color that you can provide on this trend towards more outsourcing which we have continued to see? Thanks.

It is a great question and the answer is yes. We do see a lot of financial institutions in that size and in that top 100 that are looking to outsource bigger and bigger components. We have signed a number of them in the last 12 months and we've talked about those on earlier calls and Umpqua is just a continued example of that.

What is driving it, you hit the nail on the head. One, with the regulatory compliance, the security compliance around cyber, the increased demands in digital when you are in an engagement back to the consumer, all of that we are seeing substantial increased costs for financial institutions. And so they are looking to companies like FIS and primarily FIS to leverage our scale, our balance sheet, to be able to lower their cost and be able to deliver the necessary services that they need to deliver to compete in the market.

So when these banks are looking at it including the top-tier banks, they are saying you know what, we need to focus on our banking business and the challenges and opportunities we have there and leave it to somebody who has the skill set and the scale and the size that can optimize our environment while we focus on building relationships.

That is good. Thanks. Thanks a lot for the color.

You are welcome.

Glenn Greene, Oppenheimer.

Thank you. Good morning. Apologize if some of these questions have been asked or talked about. I think a lot of us are juggling calls. But basically the pace and the tone of the sales activity in the quarter, how would you sort of contrast it with three to six months ago? Has it picked up and especially for the larger deals as well?

No, Glenn, I don't think that question has been asked. Two things we are seeing. One, let's go back to the pipeline. The increase in the pipeline is definitely growing over where it was six months ago to a year ago. I would also tell you that certainly in our global financial institution market and our North American market, we saw very strong sales signings and growth year-over-year as well.

International is a little more lumpy. We had some really big sales success a year ago for the quarter but international has got some very, very strong signings lined up for the rest of the year in the pipeline. So I would tell you across the board everything is green from a standpoint of what we are seeing with regards to our sales engine across all of our markets.

I also highlighted in the call, you might not have been able to listen in, but we are in our busy time of the year for conferences around our user conferences and we just wrapped up our largest North American conference. We run multiple conferences for a company this size and there was about 2000 people in attendance and a little over in fact and frankly had a lot of one-on-ones during that conference. And just the whole mood is I would say much more bullish than what we saw this time last year.

And so I think that is one of the reasons that we are seeing an elevated pipeline. We are seeing our customers look and trying to push projects and make broader investments and I think we also we can attribute that to our sales success. We came out of that conference with a lot of very strong sales leads and so that is always a great indication as well.

So those would really be the proof points, sales up year-over-year, pipeline up year-over-year, sales leads out of our first conference up year-over-year so we feel good about it.

You actually sound very bullish.

And the reason is, we have had a strong pipeline, we have talked to that for the last few quarters. But when you start seeing the impact and the real results and some of the deals that Gary just talked about, you gain more optimism.

Okay. And the inference here would be your conference and to your ramp into fiscal 2015; obviously you've got accelerations for those implicit to get to your four-year CAGR, are you feeling better about that?

I'm not going to give you 2015 guidance after Q1 of 2014.

You did last quarter.

But looking pretty good. Happy with the start. We will see acceleration throughout this year and we will continue to update you as sales success continues.

We like the way we are tracking. The proof is in the results.

Anything on the corporate costs being down 10% year-over-year on the EBITDA?

We talked a little bit about -- really you've got some administrative costs, some lower project costs that we had in 2013 that aren't going to recur, lower legal costs this year but we think corporate costs will be in a $110 million per quarter range so slightly up from Q1 but overall relatively flat to last year.

Okay, great. Thanks a lot.

Thank you.

Tim Willi, Wells Fargo.

Thank you. A couple of questions. The first was on just a housekeeping item. Could you go back through the $9 million contractual -- I guess distinguishment in payments. I just want to make sure I understand that.

We had a contract with a reseller and ultimately negotiated a settlement of certain minimums on that contract. The cash we received extinguished some of those minimums and basically it is consistent with how we have presented cash EPS over the periods. The GAAP requirement under this is unique in that because of the relationship with the reseller, you've got to amortize it but we received the cash and have no obligation on performance.

Okay, thank you. Just a few questions about the business. One, you mentioned card issuance I think in the financial institutions commentary. We have heard a couple of other companies talk about reissuance that they could attribute maybe to the Target breach, etc., we have seen some headlines about EMV and ship contracts being established.

How do you guys think about that as an impact, whether it is in FI or payments, I can't remember exactly where it falls but is that something that you think we might be hearing more about from you guys in the next 12 to 24 months about card issuance revenues around security and chip and PIN?

Yes, Tim, one, that would fall under our payment segments. We do a tremendous amount of card issuance every year. We've got capacity of almost 200 million cards. We have seen a slow and steady kind of increase of EMV. So we do think that you will see EMV roll out across North America over the next several years.

But are we seeing any very large just reissuance by our banks yet today? Not yet. We are talking to our customers about it. We are fully EMV ready. We have no problem handling chip cards, and not only our software but our card production locations. But right now, it looks like it is going to be slow and steady.

Some people are taking advantage of some of the breaches and coming back with some chip and pin reissuance. Some are just coming back with normal plastic. But the business has continued to -- we have seen like we always do when there are big breaches, we have seen a small spike or increase in card reissuance, which is pretty typical of any large breach.

Great, thank you. And then just the last one, Woody, on the international EBITDA can you -- I didn't see it in the press release unless I missed it -- could you frame what FX did to the EBITDA growth? I know you gave some color around the top line. Just what was the impact of the EBITDA from FX?

Well, if you kind of think about it and you kind of look at the margin and do some back-of-the-envelope calculations around the impact of the revenue down to the margin and you flow it all the way down, it was under a penny for the quarter in terms of EPS impact on EBITDA -- sorry, on FX.

Okay, great. Thanks very much. Appreciate the time.

Thank you.

Tien-Tsin Huang, JPMorgan.

First, I had a big question I have been itching to ask you if you don't mind here. Just there is a lot of talk about this Russia development of a national payment switch, and it made me think of FIS with the building out a new switch for Australia. Do you see that as an opportunity or a good case study that maybe you can be behind some of those national payment systems to the extent that it becomes a bigger theme, especially given some of the success you have had with building out things, even in the US?

We do. There have actually been several examples of national payments, which we talked about eftpos that we are doing in Australia. You might remember a couple of years ago in Thailand, we built out ITMX which was their national switch. So we have got a lot of proof points in that and capabilities and so definitely as countries go through those processes, we certainly participate in it and frankly have won a number of them so those are always good opportunities for us.

Understood. And I know with the EMV and certifications with all the different debit switches, do you think that there is an opportunity for branded wins here over the next 12 to 18 months that we should watch on the [nice] front? Do you think it will have an impact on pricing? And I have a follow-on to that if you don't mind.

As far as do we think there is an opportunity for branded wins, the answer is, yes. I think we do have an opportunity and we are continuing to -- our nice business continues to perform very well and we think there is further opportunities for that. We talk about EMV all lot certainly in the card perso area, you are going to see an increase if a lot of national banks start reissuing EMV, I think we could see an acceleration of that. That could drive an acceleration. We are not seeing it yet. We have actually talked to some clients about a large-scale reissue but I think when some of the very large financial institutions start doing that, you could see an increase around that front.

Okay. That is helpful and sorry if I missed this. I was jumping on and off but I think I caught most of this commentary but just on the debit front, I think you guys mentioned a little bit of winter and Easter and perhaps -- but structurally did you guys see any increase in decline rates and maybe consumer reluctance to use their nice cards or debit cards because of the Target breach? Any evidence of that?

None whatsoever. We haven't seen that. We certainly haven't seen that, no.

Peter Heckmann, Avondale Partners.

Good morning, everyone. Most of my questions have been answered but I did want to follow-up on this acquisition of CMSI. It looks like it is pretty small but can you talk about how we might slide that into our model and some of the background rationale for it?

I think you are right, it is pretty small. As we have talked about, some of the tuck-ins that we have done to try to improve product capabilities, this is more of a front-end consumer lending type product which would give us a full end-to-end on a consumer lending platform.

As we go through our whiteboarding exercises and look at where our product roadmap and the needs of our clients and what we think the opportunity to take some type of capability and roll through our go-to-market engine, we have talked about, we have more than 600 sales resources in North America. Clearly this was a component in the overall end-to-end loan origination stream that we felt like we were missing.

You evaluate in these situations can you build it or can you buy it and then the speed to market and this is just a small tuck-in and the team will do a nice job of integrating it into our other loan origination capabilities document preps which we will then onboard into our core banking systems. And so we will get some very nice cross sales with this product and it will be a nice little tuck-in acquisition for us.

Okay. Generally that is what we have seen as we communicated several years ago and that is what we have seen from FIS over the last couple of years. Are there opportunities out there to make midsized acquisitions or should we expect that most going forward are going to be tuck-ins?

We continue to look in the marketplace. We don't want to ever miss an opportunity to find something that can help us grow profitability faster or get good returns to our shareholders. However, we haven't seen anything in the past several years that really fit that bill but we are always taking a look. Our default has always been to buy back shares in terms of taking that cash flow generation and trying to give returns to shareholders but could there be something in the future? Sure, there could be.

Georgios Mihalos, Credit Suisse.

Thanks for taking my questions. I wanted to start off if you could remind us just size your non-FI business for us and maybe talk a little bit about the growth trends and the potential that you see there, sort of where the bucket -- where the retailers and MCX are for example?

If memory serves, I think that was about a 12%, 14% kind of area for us primarily in infrastructure outsourcing leveraging our technology capabilities. So that is kind of the sizing. What was the second part of your question again?

Talk about MCX and whether -- that really doesn't fall under our merchant business for us. That is actually falling under our payments business because we are doing all of the network plumbing for that environment. Really on a merchant acquiring side we are a very small player.

The business is growing well. I mean you asked the other questions is how is non-FI growing? We are getting nice growth in that business. We have seen some expansion in and around some of our check capabilities on the gaming side. We have also seen some nice pickup of the business. Our team that runs that business for us is doing a very nice job.

Okay. Is the growth in line with the overall company, ahead? Just trying to get a sense of what you are seeing in that 12% to 14% bucket?

Yes, I would say probably in line with the overall company would be a fair way to look at it.

Ramsey El-Assal, Jefferies.

Do you have any material Russia exposure?

No, we don't.

A follow-up then. I read that there was a coop financial services that was going to be using PayNet for a real-time funds movement I think between customers and banks across their network. Aside from MCX, which must be your highest profile implementation, can you give us an idea of some of the use cases for PayNet that you are exploring or focused on whether it is bill pay or money transfer or tying in with ACH? It seems like there is a ton of possibilities but where do you see maybe ex-MCX, where do you see -- which markets do you see developing?

We are seeing a lot of applicability on a number of those things, Ramsey. The co-op has been a great partner with us over the years and that is just another great example of a good add-on sale to a long-term customer. We do a lot for them around their network in debit capabilities.

But turning back to PayNet, we are really seeing a lot of use cases, we are seeing it at the point of sale from a check standpoint, we are seeing use cases in P2P, we are seeing some interesting use cases in some real-time ACH. So there is a lot of opportunities for us with that network. We continue to have good traction in the sales cycle and bringing on customers and co-op is a great example of it.

There is no one other particular bucket that is sort of starting to dominate the mix a little bit? It is really early days to see (multiple speakers)?

Yes, at this time it is early days and as we talked about in the past on that, you have got to build out the users of the network and then as the users of the network are built out, you are going to see -- I do think you will see more traction around one or more channel but I think it is still a little early to start talking about that yet.

Got it. Thanks a lot. Thank you.

And with that, speakers, I would like to turn it over to you for any closing comments.

Sure, thank you. First of all, thank you for your questions and interest in FIS. As you heard, we are pleased with our first-quarter results and execution of our growth strategy. Our consistently strong performance reflects demand for our solutions and services and acknowledges our investment in innovation which enables our clients to reach their efficiency and growth requirements.

We are very confident in our 2014 outlook and long-term growth prospects and we remain focused on driving superior returns for our shareholders.

Finally, I would like to thank our employees who are dedicated to the success of our clients and each of you for joining us on today's call. Thank you.

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