Fidelity National Information Services Inc (FIS) 2014 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the FIS Global Q4 2014 Earnings conference call.

(Operator Instructions)

As reminder, today's conference is being recorded. I would now like to turn the conference over to our host Mr. Pete Gunnlaugsson. Please go ahead, sir.

Thank you, Brad. Good morning, everyone, and welcome to our fourth-quarter 2014 earnings conference call.

Gary Norcross, President and Chief Executive Officer, will begin with a summary of our financial performance followed by the 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.

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 3 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 4. Reconciliations between the GAAP and the non-GAAP results are provided in the attachments to the press release.

With that, I will turn the call over to Gary to discuss the fourth-quarter financial highlights on slide 6. Gary?

Thank you, Pete, and good morning, everyone. Thank you for joining us on today's call.

Turning to slide 6, 2014 proved to be another very strong year. We drove consistent execution, continued to deliver on our financial commitments to our shareholders, and achieved our full-year growth outlook.

We finished the year with record revenue of $6.4 billion, reflecting 6% year-over-year growth. We drove adjusted EBITDA of $1.9 billion, and adjusted earnings-per-share of $3.10. Growing our earnings-per-share by 10% year-over-year. We generated free cash flow of $864 million.

In the fourth quarter, our results are equally as strong. Revenue increased 7%, EBITDA increased 9%, margins expanded 30 basis points, and adjusted earnings-per-share increased 16% over the prior-year period. We finished the year on a strong footing with continued sales success across all markets, a robust pipeline and good visibility heading into 2015.

Turning to slide 7, consistent with our growth strategy, we are using our significant cash flow to drive value for our clients and our shareholders. First, we continued to invest for growth in our operations that target global financial institutions, as well as strategic solution oriented acquisitions including Clear2Pay, Reliance Trust, and CMSI. All of which strengthened their payments, wealth, and lending capabilities respectively.

Second, we maintained our strong balance sheet, ending the year with leverage of 2.6 times debt to EBITDA. Which reflects complete deleveraging of our investment in Clear2Pay during the fourth quarter. Our continued financial discipline was recognized by upgrades from both Fitch and Standard & Poor's during 2014.

Third, we continued to deliver strong value to our investors, returning $750 million to our shareholders in 2014 through $475 million of stock repurchases and $275 million in dividends. We also recently announced an 8% increase in the quarterly dividend. Overall, our strong fourth-quarter and full-year results demonstrate the continued successful execution of our business strategy, and our ability to consistently enhance shareholder returns.

Turning now to the markets on slide 8. We continued to capitalize on the increasing market demand for scalable outsource solutions and transformational services by leveraging our comprehensive suite of end-to-end technology assets, consulting services, and outsourced managed delivery capabilities.

We saw increased demand in the quarter, and year-over-year for our suite of integrated financial solutions. This was especially true in North America, where we saw a number of key competitive core banking wins in the quarter and for the full-year. For the fourth quarter we signed 14 new core deals, and for the year we saw a 54% increase in total new core wins compared to the prior year.

Digital channels continued to be a key driver, as consumer adoption rates grow. Creating strong opportunities for our broad-based mobile platforms. These opportunities have translated into strong double-digit revenue growth in our mobile business, supported by a strong performance in new mobile deals last year and a user base approaching 30 million.

We continued to be one of the leaders in integrated digital channels and mobile platforms, and are delivering key innovations that are changing the way people bank. As you would expect with the increasing regulatory burdens, our enterprise governance risk and compliance business continues to experience double-digit growth. We see institutions of all sizes looked to FIS to more effectively address the increasing regulatory requirements, enforcement actions, and cyber security threats.

In fact, last week we hosted over 300 clients in San Diego for 11th Annual Enterprise Governance Risk and Compliance Summit. This event brings together key stakeholders from banks and non-banks of federal and state regulatory agencies to discuss emerging risk and explore new best practices for handling these risks.

These events are not only information sharing events, but create significant sales opportunities for our teams over the following months. These successes coupled with others within our North American businesses have created strong momentum and the pipeline for 2015.

Outside North America, macroeconomic trends around the globe continue to cause headwinds in Brazil and some slippage of deals in Europe. Foreign currency exchange rates were a headwind in Q4, and will continue in 2015. However, due to our broad geographic business and extensive asset portfolio, we produced strong double-digit growth overall for the year, and have confidence in similar double-digit organic growth in 2015.

This confidence is due to our success in 2014, delivering several key client wins as well as continued progress on our large implementation projects. For example, in Q4, Bandhan Financial Services Limited, India's largest micro finance institution with over 2,000 locations and 6 million customers, will be offering retail banking services to its customers utilizing our core banking capabilities on an outsourced basis.

The proposed Bandhan Bank plans to launch between 400 to 600 branch locations beginning in Q2 of 2015. In addition, Muthoot Financial Partners also delivered another strong growth opportunity in Q4, by selecting us to fully manage its ATM services and switching solutions across India. Finally, the new start-up banks in the UK proved to be a solid area of opportunity, with FIS signing several start-up bank clients in the quarter.

To capitalize on the large IT spend and our success in selling to the top global financial institutions, throughout 2014, we added new global client partners, sales, and client implementation support teams. Along with client centered marketing through our operations.

As a result of these additions, we are building on our 2014 success. And have a strong pipeline for large transformational outsourcing deals, and are seeing results as cost containment, regulatory pressures, and front to back office transformation projects continue to dominate our client's agendas.

Additionally, we have seen significant increase in demand for our Clear2Pay solutions among these institutions. Our integration of Clear2Pay is on track, and early sales results are in line with our investment case. We continue to see the benefit of FIS' global sales force adds to these strategic acquisitions by increasing access to our broad client base.

Before I turn it over to Woody for the financial report, I'd like to review the key pillars of our multi-year strategy that provide us a strong foundation for success in 2015. Turning to slide 9.

The breadth and depth of FIS' solution portfolio, combined with our large-scale and global reach enables us to drive change within our organization to deliver on our growth commitments. From this, we are able to deliver on our financial commitments to our shareholders, while continuing to drive profitable growth consistently year-over-year.

Strength in our balance sheet by maintaining and improving our investment-grade ratings, and meeting our total debt to EBITDA target. Continue to return cash to our shareholders in the form of share buybacks and quarterly dividends.

Leverage our scale and cost effectively manage our operations through continuous expense management discipline. And then act on strategic acquisitions in an environment of increasingly rapid and aggressive global competition.

This increasingly rapid change is driven by disruptive innovators, entrenched competitors expanding their services, and global players where scale with a wider breadth of solutions and services is growing in importance to clients. This strategic focus provides us confidence in our ability to drive continued growth and strong financial performance.

Woody will now provide details around our Q4 and full-year performance. Woody?

Thanks, Gary. I will begin on slide 11 with a summary of our consolidated results for the quarter, and then for the full-year 2014.

In the fourth quarter, consolidated revenue increased 7% on a reported basis to $1.7 billion. Consolidated revenue increased 5.4% on an organic basis, continuing our trend of accelerating organic revenue growth for this year. EBITDA increased 9% to $526 million, with EBITDA margin expanding 30 basis points to 31.1% compared to 30.8% in the prior-year period.

Non-GAAP adjusted net earnings from continuing operations increased to $249 million from $220 million. And adjusted earnings-per-share increased 16% to $0.87 from $0.75 in the fourth quarter of 2013.

For the year, revenue increased 6% on a reported basis and 5% on an organic basis to $6.4 billion. Adjusted EBITDA increased 5% to $1.9 billion, EBITDA margin of 30% was 20 basis points lower than the prior-year period. Reflecting our strategic investment in the global financial institutions market, shift in revenue mix, and lower termination fees.

Adjusted earnings-per-share rose 10% to $3.10 per share, which is in line with the EPS guidance we provided in the third-quarter call. These results include a negative currency impact on EPS of $0.01 for the quarter and $0.02 for the full-year.

Next, I will continue on slide 12 with a review of segment results. In the fourth quarter, Financial Solutions revenue grew 7% on a reported basis, and 4% on an organic basis to $645 million. These results were driven primarily by growth in Implementations, Consulting and Services, and Risk and Compliance Solutions.

Financial Solutions EBITDA for the quarter increased 6% to $253 million. EBITDA margin was 39.2%, down from 39.7% in the prior-year quarter. Primarily reflecting higher Consulting and Services revenue.

For the year, Financial Solutions revenue increased 6% on a reported basis and 4% on an organic basis to $2.5 billion from $2.3 billion. This growth was primarily driven by Consulting and Services, Mobile Banking, and Risk and Compliance Solutions.

Full-year EBITDA increased 4% to $980 million. EBITDA margin was 39.3%, was 70 basis points lower than the prior-year period resulting primarily from lower termination fees.

Turning to slide 13, in the fourth quarter, Payment Solutions revenue increased 5% on a reported basis and 3% on an organic basis to $647 million. This growth reflects increased volumes in Network Solutions and card production.

Payment Solutions EBITDA increased 5% to $275 million in the quarter, and the margin increased 10 basis points to 42.5%. Driven primarily by transaction volume growth on our processing platforms. For the full-year, Payment Solutions revenue increased 2% on a reported an organic basis to $2.5 billion.

Full-year adjusted EBITDA increased 2% to $1.1 billion. Adjusted EBITDA margin decreased 30 basis points, primarily due to lower termination fees compared to the prior-year period.

Now I'll cover our International business on slide 14. In the fourth quarter, International Solutions revenue grew 13% on a reported basis, and 11% on an organic basis to $398 million. This double-digit organic growth was driven by increased Implementation revenue and Consulting Services.

International EBITDA increased 7% to $103 million. EBITDA margin was 25.9%, down 140 basis points compared to the prior year due to shift in revenue mix. For the full-year, International Solutions revenue increased 12% on a reported basis, and 11% on an organic basis to $1.4 billion.

Full-year EBITDA increased 6% to $320 million, compared to $303 million in the prior-year period. EBITDA margin decreased 140 basis points to 22.5%, reflecting the shift in revenue mix in 2014 and the investment in the global financial institution market.

Overall Corporate expense in the fourth quarter was $105 million, down from $114 million in the prior-year period. For the year, Corporate expense was down $18 million to $427 million. This decrease is driven by our continued commitment to productivity improvements and cost management.

Moving to the reconciliation of GAAP to non-GAAP EPS on slide 15. GAAP earnings totaled $0.71 per share, compared to $0.25 per share in the fourth quarter of 2013. GAAP results for the quarter our adjusted to exclude $0.12 for acquisition related purchase price amortization, and $0.04 per share related to acquisition, integration, and severance costs.

Adjusted cash flow from operations totaled $455 million in the quarter of 2014, and $1.2 billion for the full year. Capital expenditures in the quarter totaled $99 million, and $371 million for the year. The $371 million for the year is 6% of 2014 revenue, and represents our commitment to continue to invest in our businesses and new products and services.

We delivered free cash flow of $357 million for the quarter, and $864 million for the full-year of 2014. These results are consistent with our previous guidance for free cash flow conversion to approximate adjusted net earnings for the full-year. Our uses of cash flow during 2014 were consistent with our capital allocation priorities of investing for future growth, maintaining a strong balance sheet, and returning cash to shareholders.

Moving to slide 16. We returned $750 million to shareholders in 2014. This consisted of $275 million in dividends, and $475 million in share repurchases.

In 2014, we repurchased 8.7 million shares in the open market at an average cost of about $55 per share. The share repurchase program drove a 2% decrease in our weighted average diluted share count to 288.7 million in 2014, from 294.2 million in 2013. We did not repurchase any shares in the fourth quarter, as we reduced debt related to the Clear2Pay acquisition.

Debt outstanding totaled $5.1 billion as of December 31st. The weighted average interest-rate was 3.1% at year end. Total debt to EBITDA was 2.6 times, which is in line with our target of approximately 2.5 times.

On December 18th, we announced the amendment of our existing credit facility. We increased our revolver capacity from $2 billion to $3 billion, and extended maturity to 2019 from 2017. Heading into 2015, we feel very comfortable with the strength of our balance sheet and the flexibility it affords us to continue to invest for growth.

Moving onto slide 17, I will discuss our outlook for 2015. For 2015, we expect revenue growth of 5% to 7% on both a reported an organic basis. As stated in our third-quarter call, we expect margin expansion to continue into 2015, and to be in the range of 10 to 30 basis points for the year.

We expect 2015 adjusted earnings-per-share in a range of $3.37 to $3.49 per share, which is a 9% to 13% increase over 2014. Foreign currency exchange rates will continue to be a meaningful headwind in 2015, negatively impacting EPS by approximately $0.06. Excluding the impact of currency, our 2015 EPS growth would be 11% to 15%. We expect free cash flow to approximate adjusted net earnings.

And finally, as Gary noted, we recently increased our dividend by 8% to $0.26 per share. Today, we're also providing first quarter 2015 EPS guidance to give color on the calendarization of our 2015 plan. We expect continued negative foreign currency impacts in Q1 of 2015.

Additionally, while good news for the long-term, we are planning for very little impact from bank consolidation. Resulting in our lowest level of termination fees in the first quarter over the past three years. Based on these items, we expect adjusted EPS to be in the range of $0.67 to $0.72 per share in the first quarter.

We are confident that we will again deliver on our full-year guidance. This is based on our proven ability to execute and meet our stated financial commitments. Revenue visibility from deals sold in 2014, our sales pipeline, and our continued focus on managing our cost structure.

That concludes our prepared remarks, operator, you may now open the line for questions.

(Operator Instructions)

Brett Huff from Stephens Inc.

Good morning, guys.

Morning, Brett.

On the organic growth, Woody and Gary, can you explain the 5% to 7% range both reported and organic? I think there is some Clear2Pay in there, I think that's the big inorganic item. Can you just give us a sense of how you parse that in the 5% to 7% range?

You really got two things going, Brett. On the reported growth, you've got Clear2Pay coming on for three extra quarters in 2015. You also have Reliance Trust coming on for a full half a year, and CMSI coming on for maybe an extra quarter.

On the opposite side of that, you've got about 2 points of FX on the top line that will dilute that reported growth. And that's how you end up with a reported and organic in the same area.

I see, I got it. So we basically -- if we took the midpoint of 6%, we'd add 2 points to get 8 ex-ForEx?

That's correct.

And then we'd subtract, I know there's other things, I assumes there's other things, about 2 points. Of the inorganic?

That's about right.

Okay. That's helpful, thank you. And then my only other question was, Gary, you talked about a couple things in India.

One, I think we knew about, the big micro finance with many branches, and then I think you announced new one. Can you just tell us about the new one again? I didn't quite get that.

The team continues to execute very well in India, Brett. We signed a deal with Muthoot, who's going actually to bring over all of their ATM driving, all their ATM settlement, and it just continues to build out that ATM franchise.

As you know, we signed that very large India ATM deal with the public sector banks. That's going very well, that roll out. And we just continue to expand our business there. So it's just a very nice add-on to our existing infrastructure.

Okay. And then any other -- can you just talk a little bit about Risk and Compliance generally? Woody, when you went through the segments, I heard Risk and Compliance mentioned a lot.

Are we still in inning two or three of bank spending on Risk and Compliance? Can we expect to look forward to that for some time to come, or are we more in inning seven or eight and we got to find a new source of revenue?

No, I think we're in the early stages. What we're starting to see now, Brett, is as you know, we went through a series starting all the way back to 2011,where we saw a significant ramp in our OpEx around Risk and Security. And those investments have now parlayed into some assets that we're now offering out to our customer base. And just like everything we see, we saw the precursor of it being Consulting Services.

So we saw our Consulting side of our business grow, we then moved into back-office services, and now we're seeing it move into some of the product capabilities that we've built out over the last several years. So we think we're in the early stages.

It's absolutely the top of mind. I just got back from a large conference a couple of weeks ago, and it was literally the number one theme across all of the CEOs of the largest banks in the world. And so, we think there's tremendous opportunity here for us to continue to grow the business going forward.

Great. That's what I needed. Appreciate it.

Thank you.

Dave Koning with Baird.

Hey, guys, nice job.

Thanks, Dave.

My first question is, Q1, you talked a little bit about guidance for Q1. It's the easiest comp of the year in terms of revenue growth.

But I'm just wondering is this your going to be a little different? I know you had a big pipeline of deal activity. Do we actually, this year, even though it's an easier comp, start a little slower growth, and then as some of that deal momentum builds and you layer it on, that revenue growth actually accelerates through the year?

I think it's really more around timing around some term fees as I tried to mention. Typically, we've had probably 1 to 1.5 points per quarter in the form of term fees, Dave. We've called that out, it's been as high as almost 2 points when we had M&I flowing through back in 2013.

We're planning for the lowest level of term fees we've seen in three years in 2015. Which again, very good for the long-term because you don't lose the run rate, but it does move some of that lumpiness around. We had over 1 point in first quarter of last year in terms of term fees, and we're looking at, at least from a planning perspective, almost negligible term fees for Q1 of 2015.

Dave, just to add to that. If you think about it, term fees are very hard to predict obviously. We don't know what acquisitions are going on in the market until typically their announced. Every now and then, we get a little advance notice.

But if you think about when we came out of the 2008 economic collapse, and once the banks stabilized and dealt with all of their loan issues and we saw the closure rate fall off. We now have seen a spike over the last several years of increased, what I would say, almost pent-up acquisition demand.

As Woody said, the good news is that we see that trailing off. Which is positive for us, because as we talked in the past, even when one of our clients buys one of our -- one plus one never equals two.

So for us, based on what we're seeing, based on what our clients are telling us, that's going to continue to trend down. We saw a drop in terms fees last year, we think it's going to be a drop again this year.

But as far as the growth of the revenue goes, it always cycles where Q1 is always typically our slowest growth, and then it ramps up through the course of the year. It's just the nature of the business.

Okay, good. And then the other thing, margins up year-over-year this quarter, which is nice trend to start again. My guess the way you're talking through this, is margins actually might be down year-over-year in Q1 because of the term fee issue. But then, should they be up year-over-year in all the other quarters of 2015?

Again, we were trying to add further color from Q3. We saw some margin expansion expectations into the fourth quarter, and actually executed on that and did see those come through.

We do anticipate margins for the full year to be in the 10 to 30 basis point range. We do believe that margin will come further in the year, second, third, fourth quarter.

Okay. And then finally FX, you characterize as a 2 point headwind. We're usually pretty close, our model is 2.8% headwind right now. And I know you give a wide enough range on revenues to absorb different moving parts.

But I'm just wondering -- it just feels a little more like 3% would be the conservative approach. But unless there's a little change in FX makeup now with some of the acquisitions, maybe you could just quickly walk through that.

I think the difficulty is exactly what you talked about. If you can give me where you think all the different rates are going to be for the year, I can give you exactly what FX is going to be.

Very challenging, as you know, particularly in a very dynamic market over the past eight weeks or so in FX. But in that range, could be a little higher, Dave, but we think -- we think we're in a range of ballpark that's about there.

I'll stick to my day job. But thanks, good job.

Thanks, Dave.

George Mihalos from Credit Suisse.

Hello, congrats on the quarter. This is Alison Jordan in for George. I had a question if you could possibly provide a breakdown of constant currency growth within International. Maybe what you're seeing across you're up in LatAm, and if you can give us a sense of the contribution coming from Asia?

AsiaPac has been growing very significantly for us. We typically haven't been giving individual growth rates in those regions, but I can tell you it's in the 20% type range. It's been growing very well.

As you know, LatAm, we gave a lower growth profile around LatAm. In fact, for the year, we saw almost flat Latin America growth and some decline in Brazil, and then we saw a good bounce back in Europe, where we saw mid teen growth in Europe. Adding it all together, we ended up at that, I think it was around 11% for the full year in terms of growth.

We're seeing, again, we keep talking India. You're hearing wins in Asia. It's not a huge dollar impact yet, but it's growing very rapidly for us and we believe it will become a more and more important piece of the overall pie.

The full geographic breadth is the strength of our International business right now. Where you can see certain areas growing very fast, other areas that may not be growing as fast but still giving us good visibility into solid double-digit growth for a long, long horizon there.

Yes, I think that's key, Allison. When I think about the business and where the businesses is growing, you saw Brazil be a huge tailwind for us post 2008, while Europe was struggling to recover. We signaled on many calls how we started seeing our Consulting business grow again in Europe, which is great. Then it lead into some significant product wins, which we have announced on the call, and now Brazil is going through that cycle.

And Asia frankly, it's been strong throughout the entire recovery. The team is just doing a great job over there. So for us, it's really that geographic dispersion that allows us to have good strong confidence that we can maintain that double-digit growth rate outside the US in 2015.

That's great color. Thank you.

And then one more from me, are you seeing any more EMV driven issuance activity? And do you expect that to be a meaningful contributor to top line growth in 2015?

EMV is going to be a tailwind for us in 2015. The sales team has done a nice job, we're continuing to see more and more activity on that. We've announced on several calls some very nice wins of people converting their entire card base.

We've now got a lot of people who are starting to sign up, and they're on a three-year cycle to go through that. So I think you're going that there's a nice tailwind for us for the next several years.

You're also going to see frankly, even mag stripe in some of the prepaid areas, et cetera. It's going to maintain its steady state. So card production will be definitely a tailwind and for us for the next couple of years.

If you look back to Q4, PSG grew in the 3.5% zone, and card production was definitely one of the drivers. If you go back to the prepared remarks, you should be able to read that.

Thanks, guys. Congrats on the quarter.

Thank you.

Glenn Greene from Oppenheimer.

Good morning. I'll start with the sales activity. Gary, it sounded like the commentary overall was good, maybe a little bit mixed.

It sounded like there were a few deals that slipped maybe in Europe, on the other hand it sounded like you've got a pretty robust transformational outsourcing pipeline. Maybe you could just give us a little bit more color, and do you think this is the breakout year for those big transformational deals?

Glenn, I think the answer to that is it could be us. What we're seeing is, frankly, we're seeing good signs. We are seeing some bill slippage in Europe, which continues to bother us but I think it's the state of the whole European environment.

But we still signed a number of -- in Q4, we signed a number of startups in the UK, for example, on product. We continue to see our Consulting business grow exponentially in that market which, is always a great sign. And we've already announced a number of big transformational outsourcing deals.

So I think when I think about the global marketplace, global financial institution marketplace. The pipeline continues to grow, and we continue to execute. I wish some of these deals wouldn't slip from quarter to quarter, but that's just the nature of these areas and the economy.

When I turn to the US, the US sales team had a great year last year. And had good strong consistent growth over the prior year, and their pipeline is starting to see good throughput. So all in all, I'm very bullish on where the Company is, how the sales team is executing, and I think that's why we've increased our guidance for growth going into 2015.

Okay. And then for Woody, maybe you could help us a little bit in terms of thinking about the segment growth and margins. Directionally, if I was to talk about International continuing in that double-digit organic, should we assume some continued mix pressure on the margins in International? And how should we be thinking about the organic growth in Financial and Payments?

I think on Financial and Payments, you're still looking at a similar trend line. Where we've got some of the Consulting and Services in the US helping to drive our Financial group at a little higher growth rate.

And then our PSG segment, similar to what we've seen in the past in the low to mid single digits around the breath of products. With some growing pretty rapidly, and some of the more mature products not growing, and some even declining.

So you're still seeing that in the low to mid single-digit area. I don't think we're looking at a significant trend different on either one of those than we've seen in the past.

And same on margins?

Probably so. I think we'll continue to focus on cost structure, where if you looked at the individual components of the fourth quarter. You had FSG driven down by some of the Consulting and Services, as well as the investment in the global market. You had ISG with the same trends.

PSG expanded a little bit of margins, and then we got about 30 basis points of consolidated margin. Because we're continuing to manage that consolidated corporate cost structure, and getting leverage out of the balance of the businesses.

So I think you'll continue to see that. I think you'll see it further in Q2, Q3, Q4 as we continue to get growth out of the balance of the business and manage our overall cost structure.

Glenn, our overall Services business is just across the end of our Company, continues to grow very well. And that's the testament to the size of our Company, and the ability to deliver these robust services. So you've got that in general growing double digits, but you also keep in mind, you've got the Clear2Pay acquisition which is a very nice product pull through that's going to be splitting between ISG and PSG.

So, and as Woody pointed out, there's a number of key product elements that I even mentioned in my prepared around mobile and some of those things. So it's going to be a nice dynamic, but we feel comfortable that the margin expansion that we described will come through in 2015.

And just one real quick, the $0.06 EPS drag from FX. Historically, from what I recall, you had more of a natural hedge. And so whenever you saw a revenue headwind, you generally didn't have too much of an EPS drag.

Any reason why that's changed? Has the mix changed? Or I guess I was surprised at the order of magnitude of the EPS drag.

Well I think the point really is around the magnitude of the rate changes. If you looked at full-year, our currency impact this year was about $35 million, $37 million on the top line. To follow-up on Dave's point, we're looking at 2 points plus on the top line this year, which is a much more significant change in the FX. So therefore, we called it out.

Again, it's a translation risk, it's a translation of the P&L. Unless we're trying to get those euros or Brazilian reals or pounds and trying to repatriate them, then it becomes a paper issue more than an economic issue.

Great. Thanks, guys.

Tien-tsin Huang from JPMorgan.

Great, thanks, good morning. Just on the Europe deals slipping. Is that a macro issue, or is it perhaps regulation driven with PSD 2 going on and whatnot?

No, I don't think so. I just think as the economy bounces around and the recovery bounces around over there, Tien-tsin, it's going to [beal] slide. It's nothing that we're concerned about at all.

We've had this going on now for well over the last couple of years. And so we saw that movement coming out of the recovery in the US, where deals were hard to predict when they were going to close and what quarter, and they would slide to another quarter. So I don't think its anything more than just the course of business.

The good news is, the team keeps building the pipeline and it just incents our sales team to make sure the pipeline is as robust as possible. And as I said and Woody mentioned a minute ago, we saw good recovery in Europe last year. It had good performance from a growth standpoint. So, it's nothing that we're concerned about.

Tien-tsin, to add some color, I think part of it may be around Gary and my expectation around the team. We still grew in the 12% zone in Europe. We just anticipated more.

That's obviously a good rate. So just as a follow-up to that then, we've been hearing that there could be some higher M&A activity in Europe as well given the regulation getting closer to being finalized. Do you think that's going to be the case, and do you expect to be active?

I'll tell you, and I'll state it this way. We're seeing an increased level of M&A activity, definitely. As we've talked about in the past, for us, we want to make sure that we're doing the responsible M&A that returns value to our shareholders and also drives product and service to our clients.

So as I said in my prepared remarks, if we can find an opportunity that drives earning-per-share, always compared to share buybacks as the bar, then we'll certainly evaluate it. We've done a number of acquisitions last year. You've seen over the last three years the level of acquisition activity from a dollar amount has increased consistently. I think last year we did about $600 million in acquisitions.

So it's important for us to keep ahead of the innovation curve. Our clients, we continue to see are demanding a larger portfolio suite from providers like us in order for them to be competitive to deal with the regulatory burden, and the security burden, and frankly, just all the innovations going on. So we'll always evaluate if there's an opportunity that make sense.

Got it, Gary, thank you. Then just a quick one for Woody. Did you give the bookings growth number or target that you set for -- or how you came in on 2014 and what's expected in 2015 related to booking for new sales?

No. We typically don't give bookings numbers, Tien-tsin. So, no.

Cool, thank you. I just wanted to make sure I didn't miss it. Thank you.

Thanks.

Ramsey El-Assal from Jefferies.

Hello, guys. I wanted to ask you about, you mentioned that you had strong I think network transaction growth. Could you flesh out that comment a little bit? What's the driver there, what is that referring to?

This is really our nice network.

Exactly.

And we just had strong transaction growth and volumes in the fourth quarter.

We saw a good increase in volumes across Q4. We typically see the spike. It's always a big shopping season, as everybody knows. And so we were a good recipient of those transactions throughout the quarter.

Anything related to lower fuel prices? Anything you can read into a boost in debit spend due to lower fuel, or is that tough to call?

Yes, I would say that would be tough to call. I'm sure someone our team could give you that kind of detail.

But for us, we saw just a nice increase across our networks, and it translated to nice revenue and profit growth for us. Was it fuel cost reductions that accelerated that? It would be too hard to call for us at this point.

Okay. I wanted to ask you for an update on your broader check business. Has the rate of decline in that business continued to stabilize? First. And I guess second, would you entertain any -- are you closer to entertaining any strategic options for that business in terms of potentially divesting it or that type of thing?

First, the decline of the unit rate of checks continues to be steady. We continue to see it in various pockets.

The team has done a very nice job, as we've highlighted, over the years. Especially in our back office check processing, the team has done a nice job of selling to financial institutions to outsource that. So actually, the sales team last year was able to fill in that hole, and we actually saw our check business on a back office side be -- it actually had a minor growth, low single-digits.

On the point of sale offering, which is another area that we engage in checks, we're seeing a fairly consistent decline there. The team is doing a good job of maintaining margins on that business.

As far as a strategic look at it, we've looked at it several times, as you guys might know. And frankly, at this point in time, we just haven't ever been able to find an offering that would make sense for our shareholders.

Got it. All right. Thanks a lot, guys.

Ashwin Shirvaikar with Citi.

Thanks. Hey, guys, good morning.

Good morning, Ashwin.

So my question is trying to get from the 5% to 7% revenue growth to be 9% to the 13% EPS growth. If I assume maybe, let's call it, 1.5% to 2% of buyback. Is there in the delta there, could you provide some detail with regards to how you're going to continue to pay down debt?

What's the operating leverage coming through? And where I'm getting to is really, you guys have had a couple of good years of pretty good solid bookings.

Consulting growth, International growth, some of these things have lower margins obviously. But the backend of that lower margin is higher revenue processing type work. So when do we get that? Is the question.

If you take the top line growth in there, let's use 6% as the midpoint, Ashwin. We will get some level of margin expansion in that 10 to 30 basis points, so that gives you a little but more there.

We've done a good bit of refinancing activity over the course of the year. We get a little bit of benefit for the first half of this year, as you get the annualization of the activities we did in 2014. And then from a default standpoint, you're looking at our share buyback to give you those last couple of points, if you will, to get to that 9% to 13% range. So that bridges you between the revenue growth to the 9% to 13%.

And keep in mind, Ashwin, I know you've seen us do this every year. Last year it was overshadowed a little bit with our global partner investment. But every year as we've worked through our plan, we also take cost actions and shift our cost structure around associated where growth is going to be.

So fundamentally, that's just part of our DNA as a Company. And last year, that was overshadowed because we also ramped up a big investment. But you'll get some left out of that as well.

And that was going to be my next question. The global investment that you had I think last year was what 50 basis points, 30 basis points, something like that.

Does it step down now this year, or do you continue at that same level but that isn't a year-over-year impact? How should we think of that?

What we talked about was a $30 million investment we did make right at that investment level in 2014. We would anticipate continuing to keep that investment.

Again, this is people and go to market resources in those large banks. We would continue to keep that investment at the same level in 2015.

Again, long lead times on these deals. So we want to make sure we're getting a return, but it takes a while to get that return on the investment, as we anticipated.

Absolutely.

And then my last question is, it was good to get the 1Q color. But thinking beyond that, you do have the divestiture to GPN, and so on and so forth. So how should we think of the timing of how the revenue growth flows versus margin growth through the year?

I think you're going to see margin growth -- through the years, we continue to drive that cost management through there. I think the global deal we anticipate to close early Q2, somewhere in late April time frame, as we've talked about. It compared to Clear2Pay, the commendation of the two we thought would be neutral to EPS in 2015.

Still thinking that the same. So you'll see some revenue from global drop-off in the second quarter, and continue to see the ramp-up of the acquisitions that we've made in 2014 flowing into 2015 over the course of the year.

And that's all in your guidance, right?

Correct.

Great. Thank you, guys. Congratulations.

Thanks, Ashwin.

Thank you for your questions today, and for your continued interest in FIS. We are executing consistently on our commitments. We are driving profitable revenue growth, and operating with strong fundamentals.

Our proven business model of technology, consulting, and managed services capabilities worldwide with high reocurring revenue delivering strong cash flow drives stability and predictability. We have a strong foundation for success in 2015 through our multi-year strategy.

We are excited to share more detail with you around our strategy at our upcoming investor and analyst day meeting scheduled for May 4 in New York. We hope that you will be able to join us for this exciting event.

In closing today, I'd like to thank our more than 40,000 employees around the world who are committed to being champions to our clients each and every day. This passion for moving our clients businesses forward to make them successful has earned us the loyalty of over 14,000 institutions across the globe. Thank you for joining us today.

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