26 Jul Fiserv reports stronger earnings and revenues
Brookfield, Wis. – With its Investor Day program scheduled for Sept. 19, Fiserv, Inc. will have some good news to spread.
The Brookfield-based global provider of information management systems and services has reported stronger earnings for the second quarter of 2006, and the company saw a double-digit percentage increase in total revenues during the first half of the year.
Fiserv’s total revenues for the quarter increased 10 percent to $1.09 billion, compared to $996 million in 2005, and its earnings per share for the quarter grew to 66 cents compared to 59 cents in 2005.
For the six months ended June 30, 2006, total revenues increased 11 percent to $2.19 billion compared to 1.97 billion in 2005.
Jeff Yabuki, president and CEO of the Fortune 500 Company, said earnings for the second quarter and first half exceeded expectations based on performances in sales and business development activities.
In its second quarter financial statement, Fiserv reported an almost $4 million net income increase compared to the second quarter of 2005. Total unaudited expenses for the quarter were $909 million, up almost $100 million from the same quarter in 2005, but still resulting in a net income of $118 million.
However, the company’s $233.9 million in net income for the first six months of 2006 is running well behind the $253 million reported in the first half of 2005.
The second quarter revenue numbers followed strong first-quarter sales. For the six months ended June 30, 2006, the company’s total revenues increased 11 percent to $2,189.9 million, compared to $1,969.5 million in 2005.
Earnings per share from continuing operations were up 16 percent to $1.26 for the first six months of 2006, versus adjusted earnings per share of $1.09 in 2005.
That first-half performance bodes well for the company’s annual outlook. “Earnings for the quarter exceeded our expectations after an exceptionally strong first quarter,” Yabuki said in a statement. “Our stronger-than-expected first half financial performance provides us with increased confidence that we will achieve our full-year earnings and organic revenue growth targets while continuing to invest for the future.”
A major part of that organic growth will be generated by new business in Fiserv’s existing markets – the financial and health-benefit industries. Fiserv Health, for example, signed multi-year agreements with three new clients to provide pharmacy benefit and administration services beginning in July. The new client agreements are estimated to generate incremental, full-year revenue of $190 million to $230 million.
Fiserv’s sales quota attainment was 30 percent higher than last year at this time, and 10 percent above its year-to-date plan, according to Dave DeClark, head of investor relations. DeClark said these quotas will take time to convert into visible revenues, but added, “We had a very strong half of the year in new sales.”
DeClark also cited forthcoming health plan administration operational enhancement projects, which are expected to provide annualized expense savings of approximately $6 to $12 million.
As a result of a one-time tax benefit of $3.1 million, or two cents per share, the company increased its full-year, 2006 continuing operations earnings estimate to the range of $2.48 to $2.54 per share. Fiserv’s previous estimate was $2.46 to $2.53 per share. The tax benefit is related to a change in a state tax law during the quarter.
The company’s effective income tax rate for the second half of 2006 is estimated to be 38.5 percent.
Other financial highlights from the quarter include:
• Cash flow from operations increased 13 percent for the first six months to $283 million, and capital expenditures reached $96 million during the fist half of the year.
• Fiserv Electronic Funds Transfer (EFT) signed 111 new clients, of which nearly 80 percent were sales within its client base.
• The company repurchased 2.8 million shares of its common stock in the second quarter for a total of 8.2 million shares during the first six months of 2006. It had 4.9 million shares authorized for repurchase as of June 30, 2006.
• Fiserv completed one acquisition in the quarter, purchasing Insurance Wholesalers, Inc., a lead generation and wholesale firm for term and universal life insurance products. The acquisition was made to enhance the Fiserv’s distribution capabilities.
Fiserv has been ranked among the largest providers of information technology services to the financial services industry worldwide, and recently appeared at No. 488 on the Fortune 500 list of companies. Headquartered in Brookfield, the company reported more than $4 billion in total revenue for 2005, and it employs nearly 22,000 people at 230 North American and 20 international locations.
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