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FIS; Solid Credit Stats in 4Q23 Results, Small Earnings Downgrade

FINANCIALS

FIS (FIS US) reported 4Q23 results, complicated by the WorldPay sale, but these were accompanied by solid credit metrics and cash generation, albeit a downgrade to FY24 earnings expectations. We see these results as credit neutral but the transaction does reduce risk in the stack.

  • Key credit metrics; FCF generation continued to be good (USD 4.3bn, +10% y/y), debt levels are down slightly and there’s the obvious simplification benefit of now having sold WorldPay.
  • Revenues missed consensus very slightly (and were flat y/y) and earnings of USD1.67 are c.5% ahead of expectations. A messy set of earnings as the sale of WorldPay was completed on 31-Jan-24 so outlook is really the key here.
  • Outlook: this appears rather muted and an earnings downgrade, albeit with some offset from an incremental USD500m buyback. FY24 revenue outlook is in line with consensus but adjusted EPS is around 6% lower.

Conf call is ongoing at: https://edge.media-server.com/mmc/p/7rf58ktu

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