Fidelity National Information Services, Inc.

Good day and welcome to the FIS second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Nate Rosoff with Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thanks for joining us today. This call is being webcasted. Today's news release, corresponding presentation, and webcast are all available on our website at fisglobal.com. Gary Norcross, our Chairman and CEO, will provide a business and strategy update. Stephanie Ferris, our President, will discuss our operating performance. Woody Woodall, our Chief Financial Officer, will then review our financial results and provide forward guidance. Finally, Eric Hoge, our Deputy CFO, will be with us for Q&A. Turning to slide three, 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. Also, throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings, adjusted net earnings per share, and free cash flow. These are important financial performance measures for the company, but are not financial measures as defined by GAAP. Reconciliation of our non-GAAP information to the GAAP financial information are presented in our earnings release. Finally, I'm excited to share that George Mahalos will be joining our team during the third quarter. He knows both our company and the industry extremely well and will be a valuable addition to FIS. With that, Gary, I'll turn the call to you.

Thanks, Nate, and thank you for joining us today. I'd like to begin today's call by congratulating Eric Hogue as he begins to transition into his new role as Chief Financial Officer of FIS and by thanking Woody for his more than 14 years of distinguished service with the company. Eric's been with FIS for nearly 15 years, working closely with Woody throughout that time. Having spent most of his time leading financial planning and analysis at FIS, Eric has a strong insight into both our business and financials. This transition represents the strength of our talent development and succession planning, and I have the utmost confidence in Eric's ability to meet or exceed our financial commitments while returning capital to our shareholders. As a key member of my leadership team, Woody's contribution to FIS has been immeasurable. During his tenure, he helped transform FIS with two of the largest strategic acquisitions in the industry. He meticulously managed costs while at the same time empowering our businesses to accelerate their growth profiles. His leadership will be missed. Woody will step down effective November 4th and remain with the company through a transitionary period as CFO Emeritus to ensure a smooth transition. I'll now begin our earnings presentation on slide five. FIS delivered another strong operating performance in the second quarter. Revenue grew 8% organically to $3.7 billion. EVA day increased 5% to $1.6 billion, and adjusted EPS grew 7% to $1.73 per share. Each of our segments exceeded their revenue expectations with banking growth of 6%, merchant of 14%, and capital markets of 7%. Our decision to continue to invest through the pandemic has put FIS in a leading position as we continue to see strong demand from our clients and prospects. U.S. consumer health and client demand were strong throughout the quarter as evidenced by our financial results. I want to highlight how proud I am of our team who remain focused on our clients, colleagues, and communities. They have continued to deliver excellent results in the face of increasing volatile macro conditions. Turning to slide six. In addition to our strong financial model, our competitive position has never been better. We have the most modern solution suites in the market with world-class scale and differentiated end-to-end solutions. In banking, we continue to be the leader in cloud-native core processing with our modern banking platform. In addition, we are quickly becoming a leader in embedded finance under Stephanie's leadership. We continue to expand our capabilities to enable financial institutions to offer digital banking services to business and commercial clients through a SaaS-based offering that can be quickly deployed as the consumer demands continue to evolve. Our embedded finance solutions are easily scalable, and they create new revenue streams for our clients by enhancing their digital footprint. In our merchant segment, we continue to be a disruptor in the industry. We recently became the first payment processor to eliminate our clients' financial liability for chargebacks due to fraudulent purchases. The new guaranteed payments offering allows us to increase our already industry-leading authorization rates with fraud protection through a single integrated solution. We've also continued to see exceptional strength out of our recent PayRix acquisition, and we're actively integrating PayRix with our ISV channel to develop an enhanced SMB offering. Stephanie will expand on these in a moment. In capital markets, we continue to differentiate with end-to-end solutions using a reoccurring revenue SaaS model. For example, our clear derivative suite is a high-performing and modernized technology platform that seamlessly integrates with clients' existing infrastructure and spans end-to-end post-trade derivatives processing. We also continue to invest in self-service automation, which is a key feature in our personal pension solution that recently drove a new win with the UK Pension Service. Despite the cloudy macro environment, this is an exciting time at FIS from a technology and a client services standpoint. Lastly, I'd like to touch on the strength of our balance sheet on slide seven. FIS has historically performed very well during periods of economic stress, and the strength of our balance sheet is a key differentiator for us in the marketplace. To that end, we reduced our leverage ratio to 2.9 times during the second quarter. We also successfully refinanced a portion of our debt in early July to increase our financial flexibility and to further decrease interest rate risk. In addition, return of shareholder capital is a priority for us. We paid nearly $300 million in quarterly dividends, and we intend to continue to drive to 20% plus annual dividend growth each year. We also resumed share repurchase, buying back approximately $300 million in shares during the second quarter, consistent with expectations. Our cash flow conversion is robust, which we will utilize to sustainably invest for growth. while simultaneously returning significant capital to our shareholders through dividends and, by default, share repurchases in the back half of the year and throughout 2023. With that, I'll turn the call over to Stephanie to describe how these strategic accomplishments are translating to our segment's operating performance. Stephanie?