First Data Corporation (NYSE:FDC) Q2 2018 Earnings Conference Call - Final Transcript

Jul 30, 2018 • 08:00 am ET


First Data Corporation (NYSE:FDC) Q2 2018 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the First Data Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) I would now like to turn the conference over to Peter Poillon. Please go ahead.

Peter Poillon

Thank you. Welcome, everyone, to First Data's second quarter 2018 earnings conference call. Our call today is being hosted by Frank Bisignano, Chairman and Chief Executive Officer of First Data. Joining Frank on the call is Himanshu Patel, Chief Financial Officer. Frank and Himanshu will be referencing a slide presentation during their prepared remarks.

A copy of the slide presentation, as well our earnings press release and supplemental schedules are available on our website at Throughout this call, segment revenue and EBITDA growth rates referenced by Frank and Himanshu will be on an organic constant currency basis, and exclude the impacts from currency and acquisitions and divestitures, and measure growth on a comparable accounting basis.

After Frank's and Himanshu's prepared remarks, we'll open the call up to Q&A and our standard ground rules apply. We request that you limit your questions to one question and one follow-up in order to be fair to as many participants as possible. (Forward-looking Cautionary Statements) With that, I'll hand the call over to Frank.

Frank Bisignano

Thank you, Peter. Good morning, everyone, it's a pleasure to be on the call today. I'll start with a quick review of our second quarter, which built on the momentum from our first quarter performance.

Our segment revenue grew 6% on an organic constant currency basis, led by strong performance, once again, in GBS. Total GBS grew 8% in the quarter, with GBS North America contributing 6% growth during the quarter. Segment EBITDA grew 8% on an organic constant currency basis, driven by the good growth across all of our business segments.

Free cash flow was very healthy once again, totaling $378 million in the quarter. Finally, we continued to execute against our capital allocation strategy as we paid down more than $360 million of debt in Q2 and further reduced our leverage ratio to 5.6 times at the end of the quarter.

Let me now briefly touch on some of the important initiatives that demonstrate our commitment to innovation and growth before turning it over to Himanshu to discuss the financials in more detail. I'll start with Clover, which is well positioned to win in the market with a compelling value proposition for merchants, developers and our distribution partners.

Clover continued its strong performance in the second quarter. We're now processing in excess of $65 billion of annualized volume globally on Clover. Once again, that's up more than 50% year over year. We're expanding Clover's addressable market. Our distribution partners will offer the Clover platform through the digital sign up solutions that are now starting to go live on partner websites.

We're leveraging our global presence to launch Clover in key international markets, as we successfully did in Germany and Austria earlier this year and are planning to launch in Argentina