Pete Gunnlaugsson - SVP, Corporate Finance and Investor Relations Gary A. Norcross - President and Chief Executive Officer James W. Woodall - Executive Vice President and Chief Financial Officer.

David J. Koning - Robert W. Baird & Co., Inc. (Broker) David Mark Togut - Evercore ISI Allison M. Jordan - Credit Suisse Securities (USA) LLC (Broker) Brett Huff - Stephens, Inc. Darrin D. Peller - Barclays Capital, Inc. Jim E. Schneider - Goldman Sachs & Co. Tien-Tsin Huang - JPMorgan Securities LLC Glenn E. Greene - Oppenheimer & Co., Inc.

(Broker) Ashwin Shirvaikar - Citigroup Global Markets, Inc. (Broker) Ramsey El-Assal - Jefferies LLC Andrew Jeffrey - SunTrust Robinson Humphrey, Inc..

Ladies and gentlemen, thank you for standing by. Welcome to the FIS First Quarter 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given at that time. As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Mr. Peter Gunnlaugsson. Please go ahead, sir..

Thank you, Christy. Good morning, everyone, and welcome to FIS' first quarter 2015 earnings conference call. Turning to slide two, Gary Norcross, President and Chief Executive Officer, will begin with a summary of our financial performance followed by a market review.

Woody Woodall, Chief Financial Officer, will continue with the financial results for the quarter. Today's news release and the supplemental slide presentation are available on our website at fisglobal.com. Please turn 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.

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 three as well.

Reconciliations between the GAAP and non-GAAP results are provided in the attachments to the press release and in the appendix of the supplemental slide presentation. With that, I will turn the call over to Gary to discuss the first quarter financial highlights on slide five.

Gary?.

Thank you, Pete, and good morning, everyone. Thank you for joining us on today's call. Starting on slide five, we finished the quarter with an increase in revenue of $1.6 billion, reflecting a 2% reported revenue growth while adjusted earnings per share was down 4% from the prior year quarter.

Fundamentally, our Integrated Financial Solutions segment had a solid quarter while our Global Financial Solutions segment was presented with a number of challenges that will continue into Q2.

In the quarter, we were negatively impacted in our Global segment by changes in foreign exchange rates, continued slow higher margin product sales, a project delay on a previously announced large scale transformational project, and a large non-bank contract that did not meet our profitability metrics.

We also experienced the lowest level of termination fees due to bank consolidation we have seen in the last 11 quarters. While this initially creates some challenges in our IFS segment first half comparisons, overall it translates into a lower client churn and replacement cost.

Adjusted for these one-time fees, reported revenue growth would have resulted in 5% top line and 7% bottom line growth in the IFS segment. The combination of all these factors impacted our Q1 results and prompted the change in guidance for the quarter and the full year which we announced on April 9.

Consistent with our growth strategy and in line with me becoming CEO, we have resegmented the company to give greater transparency around the drivers for FIS as well as highlight the potential value for expansion due to the two diverse businesses that we currently operate.

These two segments are the Integrated Financial Solutions segment, which focuses primarily on regional and community-based financial institutions in the United States, and Global Financial Solutions segment, which serves global and international financial institutions.

We will continue to leverage our technology investment and scale across both market segments while we capitalize on growth opportunities created by the fundamentally different needs and buying patterns of each of these respective markets.

This segmentation will also enable more accurate comparison of these segments against the unique competitors in their respective markets to drive overall long-term shareholder value. Next, I'll define the business conditions and strategy for each segment as well as provide business insight on their performance in the quarter.

Woody will provide some additional insight into the financial performance of these segments for the quarter as well as additional metrics we're now reporting. Turning to slide 6, served by our new Integrated Financial Solutions segment, U.S.-based regional and community institutions traditionally buy end-to-end integrated and outsourced solutions.

These institutions value partners that offer a total solution package and on an outsourced basis, invest in new ways that allow them to more effectively compete with the largest global money center banks.

Due to continued bank consolidations, this is a slower growing but solid market segment where FIS can leverage its scale and solution integration to generate attractive margins and to drive a significant highly recurring revenue base. The fundamentals of IFS segment are strong.

They had a good first quarter when looking beyond the lower term fees that will continue into Q2 but improve in the back half of the year.

As banks continue to move beyond the increased burden of regulatory environment and economic recovery, we should see continued increase in investment decisions which should also increase reported revenue growth in the back half of the year.

From a sales standpoint for IFS, we closed a number of long-term outsourcing deals including a large multi-billion dollar bank that is utilizing our core digital banking and item processing capabilities, demonstrating our continued ability to deliver a comprehensive outsourced solution.

Wealth management also continues to perform well for the company. As an example, we signed a new long-term agreement with Argent Financial. This win combines our trust platform solution with a full suite of outsourced back office services.

This agreement was just one of our wealth wins this quarter and a solid proof of how last year's acquisition of Reliance Trust is creating new wealth management opportunities.

These types of successes coupled with others within our Integrated Financial Solutions segment have allowed a year-over-year increase in new contract value sales for five consecutive quarters. Additionally, we just completed one of our largest client conferences, hosting record client and prospect attendants.

Feedback and client engagement was extremely positive with strong opportunities being generated as a result.

Turning to the Global Financial Solutions segment, these clients have a greater demand for outcome-based intellectual property-led services and an increased willingness to outsource solutions and services to drive cost reductions and transformation.

They have a strong desire to innovate, particularly in the consumer-oriented channels, and value partners that have the agility to develop and bring solutions to market at scale and across geographic boundaries.

This is a higher growth market where we generate lower margins due to the high mix of professional services including consulting, IT integration and business process outsourcing. Over the last four quarters, our higher margin product sales in our GFI market have not met our expectations.

Meanwhile, our consulting business and our intellectual property-led reoccurring services continue to accelerate, causing us a mix problem with regards to revenue and profits.

Based on these results and as Woody and I have discussed on prior calls, we are restructuring our two former divisions of Global Financial Institutions and International Financial Institutions. As part of this restructuring, we also have moved all appropriate products and product sales that serve global requirements into our GFS segment.

In making these adjustments we expect margin expansion to occur over time in this segment as we gain scale and continue to rationalize our operations. The restructuring of these two significant divisions will continue in Q2.

These adjustments as well as a resolution to a number of the prior mentioned headwinds for this segment will accelerate our revenue and profit growth in the back half of the year. Despite these challenges we did see a number of very nice wins in the quarter.

We saw significant increases in our consulting business in Europe and North America and are in final negotiations on a number of key outsourcing transactions. Asia continues to be a strong market with rapid growth. We extended that success with the recently signed engagement with Karnataka Bank to deliver an entirely new eLobby self-service channel.

In addition, we continue our success in the auto finance market, signing a significant outsourcing agreement with the financial subsidiary of a top automobile manufacturer in North America.

Turning to slide seven, I'd like to summarize the quarter before I turn it over to Woody for the financial report by saying Q1 was clearly a more challenging quarter than expected for FIS.

We continued to grow revenue and return cash to shareholders, demonstrating the consistency of our business model, but we did not achieve the results we had expected.

The restructuring and resegmentation of our business enables us to achieve operational efficiencies and better combat timing and revenue mix changes that occur with large complex deals such as in our GFS segment.

Our new segmentation model better aligns our service and solution sets to clients bearing requirements and enables us to leverage FIS' scale to more effectively propel our clients' business forward.

We are confident that our business model, proven execution and deep client relationships will continue to enable us to drive profitable growth, maintain the strength of our balance sheet and return value to our shareholders. Woody will now provide details around our Q1 performance.

Woody?.

Thanks, Gary. I will begin on slide nine with a summary of our consolidated results for the quarter. The first quarter consolidated revenue increased 2% on a reported basis and 5% on a constant currency basis to $1.6 billion.

EBITDA was $425 million, a decline of 5% from the prior year period, with EBITDA margin declining 190 basis points to 27.4% compared to 29.3% in the prior year.

Non-GAAP adjusted net earnings from continuing operations decreased to $186 million from $199 million and adjusted earnings per share was $0.65 per share compared to $0.68 per share in the prior-year period.

Our results for the quarter reflect the negative impacts from lower termination fees, increased investment in our European capabilities and a scope modification delay of a significant project which adversely impacted the quarter. In addition, the quarter was negatively impacted by changes in foreign currency exchange rates.

Non-GAAP results for the quarter are adjusted to exclude $0.12 per share for acquisition-related purchase price amortization, $0.10 per share related to the global restructuring activities and $0.03 per share related to acquisition, integration and severance costs.

The global restructuring charge is a result of our resegmentation and alignment of resources in our Global Financial Solutions segment. The activities relate primarily to Europe and are a combination of optimizing onshore and offshore resources as well as the removal of overlapping management resources.

As Gary mentioned, we resegmented the business into two new reportable segments, the Integrated Financial Solutions segment and the Global Financial Solutions segment.

We're also providing additional financial and operating metrics which we believe provide greater visibility and transparency into each segment and the key drivers we monitor to operate the business.

This resegmentation provides flexibility and more clearly differentiates the market dynamics and gives better comparisons of our results to our competitors. I will now continue on slide 10 for the first quarter segment results. In the first quarter, Integrated Financial Solutions revenue grew 2% on a reported basis to $969 million.

Termination fees were $28 million lower compared to the prior year period. Integrated Financial Solutions EBITDA for the quarter decreased 1% to $379 million. EBITDA margin was 39.1%, down from 40.2% in the prior year period, primarily reflecting lower termination fees.

Turning to slide 11, you'll see new details on revenue contribution and growth from banking, business and payment solutions, and revenue composition for the period. We're also providing metrics regarding outsourced accounts processed and transaction volumes, both which are key metrics underlying the recurring revenue of the business.

For the first quarter, this segment had 89% recurring revenue. Banking solutions grew 12%, driven by our acquisition of Reliance Trust and cross-selling and upselling new products into our existing clients. Business solutions grew 4%, primarily driven by card production.

Our payment solutions revenue was down 4%, primarily driven by a termination fee headwind from the prior year period. Turning to slide 12, in the first quarter, Global Financial Solutions revenue increased 1% on a reported basis to $587 million.

The reported results for GFS reflect a negative foreign currency translation revenue impact of $45 million for the quarter and the previously announced non-renewal of a non-bank contract. On a constant currency basis, Global revenue grew 8%. Global Financial Solutions EBITDA decreased 14% to $90 million.

EBITDA margins were 15.4% These results were adversely impacted by foreign currency exchange rates, the project delay, investment in expanding capabilities in the UK, lower than expected product sales and a heavier mix of services revenue which was partially offset by cost actions and lower incentives for the quarter.

Moving to slide 13, you will see our reporting metrics for Global Financial Solutions. We are including revenue growth by region in constant currency. For the quarter, Asia Pacific had strong growth of 45% driven primarily by the India ATM and our expanding core banking presence in India.

Europe grew 16%, driven primarily by Clear2Pay and Capco consulting. In North America, product sales and information technology outsourcing was slower than anticipated and, as expected, Latin America revenue growth remained slower due to macroeconomic conditions.

We are also disclosing the revenue composition for the segment, 73% of GFS revenue is recurring in nature. The bottom half of the slide provides revenue by currency and our consulting and services head count. The largest global and international banks, the target market of the GFS segment, continue to focus their spending on services and consulting.

This drives strong revenue growth but creates margin headwind with the change in revenue mix. As disclosed in the 8-K filed a few weeks ago, corporate expenses directly related to supporting the segments, such as sales, finance and human resources, are now reflected in the segment results.

For the quarter, corporate expenses not attributable to directly to the segments were $44 million. Please refer appendix material in the presentation for more information on the businesses and products for both segments. Moving to slide 14, we continue to reinvest in our business.

Adjusted cash flow from operations totaled $315 million for the first quarter of 2015. Capital expenditures in the quarter totaled $101 million. We delivered free cash flow of $214 million for the quarter. These results are consistent with our previous guidance of free cash flow conversion to approximate adjusted net earnings.

For the quarter, we returned $223 million to shareholders. $150 was returned to shareholders through the repurchase of 2.2 million shares in the open market at an average cost of about $68 per share. The share repurchase program drove a 2% decrease in our weighted average diluted share count to 286.8 million.

We returned $73 million to shareholders through dividends. As of March 31st, debt outstanding was $5.2 billion, resulting in a leverage ratio of 2.7 times debt-to-EBITDA. The weighted average interest rate was 3% at the end of the quarter. Moving on to slide 15, on April 9th, we adjusted our outlook for the full year.

There were a number of moving parts to that change and I want to walk you through each one. First, M&A activity creates a tailwind to reported growth of approximately 2%. This is comprised of the 3% tailwind from acquisitions, primarily Clear2Pay and Reliance Trust, and 1% headwind from divestitures, primarily the Certegy Gaming business.

Second, we announced the non-renewal of a contract which created a 1% headwind to reported growth. This contract was not with a financial institution and had minimal profitability. Third, we had a project delay in Europe and high margin global product sales are not materializing as we anticipated, creating another 1% of headwind.

Since providing our initial guidance on February 5th, we have continued to see pressure from changes in foreign currency exchange rates. This further decline of non-dollar currencies is expected to impact our full year reported growth by 4% or an additional 2% adverse change from our February guidance.

We now expect reported revenue growth of 1% to 3%. Moving to slide 16. In an effort to help with quarterly modeling of our full-year outlook, I will add some color on the second quarter and full year. The second quarter of 2015 will continue to see headwinds and difficult comparisons.

The prior-year quarter included benefits of approximately $0.09 from termination fees and a discrete tax benefit. We do not expect to see similar benefits again in the second quarter of 2015. Foreign currency exchange rate headwinds and the project delay will also adversely impact the second quarter.

Our restructuring efforts to address the shift in GFS sales mix will benefit the third and fourth quarters more heavily. Based on these factors, we are now expecting second quarter adjusted earnings per share to be in the range of $0.67 to $0.73 per diluted share. As discussed, the first half of the year is challenging.

The second half of 2015 will drive more earnings per share as we anniversary difficult comparisons and see the impacts of cost actions taken. Further, we expect the project delay issue to be behind us. For the remainder of 2015, we expect reported revenue growth in the range of 1% to 3%.

We expect margin expansion to continue into 2015 and will now be about 50 basis points. We expect 2015 adjusted earnings per share in a range of $3.27 to $3.37, which is a 6% to 9% increase over 2014. This will be more heavily weighted in the second half of the year based on the items described above.

And we expect free cash flow to approximate adjusted net earnings. That concludes our prepared remarks. Operator, you may now open the line for questions..

Thank you. And we'll go directly to the line of Dave Koning with Baird. Please go ahead..

Yeah. Hey, guys. Thanks for all the new disclosures. That's great..

Thanks, Dave..

I noticed a couple of things in there. It looked like core accounts, so core banking accounts have been trending a little bit lower the last few quarters and also ITO, BPO head count has been trending down a bit.

Those are new disclosures, maybe you could just talk through those?.

Yeah, let me give you a little color on that, it's kind of two things going on. As we talked about in the Integrated Financial Solutions segment, we continue to see a lot of consolidation and acquisition in that space. As you are very aware, in the U.S., that continues to be a consistent trend.

So the sales team is doing a very nice job of selling through that and maintaining kind of consistent account volumes and that is contributing to our slower growth in that segment. You do see one big drop which is really an interesting anomaly.

We had a very large bank that actually had an in-house developed system, one of the only ones I can think of that's happened like this in the last three or four years, and they actually migrated in-house on their in-house developed system. It was a simple product offering.

We extended a real robust services engagement from them, so that's the anomaly you see in the drop there. When you go on to the ITO and BPO resources, frankly that's all Brazil. As Woody mentioned, we've got some serious macroeconomic issues in Brazil.

It's really growing slow and as transaction volumes come down, you'd expect your call center agents to come down as well. So that's what's going on in that grouping..

The other area you're seeing in the first quarter around the ITO, BPO head count would be associated with the non-renewal of the contract, too, Dave..

Yeah, good point..

Got you. Okay, that makes sense. And then historically there has been quite a bit of seasonality in the second half of the year is always better than the first. But this year, obviously, it's a lot more than usual and requires almost $1 of EPS in each of the final two quarters.

Is some of that going to be a new type of phenomenon? I guess, how do you get there? And is there anything one-off in the second half this year? I know last year there was some one-off stuff in the first half.

This year, is there going to be some one-time benefits in the second half?.

I think you've got a combination of items, Dave. To your first point, you definitely see more growth in the second half of our business than we do the first half. That has been a normal growing occurrence over the past several years and you can model something around that.

The second will be really around getting out from one the difficult comparisons where we've had term fees as a giant headwind in the first half of the year. We're actually seeing a little bit of tailwind in the back half of the year in terms of term fees year-over-year.

The second would be getting the benefit of the cost actions that we're taking more in the third quarter and the fourth quarter and getting the project delay behind us. So, a combination of those items, we'll see a definite swing in the back half of the year compared to the first half of the year.

Okay. And then just final quick one. Your share count basically the last two quarters has been pretty stable. I know you've bought back quite a bit of stock.

Just wondering why we haven't really seen the share count go down much?.

Well, I think you've seen a couple of things. One, you've seen us buying back shares but you've seen the growth in the stock price over the past several quarters that's taking the diluted share count up a little bit associated with it. So you've got a combination of the two of those areas as well. Stock compensation is up slightly year-over-year.

So we're seeing a little bit of that. But that's the big change, Dave, more than anything else..

Okay. Great. Thank you..

Thank you..

Thank you. And our next question is from David Togut with Evercore ISI. Please go ahead..

Thank you. Good morning, Gary and Woody..

Hi, David..

Good morning, David..

Gary, what gives you the conviction that the actions you've taken in the first quarter are sufficient to put FIS back on a more consistent growth track? And I'm sort of asking the question looking beyond the second half. I recognize second half you have some easier comparisons but obviously major restructuring actions.

So, maybe just fleshing out your thinking and what's behind your getting back on a growth trajectory?.

Well, David, it's a great question. One of the things we've looked at in the global market very consistently as we've gone to that and we've disclosed to the market as well is we felt that there was an opportunity to pull more higher margin product sales into that business.

As you see in what we disclosed this quarter, I think it was 2% was software license. What we continue to see over the last four quarters is we continue to see some of our license engagement slide from quarter-to-quarter.

We're not seeing other people win those but we're also seeing them getting converted to complex services engagements where we leverage our software. But frankly, it goes into either our outsourcing which you're actually seeing a ramp-up in Europe around our banking utility we're building out.

And so, after four quarters of this consistently, we decided to actually take our former product division, which was IFI, and we took our former services division, GFI, and are putting those together. So, we're getting a lot of opportunity of moving some resources from very expensive countries to offshore.

As you know that's been a consistent strategy for us for years. We've also gotten some synergies in management. We've also gotten some synergies in go-to-market. So, you can tell by the severance costs, granted they're skewed because some of the countries that we had the resources in, but we had a lot of synergies between those two divisions.

And that's going to continue through Q2 as we build out the go-to-market. We also, as I mentioned in my script, there is a number of large outsourcing engagements we're in the final negotiation stage of as well. So that makes us feel confident that the services concept.

So if you see in what we've disclosed, you'll see our intellectual property-led services consistently growing quarter-over-quarter and you'll see our software sales is a very small amount. So these two trends over the last year has allowed us to bring these things together. So we think we've made the necessary actions.

We feel confident with the pipeline and all of the services led opportunities that we have in the pipeline and we're in final negotiations on a number of them..

Understood. And then just shifting over to the GFI business, you announced a large investment in GFI, about $30 million at the beginning of last year. It sounds like that hasn't gotten the traction that you were expecting.

Where do you stand right now with the large GFI initiative and the build-out of the those sales teams?.

Yeah, it actually has gotten traction. It's just gotten traction in more complex services and transformation. It really can be attributed to as you are seeing that growth occur. So they continue to drag and penetrate very nicely in those global institutions with some large transformational outsourcing deals.

One of the things that's also interesting is a lot of that's leading into long-term contracts. So it's not a classic services business where you're having the book and build on a very short timeframe. We're getting a lot of long term. So that actually is gaining very nice traction.

The issue for us is just the elimination of really the software license as a material component of that business. That was something that we saw transitioning after 2008 but, frankly, it just – for whatever reason, as the market continues to evolve that type of business is not coming back.

And now those clients are really looking for ways that we can leverage our talent, drive their cost down, and use our intellectual property to drive a different outcome for them. So really that GFI investment has done well.

We did, as I just mentioned, though, as we went through the restructuring and we put these two groups together, we were able to get some efficiencies in some of our go-to-market overlap as well. So, long-term, it's going to be a good outcome for this group..

Are you seeing the traction with the EMV card manufacturing that you expected at this point in the year?.

We actually are. If you turn to the IFS section, one of the things you're going to see is a line item that shows 4% growth, if memory serves. And that's primarily our card production EMV. We're seeing a nice ramp-up over that. We've disclosed a number of big wins. And so that volume continues to grow.

While it's still small volume relative to our overall volume of cards we produce, we produced millions of EMV cards this past quarter..

I see. Just a quick final question on FX, Woody. It looks like you had a 3 percentage point FX headwind to revenue in the first quarter. You're calling out a 4 point headwind for the year. But a number of your international currencies, particularly the pound, have strengthened significantly versus the dollar in the last month.

Is that 4 point headwind just including some element of conservatism or do you really think 4 points is the right number given current spot rates?.

Well, I think it's difficult with the volatility going on in the currencies that we are in right now. As you know, we updated our guidance on April the 9th, and I think you have seen some level of improvement in the currencies since April 9 even, David, to your point.

But I would tell you that we think 4% is close to where we think we'll be for the full year. If the dollar weakens a little bit against these currencies, obviously it wouldn't have as big of an impact. Very difficult right now to try to figure out exactly where currencies may land.

If you look at the euro and the real, for example, I think they're down or have depreciated about 18% compared to this time last year. But you're right, if we see some improvement in currencies compared to the U.S dollar, that 4% headwind may not be as big but that's where we got it to at the time it updated and that's where we're at for the moment..

Understood. Thank you very much..

Thank you, David..

Thank you, David..

And our next question is from the line of George Mihalos with Credit Suisse. Please go ahead..

Good morning. This is Allison in for George.

I have a question on the IFS segment, the 2% growth that you saw this quarter, how do you think about the longer term revenue target there and how long do you think it takes to get back there?.

Well, Allison, we're going to go into a lot of that on Monday in our investor update but clearly the biggest headwind this group has is just consolidation in the industry, right? I mean we continue to see acquisitions occur through the various different asset ranges within the space.

Depending on what that continues to do, that will actually turn into a nice tailwind for IFS. But certainly we think long term, given our position, given our dominance in outsourcing in a number of the key markets, it's certainly a mid single-digit grower for us. You see the margins that we generate out of that.

Frankly, when you start really breaking out that group and comparing it to some of its competitors, you're going to see that the margin contribution given the outsourced nature of the business is going to be superior to a lot of the competitors.

So, it's a very strong fundamental business and we would expect that growth over the long-term would accelerate back into the mid single-digits which is, frankly as I said, on adjusted basis if term fees didn't exist, that grow over, that's exactly where we would have been this quarter which is right about 5% and 7% on the EBITDA line.

So, we would have gotten margin expansion and good md single-digit growth. So it's really just the nature of how the acquisitions hit at any given point in time in that business. But fundamentally, it's a strong business and should continue to operate in that mid single-digit range..

Great, thanks for that color.

And then just shifting gears a little bit, on the M&A front, how are you thinking about opportunities domestically versus internationally?.

Yeah, I think there are some opportunities. Certainly, you see the last big one we did was Clear2Pay. That's going exceptionally well for us in Europe and in other areas. We're always going to look for the right opportunity.

We want to find something that gives our markets or our businesses an opportunity to accelerate growth and return value to our shareholders. Frankly, there's still probably too much supply in some of the markets that we're operating in. So if we can find a transaction that would make sense, we would certainly evaluate it.

But like always, we've got to make sure that it makes sense for our shareholders..

I could tell you, Allison, that the international opportunities have definitely looked a little more robust right now, given the strength of the dollar, coupled with we've got a lot of offshore cash right now, so..

Great. Thanks for the color, guys..

Thank you..

And we'll now go to the line of Brett Huff with Stephens, Inc. Please go ahead..

Good morning, Gary, Woody and Pete..

Hey, Brett..

Good morning, Brett..

On the project delay, can you give us more detail on that? And I ask that in the context of your commentary that the GFI business has more of these big complex services deals, so what comfort can we get that that delay is unique or was there something that we had to fix in our project approach or can you just give us some thoughts on that?.

Yeah, Brett, we're looking at right now about a 3-month total, 2.5-month 3-month total delay. Frankly, it was impacted by two things. One, it is a very large transformational project and we're bringing this financial institution out of a very old legacy environment. So they have some issues on their side as well that actually added to the delay.

We also kind of had a perfect storm there. We've had a lot of success in that region with the challenger bank. So that ended up having us build out scope to build out a much larger banking utility given some of that success. So I think it's the combination of those two things. As you know, I've been with the company 27 years.

We've had project delays before. Any big company that would tell you they haven't had a project delay is not being accurate. But the reality is this one kind of caught us from those couple of angles. We definitely have made some changes in our program management function.

Obviously, as we build out these capabilities in Europe, we got to make sure that we have the talent that's applied to these projects to make sure they have high success. But am I overly concerned about the project delay? I'm not.

I think the team is very focused and when I look at not only the sales success we've had to-date and we've announced some of those, but when I look at the contracts that we're actively negotiating, I feel very confident that the whole banking utility is going to be a very successful business for FIS going forward..

And Brett, if you think about sort of the financial impact in terms of what it is to the total contract. To the total contract, this delay is insignificant to a several hundred million dollar contract, but it did impact our quarter..

Okay. And then my second question is, Woody, you mentioned that you think that there's 50 basis points of margin expansion this year even with some of the changes. And I know there's some of the cost overruns but I also know you're taking some costs out of the business.

But as we look further out, one of the key questions that I think a lot of folks were wondering about last year, as the GFI business grows faster and it's lower margin, can we still expect a 50 basis points type expansion over the medium-term or long-term given this what looks to be a fairly permanent mix shift?.

Yeah. I think we're going to talk more about that on Monday in terms of the details behind it, Brett. But you're exactly right. I think you've got very good margin expansion capabilities in the IFS segment and it will continue as we consolidate data centers, as we sell into leverage platforms, as we continue to drive that business as we always have.

The GFS business, it does create some challenges in the short run and potentially longer-term, but we do expect margins to expand as you get more of those services growing and you get more of scale in the areas that we're serving associated with that. But it's a challenge that we're going to continue to monitor and work through..

Okay. That's what we needed. Thank you..

Thank you..

Our next question comes from Darrin Peller, Barclays. Please go ahead..

Thanks, guys. It looks like you've shifted over the past couple of years to a company that's now adding contracts that are three, four, even five times the size of your average contracts in the past.

And I think some of this is – these transitions we're seeing or delays on a big contract may be understandable given what kind of a transition comes with these adjustments. But when we consider constant currency growth guidance, you're still starting with a year for 5% to 7%, or even if you start with the low end of that.

Is the pipeline that you guys talked about earlier have contracts that are big enough kind of like the same Sainsbury's and the Crédit Agricoles to enable potential acceleration in revenue growth in 2016? I mean, I know we're not guiding yet but I just wonder if the pipeline is big enough now or are the sales times on these things going to be much longer?.

Yeah, Darrin. It's a great question. You're exactly right. We really have in our global business seen a massive expansion in the size of our contracts. We've highlighted those on a number of our calls. And as you said, as you're dealing with the these larger and larger agreements you can run into some of these things.

Let's get to your question about pipeline, the quick answer is yes. I mean the pipeline is very supportive. We've got a number of large transformational opportunities that we're actively negotiating and so we see good line of sight that we can continue to that growth in these large transformational engagements.

Capco has been just an unbelievable acquisition for us. It's been over five years but if you look at the growth in the consulting engagement and you look at how that's augmented into our IP-led services and we give that transparency, you can also see we have good pipeline supporting that. We'll see that continue..

Okay.

I mean maybe we can talk about this more at the Investor Day but is there any other fundamental reason why 2016 wouldn't be able to be at or above this year's constant currency 5% to 7% kind of range?.

Yeah, again, not going guide on 2016 yet after the first quarter of 2015 but we're going to give some outlook, a multi-year outlook, on Monday, Darrin, as to what drivers are in these businesses and what the growth characteristics should look like in both of these businesses..

Okay, and then just lastly, I mean you had a couple of moving parts you mentioned around the deals and the addbacks and take-out.

The term fees, just so we understand, that was what, about a 50 basis point headwind on this year's growth rate versus last year? Is that right in terms of my math?.

I think it was little bigger than that, it was $28 million associated..

Okay, so okay, so absent that in terms of normalized, your growth rate would have been about – a little over that higher?.

Correct..

That's helpful. All right. I'll leave the rest for the Investor Day. Thanks a lot, guys..

Thanks, Darrin.

Thank you. And our next question is from Jim Schneider with Goldman Sachs. Please go ahead..

Good morning, thanks for taking my question.

I was wondering if you could maybe address the pricing environment for a moment, and give us a little bit detail around what let to the non-renewal of that client contract and whether you're seeing that for other customers in the non-financial segment or even in the international segment in the financial part?.

Jim, two parts to that question. Let's get to the first one on the non-renewal. Frankly, this was an IT data center engagement and it was a very low margin contract. The client wanted to have a reduction that was even lower that would make actually the agreement non-profitable. It's just not a strategic business for us. So we just chose not to renew it.

And as I said, it wasn't in the financial services industry whatsoever because we're just not going to provide service at those kind of margins for our company and our shareholders.

If you start getting into financial institutions, as I mentioned to an earlier question, we do continue to see a lot of competition or perhaps even an oversupply in what I would say the traditional U.S. business, right, what we're now calling the Integrated Financial Solutions segment.

So pricing is always going to be an issue, especially when you've got what I would call a monoline player. So you've got a single product offering in the market or in that customer, some of the pricing characteristics of that can be disproportionate.

You can also see opportunities where larger scale competitors of ours that will have a broader solution. As they try to move upmarket, you can also see some aggressiveness around price. When we get over in the global marketplace, it's a little different.

You're really – in those large transformational projects, there's always going to be an element of cost saves involved in those.

That would be one of the reasons why a large global institution would not only outsource because on some intellectual property and the capability that we have, but they're looking for ways that through our best practices we can drive those costs now.

But we don't see as much aggression from some of the other providers because it's more of a long-term project base type approach on those..

Thanks. That's helpful.

And then as a follow-up, if you look ahead to the EMV liability shift in October this year and you consider your NYCE network, do you see any potential share gains or any market share shifts at all because of the Durbin compliance changes that some retailers might decide to implement?.

You know, our NYCE business continues to perform very well. I mean, we've been pleased with its performance so far. Is the team modeling a big increase for the back half of the year in that, no. I think it's been fairly consistent, but it has performed very well and they continue to grow their share..

Thank you..

And our next question comes from Tien-Tsin Huang with JPMorgan. Please go ahead..

Hi, thanks. Good morning. Just a couple questions on the, just first on I guess Brazil and Bradesco. I know there has been a lot of news flow there, Itaú with its network deal and MasterCard and GDP slowing some regulation changes.

Any update on the Bradesco JV and its current state and any opportunity to add more partners there?.

You know we have actually added some partners over the last several years. Bradesco, as you know, just continues to be the dominant client in that JV. We've got a number of years left on that contract. I mean Bradesco is very pleased with the service we're providing.

We wish the macroeconomic issues were a little more favorable in Brazil but we're still very committed to the JV and things are going well there..

Okay, good.

And then on Jim's prior question, just the non-bank outsourcing book itself, how big is that today for FIS?.

It's less than 5% revenue, sort of those IT outsourcing or IT infrastructure outsourcing, is less tan 5%, Tien-Tsin, and even smaller on the EBITDA side..

Perfect, okay. That's good. Last one from me, just I know there has been some consolidation in the baking space, surprised we haven't seen more actually but any of the announced deals have implications for FIS and should we expect more term fees just from a bit higher level standpoint? It seems like maybe that's a fair assumption to include..

Well, you know, it's interesting. For the last three years, we've actually seen a steady decline in our term fees for three consecutive years. We would actually tell you the number, the percentage of acquisitions increased to the highest we've seen last year.

A lot of those acquisitions are occurring in lower asset size institutions where we don't have as much penetration. Of course, when one of our large guys is acquired, it overdrives in a dollar amount, so our term fees can be quite large. There are a number of large combinations that have been announced.

We would go back to the Umpqua Sterling, that's been a very successful situation where Sterling was on FIS, Umpqua was on a competitor. They chose to stay with FIS and we have successfully converted that client now onto all the FIS systems, so that's a very successful conversion.

And there's going to be some other announcements coming where we've had a couple of combinations in a similar vein of Umpqua Sterling that FIS also was selected. So we're pleased as we get in the large bank market, given our size and scope and scale in those markets, we continue to have a lot of success growing that business..

All right, great, thanks for the update. See you next week..

Thanks, Tien-Tsin..

And we'll now go to the line of Glenn Greene with Oppenheimer. Please go ahead..

Thanks, good morning, a few question. I guess the first one maybe if you could help us quantify the cost savings from the restructuring so we get a little bit more comfortable with the implied margin parameters going into the back half.

I think David Koning referenced like the dollar EPS per quarter in the back half and our math was similar but wanted to get more comfortable on the margin implications?.

Yeah, I think you've got a couple things there. One, you've got a charge associated with it of about $44 million, a good bit of that is in Europe where you've got a higher level of severance, if you will, associated with removing head count.

The vast majority of that will be in the third quarter and the fourth quarter, Glenn, and we're looking at in the range of probably 70% of our savings in the third quarter and the fourth quarter this year compared to the charge. So you definitely will see benefits there.

Some of those benefits will flow through and anniversary into 2016 as well but most of it is going to hit the third quarter and the fourth quarter in terms of benefit as we transition and onshore offshore some of those resources. And then obviously, the pure management overlaps will take place a little faster than that..

Could you put a dollar amount on the savings, though?.

We haven't put an exact dollar amount on it but you know, I'm thinking probably $25 million third, fourth quarter combined is probably what you're looking at..

And then I haven't done the math precisely but it almost implies like a 33% or so EBITDA margin exiting the year so? Maybe the sliver lining here is 1Q and 2Q don't look great but you exit the year at a really nice profitability level.

Is that a good baseline to be – first of all, am I right on that math and then is that a good baseline going into fiscal 2016?.

Well I think you'll see some benefits from the costs actions specifically. I think you'll see some benefits from term fees in the second half versus first half.

I'm not sure that's the proper baseline because you're getting some benefit out of the term fees in the second half just like you're getting some detriment in the first half, but we do anticipate continuing to see some level of margin expansion through 2015 and then further into 2016..

And then the product sales weakness, are you sort of talking about license deals or is this somewhat related to the project delay, or is this just a question of timing on this..

Yeah, Glenn, it's definitely more license fee in nature. If you see, I mean we only had 2% license fees in the quarter. This business used to be a heavy license business and certainly we thought that would recover give our engagements but we continue to see our license fees slide from quarter to quarter.

There's just lot of softness whereas our services stuff just consistently ramps up. So we're not sure that this market is ever going to return to really big license model again and we thought it would. I mean, it used to be a heavy license model historically but which is good for us long term, it builds our reoccurring revenue base.

It allows it to be much more predictable in the long term and then, with that scale, you'll see steady margin recovery..

Okay, great. Thanks..

Thank you..

We will now go to Ashwin Shirvaikar with Citi. Please go ahead..

Thank you. Good morning, guys..

Good morning, Ashwin..

So I guess the first question is obviously you have a presence in all various different parts of the market but clearly you've done better in the mid sized regional and larger contracts.

So now with the new breakout with IFS, should we look for – when you look at the market like that and who competes in that market, should we look for more of a push towards the lower end, credit union, community banks, or is that not appropriate?.

I don't think so Ashwin, if you look at where we do very well in that market, we don't do a lot in credit unions. We do in the payment space but most of our focus in that market would be larger community banks. So I would draw in the greater than $1 billion, we might go down to greater than $500 million.

But when you really get in the small end, a lot of our competitors, they have very nice share down in the smaller end of that market. And, frankly, a lot of the consolidation, at least number of units, is occurring down on that low end.

So we'll talk a lot about that on Monday but basically what you're seeing is actually the mid tier is actually growing -- that greater than $1 billion – because we've got clients that are trying to get the scale to deal with the regulatory change and, frankly, the complexity of all the technology that's being rolled out and that's playing really to FIS' strength long term.

We definitely will have some lumpiness due to term fees because when have a large multi-billion dollar bank get acquired, typically the term fees can be a very large number as you see evidenced by this quarter. But when you look at that greater $1 billion space, we continue to gain share in that market.

We continue to see evidence when really two large institutions combine together that they look to FIS to outsource to.

And so all of that is going to be positive trends for IFS long term but you won't hear on Monday that part of our strategy is to push deeper in the lower end of the community bank market or, frankly, in the low end of the credit union market. We will certainly continue to be opportunistic there. We've got a number of customers there.

We're going to serve them just as well as we serve any of them. But there's just – that's were most of the churn is occurring as we see it..

Okay, thank you for that. Moving to the GFS side, clearly more traction there but you have been talking of larger deals for a year and half, two years now at least, if not slightly longer.

The question is do you have the ability to support the higher growth that's coming down the funnel both in terms of people and in terms of IP or do you need to continue making further investments whether they are organic or through M&A, if you could comment on that?.

You know, I think one of the things you're going to see with the new transparency and hopefully you guys are going to enjoy this level of detail, but you're certainly seeing as we grow these complex projects, we've got to hire people, right. So competition for talent is going to always be something that we're going to have deal with.

I think we've proven that over the last two years we've really signed some very nice agreements and we've been able to deliver on those. And we've seen the revenue and profit growth associated with those services. When you get to investments, to Woody's point, there are some good opportunities outside the U.S. for acquisition.

The Clear2Pay acquisition has been a good one for us. That's a great example where they had some great IT capabilities around payment hub technology already in the money center banks but once again heavily services oriented around the deployment of that. So we'll continue to look at those opportunities.

We also are continuing to invest in intellectual property for that market. We've seen a lot of engagements with some of our largest clients where we'll come in and do a specific build leveraging some of our components but then customizing it their benefit, once again through a services engagement.

But you are right, I mean, as we grow that business, the recruitment of talent is going to continue to be an important issue for us to monitor. I'll tell you, I mean, our consulting group Capco is really a desirable place if you want to be in the consulting field in financial services to join.

So we're able to recruit very well in that space from a lot of the larger providers. And traditionally, as you see, we've been able to ramp up our IP-led services as well, but we're going to continue to monitor that..

Okay, and one last question, if I may, the higher sales costs which, I guess, clearly you have to go after an opportunity when you see it, but there's also what opportunities do you go after versus you say no to. And last year you guys made a pretty big investment in going after larger relationships.

Could you sort of provide an update and maybe Monday is the right place to do this as opposed to right now, but can you provide us an update with regards to when do you say yes versus when do you say no, what are the criteria that you're using?.

Well, we'll certainly go into a lot more of that detail on Monday, but it's a good question and our strategy has not changed. I mean we're materially focused on a very small number of global countries, right. We are very focused on the type of capabilities that we have existing capabilities that we can leverage, right.

So we're focused heavily on the retail banking side in certain sectors and also from the consulting side on the capital market side. So where we truly aren't building out capabilities, we have capabilities that exist today that we can leverage. When you're outside of that space, we say no often, right.

So, we really aren't looking at country expansion as a growth opportunity for us and we're also not looking at getting into product deployments or capabilities that don't exist within FIS. But we'll go into that detail for you on Monday to give you a better sense of that..

Okay, great. See you guys next week..

All right..

Thanks..

Thank you. And our next question is from Ramsey El-Assal with Jefferies. Please go ahead..

Hi, guys. Curious about in the GFS segment, how does the margin profile in that segment vary by geography? I guess it's kind of, I'm trying to get a better idea of how scale efficiency is operative in your business across these different geographies. Are GFSs in Europe more profitable than in Brazil versus the U.S.

versus here versus there, just wondering if you can give me any color there?.

No, Ramsey, it's a good question. What I think you'll find is the margins are directly related to the type of IP engagement we have in that. So as you would expect, on the highest end would be where we truly have a product solution that's outsourced to us in our data center.

That would be on the higher end of those margins and then it moves down to where we're doing just traditional back office BPO would be on the low end of that spectrum. So and then when you start getting into each country based on that dynamic, you start getting into the scale growth components of that.

Overall we do believe that the margins on this business are going be able to accelerate, especially as our services components grow because we're seeing that occur in our large scale services engagements. But it really is based on how much product is truly engaged or in the engagement..

All right, that makes a lot of sense. Changing channels here, in the Asia Pacific segment I mean, that was pretty remarkable growth now that you break it out.

Is most of that coming from India or is growth in Asia Pac pretty broad based?.

The team is doing very well. India is definitely the leader here in this growth. I mean, we highlighted the India ATM deal several years ago and you see the ramp that's provided but we can't lose sight of the job the team has done there in building out a true core franchise as well. Mahila Bank, Bandhan Bank. We talked about Karnataka on the call today.

So India is by far the lead but we're seeing some nice growth in some other regions as well. Thailand is a very strong market for us and we obviously are doing well in other regions like the Philippines and Australia. But by far, India is the majority of the revenue in that sector..

If you look at the calls over the last several quarters, almost every call has had some mention of a win in India. And as we've talked about it, it was growing very well but not a giant needle mover.

I think this kind of gives you some clarity and visibility into what growing very well really means and it's becoming a larger component of the overall GFS group..

All right, guys. Thanks a lot. That's very helpful..

Thank you..

Thank you. And our final question is from Mr. Andrew Jeffrey with SunTrust. Please go ahead..

Hey, guys. Good morning..

Morning, Andrew..

Thanks for taking the question.

We've covered a lot of ground today but I want to understand a little bit as you realigned your go-to-market strategy and realigned the segments, what specifically do you feel like has changed in terms of how you're actually going to address your customer opportunities? In other words, is it personnel, is it technology, is it other assets, what about the realignment sort of practically on a day-to-day basis do you think work better and gives you the confidence in the outlook for a better second half?.

That's a great question, Andrew. Well first, what we've done is we've now got truly two pure play companies here that exist. We've moved all of product, all of accountability, all of ownership in both unique segments. You've got the IFS segment which is really, it's just the dominant outsourcer in community banking.

It's got the broadest product suite in the industry. The team is very focused whereas in the past we used to have that team being distracted to help focus on things going on in the global markets even though the revenue didn't flow there. A lot of the R&D was going on in that group just because historically that's where it was.

We've now got two groups that truly own end-to-end all their capabilities. They have the products that they need in both markets. When you get over to Global, it's just that. We've really moved now Global from a sales engine to truly an end-to-end business.

So, now they've got the capability to invest in their products or de-invest in solutions that aren't working in that market. So, in the simplest form, it's just one of accountability and focus that we think are going to drive much better results. We've been moving in this direction for a number of years.

When we announced our strategy shift back in 2012, this was the direction we've been taking the company. As you would expect, these are a lot of people to reorganize and so fundamentally this was the last step in the strategy. And so we're going to get people that have lot more focus and accountability, right products.

We're going to be able to make investments more effectively in those segments and then convey them to our investors on the returns we expect. So we think all of that's is going to accelerate the execution..

So, would you characterize the way you've positioned or repositioned the businesses, this is kind of perhaps an acceleration of the final step in the plan that was already contemplated and already was kind of a work in progress?.

Yeah, exactly. We've been working on the resegmentation for last year as we started moving through me transitioning from Chief Operating Officer into the CEO role. And so before when I was Chief Operating Officer, we ran the business in a very different manner. But we had always had the strategy to move towards this more market focus.

And if you look back on our calls, we talked a lot about our markets and the unique buying characteristics of our markets. If you look, the services fees from a professional services consulting piece is very small in IFS. You know we don't have a lot of that type of revenue driven. It's all outsourcing and highly leveraged products.

So we take a product and we launch it many times. And you know our traditional competitors in that space very well. You move over into the Global business, very different, right. Heavy head count, a lot of advanced professional services consulting with IP built into that process.

So it really is gotten us to the ultimate disposition of where we were taking the company. So now you'll have the ability to really look at both of these groups against their true pure play competitors and see how they're performing against those.

So we're excited about the transparency this is going to drive and the ability for these two market leaders to focus and invest and drive their businesses..

Okay, thanks a lot, appreciate it..

Thank you..

And we'll now turn the call back over to Gary Norcross. Please go ahead..

Thank you for your questions today and for your interest in FIS. We continue to deliver revenue growth fueled by significant reoccurring revenue streams and strong sales results.

We are confident that the resegmentation of our business will enable us to better leverage our technology, consulting and managed services portfolio to realize cost efficiencies within our own organization as well as deliver true value to our clients within the unique markets we serve.

Together with over 14,000 clients across the globe, FIS and our more than 42,000 employees are empowering the financial world. In closing, we are pleased to share more detail with you around our strategy and resegmented operating model at our upcoming Investor Conference scheduled for May 4th in New York.

We hope that you will be able to join us for this exciting event. Thank you for joining us today..

Ladies and gentlemen, this conference will be available for replay after 10:30 a.m. today through May 14, 2015. You may access the AT&T Executive Replay System at any time by dialing 1-800-475-6701 and entering the access code 357369. International participants please dial 320-365-3844. This does conclude your conference for today.

Thank you for your participation. You may now disconnect..