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The Green SheetGreen Sheet

Monday, May 9, 2011

First Data enjoys growth

First Data Corp. reported its first quarter 2011 earnings were $2.5 billion, up 6 percent ($142 million) over the first quarter 2010. Revenue adjusted for reimbursables increased 2 percent ($29 million) to $1.5 billion.

First Data Chief Executive Officer Jonathan J. Judge reported, "Higher volumes and good sales performance in our domestic and international merchant acquiring businesses coupled with lower expenses led to increased profitability across the board during the first quarter for First Data. We continued to strengthen the capital structure by refinancing debt well ahead of maturities. This provides increased financial flexibility and the opportunity to invest for future top-line growth."

The company indicated the revenue growth rode on the back of increased debit network fees, a greater volume in merchant related services in an improved economy and a corresponding greater volume of international business.

First Data made interest payments of $353 million and finished the quarter with $1.9 billion in unrestricted liquidity – $150 million in cash available for corporate use plus $1.7 billion in revolving credit.

Earnings up in several areas

First Data showed a net loss in the first quarter of $217 million, a $23 million improvement over last year's $240 million loss. Adjusted earnings were up 10 percent to $468 million.

The company said retail and alliance service segment revenue increased $27.6 million (4 percent) to $765 million. Transaction growth and cross-selling of complementary products such as prepaid cards and POS equipment accounted for much of this increase with a year-to-year increase of 9 percent. Earnings before interest, taxes and amortization were up 15 percent in the first quarter to $286 million, some of it due to reduced credit losses.

In addition, the first quarter margin was up 37 percent. First Data reported financial services revenue for the quarter was down 2 percent ($8.5 million) when growth in debit transaction volume was offset by customer losses, pricing pressure and a decline in active cards on file. Financial services earnings before interest, taxes and amortization were up $4 million (3 percent) to $133 million. The margin was up 41 percent. International revenues were up in the first quarter to $415 million, an increase of $23.6 million (6 percent) over the same quarter last year. The company said the international increases are due to growth in the merchant acquiring business driven by bank alliances in Europe and volumes in Argentina. New card business offset lower volumes and lost business, First Data reported. end of article

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