Ladies and gentlemen, thank you for standing by and welcome to the FIS Third Quarter 2018 Earnings Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. And as a reminder, today's conference is being recorded. I'd now like to turn the conference over to our first speaker, Pete Gunnlaugsson. Please go ahead.

Thank you, Ryan. Good morning, everyone and welcome to FIS's third quarter 2018 earnings conference call. Turning to slide 2; Gary Norcross, Chairman, President and Chief Executive Officer will begin today's call with company highlights for the quarter; Woody Woodall, Chief Financial Officer will continue with the financial results. This conference call is also being webcast with today's news release and corresponding presentation available on our website at fisglobal.com. Moving to slide 3, 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. I refer you to the safe harbor language on the slide. The materials presented today will also include references to non-GAAP financial measures in order to provide a more meaningful comparison between the periods presented. 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. Turning to slide 4, it is now my pleasure to turn the call over to Gary to discuss the business highlights for the third quarter. Gary?

Thank you, Pete. Good morning and thank you for joining us. I'm pleased to announce that FIS delivered strong results again this quarter, delivering 4% organic growth. Our sales pipeline and revenue backlog are strong and continue to grow. These are positive signals that our clients are continuing to invest for the future. Growth in the quarter was driven by strong sales over the prior three quarters as well as exceptional operational execution. The continued expansion of existing client relationships, growth of our clients through higher volumes of transactions and accounts and new client logos builds on our positive momentum as we near the end of the year. We continue to be pleased by the accelerating market momentum globally for our mission-critical products and services. Turning to slide 5 for key themes, in the year, we continued to make strong progress executing against our modernization and market expansion strategies, which we have shared throughout the year. Our focused investment in our enterprise DIGITAL ONE platform brings modern, best-in-class capabilities to both self-service channels such as mobile, lab and tablet to banker-assisted channels like branch systems, teller, kiosk, call center and back office. Its new architecture and design provides a clear path to a modern banking experience for financial institutions around the world and allows us to expand our reach into new markets. DIGITAL ONE has already had early success throughout 2018 in the large regional and direct bank market in the U.S. We are excited about this solution making an even broader impact to financial institutions and credit unions for the remainder of the year and throughout 2019. Similarly, our investments into more modern payment loyalty solutions are seeing strong demand with solid end quarter results. These solutions are also opening new markets globally to FIS. Additionally, through our modernization…

Thanks Gary. I'll begin with slide 8 with a summary of our consolidated results for the quarter. In the third quarter, revenue increased 4% to $2.1 billion on an organic basis and adjusted EBITDA increased 7.6% to $808 million. Adjusted EBITDA margin expanded 290 basis points to 38.7% for the quarter. Adjusted net earnings was $438 million and adjusted earnings per share increased 13.7% to $1.33 per share compared to $1.17 per share in the prior-year quarter. For the first nine months of the year, revenue increased 2.7% on an organic basis to $6.3 billion and adjusted EBITDA grew 4.9% to $2.3 billion. Adjusted EBITDA margin expanded 310 basis points to 36.3%. Adjusted earnings per share grew 19.7% to $3.64 per share. Moving to slide 9, in the third quarter, IFS revenue grew a healthy 5.6% on an organic basis and EBITDA grew 5.9% to $496 million versus $469 million in the prior-year quarter. EBITDA margins expanded 30 basis points to 45.5%. For the first nine months of the year, revenue increased 4.3% on an organic basis and adjusted EBITDA grew to $1.4 billion, a 4.8% increase compared to the prior-year period. Turning to slide 10, banking and wealth grew 5.2% for the quarter. This strong performance was driven by growth in our community bank channels as well as continuing demand for our outsourced wealth solutions. Payments grew a robust 7%. As Gary mentioned, we are seeing interest and demand in our innovative solutions. These market-differentiating solutions were called out at our Investor Day in May and they continue to gain traction in the market. Performance was also enhanced by increasing transaction volumes in our debit and fraud solutions. Term fees were $21 million for the quarter versus $18 million in the prior-year period. We still anticipate full year term…

Okay. Our first question comes from the line of David Togut with Evercore. Please go ahead.

Thanks. Good morning.

Good morning, David.

Good morning, David.

It looks like for 2018, your revenue growth for IFS and GFS will actually be sort of the mirror opposite of what is in your long-term guidance, which has GFS growing significantly higher than IFS. So, my question is, is this more of a 2018 phenomenon really driven by higher bank IT spending? Or do you think this is more sustainable where the higher margin IFS business can outgrow GFS in 2019 as well?

Yeah. No, it's great question, David. We're coming off of three really good quarters of sales in IFS. You're seeing that flow through toward the organic growth rates. Frankly as Woody and I both talked about, Q3 exceeded our expectations. We're looking at a strong Q4. So from a sales perspective, and confident going in (19:43) 2019. So, I do think the fundamental spending environment has improved across our regional and community banks. And we're certainly seeing stronger demand for our solutions given the fact that we're focused on our modernization strategy, movement into the cloud, the new DIGITAL ONE announcement. We're actually pretty excited that IFS will continue strong growth rates into 2019.

Understood. And just as a quick follow-up, your long-term guide called for 75 basis points to 125 basis points of average annual EBITDA margin expansion. Do you expect to be on that trajectory in 2019?

Yeah. I think, David, we don't have any broad change to the mid-term guidance we outlined in May and we believe we'll absolutely be in that level of margin expansion in 2019.

In fact, you're really seeing some great traction and pull-through with our data center consolidation. So, you're starting to see those numbers drop to the bottom-line, which is a great positive. So, we're actually very confident in our guide on continued margin expansion going forward.

Understood. Thank you very much.

Thank you.

Our next question comes from the line of Dave Koning with Baird. Please go ahead. David J. Koning - Robert W. Baird & Co., Inc.: Yeah. Hey, guys. Thanks.

Hi, Dave. David J. Koning - Robert W. Baird & Co., Inc.: Yeah, nice re-acceleration in GFS.

Thanks. David J. Koning - Robert W. Baird & Co., Inc.: Yeah. I guess, first of all, when we think of GFS, I think, you imply now about 7% or so growth in Q4 to get to that 3% for the year. But I guess I'm kind of wondering as we look into next year now because 2018 had a lot of lumpiness because of license and ASC 606, is next year going to be a smoother trajectory to kind of normal growth all through the year? I guess those couple of questions first.

Yeah. I think as you remember, we talked about some lumpiness because of the adoption of ASC 606 in 2018. Our expectation in 2019 is a smoother alignment. Although you may have some renewals in a particular quarter versus another, but we don't expect the level of movement that we had because of the adoption of ASC 606. As you remember, we are looking at a robust fourth quarter growth rate to get to the range we talked about. But we anticipate at least a few points out of the shoot (22:17) just from the adoption of ASC 606, and then the remainder of the organic growth to be driven through a robust pipeline and good solid license sales that we anticipate in the fourth quarter. But I think going back to your original question, we do anticipate less lumpiness in 2019 than we had this year.

Yeah. And Dave, I just want to remind you Q4 is always a big quarter for the GFS business. It's just cyclically always a quarter in which there's a lot of decisions made by the Tier 1s around the globe. And frankly, they're cleaning out their budgets for the year they're in and preparing for their implementation of their big programs starting in the next year. So even as Woody described, the smoothing out at some in next year, you'll still see Q4 as a big year next year. David J. Koning - Robert W. Baird & Co., Inc.: Okay. Thank you. And then I guess, secondly on the JV change, how does that affect kind of annualized revenue and margins? And is that going to be included kind of in your margin expansion, if it doesn't have an EPS impact, but it takes revenue down, that would seemingly help your margins.

It's a great question, Dave. I'm going to give you some color around the JV itself. We put out a press release that had roughly an annualized impact to reported revenue of about $200 million. First, while we consolidate the JV, we only own 51% of the economics, Bradesco owns the other 49%. And after we closed the transaction, we'll remove ourselves from some low margin call center operations and some low margin, almost no margin, pass-through revenues from a third-party vendor. The combination of those and removing the minority interest is why we anticipate really no impact on EPS, but it will impact reported revenue some. All those collectively will help our margin profile in 2019.

And to build on that, Dave, I mean one of the things that's exciting about this as we've talked about in the past, it was a great partnership that allowed us to really penetrate the high growth market of Brazil. But now that the fact that we're going to be independent, we've got a great commercial arrangement going forward with Bradesco, but it really does allow us now to fill the full capabilities of FIS, not only in Brazil, but the broader Latin America market. So, we're pretty bullish on our opportunities down there in the future given the fact that we've now unwound the JV. In the past, we had prospects that really didn't want to enter the JV because of the Bradesco ownership. So, now all that goes away as a barrier for our sales going forward. So, it's a great outcome for us. David J. Koning - Robert W. Baird & Co., Inc.: Sounds great. Thanks guys. Nice job.

Thank you.

Thanks.

Next question comes from the line of Brett Huff with Stephens. One moment please. Okay, Mr. Huff your line is open.

Good morning. Can you hear me okay?

Yeah. Hey, Brett.

Yeah, Brett.

Great. Thanks. Congrats on the results. One question, Gary, you talked about the modernization progress you guys are doing, so less a numbers question. I know that you've talked about modularizing your cores, customizing sort of the front UIs, and then trying to make, sort of, I guess a – I don't know – a manufacturing or infrastructure that kind of works across all those. Can you give us a more specific update on that? Number one. And then kind of related to that, do we have any implementations of some of those new modules? And how is the conversation going with some of those mid and larger banks in terms of are they buying into this thesis that you guys have?

Yeah. No, Brad, it's a great question. As we talked about we're very far down the path of our modernization transformation and it really spans from the technology side, so data center consolidation. As you're aware, we're wrapping up year three of a five-year journey. You're seeing great outcome from the operating savings. We'll have $100 million in run rate by the end of this year. We'll have $250 million by the end of year five, and we'll have over 50% of our production compute in the cloud by the end of this year. So, great progress and being very well received. And that's not just cloud-based deployment that's modernizing our network, modernizing our infrastructure, using artificial intelligence, et cetera, through the whole process of delivery, so that's going very well. I highlighted a number of key wins on our more modern digital omni-channel platform that we're able to deploy globally across any and all financial institutions. I highlighted a number of DIGITAL ONE wins in the quarter. We've had quite a bit of success with that solution throughout the year, not only with sales but also going live in production on a true – the true future of where we see both the assisted and unassisted. From a core modernization standpoint, we have had great progress on that development and a number of key wins this year in the market, and a lot of traction in the larger financial institutions. We're deploying those components under our brand Profile 8, which is the next generation of our Profile suite. But we're also now consuming those components in a number of our regional and community bank cores as well. So, all of that combined we feel really good about the retail banking side, and what we're doing. I also highlighted a number of key wins with our modernization effort around payments. You're starting to see some traction in our payments growth. A lot of that is next generation technologies that we're starting to deploy and gain traction. I highlighted the example with the U.S. fuel stations, and that success. We're also seeing and we highlighted several wins – significant win in Europe where our PaaS product, Payment as a Service product is gaining a lot of success. We've now had three wins there. And then on the institutional and wholesale side, doing a number of key modernization efforts around some of our SunGard assets. So, long-winded answer to we have a lot of traction across this and it really is starting to resonate with our client base.

That's helpful. And just the quick follow-up is on M&A, I think Woody you said, if I heard you right, it sounds like post the Check business, congrats on that sale, it seems like we've trimmed most of what we want to trim and feel pretty good about our portfolio. And if that's the case as we look forward on – now that our balance sheet is in pretty good shape, what are we thinking about from an M&A point of view maybe even as some of the valuations have come in with this market turnaround?

Yeah. With regard to the first question, I think, that's right. We're about as clean and focused as we can and we have been since I've been with the company for 10 years. Feel very good about where we're at in terms of the amount of technology and software-related mission-critical-related applications that are in the portfolio, and things that we've pruned off over the last few years. With regard to future M&A, I think, it's the same philosophy that we've always had. We try to find things that are good strategic fits that increase our capabilities in markets that we serve or break us into new markets and they also have to make sure they make good financial sense and drive solid returns to our shareholders. I don't think that's changed very much. We continue to watch the market dynamics as everyone does. But we're always keeping an eye out for what's going on out there.

Great. Thanks guys. I appreciate it.

Thank you, Brett.

Our next question comes from the line of George Mihalos with Cowen. Please go ahead. George Mihalos - Cowen & Co. LLC: Hey, guys. Congrats on the quarter and the acceleration in the organic growth, nice to see.

Thank you.

Thanks, George. George Mihalos - Cowen & Co. LLC: Wanted to ask on the IFS strength, specifically, within the payments division, that obviously accelerated significantly from the first half of the year. Is that one or two deals that are kind of dropping in now, and really pushing that growth rate, or is it more broad-based? And then, related to that you talked about stronger market and also some competitive takeaways. Is there a way to kind of gauge the strength between those two or sort of break it down between those two drivers?

Yeah. I would think – I would say it's a combination of both, George. The nice thing about the IFS business is, it's got a very diversified client base. And so the acceleration in payments, you're seeing that from economic indicators, you're seeing increased volume, especially around credit, debit and our network businesses. So we saw nice volume increases across the quarter, which obviously contribute to our organic growth. But the team has also done a very nice job over the last three quarters, selling some nice payment sales and you're seeing the team get those onboarded and starting to gain traction as well. So it's really a combination of market dynamics as well as sales dynamics, both contributing to an accelerated growth rate. Across IFS, it was a very clean quarter. And if you look, we're encouraged about what we're seeing in that market, what we're seeing in the sales force, taking market share and the growth across it. So I think there's a lot of good indicators that make us excited for not only the rest of the year, but into 2019.

I'll follow on to that too. I mean, we had robust growth in payments. I think, it's an indicator that the investments we've been making over the past few years are actually paying dividends now. And we continue to anticipate robust growth in payments going into Q4. George Mihalos - Cowen & Co. LLC: Okay. That's great to hear. And then, not sure if I missed it, but the outsized margin expansion in GFS that you saw this quarter, what were sort of the key drivers of that?

You got a couple of things. We continue to monitor costs, no doubt about it. We've got some absence of lower margin business from divestitures that we made in the prior year.

Right.

And we've seen some of the data center consolidation efforts flowing through to the margin health within that business. George Mihalos - Cowen & Co. LLC: Great. Thank you.

Thank you, George.

Next question comes from the line of James Schneider with Goldman Sachs. Please go ahead. James Schneider - Goldman Sachs & Co. LLC: Good morning. Thanks for taking my question. Sorry about that. I was wondering if you could maybe talk a little bit about what you're seeing in the M&A landscape among your bank partners. Clearly, we've seen a little bit more elevated M&A in the space, maybe not to the lower end of the market. Maybe talk about what you're seeing and how you expect that is going to potentially impact your growth rate going into next year?

Yeah. It's a good question, Jim. We're seeing a pretty consistent trend across M&A. Woody highlighted the term fees in Q3 pretty much in alignment. You can almost use that as a proxy for M&A activity pretty much in alignment over last year and looks like they'll be down a little bit in Q4 based on where we sit which makes us come in flat year-over-year. Yeah. There's a lot of discussion going on I would say it that way. But those discussions and frankly decisions have been fairly consistent over the years. There's some indication as we've raised the SIFI limit that we might see more activity in the larger bank space. But I'd also come back and say valuations are high in the markets. And so the good news about FIS is we've got very strong positioning in the large bank market. And typically we're the net benefactor as our customers are buying other clients and driving scale. And then as even in the smaller bank markets as banks grow into the larger bank space, they tend to look to FIS to really drive their capabilities necessary to compete at that level. So long-winded answer to not seeing a lot of change, but it's something that we monitor very closely. James Schneider - Goldman Sachs & Co. LLC: That's helpful color. Thanks. And then maybe just as a follow-up, at a macro level, you clearly highlighted that IFS is coming on a little bit above plan because of the strong sales in the IT spending backdrop. What's your client conversations look like in terms of their expectations for 2019 spending? And directionally whether that's going to be quite as strong as it was this year?

Well, right now, all we can look to is what Q4 looks like. As I highlighted in my prepared remarks, it looks like we're going to have a strong sales quarter in Q4. And I will remind everybody as we onboard these sales, you need to look that those are – that's going to drive organic growth 9 and 12 months out, all right? Because it takes time to not only sell the solution, it takes time to implement it. And I'd also highlight that our pipeline continues to be highly qualified and robust in the IFS segment, so that gives us confidence as we look into 2019. I think a lot of our clients as interest rates continue to rise, their net interest margin continues to spread and they're more bullish on spending on some programs that they've held back. There's also a real need to modernize these platforms and FIS is certainly leading the way in that category. The benefits to cloud computing drives, the benefits to omni-channel deployment, next-generation components, payments, and institutional wholesale are really resonating across those client bases. So we feel good about 2019 as it sits today given the size of the qualified pipeline and the activities we're having in the sales channel. James Schneider - Goldman Sachs & Co. LLC: Thank you very much.

And our last question comes from the line of Chris Shutler with William Blair. Please go ahead. Chris Charles Shutler - William Blair & Co. LLC: Hey guys, good morning.

Good morning. Chris Charles Shutler - William Blair & Co. LLC: Could you just talk about the free cash conversion? When we quantify, it provides more details on the two impacts that you called out, Woody, working capital investment and higher sales commissions. And then is there any update on free cash flow guidance for the year or beyond?

Yeah. If you look at the free cash flow again we're trying to highlight year-over-year, we had a benefit in Q3 2017 of roughly $50 million. That would get you to about flat year-to-year. We have had some modest investment in working capital to support the growth primarily in the payments area. And we've had some higher sales commissions this year that frankly we're happy to pay. If you look back we've been trying to increase the percentage of revenue conversion into free cash flow if you go back to 2014 that was roughly 14% conversion of free cash flow from revenue. And we are looking to be very close to 20% this year, and we want to continue to drive growth in that revenue to free cash flow conversion at or above 20% going forward. So that's where we're at on the free cash flow comment. Chris Charles Shutler - William Blair & Co. LLC: Do you still expect it to be north of 100% of adjusted net income going forward?

I would anticipate it to be roughly 100% this year. And then would continue to think it could be 100% to 110% on a go-forward basis. Chris Charles Shutler - William Blair & Co. LLC: Got it. Okay. And just my follow-up would just be on the sales commentary. Great to hear that, that's solid. I know you don't quantify the retention rate type of comment. But can you give us some comments at least qualitatively on dollar retention rates? Thanks.

Yeah. From a retention standpoint we continue to do very well, not only taking share with new wins. Obviously, on this call, we highlighted a lot of new wins. But I would tell you our renewal rates continue to be in line with historicals and we're very pleased with the retention rates that the team is executing on. That's a great opportunity for us during the renewal cycle to cross-sell and up-sell our new capabilities, to really communicate our modernization story, help push people to the cloud and also gain the benefits of many of the next-generation technologies we've talked on the call. Chris Charles Shutler - William Blair & Co. LLC: Okay. Thanks a lot.

Thank you. Thank you for joining us today and for your ongoing interest in FIS. We are pleased with our year-to-date results and are confident that this positive momentum is paving the way for a successful 2019 and beyond. In closing, I'd like to reinforce our core fundamentals. We have a proven market leadership position driving continuous innovation for modernization and improving our capabilities. We are serving healthy and improving market segments and have very strong financial fundamentals with a proven track record of generating shareholder returns. And we believe our business continues to have a compelling investment thesis and we look forward to delivering on our commitments. I'd like to thank our loyal clients who depend on us to keep their businesses running and growing every day. The successful partnership between our clients, leaders and employees enables FIS to continue to empower the financial world. Thank you for joining us today.