James Kehoe
Chief Financial Officer at Fidelity National Information Services
Thank you, Stephanie, and hello, everyone. We are very pleased with our performance in the first quarter, and our successful cash management and tax initiatives have allowed us to meaningfully raise our full-year EPS outlook.
On a continuing operations basis, adjusted revenue growth accelerated to 3% compared to flat in the fourth quarter of 2023. The adjusted EBITDA margin expanded by 200 basis points year-over-year, primarily reflecting cost optimization initiatives, which boosted margins in the Banking segment. Adjusted EPS from continuing operations was $1.10 in the quarter, up 53% compared to the prior year and up 24% on a normalized basis. On a total Company basis, including one month of discontinued operations, revenue was $2.9 billion, with adjusted EPS of $1.33. Beginning in February 2024, our 45% interest in Worldpay is reported on the EMI line of the income statement.
Moving now to our balance sheet and cash flow metrics. After paying down debt with the Worldpay proceeds, our total debt at the end of the quarter was $11.2 billion, with a leverage ratio of 2.7 times. We repurchased approximately $1.4 billion of shares, resulting in over $1.6 billion of capital returned to shareholders during the first quarter. Additionally, we are once again increasing our share repurchase target for the year by $500 million to $4 billion in total. We will deploy this incremental $500 million over the course of the fourth quarter of 2024, benefiting 2025 EPS.
On a continuing operations basis, we generated free cash flow of $95 million in the first quarter, with a free cash flow conversion rate of 18%. Free cash flow was negatively impacted by a number of factors, which are temporary in nature, including the delay of prior year tax payments for the first quarter of 2024 and the timing of TSA reimbursements from Worldpay. Overall, these temporary items amounted to $195 million or 36 points of negative impact. Adjusting for these items, free cash flow conversion would have been approximately 54% compared to 40% in the first quarter of 2023. Importantly, these temporary items were already factored into our full-year cash conversion target of 85% to 90%, and we are confident that we will achieve this target.
Turning now to our segment results on Slide 8. Adjusted revenue growth was 3%, in-line with our expectations and recurring revenue growth was a steady 5%, broadly in-line with the trends we saw during 2023. One quick note on backlog. While we will continue to provide backlog data in our quarterly 10-Q filings, we will no longer be focusing on backlog during our earnings presentation. As you already know, backlog does not appropriately capture underlying growth from existing clients, such as account and transaction growth. Last quarter, we provided you with increased disclosure around our recurring and non-recurring revenue streams within the Banking segment. And building on that transparency, we have now added a schedule in the appendix, highlighting the resiliency of our recurring revenue growth across a multi-year period. Compared to backlog, recurring revenue growth is a more meaningful predictor of sustainable future revenue growth, and we will be increasingly focused on this measure as a key indicator of the underlying strength of the business.
Moving on to segment performance. Banking adjusted revenue growth was at the high-end of our outlook range and accelerated to 2% in the quarter compared to flat in the fourth quarter of '23. Adjusted EBITDA margin expanded by an impressive 350 basis points, primarily driven by cost initiatives and favorable revenue mix. Banking recurring revenue grew a healthy 4%, representing continued steady growth. Other non-recurring revenue grew 9% with strong year-over-year growth in license fee revenue, more than offsetting declines in pandemic-related revenue. Professional services revenue declined 14%, reflecting a difficult year-over-year comparison in project revenue related to a large client.
Turning now to Capital Markets. Adjusted revenue growth was 6%, an improvement from 1% growth in the fourth quarter, led by strong recurring revenue growth. Excluding the impact from acquisitions, adjusted revenue increased 5%. Adjusted EBITDA margin contracted 80 basis points during the quarter, primarily reflecting less favorable revenue mix. And for the year, we continue to expect modest margin expansion. Capital Markets recurring revenue grew by a strong 9% in the quarter, whereas other non-recurring revenue was flat and professional services declined 4%.
Turning now to our full-year outlook on Slide 9. Our first quarter operational performance gives us great confidence in meeting our full-year outlook. However, given that it is so early in the year, for now, we are reiterating our full-year outlook for revenue and adjusted EBITDA. We are raising our full-year adjusted EPS outlook by $0.22 to $4.88 to $4.98, as we drive broad-based favorability across taxes, interest expense, depreciation and the EMI.
Let's walk through the key changes on Slide 10. We continue to project total reported revenue of $10.10 billion to $10.15 billion, with adjusted revenue growth of 4.0% to 4.5%. We expect the Banking segment to grow between 3.0% to 3.5% and we anticipate Capital Markets revenue growth of 6.5% to 7.0%. We continue to forecast year-over-year margin expansion of 20 basis points to 40 basis points for the full year, implying an expected moderation in the margin expansion relative to the first quarter's 200 basis points.
Over the past few months, we've been very focused on optimizing our cash management, taxes and capital structure. And these initiatives are driving $0.22 of favorability compared to our original EPS guidance. We are now in a position to reduce our tax-rate projection to around 14.5% from over 17% previously. This contributes approximately $0.14 and a lower tax-rate is sustainable going forward. More to follow on this at Investor Day. We are also reducing our depreciation and amortization projections by $5 million to $10 million compared to our prior outlook. And we now anticipate full-year interest expense of $320 million to $325 million, an improvement of $25 million, reflecting strong execution in quickly deploying the Worldpay proceeds to maximize returns.
Lastly, we have raised our 11-month Worldpay EMI contribution by $15 million to $20 million, mostly reflecting their strong start to the year. As a result, we are raising our full-year EPS outlook to a range of $4.88 to $4.98, growing more than 45% on a continuing operations basis. On a normalized basis, we now expect adjusted EPS to grow 10% to 12%, including the high-single-digit negative impact from dissynergies.
Let's now move to our second quarter outlook on Slide 11. We are forecasting another quarter of accelerating revenue growth, margin expansion and strong earnings growth. We are projecting adjusted revenue growth of 3% to 4%, with Banking Solutions at 2.0% to 2.5% and Capital Markets at 7% to 8%. We expect Banking revenue growth to accelerate over the course of the year, reflecting easier year-over-year revenue comparisons and the favorable impact from stronger new sales over the second-half of 2023. We expect steady Capital Markets adjusted revenue growth over the remainder of the year, in-line with our second quarter outlook. We are projecting adjusted EBITDA of $980 million to $995 million, which translates to year-over-year margin expansion of 80 basis points to 100 basis points. Continuing operations adjusted EPS is projected to increase 59% to 64% to $1.21 to $1.25.
In summary, we expect the favorable first quarter trends to continue into the second quarter, and we are confident in our full-year outlook.
Let me now wrap-up on Slide 12. In closing, we are very encouraged by our first quarter results, delivering our fifth straight quarter of outperformance. We are raising our full-year EPS outlook by $0.22, an increase of 4.5%, and we are reaffirming our revenue and adjusted EBITDA targets. We are confident in our full-year outlook and are well on track to deliver accelerating revenue growth and expanding margins in 2024. Lastly, we returned over $1.6 billion of capital to our shareholders in the quarter and increased our 2024 share repurchase target by $500 million to $4 billion.
With that, we will be concluding today's call and we look forward to speaking with you and taking your questions at tomorrow's Investor Day. Have a good evening.
