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First Data Corp. late on Monday named Ed Labry, president of the big processor’s North American unit, as interim chief executive officer to replace current chief executive Jonathan J. Judge, who is retiring early for health reasons. The announcement came less than a day before First Data announced mixed fourth-quarter and yearly financial and operational results.
Labry came to First Data in 2004 when the company acquired processor Concord EFS Inc., where he was president, and would appear to have the inside track in the competition for the appointment of Judge’s permanent successor. Labry has risen steadily at First Data in eight-plus years and now heads a unit that brings in about 85% of company revenues, including its huge U.S. merchant-acquiring operations. Atlanta-based First Data’s board of directors, however, is considering both internal and external candidates, a spokesperson tells Digital Transactions News.
Judge, who said he would stay on during the transition, gave Labry a plug during Tuesday’s quarterly conference call with analysts. “As you know, Ed is currently the president of our North American business unit and a terrific leader with nearly 30 years experience in our industry,” Judge said. “I’m a huge supporter of Ed’s, and our company is in very good hands with Ed in this position. I feel very comfortable turning over the reins to Ed.”
First Data chairman Joe W. Forehand said in statement that Labry “is a natural fit for us as interim CEO and will do an excellent job to ensure that the company remains focused on driving its 2013 objectives. This also allows Jon the time to focus on his health and well-being.”
Judge, who assumed the top job in late 2010, briefly addressed his medical problems in the call but didn’t say specifically what ails him. “While my plans hadn’t anticipated such an early retirement, in discussion with my doctors this seemed the only practical step given my health issue and the need to make some lifestyle changes,” he said. He thanked First Data’s board, management, and employees for their support.
Labry takes over at a time of mixed results for First Data. Retail and Alliance Services, which includes the domestic acquiring business, saw transactions grow 6% in the fourth quarter from a year earlier. Quarterly revenues increased 1% to $931.4 million, and full-year segment revenues grew 7% to $3.6 billion from $3.38 billion in 2011.
Quarterly revenues in the Financial Services unit, which provides a host of services for card issuers, slipped 1% to $348.7 million, however. International revenues grew 5% to $461.9 million. For all of 2012, Financial Services revenues increased 1% to $1.39 billion while the International segment slipped 2% to $1.72 billion.
Within the Retail and Alliance Services segment, merchant revenues grew 1% in the fourth quarter while prepaid card revenues jumped 8%. Check-processing revenues fell 7%, reflecting the general decline in consumer check writing.
In the Financial Services segment, debit card issuer transactions processed increased 6% in the fourth quarter. New business resulting from the Durbin Amendment’s transaction-routing and network-exclusivity provisions accounted for two-thirds of the growth. Labry did not divulge numbers, but expressed satisfaction with the performance of Star, First Data’s electronic funds transfer network, during the EFT network scramble for new business caused by the Durbin provisions that took effect last April. The provisions ban debit card issuers and networks from offering merchants only affiliated networks for the routing of debit transactions.
“We were very aggressive in the pursuit of new brands and new banks and relationships that were not in the Star network as some banks had to choose an alternative network, and we did very well,” Labry said.
Heavily leveraged First Data reported net losses of $179 million for the quarter and $700.9 million for 2012, mostly because of interest payments and other non-operating expenses. The company, which has $22.5 billion in debt on its balance sheet because of its 2007 leveraged buyout, paid $467.4 million in interest in the fourth quarter and $1.9 billion in all of 2012. Chief financial officer Ray Winborne expects First Data will pay $1.8 billion in interest expense this year, but because of refinancing most of the principal won’t be due until 2016 and later.
