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ATLANTA, May 10, 2019 /PRNewswire/ -- Equifax Inc. (NYSE: EFX) today announced financial results for the quarter ended March 31, 2019.

"In the first quarter, Equifax made positive steps forward with customers and partners while continuing to invest significantly to transform our technology to the public cloud. Our incremental investment of $1.25 billion from 2018 through 2020 in technology and security will accelerate the expansion of our data assets and analytics capabilities, increase the speed of new products to market, enhance our data security, and reduce our costs," said Mark W. Begor, Chief Executive Officer of Equifax. "We also continue to make progress to resolve the litigation and regulatory matters related to the 2017 cybersecurity incident. During the quarter, we took a $690 million charge that includes our estimate of losses we expect to incur in connection with a potential global resolution of the consumer class action cases and the investigations by certain federal and state regulators."

Financial Results Summary

The company reported revenue of $846.1 million in the first quarter of 2019, down 2 percent compared to the first quarter of 2018 and up 1 percent on a local currency basis.

Net loss attributable to Equifax of $555.9 million was down compared to net income attributable to Equifax of $90.9 million in the first quarter of 2018.

First quarter diluted EPS attributable to Equifax was a loss of $4.57, down compared to income of $0.75 in the first quarter of 2018.

Our results in the first quarter of 2019 included a pre-tax legal accrual of $690.0 million for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident. The impact of this accrual on diluted EPS was $4.88 per share. Please see Part II, "Item 1. Legal Proceedings" in our Form 10-Q for the first quarter of 2019 for more information.

USIS first quarter results

• Total revenue was down 3 percent at $298.3 million in the first quarter of 2019 compared to $306.9 million in the first quarter of 2018. Operating margin for USIS was 32.2 percent in the first quarter of 2019 compared to 36.1 percent in the first quarter of 2018. Adjusted EBITDA margin for USIS was 42.9 percent in the first quarter of 2019 compared to 44.1 percent in the first quarter of 2018.
• Online Information Solutions revenue was $217.7 million, down 1 percent compared to the first quarter of 2018.
• Mortgage Solutions revenue was $32.2 million, down 23 percent compared to the first quarter of 2018.
• Financial Marketing Services revenue was $48.4 million, up 6 percent compared to the first quarter of 2018.

International first quarter results

• Total revenue was $225.1 million in the first quarter of 2019, down 8 percent and up 2 percent compared to the first quarter of 2018 on a reported and local currency basis, respectively. Operating margin for International was 5.0 percent in the first quarter of 2019, compared to 15.0 percent in the first quarter of 2018. Adjusted EBITDA margin for International was 25.3 percent in the first quarter of 2019, compared to 29.4 percent in the first quarter of 2018.
• Asia Pacific revenue was $73.1 million, down 11 percent compared to the first quarter of 2018 and down 3 percent on a local currency basis.
• Europe revenue was $68.5 million, down 3 percent compared to the first quarter of 2018 and up 4 percent on a local currency basis.
• Latin America revenue was $47.2 million, down 16 percent compared to the first quarter of 2018 and up 5 percent on a local currency basis.
• Canada revenue was $36.3 million, up 2 percent compared to the first quarter of 2018 and up 8 percent on a local currency basis.

Workforce Solutions first quarter results

• Total revenue was $228.5 million in the first quarter of 2019, an 8 percent increase compared to the first quarter of 2018. Operating margin for Workforce Solutions was 42.1 percent in the first quarter of 2019 compared to 42.7 percent in the first quarter of 2018. Adjusted EBITDA margin for Workforce Solutions was 49.4 percent in the first quarter of 2019 compared to 48.9 percent in the first quarter of 2018.
• Verification Services revenue was $148.9 million, up 16 percent compared to the first quarter of 2018.
• Employer Services revenue was $79.6 million, down 4 percent compared to the first quarter of 2018.

Global Consumer Solutions first quarter results

• Revenue was $94.2 million in the first quarter of 2019, down 9 percent and 8 percent compared to the first quarter of 2018 on a reported and local currency basis, respectively. Operating margin was 12.1 percent in the first quarter of 2019 compared to 29.2 percent in the first quarter of 2018. Adjusted EBITDA margin was 23.9 percent compared to 33.8 percent in the first quarter of 2018.

Adjusted EPS and Adjusted EBITDA Margin

• Adjusted EPS attributable to Equifax was $1.20 in the first quarter of 2019, down 16 percent compared to the first quarter of 2018. This financial measure for 2019 excludes the foreign currency impacts from Argentina being a highly inflationary economy, expenses related to the realignment of internal resources, and an accrual for legal matters related to the 2017 cybersecurity incident. The financial measure for both 2019 and 2018 excludes cybersecurity incident related costs, acquisition-related amortization expense, net of associated tax impacts, and income tax effects of stock awards recognized upon vesting or settlement. These items are described more fully in the attached Q&A.
• Adjusted EBITDA margin was 30.5 percent in the first quarter of 2019 compared to 33.5 percent in the first quarter of 2018. This financial measure for 2019 and 2018 has been adjusted for certain items, including costs related to the cybersecurity incident, expenses related to the realignment of internal resources, and an accrual for legal matters related to the 2017 cybersecurity incident as well as the foreign currency impacts from Argentina being a highly inflationary economy, which affect the comparability of the underlying operational performance and are described more fully in the attached Q&A.

Second Quarter and Full Year Guidance

• For the second quarter of 2019, we expect reported revenue to be between $865 and $880 million, reflecting local currency growth as compared to the second quarter of 2018 of 0.5% to 2.5%, partially offset by an expected 2.5% negative impact of foreign exchange. Adjusted EPS is expected to be between $1.32 and $1.37 per share. The impact of foreign exchange on adjusted EPS compared to the second quarter of 2018 is expected to be negative $0.035 per share.
• We expect full year 2019 reported revenue to be between $3.425 and $3.525 billion, reflecting local currency growth of 2% and 5% compared to 2018, partially offset by an expected just over 2% negative impact of foreign exchange. Adjusted EPS is expected to be between $5.60 and $5.80 per share. The impact of foreign exchange on adjusted EPS compared to 2018 is expected to be negative $0.12 per share. Factors impacting 2019 revenue and adjusted EPS include an expected approximate 2% decline in mortgage market inquiries, and higher Corporate costs principally for security and related technology spend.

About Equifax

Equifax is a global information solutions company that uses unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions.

Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 10,700 employees worldwide.

Earnings Conference Call and Audio Webcast

In conjunction with this release, Equifax will host a conference call on May 10, 2019 at 8:30 a.m. (ET) via a live audio webcast. To access the webcast, go to the Investor Relations section of our website at www.equifax.com. The discussion will be available via replay at the same site shortly after the conclusion of the webcast. This press release is also available at that website.

Non-GAAP Financial Measures

This earnings release presents adjusted EPS attributable to Equifax which is diluted EPS attributable to Equifax adjusted (to the extent noted above for different periods) for costs related to the 2017 cybersecurity incident, acquisition-related amortization expense, net of tax, the adjustment for redeemable noncontrolling interest that reflects a redemption value in excess of fair value, the foreign exchange impact resulting from accounting for Argentina as a highly inflationary economy, an accrual for legal matters related to the 2017 cybersecurity incident, expenses related to the realignment of internal resources, and the income tax effects of stock awards that are recognized upon vesting or settlement. This earnings release also presents adjusted EBITDA and adjusted EBITDA margin which is defined as consolidated net income attributable to Equifax plus net interest expense, income taxes, depreciation and amortization, and also excludes certain one-time items. These are important financial measures for Equifax but are not financial measures as defined by GAAP.

These non-GAAP financial measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as an alternative measure of net income or EPS as determined in accordance with GAAP.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes are presented in the Q&A. This information can also be found under "Investor Relations/Financial Information/Non-GAAP Financial Measures" on our website at www.equifax.com.

Forward-Looking Statements

This release contains forward-looking statements and forward-looking information. These statements can be identified by expressions of belief, expectation or intention, as well as statements that are not historical fact. These statements are based on certain factors and assumptions including with respect to foreign exchange rates, expected growth, results of operations, performance, the outcome of legal proceedings, business prospects and opportunities and effective tax rates. While the company believes these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect.

Several factors could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to actions taken by us, including restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions), as well as from developments beyond our control, including, but not limited to, changes in worldwide and U.S. economic conditions that materially impact consumer spending, consumer debt and employment and the demand for Equifax's products and services. Other risk factors include the impact of the 2017 cybersecurity incident and the resulting government investigations, litigation and other impacts on our business and results of operations; impact of our technology transformation and improvements in our information technology and data security infrastructure; changes in tax regulations; adverse or uncertain economic conditions and changes in credit and financial markets; economic, political and other risks associated with international sales and operations; risks relating to unauthorized access to data or breaches of confidential information due to criminal conduct, attacks by hackers, employee or insider malfeasance and/or human error; changes in, and the effects of, laws and regulations and government policies governing or affecting our business, including, without limitation, our examination and supervision by the Consumer Financial Protection Bureau ("CFPB"), a federal agency that holds primary responsibility for the regulation of consumer protection with respect to financial products and services in the U.S., oversight by the U.K. Financial Conduct Authority ("FCA") and Information Commissioner's Office of our debt collections services and core credit reporting businesses in the U.K., oversight by the Office of Australian Information Commission, the Australian Competition and Consumer Commission ("ACCC") and other regulatory entities of our credit reporting business in Australia and the impact of privacy laws and regulations, including the European General Data Protection Regulation and the California Consumer Privacy Act; federal or state responses to identity theft concerns; potential adverse developments in new and pending legal proceedings or government investigations, including investigations or examinations undertaken by the Federal Trade Commission, the CFPB, State Attorneys General, the FCA, the ACCC or other governmental agencies; our ability to successfully develop and market new products and services, respond to pricing and other competitive pressures, complete and integrate acquisitions and other investments and achieve targeted cost efficiencies; timing and amount of capital expenditures; changes in capital markets and corresponding effects on the company's investments and benefit plan obligations; foreign currency exchange rates and earnings repatriation limitations; and the decisions of taxing authorities, all of which could affect our effective tax rates. A summary of additional risks and uncertainties can be found in our Annual Report on Form 10-K for the year ended December 31, 2018, including without limitation under the captions "Item 1. Business -- Governmental Regulation" and "-- Forward-Looking Statements" and "Item 1A. Risk Factors," and in our other filings with the U.S. Securities and Exchange Commission. Forward-looking statements are given only as at the date of this release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

 

 

 

 

 

Common Questions & Answers (Unaudited)
(Dollars in millions)

1.    Can you provide a further analysis of operating revenue by operating segment?

Operating revenue consists of the following components:

 *Reflects percentage change in revenue conforming 2019 results using 2018 exchange rates.

2.    What drove the fluctuation in the effective tax rate?

Our effective income tax rate is 13.7% for the first quarter of 2019 compared to 23.9% for the first quarter of 2018. Our effective tax rate was lower during the first quarter of 2019 as compared to 2018 due to permanent tax differences resulting from the accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident. We computed income taxes for the first quarter of 2019 using the discrete method, applying the actual year-to-date effective tax rate to our pre-tax loss. We believe that this method yields a more reliable income tax calculation for the period due to the uncertainty associated with the estimate of our annual domestic pre-tax book income due to the ongoing litigation, claims, and government investigations related to the 2017 cybersecurity incident.

3.    What is the breakdown of the costs related to the September 2017 cybersecurity incident?

Costs related to the 2017 cybersecurity incident are defined as incremental costs to transform our information technology infrastructure and data security; legal fees and professional services costs to investigate the 2017 cybersecurity incident and respond to legal, government and regulatory claims; as well as costs to provide the free product and related support to the consumer.

In addition, in the first quarter of 2019, the Company recorded an accrual of $690.0 million for certain legal proceedings and investigations related to the 2017 cybersecurity incident, exclusive of our legal and professional services expenses. While it is reasonably possible that losses exceeding the amount accrued will be incurred, it is not possible at this time to estimate the additional possible loss in excess of the amount already accrued that might result from adverse judgments, settlements, penalties or other resolution of the proceedings and investigations related to the 2017 cybersecurity incident based on a number of factors, such as the various stages of these proceedings and investigations, that alleged damages have not been specified or are uncertain, the uncertainty and complexity of achieving a multi-party resolution, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues. The ultimate amount paid on these actions, claims and investigations in excess of the amount already accrued could be material to the Company's consolidated financial condition, results of operations, or cash flows in future periods.

We recorded $786.8 million ($665.0 million, net of tax) and $68.7 million ($50.6 million, net of tax) for the first quarter of 2019 and 2018, respectively, for costs related to the 2017 cybersecurity incident, incremental information technology and data security costs, and the accrual for legal matters related to the 2017 cybersecurity incident. The components of the costs are as follows:

The $82.8 million and $45.7 million of technology and data security costs include incremental costs to transform our technology infrastructure and improve application, network, data security, and the costs of development and launch of Lock and Alert^™. These include, but are not limited to, costs for people, professional and contracted services, technical services and products, and other costs added either directly or indirectly to manage, execute, and support the implementation of these plans. The $12.5 million and $28.9 million of legal and investigative fees include legal fees and professional services costs to investigate the 2017 cybersecurity incident and respond to legal, government, and regulatory investigations and claims related to the 2017 cybersecurity incident. The $1.5 million and $4.1 million of product liability costs include the expected costs of fulfillment of TrustedID^® Premier and support of consumers using TrustedID^® Premier. Additionally, in 2018, the Company extended the free credit file monitoring services for impacted consumers using the free TrustedID^® Premier service by providing them the opportunity to enroll in Experian^® IDNotify^™ at no cost for an additional twelve months.

Since the announcement of the cybersecurity incident in September 2017, we have incurred a total of $1,352.0 million of costs related to the incident, incremental technology and data security costs, and an accrual for losses associated with legal proceedings and investigations related to the 2017 cybersecurity incident.

We expect 2017 cybersecurity incident related costs for the remainder of 2019 to be less than the levels incurred in 2018. 2017 cybersecurity incident related costs do not include the accrual for legal proceedings and investigations related to the 2017 cybersecurity incident, as further described in the Notes to the reconciliations of this release.

At the time of the 2017 cybersecurity incident, we had $125.0 million of cybersecurity insurance coverage, above a $7.5 million deductible, to limit our exposure to losses such as those related to this incident. Since the announcement of the 2017 cybersecurity incident, we have received the maximum reimbursement under the insurance policy of $125.0 million, all of which was received prior to 2019.

Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures (Unaudited)

(Dollars in millions, except per share amounts)

A.    Reconciliation of net income attributable to Equifax to diluted EPS attributable to Equifax, adjusted for acquisition-related amortization expense, an accrual for legal matters related to the 2017 cybersecurity incident, costs related to the 2017 cybersecurity incident, realignment of internal resources, the income tax effect of stock awards recognized upon vesting or settlement, Argentina highly inflationary foreign currency impacts, and income tax adjustments:

 

(1)     During the first quarter of 2019, we recorded acquisition-related amortization expense of certain acquired intangibles of $34.1 million ($29.1 million, net of tax). We calculate this financial measure by excluding the impact of acquisition-related amortization expense and including a benefit to reflect the significant cash income tax savings resulting from the income tax deductibility of amortization for certain acquired intangibles. The $5.0 million of tax is comprised of $9.0 million of tax expense net of $4.0 million of a cash income tax benefit. During the first quarter of 2018, we recorded acquisition-related amortization expense of certain acquired intangibles of $42.2 million ($35.2 million, net of tax). The $7.0 million of tax is comprised of $10.9 million of tax expense net of $3.9 million of a cash income tax benefit. See the Notes to this reconciliation for additional detail.

(2)     During the first quarter of 2019, we recorded a $690.0 million ($592.7 million, net of tax) accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident, exclusive of our legal professional services expenses. See the Notes to this reconciliation for additional detail.

(3)     During the first quarter of 2019, we recorded pre-tax expenses related to the 2017 cybersecurity incident of $96.8 million ($72.3 million, net of tax). During the first quarter of 2018, we recorded $68.7 million ($50.6 million, net of tax) for costs related to the 2017 cybersecurity incident. See the Notes to this reconciliation for additional detail.

(4)     During the first quarter of 2019, we recorded a restructuring charge for the realignment of internal resources and other costs of $11.5 million ($8.8 million, net of tax) which predominantly relates to the reduction of headcount and the realignment of our internal resources to support the Company's strategic objectives. See the Notes to this reconciliation for additional detail.

(5)     During the first quarter of 2019, we recorded a tax benefit of $1.3 million related to the tax effects of deductions for stock compensation in excess of amounts recorded for compensation costs. During the first quarter of 2018, we recorded a tax benefit of $3.0 million related to the tax effects of deductions for stock compensation expense in excess of amounts recorded for compensation costs. See the Notes to this reconciliation for additional detail.

(6)     Argentina experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina has been deemed a highly inflationary economy by accounting policymakers. During the first quarter of 2019, we recorded a foreign currency loss of $0.3 million related to the impact of remeasuring the peso denominated monetary assets and liabilities as a result of Argentina being a highly inflationary economy. See the Notes to this reconciliation for additional detail.

(7)     During the first quarter of 2019, we recorded the tax impact of adjustments of $129.5 million comprised of (i) acquisition-related amortization expense of certain acquired intangibles of $5.0 million ($9.0 million of tax expense net of $4.0 million of cash income tax benefit), (ii) a tax adjustment of $24.5 million related to expenses for the 2017 cybersecurity incident, (iii) a tax adjustment of $97.3 million related to the accrual of a legal matter, and (iv) a tax adjustment of $2.7 million related to the realignment of internal resources.

During the first quarter of 2018, we recorded the tax impact of adjustments of $25.1 million comprised of (i) acquisition-related amortization expense of certain acquired intangibles of $7.0 million ($10.9 million of tax expense net of $3.9 million of cash income tax benefit) and (ii) a tax adjustment of $18.1 million related to expenses for the 2017 cybersecurity incident.

B.    Reconciliation of net income attributable to Equifax to adjusted EBITDA, excluding income taxes, interest expense, net, depreciation and amortization expense, an accrual for legal matters related to the 2017 cybersecurity incident, costs related to the 2017 cybersecurity incident, realignment of internal resources, Argentina highly inflationary foreign currency impacts, and presentation of adjusted EBITDA margin:

 

(1)     During the first quarter of 2019, we recorded a $690.0 million ($592.7 million, net of tax) accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident, exclusive of our legal professional services expenses. See the Notes to this reconciliation for additional detail.

(2)   During the first quarter of 2019, we recorded pre-tax expenses related to the 2017 cybersecurity incident of $96.8 million ($72.3 million, net of tax). During the first quarter of 2018, we recorded $68.7 million ($50.6 million, net of tax) for expenses related to the 2017 cybersecurity incident. See the Notes to this reconciliation for additional detail

(3)     During the first quarter of 2019, we recorded a restructuring charge for the realignment of internal resources and other costs of $11.5 million ($8.8 million, net of tax) which predominantly relates to the reduction of headcount and the realignment of our internal resources to support the Company's strategic objectives. See the Notes to this reconciliation for additional detail.

(4)     Argentina experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina has been deemed a highly inflationary economy by accounting policymakers. During the first quarter of 2019, we recorded a foreign currency loss of $0.3 million related to the impact of remeasuring the peso denominated monetary assets and liabilities as a result of Argentina being a highly inflationary economy. See the Notes to this reconciliation for additional detail.

C.    Reconciliation of operating income to Adjusted EBITDA, excluding depreciation and amortization expense, other income, net, noncontrolling interest, an accrual for legal matters related to the 2017 cybersecurity incident, costs related to the 2017 cybersecurity incident, realignment of internal resources, and presentation of adjusted EBITDA margin for each of the segments:

 

(1)     During the first quarter of 2019, we recorded pre-tax expenses related to the 2017 cybersecurity incident of $96.8 million ($72.3 million, net of tax), $690.0 million ($592.7 million, net of tax) for an accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident, exclusive of our legal professional services expenses, and $11.5 million ($8.8 million, net of tax) for the realignment of internal resources and other costs. In addition, we recorded a foreign currency loss of $0.3 million related to the impact of remeasuring the peso denominated monetary assets and liabilities as a result of Argentina being a highly inflationary economy.

During the first quarter of 2018, we recorded $68.7 million ($50.6 million, net of tax) for expenses related to the 2017 cybersecurity incident.

Notes to Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures

Diluted EPS attributable to Equifax is adjusted for the following items:

Acquisition-related amortization expense - We calculate this financial measure by excluding the impact of acquisition-related amortization expense and including a benefit to reflect the material cash income tax savings resulting from the income tax deductibility of amortization for certain acquired intangibles. These financial measures are not prepared in conformity with GAAP. Management believes excluding the impact of amortization expense is useful because excluding acquisition-related amortization, and other items that are not comparable allows investors to evaluate our performance for different periods on a more comparable basis. Certain acquired intangibles result in material cash income tax savings which are not reflected in earnings. Management believes that including a benefit to reflect the cash income tax savings is useful as it allows investors to better value Equifax. Management makes these adjustments to earnings when measuring profitability, evaluating performance trends, setting performance objectives and calculating our return on invested capital.

Costs related to the 2017 cybersecurity incident - We recorded $96.8 million ($72.3 million, net of tax) and $68.7 million ($50.6 million, net of tax) during the first quarter of 2019 and 2018, respectively, associated with the costs to investigate the 2017 cybersecurity incident, legal fees to respond to subsequent litigation, costs to deliver the free product offering made to all U.S. consumers and incremental costs to transform our information technology, data security, and infrastructure. Management believes excluding these charges is useful as it allows investors to evaluate our performance for different periods on a more comparable basis. Management makes these adjustments to net income when measuring profitability, evaluating performance trends, setting performance objectives and calculating our return on invested capital. This is consistent with how management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods. Costs related to the 2017 cybersecurity incident does not include losses accrued for certain legal proceedings related to the 2017 cybersecurity incident, which is described below under "accrual for legal matters related to the 2017 cybersecurity incident."

Charge related to the realignment of internal resources and other costs - During the first quarter of 2019, we recorded a restructuring charge for the realignment of internal resources and other costs of $11.5 million ($8.8 million, net of tax) which predominantly relates to the reduction of headcount and the realignment of our internal resources to support the Company's strategic objectives. Management believes excluding this charge from certain financial results provides meaningful supplemental information regarding our financial results for the three months ended March 31, 2019, since a charge of such amount is not comparable among the periods. This is consistent with how our management reviews and assesses Equifax's historical performance and is useful when planning, forecasting, and analyzing future periods.

Income tax effects of stock awards that are recognized upon vesting or settlement - During the first quarter of 2019, we recorded a tax benefit of $1.3 million related to the tax effects of deductions for stock compensation in excess of amounts recorded for compensation costs. During the first quarter of 2018, we recorded a tax benefit of $3.0 million related to the tax effects of deductions for stock compensation expense in excess of amounts recorded for compensation costs. Management believes excluding this tax effect from financial results provides meaningful supplemental information regarding our financial results for the three months ended March 31, 2019 because this amount is non-operating and relates to income tax benefits or deficiencies for stock awards recognized when tax amounts differ from recognized stock compensation cost. This is consistent with how management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

Argentina highly inflationary foreign currency adjustment - Argentina has experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina has been deemed a highly inflationary economy by accounting policymakers. During the first quarter of 2019, we recorded a $0.3 million loss as a result of remeasuring the peso denominated monetary assets and liabilities due to Argentina being highly inflationary. Management believes excluding this charge is useful as it allows investors to evaluate our performance for different periods on a more comparable basis. This is consistent with how management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

Accrual for legal matters related to the 2017 cybersecurity incident - During the first quarter of 2019, we recorded a $690.0 million ($592.7 million, net of tax) accrual for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident, exclusive of our legal and professional services expenses. While it is reasonably possible that losses exceeding the amount accrued will be incurred, it is not possible at this time to estimate the additional possible loss in excess of the amount already accrued that might result from adverse judgments, settlements, penalties or other resolution of the proceedings and investigations related to the 2017 cybersecurity incident. The ultimate amount paid on these actions, claims and investigations in excess of the amount already accrued could be material to the Company's consolidated financial condition, results of operations, or cash flows in future periods. Management believes excluding this charge from certain financial results provides meaningful supplemental information regarding our financial results for the three months ended March 31, 2019, since a charge of such an amount is not comparable among the periods. This is consistent with how our management reviews and assesses Equifax's historical performance and is useful when planning, forecasting and analyzing future periods.

Adjusted EBITDA and EBITDA margin - Management defines adjusted EBITDA as consolidated net income attributable to Equifax plus net interest expense, income taxes, depreciation and amortization, and also excludes certain one-time items. Management believes the use of adjusted EBITDA and adjusted EBITDA margin allows investors to evaluate our performance for different periods on a more comparable basis.

 

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SOURCE Equifax Inc.