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ATLANTA, July 22, 2015 /PRNewswire/ -- Equifax Inc. (NYSE: EFX) today announced financial results for the quarter ended June 30, 2015.

"Equifax continues to benefit from our unique diversified business model, high levels of execution and new product innovation," said Richard F. Smith, Equifax's Chairman and Chief Executive Officer. "Interest in our Decision 360 solutions is getting stronger as New Product Innovation 2.0 and our Enterprise Growth Initiatives deliver new and compelling insights that help our customers make better decisions. We anticipate a strong performance in 2015 and feel good about the outlook for 2016."

Financial Results Summary

The company reported revenue of $678.1 million in the second quarter of 2015, a 10 percent increase from the second quarter of 2014 on a reported basis and 14 percent in local currency. Diluted EPS attributable to Equifax was $0.92, up 23 percent from the second quarter of 2014. Adjusted EPS attributable to Equifax was $1.15, up 20 percent from the second quarter of 2014, after adjusting for an impairment in our cost method investment, an unanticipated income tax benefit, and acquisition-related amortization expense. Operating margin was 27.8 percent, up 50 points from the second quarter of 2014. 

USIS continues to deliver strong, broad-based growth driven by Decision 360 initiatives, Enterprise Selling and mortgage

• Total revenue was $315.7 million in the second quarter of 2015 compared to $281.1 million in the second quarter of 2014, an increase of 12 percent. Operating margin for USIS was 42.1 percent in the second quarter of 2015 compared to 39.5 percent in the second quarter of 2014.
• Online Information Solutions revenue was $232.9 million, up 13 percent from the second quarter of 2014.
• Mortgage Solutions revenue was $33.1 million, up 20 percent from the second quarter of 2014.
• Financial Marketing Services revenue was $49.7 million, up 4 percent when compared to the second quarter of 2014.

International drove strong, double digit local currency growth primarily through new product innovation and debt management services

• Total revenue was $148.4 million in the second quarter of 2015, a 1 percent decrease from the second quarter of 2014 and an 11 percent increase on a local currency basis. Operating margin for International was 19.9 percent in the second quarter of 2015 compared to 21.9 percent in the second quarter of 2014.
• Europe revenue was $62.5 million, down 1 percent from the second quarter of 2014 and up 12 percent on a local currency basis.
• Latin America revenue was $50.9 million, up 6 percent from the second quarter of 2014 and up 18 percent on a local currency basis.
• Canada revenue was $35.0 million, down 10 percent from the second quarter of 2014 and up 2 percent on a local currency basis.

Workforce Solutions delivered very strong, double digit growth driven by the Affordable Care Act initiatives and Verification Services

• Total revenue was $146.3 million in the second quarter of 2015, a 23 percent increase from the second quarter of 2014. Operating margin for Workforce Solutions was 38.3 percent in the second quarter of 2015 compared to 33.9 percent in the second quarter of 2014.
• Verification Services revenue was $94.0 million, up 30 percent when compared to the second quarter of 2014.
• Employer Services revenue was $52.3 million, up 11 percent when compared to the second quarter of 2014.

Personal Solutions delivered solid growth exceeding the upper end of their target range driven by double digit growth in Indirect and International, in addition to breach activity

• Revenue was $67.7 million, a 7 percent increase from the second quarter of 2014 and up 8 percent on a local currency basis.
• Operating margin was 27.6 percent compared to 30.9 percent in the second quarter of 2014.

Third Quarter 2015 and Full Year 2015 Outlook

For the third quarter, we expect revenue between $655 and $670 million, or up approximately 10% to 12% over Q3 2014, on a local currency basis. Adjusted EPS, is expected to be between $1.08 and $1.11, up 10% to 13% year-over-year, on a local currency basis.  Foreign exchange is expected to negatively impact revenue growth by 3% and Adjusted EPS by $0.03.

For the full year, based on the current level of domestic and international business activity, we anticipate revenue between $2.645 and $2.670 billion, and Adjusted EPS between $4.38 and $4.42.  Given the recent strength of the US dollar, at current exchange rates, we expect foreign currency to negatively impact 2015 revenue growth by 3%, and Adjusted EPS by approximately $0.10.  On a local currency basis, revenue is expected to grow 11% to 12% in 2015.  On a local currency basis, Adjusted EPS is expected to grow 15% to 16%.

About Equifax

Equifax is a global leader in consumer, commercial and workforce information solutions that provides businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 600 million consumers and 81 million businesses worldwide.  The company's significant investments in differentiated data, its expertise in advanced analytics to explore and develop new multi-source data solutions, and its leading-edge proprietary technology enable it to create and deliver unparalleled customized insights that enrich both the performance of businesses and the lives of consumers.

Headquartered in Atlanta, Equifax operates or has investments in 19 countries and is a member of Standard & Poor's (S&P) 500® Index.  Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. In 2014, Equifax was nominated as a Bloomberg BusinessWeek Top 50 company; its CIO was listed as one of the top 100 by CIO magazine; the company was named to the Fintech 100 list, was recognized as a top 20 company to work for by the Atlanta Journal and Constitution, and was recognized as a 2015 InformationWeek Elite 100 Winner. For more information, please visit www.equifax.com.

Earnings Conference Call and Audio Webcast

In conjunction with this release, Equifax will host a conference call tomorrow, July 23, 2015, 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 diluted adjusted EPS attributable to Equifax which (to the extent noted above for different periods) excludes acquisition-related amortization expense, an impairment of our cost method investment in Brazil, an unanticipated state income tax benefit, and the adjustment of redeemable noncontrolling interest that reflects a redemption value in excess of fair value. 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/GAAP/Non-GAAP Measures" on our website at www.equifax.com.

Forward-Looking Statements

This release contains forward-looking statements or 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, 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 adverse or uncertain economic conditions and changes in credit and financial markets; risks relating to illegal third party efforts to access data or other cybersecurity or physical security breaches; changes in, and the effects of, laws and regulations and government policies governing 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., supervision by the U.K. Financial Conduct Authority of our debt collections services and core credit reporting businesses in the U.K. (including the requirement that we apply for, by June 30, 2015, which has been submitted and is pending, and March 31, 2016, respectively, and obtain certain licenses and authorizations to carry on these businesses); 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 CFPB, State Attorneys General 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, 2014, 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.

 

 

 

 

 

 

 

 

 

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:

                Impairment of our cost method investment in Brazil - During the second quarter of 2015, we recorded a charge of $14.8 million ($9.8 million, net of tax) related to the impairment of our cost method investment in Brazil.  Management believes excluding this charge from certain financial results provides meaningful supplemental information regarding our financial results for the three months ended June 30, 2015, as compared to the corresponding period in 2014, 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.

                State income tax benefit  - During the second quarter of 2015, we recorded an unanticipated state income tax benefit of $8.6 million, due to a change in tax law.  Management believes excluding this charge from certain financial results provides meaningful supplemental information regarding our financial results for the three months ended June 30, 2015, as compared to the corresponding period in 2014, because 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.

                Acquisition-related amortization expense, net of tax - 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.

                Redeemable noncontrolling interest adjustment- During the first half of 2015, there was not an adjustment of redeemable noncontrolling interest as the redemption value is not in excess of fair value.  Management believes excluding this charge 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.

 

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SOURCE Equifax Inc.