10-KPeriod: FY2017

EQUIFAX INC Annual Report, Year Ended Dec 31, 2017

Filed March 1, 2018For Securities:EFX

Summary

Equifax Inc. (EFX) filed its 2017 Annual Report (10-K) on March 1, 2018, detailing its business operations and financial performance. The report highlights Equifax's position as a global provider of information solutions, serving a diverse client base across various industries. A significant portion of the report is dedicated to the 2017 cybersecurity incident, which involved the theft of personally identifiable information of U.S., Canadian, and U.K. consumers. This incident led to substantial remediation costs, numerous lawsuits, and governmental investigations. Financially, the company reported a 7% increase in operating revenue to $3.36 billion in 2017, driven by strong performance in its International and Workforce Solutions segments, despite the negative impact of the cybersecurity incident on certain segments. The company incurred significant expenses related to the incident, impacting its operating margin. The report also details the company's liquidity position, capital expenditures, and financing activities, including debt management and share repurchases. Investors should note the ongoing legal and regulatory scrutiny stemming from the cybersecurity breach, which will likely continue to influence future financial results and operational focus.

Financial Highlights

53 data points
Beta

Revenue

$3.36B

Net Income

$587.30M

17.5% Net Margin

EPS (Diluted)

$4.83

Total Assets

$7.23B

Cash & Equivalents

$336.40M

Free Cash Flow

$816.00M

Financial Statements
Beta
Revenue$3.36B
SG&A Expenses$1.03B
Operating Expenses$2.53B
Operating Income$831.70M
Interest Expense$92.80M
Net Income$587.30M
EPS (Basic)$4.89
EPS (Diluted)$4.83
Shares Outstanding (Basic)120.10M
Shares Outstanding (Diluted)121.50M

Key Highlights

  • 1In 2017, Equifax reported operating revenue of $3.36 billion, a 7% increase from 2016, primarily driven by growth in the International and Workforce Solutions segments.
  • 2The company incurred significant expenses ($164.0 million pretax, $114.0 million net) related to the 2017 cybersecurity incident, impacting its operating margin and leading to ongoing legal and governmental investigations.
  • 3The USIS segment remains the largest, with revenue growth of 2% in 2017, supported by mortgage and financial verticals, though impacted by the cybersecurity incident.
  • 4International revenue grew 16% in 2017, driven by broad-based organic growth and the acquisition of Veda, with strong performance across all regions.
  • 5Workforce Solutions demonstrated robust growth with a 9% revenue increase in 2017, primarily due to strong performance in Verification Services.
  • 6Global Consumer Solutions revenue was flat in 2017, impacted by the cessation of U.S. consumer business advertising following the cybersecurity incident.
  • 7The company was subject to numerous lawsuits and governmental investigations arising from the 2017 cybersecurity incident, with potential for material financial impact.
  • 8Equifax's credit rating at year-end 2017 was BBB+ (negative outlook) from S&P and Baa1 (stable outlook) from Moody's.

Frequently Asked Questions

The 2017 cybersecurity incident resulted in significant expenses for Equifax, including costs for investigation, remediation, legal services, and providing free credit monitoring services to affected consumers. These expenses negatively impacted the company's operating margin and contributed to increased selling, general, and administrative expenses.

While overall revenue grew by 7% to $3.36 billion, the cybersecurity incident negatively impacted revenue in the U.S. Information Solutions and Global Consumer Solutions segments. The company specifically noted a decline in its U.S. direct-to-consumer business due to ceasing advertising after the incident.

Equifax is cooperating with numerous federal, state, and foreign governmental agencies and officials investigating the incident. The company is also defending itself against numerous lawsuits. Management expects significant legal and other professional services expenses to continue in future periods related to these matters.

Equifax has undertaken significant steps to enhance its data security infrastructure, including engaging independent cybersecurity firms and consulting firms to review its framework and controls. The company expects to incur additional significant costs for these ongoing security enhancements.