10-QPeriod: Q1 FY2001

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2001

Filed May 14, 2001For Securities:EFX

Summary

Equifax Inc. reported solid financial results for the first quarter ended March 31, 2001. Revenue increased by 6.4% year-over-year, reaching $479.7 million. This growth was primarily driven by the acquisition of Consumer Information Services (CIS) and continued expansion in both Information Services and Payment Services segments, although offset by divestitures and foreign currency headwinds. Net income saw a healthy 13.9% increase to $48.1 million, translating to diluted earnings per share (EPS) of $0.35, up from $0.31 in the prior year's quarter. Operationally, the company demonstrated improved profitability with a consolidated operating margin increase to 20.6% from 19.6%, attributed to a favorable product mix and cost containment efforts. A significant strategic development is the planned spin-off of the Payment Services segment, expected in the third quarter of 2001, which aims to create two focused, independent public companies to enhance growth opportunities. The company also noted moderate capital expenditures and continued availability under its revolving credit facility, though potential future financing needs related to an option with Computer Sciences Corporation (CSC) were acknowledged.

Key Highlights

  • 1Revenue increased by 6.4% to $479.7 million for Q1 2001, driven by acquisitions and segment growth.
  • 2Net income rose by 13.9% to $48.1 million, with diluted EPS increasing to $0.35 from $0.31 year-over-year.
  • 3Consolidated operating margins improved to 20.6% due to better product mix and cost controls.
  • 4Planned spin-off of the Payment Services segment is anticipated in the third quarter of 2001 to create two independent entities.
  • 5North American Information Services revenue grew 11.2%, led by strong performance in Credit Information.
  • 6Payment Services revenue increased by 9.7%, with notable contributions from Card Solutions and Check Solutions.
  • 7The company maintained significant liquidity, with $374 million available under its revolving credit facility as of March 31, 2001.

Frequently Asked Questions

Equifax reported a 6.4% revenue increase for the first quarter of 2001, driven by acquisitions and underlying segment growth. While divestitures and foreign currency fluctuations posed some challenges, the core Information Services and Payment Services segments showed positive momentum. The company's strategic plan to spin off its Payment Services segment in the third quarter of 2001 suggests a future structure of two focused companies, each potentially poised for tailored growth.

As of March 31, 2001, Equifax had approximately $374 million available under its $750 million revolving credit facility. While the company acknowledges the potential need for additional financing if Computer Sciences Corporation (CSC) exercises its option to sell its credit reporting business, management believes it can arrange alternative financing sources within the required notice period. The company also has a mix of fixed and variable rate debt, with ongoing interest rate swap arrangements to manage interest rate risk.

The strengthening U.S. dollar negatively impacted revenue by approximately $10.9 million, or 2.4%, in the first quarter of 2001. Specifically, weakening local currencies in Brazil and the U.K. affected revenue and operating income in the Equifax Latin America and Equifax Europe segments, respectively. While the company generally does not hedge against currency risk due to cost, it partially hedges certain intercompany balances by denominating portions of its revolving credit facility in those currencies.

Equifax announced a plan to separate into two independent public companies, with the Payment Services segment being spun off to shareholders via a tax-free stock dividend. This transaction is expected to occur in the third quarter of 2001. The goal is to create two distinct companies, each with its own management and board focused on maximizing growth opportunities within their respective markets, allowing for more tailored strategies in acquisitions, alliances, and resource allocation.