10-QPeriod: Q2 FY2005

EQUIFAX INC Quarterly Report for Q2 Ended Jun 30, 2005

Filed August 4, 2005For Securities:EFX

Summary

Equifax Inc. reported its financial results for the second quarter and the first six months ended June 30, 2005. The company demonstrated robust revenue growth, with consolidated revenue up 15% for the quarter and 13% for the year-to-date period. This growth was primarily driven by strong performance in North America Information Services and significant expansion in Latin America. Despite revenue increases, income from continuing operations saw a decline due to increased general corporate expenses and changes in other income, net, notably the absence of a significant gain on investment sale recorded in the prior year. The company continues to invest in its growth strategy, highlighted by the acquisition of APPRO Systems, Inc. and ongoing compliance efforts related to the FACT Act, which incurred substantial costs but also generated regulatory recovery fees. From an investor perspective, the company's sustained revenue growth across its core segments, particularly in Information Services, is a positive indicator. However, the decrease in net income requires closer examination, especially concerning rising corporate expenses and the transition from prior-year one-time gains. Management is focused on leveraging its data and analytical capabilities to drive future growth, with particular emphasis on expanding its Personal Solutions offerings and enhancing its technology platforms. Investors should monitor the impact of FACT Act compliance costs and the progress in integrating recent acquisitions.

Key Highlights

  • 1Consolidated revenue increased by 15% year-over-year for the second quarter and 13% for the first six months of 2005.
  • 2North America Information Services revenue saw strong growth, up 17% for the quarter and 14% year-to-date.
  • 3Latin America operations showed significant acceleration, with revenue up 40% for the quarter and 32% year-to-date.
  • 4Income from continuing operations decreased by 19% for the quarter and 6% year-to-date, influenced by higher general corporate expenses and reduced other income.
  • 5The company incurred approximately $24.8 million in FACT Act compliance costs from January 2004 through June 30, 2005.
  • 6Acquired APPRO Systems, Inc. for approximately $91.5 million in March 2005 to enhance technology capabilities.
  • 7Increased the quarterly dividend per share from $0.03 to $0.04 in March 2005.

Frequently Asked Questions

The primary driver of revenue growth was a strong performance across all segments, particularly North America Information Services, which increased revenue by 17% to $205.8 million. Latin America also showed significant growth, up 40% to $30.5 million. The FACT Act regulatory recovery fee contributed approximately 3% to the consolidated revenue growth.

The decline in income from continuing operations was primarily due to an increase in general corporate expenses, which rose from $14.4 million to $21.4 million for the quarter. Additionally, 'Other income, net' decreased significantly from $39.7 million in the prior year's quarter to $2.4 million in the current quarter, largely due to the absence of a $36.8 million gain from the sale of an investment in Intersections Inc. that occurred in the second quarter of 2004.

Equifax incurred approximately $24.8 million in FACT Act compliance costs from January 1, 2004, through June 30, 2005, with $11.7 million classified as capital expense and $13.1 million as operating expense. Net of regulatory recovery fees of approximately $13.5 million, the net unrecovered investment in FACT Act compliance was about $11.3 million as of June 30, 2005.

Equifax acquired APPRO Systems, Inc. in March 2005 for approximately $91.5 million to strengthen its enabling technologies capabilities in North America. Additionally, during the first six months of 2005, the company acquired the credit files and related businesses of two independent credit reporting agencies in the U.S. and Canada for a total cash purchase price of $111.0 million.