10-QPeriod: Q3 FY2005

EQUIFAX INC Quarterly Report for Q3 Ended Sep 30, 2005

Filed November 7, 2005For Securities:EFX

Summary

Equifax Inc. (EFX) reported solid financial performance for the third quarter and the first nine months of 2005, demonstrating robust revenue growth and improved profitability. Total revenue for the third quarter increased by 17% year-over-year to $375.3 million, driven by strong performance in North America's Information Services and Latin America segments, along with regulatory recovery fees related to the FACT Act. For the nine-month period, revenue grew 14% to $1,082.1 million. The company's operational efficiency remains strong, with operating margins holding steady at 29% for both the quarter and the year-to-date period. Diluted earnings per share from continuing operations saw an increase to $0.47 for the quarter and $1.39 for the nine months, up from $0.40 and $1.36 respectively in the prior year. Strategic acquisitions, including BeNow Inc. and APPRO Systems, Inc., are contributing to growth, particularly within the Marketing Services and North America Information Services businesses. Equifax continues to strengthen its financial position, with operating cash flow showing a healthy increase.

Key Highlights

  • 1Total revenue for Q3 2005 increased 17% to $375.3 million, and 14% for the first nine months to $1,082.1 million, driven by segment growth and FACT Act recovery fees.
  • 2Operating income grew by 12% for Q3 to $107.3 million and by 14% for the first nine months to $316.0 million.
  • 3Diluted EPS from continuing operations increased to $0.47 for Q3 and $1.39 for the nine months, compared to $0.40 and $1.36 in the prior year.
  • 4Strategic acquisitions, including BeNow Inc. and APPRO Systems, Inc., are integrating well and contributing to revenue growth, particularly in North America Information Services and Marketing Services.
  • 5The company experienced significant growth in its Latin America segment, with revenue up 47% for the quarter and 37% year-to-date.
  • 6Operating cash flow increased by 13% for the first nine months of 2005, reaching $231.8 million, indicating strong operational cash generation.
  • 7Goodwill increased significantly to $832.7 million due to recent acquisitions, and the company performed its goodwill impairment test as of September 30, 2005, finding no impairment at that time.

Frequently Asked Questions

Revenue growth in the third quarter of 2005 was primarily driven by strong performance in Equifax's North America Information Services and Latin America segments. Additionally, regulatory recovery fees related to the FACT Act contributed to the revenue increase.

The acquisitions of BeNow Inc. and APPRO Systems, Inc. are contributing positively to Equifax's growth. BeNow strengthened the Marketing Services business, while APPRO enhanced capabilities in North America Information Services. These acquisitions are reflected in the overall revenue increases.

Equifax Europe's revenue saw a slight decrease in the third quarter, with overall performance reflecting a soft European economic environment. However, operating income for the segment improved due to cost savings initiatives.

Equifax maintains multiple sources of liquidity, including operating cash flows and revolving credit facilities. The company redeemed $250 million of its 6.3% Notes in July 2005 using a combination of its U.S. senior unsecured revolving credit agreement and its trade receivables-backed revolving credit facility. The company believes its existing and potential financing sources are sufficient to meet its obligations.