10-QPeriod: Q3 FY2008

EQUIFAX INC Quarterly Report for Q3 Ended Sep 30, 2008

Filed October 28, 2008For Securities:EFX

Summary

Equifax Inc. reported its third quarter 2008 financial results, showing a slight year-over-year decline in total operating revenue to $484.1 million from $492.5 million. This decrease was primarily attributed to economic pressures affecting the U.S. Consumer Information Solutions (USCIS) segment. Despite revenue challenges, net income saw a modest increase to $72.3 million from $67.9 million in the prior year's quarter, driven by a significant income tax benefit. The company also implemented a business realignment initiative incurring $16.8 million in restructuring and asset write-down charges, aimed at cost management and strategic focus. For the first nine months of 2008, revenue grew by 10% to $1,489.1 million, largely propelled by the acquisition of TALX Corporation. Net income for this period also edged up to $208.8 million from $207.0 million. The company maintained a strong cash flow from operations and ended the quarter with $69.0 million in cash and cash equivalents. Despite a challenging economic climate, Equifax continues to focus on expense management and strategic growth initiatives, including international expansion.

Key Highlights

  • 1Total operating revenue for Q3 2008 was $484.1 million, a 2% decrease compared to $492.5 million in Q3 2007, mainly due to economic weakness impacting the USCIS segment.
  • 2Net income for Q3 2008 increased by 6% to $72.3 million ($0.56 per diluted share) from $67.9 million ($0.48 per diluted share) in Q3 2007, boosted by a $14.6 million income tax benefit.
  • 3For the nine months ended September 30, 2008, revenue increased by 10% to $1,489.1 million, significantly influenced by the acquisition of TALX Corporation.
  • 4The company recorded $16.8 million in restructuring and asset write-down charges in Q3 2008 as part of a business realignment strategy to manage expenses and focus on strategic objectives.
  • 5Cash provided by operating activities for the nine months ended September 30, 2008, increased by 19% to $324.8 million, indicating strong operational cash generation.
  • 6Equifax repurchased 1.8 million shares of its common stock during Q3 2008 for $62.8 million.
  • 7The company's effective income tax rate decreased significantly in Q3 2008 (19.9%) and for the nine months (31.5%) compared to the prior year periods, primarily due to the tax benefit recognized.

Frequently Asked Questions

The primary driver of the revenue decline in the third quarter of 2008 was the continued weakness in the U.S. and U.K. economies, which significantly impacted demand for services in the U.S. Consumer Information Solutions (USCIS) segment and the company's U.K. businesses. This was partially offset by strength in Latin America and the TALX segment's 'The Work Number' service.

The acquisition of TALX Corporation, completed in May 2007, had a significant positive impact on revenue, contributing $124.1 million for the first nine months of 2008 and $3.0 million for the third quarter of 2008. It also contributed to increased operating expenses, depreciation, and amortization.

Equifax generated substantial cash from operations and maintained a strong financial position. The company believes that funds from operations, available cash, and its credit facilities will be sufficient to finance its anticipated working capital, capital expenditures, debt payments, dividends, and potential stock repurchases for the foreseeable future. However, it acknowledges potential impacts from the volatile credit markets.

In the third quarter of 2008, Equifax undertook a business realignment, resulting in $16.8 million of restructuring and asset write-down charges. These charges included $10.3 million for headcount reductions, $4.1 million for contractual costs, and $2.4 million for software write-downs. This initiative was aimed at reducing expenses and focusing resources on strategic objectives.