10-QPeriod: Q1 FY2009

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2009

Filed April 28, 2009For Securities:EFX

Summary

Equifax Inc. reported a 10% decrease in operating revenue for the first quarter of 2009 compared to the same period in 2008, largely due to a weakening global economy and unfavorable foreign currency exchange rates. Net income attributable to Equifax also declined by 17%. The company experienced revenue decreases across most segments, particularly in U.S. Consumer Information Solutions and International, while the TALX segment showed notable growth. To counter the economic challenges, Equifax implemented expense reduction measures, including a restructuring charge of $8.4 million related to headcount reductions. Despite the revenue decline, the company maintained a strong liquidity position with substantial cash from operating activities and available credit facilities.

Financial Highlights

27 data points
Beta

Revenue

$446.60M

Net Income

$54.40M

12.2% Net Margin

EPS (Diluted)

$0.43

Cash & Equivalents

$60.00M

Free Cash Flow

$44.50M

Financial Statements
Beta
Revenue$446.60M
SG&A Expenses$122.00M
Operating Expenses$345.60M
Operating Income$101.00M
Interest Expense$14.30M
Net Income$54.40M
EPS (Basic)$0.43
EPS (Diluted)$0.43
Shares Outstanding (Basic)126.20M
Shares Outstanding (Diluted)127.40M

Key Highlights

  • 1Operating revenue declined by 10% to $452.9 million, impacted by economic weakness and currency fluctuations.
  • 2Net income attributable to Equifax decreased by 17% to $54.4 million, resulting in diluted EPS of $0.43, down from $0.50 in the prior year.
  • 3The TALX segment was a bright spot, with revenue increasing by 10% driven by The Work Number® and Tax and Talent Management Services.
  • 4A restructuring charge of $8.4 million was recorded in Q1 2009 due to headcount reductions aimed at managing expenses.
  • 5The company's liquidity remains strong, with $44.5 million in cash provided by operating activities and $428.7 million available under its Senior Credit Facility.
  • 6Capital expenditures were reduced significantly, with $15.0 million in Q1 2009 compared to $30.0 million in Q1 2008, reflecting the completion of data center improvements.
  • 7Equifax is exercising its option to purchase its headquarters building for $29.0 million in February 2010, which will be accounted for as a capital lease.

Frequently Asked Questions

The primary driver of the revenue decline was the continued weakness in the U.S., U.K., and Canadian economies, which significantly impacted demand for consumer credit services. Unfavorable foreign currency exchange rates also contributed approximately 6% of the total revenue decline.

Equifax is focusing on reducing and managing operating expenses. In the first quarter of 2009, they recorded an $8.4 million restructuring charge related to headcount reductions of approximately 300 positions. They also benefited from lower technology outsourcing costs due to a renegotiated vendor contract and reduced personnel costs.

Equifax maintains a strong liquidity position with $44.5 million in cash from operations. They have an $850 million Senior Credit Facility with $428.7 million available for borrowing as of March 31, 2009. The company's leverage ratio was 2.01, well within the covenant limit of 3.5. Approximately 64% of their debt is fixed-rate.

Equifax is involved in several legal proceedings, including class action lawsuits related to bankruptcy reporting and credit reporting practices. While some settlements are pending approval, the company believes that individually, these matters are not expected to be material to its financial condition or results of operations. However, they acknowledge that adverse judgments are possible.