10-QPeriod: Q3 FY2009

EQUIFAX INC Quarterly Report for Q3 Ended Sep 30, 2009

Filed October 28, 2009For Securities:EFX

Summary

Equifax Inc. (EFX) reported its third-quarter 2009 financial results, indicating a challenging operating environment characterized by a continued global economic slowdown. For the three months ended September 30, 2009, total operating revenue decreased by 7% year-over-year to $451.9 million, and net income attributable to Equifax declined by 17% to $59.7 million, or $0.47 per diluted share, compared to $72.3 million, or $0.56 per diluted share, in the prior year quarter. The decline in revenue was primarily driven by weakness in the U.S. Consumer Information Solutions and International segments, exacerbated by unfavorable foreign currency exchange rates. Despite the revenue challenges, Equifax demonstrated resilience through expense management and the strong performance of its TALX segment, which provides employment and income verification services and saw a 13% increase in revenue. The company also benefited from lower interest expenses due to a reduced debt level. Equifax maintained a solid cash flow from operations, amounting to $268.8 million for the nine-month period, and ended the quarter with $77.7 million in cash and cash equivalents. Management's strategic focus remains on diversifying revenue streams, innovating new products, expanding internationally, and controlling costs to navigate the economic downturn.

Financial Highlights

28 data points
Beta

Revenue

$425.00M

Net Income

$59.70M

14.0% Net Margin

EPS (Diluted)

$0.47

Cash & Equivalents

$77.70M

Free Cash Flow

$123.20M

Financial Statements
Beta
Revenue$425.00M
SG&A Expenses$111.20M
Operating Expenses$325.00M
Operating Income$100.00M
Interest Expense$14.10M
Net Income$59.70M
EPS (Basic)$0.47
EPS (Diluted)$0.47
Shares Outstanding (Basic)126.40M
Shares Outstanding (Diluted)128.00M

Key Highlights

  • 1Operating revenue for the third quarter of 2009 was $451.9 million, a 7% decrease from $484.1 million in the third quarter of 2008, reflecting a challenging economic environment.
  • 2Net income attributable to Equifax for the third quarter of 2009 decreased by 17% to $59.7 million ($0.47 per diluted share) from $72.3 million ($0.56 per diluted share) in the prior year period.
  • 3The TALX segment showed robust growth with a 13% increase in operating revenue to $83.1 million, driven by The Work Number employment verification services and Tax and Talent Management services.
  • 4U.S. Consumer Information Solutions (USCIS), the largest segment, experienced a 9% revenue decline to $200.7 million, impacted by economic weakness, though Mortgage Solutions showed strong growth (+35%).
  • 5International revenue decreased by 13% to $114.9 million, primarily due to unfavorable foreign currency translation effects and global economic weakness.
  • 6Cash provided by operating activities for the nine months ended September 30, 2009, was $268.8 million, demonstrating continued strong cash generation despite the economic challenges.
  • 7The company announced the acquisition of IXI Corporation on October 27, 2009, for $124 million to enhance its U.S. Consumer Information Solutions segment.

Frequently Asked Questions

The primary drivers of the revenue decline were the continued global economic weakness impacting demand for U.S. Consumer Information Solutions and International business units, compounded by unfavorable foreign currency exchange rates. Specifically, the U.S. Consumer Information Solutions segment (excluding the growth in Mortgage Solutions) and the International segment saw significant decreases in revenue.

Equifax focused on expense management, leading to a decrease in total operating expenses by 8% in the third quarter of 2009 compared to the prior year. This was achieved through lower cost of services (partially due to foreign currency impact and outsourcing cost reductions), reduced selling, general and administrative expenses (benefiting from previous restructuring charges and lower personnel costs), and relatively stable depreciation and amortization.

Management acknowledges the challenging operating environment but is focused on revenue diversification through new product innovation, technology, international expansion, and strategic acquisitions like IXI Corporation. The company aims to maintain attractive operating margins and earnings performance through ongoing expense management and efficiency improvements. The outlook suggests continued reliance on cost containment measures to offset revenue pressures until a broader economic recovery takes hold.

Equifax has reduced its total debt outstanding. For the nine months ended September 30, 2009, net short-term borrowings increased while net borrowings under long-term revolving credit facilities decreased, reflecting a shift towards commercial paper. The company had $566.7 million available under its Senior Credit Facility at quarter-end. Equifax generated $268.8 million in cash from operations for the nine-month period and ended the quarter with $77.7 million in cash and cash equivalents, indicating a solid liquidity position.