10-QPeriod: Q2 FY2011

EQUIFAX INC Quarterly Report for Q2 Ended Jun 30, 2011

Filed July 28, 2011For Securities:EFX

Summary

Equifax Inc. reported a decrease in net income attributable to Equifax for the three and six months ended June 30, 2011, compared to the prior year. This decline was largely driven by a significant pre-tax loss of $10.3 million associated with the merger of its Brazilian business into Boa Vista Servicos S.A., which was accounted for as a sale. Despite this, the company saw revenue growth across most segments, with notable increases in International and North America Personal Solutions. Operationally, the company's core revenue streams showed resilience, with U.S. Consumer Information Solutions and International segments experiencing growth. However, the TALX segment saw a slight revenue decline in the quarter due to reduced demand in specific areas. Equifax also highlighted strategic initiatives focused on revenue diversification, new product innovation, and cost management. The company maintained a strong liquidity position, with ample availability under its Senior Credit Facility.

Financial Highlights

52 data points
Beta

Revenue

$487.10M

Net Income

$34.50M

7.1% Net Margin

EPS (Diluted)

$0.28

Total Assets

$3.49B

Cash & Equivalents

$108.70M

Free Cash Flow

$123.90M

Financial Statements
Beta
Revenue$487.10M
SG&A Expenses$142.70M
Operating Expenses$372.50M
Operating Income$114.60M
Interest Expense$13.70M
Net Income$34.50M
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)122.80M
Shares Outstanding (Diluted)124.60M

Key Highlights

  • 1Consolidated operating revenue increased by 6% for both the three and six months ended June 30, 2011, compared to the prior year.
  • 2Net income attributable to Equifax decreased significantly by 52% for the three months and 28% for the six months ended June 30, 2011, primarily due to a $10.3 million pre-tax loss from the Brazilian business merger.
  • 3The International segment showed robust revenue growth of 11% for the quarter and 10% year-to-date, driven by Europe and Canada.
  • 4North America Personal Solutions also delivered strong revenue growth of 12% for both periods.
  • 5The company's effective income tax rate significantly increased to 59.4% for the quarter (from 35.3% in 2010) and 48.4% year-to-date (from 36.4% in 2010), largely due to $17.5 million in tax expense related to the Brazilian transaction.
  • 6Cash provided by operating activities increased by $8.1 million to $147.0 million for the six months ended June 30, 2011.
  • 7Equifax repurchased $31.3 million of its stock in the first six months of 2011, a decrease from $64.8 million in the same period of 2010, and increased its quarterly dividend to $0.16 per share.
  • 8The company extended its Senior Credit Facility maturity to February 2015, with $498.4 million available for borrowing as of June 30, 2011.

Frequently Asked Questions

The primary driver for the decrease in net income attributable to Equifax was a pre-tax loss of $10.3 million recognized during the second quarter of 2011 related to the merger of its Brazilian business with Boa Vista Servicos S.A. This transaction was accounted for as a sale, and also incurred significant tax expenses.

Overall revenue grew by 6% for both the quarter and year-to-date periods. The U.S. Consumer Information Solutions segment grew 5%, International grew 11% (quarterly) and 10% (year-to-date), and North America Personal Solutions grew 12% for both periods. However, the TALX segment experienced a 3% revenue decline in the quarter due to reduced demand in specific areas, though it saw slight growth year-to-date.

Equifax maintains a strong liquidity position. The company generated $147.0 million in cash from operating activities for the first six months of 2011. Its Senior Credit Facility, extended to February 2015, had $498.4 million available for borrowing as of June 30, 2011. Total debt decreased to $970.1 million from $990.2 million at the end of 2010, with approximately 70% of its debt being fixed-rate.

Yes, the effective income tax rate increased significantly. For the three months ended June 30, 2011, it was 59.4% (up from 35.3% in 2010) and for the six months it was 48.4% (up from 36.4% in 2010). This increase was primarily due to $17.5 million in tax expense related to the Brazilian Transaction and higher foreign income tax rates.