10-QPeriod: Q3 FY2011

EQUIFAX INC Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 27, 2011For Securities:EFX

Summary

EQUIFAX INC. (EFX) reported its third-quarter and year-to-date results for the period ending September 30, 2011. For the third quarter, the company saw a 4% increase in operating revenue to $490.4 million, with a notable 10% rise in operating income to $121.6 million, leading to an improved operating margin of 24.8%. Net income attributable to Equifax for the quarter was $66.7 million, or $0.54 per diluted share, representing a decrease compared to the prior year primarily due to the absence of income from discontinued operations. For the nine-month period, revenue grew 5% to $1.45 billion, while operating income increased 8% to $345.3 million. However, net income attributable to Equifax for the nine months declined by 23% to $158.5 million, or $1.28 per diluted share, impacted by a significant pre-tax loss related to the merger of its Brazilian business and the absence of gains from discontinued operations seen in the prior year. The company's strategic initiatives, including revenue diversification, new product innovation, and expense management, are showing traction, particularly in driving growth in segments like North America Personal Solutions and North America Commercial Solutions. The company also continues to manage its debt effectively, with a strong liquidity position and ample availability under its Senior Credit Facility. While the overall economic environment remains challenging, Equifax is focused on leveraging its data assets and technology to enhance customer decision-making and risk management, positioning itself for future growth.

Financial Highlights

52 data points
Beta

Revenue

$490.40M

Net Income

$66.70M

13.6% Net Margin

EPS (Diluted)

$0.54

Total Assets

$3.51B

Cash & Equivalents

$102.00M

Free Cash Flow

$112.00M

Financial Statements
Beta
Revenue$490.40M
SG&A Expenses$141.70M
Operating Expenses$368.80M
Operating Income$121.60M
Interest Expense$13.70M
Net Income$66.70M
EPS (Basic)$0.55
EPS (Diluted)$0.54
Shares Outstanding (Basic)121.80M
Shares Outstanding (Diluted)123.30M

Key Highlights

  • 1Operating revenue for Q3 2011 increased by 4% to $490.4 million, compared to $473.8 million in Q3 2010.
  • 2Operating income for Q3 2011 grew by 10% to $121.6 million, resulting in an expanded operating margin of 24.8%.
  • 3Net income attributable to Equifax for Q3 2011 was $66.7 million ($0.54/share), a decrease from $76.5 million ($0.61/share) in Q3 2010, primarily due to discontinued operations in the prior year.
  • 4For the nine months ended September 30, 2011, revenue increased by 5% to $1.45 billion, and operating income rose by 8% to $345.3 million.
  • 5The merger of its Brazilian business resulted in a $10.3 million pre-tax loss and impacted the year-to-date effective tax rate.
  • 6Acquisitions, including DataVision Resources, contributed to growth in segments like TALX.
  • 7The company maintained a strong liquidity position, with $448.5 million available under its Senior Credit Facility as of September 30, 2011.

Frequently Asked Questions

The primary driver for the decrease in net income attributable to Equifax in Q3 2011 compared to Q3 2010 was the absence of income from discontinued operations, which significantly benefited the prior year's results, particularly from the gain on the sale of the Direct Marketing Services (DMS) business.

The merger of Equifax's Brazilian business with Boa Vista Serviços S.A. (BVS) in May 2011 was accounted for as a sale, resulting in a $10.3 million pre-tax loss recognized in other expense for the nine-month period. This transaction, along with a tax expense of $17.5 million, contributed to an increase in the year-to-date effective income tax rate and a decrease in overall net income for the nine-month period.

Equifax maintains a strong liquidity position, generating substantial cash from operations. As of September 30, 2011, the company had $448.5 million available under its Senior Credit Facility, which was extended to mature in February 2015. Management expects operating cash flows to be sufficient for working capital, capital expenditures, interest, and dividend payments.

While Equifax is involved in various legal proceedings, the company states that it believes it has strong defenses and will contest many matters. It does not believe that these litigation matters will be individually material to its financial condition or results of operations. A California bankruptcy litigation settlement was preliminarily approved, with appeals pending. Other proceedings are ongoing, and while adverse outcomes are possible, they are not expected to be individually material.