10-QPeriod: Q1 FY2012

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 26, 2012For Securities:EFX

Summary

Equifax Inc. (EFX) reported solid financial results for the first quarter ended March 31, 2012, demonstrating significant revenue and net income growth compared to the prior year period. The company saw an 11% increase in consolidated operating revenue, driven by strong performance in its U.S. Consumer Information Solutions and TALX Workforce Solutions segments. This top-line growth, coupled with effective cost management and the deconsolidation of its Brazilian business, led to an impressive 25% increase in net income attributable to Equifax. The company also highlighted a strengthening balance sheet and robust cash flow from operations, providing flexibility for strategic investments and shareholder returns. Key financial metrics indicate positive momentum, with diluted earnings per share increasing by 27% to $0.58. The company's strategy of revenue diversification, investment in new products, international expansion, and operational efficiency appears to be yielding positive results. Equifax also maintained a strong liquidity position with significant availability under its senior credit facility. Investors can take comfort in the company's continued growth trajectory and its proactive approach to managing its business in a dynamic economic environment.

Financial Highlights

49 data points
Beta

Revenue

$505.90M

Net Income

$71.50M

14.1% Net Margin

EPS (Diluted)

$0.58

Total Assets

$3.52B

Cash & Equivalents

$132.70M

Free Cash Flow

$48.30M

Financial Statements
Beta
Revenue$505.90M
SG&A Expenses$149.80M
Operating Expenses$377.60M
Operating Income$128.30M
Interest Expense$13.80M
Net Income$71.50M
EPS (Basic)$0.60
EPS (Diluted)$0.58
Shares Outstanding (Basic)120.00M
Shares Outstanding (Diluted)122.40M

Key Highlights

  • 1Consolidated operating revenue increased by 11% to $522.7 million, compared to $472.6 million in the prior year's first quarter.
  • 2Net income attributable to Equifax grew by 25% to $71.5 million, up from $57.3 million in the same period last year.
  • 3Diluted earnings per share (EPS) rose by 27% to $0.58, compared to $0.46 in the first quarter of 2011.
  • 4The U.S. Consumer Information Solutions segment showed robust revenue growth of 20%, reaching $217.7 million.
  • 5TALX Workforce Solutions segment also reported strong revenue growth of 14%, totaling $113.7 million.
  • 6Cash provided by operating activities significantly increased to $48.3 million, up from $23.1 million in the prior year, indicating improved operational cash generation.
  • 7The company maintained a strong liquidity position with $498.6 million available under its senior credit facility and no outstanding borrowings at the end of the quarter.

Frequently Asked Questions

Equifax's revenue growth was primarily driven by strong performance in its U.S. Consumer Information Solutions (USCIS) and TALX Workforce Solutions segments. USCIS saw a 20% increase, fueled by strong growth in Online Consumer Information Solutions (OCIS) and Mortgage Solutions, benefiting from increased mortgage refinancing activity. TALX Workforce Solutions grew 14%, largely due to a 37% surge in its Verification Services, particularly mortgage-related verifications.

The deconsolidation of Equifax's Brazilian business, which occurred in the second quarter of 2011, negatively impacted reported revenue by $19.3 million in the first quarter of 2012 compared to the prior year. However, the company notes that excluding Brazil, overall revenue increased by 15%, highlighting the underlying strength of its other operations. The deconsolidation also had a positive impact on operating margins in the International segment.

Equifax anticipates continued modest to moderate economic growth and is focusing on key strategic initiatives. These include diversifying revenues through new product innovation and decisioning solutions, leveraging its data assets, enhancing technology platforms, intensifying sales focus on key accounts, expanding in international markets like Russia, India, and Brazil, and managing expenses through process improvement. The company expects 6-8% organic revenue growth and 1-2% from acquisitions, with earnings per share growing at a faster rate.

Equifax reported a net repayment of short-term borrowings, reducing its commercial paper outstanding. The company maintained a strong liquidity position with $498.6 million available under its senior credit facility and no outstanding borrowings at the end of the quarter. Approximately 71% of its debt was fixed-rate. The company's leverage ratio was 1.51, well within its covenant of not more than 3.5, indicating a sound financial position.