10-QPeriod: Q1 FY2013

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2013

Filed April 25, 2013For Securities:EFX

Summary

Equifax Inc. reported a strong first quarter for 2013, with total operating revenue increasing by 12% year-over-year to $566.5 million. This growth was primarily driven by the acquisition of CSC Credit Services in late 2012 and robust activity in the mortgage market, which benefited the U.S. Consumer Information Solutions segment. The company also saw significant contributions from its Workforce Solutions segment, which experienced 14% revenue growth. Net income attributable to Equifax surged by 41% to $101.1 million, or $0.82 per diluted share, bolstered by a gain from divested businesses. The company reaffirmed its positive outlook, expecting continued organic revenue growth between 6-8% and earnings per share growth exceeding revenue growth. Financially, Equifax maintained a solid liquidity position, with cash provided by operating activities increasing by 37% to $66.3 million. The company also benefited from a favorable divestiture, receiving $43.7 million in cash. Despite increased interest expenses due to recent debt issuance to fund acquisitions, the company's leverage ratio remained well within its covenants, indicating continued financial strength and flexibility. Management highlighted ongoing investments in product innovation, technology, and strategic acquisitions as key drivers for future growth.

Financial Highlights

51 data points
Beta

Revenue

$566.50M

Net Income

$101.10M

17.8% Net Margin

EPS (Diluted)

$0.82

Total Assets

$4.39B

Cash & Equivalents

$107.60M

Free Cash Flow

$66.30M

Financial Statements
Beta
Revenue$566.50M
SG&A Expenses$174.50M
Operating Expenses$417.50M
Operating Income$149.00M
Interest Expense$17.70M
Net Income$101.10M
EPS (Basic)$0.84
EPS (Diluted)$0.82
Shares Outstanding (Basic)120.50M
Shares Outstanding (Diluted)123.10M

Key Highlights

  • 1Total operating revenue grew 12% to $566.5 million in Q1 2013, driven by acquisitions and strong mortgage market activity.
  • 2Net income attributable to Equifax increased significantly by 41% to $101.1 million, translating to diluted EPS of $0.82.
  • 3The U.S. Consumer Information Solutions segment, the largest contributor, saw revenue jump 17% to $245.1 million.
  • 4Workforce Solutions segment revenue increased 14% to $123.7 million, with Verification Services up 21%.
  • 5The company reported a $18.4 million gain on the sale of two non-strategic business lines (Equifax Settlement Services and Talent Management Services).
  • 6Cash provided by operating activities increased by 37% to $66.3 million.
  • 7The company reaffirmed its expectation for 6-8% organic revenue growth and higher EPS growth in 2013, aided by acquisitions.

Frequently Asked Questions

Revenue growth was primarily driven by the acquisition of CSC Credit Services in late 2012, strong mortgage refinancing activity, and strategic growth initiatives across various business segments, notably U.S. Consumer Information Solutions and Workforce Solutions.

Profitability saw a significant improvement. Net income attributable to Equifax rose 41% to $101.1 million, and diluted earnings per share increased to $0.82 from $0.58 in the prior year's quarter. This was supported by increased operating income and a gain from discontinued operations.

Equifax expects continued modest economic growth and anticipates delivering long-term average organic revenue growth between 6% and 8%, with additional growth from strategic acquisitions. They also expect earnings per share to grow at a faster rate than revenue.

Total debt increased due to the issuance of $500 million in senior notes and additional commercial paper to fund the CSC Credit Services acquisition. However, the company's leverage ratio remained at a healthy 1.95 as of March 31, 2013, well within their covenant limit of 3.5. Interest expenses also increased due to higher debt levels.