10-QPeriod: Q2 FY2014

EQUIFAX INC Quarterly Report for Q2 Ended Jun 30, 2014

Filed July 24, 2014For Securities:EFX

Summary

Equifax Inc. reported solid revenue growth for the second quarter and first six months of 2014, driven by strategic acquisitions and organic growth in core non-mortgage businesses. While overall revenue increased by 5% and 4% respectively, this was partially offset by an expected decline in mortgage-related revenues. The company demonstrated improved operating income and margins, particularly in the U.S. Consumer Information Solutions and Workforce Solutions segments. Significant investment in acquisitions, notably TDX Group, expanded global capabilities and product offerings. Despite challenging international economic conditions and foreign currency headwinds, Equifax maintained a strong financial position, with healthy cash flow from operations and available credit facilities. The company reiterated its long-term organic revenue growth target of 6-8%, supported by ongoing innovation and strategic initiatives.

Financial Highlights

52 data points
Beta

Revenue

$613.90M

Net Income

$92.80M

15.1% Net Margin

EPS (Diluted)

$0.75

Total Assets

$4.77B

Cash & Equivalents

$91.70M

Free Cash Flow

$152.80M

Financial Statements
Beta
Revenue$613.90M
SG&A Expenses$183.50M
Operating Expenses$446.50M
Operating Income$167.40M
Interest Expense$17.40M
Net Income$92.80M
EPS (Basic)$0.76
EPS (Diluted)$0.75
Shares Outstanding (Basic)122.00M
Shares Outstanding (Diluted)124.30M

Key Highlights

  • 1Total operating revenue increased by 5% to $613.9 million for Q2 2014 and 4% to $1,198.4 million for the first six months of 2014, compared to the prior year periods.
  • 2Operating income grew by 6% to $167.4 million for Q2 2014 and 4% to $319.3 million for the first six months of 2014.
  • 3The acquisition of TDX Group in the UK for $322.8 million in Q1 2014 significantly contributed to the International segment's revenue growth.
  • 4Net income attributable to Equifax decreased by 8% to $176.7 million for the first six months of 2014, primarily due to the absence of gains from discontinued operations in the prior year.
  • 5Cash provided by operating activities increased by $15.0 million to $217.8 million for the first six months of 2014.
  • 6The company repurchased $73.4 million of its common stock in the first six months of 2014 and has $141.7 million remaining under its share repurchase authorization.
  • 7Effective income tax rate for Q2 2014 was 37.2%, up from 35.9% in Q2 2013, primarily due to increased state income taxes and decreased discrete tax benefits.

Frequently Asked Questions

Equifax's revenue growth was primarily driven by strategic acquisitions, notably the acquisition of TDX Group, and organic growth in its core non-mortgage businesses across segments like U.S. Consumer Information Solutions and International. This growth was partially tempered by an expected decline in mortgage-related revenues.

The acquisition of TDX Group, completed in the first quarter of 2014, significantly boosted the International segment's revenue and contributed to the increase in cost of services and depreciation and amortization expenses. It expanded Equifax's capabilities in the collections and recovery performance optimization market.

Equifax expects long-term average organic revenue growth ranging between 6% and 8%, with an additional 1% to 2% growth from strategic acquisitions. This outlook is based on a modestly growing global economy and the company's ongoing investments in innovation, technology, and business execution.

Equifax is involved in several legal and regulatory matters, including ongoing investigations by the Consumer Financial Protection Bureau (CFPB) and various State Attorneys General regarding their business practices. The company is cooperating with these investigations and cannot predict their outcomes, though they have not materially impacted the consolidated financial statements to date.