10-QPeriod: Q1 FY2015

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 23, 2015For Securities:EFX

Summary

Equifax Inc. reported solid revenue growth of 12% year-over-year for the first quarter of 2015, reaching $651.8 million. This growth was driven by strong performance in the U.S. Information Solutions and Workforce Solutions segments, with notable increases in direct-to-consumer revenue, mortgage refinancing activity, and employment/income verification services. While overall operating income saw a modest increase of 2% to $154.2 million, the operating margin declined by 2.3 percentage points to 23.7%. This margin compression was primarily due to a significant increase in selling, general, and administrative expenses, largely driven by a $20.7 million restructuring charge related to realigning internal resources and integrating global operations. Despite this, net income attributable to Equifax increased by 5% to $88.3 million, leading to a 9% rise in diluted earnings per share to $0.73, indicating effective cost management and operational leverage in core business areas.

Financial Highlights

53 data points
Beta

Revenue

$651.80M

Net Income

$88.30M

13.5% Net Margin

EPS (Diluted)

$0.73

Total Assets

$4.59B

Cash & Equivalents

$95.00M

Free Cash Flow

$102.90M

Financial Statements
Beta
Revenue$651.80M
SG&A Expenses$232.90M
Operating Expenses$497.60M
Operating Income$154.20M
Interest Expense$16.10M
Net Income$88.30M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)119.40M
Shares Outstanding (Diluted)121.70M

Key Highlights

  • 1Operating revenue grew 12% to $651.8 million, driven by strong performance in U.S. Information Solutions and Workforce Solutions.
  • 2Diluted Earnings Per Share (EPS) increased by 9% to $0.73, reflecting revenue growth and effective leverage.
  • 3Operating income increased by 2% to $154.2 million, though operating margin decreased by 2.3 percentage points due to higher SG&A expenses.
  • 4A restructuring charge of $20.7 million was recorded in Q1 2015 related to workforce realignment and global integration efforts, impacting SG&A expenses.
  • 5The company repurchased approximately 1.0 million shares for $89.9 million as part of its share repurchase program.
  • 6Dividends paid to shareholders increased by 13% to $0.29 per share ($34.7 million total).
  • 7International revenue saw a slight decrease of 1% due to negative foreign exchange rate impacts, despite local currency revenue growth of 10%.

Frequently Asked Questions

Equifax's revenue growth of 12% was primarily driven by strong performance in the U.S. Information Solutions (USIS) and Workforce Solutions segments. Key contributors included increased direct-to-consumer reseller revenue volume, strong mortgage refinancing activity, and growth in auto and government verticals for USIS, alongside significant increases in employment and income verification services for Workforce Solutions.

The operating margin decreased by 2.3 percentage points to 23.7% despite revenue growth. This was mainly due to a significant increase in Selling, General, and Administrative (SG&A) expenses, which rose by 33%. A major factor was a $20.7 million restructuring charge related to realigning internal resources and integrating global operations, along with increased incentive, salary, and litigation costs.

Equifax is actively managing its capital structure through share repurchases and dividend payments. In Q1 2015, the company repurchased approximately 1.0 million shares for $89.9 million and increased its quarterly dividend to $0.29 per share, a 13% increase from the prior year's $0.25 per share.

Foreign exchange rates negatively impacted Equifax's reported results. Consolidated revenue was reduced by $17.0 million (2%) due to unfavorable currency movements. Similarly, cost of services and SG&A expenses were reduced by $5.8 million and $5.6 million, respectively, due to foreign currency translation, though this did not offset the negative revenue impact on the International segment.