10-QPeriod: Q2 FY2015

EQUIFAX INC Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 23, 2015For Securities:EFX

Summary

Equifax Inc. (EFX) reported strong financial performance for the second quarter and first half of 2015, demonstrating consistent growth across key metrics. Operating revenue saw a significant increase of 10% year-over-year for the quarter and 11% for the first half, driven by robust performance in the U.S. Information Solutions and Workforce Solutions segments, partially offset by a slight decline in the International segment due to unfavorable foreign exchange rates. Profitability also improved, with operating income up 13% for the quarter and 7% for the first half. Net income attributable to Equifax increased by 20% for the quarter and 13% for the first half, translating to a healthy rise in diluted Earnings Per Share (EPS) to $0.92 from $0.75 in the prior year's quarter and $1.64 from $1.42 for the first half. The company maintained a strong cash position, with operating cash flow increasing significantly, and continued to return value to shareholders through dividends and share repurchases.

Financial Highlights

53 data points
Beta

Revenue

$678.10M

Net Income

$111.00M

16.4% Net Margin

EPS (Diluted)

$0.92

Total Assets

$4.59B

Cash & Equivalents

$84.20M

Free Cash Flow

$186.70M

Financial Statements
Beta
Revenue$678.10M
SG&A Expenses$218.70M
Operating Expenses$489.60M
Operating Income$188.50M
Interest Expense$16.20M
Net Income$111.00M
EPS (Basic)$0.94
EPS (Diluted)$0.92
Shares Outstanding (Basic)118.60M
Shares Outstanding (Diluted)120.90M

Key Highlights

  • 1Operating revenue grew by 10% to $678.1 million in Q2 2015 and by 11% to $1,329.9 million in H1 2015, demonstrating consistent top-line expansion.
  • 2Net income attributable to Equifax increased by 20% to $111.0 million in Q2 2015 and by 13% to $199.3 million in H1 2015, indicating strong profitability.
  • 3Diluted EPS rose to $0.92 in Q2 2015 (up from $0.75 in Q2 2014) and $1.64 in H1 2015 (up from $1.42 in H1 2014), reflecting improved per-share earnings.
  • 4The U.S. Information Solutions (USIS) segment continues to be a strong performer, with revenue up 12% in Q2 and 13% in H1, and a significant operating margin expansion.
  • 5Workforce Solutions also showed robust growth, with revenue up 23% in both Q2 and H1, and substantial operating margin improvement.
  • 6Cash provided by operating activities increased by $65.0 million in H1 2015 to $289.6 million, highlighting strong cash generation.
  • 7The company repurchased $182.2 million of its common stock in H1 2015 and increased its quarterly dividend to $0.29 per share, demonstrating commitment to shareholder returns.

Frequently Asked Questions

Revenue growth was primarily driven by increases in the U.S. Information Solutions (USIS) and Workforce Solutions segments. Strong performance in direct-to-consumer reseller revenue, robust mortgage market activity, and overall increases in financial services, auto, government, and pre-employment verticals contributed significantly to the top-line increase.

Unfavorable foreign exchange rates negatively impacted reported revenue by $19.0 million in the second quarter and $36.0 million in the first six months of 2015, primarily affecting the International segment. Similarly, cost of services and selling, general and administrative expenses were reduced by foreign exchange rate changes.

The company expects modest growth in overall economic activity and consumer credit in the U.S. for the remainder of 2015. Mortgage market origination activity is expected to be up slightly. Internationally, the environment remains challenging due to political, fiscal, and economic issues in various countries, and weaker foreign exchange rates are expected to negatively impact reported revenue and profit. Long-term, Equifax anticipates organic revenue growth of 6-8% annually with an additional 1-2% from acquisitions.

Equifax recorded a $20.7 million restructuring charge in the first quarter of 2015 related to realigning internal resources and reducing headcount. Additionally, the company recorded an impairment loss of $14.8 million on its cost method investment in Brazil due to the weakness in the Brazilian credit markets.