10-QPeriod: Q1 FY2017

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 27, 2017For Securities:EFX

Summary

Equifax Inc. reported a strong first quarter for 2017, with operating revenue increasing by 14% to $832.2 million compared to the same period in 2016. This growth was driven by broad-based increases across its segments, particularly the International segment bolstered by the Veda acquisition, and a significant 52% jump in consolidated net income to $155.4 million. Diluted earnings per share rose by 48% to $1.26. The company also benefited from a lower effective tax rate of 20.6% due to accounting standard changes and favorable tax audit settlements. The company maintained a strong financial position, with cash provided by operating activities at $103.7 million. While investing activities showed a significant decrease in cash outflow due to the absence of a large acquisition like Veda in the prior year, financing activities reflected a substantial reduction in net short-term borrowings. Equifax declared a dividend of $0.39 per share, an increase from the previous year's $0.33 per share, underscoring its commitment to returning value to shareholders. The company reiterated its long-term growth outlook of 6-8% organic revenue growth supplemented by strategic acquisitions.

Financial Highlights

52 data points
Beta

Revenue

$832.20M

Net Income

$153.30M

18.4% Net Margin

EPS (Diluted)

$1.26

Total Assets

$6.79B

Cash & Equivalents

$123.20M

Free Cash Flow

$103.70M

Financial Statements
Beta
Revenue$832.20M
SG&A Expenses$241.50M
Operating Expenses$613.60M
Operating Income$218.60M
Interest Expense$24.20M
Net Income$153.30M
EPS (Basic)$1.28
EPS (Diluted)$1.26
Shares Outstanding (Basic)120.00M
Shares Outstanding (Diluted)121.90M

Key Highlights

  • 1Operating revenue increased by 14% to $832.2 million in Q1 2017 compared to Q1 2016.
  • 2Consolidated net income surged by 52% to $155.4 million.
  • 3Diluted earnings per share (EPS) grew by 48% to $1.26 from $0.85 in the prior year.
  • 4The International segment saw significant revenue growth of 37%, largely due to the Veda acquisition.
  • 5Effective income tax rate decreased significantly to 20.6% from 33.5% due to accounting standard adoption and tax settlements.
  • 6Cash provided by operating activities remained strong at $103.7 million.
  • 7Dividends paid to shareholders increased to $0.39 per share, up from $0.33 per share in Q1 2016.

Frequently Asked Questions

The primary driver for the 37% revenue increase in the International segment was the acquisition of Veda Group Limited, which closed in February 2016. This acquisition provided Equifax with a strong platform in the Asia Pacific region.

The effective income tax rate decreased substantially from 33.5% in Q1 2016 to 20.6% in Q1 2017. This reduction was primarily due to the prospective adoption of new stock-based compensation accounting guidance, which recognizes tax effects in the income statement upon vesting or settlement, and favorable adjustments from the settlement of an income tax audit.

Equifax demonstrated its commitment to shareholder returns by increasing its quarterly dividend to $0.39 per share from $0.33 per share. The company also had $667.2 million remaining under its share repurchase authorization as of March 31, 2017, although no shares were repurchased in the first quarter of 2017.

Equifax expects long-term average organic revenue growth to range between 6% and 8%, with an additional 1% to 2% growth anticipated from strategic acquisitions. They also project earnings per share to grow at a faster rate than revenue over time due to operating and financial leverage.