10-QPeriod: Q1 FY2020

EQUIFAX INC Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 21, 2020For Securities:EFX

Summary

Equifax Inc. (EFX) reported a significant rebound in its first quarter of 2020 compared to the same period in 2019. Total operating revenue increased by 13% to $957.9 million, driven by strong performance in its Workforce Solutions and U.S. Information Solutions segments. This top-line growth, coupled with a substantial decrease in operating expenses primarily due to the absence of a large legal accrual recorded in the prior year, led to a return to profitability with net income attributable to Equifax of $112.6 million, or $0.92 per diluted share. The company also highlighted the initial impacts of the COVID-19 pandemic, noting a material weakening in revenue trends in the latter half of March 2020, which is expected to continue into the second quarter. Despite the uncertainty, Equifax emphasized its focus on employee safety, customer support, and continuing its EFX2020 cloud technology transformation. The company ended the quarter with a solid liquidity position, including approximately $370 million in cash and $1.2 billion available under its credit facilities.

Financial Highlights

53 data points
Beta

Revenue

$957.90M

Net Income

$116.90M

12.2% Net Margin

EPS (Diluted)

$0.95

Total Assets

$7.62B

Cash & Equivalents

$369.90M

Free Cash Flow

$30.80M

Financial Statements
Beta
Revenue$957.90M
SG&A Expenses$316.00M
Operating Expenses$822.00M
Operating Income$135.90M
Interest Expense$30.70M
Net Income$116.90M
EPS (Basic)$0.96
EPS (Diluted)$0.95
Shares Outstanding (Basic)121.30M
Shares Outstanding (Diluted)122.60M

Key Highlights

  • 1Total operating revenue increased by 13% to $957.9 million in Q1 2020 compared to $846.1 million in Q1 2019.
  • 2The company returned to profitability, reporting net income attributable to Equifax of $112.6 million ($0.92 per diluted share) in Q1 2020, a significant improvement from a net loss of $555.9 million ($-4.57 per diluted share) in Q1 2019.
  • 3Workforce Solutions and U.S. Information Solutions were key growth drivers, with revenue up 32% and 15% respectively.
  • 4Operating expenses decreased significantly by 44% due to the absence of a large legal accrual related to the 2017 cybersecurity incident recorded in Q1 2019.
  • 5The company initiated cost management actions in response to the COVID-19 pandemic and expects continued revenue impact in Q2 2020.
  • 6Equifax ended the quarter with $369.9 million in cash and cash equivalents and $1.2 billion in availability under its credit facilities.
  • 7The company continues its EFX2020 cloud technology, data, and security transformation.

Frequently Asked Questions

Equifax reported a strong rebound in the first quarter of 2020. Operating revenue increased by 13% to $957.9 million. The company returned to profitability, with net income attributable to Equifax of $112.6 million, or $0.92 per diluted share, a substantial improvement from a net loss of $555.9 million, or $(4.57) per diluted share, in the same period of 2019. This was driven by revenue growth and a significant decrease in operating expenses.

The company experienced a material weakening in its revenue trends in the latter half of March 2020 due to the COVID-19 pandemic, which is expected to continue into the second quarter of 2020. While some areas like mortgage solutions and unemployment cost management saw growth, others, particularly in non-mortgage related revenue and international markets, experienced declines. Equifax has implemented cost management actions and continues to monitor the situation.

Most major litigation and investigations related to the 2017 cybersecurity incident have been resolved or are nearing resolution. The company entered into a significant settlement agreement in 2019 for U.S. consumer class action cases, which received final court approval in March 2020, although appeals are still pending. Other settlements related to securities class action and shareholder derivative litigation have received preliminary court approval. While the majority of legal accruals from prior periods did not recur in Q1 2020, the company noted that the ultimate amount paid could still be material.

Equifax maintains a strong liquidity position. As of March 31, 2020, the company had $369.9 million in cash and cash equivalents and $1.2 billion available under its revolving credit facility and receivables funding facility. The company also amended its revolving credit facility to increase leverage ratios, providing additional financial flexibility.