8-KEarnings & ResultsMaterial AgreementsRegulation FD+1

EQUIFAX INC 8-K Report, Material Agreement (Apr 14, 2020)

Filed April 14, 2020For Securities:EFX

Summary

Equifax Inc. (EFX) filed an 8-K on April 14, 2020, detailing a material amendment to its existing Credit Agreement. The primary focus of this amendment is to enhance the company's financial flexibility, particularly in light of the prevailing economic conditions. The key changes involve adjustments to the company's leverage ratio covenants and the allowed add-backs for certain expenses, providing Equifax with more room to maneuver operationally and strategically. These amendments are designed to ensure Equifax maintains adequate liquidity and financial flexibility through at least the end of 2021. Investors should note the temporary relaxation of leverage ratio requirements and the extended ability to net cash against debt and add back cybersecurity incident expenses. While these changes provide a buffer, they are temporary, with covenants returning to stricter levels in 2022. The company also retains the option to further increase the leverage ratio in connection with strategic acquisitions.

Key Highlights

  • 1Equifax entered into a First Amendment to its Credit Agreement on April 10, 2020, to increase financial flexibility.
  • 2The maximum leverage ratio (consolidated funded debt / consolidated EBITDA) is temporarily increased: to 4.5:1.0 from June 30, 2020, through September 30, 2021, and to 4.0:1.0 for the December 31, 2021, quarter.
  • 3The leverage ratio will revert to 3.5:1.0 beginning March 31, 2022.
  • 4The Company can elect to increase the leverage ratio by an additional 0.5:1.0 (not to exceed 4.5:1.0) for material acquisitions starting January 1, 2021, subject to certain conditions.
  • 5Cash in excess of $200 million can be netted against debt in leverage ratio calculations through September 30, 2021.
  • 6Add-back of certain 2017 cybersecurity incident expenses to Consolidated EBITDA is extended through December 31, 2021.
  • 7As of March 31, 2020, Equifax had $370 million in cash and $1.2 billion available under its credit facilities, indicating a solid liquidity position.

Frequently Asked Questions

Equifax amended its credit agreement to provide greater financial flexibility, particularly during a period of economic uncertainty. The changes allow for a higher leverage ratio and extend certain expense add-backs, ensuring the company has the necessary resources to manage its operations and potential strategic initiatives.

The maximum leverage ratio is increased to 4.5 to 1.0 from June 30, 2020, through September 30, 2021, and to 4.0 to 1.0 for the December 31, 2021, quarter. It will return to 3.5 to 1.0 starting March 31, 2022. Additionally, the company may increase this ratio by 0.5 to 1.0 for acquisitions from January 1, 2021.

Yes, the add-back of certain expenses related to the 2017 cybersecurity incident to the definition of Consolidated EBITDA has been extended through December 31, 2021.

As of March 31, 2020, Equifax reported approximately $370 million in cash and $1.2 billion in available credit under its revolving credit facility and receivables funding facility, indicating a robust liquidity position.