EQUIFAX ENDS 2005 WITH RECORD RESULTS FOR FOURTH QUARTER AND FULL YEAR; EPS ROSE 14 PERCENT IN THE FOURTH QUARTER OF 2005
ATLANTA, February 2, 2006 -- Equifax Inc. (NYSE: EFX), today reported fourth quarter 2005 earnings with record revenue and recorded the strongest year in the company's 106-year history.
For the quarter, earnings from continuing operations were $63 million, a 14 percent increase from the fourth quarter of 2004. Revenue of $361 million was up 10 percent. Earnings per share (EPS) from continuing operations totaled $0.48, a 14 percent increase from the fourth quarter of 2004. Excluding Fair and Accurate Credit Transactions Act (FACT Act) related revenue and expense in the fourth quarter of 2005, EPS increased to $0.46, up 10 percent, in the fourth quarter of 2005.
For the full year 2005, revenue increased 13 percent to a record $1.4 billion. EPS from continuing operations was $1.86 per share, a 5 percent increase from 2004. Excluding FACT Act-related revenue and expense in 2005 and special items in 2004, EPS increased to $1.79, up 11 percent, in 2005.
“Equifax closed 2005 with significant momentum in most of our businesses around the world,” said Richard F. Smith, Equifax Chairman and Chief Executive Officer. “This is an exciting time for Equifax and its shareholders. Our stock price increased 35 percent in 2005. In 2006, we will continue to build on our momentum and initiate new and innovative ways to grow the company and enhance shareholder value.”
Fourth Quarter 2005 Highlights
- Operating profit margin was 29 percent compared to 30 percent in the fourth quarter 2004.
- Cash provided by operating activities for the fourth quarter of 2005 was $106 million, up 4 percent from the same period in 2004.
- Free cash flow (a non-GAAP measure), which is an alternative measure of liquidity (and is defined as cash provided by operating activities less capital-related expenditures), was $93 million, an increase of 7 percent from $87 million in fourth quarter 2004.
- Equifax repurchased 1.3 million shares of its common stock for $49 million.
- Total debt at December 31, 2005 decreased by $52 million to $556 million from the third quarter of 2005.
Fourth Quarter 2005 Operating Highlights
North America
Total revenue increased 10 percent to $290 million in the fourth quarter, compared to $264 million in the prior year. FACT Act-related regulatory recovery fee revenue contributed $9 million to North America’s revenue growth. This fee was instituted in the beginning of December 2004 to mitigate compliance costs related to FACT Act. North America Information Services reported revenue of $197 million, up 9 percent. Marketing Services revenue in North America was $67 million, up 9 percent. Personal Solutions increased revenue 15 percent to $27 million.
Operating margin for North America was 38 percent in the fourth quarter of 2005 and 2004.
Europe
Total revenue was $35 million, down 8 percent compared to 2004. Operating margin was 26 percent, up from 24 percent in 2004.
Latin America
Total revenue rose to $36 million, up 42 percent, reflecting strong growth in the region. Operating margin was 25 percent, up from 19 percent in 2004.
Full Year 2005 Highlights
- Operating profit margin was 29 percent compared to 30 percent in 2004.
- Cash provided by operating activities for 2005 was $338 million, up 9 percent.
- Free cash flow (a non-GAAP measure) was $292 million, an increase of 12 percent from $262 million in 2004.
- Equifax repurchased 4.2 million shares of its common stock for $144 million.
- Total debt at December 31, 2005 decreased by $98 million to $556 million from 2004. The remaining borrowing capacity at the end of 2005 under Equifax's committed financing facilities totaled approximately $460 million.
North America
Total revenue was $1.2 billion, up 13 percent from 2004. FACT Act-related regulatory recovery fee revenue contributed $38 million to North America’s revenue growth. North America Information Services reported revenue of $806 million, up 14 percent. Marketing Services revenue in North America was $254 million, up 7 percent. Personal Solutions increased revenue 19 percent to $115 million.
Operating margin for North America was 38 percent in 2005 compared to 37 percent in 2004.
Europe
Total revenue was $142 million, flat compared to 2004. Operating margin was 24 percent, up from 21 percent in 2004.
Latin America
Total revenue rose to $127 million, up 38 percent. Operating margin was 26 percent, up from 19 percent in 2004.
2006 Outlook
Based on recent business trends, Equifax expects earnings per share to be between $1.90 and $1.99 in 2006. For additional information concerning EPS excluding certain items impacting comparability between 2005 and the 2006 estimate, see Note C of the attached Reconciliation of non-GAAP financial measures to corresponding GAAP measures and the Form 8-K filed with the Securities and Exchange Commission (SEC) on December 13, 2005. Revenue growth is expected to be between 7 percent and 10 percent. Cash provided by operating activities is expected to be in the range of $360 million to $365 million, and capital expenditures are targeted at $60 million to $65 million.
About Equifax
Equifax Inc. is a global leader in turning information into intelligence. For businesses, Equifax provides faster and easier ways to find, approve and market to the appropriate customers. For consumers, Equifax offers easier, instantaneous ways to buy products or services and better insight into and management of their personal credit.
Equifax. Information that Empowers.
Earnings Webcast
Equifax's quarterly teleconference to discuss results will be held today at 9 a.m. (EDT). The live audio Webcast of the speakers’ presentations will be available at www.equifax.com and a replay will be available at the same site shortly after the conclusion of the Webcast.
Equifax has presented in this press release and will discuss during the teleconference certain non-GAAP financial measures the company believes are useful to investors to assess the company’s operating performance. These non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and may be different from the non-GAAP financial measures used by other companies. As required by SEC rules, a reconciliation of such measures to the most comparable GAAP measure is presented below in the Common Questions and Answers (Unaudited) that are a part of this press release. This information can also be found under "Our Company/Investor Center/Non-GAAP/GAAP Financial Measures" on our website at www.equifax.com. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Caution Concerning Forward-Looking Statements
Statements in this press release that relate to Equifax's future plans, objectives, expectations, performance, events and the like may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Future events, risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from those expressed or implied in these forward-looking statements. Those factors include, but are not limited to, changes in worldwide and U.S. economic conditions that materially impact consumer spending and consumer debt, changes in demand for Equifax's products and services, our ability to develop new products and services, pricing and other competitive pressures, risks relating to illegal third party efforts to access data, risks associated with the integration of acquisitions and other investments, changes in laws and regulations governing our business, including the cost of compliance with the Fair and Accurate Credit Transactions Act and federal or state responses to identity theft concerns, the outcome of pending litigation and certain other factors discussed under the caption "Risk Factors" in the Management's Discussion and Analysis section of Equifax's Annual Report on Form 10-K for the year ended December 31, 2004, and in our other filings with the SEC. Equifax assumes no obligation to update any forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made.
