Equifax Delivers Strong Revenue and Earnings in Second Quarter 2007; Completes Largest Acquisition in Company’s History
ATLANTA, July 23, 2007 – Equifax Inc. (NYSE: EFX) today reported second quarter results. Revenue increased to $454.5 million, up 17 percent compared to the second quarter of 2006. Diluted earnings per share (“EPS”) was 51 cents, a 4 percent decrease from the second quarter of 2006. On a non-GAAP basis, diluted EPS adjusted for acquisition-related amortization expense and excluding the favorable net impact of several 2006 litigation-related matters, increased 8 percent to 57 cents from the second quarter of 2006. Our second quarter operating results include TALX Corporation subsequent to the date of acquisition on May 15, 2007.
“In the second quarter we completed, ahead of schedule, the acquisition of TALX, a leading provider of employment and income verification and human resources outsourcing services,” said Richard F. Smith, Equifax Chairman and Chief Executive Officer. “At the same time, we kept our focus on customers of the traditional Equifax businesses and, excluding the impact of TALX, delivered 8 percent revenue growth, including double-digit growth in our International, North America Personal Solutions and North America Commercial Solutions businesses.”
Second Quarter 2007 Highlights
- Solid double-digit revenue growth in our International, North America Personal Solutions and North America Commercial Solutions operating segments and the acquisition of TALX contributed to a 17 percent increase in revenue in the second quarter of 2007, when compared to the same period in 2006.
- Operating margin was 26.4 percent compared to 24.9 percent in the second quarter of 2006.
- Operating income grew to $119.8 million, up 24 percent from the second quarter of 2006. On a non-GAAP basis, excluding the impact of the second quarter 2006 litigation matters mentioned above, operating income grew 8 percent.
- Net income rose to $70.1 million, a one percent increase from the second quarter of 2006, which included the favorable net impact of the 2006 litigation-related matters. On a non-GAAP basis excluding the impact of these litigation matters, net income increased 9 percent.
- Total debt increased to $1.2 billion in the second quarter of 2007, from $503.9 million at December 31, 2006. The increase resulted primarily from our issuance of an aggregate of $550 million of ten- and thirty-year fixed rate senior notes in late June, assumption of $75 million in senior guaranteed notes of TALX and commencement of a commercial paper program on May 22, 2007 to refinance certain other outstanding debt.
- We repurchased 4.2 million of our common shares for $179.3 million in the quarter, as part of our previously announced share repurchase programs.
U.S. Consumer Information Solutions
Total revenue was $250.0 million in the second quarter of 2007, a 2 percent increase from the second quarter of 2006. Solid demand for our online consumer information solutions product lines was partially offset by weakness in the mortgage and marketing services markets. Operating margin for U.S. Consumer Information Solutions was 40.4 percent in the second quarter of 2007 versus 41.5 percent in the second quarter of 2006.
- Online Consumer Information Solutions revenue was $165.4 million, up 5 percent compared to the second quarter of 2006.
- Mortgage Reporting Solutions revenue was $19.0 million, down 1 percent compared to the second quarter of 2006.
- Credit Marketing Services revenue was $39.6 million, down 3 percent compared to the second quarter of 2006.
- Direct Marketing Services revenue was $26.0 million, down 9 percent compared to the second quarter of 2006.
International
Total revenue was $115.3 million in the second quarter of 2007, a 15 percent increase from the second quarter of 2006. In local currency, revenue was up 9 percent when compared to the same period in the prior year. Operating margin for International was 29.0 percent in the second quarter of 2007, down from 29.7 percent in the second quarter of 2006.
- Europe revenue was $45.2 million, up 20 percent compared to the second quarter of 2006. In local currency, revenue was up 11 percent when compared to the same period in the prior year.
- Latin America revenue was $44.1 million, up 14 percent compared to the second quarter of 2006. In local currency, revenue was up 9 percent when compared to the same period in the prior year.
- Canada Consumer revenue was $26.0 million, up 8 percent compared to the second quarter of 2006. In local currency, revenue was up 6 percent when compared to the same period in the prior year.
North America Personal Solutions
Total revenue rose to $38.6 million, a 24 percent increase from the second quarter of 2006. Operating margin was 19.0 percent versus a negative margin in the second quarter of 2006. Operating margin for the second quarter of 2006 included the impact of a $14 million loss contingency related to certain litigation matters. On a non-GAAP basis, excluding the impact of the loss contingency, operating margin was 9 percent in the second quarter of 2006.
North America Commercial Solutions
Total revenue rose to $15.3 million, a 41 percent increase from the second quarter of 2006. Operating margin was 6.4 percent, down from 13.5 percent in the second quarter of 2006.
TALX
Total revenue was $35.3 million, and operating margin was 12.8 percent, for the period from the acquisition on May 15, 2007 through June 30, 2007, meeting our expectations. For the full calendar quarter, transaction volume for The Work Number business unit was 3.5 million, up 15 percent from the second quarter of 2006. In addition, almost 5.3 million total records were added, bringing total records in the database to 152.3 million.
About Equifax
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.
Customers have trusted Equifax for over 100 years to deliver innovative solutions with the highest integrity and reliability. Businesses – large and small – rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity and maximize their financial well-being.
Headquartered in Atlanta, Georgia, Equifax Inc. employs approximately 5,000 people in 14 countries throughout North America, Latin America and Europe. Equifax is a member of Standard & Poor’s (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.
Earnings Conference Call and Webcast
Equifax's quarterly teleconference to discuss the second quarter earnings release will be held tomorrow, July 24, at 8:30 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. This press release, the financial tables, as well as other supplemental information, are also available at that web site.
Supplemental Financial Information and Non-GAAP Financial Measures
The Common Questions and Answers (Unaudited) (“Q&A”) that are a part of this press release include supplemental financial information which Equifax believes is useful to assess its operating performance. The following financial measures included herein or in the Q&A are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”): Operating income and net income excluding the 2006 litigation matters; consolidated operating margin excluding TALX operating results in 2007 and litigation-related matters in 2006; EBITDA, defined as operating income adding back depreciation and amortization expense and excluding the 2006 litigation matters; and diluted EPS, as adjusted for acquisition-related amortization expense and excluding the 2006 litigation matters. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures and related notes are presented in the Q&A. This information can also be found under "About Equifax/Investor Center/Non-GAAP/GAAP Financial Measures" on our web site 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.
Reported results for the prior year quarter do not include revenue, operating income or operating expenses from TALX, which we acquired on May 15, 2007. To give investors further basis for comparison, in addition to the historical reported results, we have provided pro forma results for the year ended December 31, 2006 and three months ended March 31, 2007. These pro forma results combine financial results from Equifax and TALX and are available in our Form 8-K/A filed on June 25, 2007 and on our web site at www.equifax.com/About Equifax/Investor Center/Financials/SEC Filings.
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, consumer debt and employment, 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 our ability to complete and integrate acquisitions and other investments, changes in laws and regulations governing our business, including federal or state responses to identity theft concerns, the outcome of pending litigation, the impact of tax audits by the IRS or other taxing authorities, 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, 2006, in “Risk Factors” in TALX Corporation’s Annual Report on Form 10-K for the year ended March 31, 2006 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and in our other filings with the Securities and Exchange Commission. 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.
Jeff Dodge
Investor Relations
(404) 885-8804
jeff.dodge@equifax.com
David Rubinger
Media Relations
(404) 885-8555
david.rubinger@equifax.com
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