Equifax Full Earnings Release - Q4 2011
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EQUIFAX REPORTS STRONG FOURTH QUARTER AND FULL YEAR 2011 RESULTS
- Fourth quarter revenue growth was 6 percent, and 10 percent excluding Brazil, which was deconsolidated in the second quarter of 2011.
- Operating income for the quarter was up 14 percent.
- Operating margin was 24.7 percent, up 190 basis points from the fourth quarter of 2010.
ATLANTA, February 8, 2012 - Equifax Inc. (NYSE: EFX) today announced financial results for the quarter ended December 31, 2011. The company reported revenue from continuing operations of $509.7 million in the fourth quarter of 2011, a 6 percent increase from the fourth quarter of 2010. On a non-GAAP basis, fourth quarter revenue was up 10 percent, excluding Brazilian operating results due to the deconsolidation of Brazil in the second quarter of 2011.
Fourth quarter diluted EPS from continuing operations attributable to Equifax was $0.60, up 20 percent from the fourth quarter of 2010. On a non-GAAP basis, adjusted EPS from continuing operations attributable to Equifax, excluding a tax benefit and the impact of acquisition-related amortization expense, was $0.68, up 10 percent from the fourth quarter of 2010.
For the full year 2011, revenue from continuing operations was $2.0 billion, a 5 percent increase from 2010. Excluding Brazilian operating results, a non-GAAP measure, full year revenue was up 8 percent. Diluted EPS from continuing operations was $1.87 compared to $1.86 for the full year 2010. On a non-GAAP basis, full year adjusted EPS from continuing operations, which excludes the impact of acquisition-related amortization expense, the loss on the deconsolidation of our Brazilian business and an income tax benefit, was $2.52, up 9 percent from the prior year period. For the full year 2011, we returned $220.4 million of cash to shareholders through dividends and stock repurchases during the year.
"I am very proud of our fourth quarter performance which topped off a year of significant accomplishments including strong execution on our core growth initiatives, which resulted in acceleration of our organic non-mortgage revenue growth. We continue to diversify our served markets and customers through the rapid deployment of many new products. New products have resulted in an expansion of our markets as well as share gains within our current customer base. We are also becoming well positioned for long-term growth in Brazil through our successful partnership with Boa Vista Servçios," said Richard F. Smith, Equifax’s Chairman and Chief Executive Officer. "In 2012, there will be new opportunities that will drive our business performance. You can expect this management team to continue building on its accomplishments to further enhance long term revenue growth and operating margin."
Fourth Quarter 2011 Highlights
- In addition to the financial highlights noted above, fourth quarter 2011 net income from continuing operations attributable to Equifax was $72.9 million, a 17 percent increase from the prior year. On a non-GAAP basis, adjusted net income from continuing operations, which excludes an income tax benefit and the impact of acquisition-related amortization expense, was $83.0 million, an 8 percent increase from the fourth quarter of 2010.
- Operating margin from continuing operations was 24.7 percent for the fourth quarter of 2011, up from 22.8 percent in the fourth quarter of 2010.
We repurchased 1.9 million of our common shares on the open market for $67.1 million during the fourth quarter of 2011. At December 31, 2011, our remaining authorization for future share repurchases was $112.1 million.
U.S. Consumer Information Solutions (USCIS)
Total revenue was $215.6 million in the fourth quarter of 2011 compared to $191.2 million in the fourth quarter of 2010, an increase of 13 percent.
- Online Consumer Information Solutions revenue was $136.5 million, up 17 percent from a year ago.
- Mortgage Solutions revenue was $33.3 million, up 13 percent from a year ago.
- Consumer Financial Marketing Services revenue was $45.8 million, up 2 percent when compared to a year ago.
Operating margin for USCIS was 37.5 percent in the fourth quarter of 2011 compared to 36.3 percent in the fourth quarter of 2010.
Total revenue was $116.3 million in the fourth quarter of 2011, an 8 percent decrease from the fourth quarter of 2010. On a non-GAAP basis, excluding Brazil, revenue grew 10 percent on a reported basis and 12 percent on a local currency basis.
- Latin America revenue was $44.5 million, down 26 percent in U.S. dollars from a year ago. On a non-GAAP basis, excluding Brazil, revenue grew 14 percent in local currency and 10 percent in U.S dollars from a year ago.
- Europe revenue was $41.7 million, up 16 percent in local currency and 15 percent in U.S. dollars from a year ago.
- Canada Consumer revenue was $30.1 million, up 4 percent in local currency and 3 percent in U.S. dollars from a year ago.
Operating margin for International was 28.7 percent in the fourth quarter of 2011 compared to 23.6 percent in the fourth quarter of 2010.
TALX Workforce Solutions
Total revenue was $105.8 million in the fourth quarter of 2011, a 3 percent increase over the fourth quarter of 2010. TALX Workforce Solutions’ business segments were realigned to reflect how we are now managing the business. Refer to Question #5 in the Common Questions and Answers attached for further information.
- Verification Services revenue was $54.9 million, up 11 percent when compared to a year ago.
- Employer Services revenue was $50.9 million, down 4 percent from a year ago.
Operating margin for TALX Workforce Solutions was 23.2 percent in the fourth quarter of 2011 compared to 24.4 percent in the fourth quarter of 2010 and 23.0 percent in the third quarter of 2011.
North America Personal Solutions
Revenue was $45.6 million, a 21 percent increase from the fourth quarter of 2010. Operating margin was 30.5 percent compared to 30.9 percent in the fourth quarter of 2010.
North America Commercial Solutions
Revenue was $26.4 million, up 6 percent in U.S. dollars and in local currency compared to the fourth quarter of 2010. Operating margin was 34.4 percent, compared to 32.3 percent in he fourth quarter of 2010.
First Quarter 2012 Outlook
Based on the current level of domestic and international business activity that we have experienced through the current date and current foreign exchange rates, consolidated revenue from continuing operations for the first quarter of 2012 is expected to be up 9 to 12 percent from the year-ago quarter, excluding Brazil. First quarter 2012 adjusted EPS from continuing operations attributable to Equifax, which excludes the impact of acquisition-related amortization expense, is expected to be between $0.64 and $0.67.
Equifax is a global leader in consumer, commercial and workforce information solutions, providing businesses of all sizes and consumers with information they can trust. We organize and assimilate data on more than 500 million consumers and 81 million businesses worldwide, and use advanced analytics and proprietary technology to create and deliver customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates or has investments in 17 countries and is a member of Standard & Poor’s (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange under the symbol EFX. For more information, please visit www.equifax.com.
Earnings Conference Call and Audio Webcast
In conjunction with this release, Equifax will host a conference call tomorrow, February 9, 2012, at 8:30 a.m. (EST) via a live audio webcast. To access the webcast, go to the Investor Center of our website at www.equifax.com. The discussion will be available via replay at the same site shortly after the conclusion of the webcast. This press release is also available at that website.
Non-GAAP Financial Measures
This earnings release presents operating revenue excluding the results of our Brazilian operations from Equifax Inc., International, and Latin America revenue. The release also presents net income and diluted EPS from continuing operations attributable to Equifax which excludes an income tax benefit, the loss on the deconsolidation of our Brazilian business and acquisition-related amortization expense, net of tax. These are important financial measures for Equifax but are not financial measures as defined by GAAP.
These non-GAAP financial measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as an alternative measure of operating revenue or EPS as determined in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes are presented in the Q&A. This information can also be found under “Investor Center/GAAP/Non-GAAP Measures” on our website at www.equifax.com.
This release contains forward-looking statements or forward-looking information. These statements can be identified by expressions of belief, expectation or intention, as well as statements that are not historical fact. These statements are based on certain factors and assumptions including with respect to foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective tax rates. While the company believes these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect.
Several factors could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to actions taken by us, including restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions), as well as from developments beyond our control, including, but not limited to, changes in worldwide and U.S. economic conditions that materially impact consumer spending, consumer debt and employment and the demand for Equifax’s products and services. Other risk factors include our ability to successfully develop and market new products and services, respond to pricing and other competitive pressures, complete and integrate acquisitions and other investments and achieve targeted cost efficiencies; risks relating to illegal third party efforts to access data; changes in, and the effects of, laws and regulations and government policies governing our business, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, in particular the establishment of a new Consumer Financial Protection Bureau with authority to write rules impacting the business of, conduct examinations of, and enforce the laws and regulations it writes against credit reporting companies, and related regulations, federal or state responses to identity theft concerns; adverse or uncertain economic conditions and changes in credit and financial markets; the European sovereign debt crisis; the recent downgrade of U.S. sovereign debt and political concerns over related budgetary matters, exchange rates; timing and amount of capital expenditures; changes in capital markets and corresponding effects on the company’s investments and benefit plan obligations; earnings exchange rates and the decisions of taxing authorities, all of which could affect our effective tax rates; and potential adverse developments in new and pending legal proceedings or governments investigations. Additional risks and uncertainties can be found in our Annual Report on Form 10-K for the year ended December 31, 2010 under captions “Forward-Looking Statements” and “Item 1A, “Risk Factors”, and in our other filings with the U.S. Securities and 5 Exchange Commission. Forward-looking statements are given only as at the date of this release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
See attachment for results tables.
Notes to Reconciliations of Non-GAAP Financial Measures to the Comparable GAAP Financial Measures
Income Tax Benefit - During the fourth quarter of 2011, the Company recorded a cumulative income tax benefit resulting from the recognition of an income tax deduction related to several prior years. Management believes excluding this income tax benefit from certain financial results provides meaningful supplemental information regarding our financial results for the three and twelve months ended December 31, 2011, as compared to 2010, since an income tax benefit of such an amount is not comparable among the periods. This is consistent with how our management reviews and assesses Equifax’s historical performance and is useful when planning, forecasting and analyzing future periods.
Loss on the deconsolidation of Brazilian business - During the second quarter of 2011, the Company completed the merger of our Brazilian business with and into Boa Vista Servicos S.A. (“BVS”) in exchange for a 15 percent equity interest in BVS. The Company recorded a $27.8 million loss on the transaction. Management believes excluding the loss from certain financial results provides meaningful supplemental information regarding our financial results for the twelve months ended December 31, 2011, as compared to 2010, since a loss of such an amount is not comparable among the periods. This is consistent with how our management reviews and assesses Equifax’s historical performance and is useful when planning, forecasting and analyzing future periods.
Diluted EPS and net income from continuing operations attributable to Equifax, adjusted for an income tax benefit, the loss on the deconsolidation of Brazilian business and acquisition-related amortization expense - We calculate these financial measures by excluding an income tax benefit, the loss on the deconsolidation of our Brazilian business and acquisition-related amortization expense from the determination of net income attributable to Equifax in the calculation of diluted EPS. These financial measures are not prepared in conformity with GAAP. Management believes that these measures are useful because management excludes acquisition-related amortization expense and other items that are not comparable when measuring operating profitability, evaluating performance trends, and setting performance objectives, and it allows investors to evaluate our performance for different periods on a more comparable basis by excluding items that relate to acquisition-related intangible assets and items that impact comparability.
Adjusted operating revenue, excluding the results of our Brazilian operations - Management believes excluding the Brazilian revenue from the calculation of operating revenue, on a non-GAAP basis, is useful because it allows investors to evaluate the Company’s growth on a basis consistent with the current composition of our business.