TransUnion (NYSE: TRU) (the “Company”) today announced financial
results for the quarter ended June 30, 2019.
Revenue:
- Total revenue for the quarter was
$662 million, an increase of 18 percent (19 percent on a constant
currency basis, 10 percent on an organic constant currency basis)
compared with the second quarter of 2018.
- Adjusted Revenue, which removes the
impact of deferred revenue purchase accounting reductions and other
adjustments to revenue for our recently acquired entities, was $664
million for the quarter, also an increase of 18 percent (19 percent
on a constant currency basis, 10 percent on an organic constant
currency basis).
With our acquisition of Callcredit on June 19,
2018, we expanded into the United Kingdom region, which is included
in our International segment. The consolidated organic constant
currency growth rates reported above include Callcredit’s revenue
and Adjusted Revenue for the partial month of June 2018 but include
their revenue and Adjusted Revenue for the full month of June 2019.
We also recognized incremental credit monitoring revenue due to a
breach at a competitor last year in our Consumer Interactive
segment. These items obscure the comparability of our results
between periods. On a consolidated basis, after adjusting for these
items, the organic constant currency revenue and organic constant
currency Adjusted Revenue growth rates were as follows:
- Excluding only the impact of all
revenue and Adjusted Revenue attributable to our Callcredit
acquisition from both periods, revenue and Adjusted Revenue on an
organic constant currency basis would have both increased 8.5
percent compared with the second quarter of 2018.
- Excluding only the impact of last
year’s second quarter incremental credit monitoring revenue,
revenue and Adjusted Revenue on an organic constant currency basis
would have both increased 11 percent compared with the second
quarter of 2018.
- Excluding both the impact of all
revenue and Adjusted Revenue attributable to our Callcredit
acquisition from both periods and excluding the impact of last
year’s second quarter incremental credit monitoring revenue,
revenue and Adjusted revenue on an organic constant currency basis
would have both increased 9.5 percent compared with the second
quarter of 2018.
Earnings:
- Net income attributable to
TransUnion was $101 million for the second quarter, compared with
$55 million in the second quarter of 2018. Diluted earnings per
share was $0.53 for the quarter, compared with $0.29 in the second
quarter of 2018.
- Adjusted Net Income was $132
million, compared with $119 million in the second quarter of
2018. Adjusted Diluted Earnings per Share was $0.69, compared
with $0.62 in the second quarter of 2018.
- Adjusted EBITDA for the quarter was
$264 million, an increase of 20 percent (21 percent on a constant
currency basis, 13 percent on an organic constant currency basis)
compared with the second quarter of 2018. Adjusted EBITDA margin
for the quarter was 39.7 percent, compared with 39.2 percent in the
second quarter of 2018.
“TransUnion delivered a good second quarter with
strong Adjusted Revenue and Adjusted EBITDA growth,” said Chris
Cartwright, President and CEO. “Notably, in the U.S., we saw a
re-acceleration of our Financial Services and Healthcare verticals
as well as further outstanding growth in our Insurance
business. Internationally, we continue to see broad-based
strength including significant growth in India, Latin America and
Canada. Across our business, we are delivering market
leadership through innovation, attractive adjacencies and well
executed, focused go-to-market strategies.”
“During the quarter, we also prepaid $100
million of debt while also acquiring TruSignal and making an equity
investment in Payfone, both companies that help further develop our
growing Media vertical.”
“Looking ahead, we are well positioned to
deliver another very good year in 2019 and we are making the right
strategic investments to position us for strong future
performance.”
Second Quarter 2019 Segment Results
U.S. Markets (formerly U.S. Information
Services)
U.S. Markets revenue was $406 million, an
increase of 13 percent (8 percent on an organic basis) compared
with the second quarter of 2018. U.S. Markets Adjusted Revenue was
also $406 million.
- Financial Services revenue was $213
million, an increase of 11 percent (8 percent on an organic basis)
compared with the second quarter of 2018.
- Emerging Verticals revenue, which
includes Healthcare, Insurance and all other verticals, was $193
million, an increase of 16 percent (8 percent on an organic basis)
compared with the second quarter of 2018.
Adjusted EBITDA was $175 million, an increase of
19 percent (17 percent on an organic basis) compared with the
second quarter of 2018.
International
International revenue was $151 million, an
increase of 42 percent (49 percent on a constant currency basis, 20
percent on an organic constant currency basis) compared with the
second quarter of 2018. International Adjusted Revenue was $153
million. Excluding the impact of all of the revenue and Adjusted
Revenue attributable to our Callcredit acquisition from both years,
revenue and Adjusted Revenue on an organic constant currency basis
would have both increased 12 percent.
- Canada revenue was $25 million, an
increase of 5 percent (9 percent on a constant currency basis)
compared with the second quarter of 2018.
- Latin America revenue was $26
million, an increase of 2 percent (11 percent on a constant
currency basis) compared with the second quarter of 2018.
- United Kingdom revenue was $47
million. Adjusted Revenue was $48 million.
- Africa revenue was $14 million, a
decrease of 10 percent (an increase of 2 percent on a constant
currency basis) compared with the second quarter of 2018.
- India revenue was $25 million, an
increase of 32 percent (37 percent on a constant currency basis)
compared with the second quarter of 2018.
- Asia Pacific revenue was $14
million, a decrease of 1 percent (1 percent on a constant currency
basis) compared with the second quarter of 2018.
Adjusted EBITDA was $60 million, an increase of
45 percent (18 percent on an organic constant currency basis)
compared with the second quarter of 2018.
Consumer Interactive
Consumer Interactive revenue was $124 million,
an increase of 5 percent compared with the second quarter of
2018.
Adjusted EBITDA was $59 million, an increase of
2 percent compared with the second quarter of 2018.
Liquidity and Capital Resources
Cash and cash equivalents were $195 million at
June 30, 2019 and $187 million at December 31, 2018.
Total debt, including the current portion of long-term debt, was
$3,918 million at June 30, 2019 and $4,048 million at
December 31, 2018.
For the six months ended June 30, 2019 cash
provided by continuing operations was $308 million compared with
$231 million in 2018. The increase was due primarily to the
increase in operating performance, partially offset by an increase
in interest expense resulting from the increase in outstanding debt
due to our 2018 acquisitions. Cash used in investing activities was
$108 million compared with $1,882 million in 2018, due primarily to
lower cash used for acquisitions and proceeds from the sale of the
Callcredit discontinued operations, partially offset by an increase
in capital expenditures. Capital expenditures were $88 million
compared with $70 million in 2018. Cash used in financing
activities was $187 million compared with a source of cash of
$1,732 million in 2018. The change in cash from financing
activities is due primarily to the loan proceeds borrowed in 2018
to fund our acquisitions, partially offset by $100 million of
prepayments made on our outstanding debt in 2019, $37 million of
cash used to pay employee withholding taxes on restricted stock
that vested during the first quarter of 2019 that we have recorded
as treasury stock, and one additional quarterly dividend payment
made in 2019 compared with 2018.
2019 Full Year Outlook
For the full year of 2019, we are raising our
Adjusted Revenue, Adjusted EBITDA and Adjusted Diluted Earnings per
Share guidance as follows. Adjusted Revenue is expected to be
between $2.628 billion and $2.638 billion, an increase of 12
percent compared with 2018. Adjusted EBITDA is expected to be
between $1.036 billion and $1.044 billion, an increase of 13 to 14
percent. Adjusted Diluted Earnings per Share is expected to be
between $2.66 and $2.69, an increase of 6 to 8 percent. Adjusted
Diluted Earnings per Share guidance includes an approximate $0.03
per share headwind from unfavorable foreign exchange rates and an
approximate $0.16 per share headwind from the full year impact of
higher interest expense related to the additional debt for
acquisitions completed in June 2018 and higher LIBOR rates.
The Adjusted Revenue guidance includes
approximately 500 basis points of growth from acquisitions that
closed in the prior year and current year. Adjusted Revenue and
Adjusted EBITDA include approximately 100 basis points of headwind
from unfavorable foreign exchange rates. Our prior year results
included approximately $20 million of incremental monitoring
revenue due to a breach at a competitor, which negatively impacts
our organic constant currency Adjusted Revenue growth by
approximately 100 basis points.
2019 Third Quarter Outlook
For the third quarter of 2019, Adjusted Revenue
is expected to be between $672 million and $677 million, an
increase of 8 to 9 percent compared with the third quarter of 2018.
Adjusted EBITDA is expected to be between $269 million and $273
million, an increase of 10 to 11 percent. Adjusted Diluted Earnings
per Share is expected to be between $0.69 and $0.71, an increase of
6 to 8 percent. Adjusted Diluted Earnings per Share guidance
includes an approximate $0.01 per share headwind from unfavorable
foreign exchange rates and from higher interest expense related to
the additional debt for acquisitions completed in June 2018 and
higher LIBOR rates.
The Adjusted Revenue guidance includes
approximately 100 basis points of growth from acquisitions that
closed in the prior year and current year. Our prior year results
included approximately $5 million of incremental monitoring revenue
due to a breach at a competitor, which negatively impacts our
organic constant currency Adjusted Revenue growth by approximately
100 basis points.
Subsequent Event
On July 12, 2019, the Company determined that
TransUnion Limited, a Hong Kong entity in which the Company holds a
56.25 percent interest, has been the victim of criminal fraud. The
incident involved employee impersonation and fraudulent requests
targeting TransUnion Limited, which resulted in a series of
fraudulently-induced wire transfers in early July 2019 totaling
$17.8 million.
The Company has launched an internal
investigation to determine the full extent of the fraud scheme and
related potential exposure, and expects to record a one-time
pre-tax charge of up to $17.8 million in the third quarter of 2019
as the result of this event. The Company self-discovered this
fraudulent activity and promptly initiated contact with its bank as
well as appropriate law enforcement authorities.
The Company may be limited in what information
it can disclose because of the ongoing investigation. To date, the
Company has not found any evidence of additional fraudulent
activity. This incident did not result in any unauthorized access
to any of the confidential consumer information or other data that
we maintain. While this matter will result in some additional
near-term expenses, the Company does not expect this incident to
otherwise have a material impact on its business.
See our Current Report on Form 8-K dated July
18, 2019 for additional information.
Earnings Webcast Details
In conjunction with this release, TransUnion
will host a conference call and webcast today at 8:00 a.m. Central
Time to discuss the business results for the quarter and certain
forward-looking information. This session may be accessed at
www.transunion.com/tru. A replay of the call will also be available
at this website following the conclusion of the call.
About TransUnion
TransUnion is a leading global risk and
information solutions provider to businesses and consumers. The
Company provides consumer reports, risk scores, analytical services
and decisioning capabilities to businesses. Businesses embed its
solutions into their process workflows to acquire new customers,
assess consumer ability to pay for services, identify cross-selling
opportunities, measure and manage debt portfolio risk, collect
debt, verify consumer identities and investigate potential fraud.
Consumers use its solutions to view their credit profiles and
access analytical tools that help them understand and manage their
personal information and take precautions against identity
theft.
Availability of Information on TransUnion’s
Website
Investors and others should note that TransUnion
routinely announces material information to investors and the
marketplace using SEC filings, press releases, public conference
calls, webcasts and the TransUnion Investor Relations website.
While not all of the information that the Company posts to the
TransUnion Investor Relations website is of a material nature, some
information could be deemed to be material. Accordingly, the
Company encourages investors, the media, and others interested in
TransUnion to review the information that it shares on
www.transunion.com/tru.
Non-GAAP Financial Measures
This earnings release presents constant currency
growth rates assuming foreign currency exchange rates are
consistent between years. This allows financial results to be
evaluated without the impact of fluctuations in foreign currency
exchange rates. This earnings release also presents organic
constant currency growth rates, which assumes consistent foreign
currency exchange rates between years and also eliminates the
impact of our recent acquisitions. This allows financial results to
be evaluated without the impact of fluctuations in foreign currency
exchange rates and the impacts of recent acquisitions.
This earnings release also presents Adjusted
Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted
Effective Tax Rate, Adjusted Net Income (Loss) and Adjusted Diluted
Earnings per Share for all periods presented. These are important
financial measures for the Company but are not financial measures
as defined by GAAP. We present Adjusted Revenue as a supplemental
measure of revenue because we believe it provides a basis to
compare revenue between periods. We present Adjusted EBITDA and
Adjusted Net Income as supplemental measures of our operating
performance because these measures eliminate the impact of certain
items that we do not consider indicative of our cash operations and
ongoing operating performance. Adjusted EBITDA is also a measure
frequently used by securities analysts, investors and other
interested parties in their evaluation of the operating performance
of companies similar to ours. Our board of directors and executive
management team use Adjusted Revenue and Adjusted EBITDA as
compensation measures. Under the credit agreement governing our
senior secured credit facility, our ability to engage in activities
such as incurring additional indebtedness, making investments and
paying dividends is tied to a ratio based on Adjusted EBITDA. These
financial measures should be reviewed in conjunction with the
relevant GAAP financial measures and are not presented as
alternative measures of GAAP. Other companies in our industry may
define or calculate these measures differently than we do, limiting
their usefulness as comparative measures. Because of these
limitations, these non-GAAP financial measures should not be
considered in isolation or as substitutes for performance measures
calculated in accordance with GAAP, including operating income,
operating margin, effective tax rate, net income (loss)
attributable to the Company, earnings per share or cash provided by
operating activities. Reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP financial measures
are presented in the attached Schedules.
We define Adjusted Revenue as GAAP revenue
adjusted for certain acquisition-related deferred revenue and
non-core contract-related revenue as further discussed in the
footnotes of the attached Schedules 1, 2, and 3. We define Adjusted
EBITDA as net income (loss) attributable to TransUnion plus (less)
loss (income) from discontinued operations, plus net interest
expense, plus (less) provision (benefit) for income taxes, plus
depreciation and amortization, plus (less) the revenue adjustments
included in Adjusted Revenue, plus stock-based compensation, plus
mergers, acquisitions, divestitures and business
optimization-related expenses including Callcredit
integration-related expenses, plus (less) certain other expenses
(income). We define Adjusted Net Income as net income (loss)
attributable to TransUnion plus (less) loss (gain) from
discontinued operations, plus (less) the revenue adjustments
included in Adjusted Revenue, plus stock-based compensation, plus
mergers, acquisitions, divestitures and business
optimization-related expenses including Callcredit
integration-related expenses, plus (less) certain other expenses
(income), plus amortization of certain intangible assets, plus or
minus the related changes in provision for income taxes, less any
one-time tax provision benefits from the Tax Cuts and Jobs Act. We
define Adjusted Diluted Earnings per Share as Adjusted Net Income
divided by the weighted-average diluted shares outstanding. The
above definitions apply to our calculations for the periods shown
on schedules 1 through 6.
Forward-Looking Statements
This earnings release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on the current
beliefs and expectations of TransUnion’s management and are subject
to significant risks and uncertainties. Actual results may differ
materially from those described in the forward-looking statements.
Any statements made in this earnings release that are not
statements of historical fact, including statements about our
beliefs and expectations, are forward-looking statements. These
statements often include words such as “anticipate,” “expect,”
“guidance,” “suggest,” “plan,” “believe,” “intend,” “estimate,”
“target,” “project,” “should,” “could,” “would,” “may,” “will,”
“forecast,” “outlook,” “potential,” “continues,” “seeks,”
“predicts,” or the negative of these words and other similar
expressions. Factors that could cause actual results to differ
materially from those described in the forward-looking statements
include macroeconomic and industry trends and adverse developments
in the debt, consumer credit and financial services markets; our
ability to provide competitive services and prices; our ability to
retain or renew existing agreements with large or long-term
customers; our ability to maintain the security and integrity of
our data; our ability to deliver services timely without
interruption; our ability to maintain our access to data sources;
government regulation and changes in the regulatory environment;
litigation or regulatory proceedings; regulatory oversight of
“critical activities”; our ability to effectively manage our costs;
economic and political stability in the United States and
international markets where we operate; our ability to effectively
develop and maintain strategic alliances and joint ventures; our
ability to timely develop new services and the market’s willingness
to adopt our new services; our ability to manage and expand our
operations and keep up with rapidly changing technologies; our
ability to make acquisitions, successfully integrate the operations
of acquired businesses and realize the intended benefits of such
acquisitions; our ability to protect and enforce our intellectual
property, trade secrets and other forms of unpatented intellectual
property; our ability to defend our intellectual property from
infringement claims by third parties; the ability of our outside
service providers and key vendors to fulfill their obligations to
us; further consolidation in our end-customer markets; the
increased availability of free or inexpensive consumer information;
losses against which we do not insure; our ability to make timely
payments of principal and interest on our indebtedness; our ability
to satisfy covenants in the agreements governing our indebtedness;
our ability to maintain our liquidity; share repurchase plans; our
reliance on key management personnel; and other one-time events and
other factors that can be found in our Annual Report on Form 10-K
for the year ended December 31, 2018, and any subsequent Quarterly
Report on Form 10-Q or Current Report on Form 8-K, which are filed
with the Securities and Exchange Commission and are available on
TransUnion’s website (www.transunion.com/tru) and on the Securities
and Exchange Commission’s website (www.sec.gov). Many of these
factors are beyond our control. The forward-looking statements
contained in this earnings release speak only as of the date of
this earnings release. We undertake no obligation to publicly
release the result of any revisions to these forward-looking
statements to reflect the impact of events or circumstances that
may arise after the date of this earnings release.
In addition to factors previously disclosed in
TransUnion’s reports filed with the Securities and Exchange
Commission and those identified elsewhere in this press release,
the following factors, among others, could cause actual results to
differ materially from forward-looking statements or historical
performance: failure to realize the benefits expected from the
recent business acquisitions; the effects of pending and future
legislation; risks related to disruption of management time from
ongoing business operations due to the recent business
acquisitions; macroeconomic factors beyond TransUnion’s control;
risks related to TransUnion’s indebtedness and other consequences
associated with mergers, acquisitions and divestitures, and
legislative and regulatory actions and reforms.
For More Information
E-mail:
Investor.Relations@transunion.com
Telephone: 312.985.2860
TRANSUNION AND
SUBSIDIARIESConsolidated Balance
Sheets(in millions, except per share data)
|
June 30, 2019 |
|
December 31, 2018 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
194.7 |
|
|
$ |
187.4 |
|
Trade accounts receivable, net of allowance of $16.3 and $13.5 |
489.2 |
|
|
456.8 |
|
Other current assets |
185.7 |
|
|
136.5 |
|
Current assets of discontinued operations |
— |
|
|
60.8 |
|
Total current assets |
869.6 |
|
|
841.5 |
|
Property, plant and equipment,
net of accumulated depreciation and amortization of $410.6 and
$366.2 |
215.1 |
|
|
220.3 |
|
Goodwill |
3,352.5 |
|
|
3,293.6 |
|
Other intangibles, net of
accumulated amortization of $1,347.0 and $1,206.7 |
2,449.4 |
|
|
2,548.1 |
|
Other assets |
240.7 |
|
|
136.3 |
|
Total
assets |
$ |
7,127.3 |
|
|
$ |
7,039.8 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Trade accounts payable |
$ |
178.7 |
|
|
$ |
169.9 |
|
Short-term debt and current portion of long-term debt |
86.4 |
|
|
71.7 |
|
Other current liabilities |
310.6 |
|
|
284.1 |
|
Current liabilities of discontinued operations |
— |
|
|
22.8 |
|
Total current liabilities |
575.7 |
|
|
548.5 |
|
Long-term debt |
3,831.5 |
|
|
3,976.4 |
|
Deferred taxes |
461.3 |
|
|
478.0 |
|
Other liabilities |
150.3 |
|
|
54.7 |
|
Total
liabilities |
5,018.8 |
|
|
5,057.6 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value; 1.0 billion shares authorized at
June 30, 2019 and December 31, 2018, 192.6 million and 190.0
million shares issued at June 30, 2019 and December 31, 2018,
respectively, and 187.8 million shares and 185.7 million shares
outstanding as of June 30, 2019 and December 31, 2018,
respectively |
1.9 |
|
|
1.9 |
|
Additional paid-in capital |
1,976.4 |
|
|
1,947.3 |
|
Treasury stock at cost; 4.8 million and 4.2 million shares at
June 30, 2019 and December 31, 2018, respectively |
(177.1 |
) |
|
(139.9 |
) |
Retained earnings |
506.1 |
|
|
363.1 |
|
Accumulated other comprehensive loss |
(296.2 |
) |
|
(282.7 |
) |
Total TransUnion stockholders’
equity |
2,011.1 |
|
|
1,889.7 |
|
Noncontrolling interests |
97.4 |
|
|
92.5 |
|
Total stockholders’
equity |
2,108.5 |
|
|
1,982.2 |
|
Total liabilities and
stockholders’ equity |
$ |
7,127.3 |
|
|
$ |
7,039.8 |
|
|
|
|
|
TRANSUNION AND
SUBSIDIARIESConsolidated Statements of Income
(Unaudited)(in millions, except per share data)
|
|
Three Months Ended June 30, |
|
Six Months EndedJune 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
661.9 |
|
|
$ |
563.1 |
|
|
$ |
1,281.2 |
|
|
$ |
1,100.5 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization
below) |
|
216.2 |
|
|
189.1 |
|
|
424.3 |
|
|
371.4 |
|
Selling, general and administrative |
|
196.7 |
|
|
171.6 |
|
|
392.4 |
|
|
334.9 |
|
Depreciation and amortization |
|
89.2 |
|
|
68.0 |
|
|
182.7 |
|
|
134.6 |
|
Total operating
expenses |
|
502.2 |
|
|
428.7 |
|
|
999.4 |
|
|
840.9 |
|
Operating
income |
|
159.7 |
|
|
134.4 |
|
|
281.8 |
|
|
259.6 |
|
Non-operating income
and (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
(45.2 |
) |
|
(25.9 |
) |
|
(90.2 |
) |
|
(48.5 |
) |
Interest income |
|
1.8 |
|
|
1.4 |
|
|
3.3 |
|
|
2.1 |
|
Earnings from equity method investments |
|
3.3 |
|
|
2.9 |
|
|
7.1 |
|
|
5.2 |
|
Other income and (expense), net |
|
26.7 |
|
|
(39.7 |
) |
|
19.9 |
|
|
(42.3 |
) |
Total non-operating
income and (expense) |
|
(13.4 |
) |
|
(61.3 |
) |
|
(59.9 |
) |
|
(83.5 |
) |
Income from continuing
operations before income taxes |
|
146.3 |
|
|
73.1 |
|
|
221.8 |
|
|
176.1 |
|
Provision for income
taxes |
|
(39.4 |
) |
|
(15.8 |
) |
|
(39.9 |
) |
|
(43.5 |
) |
Income from continuing
operations |
|
107.0 |
|
|
57.3 |
|
|
181.9 |
|
|
132.6 |
|
Discontinued
operations, net of tax |
|
(3.0 |
) |
|
— |
|
|
(4.6 |
) |
|
— |
|
Net
income |
|
104.0 |
|
|
57.3 |
|
|
177.3 |
|
|
132.6 |
|
Less: net income
attributable to the noncontrolling interests |
|
(2.5 |
) |
|
(2.3 |
) |
|
(4.9 |
) |
|
(4.5 |
) |
Net income
attributable to TransUnion |
|
$ |
101.5 |
|
|
$ |
55.0 |
|
|
$ |
172.4 |
|
|
$ |
128.1 |
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations |
|
$ |
107.0 |
|
|
$ |
57.3 |
|
|
$ |
181.9 |
|
|
$ |
132.6 |
|
Less: income from
continuing operations attributable to noncontrolling
interests |
|
(2.5 |
) |
|
(2.3 |
) |
|
(4.9 |
) |
|
(4.5 |
) |
Income from continuing
operations attributable to TransUnion |
|
104.5 |
|
|
55.0 |
|
|
177.0 |
|
|
128.2 |
|
Discontinued
operations, net of tax |
|
(3.0 |
) |
|
— |
|
|
(4.6 |
) |
|
— |
|
Net income
attributable to TransUnion |
|
$ |
101.5 |
|
|
$ |
55.0 |
|
|
$ |
172.4 |
|
|
$ |
128.1 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share from: |
|
|
|
|
|
|
|
|
Income from continuing operations attributable to TransUnion |
|
$ |
0.56 |
|
|
$ |
0.30 |
|
|
$ |
0.95 |
|
|
$ |
0.70 |
|
Discontinued operations, net of tax |
|
(0.02 |
) |
|
— |
|
|
(0.02 |
) |
|
— |
|
Net Income attributable to TransUnion |
|
$ |
0.54 |
|
|
$ |
0.30 |
|
|
$ |
0.92 |
|
|
$ |
0.70 |
|
Diluted earnings per
common share from: |
|
|
|
|
|
|
|
|
Income from continuing operations attributable to TransUnion |
|
$ |
0.55 |
|
|
$ |
0.29 |
|
|
$ |
0.93 |
|
|
$ |
0.67 |
|
Discontinued operations, net of tax |
|
(0.02 |
) |
|
— |
|
|
(0.02 |
) |
|
— |
|
Net Income attributable to TransUnion |
|
$ |
0.53 |
|
|
$ |
0.29 |
|
|
$ |
0.90 |
|
|
$ |
0.67 |
|
Weighted-average
shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
187.5 |
|
|
184.3 |
|
|
187.1 |
|
|
184.0 |
|
Diluted |
|
191.3 |
|
|
190.8 |
|
|
191.2 |
|
|
190.5 |
|
As a result of displaying amounts in millions, rounding
differences may exist in the table above.
TRANSUNION AND
SUBSIDIARIESConsolidated Statements of Cash Flows
(Unaudited)(in millions)
|
|
Six Months EndedJune 30, |
|
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
|
Net income |
|
$ |
177.3 |
|
|
$ |
132.6 |
|
Add: loss from discontinued operations, net of tax |
|
4.6 |
|
|
— |
|
Income from continuing operations |
|
181.9 |
|
|
132.6 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
182.7 |
|
|
134.6 |
|
Loss on debt financing transactions |
|
0.8 |
|
|
11.9 |
|
Amortization and (gain) loss on fair value of hedge instrument |
|
— |
|
|
(0.7 |
) |
Net (gain) impairment from adjustments to the carrying value of
investments in nonconsolidated affiliates |
|
(22.6 |
) |
|
1.4 |
|
Equity in net income of affiliates, net of dividends |
|
1.4 |
|
|
(0.2 |
) |
Deferred taxes |
|
0.1 |
|
|
(8.9 |
) |
Amortization of discount and deferred financing fees |
|
3.2 |
|
|
1.6 |
|
Stock-based compensation |
|
16.6 |
|
|
21.3 |
|
Payment of contingent obligation |
|
(0.4 |
) |
|
— |
|
Provision for losses on trade accounts receivable |
|
5.6 |
|
|
3.4 |
|
Other |
|
1.2 |
|
|
1.8 |
|
Changes in assets and liabilities: |
|
|
|
|
Trade accounts receivable |
|
(32.6 |
) |
|
(46.6 |
) |
Other current and long-term assets |
|
(34.8 |
) |
|
(17.4 |
) |
Trade accounts payable |
|
6.1 |
|
|
25.9 |
|
Other current and long-term
liabilities |
|
(0.9 |
) |
|
(30.2 |
) |
Cash provided by
operating activities of continuing operations |
|
308.3 |
|
|
230.5 |
|
Cash used in operating
activities of discontinued operations |
|
(7.3 |
) |
|
— |
|
Cash provided by
operating activities |
|
301.0 |
|
|
230.5 |
|
Cash flows from
investing activities: |
|
|
|
|
Capital expenditures |
|
(88.0 |
) |
|
(70.4 |
) |
Proceeds from sale of trading securities |
|
3.3 |
|
|
1.8 |
|
Purchases of trading securities |
|
(1.7 |
) |
|
(1.8 |
) |
Proceeds from sale of other investments |
|
10.5 |
|
|
4.5 |
|
Purchases of other investments |
|
(19.8 |
) |
|
(14.1 |
) |
Acquisitions and purchases of noncontrolling interests, net of cash
acquired |
|
(45.9 |
) |
|
(1,801.2 |
) |
Proceeds from disposals of discontinued operations, net of cash on
hand |
|
40.3 |
|
|
(0.5 |
) |
Other |
|
(6.5 |
) |
|
— |
|
Cash used in investing
activities |
|
(107.8 |
) |
|
(1,881.7 |
) |
Cash flows from
financing activities: |
|
|
|
|
Proceeds from Senior Secured Term Loan B-4 |
|
— |
|
|
1,000.0 |
|
Proceeds from Senior Secured Term Loan A-2 |
|
— |
|
|
800.0 |
|
Proceeds from senior secured revolving line of credit |
|
— |
|
|
125.0 |
|
Payments of senior secured revolving line of credit |
|
— |
|
|
(135.0 |
) |
Repayments of debt |
|
(133.9 |
) |
|
(24.2 |
) |
Debt financing fees |
|
— |
|
|
(33.6 |
) |
Proceeds from issuance of common stock and exercise of stock
options |
|
12.8 |
|
|
14.1 |
|
Dividends to shareholders |
|
(28.5 |
) |
|
(13.8 |
) |
Distributions to noncontrolling interests |
|
(0.8 |
) |
|
(0.1 |
) |
Employee taxes paid on restricted stock units recorded as treasury
stock |
|
(36.9 |
) |
|
(0.5 |
) |
Cash (used in)
provided by financing activities |
|
(187.3 |
) |
|
1,731.9 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
1.4 |
|
|
(4.2 |
) |
Net change in cash and cash
equivalents |
|
7.3 |
|
|
76.5 |
|
Cash and cash equivalents,
beginning of period |
|
187.4 |
|
|
115.8 |
|
Cash and cash
equivalents, end of period |
|
$ |
194.7 |
|
|
$ |
192.3 |
|
SCHEDULE 1TRANSUNION AND
SUBSIDIARIESRevenue, Adjusted Revenue, and
Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic
and Organic CC (Unaudited)
|
|
For the Three Months Ended June 30, 2019 compared with the Three
Months Ended June 30, 2018 |
|
|
Reported |
|
CC Growth(2) |
|
Inorganic(1,3) |
|
Organic Growth(4) |
|
Organic CC Growth(5) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
17.5 |
% |
|
18.8 |
% |
|
8.9 |
% |
|
8.6 |
% |
|
9.9 |
% |
U.S. Markets |
|
13.3 |
% |
|
13.3 |
% |
|
5.4 |
% |
|
8.0 |
% |
|
8.0 |
% |
Financial Services |
|
10.6 |
% |
|
10.6 |
% |
|
2.5 |
% |
|
8.1 |
% |
|
8.1 |
% |
Emerging Verticals |
|
16.5 |
% |
|
16.5 |
% |
|
8.7 |
% |
|
7.8 |
% |
|
7.8 |
% |
International(1) |
|
42.1 |
% |
|
48.7 |
% |
|
29.1 |
% |
|
13.0 |
% |
|
19.5 |
% |
Canada |
|
4.7 |
% |
|
8.6 |
% |
|
— |
% |
|
4.7 |
% |
|
8.6 |
% |
Latin America |
|
1.8 |
% |
|
10.7 |
% |
|
— |
% |
|
1.8 |
% |
|
10.7 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
(10.2 |
)% |
|
2.4 |
% |
|
— |
% |
|
(10.2 |
)% |
|
2.4 |
% |
India |
|
31.7 |
% |
|
37.1 |
% |
|
— |
% |
|
31.7 |
% |
|
37.1 |
% |
Asia Pacific |
|
(1.0 |
)% |
|
(1.2 |
)% |
|
— |
% |
|
(1.0 |
)% |
|
(1.2 |
)% |
Consumer Interactive |
|
5.1 |
% |
|
5.1 |
% |
|
— |
% |
|
5.1 |
% |
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
17.9 |
% |
|
19.1 |
% |
|
9.1 |
% |
|
8.8 |
% |
|
10.0 |
% |
U.S. Markets |
|
13.3 |
% |
|
13.4 |
% |
|
5.4 |
% |
|
8.0 |
% |
|
8.0 |
% |
Financial Services |
|
10.6 |
% |
|
10.6 |
% |
|
2.5 |
% |
|
8.1 |
% |
|
8.1 |
% |
Emerging Verticals |
|
16.6 |
% |
|
16.6 |
% |
|
8.8 |
% |
|
7.8 |
% |
|
7.8 |
% |
International(1) |
|
43.6 |
% |
|
50.2 |
% |
|
30.1 |
% |
|
13.5 |
% |
|
20.1 |
% |
Canada |
|
4.7 |
% |
|
8.6 |
% |
|
— |
% |
|
4.7 |
% |
|
8.6 |
% |
Latin America |
|
1.8 |
% |
|
10.7 |
% |
|
— |
% |
|
1.8 |
% |
|
10.7 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
(10.2 |
)% |
|
2.4 |
% |
|
— |
% |
|
(10.2 |
)% |
|
2.4 |
% |
India |
|
31.7 |
% |
|
37.1 |
% |
|
— |
% |
|
31.7 |
% |
|
37.1 |
% |
Asia Pacific |
|
(1.0 |
)% |
|
(1.2 |
)% |
|
— |
% |
|
(1.0 |
)% |
|
(1.2 |
)% |
Consumer Interactive |
|
5.1 |
% |
|
5.1 |
% |
|
— |
% |
|
5.1 |
% |
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
19.5 |
% |
|
20.7 |
% |
|
7.6 |
% |
|
12.0 |
% |
|
13.1 |
% |
U.S. Markets |
|
18.6 |
% |
|
18.7 |
% |
|
2.1 |
% |
|
16.5 |
% |
|
16.5 |
% |
International(1) |
|
44.5 |
% |
|
50.6 |
% |
|
32.8 |
% |
|
11.7 |
% |
|
17.8 |
% |
Consumer Interactive |
|
1.9 |
% |
|
1.9 |
% |
|
— |
% |
|
1.9 |
% |
|
1.9 |
% |
SCHEDULE 1TRANSUNION AND
SUBSIDIARIESRevenue, Adjusted Revenue, and
Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic
and Organic CC (Unaudited)
|
|
For the Six Months Ended June 30, 2019 compared with the Six
Months Ended June 30, 2018 |
|
|
Reported |
|
CC Growth(2) |
|
Inorganic(1,3) |
|
Organic Growth(4) |
|
Organic CC Growth(5) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
16.4 |
% |
|
17.9 |
% |
|
10.0 |
% |
|
6.4 |
% |
|
7.9 |
% |
U.S. Markets |
|
10.6 |
% |
|
10.6 |
% |
|
5.3 |
% |
|
5.3 |
% |
|
5.3 |
% |
Financial Services |
|
7.2 |
% |
|
7.2 |
% |
|
2.3 |
% |
|
4.8 |
% |
|
4.8 |
% |
Emerging Verticals |
|
14.5 |
% |
|
14.5 |
% |
|
8.6 |
% |
|
5.9 |
% |
|
5.9 |
% |
International(1) |
|
46.9 |
% |
|
54.7 |
% |
|
36.2 |
% |
|
10.7 |
% |
|
18.5 |
% |
Canada |
|
5.3 |
% |
|
9.9 |
% |
|
— |
% |
|
5.3 |
% |
|
9.9 |
% |
Latin America |
|
1.1 |
% |
|
10.2 |
% |
|
— |
% |
|
1.1 |
% |
|
10.2 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
(11.0 |
)% |
|
2.5 |
% |
|
— |
% |
|
(11.0 |
)% |
|
2.5 |
% |
India |
|
34.6 |
% |
|
44.2 |
% |
|
— |
% |
|
34.6 |
% |
|
44.2 |
% |
Asia Pacific |
|
3.3 |
% |
|
3.5 |
% |
|
— |
% |
|
3.3 |
% |
|
3.5 |
% |
Consumer Interactive |
|
4.9 |
% |
|
4.9 |
% |
|
— |
% |
|
4.9 |
% |
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
17.0 |
% |
|
18.4 |
% |
|
10.5 |
% |
|
6.5 |
% |
|
7.9 |
% |
U.S. Markets |
|
10.6 |
% |
|
10.6 |
% |
|
5.3 |
% |
|
5.3 |
% |
|
5.3 |
% |
Financial Services |
|
7.2 |
% |
|
7.2 |
% |
|
2.3 |
% |
|
4.8 |
% |
|
4.8 |
% |
Emerging Verticals |
|
14.6 |
% |
|
14.6 |
% |
|
8.7 |
% |
|
5.9 |
% |
|
5.9 |
% |
International(1) |
|
49.7 |
% |
|
57.4 |
% |
|
38.6 |
% |
|
11.0 |
% |
|
18.8 |
% |
Canada |
|
5.3 |
% |
|
9.9 |
% |
|
— |
% |
|
5.3 |
% |
|
9.9 |
% |
Latin America |
|
1.1 |
% |
|
10.2 |
% |
|
— |
% |
|
1.1 |
% |
|
10.2 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
(11.0 |
)% |
|
2.5 |
% |
|
— |
% |
|
(11.0 |
)% |
|
2.5 |
% |
India |
|
34.6 |
% |
|
44.2 |
% |
|
— |
% |
|
34.6 |
% |
|
44.2 |
% |
Asia Pacific |
|
3.3 |
% |
|
3.5 |
% |
|
— |
% |
|
3.3 |
% |
|
3.5 |
% |
Consumer Interactive |
|
4.9 |
% |
|
4.9 |
% |
|
— |
% |
|
4.9 |
% |
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
18.7 |
% |
|
20.3 |
% |
|
9.0 |
% |
|
9.7 |
% |
|
11.3 |
% |
U.S. Markets |
|
12.9 |
% |
|
12.9 |
% |
|
2.1 |
% |
|
10.8 |
% |
|
10.8 |
% |
International(1) |
|
67.7 |
% |
|
76.7 |
% |
|
43.4 |
% |
|
24.2 |
% |
|
33.3 |
% |
Consumer Interactive |
|
3.9 |
% |
|
3.9 |
% |
|
— |
% |
|
3.9 |
% |
|
3.9 |
% |
nm: not meaningful
(1) We acquired Callcredit, which is our
United Kingdom region in our International segment, on June 19,
2018. Our 2018 consolidated, International segment and United
Kingdom region revenue, Adjusted Revenue and Adjusted EBITDA
include the activity of Callcredit from the date of acquisition,
which obscures comparability of our results between periods.
(2) CC (constant currency) growth rates
assume foreign currency exchange rates are consistent between
years. This allows financial results to be evaluated without the
impact of fluctuations in foreign currency exchange rates.
(3) Inorganic growth rate represents
growth attributable to the first twelve months of activity for
recent business acquisitions.
(4) Organic growth rate is the reported
growth rate less the inorganic growth rate.
(5) Organic CC growth rate is the CC
growth rate less inorganic growth rate.
SCHEDULE 2TRANSUNION AND
SUBSIDIARIESConsolidated and Segment Revenue,
Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA Margins
(Unaudited)(dollars in millions)
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue and Adjusted
Revenue: |
|
|
|
|
|
|
|
U.S. Markets gross
revenue |
|
|
|
|
|
|
|
Financial Services |
$ |
213.0 |
|
|
$ |
192.6 |
|
|
$ |
402.1 |
|
|
$ |
375.2 |
|
Emerging Verticals |
192.9 |
|
|
165.6 |
|
|
372.6 |
|
|
325.3 |
|
Total U.S. Markets gross
revenue |
405.9 |
|
|
358.2 |
|
|
774.7 |
|
|
700.5 |
|
Acquisition revenue - related adjustments(1) |
0.2 |
|
|
— |
|
|
0.4 |
|
|
— |
|
U.S. Markets gross Adjusted
Revenue |
$ |
406.0 |
|
|
$ |
358.2 |
|
|
$ |
775.0 |
|
|
$ |
700.5 |
|
|
|
|
|
|
|
|
|
International gross revenue |
|
|
|
|
|
|
|
Canada |
25.4 |
|
|
24.2 |
|
|
48.4 |
|
|
45.9 |
|
Latin America |
26.2 |
|
|
25.8 |
|
|
51.5 |
|
|
51.0 |
|
UK |
46.6 |
|
|
7.7 |
|
|
88.8 |
|
|
7.7 |
|
Africa |
14.0 |
|
|
15.6 |
|
|
29.0 |
|
|
32.6 |
|
India |
24.9 |
|
|
18.9 |
|
|
52.6 |
|
|
39.1 |
|
Asia Pacific |
14.0 |
|
|
14.1 |
|
|
26.8 |
|
|
26.0 |
|
Total International gross
revenue |
151.1 |
|
|
106.3 |
|
|
297.1 |
|
|
202.3 |
|
Acquisition revenue - related
adjustments(1) |
1.6 |
|
|
— |
|
|
5.6 |
|
|
— |
|
International Adjusted
Revenue |
$ |
152.7 |
|
|
$ |
106.3 |
|
|
$ |
302.7 |
|
|
$ |
202.3 |
|
|
|
|
|
|
|
|
|
Consumer Interactive gross
revenue |
$ |
123.6 |
|
|
$ |
117.6 |
|
|
$ |
246.9 |
|
|
$ |
235.5 |
|
|
|
|
|
|
|
|
|
Less: intersegment
eliminations |
|
|
|
|
|
|
|
U.S. Markets |
(17.2 |
) |
|
(17.5 |
) |
|
(34.7 |
) |
|
(34.9 |
) |
International |
(1.3 |
) |
|
(1.4 |
) |
|
(2.5 |
) |
|
(2.6 |
) |
Consumer Interactive |
(0.2 |
) |
|
(0.2 |
) |
|
(0.4 |
) |
|
(0.3 |
) |
Total intersegment
eliminations |
(18.6 |
) |
|
(19.0 |
) |
|
(37.5 |
) |
|
(37.8 |
) |
|
|
|
|
|
|
|
|
Total revenue, as
reported |
$ |
661.9 |
|
|
$ |
563.1 |
|
|
$ |
1,281.2 |
|
|
$ |
1,100.5 |
|
Acquisition revenue-related adjustments(1) |
1.7 |
|
|
— |
|
|
5.9 |
|
|
— |
|
Consolidated Adjusted
Revenue |
$ |
663.6 |
|
|
$ |
563.1 |
|
|
$ |
1,287.1 |
|
|
$ |
1,100.5 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
U.S. Markets |
$ |
175.4 |
|
|
$ |
147.9 |
|
|
$ |
317.5 |
|
|
$ |
281.2 |
|
International |
59.6 |
|
|
41.2 |
|
|
124.5 |
|
|
74.3 |
|
Consumer Interactive |
59.1 |
|
|
58.0 |
|
|
119.3 |
|
|
114.9 |
|
Corporate |
(30.4 |
) |
|
(26.4 |
) |
|
(58.7 |
) |
|
(47.1 |
) |
Consolidated Adjusted EBITDA |
$ |
263.7 |
|
|
$ |
220.6 |
|
|
$ |
502.6 |
|
|
$ |
423.3 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin: |
|
|
|
|
|
|
|
U.S. Markets |
43.2 |
% |
|
41.3 |
% |
|
41.0 |
% |
|
40.1 |
% |
International |
39.0 |
% |
|
38.8 |
% |
|
41.1 |
% |
|
36.7 |
% |
Consumer Interactive |
47.8 |
% |
|
49.3 |
% |
|
48.3 |
% |
|
48.8 |
% |
Consolidated |
39.7 |
% |
|
39.2 |
% |
|
39.1 |
% |
|
38.5 |
% |
Segment Adjusted EBITDA margins are calculated
using segment gross Adjusted Revenue and segment Adjusted EBITDA.
Consolidated Adjusted EBITDA margin is calculated using
consolidated Adjusted Revenue and consolidated Adjusted EBITDA.
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Reconciliation of net income attributable to TransUnion to
consolidated Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to TransUnion |
$ |
101.5 |
|
|
$ |
55.0 |
|
|
$ |
172.4 |
|
|
$ |
128.1 |
|
Discontinued operations, net
of tax |
3.0 |
|
|
— |
|
|
4.6 |
|
|
— |
|
Net income from continuing
operations attributable to TransUnion |
104.5 |
|
|
55.0 |
|
|
177.0 |
|
|
128.2 |
|
Net interest expense |
43.4 |
|
|
24.5 |
|
|
86.9 |
|
|
46.4 |
|
Provision for income taxes |
39.4 |
|
|
15.8 |
|
|
39.9 |
|
|
43.5 |
|
Depreciation and amortization |
89.2 |
|
|
68.0 |
|
|
182.7 |
|
|
134.6 |
|
EBITDA |
276.4 |
|
|
163.4 |
|
|
486.5 |
|
|
352.6 |
|
Adjustments to EBITDA: |
|
|
|
|
|
|
|
Acquisition-related revenue adjustments(1) |
1.7 |
|
|
— |
|
|
5.9 |
|
|
— |
|
Stock-based compensation(2) |
8.2 |
|
|
16.0 |
|
|
20.9 |
|
|
26.9 |
|
Mergers and acquisitions, divestitures and business
optimization(3) |
(23.9 |
) |
|
25.9 |
|
|
(12.6 |
) |
|
29.2 |
|
Other(4) |
1.3 |
|
|
15.3 |
|
|
1.9 |
|
|
14.7 |
|
Total adjustments to
EBITDA |
(12.7 |
) |
|
57.2 |
|
|
16.2 |
|
|
70.7 |
|
Consolidated Adjusted
EBITDA |
$ |
263.7 |
|
|
$ |
220.6 |
|
|
$ |
502.6 |
|
|
$ |
423.3 |
|
As a result of displaying amounts in millions,
rounding differences may exist in the tables above and footnotes
below.
(1) This adjustment represents certain
non-cash adjustments related to acquired entities, predominantly
adjustments to increase revenue resulting from purchase accounting
reductions to deferred revenue we record on the opening balance
sheets of acquired entities. Deferred revenue results when a
company receives payment in advance of fulfilling their performance
obligations under contracts. Business combination accounting rules
require us to record deferred revenue of acquired entities at fair
value if we are obligated to perform any future services under
these contracts. The fair value of this deferred revenue is
determined based on the direct and indirect incremental costs of
fulfilling our performance obligations under these contracts, plus
a normal profit margin. Generally, this fair value calculation
results in a reduction to the purchased deferred revenue balance.
The above adjustment includes an estimate for the increase in
revenue equal to the difference between what the acquired entities
would have recorded as revenue and the lower revenue we record as a
result of the reduced deferred revenue balance. This increase is
partially offset by an estimated decrease to revenue for certain
acquired non-core customer contracts that are not classified as
discontinued operations that will expire within approximately one
year from the date of acquisition. We present Adjusted Revenue as a
supplemental measure of our revenue because we believe it provides
meaningful information regarding our revenue and provides a basis
to compare revenue between periods. In addition, our board of
directors and executive management team use Adjusted Revenue as a
compensation measure under our incentive compensation plans. The
table above provides a reconciliation for revenue to Adjusted
Revenue.
(2) Consisted of stock-based compensation
and cash-settled stock-based compensation.
(3) For the three months ended June 30,
2019, consisted of the following adjustments: a $(31.2) million
gain on a Cost Method investment resulting from an observable price
change for a similar investment of the same issuer; a $(0.9)
million adjustment to contingent consideration expense from
previous acquisitions; a $(0.2) million reimbursement for
transition services provided to the buyers of certain of our
discontinued operations; $4.4 million of Callcredit integration
costs; a $3.3 million loss on the impairment of a Cost Method
investment; and $0.8 million of acquisition expenses.
For the six months ended June 30, 2019,
consisted of the following adjustments: a $(31.2) million gain on a
Cost Method investment resulting from an observable price change
for a similar investment of the same issuer; $(0.2) million
reimbursement for transition services provided to the buyers of our
discontinued operations; $8.6 million loss on the impairment of
certain Cost Method investments; $8.5 million of Callcredit
integration costs; and $1.6 million of acquisition expenses.
For the three months ended June 30, 2018,
consisted of the following adjustments: $25.4 million of
acquisition expenses; a $1.1 million loss on the divestiture of a
small business operation; a $(0.3) million gain on a Cost Method
investment resulting for an observable price change for a similar
investment of the same issuer; and a $(0.3) million offset to the
loss included in operating income adjustments on the divestiture of
a small business operation for the portion that is attributable to
the non-controlling interest.
For the six months ended June 30, 2018,
consisted of the following adjustments: $27.1 million of
acquisition expenses; a $1.6 million loss on the impairment of a
Cost Method investment; a $1.1 million loss on the divestiture of a
small business operation; a $(0.3) gain on a Cost Method investment
resulting from an observable price change for a similar investment
of the same issuer; and a $(0.3) million offset to the loss
included in operating income adjustments on the divestiture of a
small business operation for the portion that is attributable to
the non-controlling interest.
(4) For the three months ended June 30,
2019, consisted of the following adjustments: $0.8 million of
deferred loan fees written off as a result of the prepayments on
our debt; $0.6 million of loan fees; and $(0.1) from currency
remeasurement.
For the six months ended June 30, 2019,
consisted of the following adjustments: $1.0 million of loan fees;
$0.8 million of deferred loan fees written off as a result of the
prepayments on our debt; $0.2 million from currency
remeasurement.
For the three months ended June 30, 2018,
consisted of the following adjustments to non-operating income and
expense: $11.9 million of fees related to new financing under our
senior secured credit facility; a $3.0 million loss from currency
remeasurement of our foreign operations; $0.3 million of loan fees;
and $0.1 million of miscellaneous.
For the six months ended June 30, 2018,
consisted of the following adjustments to non-operating income and
expense: $11.9 million of fees related to new financing under our
senior secured credit facility; a $2.3 million loss from currency
remeasurement of our foreign operations; $0.7 million of loan fees;
$0.5 million of fees incurred in connection with a secondary
offering of shares of TransUnion common stock by certain of our
stockholders; and a $(0.7) million mark-to-market gain related to
ineffectiveness of our interest rate hedge.
SCHEDULE 3TRANSUNION AND
SUBSIDIARIESAdjusted Net Income and Adjusted
Earnings Per Share - Unaudited(in millions, except per
share data)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income attributable to TransUnion |
|
$ |
101.5 |
|
|
$ |
55.0 |
|
|
$ |
172.4 |
|
|
$ |
128.1 |
|
Discontinued operations |
|
3.0 |
|
|
— |
|
|
4.6 |
|
|
— |
|
Net income from continuing
operations attributable to TransUnion |
|
104.5 |
|
|
55.0 |
|
|
177.0 |
|
|
128.2 |
|
Adjustments before income tax
items: |
|
|
|
|
|
|
|
|
Acquisition revenue-related adjustments (1) |
|
1.7 |
|
|
— |
|
|
5.9 |
|
|
— |
|
Stock-based compensation(2) |
|
8.2 |
|
|
16.0 |
|
|
20.9 |
|
|
26.9 |
|
Mergers and acquisitions, divestitures and business
optimization(3) |
|
(23.9 |
) |
|
25.9 |
|
|
(12.6 |
) |
|
29.2 |
|
Other(4) |
|
0.7 |
|
|
15.0 |
|
|
1.0 |
|
|
13.9 |
|
Amortization of certain intangible assets(5) |
|
52.5 |
|
|
38.3 |
|
|
109.2 |
|
|
74.8 |
|
Total adjustments before
income tax items |
|
39.2 |
|
|
95.1 |
|
|
124.4 |
|
|
144.8 |
|
Change in provision for
income taxes per schedule 4 |
|
(11.8 |
) |
|
(31.4 |
) |
|
(54.6 |
) |
|
(46.7 |
) |
Adjusted Net Income |
|
$ |
131.8 |
|
|
$ |
118.8 |
|
|
$ |
246.8 |
|
|
$ |
226.4 |
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings per
Share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.70 |
|
|
$ |
0.64 |
|
|
$ |
1.32 |
|
|
$ |
1.23 |
|
Diluted(6) |
|
$ |
0.69 |
|
|
$ |
0.62 |
|
|
$ |
1.29 |
|
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
187.5 |
|
|
184.3 |
|
|
187.1 |
|
|
184.0 |
|
Diluted(6) |
|
191.3 |
|
|
190.8 |
|
|
191.2 |
|
|
190.5 |
|
As a result of displaying amounts in millions,
rounding differences may exist in the table above and footnotes
below.
(1) This adjustment represents certain
non-cash adjustments related to acquired entities, predominantly
adjustments to increase revenue resulting from purchase accounting
reductions to deferred revenue we record on the opening balance
sheets of acquired entities. Deferred revenue results when a
company receives payment in advance of fulfilling their performance
obligations under contracts. Business combination accounting rules
require us to record deferred revenue of acquired entities at fair
value if we are obligated to perform any future services under
these contracts. The fair value of this deferred revenue is
determined based on the direct and indirect incremental costs of
fulfilling our performance obligations under these contracts, plus
a normal profit margin. Generally, this fair value calculation
results in a reduction to the purchased deferred revenue balance.
The above adjustment includes an estimate for the increase in
revenue equal to the difference between what the acquired entities
would have recorded as revenue and the lower revenue we record as a
result of the reduced deferred revenue balance. This increase is
partially offset by an estimated decrease to revenue for certain
acquired non-core customer contracts that are not classified as
discontinued operations that will expire within approximately one
year from the date of acquisition.
(2) Consisted of stock-based compensation
and cash-settled stock-based compensation.
(3) For the three months ended June 30,
2019, consisted of the following adjustments: a $(31.2) million
gain on a Cost Method investment resulting from an observable price
change for a similar investment of the same issuer; a $(0.9)
million adjustment to contingent consideration expense from
previous acquisitions; a $(0.2) million reimbursement for
transition services provided to the buyers of certain of our
discontinued operations; $4.4 million of Callcredit integration
costs; a $3.3 million loss on the impairment of a Cost Method
investment; and $0.8 million of acquisition expenses.
For the six months ended June 30, 2019,
consisted of the following adjustments: a $(31.2) million gain on a
Cost Method investment resulting from an observable price change
for a similar investment of the same issuer; $(0.2) million
reimbursement for transition services provided to the buyers of our
discontinued operations; $8.6 million loss on the impairment of
certain Cost Method investments; $8.5 million of Callcredit
integration costs; and $1.6 million of acquisition expenses.
For the three months ended June 30, 2018,
consisted of the following adjustments: $25.4 million of
acquisition expenses; a $1.1 million loss on the divestiture of a
small business operation; a $(0.3) million gain on a Cost Method
investment resulting from an observable price change for a similar
investment of the same issuer; and a $(0.3) million offset to the
loss included in operating income adjustments on the divestiture of
a small business operation for the portion that is attributable to
the non-controlling interest.
For the six months ended June 30, 2018,
consisted of the following adjustments: $27.1 million of
acquisition expenses; a $1.6 million loss on the impairment of a
Cost Method investment; a $1.1 million loss on the divestiture of a
small business operation; a $(0.3) gain on a Cost Method investment
resulting from an observable price change for a similar investment
of the same issuer; and a $(0.3) million offset to the loss
included in operating income adjustments on the divestiture of a
small business operation for the portion that is attributable to
the non-controlling interest.
(4) For the three months ended June 30,
2019, consisted of the following adjustments: $0.8 million of
deferred loan fees written off as a result of the prepayments on
our debt and a ($0.1) million gain from currency remeasurement of
our foreign operations.
For the six months ended June 30, 2019 consisted
of the following adjustments: $0.8 million of deferred loan fees
written off as a result of the prepayments on our debt; and a $0.2
million loss from currency remeasurement of our foreign
operations.
For the three months ended June 30, 2018,
consisted of the following adjustments: $11.9 million of fees
related to new financing under our senior secured credit facility;
a $3.0 million loss from currency remeasurement of our foreign
operations; and $0.1 million of miscellaneous.
For the six months ended June 30, 2018,
consisted of the following adjustments: $11.9 million of fees
related to new financing under our senior secured credit facility;
$2.3 million loss from currency remeasurement of our foreign
operations; $0.5 million of fees incurred in connection with a
secondary offering of shares of TransUnion common stock by certain
of our stockholders; a $(0.7) million mark-to-market gain related
to ineffectiveness of our interest rate hedge; and $(0.1) of
miscellaneous.
(5) Consisted of amortization of
intangible assets from our 2012 change in control and amortization
of intangible assets established in business acquisitions after our
2012 change in control.
(6) As of June 30, 2019, there were
1.1 million contingently issuable stock-based awards outstanding
that were excluded from the diluted earnings per share calculation
because the contingencies had not been met.
As of June 30, 2018, there were less than 0.1
million contingently issuable stock based awards outstanding that
were excluded from the diluted earnings per share calculation
because the contingencies had not been met.
SCHEDULE 4TRANSUNION AND
SUBSIDIARIESEffective Tax Rate and Adjusted
Effective Tax Rate - Unaudited(dollars in millions)
|
Three Months EndedJune 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Income before income taxes |
$ |
146.3 |
|
|
$ |
73.1 |
|
|
$ |
221.8 |
|
|
$ |
176.1 |
|
Total adjustments before income taxes per Schedule 3 |
39.2 |
|
|
95.1 |
|
|
124.4 |
|
|
144.8 |
|
Adjusted income before income
taxes |
$ |
185.6 |
|
|
$ |
168.2 |
|
|
$ |
346.3 |
|
|
$ |
321.0 |
|
|
|
|
|
|
|
|
|
(Provision) for income
taxes |
(39.4 |
) |
|
(15.8 |
) |
|
(39.9 |
) |
|
(43.5 |
) |
Adjustments for income
taxes: |
|
|
|
|
|
|
|
Tax effect of above adjustments(1) |
(5.8 |
) |
|
(22.5 |
) |
|
(25.6 |
) |
|
(34.0 |
) |
Eliminate impact of excess tax benefits for share
compensation(2) |
(6.3 |
) |
|
(9.8 |
) |
|
(27.3 |
) |
|
(18.1 |
) |
Other(3) |
0.2 |
|
|
1.0 |
|
|
(1.7 |
) |
|
5.4 |
|
Total adjustments for income
taxes |
(11.8 |
) |
|
(31.4 |
) |
|
(54.6 |
) |
|
(46.7 |
) |
Adjusted provision for income
taxes |
$ |
(51.2 |
) |
|
$ |
(47.2 |
) |
|
$ |
(94.5 |
) |
|
$ |
(90.2 |
) |
|
|
|
|
|
|
|
|
Effective tax rate |
26.9 |
% |
|
21.7 |
% |
|
18.0 |
% |
|
24.7 |
% |
Adjusted Effective Tax
Rate |
27.6 |
% |
|
28.1 |
% |
|
27.3 |
% |
|
28.1 |
% |
As a result of displaying amounts in millions,
rounding differences may exist in the table above.
(1) Tax rates used to calculate the tax
expense impact are based on the nature of each item.
(2) Eliminates the impact of excess tax
benefits for share compensation.
(3) Eliminates impact of state tax rate
changes on deferred taxes, valuation allowances on foreign net
operating losses, and valuation allowances on capital losses and
other discrete adjustments.
SCHEDULE 5TRANSUNION AND
SUBSIDIARIESSegment Depreciation and Amortization
- Unaudited(in millions)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
U.S. Markets |
$ |
56.1 |
|
|
$ |
45.5 |
|
|
$ |
113.1 |
|
|
$ |
90.2 |
|
International |
28.6 |
|
|
18.3 |
|
|
60.6 |
|
|
35.9 |
|
Consumer Interactive |
3.2 |
|
|
3.0 |
|
|
6.5 |
|
|
5.9 |
|
Corporate |
1.2 |
|
|
1.3 |
|
|
2.5 |
|
|
2.5 |
|
Total depreciation and
amortization |
$ |
89.2 |
|
|
$ |
68.0 |
|
|
$ |
182.7 |
|
|
$ |
134.6 |
|
As a result of displaying amounts in millions, rounding
differences may exist in the table above.
SCHEDULE 6TRANSUNION AND
SUBSIDIARIESReconciliation of Non-GAAP Guidance -
Unaudited(dollars in millions)
|
Three Months EndedSeptember 30, 2019 |
|
Twelve Months EndedDecember 31, 2019 |
|
Low |
|
High |
|
Low |
|
High |
Guidance reconciliation of revenue to Adjusted
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue |
$ |
672 |
|
|
$ |
677 |
|
|
$ |
2,622 |
|
|
$ |
2,632 |
|
Acquisitions revenue-related
adjustment(1) |
— |
|
|
— |
|
|
6 |
|
|
6 |
|
Adjusted Revenue |
$ |
672 |
|
|
$ |
677 |
|
|
$ |
2,628 |
|
|
$ |
2,638 |
|
|
|
|
|
|
|
|
|
Guidance
reconciliation of net income attributable to TransUnion to Adjusted
EBITDA: |
|
|
|
|
|
|
|
Net income attributable to
TransUnion |
$ |
75 |
|
|
$ |
78 |
|
|
$ |
331 |
|
|
$ |
337 |
|
Discontinued operations, net
of tax |
— |
|
|
— |
|
|
5 |
|
|
5 |
|
Net income attributable to
TransUnion from continuing operations |
75 |
|
|
78 |
|
|
336 |
|
|
342 |
|
Interest, taxes and
depreciation and amortization |
157 |
|
|
158 |
|
|
625 |
|
|
627 |
|
EBITDA |
232 |
|
|
236 |
|
|
961 |
|
|
969 |
|
Acquisitions revenue-related
adjustment(1) |
— |
|
|
— |
|
|
6 |
|
|
6 |
|
Stock-based compensation,
mergers, acquisitions divestitures and business
optimization-related expenses and other adjustments(2) |
36 |
|
|
36 |
|
|
70 |
|
|
70 |
|
Adjusted EBITDA |
$ |
269 |
|
|
$ |
273 |
|
|
$ |
1,036 |
|
|
$ |
1,044 |
|
|
|
|
|
|
|
|
|
Reconciliation of
diluted earnings per share from continuing operations to Adjusted
Diluted Earnings per Share from Continuing
Operations: |
|
|
|
|
|
|
|
Diluted earnings per share
from continuing operations |
$ |
0.39 |
|
|
$ |
0.41 |
|
|
$ |
1.75 |
|
|
$ |
1.78 |
|
Adjustments to diluted
earnings per share(1)(2) |
0.30 |
|
|
0.30 |
|
|
0.91 |
|
|
0.90 |
|
Adjusted Diluted Earnings per
Share from Continuing Operations |
$ |
0.69 |
|
|
$ |
0.71 |
|
|
$ |
2.66 |
|
|
$ |
2.69 |
|
As a result of displaying amounts in millions,
rounding differences may exist in the table above.
(1) This adjustment represents certain
non-cash adjustments related to acquired entities, predominantly
adjustments to increase revenue resulting from purchase accounting
reductions to deferred revenue we record on the opening balance
sheets of acquired entities. Deferred revenue results when a
company receives payment in advance of fulfilling their performance
obligations under contracts. Business combination accounting rules
require us to record deferred revenue of acquired entities at fair
value if we are obligated to perform any future services under
these contracts. The fair value of this deferred revenue is
determined based on the direct and indirect incremental costs of
fulfilling our performance obligations under these contracts, plus
a normal profit margin. Generally, this fair value calculation
results in a reduction to the purchased deferred revenue balance.
The above adjustment includes an estimate for the increase in
revenue equal to the difference between what the acquired entities
would have recorded as revenue and the lower revenue we record as a
result of the reduced deferred revenue balance. This increase is
partially offset by an estimated decrease to revenue for certain
acquired non-core customer contracts that are not classified as
discontinued operations that will expire within approximately one
year. We present Adjusted Revenue as a supplemental measure of our
revenue because we believe it provides meaningful information
regarding our revenue and provides a basis to compare revenue
between periods. In addition, our board of directors and executive
management team use Adjusted Revenue as a compensation measure
under our incentive compensation plan. The table above provides a
reconciliation for revenue to Adjusted Revenue. The estimated
adjustments to revenue are subject to change as we finalize the
fair value assessments of the deferred revenue acquired with recent
acquisitions and as we complete our assessment of the non-core
customer contracts.
(2) This adjustment includes the same
adjustments we make to our Adjusted EBITDA and Adjusted Net Income
as discussed in the Non-GAAP Financial Measures section of our
earnings release, which includes the Callcredit integration-related
costs as well as an adjustment for the item discussed in the
Subsequent Event section of this earnings release.
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